================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

       FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

    (Mark One)

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM ____________TO____________

                          COMMISSION FILE NUMBER 1-3920

                   NORTH AMERICAN GALVANIZING & COATINGS, INC.
                          (FORMERLY KINARK CORPORATION)
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)

                                   71-0268502
                      (I.R.S. Employer Identification No.)

                2250 EAST 73RD STREET, TULSA, OKLAHOMA 74136-6832
               (Address of principal executive offices)(Zip Code)

               Registrant's telephone number, including area code
                                 (918) 494-0964

           Securities registered pursuant to Section 12(b) of the Act:

       TITLE OF EACH CLASS             NAME OF EACH EXCHANGE ON WHICH REGISTERED
       -------------------             -----------------------------------------
   Common Stock, $.10 par value                American Stock Exchange

     Securities registered pursuant to Section 12(g) of the Act: NONE

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K.  [X]

     Indicate by check mark whether the Registrant is an accelerated filer (as
defined In Exchange Act Rule 12b-2). Yes  [ ]  No  [X]

     The aggregate market value of Common Stock held by non-affiliates on March
30, 2004 was approximately $7.5 million. As of March 30, 2004, there were
6,794,293 shares of North American Galvanizing & Coatings, Inc. Common Stock
$.10 par value outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive proxy statement to be filed not
later than 120 days after the end of the fiscal year covered by this report are
incorporated by reference in Part III.
================================================================================
<PAGE>

                   NORTH AMERICAN GALVANIZING & COATINGS, INC.

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                   For the Fiscal Year Ended December 31, 2003

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

FORWARD LOOKING STATEMENTS OR INFORMATION.....................................3

PART I

  Item 1.    Business.........................................................4
  Item 2.    Properties.......................................................6
  Item 3.    Legal Proceedings................................................7
  Item 4.    Submission of Matters to a Vote of Security Holders..............7

PART II

  Item 5.    Market for Registrant's Common Equity and Related
               Stockholder Matters............................................8
  Item 6.    Selected Financial Data..........................................8
  Item 7.    Management's Discussion and Analysis of Financial
               Condition and Results of Operations............................8
  Item 7A.   Quantitative and Qualitative Disclosures
               About Market Risk..............................................8
  Item 8.    Financial Statements and Supplementary Data......................8
  Item 9.    Changes in and disagreements with Accountants on
               Accounting and Financial Disclosure............................8
  Item 9A.   Controls and Procedures .........................................9

PART III

  Item 10.   Directors and Executive Officers of the Registrant..............10
  Item 11.   Executive Compensation..........................................10
  Item 12.   Security Ownership of Certain Beneficial Owners
               And Management and Related Stockholder Matters ...............10
  Item 13.   Certain Relationships and Related Transactions..................10
  Item 14.   Principal Accountant Fees and Services .........................10

PART IV

  Item 15.   Exhibits, Financial Statement Schedules, and Reports
               on Form 8-K...................................................11


                                        2
<PAGE>

FORWARD LOOKING STATEMENTS OR INFORMATION

Certain statements in this Annual Report in Form 10-K, including information set
forth under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations", constitute "Forward-Looking Statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
are typically punctuated by words or phrases such as "anticipates," "estimate,"
"should," "may," "management believes," and words or phrases of similar import.
The Company cautions investors that such forward-looking statements included in
this Form 10-K, or hereafter included in other publicly available documents
filed with the Securities and Exchange Commission, reports to the Company's
stockholders and other publicly available statements issued or released by the
Company involve significant risks, uncertainties, and other factors which could
cause the Company's actual results, performance (financial or operating) or
achievements to differ materially from the future results, performance
(financial or operating) or achievements expressed or implied by such
forward-looking statements. Factors that could cause or contribute to such
differences could include, but are not limited to, changes in demand, prices,
and the raw materials cost of zinc; changes in economic conditions of the
various markets the Company serves, as well as the other risks detailed herein
and in the Company's reports filed with the Securities and Exchange Commission.
The Company believes that the important factors set forth in the Company's
cautionary statements at Exhibit 99 to Form 10-K could cause such a material
difference to occur and investors are referred to Exhibit 99 for such cautionary
statements.












                                        3
<PAGE>

PART I

AVAILABLE INFORMATION

We make available through our Internet website at www.nagalv.com, our Statements
of Beneficial Ownership of Securities Forms 3, 4 and 5 for Directors and
Officers of the Company, filed with the Securities and Exchange Commission. We
have also posted on our website our (1) Corporate Governance Guidelines; (2)
Code of Business Conduct and Ethics and, (3) the Company's charters for the
Audit Committee, the Compensation Committee, and the Corporate Governance and
Nominating Committee.

ITEM 1. BUSINESS
At the Company's Annual Meeting held May 14, 2003, stockholders approved an
amendment of the Company's certificate of incorporation to change the Company's
name from Kinark Corporation to North American Galvanizing & Coatings, Inc.,
effective July 1, 2003. The former Kinark Corporation was incorporated under the
laws of the state of Delaware in 1955. The Company's corporate headquarters are
located in Tulsa, Oklahoma. As used in this report, except where otherwise
stated or indicated by the context, "North American Galvanizing", the "Company"
and the "Registrant" means North American Galvanizing & Coatings, Inc. and its
consolidated subsidiary.

North American Galvanizing is a manufacturing services holding company currently
conducting business in galvanizing and coatings through its wholly-owned
subsidiary, North American Galvanizing Company and its wholly-owned subsidiaries
("NAG"). Formed in 1996, NAG merged with Rogers Galvanizing Company ("Rogers")
in 1996 and Boyles Galvanizing Company ("Boyles") in 1997, with NAG as the
surviving company. Rogers was acquired by the Company in 1996 and Boyles was
acquired in 1969.

GALVANIZING
The Company conducts galvanizing and coating operations through its NAG
subsidiary. NAG is principally engaged in hot dip galvanizing of metal products
and components fabricated by its customers. All of NAG's revenue is generated
from the value-added galvanizing and coating of its customer's products. NAG
galvanizes iron and steel products by immersing them in molten zinc. This
bonding process produces an alloyed metal surface that provides an effective
barrier ("cathodic protection") against oxidation and corrosion from exposure to
the elements, for up to 50 years. Additional coating services provided by NAG
include sandblasting, quenching, metalizing (flame sprayed), centrifuge spinner
galvanizing, Corrocote Classic II painting and INFRASHIELDSM Coating.

The galvanizing process provides effective corrosion protection of fabricated
steel which is used in numerous markets such as petrochemical, highway and
transportation, energy, utilities, communications, irrigation, pulp and paper,
waste water treatment, food processing, recreation and the manufacture of
original equipment. In a typical year, NAG will galvanize in excess of
300,000,000 (approximately 263,000,000 in 2003) pounds of steel products for
approximately 1,800 customers nationwide. Based on the number of its operating
plants, NAG is one of the

                                        4
<PAGE>

largest merchant market hot dip galvanizing companies in the United States.
Revenues and income (loss) from continuing operations for the three years ended
December 31, 2003 are presented herein on page FS-18, Consolidated Statements of
Operations and Comprehensive Income.

NAG operates ten galvanizing plants in six states. These strategically located
plants enable NAG to compete effectively by providing galvanizing to
manufacturers representing a broad range of basic industries throughout the mid
and south-central United States, and beyond. Its galvanizing plants are located
in Tulsa, Oklahoma; Kansas City, Missouri; St. Louis, Missouri; Nashville,
Tennessee; Louisville, Kentucky; Denver, Colorado; Hurst, Texas; and Houston,
Texas.

In June 2003, NAG wrote-off its investment in the formerly idled Cunningham
galvanizing plant located in Houston, Texas as a discontinued operation.

In January 2003, NAG expanded services at its Nashville, Tennessee facility with
the installation of a centrifuge spinner line to galvanize small product and
threaded materials.

In the fourth quarter of 2002, NAG began operations at its newest galvanizing
plant in St. Louis, Missouri. This state-of-the-art facility features a 51-foot
kettle, providing the largest galvanizing capacity in the St. Louis region.

In the third quarter of 2002, NAG introduced INFRASHIELDSM coating, a specialty
multi-part polymer coating system designed to be applied over hot dip galvanized
material. The resultant superior corrosion protection offered by combining
cathodic protection with a non-conductive coating is applicable to many
environments that have unique corrosion issues.

In 2001, the Company completed a major expansion of its galvanizing operations
with the construction of a new galvanizing plant in Houston, Texas. This
state-of-the-art facility includes a 62-foot galvanizing kettle with
capabilities to process extra large poles for the wireless communication and
electric transmission markets. The new facility became operational in the first
quarter of 2001.

Zinc, the primary raw material and largest cost component in the Company's
galvanizing process, is a widely available commodity in the open market. The
London Metal Exchange price of zinc for three month delivery was $.34 per pound
at the beginning of 2003. During 2003, there was relatively little movement in
the price of zinc through the first eight months, followed by gradual increases
to close the year at $.46 per pound. In an attempt to minimize the potential
risk associated with zinc price fluctuations, the Company periodically enters
into forward purchase commitments for up to one year.

NAG ten largest customers, on a combined basis, accounted for approximately 33%
of the Company's consolidated sales in 2003, compared with 34% in 2002. The
backlog of orders at NAG is generally nominal due to the short turn-around time
requirement demanded in the galvanizing industry.

                                        5
<PAGE>

Hot dip galvanizing is highly competitive. NAG competes with other publicly and
privately owned independent galvanizing companies, captive galvanizing
facilities operated by manufacturers, and alternative forms of corrosion
protection such as paint. The type and number of competitors vary throughout the
geographic areas in which NAG does business. Competition is driven primarily by
price, rapid turn-around service time, and the quality of the finished
galvanized product. Management believes that the broad geographic disbursement
of its galvanizing plants and the reliable quality of its service enables NAG to
compete on a favorable basis. The Company continues to develop and implement
operating and market strategies to maintain its competitive position and to
develop new markets, as demonstrated by the recent opening of new galvanizing
plants in Houston and St. Louis, as well as expanded service capabilities at its
existing plants.

NAG's business is not generally considered to be seasonal due to the breadth and
diversity of markets served, although revenues typically are lower in the first
and fourth quarters due to seasonality in certain construction markets. In line
with its historical pattern, NAG generated 50% of its revenues during the first
six-months of 2003, compared with 51% in the first six-months of 2002.

The Company's facilities are subject to extensive environmental legislation and
regulation affecting their operations and the discharge of wastes. The cost of
compliance with such regulations was approximately $1,061,000 and $1,168,000 in
2003 and 2002, respectively, for the disposal and recycling of wastes generated
by the galvanizing operations. In 1997, NAG was named a potentially responsible
party by the Illinois Environmental Protection Agency ("IEPA") in connection
with cleanup of an abandoned site formerly owned by Sandoval Zinc Co. The IEPA
notice included NAG and a number of other organizations which arranged for the
treatment and disposal of hazardous substances at Sandoval. Based on current
information, NAG's share of any probable future costs cannot be estimated at
this time.

NAG's one-year labor agreement with the United Steel Workers Union covering
production workers at its Tulsa galvanizing plants originally expired March 31,
2003. In October 2003, the union employees ratified a new three-year labor
agreement, effective November 1, 2003. The new agreement re-defines eligibility
for payment of over-time, requires employee contributions for family coverage
under the Company's group medical insurance program and grandfathers vacation
benefits for certain long-term employees. Nation-wide, NAG employed 318 persons
at December 31, 2003, compared to 364 persons at the end of 2002.

ITEM 2. PROPERTIES
NAG operates hot dip galvanizing plants located in Oklahoma, Missouri, Texas,
Colorado, Tennessee and Kentucky. Two of the plants are leased under terms which
gives NAG the option to extend the lease for up to 15 years. NAG's galvanizing
plants average 20,000 square feet in size, with the largest approximately 55,000
square feet, and it operates zinc kettles ranging in length from 33 to 62 feet.

                                        6
<PAGE>

The Company's headquarters office is located in Tulsa, Oklahoma, in
approximately 4,100 square feet of office space leased through December, 2005.


ITEM 3. LEGAL PROCEEDINGS
In December 2003, the Company's liability insurance provider reached agreement
with a plaintiff to settle an outstanding claim filed in 2002 in which NAG was
named a defending party resulting from the personal injury of an independent
contractor at one of its facilities. At December 31, 2003, the Company was not a
party to, nor is any of its property subject to, any material legal proceedings,
other than routine litigation incidental to the business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth quarter of
2003.

EXECUTIVE OFFICERS OF THE REGISTRANT

PAUL R. CHASTAIN     69     Vice President and Chief Financial Officer since
                            February 1996, and Secretary of the Company since
                            January 2000 to present. From July 1993 through
                            January 1996, President and Chief Executive Officer
                            of the Company. From June 1991- July 1993, Chairman
                            and Chief Executive Officer. Co-Chairman and
                            Co-Chief Executive Officer of the Company from June
                            1990-June 1991. From 1976, Executive Vice President
                            and Treasurer. From 1973 through 1976, Vice
                            President of Finance and Secretary of the Company.
                            Director of the Company since 1975.


RONALD J. EVANS      54     President of the Company since February 1996 and
                            appointed Chief Executive Officer November 1999 to
                            present. From May 1995 through January 1996, private
                            investor. From 1989-1995, Vice President-General
                            Manager of Deltech Corporation. Mr. Evans' previous
                            experience includes 13 years with Hoechst Celanese
                            Corporation. Director of the Company since 1995.

                            Pursuant to the bylaws of the Company, the executive
                            officers are appointed annually by the Board of
                            Directors, and shall hold office until their
                            successors are chosen.


                                        7
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

STOCK INFORMATION
The principal trading market for the common stock of North American Galvanizing
& Coatings, Inc. is the American Stock Exchange. The Company's common stock
trades under the symbol "NGA". The Company does not pay a dividend and expects
to continue that policy in order to reinvest earnings to support and expand its
business operations. The Company's board of directors may review the dividend
policy in the future, recognizing that dividends may be a desirable form of
return on the investment made by many of its stockholders. Stockholders of
record at April 1, 2004 numbered approximately 1,950, excluding an estimated 500
stockholder accounts held in street name.

                             QUARTERLY STOCK PRICES

                 FIRST        SECOND         THIRD        FOURTH

2003-High        $1.64         $1.58         $1.45         $1.83
     Low         $1.46         $1.20         $1.10         $1.16

2002-High        $1.34         $1.70         $1.75         $1.65
     Low         $0.93         $0.96         $1.20         $1.30


ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for years 1999 through 2003 are presented on page
FS-35 of this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The index to Management's Discussion and Analysis of Financial Condition and
Results of Operations is presented on page 15 of this Annual Report on Form
10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management's discussion of quantitative and qualitative disclosures about market
risk is presented on page FS-13.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The index to Financial Statements and Supplementary Data is presented on page 15
of this annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with the Company's independent accountants on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope.

                                        8
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES
The certifying officers of the Company are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the Company and have (i) designed such disclosure
controls and procedures to ensure that material information relating to the
Company, including its consolidated subsidiary, is made known to them by others
within those entities, particularly during the period in which this annual
report is being prepared; and (ii) evaluated the effectiveness of the Company's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"). Based on this
evaluation, the chief executive officer and the chief financial officer of the
Company have concluded that the Company's disclosure controls and procedures
were effective during the period being reported on in this annual report.

The Company's certifying officers have indicated that there were no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their most recent evaluation,
including any significant deficiencies or material weaknesses that would require
corrective actions.



















                                        9
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the headings "Election of Directors," "Board of
Directors and Committees" and "Company Information Available on Website" in the
Company's Proxy Statement (the "2004 Proxy Statement") for its annual meeting of
stockholders to be held on May 14, 2004 (subject to the Company's ability to
mail the 2004 proxy statement on or about April 19, 2004) is incorporated by
reference.

Information about our Executive Officers may be found in Part I, Item 4A of this
Form 10-K under the heading "Executive Officers of the Registrant" in accordance
with Instruction 3 of Item 401(b) of Regulation S-K and General Instruction G(3)
of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION
The information required by this item appears in the 2004 Proxy Statement under
the headings "Executive Compensation," "Stock Option Grants in Fiscal Year
2003," "Options Exercised in Fiscal Year 2003 and Fiscal Year End Values,"
"Director's Compensation," "Compensation Committee Interlocks and Insider
Participation" and "Compensation Committee Report" and is incorporated by
reference. Information regarding the Company's stock option plans appears herein
on page FS-30, Footnotes to Consolidated Financial Statements.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item concerning security ownership of certain
beneficial owners and management appears in the 2004 Proxy Statement under the
heading "Security Ownership of Principal Stockholders and Management" and is
incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item concerning certain relationships and
related party transactions appears in the 2004 Proxy Statement under the heading
"Related Party Transactions" and is incorporated by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required by this item are incorporated herein by reference from the
2004 Proxy Statement under the captions "Audit Committee Report" and
"Ratification of Appointment of Independent Accountants."

                                       10
<PAGE>

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:

(1) FINANCIAL STATEMENTS                                                   PAGE

Independent Auditors' Report                                               FS-16

Consolidated Balance Sheets at December 31, 2003 and 2002                  FS-17

Consolidated Statements of Operations and Comprehensive Income
    for the years ended December 31, 2003, 2002 and 2001                   FS-18

Consolidated Statements of Stockholders' Equity
    for the years ended December 31, 2003, 2002 and 2001                   FS-19

Consolidated Statements of Cash Flows for the years ended
    December 31, 2003, 2002 and 2001                                       FS-20

Notes to Consolidated Financial Statements                                 FS-21

(2) FINANCIAL STATEMENT SCHEDULES:

Schedule II - Valuation and Qualifying Accounts                               13

          All schedules omitted are inapplicable or the information required is
          included in either the consolidated financial statements or the
          related notes to the consolidated financial statements.


(3) EXHIBITS:

          The Exhibits filed with or incorporated by reference into this report
          are listed in the following Index to Exhibits.


                                       11
<PAGE>

EXHIBIT INDEX

EXHIBIT
  NO.                                DESCRIPTION
-------   ----------------------------------------------------------------------
  3.1     Restated Certificate of Incorporation of Kinark Corporation, as
          amended on June 6, 1996 (incorporated by reference to Exhibit 3.1 of
          the Company's Pre-Effective Amendment No. 1 to Registration Statement
          on Form S-3, Registration No. 333-4937, filed with the Commission on
          June 7, 1996).

  3.2     Amended and Restated Bylaws of Kinark Corporation (incorporated by
          reference to Exhibit 3.1 to the Company's Quarterly Report on Form
          10-Q dated March 31, 1996).

 10.1     Credit Agreement, dated September 24, 1999,  between Kinark
          Corporation, a Delaware corporation, and Bank One, Oklahoma, N.A.,
          National Association, a national banking association.

 21.      Subsidiaries of the Registrant.

 23.      Independent Auditors' Consent.

 24.01    Power of attorney from Linwood J. Bundy.

 24.02    Power of attorney from Ronald J. Evans.

 24.03    Power of attorney from Gilbert L. Klemann, II.

 24.04    Power of attorney from Patrick J. Lynch.

 24.05    Power of attorney from Joseph J. Morrow.

 24.06    Power of attorney from John H. Sununu.

 31.      Certifications pursuant to Section 302 of the Sarbanes, Oxley Act of
          2002.

 32.      Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

 99       Cautionary Statements by the Company Regarding Forward Looking
          Statements.

 99       Amendment Three to Amended and Restated Credit Agreement, September
          26, 2003.

(B) REPORTS ON FORM 8-K.

          The Company filed one (1) Form 8-K Current Report during the quarter
          ended December 31, 2003: November 6, 2003 - Announcement of Third
          Quarter 2003 Sales and Earnings Results

                                       12
<PAGE>

SCHEDULE II

NORTH AMERICAN GALVANIZING & COATINGS, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001



                                              Additions
                                  Balance at  charged to              Balance at
                                  beginning   costs and                 end of
Description                        of year     expenses   Deductions     year
--------------------------------------------------------------------------------
Allowance for doubtful receivables
(deducted from accounts receivable)


2003                              $ 285,000   $ 190,000   $ 136,000   $ 339,000
--------------------------------------------------------------------------------
2002                              $ 293,000   $ 184,000   $ 192,000   $ 285,000
--------------------------------------------------------------------------------
2001                              $ 321,000   $ 110,000   $ 138,000   $ 293,000
--------------------------------------------------------------------------------

                                       13
<PAGE>

SIGNATURES

     Pursuant to the requirements of Section 13 and 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, as duly authorized.



                                                NORTH AMERICAN GALVANIZING
                                                     & COATINGS, INC.
                                                       (Registrant)


Date: March 26, 2004                       By:  /s/Paul R. Chastain
                                                --------------------------
                                                Paul R. Chastain
                                                Vice President and
                                                Chief Financial Officer


      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 26, 2004, by the following persons on
behalf of the Registrant and in the capacities indicated.


/s/Joseph J. Morrow*                          /s/Patrick J. Lynch*
------------------------------------          ---------------------------------
Joseph J. Morrow, Non-Executive               Patrick J. Lynch, Director
Chairman of the Board

/s/Ronald J. Evans*                           /s/John H. Sununu*
------------------------------------          ---------------------------------
Ronald J. Evans, President and                John H. Sununu, Director
Chief Executive Officer (Principal
Executive Officer), and Director

/s/Paul R. Chastain                           /s/Gilbert L. Klemann, II*
------------------------------------          ---------------------------------
Paul R. Chastain, Vice President,             Gilbert L. Klemann, II, Director
Chief Financial Officer, Secretary &
Director (Principal Financial and
Accounting Officer)

/s/Linwood J. Bundy*
------------------------------------
Linwood J. Bundy, Director


*Paul R. Chastain, by signing his name hereto, does hereby sign this Annual
Report on Form 10-K on behalf of each of the directors and officers of the
Registrant after whose typed names asterisks appear pursuant to powers of
attorney duly executed by such directors and officers and filed with the
Securities and Exchange Commission as exhibits to this report.


                                        By: /s/ Paul R. Chastain
                                            ----------------------------------
                                            Paul R. Chastain, Attorney-in-fact



                                       14
<PAGE>

INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS,
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                                                       Page
                                                                       ----

Management's Discussion and Analysis...............................FS-1 to FS-14

Management's Responsibility For Financial Statements...................FS-15

Independent Auditors' Report...........................................FS-16

Consolidated Balance Sheets............................................FS-17

Consolidated Statements of Operations and
  Comprehensive Income.................................................FS-18

Consolidated Statements of Stockholders' Equity........................FS-19

Consolidated Statements of Cash Flows..................................FS-20

Notes to Consolidated Financial Statements........................FS-21 to FS-33

Quarterly Results......................................................FS-34

Selected Financial Data................................................FS-35


                                       15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

North American Galvanizing is a leading provider of corrosion protection for
iron and steel components fabricated by its customers. Based on the number of
its operating plants, the Company is one of the largest merchant market hot dip
galvanizing companies in the United States. Hot dip galvanizing is the process
of applying a zinc coating to fabricated iron or steel material by immersing the
material in a bath consisting primarily of molten zinc.

The Company's galvanizing plants offer a broad line of services including
centrifuge galvanizing for small threaded products, sandblasting, chromate
quenching, polymeric coatings, and proprietary INFRASHIELDSM Coating Application
Systems for polyurethane protective linings and coatings over galvanized
surfaces. The Company's structural and chemical engineers provide customized
assistance with initial fabrication design, project estimates and steel
chemistry selection.

The Company's galvanizing and coating operations are managed through two regions
with ten (10) facilities located in Colorado, Kentucky, Missouri, Oklahoma,
Tennessee and Texas. These facilities operate galvanizing kettles ranging in
length from 30 feet to 62 feet, and have lifting capacities ranging from 12,000
pounds to 40,000 pounds.

The Company maintains a sales and service network coupled with its galvanizing
plants, supplemented by national account business development at the corporate
level. In a typical year, the Company will galvanize in excess of 300,000,000
pounds of steel products for approximately 1,800 customers nationwide.

All of the Company's sales are generated for domestic customers whose end
markets are principally in the United States. The Company markets its
galvanizing and coating services directly to its customers and does not utilize
agents or distributors. Although hot dip galvanizing is considered a mature
service industry, the Company is actively engaged in developing new markets
through participation in industry trade shows, metals trade associations and
presentation of technical seminars by its national marketing service team.

Hot dip galvanizing provides metals corrosion protection for many product
applications used in commercial, construction and industrial markets. The
Company's galvanizing can be found in almost every major application and
industry that requires corrosion protection where iron or steel is used,
including the following end user markets:

   o  highway and transportation,
   o  power transmission and distribution,
   o  wireless and telecommunications,
   o  utilities,
   o  petrochemical processing,
   o  infrastructure including buildings, airports, bridges and power generation

                                      FS-1
<PAGE>

   o  industrial grating,
   o  wastewater treatment; fresh water storage and transportation
   o  pulp and paper,
   o  pipe and tube,
   o  food processing,
   o  agricultural (irrigation systems)
   o  recreation (boat trailers, marine docks, stadium scaffolds)
   o  original equipment manufactured products, including general fabrication

As a value-added service provider, the Company's revenues are directly
influenced by the level of economic activity in the various end markets that it
serves. Economic activity in those markets that results in the expansion and/or
upgrading of physical facilities (i.e., construction) may involve a time-lag
factor of several months before translating into a demand for galvanizing
fabricated components. Despite the inherent seasonality associated with large
project construction work, the Company maintains a relatively stable revenue
stream throughout the year by offering fabricators, large and small, reliable
and rapid turn-around service. The Company records revenues when the galvanizing
and customer billing processes are completed. The Company generates all of its
operating cash from such revenues, and utilizes a line of credit secured by the
underlying accounts receivable and zinc inventory to facilitate working capital
needs.

Each of the Company's galvanizing plants operate in a highly competitive
environment underscored by pricing pressures, primarily from other public and
privately-owned galvanizers and alternative forms of corrosion protection, such
as paint. The Company's long-term response to these challenges has been a
sustained strategy focusing on providing a reliable quality of galvanizing to
industry ASTM specifications and rapid turn-around time on every project, large
and small. Key to the success of this strategy is the Company's continuing
commitment and long-term record of reinvesting earnings to upgrade its
galvanizing facilities and provide technical innovations to improve production
efficiencies; and to construct new facilities when market conditions present
opportunities for growth. The Company is addressing long-term opportunities to
expand its galvanizing and coatings business through programs to increase
industry awareness of the proven, unique benefits of galvanizing for metals
corrosion protection. Each of the Company's independently operated galvanizing
plants is linked to a centralized control system involving sales order entry,
facility maintenance and operating procedures, quality assurance, purchasing and
credit and accounting that enable the plant to focus on providing galvanizing
and coating services in the most cost-effective manner.

The principal raw materials essential to the Company's galvanizing and coating
operations are zinc and various chemicals which are normally available for
purchase in the open market.

KEY INDICATORS

Key industries which historically have provided the Company some indication of
the potential demand for galvanizing in the near-term, (i.e., primarily within a
year) include highway and transportation, power transmission and distribution,
telecommunications and the level of quoting activity for regional metal
fabricators. In general, growth in the commercial/industrial sectors of the
economy generates new construction and capital spending which ultimately impacts
the demand for galvanizing.

                                      FS-2
<PAGE>

Key operating measures utilized by the Company include new orders, zinc
inventory, tons of steel galvanized, revenue, pounds and labor costs per hour,
zinc usage related to tonnage galvanized, and lost-time safety performance.
These measures are reported and analyzed on various cycles, including daily,
weekly and monthly.

The Company utilizes a number of key financial measures to evaluate the
operations at each of its galvanizing plants, to identify trends and variables
impacting operating productivity and current and future business results, which
include: sales, gross profit, fixed and variable costs, selling and general
administrative expenses, operating cash flows, capital expenditures, interest
expense, and a number of ratios such as profit from operations and accounts
receivable turnover. These measures are reviewed by the Company's operating and
executive management monthly, or more frequently, and compared to prior periods,
the current business plan and to standard performance criteria, as applicable.

RESULTS OF OPERATIONS

The following table shows the Company's results of operations:
<TABLE><CAPTION>

                                                                          YEARS ENDED DECEMBER 31
                                                   --------------------------------------------------------------------
                                                           2003                    2002                    2001
                                                   --------------------    --------------------    --------------------
(DOLLARS IN THOUSANDS)                              AMOUNT    %OF SALES     AMOUNT    %OF SALES     AMOUNT    %OF SALES
---------------------                              --------    --------    --------    --------    --------    --------
<S>                                               <C>            <C>      <C>            <C>      <C>            <C>
Sales                                              $ 33,200       100.0%   $ 38,178       100.0%   $ 35,039       100.0%
Cost of sales                                        23,833        71.8%     26,208        68.7%     24,527        70.0%
                                                   --------    --------    --------    --------    --------    --------

Gross profit                                          9,367        28.2%     11,970        31.3%     10,512        30.0%
Selling, general & administrative expenses            5,992        18.0%      5,904        15.5%      5,341        15.2%
Depreciation and amortization                         2,880         8.7%      3,028         7.9%      3,181         9.1%
                                                   --------    --------    --------    --------    --------    --------

Operating income                                        495         1.5%      3,038         7.9%      1,990         5.7%
Interest expense, net                                   654         2.0%        872         2.3%      1,315         3.7%
Other expense                                           --          --          --          --          258         0.8%
                                                   --------    --------    --------    --------    --------    --------

Income (loss) from continuing operations
   before income taxes                                 (159)       (0.5%)     2,166         5.6%        417         1.2%
Income taxes                                             23         --          851         2.2%        175         0.5%
                                                   --------    --------    --------    --------    --------    --------

Income (loss) from continuing operations
   before effect of discontinued operations            (182)       (0.5%)     1,315         3.4%        242         0.7%
Income (loss) from discontinued operations             (831)        2.5%       (205)       (0.5%)        47         0.1%
                                                   --------    --------    --------    --------    --------    --------

Net Income (Loss)                                  $ (1,013)       (3.0%)  $  1,110         2.9%   $    289         0.8%
                                                   ========    ========    ========    ========    ========    ========
</TABLE>

                                      FS-3
<PAGE>

In 2003, the Company's galvanizing and coatings operations, its sole line of
business, experienced a 13% decline in sales revenue compared to the prior year,
due to the weak economy impacting construction and fabrication activity
requiring galvanizing. As a result, the Company operated at or near break-even
for most of the year. The slow-down in construction activity that began to
impact the demand for galvanized steel in mid-2002 continued throughout 2003.
The Company expects this condition will extend into the first half of 2004, due
to the wide-spread weakness in capital spending in a number of its major market
sectors.

KEY DEVELOPMENTS. During the period 2001 through 2003, the Company reported a
number of developments supporting its strategic program to reposition its
galvanizing business in the national market.

The Company's new St. Louis galvanizing plant completed its first full year of
operations in 2003 with a 71% increase in tonnage over the smaller plant that it
replaced. This larger, new facility is providing NAG a strategic base for
extending its geographic area of service. A 51-foot kettle at this new facility
provides the largest galvanizing capacity in the St. Louis region.

In January 2003, the Company expanded services at its Nashville galvanizing
plant with the announced installation of a state-of-the-art Spinner line to
galvanize small products, including bolts and threaded material.

As reported previously, the Company wrote-off its investment in the formerly
idled Houston-Cunningham galvanizing plant in the second quarter ended June 30,
2003. The write-off resulted in a net loss on the abandoned assets of $754,000,
net of taxes of $443,000 in 2003. The net loss from operations for the
Cunningham plant was $77,000 and $205,000, net of taxes of $45,000 and $133,000,
for the years ended December 31, 2003 and 2002, respectively. The abandoned
Cunningham plant has been classified as a discontinued operation and its
expenses are not included in the results of continuing operations discussed
below.

In the third quarter of 2002, the Company announced the introduction of
INFRASHIELDSM Coating, a specialty polymer coating system that is designed to be
applied over hot dip galvanized material slated for harsh operating conditions.
The INFRASHIELDSM coating technology results in superior corrosion protection by
combining cathodic protection with a non-conductive coating.

In the first quarter of 2001, NAG began operations at its newly-constructed
galvanizing facility in Houston, Texas. The Fairbanks plant -- approximately
55,000 square feet under roof -- features a state-of-the-art galvanizing process
line, with 40,000 pound lifting capacity supporting a massive 62-foot zinc
dipping kettle. The plant started operations supported by a multi-year contract
to galvanize large wireless communication and electric transmission poles for a
major company. In addition to conventional hot dip galvanizing, the Fairbanks
plant offers its customers grit blasting and etching for pre-paint coatings,
polymeric coating and INFRASHIELDSM coating application systems in a dedicated
facility at this same site.

                                      FS-4
<PAGE>

2003 COMPARED TO 2002

SALES. Sales for the year ended December 31, 2003 were $33,200,000, down 13%
from sales of $38,178,000 posted for 2002. In 2003, the lower demand for
galvanizing due to weaknesses in the economy adversely impacted NAG's
operations. Total production volume decreased 17% from the record tonnage NAG
achieved in 2002. This lower volume resulted in a sales decrease of $6,500,000,
which was partially offset by a $1,500,000 increase in sales attributed to
product mix. In addition to competing with a number of galvanizing companies in
each of its market areas, NAG experienced a continuation of competitive pressure
on selling prices due to the weak market conditions. Production volume at the
Company's galvanizing facilities varied significantly by region in 2003, with
the weakness in some industrial markets still impacting small and medium-sized
fabricators. Over the course of 2003, the Company lowered its operating
break-even cost structure and as the capital goods spending segment of the
economy recovers, the resultant demand for galvanizing should gradually be
reflected in higher sales and improved operating results.

GROSS PROFIT. Gross profit of $9,367,000 for 2003 declined $2,603,000 or 21.7%
from last year. Gross profit as a percentage of sales declined to 28.2% from
31.3% in 2002. Gross profit margins declined primarily because of lower sales in
2003 and higher costs for labor, natural gas and insurance for liability and
workers compensation. During 2003, NAG countered declining sales with a number
of cost containment measures, including reductions in personnel. As a result of
these measures, cost of sales as a percent of sales was held to 71.8% in 2003
compared with 68.6% for the previous year. In 2003, significantly higher market
prices resulted in a 39% increase in NAG's cost of natural gas, compared to
2002. NAG does not expect any measurable abatement in the average price it will
have to pay for natural gas in 2004. For the second consecutive year, the
Company experienced higher premiums for liability and workers compensation
insurance, which increased approximately 21% in 2003. The Company has realigned
its insurance program and expects these costs will not increase in 2004.

DEPRECIATION EXPENSE. Depreciation expense decreased $148,000 for 2003 to
$2,880,000 compared with $3,028,000 in 2002. The decrease for 2003 primarily
relates to lower production volume as the unit of production method for
depreciation is utilized by the Company in its new galvanizing plants.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A increased $88,000, or
1.5%, in 2003 to $5,992,000. The increase in SG&A is due primarily to the
incremental costs of higher premiums for insurance of $74,000, increased travel
and recruiting of $44,000, and an increase in legal and professional services of
$190,000, which were partially offset by reductions in administrative salaries
and marketing activities of $215,000. The Company anticipates insurance costs
will stabilize in 2004 but travel expenses are expected to increase in support
of the Company's sales and marketing programs. In addition to sales and service
support teams assigned to each of its regional galvanizing plants, NAG is
committing corporate-level marketing resources to expand and develop new
national account business.

INTEREST EXPENSE. Interest expense decreased to $654,000 in 2003 from $872,000
in 2002, reflecting lower average borrowings for working capital and lower
average interest rates on variable rate debt. During the two-year period 2002
through 2003, the interest rate on the Company's variable rate debt decreased
from 6.75% to 4.25% as a result of changes in the

                                      FS-5
<PAGE>

prime rate. The Company's average outstanding borrowings for 2003 were
$17,622,000 compared to $18,135,000 for 2002. Interest expense also decreased
due to interest rebates of $354,000 in 2003 on the Company's industrial revenue
bonds. In September 2003, the Company amended the bond agreement to more nearly
reflect the interest rate earned by the bondholders. The amendment provides that
the bond trustee will evaluate the interest account at the end of each calendar
quarter and refund the excess amount determined, if any, and rebate such excess
to the Company. The Company does not expect to receive future interest rebates
comparable to those received in 2003. The Company's interest expense for 2003
was not impacted by inflation.

INCOME FROM CONTINUING OPERATIONS. In 2003, the Company reported a loss of
$159,000 from continuing operations before income taxes, reflecting a decline of
approximately $5,000,000, or 13%, in sales from 2002 when the Company produced a
record tonnage volume and reported income of $2,166,000 from continuing
operations before income taxes.

INCOME TAXES. The Company's effective income tax rates, including taxes related
to discontinued operations in 2003, for 2003 and 2002 were 31.5% and 39.3%,
respectively. The rate for 2003 differed from federal statutory rate primarily
due to state income taxes and adjustments to the estimate of the deferred tax
asset accounts. The rate for 2002 differed primarily due to state income taxes.

DISCONTINUED OPERATIONS. In 2002, the Board of Directors authorized the Company
to pursue alternative uses for the Houston-Cunningham plant, which was
temporarily idled in late 2001. Management believed the carrying value of the
plant and the related galvanizing assets would be realized through future
operations of the plant. Accordingly, no write-down was recognized in 2002.
However, in late April 2003, new events, combined with a further contraction of
the galvanizing business in the Houston market, resulted in the likely inability
to maintain the plant as part of the Company's continuing operations. As a
result, the Company wrote-off its investment in the formerly idled
Houston-Cunningham galvanizing plant in the second quarter ended June 30, 2003
as discontinued operations. The write-off resulted in a net loss on the
abandoned assets of $754,000, net of taxes of $443,000. The net loss from
operations for the Cunningham plant was $77,000 and $205,000, net of taxes of
$45,000 and $133,000 for 2003 and 2002, respectively; in 2001, the Cunningham
plant reported net income $47,000, net of taxes of $34,000.

NET INCOME (LOSS). For 2003, the Company reported a net loss of $1,013,000
compared net income of $1,110,000 last year. The loss per share for 2003 was
$.15 per share compared to diluted earnings of $.15 per share in 2002.

2002 COMPARED TO 2001

SALES. In 2002, total sales from NAG's multi-plant galvanizing business
increased for the second consecutive year. Sales of $38,178,000 rose 2.6%, or
$959,000, over comparable sales of $37,219,000 in 2001, based on record tonnage
up 4.4% from the prior year. In its second full year of operation, tonnage
production at NAG's newest and largest facility in Houston increased 52% over
2001, led by galvanizing of tubular steel structures for the communications and
utility markets. Despite intense competition from other galvanizers in 2002's
uncertain economy, NAG's planned marketing and sales efforts achieved a stable
average selling price per ton, only

                                      FS-6
<PAGE>

slightly below the level reported for 2001. The impact on sales from these
slightly lower prices in 2002 was significantly offset by the record tonnage.
During 2002, fabricators' demand for galvanizing showed a pattern quite similar
to the prior year, with galvanizing sales for the first nine months of 2002 up
4.2%, followed by a sales decline of 2.4% in the fourth quarter, compared to the
same periods in 2001.

GROSS PROFIT. Gross profit of $11,970,000 for 2002 increased $1,458,000 or 13.9%
compared with 2001. The gross profit margin on sales rose to 31.4% compared to
30.0% in 2001, due primarily to increased sales volume and a lower cost of zinc,
the principal material used in galvanizing. Cost of sales for 2002 of
$26,208,000 increased 6.9% from cost of sales of $24,527,000 in 2001, reflecting
an 8.9% increase in 2002 sales over the prior year. Cost of sales as a percent
of sales was 68.6% in 2002 compared 70.0% in 2001. Also, nominal improvements in
productivity, resulting from efficient usage of zinc and increased tonnage
throughput per man-hour, favorably impacted the gross profit margin.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation expense of $3,028,000 in
2002 decreased $153,000 from $3,181,000 in 2001. The decrease was primarily due
to the adoption on January 1, 2002 of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," which no longer
requires amortization of goodwill. Under this standard, goodwill must be
reviewed at least annually for impairment. In 2001, the Company recorded
goodwill amortization of $188,000.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses increased
$563,000 or 10.5% to $5,904,000 for 2002 compared with $5,341,000 for 2001. The
increase in SG&A expenses was the result of increased sales and marketing
expense for revenue growth plans, higher premiums for property and liability
insurance, and increased incentive awards for achieving plan targets.

OTHER EXPENSE. Other expense in 2001 of $258,000 resulted from losses incurred
on two commodity collar contracts which were intended to hedge the price risk
associated with fixed price zinc purchase commitments. The Company did not apply
hedge accounting to these contracts. The contracts expired in 2001 and were not
replaced.

INTEREST EXPENSE. Interest expense decreased 33.7% or $443,000 to $872,000 from
$1,315,000 in 2001. The decrease resulted from lower average borrowings, lower
average interest rates on variable rate debt and an interest refund on the
Company's industrial revenue bonds. For 2002, the Company's average outstanding
borrowings were $18,135,000 compared to $18,743 in 2001. During the two-year
period 2001 through 2002, the interest rate on the Company's variable rate debt
decreased from 9.75% to 6.25% as a result of changes in the prime rate. Interest
expense also decreased $200,000 in 2002 due to an interest rebate on the
Company's industrial revenue bonds. The Company's interest expense for 2002 was
not impacted by inflation.

INCOME FROM CONTINUING OPERATIONS. In 2002, income from continuing operations
before income taxes increased 419% or $1,749,000 to $2,166,000, reflecting
increased sales, improvement in gross profit margins and lower interest expense,
partially offset by higher selling, general and administrative costs.

                                      FS-7
<PAGE>

INCOME TAXES. The Company's effective income rates for 2002 and 2001 were 39.3%
and 42.0%, respectively. The rates differed for 2002 and 2001 from federal
statutory rates primarily due to state income taxes and non-deductible
amortization of goodwill in 2001.

DISCONTINUED OPERATIONS. The net loss from the Company's discontinued
Houston-Cunningham galvanizing operation for 2002 was $205,000, net of taxes of
$133,000.

NET INCOME. The Company reported net income of $1,110,000 for 2002 compared to
net income of $289,000 for 2001. Diluted earnings per share were $.15 per share
for 2003 compared to $.04 per share in 2001.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash flow from operations has consistently been adequate to fund
its working capital and current facilities' capital spending requirements.
During the three years ended December 31, 2003, operating cash flow has been the
primary source of liquidity, supplemented by funds from issuance of a private
placement of notes and a term loan to finance a new galvanizing plant. The
Company monitors working capital and planned capital spending to assess
liquidity and minimize cyclical cash flow.

The Company generated operating cash flow from continuing operations of
$3,131,000 in 2003, a decrease of 21% compared to operating cash flow of
$3,971,000 in 2002. Decreased cash flow from continuing operations in 2003 was
due primarily to a net loss and increases in deferred taxes, partially offset by
a decrease in working capital. In 2003, zinc inventory decreased $746,000
reflecting utilization of start-up stock at the new galvanizing facility in St.
Louis, Missouri. In 2003, discontinued operations provided cash flow of $96,000.
The Company anticipates that it will be able to satisfy cash requirements for
its ongoing business operations for the foreseeable future with cash generated
by operations and borrowings under its existing credit facilities.

For the first three quarters of 2003, the Company was in compliance with the
financial covenants of its credit agreement with a bank. For the fourth quarter
ended December 31, 2003, the Company's debt service and capital expenditures
coverage ratios fell slightly below the levels permitted under the credit
agreement, due to the lag in economic recovery with respect to demand for
galvanizing. The Company obtained a waiver from the bank for these two events of
non-compliance. Based on the Company's analysis and projections of operations
and capital expenditure requirements, the Company expects to be in compliance
with such covenants during 2004.

Operating cash flows were $3,971,000 and $4,397,000 in 2002 and 2001,
respectively.
Decreased cash flow from continuing operations in 2002 resulted primarily from
the increase in zinc inventory for a new galvanizing facility in St. Louis,
Missouri, which was partially offset by an increase in net income. Discontinued
operations provided cash flow of $200,000 and $246,000 in 2002 and 2001,
respectively.

Cash of $969,000 used in investing activities in 2003 consisted of $68,000 for
the purchase of investment securities and capital expenditures of $901,000.
Capital expenditures were $5,880,000 in 2002 and $3,297,000 in 2001. Capital
expenditures in 2003 primarily focused on

                                      FS-8
<PAGE>

budgeted capital programs to upgrade existing galvanizing facilities and the
Company expects capital expenditures in 2004 will be maintained at a comparable
level. NAG completed construction of new galvanizing facilities in St. Louis,
Missouri in 2002 and in Houston, Texas in 2001. The new Houston plant continues
to rank first in tonnage and sales among all of NAG's plants.

In 2003, the Company's total debt (current and long-term obligations) decreased
$2,185,000 to $16,415,000. Financing activities in 2003 included payments of
$618,000 to a bond sinking fund, net payments of $1,800,000 on bank debt and
other obligations and proceeds of $233,000 from an advancing construction loan
provided by a bank (See Note 3 to Consolidated Financial Statements) to complete
construction of the new galvanizing plant in St. Louis. In 2003, the Company
issued 46,218 shares of its common stock from treasury in lieu of cash for
payment of board fees to its directors.

In 2002, the Company's total debt (current and long-term obligations) increased
$859,000 to $18,600,000. Financing activities in 2002 included payments of
$587,000 to a bond sinking fund, net payments of $1,321,000 on bank debt and
other obligations and proceeds of $2,767,000 from an advancing construction loan
provided by a bank. In 2002, the Company issued 56,094 shares of its common
stock from treasury in lieu of cash for payment of board fees to its directors.

In September 2003, the Company amended a three-year bank credit agreement that
was scheduled to expire in June 2004 and extended its maturity to January 1,
2005. Subject to borrowing base limitations, the amended agreement provides (i)
a $7,000,000 maximum revolving credit facility for working capital and general
corporate purposes, (ii) a $1,911,924 term note and (iii) a $2,833,332 advancing
construction note.

Term note payments are based on a three-year amortization schedule with equal
monthly payments of principal and interest, and the note may be prepaid without
penalty. The revolving line of credit may be paid down without penalty, or
additional funds may be borrowed up to the maximum line of credit. Payments on
the advancing construction note are based on a 108- month amortization schedule,
plus interest, that commenced March 1, 2003, and the note may be prepaid without
penalty.

At December 31, 2003, $8,147,000 was outstanding under the bank credit
agreement, and $400,000 was reserved for outstanding irrevocable letters of
credit for workers' compensation insurance coverage. The Company's commitment to
repay $9,050,000 of tax-exempt adjustable rate industrial revenue bonds issued
in 2000 is fully secured by an irrevocable letter of credit issued by Bank One,
Oklahoma, N.A. in favor of Bank One Trust Company (See Note 4 to Consolidated
Financial Statements). At December 31, 2003, the Company had additional
borrowing capacity of $1,712,000 net of outstanding letters of credit, under its
revolving line of credit based on the borrowing base calculated under the
agreement. The Company believes that its ability to continue to generate cash
from operations and its bank credit facilities will provide adequate capital
resources and liquidity to support operations and capital expenditures plans for
2004.

The Company has various commitments primarily related to long-term debt,
industrial revenue bonds, operating lease commitments, zinc purchase commitments
and vehicle

                                      FS-9
<PAGE>

operating leases. The Company's off-balance sheet contractual
obligations at December 31, 2003, consist of $2,106,000 for long-term operating
leases for three galvanizing facilities and galvanizing equipment, $381,000 of
vehicle operating leases and $1,401,000 for zinc purchase commitments. The
various leases for galvanizing facilities, including option renewals, expire
from 2015 to 2017. A lease for galvanizing equipment expires in 2007. The
vehicle leases expire annually on various schedules through 2008. NAG
periodically enters into fixed price purchase commitments with domestic and
foreign zinc producers to purchase a portion of its requirements for its hot dip
galvanizing operations; commitments for the future delivery of zinc are
typically up to one year.

The Company expects to fund these commitments with cash generated from
operations and continuation of existing bank credit agreements as they mature.
The Company's contractual obligations and commercial commitments as of December
31, 2003 are as follows (in thousands):
<TABLE><CAPTION>
                                                      PAYMENT DUE OR COMMITMENT EXPIRATION BY PERIOD
                                     -------------------------------------------------------------------------------
                                      TOTAL        2004        2005        2006        2007        2008      5 YEARS
                                     -------     -------     -------     -------     -------     -------     -------
<S>                                  <C>         <C>         <C>         <C>         <C>         <C>         <C>
Industrial revenue bonds             $ 7,282     $   656     $   693     $   731     $   767     $   806     $ 3,629

Long-term debt                         8,176       1,409       6,749           1           1           1          15

Subordinated notes                     1,000        --          --         1,000        --          --          --

Facilities operating leases            2,106         498         491         411         379          36         291

Vehicle operating leases                 381         125          95          70          54          37        --

Zinc purchase commitments              1,401       1,401        --          --          --          --          --
                                     -------     -------     -------     -------     -------     -------     -------

Total contractual cash
   obligations                       $20,346     $ 4,089     $ 8,028     $ 2,213     $ 1,201     $   880     $ 3,935
                                     =======     =======     =======     =======     =======     =======     =======

Other contingent commitments:
  Letters of credit*                 $ 7,682     $ 1,056     $   693     $   731     $   767     $   806     $ 3,629
   Lines of credit                   $ 1,712        --       $ 1,712        --          --          --          --
</TABLE>

*Amount includes letter of credit relating to debt outstanding under the
 industrial revenue bond agreement (See Note 4 to Consolidated Financial
 Statements).


ENVIRONMENTAL MATTERS

The Company's facilities are subject to extensive environmental legislation and
regulations affecting their operations and the discharge of wastes. The cost of
compliance with such regulations was approximately $1,061,000, $1,168,000, and
$988,000 in 2003, 2002 and 2001, respectively, for the disposal and recycling of
wastes generated by the galvanizing operations.

As previously reported, NAG was notified in 1997 by the Illinois Environmental
Protection Agency ("IEPA") that it was a potentially responsible party under the
Comprehensive

                                      FS-10
<PAGE>

Environmental Response, Compensation, and Liability Information System
("CERCLIS") in connection with cleanup of an abandoned site formerly owned by
Sandoval Zinc Co. The IEPA notice includes NAG as one of 59 organizations which
arranged for the treatment and disposal of hazardous substances at Sandoval.
Based on current information and the preliminary state of investigation, NAG's
share of any probable future costs cannot be estimated at this time.

The Company is committed to complying with all federal, state and local
environmental laws and regulations and using its best management practices to
anticipate and satisfy future requirements. As is typical in the galvanizing
business, the Company will have additional environmental compliance costs
associated with past, present, and future operations. Management is committed to
discovering and eliminating environmental issues as they arise. Because of the
frequent changes in environmental technology, laws and regulations management
cannot reasonably quantify the Company's potential future costs in this area.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires that management
apply accounting policies and make estimates and assumptions that affect results
of operations and the reported amounts of assets and liabilities. The following
areas are those that management believes are important to the financial
statements because they require significant judgment and estimation.

REVENUE RECOGNITION. The Company generates revenue by providing galvanizing and
other coating services to customers' products. Revenue is recognized when the
galvanizing and customer billing processes are completed. Freight billed to
customers is recorded as revenue.

INVENTORIES. Inventories are stated at the lower of cost (LIFO basis) or market.
Since substantially all of the Company's inventory is raw zinc used in the
galvanizing of customers' products, market value is based on an estimate of the
value added to the cost of raw zinc as a result of the galvanizing service.

SELF-INSURANCE RESERVES. The reserves for the self-insured portion of workers
compensation and health insurance coverage is based on historical data and
current trends. Estimates for claims incurred and incurred but not reported
claims are included in the reserves. These estimates may be subject to
adjustment if the Company's actual claims are significantly different than its
historical experience. The Company has obtained insurance coverage for medical
claims exceeding $60,000 and workers' compensation claims exceeding $125,000 per
occurrence, respectively, and has implemented safety training and other programs
to reduce workplace accidents.

IMPAIRMENT OF LONG-LIVED ASSETS. The Company reviews long-lived assets for
impairment using forecasts of future cash flows to be generated by those assets.
These cash flow forecasts are based upon expected tonnage to be galvanized and
the margin to be earned by providing that service to customers. These
assumptions are susceptible to the actions of competitors and changes in
economic conditions in the industries and geographic markets the Company serves.

                                      FS-11
<PAGE>

ENVIRONMENTAL. The Company expenses or capitalizes, where appropriate,
environmental expenditures that relate to current operations as they are
incurred. Such expenditures are expensed when they are attributable to past
operations and are not expected to contribute to current or future revenue
generation. The Company records liabilities when remediation or other
environmental assessment or clean-up efforts are probable and the cost can be
reasonably estimated.

GOODWILL IMPAIRMENT. On January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."
The Company assessed initial impairment under the transition rules of SFAS 142
in the second quarter of 2002 and determined that goodwill was not impaired at
January 1, 2002. Management selected May 31 as the date of its annual goodwill
impairment test. Based upon the impairment test performed at May 31, 2003,
management determined that goodwill was not impaired. This statement requires
management to estimate the fair value of the Company's reporting units. The
determination of fair value is dependent upon many factors including, but not
limited to, management's estimate of future cash flows of the reporting units
and discount rates. Any one of a number of future events could cause management
to conclude that impairment indicators exist and that the carrying value of
these assets will not be recovered.

NEW ACCOUNTING STANDARDS

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143") which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and/or the normal operation of a long-lived asset, except for certain
obligations of lessees. This statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The adoption of this
standard had no effect on the Company's consolidated financial position or
results of operations.

In July 2002, FASB issued SFAS 146, "Accounting for Costs Associated with Exit
or Disposal Activities." The statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)." SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when a liability is incurred.
Under Issue 94-3, a liability for an exit cost as generally defined in Issue
94-3 was recognized at the date of an entity's commitment to an exit plan. The
provisions of this Statement are effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of this standard, in the
first quarter of 2003, had no impact on the Company's consolidated financial
position, results of operations or financial statement disclosures.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." This interpretation elaborates on the disclosures to be
made by a guarantor in its financial statements about its obligations under
certain guarantees that it has issued. It also

                                      FS-12
<PAGE>

requires a guarantor to recognize, at the inception of a guarantee, a liability
for the fair value of the obligations it has undertaken in issuing the
guarantee. The interpretation had no material effect on the Company's
consolidated financial statements upon adoption.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. SFAS No. 148 also amends the disclosure requirements of SFAS No.
123, "Accounting for Stock Based Compensation" to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. The adoption of this standard had no impact on the Company's
consolidated financial position, results of operations or financial statement
disclosures

In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, "Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity" ("SFAS No. 150"). The adoption of this standard had no
impact on the Company's consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities ("FIN 46"). This interpretation did not have a
material impact on the Company's consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's operations include managing market risks related to changes in
interest rates and zinc commodity prices.

INTEREST RATE RISK. The Company is exposed to financial market risk related to
changes in interest rates. Changing interest rates will affect interest paid on
the Company's variable rate debt. Variable rate debt aggregating $8,147,000 and
$9,742,000 and was outstanding under the credit agreement at December 31, 2003
and 2002, respectively, with effective rates of 4.21% and 4.50%, respectively.
Amounts outstanding under the industrial revenue bond agreement were $7,282,000
and $7,900,000 at December 31, 2003 and 2002, respectively, with an effective
rate of 3.5% in 2003 and 5.25% in 2002 (see Note 4 to Consolidated Financial
Statements). In addition, the Company's fixed rate debt consisting of $1,000,000
of 10% subordinated promissory notes was outstanding at December 31, 2003. The
borrowings under all of the Company's debt obligations at December 31, 2003 are
due as follows: $2,064,000 in 2004; $7,442,000 in 2005; $1,732,000 in 2006 and
$5,220,000 in years 2007 through 2013. Each increase of 10 basis points in the
effective interest rate would result in an annual increase in interest charges
on variable rate debt of approximately $15,400 based on December 31, 2003
outstanding borrowings. The actual effect of changes in interest rates is
dependent on actual amounts outstanding under the various loan agreements. The
Company monitors interest rates and has sufficient flexibility to renegotiate
the loan agreement, without penalty, in the event market conditions and interest
rates change.

                                      FS-13
<PAGE>

ZINC PRICE RISK. NAG periodically enters into fixed price purchase commitments
with domestic and foreign zinc producers to purchase a portion of its zinc
requirements for its hot dip galvanizing operations. Commitments for the future
delivery of zinc, typically up to one (1) year, reflect rates quoted on the
London Metals Exchange. At December 31, 2003 and 2002, the aggregate fixed price
commitments for the procurement of zinc were approximately $1,401,000 and
$4,000,000, respectively. With respect to the zinc fixed price purchase
commitments, a hypothetical decrease of 10% in the market price of zinc from the
December, 2003 and 2002 levels represented potential lost gross margin
opportunities of approximately $140,000 and $400,000, respectively; however,
lower zinc prices potentially could benefit future earnings for the zinc
purchases that are made at the lower market price. During the third quarter of
2001, two one-year commodity collar contracts which were intended to hedge the
price risk associated with fixed price zinc purchase commitments expired, and
were not renewed.

The Company's financial strategy includes evaluating the selective use of
derivative financial instruments to manage zinc and interest costs. As part of
its inventory management strategy, the Company expects to continue evaluating
hedging instruments to minimize the impact of zinc price fluctuations. The
Company's current zinc forward purchase commitments (See Note 6) are considered
derivatives, but the Company has elected to account for these purchase
commitments as normal purchases.












                                      FS-14
<PAGE>

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of North American Galvanizing & Coatings, Inc. is responsible for
the integrity and accuracy of the accompanying consolidated financial
statements. Management believes that the consolidated financial statements for
the three years ended December 31, 2003 have been prepared in conformity with
accounting principles, appropriate in the circumstances, generally accepted in
the United States. In preparing the consolidated financial statements,
management makes informed judgments and estimates where necessary to reflect the
expected effects of events and transactions that have not been completed. The
Company's disclosure controls, including operating procedures and guidelines,
ensure that material information required to be disclosed is appropriately and
timely recorded and communicated to management.

Management relies on a system of internal operating procedures and accounting
controls that allows it to meet its responsibility for the reliability of the
consolidated financial statements. This system provides reasonable assurance
that the Company's physical and intellectual assets are safeguarded and
transactions are recorded and processed in accordance with management's
authorization that permits the preparation of consolidated financial statements
in accordance with accounting principles generally accepted in the United
States. Management believes that the Company's system of internal operating
procedures and accounting controls provide reasonable assurance that errors that
could be material to the consolidated financial statements are prevented or
would be detected within a timely period.

The Audit Committee of the Board of Directors, composed of three Independent
Directors, is responsible for overseeing the Company's financial reporting
process. The Audit Committee regularly meets with executive and financial
management to review financial reports and monitor matters that could be
material to the consolidated financial statements. The Audit Committee also
meets several times a year with the independent auditors who have free access to
the Audit Committee and the Board of Directors to discuss the quality and
acceptability of the Company's financial reporting, internal controls and
matters related to corporate governance.

The independent auditors are engaged to express an opinion on the Company's
consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America. Their report is included
herein on page FS-16.





           /s/ Ronald J. Evans             /s/ Paul R. Chastain
           ------------------------        ------------------------
           Ronald J. Evans                 Paul R. Chastain
           President and                   Vice President and
           Chief Executive Officer         Chief Financial Officer


                                      FS-15
<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
NORTH AMERICAN GALVANIZING & COATINGS, INC. (FORMERLY KINARK CORPORATION)

We have audited the accompanying consolidated balance sheets of North American
Galvanizing & Coatings, Inc. and subsidiary (the "Company") as of December 31,
2003 and 2002, and the related consolidated statements of operations and
comprehensive income, stockholders'equity and cash flows for each of the three
years in the period ended December 31, 2003. Our audits also included the
financial statement schedule listed in the Index at Item 15. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of North American Galvanizing &
Coatings, Inc. and subsidiary at December 31, 2003 and 2002, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company
adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," and ceased amortizing goodwill effective January 1, 2002.



       Deloitte & Touche LLP
       Tulsa, Oklahoma
       March  26, 2004

                                      FS-16
<PAGE>

CONSOLIDATED BALANCE SHEETS
                                                              December 31
-------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)              2003           2002
-------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash                                                    $     56       $      3
Investments                                                   73            --
Trade receivables, less allowances
  of $339 for 2003 and $285 for 2002                       4,594          4,529
Inventories                                                5,408          6,154
Prepaid expenses and other assets                             87            618
Deferred tax asset, net                                      746            444
-------------------------------------------------------------------------------
   TOTAL CURRENT ASSETS                                   10,964         11,748
-------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, AT COST
Land                                                       1,962          1,714
Galvanizing plants and equipment                          34,941         40,099
-------------------------------------------------------------------------------
                                                          36,903         41,813
Less: Allowance for depreciation                          14,529         16,203
Construction in progress                                     286            303
-------------------------------------------------------------------------------
   TOTAL PROPERTY, PLANT AND EQUIPMENT, NET               22,660         25,913
-------------------------------------------------------------------------------

GOODWILL, NET                                              3,389          3,389
OTHER ASSETS                                                 354            381
-------------------------------------------------------------------------------
TOTAL ASSETS                                            $ 37,367       $ 41,431
===============================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations             $  1,408       $  1,283
Current portion of bonds payable                             656            617
Trade accounts payable                                       480          1,025
Accrued payroll and employee benefits                        623            846
Other taxes                                                  316            301
Other accrued liabilities                                    874            644
-------------------------------------------------------------------------------
   TOTAL CURRENT LIABILITIES                               4,357          4,716
===============================================================================

DEFERRED TAX LIABILITY, NET                                  774          1,187
LONG-TERM OBLIGATIONS                                      6,768          8,480
BONDS PAYABLE                                              6,626          7,283
SUBORDINATED NOTES PAYABLE                                   957            937
-------------------------------------------------------------------------------
   TOTAL LIABILITIES                                      19,482         22,603
===============================================================================

COMMITMENTS AND CONTINGENCIES (NOTES 6 AND 7)
STOCKHOLDERS' EQUITY
Common stock - $.10 par value:
    authorized - 18,000,000 shares
    issued - 8,209,925 shares in 2003 and 2002               819            819
Additional paid-in capital                                17,343         17,464
Retained earnings                                          5,496          6,509
Other Comprehensive Income                                     6            --
Common shares in treasury at cost:
   1,426,788 in 2003 and 1,473,006 in 2002                (5,779)        (5,964)
-------------------------------------------------------------------------------
   TOTAL STOCKHOLDERS' EQUITY                             17,885         18,828
-------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 37,367       $ 41,431
===============================================================================

See notes to consolidated financial statements.

                                      FS-17
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

                                                      Years Ended December 31
-------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)     2003       2002       2001
-------------------------------------------------------------------------------

SALES                                             $33,200    $38,178    $35,039

Cost of sales                                      23,833     26,208     24,527
Selling, general and administrative expenses        5,992      5,904      5,341
Depreciation and amortization                       2,880      3,028      3,181
-------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES                           32,705     35,140     33,049
-------------------------------------------------------------------------------

OPERATING INCOME                                      495      3,038      1,990
   Interest expense, net                              654        872      1,315
   Other expense, net                                 --         --         258
-------------------------------------------------------------------------------
Income (Loss) from Continuing Operations
  before Income taxes                                (159)     2,166        417
   Income tax expense                                  23        851        175
-------------------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING OPERATIONS             (182)     1,315        242
Income (Loss) from Discontinued
   Operations, net                                    (77)      (205)        47
Loss on write-off of assets
  of discontinued operations, net                    (754)       --         --
-------------------------------------------------------------------------------
NET INCOME (LOSS)                                  (1,013)     1,110        289
-------------------------------------------------------------------------------

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized investment gain                              6        --         --
Cash flow hedges:
  Cumulative effect, accounting for
    derivatives, net of related income
    taxes of $48                                       --        --         (65)
  Less: reclassification adjustment for
    derivative losses included in net
    income, net of related income taxes
    of $48                                             --        --          65
-------------------------------------------------------------------------------

OTHER COMPREHENSIVE INCOME                              6        --         --
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS)                       $(1,007)   $ 1,110    $   289
===============================================================================

NET INCOME (LOSS) PER COMMON SHARE
Continuing Operations:
   Basic                                          $  (.03)   $   .20    $   .03
   Diluted                                        $  (.03)   $   .18    $   .03

Discontinued Operations:
   Basic                                          $  (.12)   $  (.03)   $   .01
   Diluted                                        $  (.12)   $  (.03)   $   .01
Net Income (Loss):
   Basic                                          $  (.15)   $   .17    $   .04
   Diluted                                        $  (.15)   $   .15    $   .04


See notes to consolidated financial statements.

                                      FS-18
<PAGE>

                                                                     FS-19

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE><CAPTION>
                                                                                            OTHER
                                                 COMMON      ADDITIONAL                     COMPRE-
                                  SHARES      STOCK ($.10     PAID-IN        RETAINED       HENSIVE      TREASURY
                               OUTSTANDING     PAR VALUE)     CAPITAL        EARNINGS       INCOME         STOCK          TOTAL
---------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>           <C>            <C>            <C>          <C>             <C>
JANUARY 1, 2001                 6,712,209      $    819      $  17,364      $   5,110      $   --       $   (5,980)     $  17,313

Net income                           --            --             --              289          --             --              289
Treasury stock purchases          (50,000)         --             --             --            (49)            (49)
Common stock
    warrants issued                  --            --              100           --            --             --              100
Shares outstanding
   adjustment                      18,616          --             --             --            --             --             --
---------------------------------------------------------------------------------------------------------------------------------

JANUARY 1, 2002                 6,680,825           819         17,464          5,399          --           (6,029)        17,653

Net income                           --            --             --            1,110          --             --            1,110
Treasury stock issued              56,094          --             --             --            --               65             65
---------------------------------------------------------------------------------------------------------------------------------

JANUARY 1, 2003                 6,736,919           819         17,464          6,509          --           (5,964)        18,828

Net loss                             --            --             --           (1,013)         --             --           (1,013)
Other comprehensive income           --            --             --             --              6            --                6
Treasury stock issued              46,218          --             (121)          --            --              185             64
---------------------------------------------------------------------------------------------------------------------------------

DECEMBER 31, 2003               6,783,137      $    819      $  17,343      $   5,496      $     6      $   (5,779)     $  17,885
=================================================================================================================================
</TABLE>
See notes to consolidated financial statements.


                                      FS-19
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>
                                                                    YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)                                      2003             2002             2001
---------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>              <C>
OPERATING ACTIVITIES
Net income (loss)                                        $ (1,013)        $  1,110         $    289
(Income) loss from discontinued operations                  1,197             --               --
(Gain) loss on disposal of assets                               7                7              (11)
Depreciation and amortization                               2,880            3,027            3,181
Deferred income taxes                                        (715)             507              109
Non-cash directors' fees                                       64               65             --
Changes in assets and liabilities:
  Accounts receivable, net                                    (65)             292              600
  Inventories and other assets                              1,299             (974)             493
  Accounts payable, accrued liabilities and other            (523)             (63)            (264)
---------------------------------------------------------------------------------------------------
Net cash provided by continuing operations                  3,131            3,971            4,397
  Net cash provided by discontinued operations                 96              200              246
---------------------------------------------------------------------------------------------------
  CASH PROVIDED BY OPERATING ACTIVITIES                     3,227            4,171            4,643
---------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of investment                                        (68)            --               --
Capital expenditures                                         (901)          (5,880)          (3,297)
Proceeds from sale of assets                                 --               --                  3
---------------------------------------------------------------------------------------------------
  CASH USED IN INVESTING ACTIVITIES                          (969)          (5,880)          (3,294)
---------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Proceeds from subordinated debt                              --               --                900
Proceeds from stock warrants                                 --               --                100
Tax exempt bond funds held by bond trustee                   --               --              1,219
Deferred financing                                           --               --                (76)
Purchase of treasury stock                                   --               --                (49)
Payment on bonds                                             (618)            (587)            (562)
Payments on long-term obligations                         (15,947)         (16,794)         (18,510)
Proceeds from long-term obligations                        14,360           18,240           16,425
---------------------------------------------------------------------------------------------------
  CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES          (2,205)             859             (553)
===================================================================================================

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               53             (850)             796
---------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                  3              853               57
---------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                 $     56         $      8         $    853
===================================================================================================

CASH PAID DURING THE YEAR FOR:
      Interest                                           $    556         $    980         $  1,292
      Income taxes                                       $     87         $    150         $    415
</TABLE>

See notes to consolidated financial statements.

                                      FS-20
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2003, 2002, and 2001

DESCRIPTION OF BUSINESS
North American Galvanizing & Coatings, Inc. ("North American Galvanizing" or the
"Company") is engaged in hot dip galvanizing and coatings for corrosion
protection of fabricated steel products through its wholly owned subsidiary,
North American Galvanizing Company ("NAG"). NAG provides metals corrosion
protection with ten regionally located galvanizing plants. The Company grants
unsecured credit to its customers on terms standard for this industry, typically
net 30 to 45 days.

(1) DISCONTINUED OPERATIONS

The Company wrote-off its investment in the formerly idled Houston-Cunningham
galvanizing plant in the second quarter ended June 30, 2003 as a discontinued
operation. In 2002, the Board of Directors authorized the Company to pursue
alternative uses for the Houston-Cunningham plant, which was temporarily idled
in late 2001. Management believed the carrying value of the plant and the
related galvanizing assets would be realized through future operations of the
plant. Accordingly, no write-down was recognized in 2002. However, in late April
2003, new events, combined with a further contraction of the galvanizing
business in the Houston market, resulted in the likely inability to maintain the
plant as part of the Company's continuing operations. The write-off resulted in
a net loss on the abandoned assets of $754,000, net of taxes of $443,000. The
net loss from operations for the Cunningham plant was $77,000 and $205,000, net
of taxes of $45,000 and $133,000 for 2003 and 2002, respectively; in 2001, the
Cunningham plant reported net income $47,000, net of taxes of $34,000.


(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary. All inter-company
transactions are eliminated in consolidation.

ESTIMATES. The preparation of financial statements in conformity with accounting
principles generally accepted in the United State of America requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the balance
sheet dates and the reported amounts of revenues and expenses for each of the
years. Actual results will be determined based on the outcome of future events
and could differ significantly from the estimates.

CASH AND CASH EQUIVALENTS. Cash and cash equivalents include interest bearing
deposits with original maturities of three months or less.

INVESTMENTS. The Company has classified its investments as available-for-sale
and records the unrealized holding gains (losses) on these investments as a
separate component of Stockholders' Equity as other comprehensive income. If the
Company believes that a decline in the fair value of a security is other than
temporary, the cost basis of such security is written down and the loss is
reflected as a charge to income. Investment income is recognized on the accrual
method. Cost is determined on the specific identification basis in computing
realized gains and losses on sales of investments.

                                      FS-21
<PAGE>

The Company's investments consist of equity securities. The amortized cost,
unrealized holding gains and losses, and fair values of the Company's
available-for-sale equity securities at December 31, 2003 are as follows:

                                         Gross        Gross
                                         Unrealized   Unrealized
                                         Holding      Holding      Fair
                              Cost       Gains        Losses       Value
                              ----       -----        ------       -----

Equity Securities             $67,841    $5,575       $   --       $73,416
                              =======    ======       =======      =======

INVENTORIES. Inventories consist of raw zinc "pigs," molten zinc in galvanizing
kettles and other chemicals and materials used in the galvanizing process.
Inventories are stated at the lower of cost or market with market value based on
estimated realizable value from the galvanizing process. Zinc cost is determined
on a last-in first-out (LIFO) basis. Other inventories are valued primarily on
an average cost basis. Inventories consist of the following:

(DOLLARS IN THOUSANDS)              2003             2002
-----------------------------------------------------------
Zinc                             $   5,215        $   5,929
Other                                  193              225
-----------------------------------------------------------
                                 $   5,408        $   6,154
===========================================================

Inventories at December 31, 2003 and 2002 would have been higher by
approximately $1,292,000 and $1,462,000, respectively, had the Company used
first-in-first-out (FIFO) basis for value its zinc inventories. The Company's
LIFO inventories represented approximately 96% of total inventories at December
31, 2003 and 2002. Raw zinc replacement cost based on year-end market prices was
$4,263,000 and $3,668,000 at December 31, 2003 and 2002, respectively.
Management estimates the cost of zinc inventories will be recovered from revenue
generated by its galvanizing services in the normal course of business. In 2003,
inventory quantities were reduced resulting in liquidation of LIFO inventory
layers which increased the Company's net loss by $71,000.

GOODWILL. Goodwill represents the excess of purchase price over the fair value
of net assets acquired in business combinations. On January 1, 2002, the Company
adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"), although certain provisions of SFAS No. 142
were applicable to goodwill and other intangible assets acquired in transactions
completed after June 30, 2001. SFAS No. 142 addresses financial accounting and
reporting for acquired goodwill and other intangible assets and requires that
goodwill and intangible assets with an indefinite life no longer be amortized
but instead be reviewed, at least annually, for impairment. The Company assessed
initial impairment under the transition rules of SFAS 142 in the second quarter
of 2002 and determined that goodwill was not impaired at January 1, 2002.
Management selected May 31 as the date of its annual goodwill impairment test.
Based upon the impairment test performed at May 31, 2003, management determined
that goodwill was not impaired. The following pro forma results of operations
reflect elimination of goodwill amortization included in the year ended December
31, 2001, as if SFAS No. 142 had been in effect at that time (Dollars in
thousands except per share amounts).

                                      FS-22
<PAGE>

                                          2003          2002          2001
                                       ---------     ---------     ---------
Reported net income (loss)             $  (1,013)    $   1,110     $     289
Add back:  Goodwill amortization             --            --            188
                                       ---------     ---------     ---------
Adjusted net income (loss)             $  (1,013)    $   1,110     $     477
                                       =========     =========     =========

Earnings per share:
Reported net income per share
  Basic                                $    (.15)    $    0.17     $    0.04
  Diluted                              $    (.15)    $    0.15     $    0.04
Goodwill amortization
  Basic                                $      --     $     --      $    0.03
  Diluted                              $      --     $     --      $    0.02
Adjusted net income per share
  Basic                                $    (.15)    $    0.17     $    0.07
  Diluted                              $    (.15)    $    0.15     $    0.06


DEPRECIATION AND AMORTIZATION. Plant and equipment, including assets under
capital leases, are depreciated on the straight-line basis over their estimated
useful lives, generally at rates of 2% to 6% for buildings and 10% to 20% for
equipment, furnishings, and fixtures. In 2001 the Company adopted the units of
production method of depreciation, based on projected total tonnage to be
processed over the estimated life of the respective equipment, for new
galvanizing plants or for significant expansions of existing plants. During 2003
and 2002, the Company removed fully depreciated assets totaling $3,027,000 and
$2,198,000, respectively, from the accounting records.

ENVIRONMENTAL EXPENDITURES. The Company expenses or capitalizes, where
appropriate, environmental expenditures that relate to current operations as
they are incurred. Such expenditures are expensed when they are attributable to
past operations and are not expected to contribute to current or future revenue
generation. The Company records liabilities when remediation or other
environmental assessment or clean-up efforts are probable and the cost can be
reasonably estimated.

LONG-LIVED ASSETS. Long-lived assets and certain intangibles to be held and used
or disposed of are reviewed for impairment on an annual basis or when events or
circumstances indicate that such impairment may have occurred. The Company has
determined that no impairment loss need be recognized for the years ended
December 31, 2003, 2002 or 2001.

SELF-INSURANCE. The Company is self-insured for workers' compensation and
certain health care claims for its active employees. The Company carries excess
insurance providing coverage for medical claims exceeding $60,000 and workers'
compensation claims exceeding $125,000 per occurrence, respectively. The
reserves for workers' compensation benefits and health care claims represent
estimates for reported claims and for claims incurred but not reported using
loss development factors. Such estimates are generally based on historical
trends and risk assessment methodologies; however, the actual results may vary
from these estimates since the evaluation of losses is inherently subjective and
susceptible to significant changing factors.

                                      FS-23
<PAGE>

REVENUE RECOGNITION. The Company generated revenues by providing galvanizing and
other coating services to customers' products. Revenue is recognized when the
galvanizing and customer billing processes are completed. Freight billed to
customers is recorded as revenue.

DERIVATIVE FINANCIAL INSTRUMENTS. The Company has previously utilized commodity
collar contracts as derivative instruments which are intended to offset the
impact of potential fluctuations in the market price of zinc. The Company had no
derivative instruments that were required to be reported at fair value
outstanding at December 31, 2003 and 2002, and did not utilize derivatives
during the years ended December 31, 2003 or 2002, except for the zinc forward
purchase commitments, which are accounted for as normal purchases (See Note 6).

On January 1, 2001 the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities
("SFAS No. 133"). The statement, as amended, establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives, at fair value, as either
assets or liabilities in the balance sheet with an offset either to
shareholder's equity and comprehensive income or income depending upon the
classification of the derivative. The derivative instruments identified at
January 1, 2001, under the provisions of SFAS No. 133 had been previously
designated in hedging relationships that addressed the variable cash flow
exposure of forecasted purchases of zinc. Under the transition provisions of
SFAS No. 133, on January 1, 2001 the Company recorded an after-tax,
cumulative-effect-type transition charge of $65,000 to accumulated other
comprehensive income related to these derivatives. The transition adjustment was
charged to other expense during 2001 as the derivatives expired. The Company did
not apply subsequent hedge accounting for the derivatives existing at January 1,
2001. Accordingly, changes in the fair value of these derivatives subsequent to
January 1, 2001 were recorded in other (income) expense.

STOCK OPTIONS. The Company accounts for its stock option plans in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", under which no compensation cost has been recognized for stock
option awards. Had compensation cost for the Company's stock option plans been
determined according to the methodology of Statement of Financial Accounting
Standard No.123, "Accounting for Stock Based Compensation" ("SFAS No. 123"), the
Company's pro forma net earnings (loss) and basic and diluted earnings (loss)
per share for 2003, 2002 and 2001, would have been as follows:

                                                      Year Ended December 31
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)    2003       2002       2001
-------------------------------------------------------------------------------
Net Income (Loss), as reported                    $(1,013)   $ 1,110    $   289
Deduct: Total stock-based employee
compensation expense determined
under fair value based methods,
net of tax                                        $   (20)   $   (11)   $   (12)
                                                  -----------------------------

Pro forma net income (loss)                       $(1,033)   $ 1,099    $   277
                                                  -----------------------------
Earnings per share:
     Basic - as reported                          $ (0.15)   $  0.17    $  0.04
                                                  -----------------------------
     Basic - pro forma                            $ (0.15)   $  0.16    $  0.04
                                                  -----------------------------

     Diluted - as reported                        $ (0.15)   $  0.15    $  0.04
                                                  -----------------------------
     Diluted - pro forma                          $ (0.15)   $  0.16    $  0.04
                                                  -----------------------------

                                      FS-24
<PAGE>

The fair value of options granted under the Company's stock option plans was
estimated using the Black-Scholes option-pricing model with the following
assumptions used:

                                             Year Ended December 31
                                      -------------------------------------
                                        2003           2002          2001
                                      -------------------------------------
Volatility                                 66%            66%           66%
Discount Rate                               4%             5%            5%
Dividend Yield                              0%             0%            0%
Fair Value                            $   0.86        $  0.68       $  0.63

INCOME TAXES. Net deferred income tax assets and liabilities on the consolidated
balance sheet reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes and the benefit of net operating loss
and other tax credit carry-forwards. Valuation allowances are established
against deferred tax assets to the extent management believes it is more likely
than not that the assets will not be realized. No valuation allowance was
considered necessary at December 31, 2003 and 2002.

NEW ACCOUNTING STANDARDS. In June 2001, the FASB issued Statement of Financial
Accounting Standards No. 143, "Accounting for Asset Retirement Obligations"
("SFAS No. 143") which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. It applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development and/or the normal operation of a long-lived asset,
except for certain obligations of lessees. This statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
adoption of this standard had no effect on the Company's consolidated financial
position, results of operations or financial statement disclosures.

In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities." The statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)." SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when a liability is incurred.
Under Issue 94-3, a liability for an exit cost as generally defined in Issue
94-3 was recognized at the date of an entity's commitment to an exit plan. The
provisions of this Statement are effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of this standard, in the
first quarter of 2003, had no impact on the Company's consolidated financial
position, results of operations or financial statement disclosures.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." This interpretation elaborates on the disclosures to be
made by a guarantor in its financial statements about its obligations under
certain guarantees that it has issued. It also requires a guarantor to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligations it has undertaken in issuing the guarantee. The interpretation
had no material effect on the Company's consolidated financial statements upon
adoption.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123."

                                      FS-25
<PAGE>

SFAS No. 148 provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. SFAS No. 148 also amends the disclosure requirements of SFAS No.
123, "Accounting for Stock Based Compensation" to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. The adoption of this standard had no impact on the Company's
consolidated financial position, results of operations or financial statement
disclosures.

In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, "Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity" ("SFAS No. 150"). The adoption of this standard had no
impact on the Company's consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities ("FIN 46"). This interpretation did not have a
material impact on the Company's consolidated financial statements.

RECLASSIFICATION. Certain reclassifications have been made to prior periods to
conform to the 2003 presentation.

(3) LONG-TERM OBLIGATIONS
                                                       December 31
--------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                            2003              2002
--------------------------------------------------------------------------
Revolving line of credit                       $   3,867         $   4,390
Term loan                                          1,567             2,584
Construction loan                                  2,722             2,768
9.5% note due 2015                                    20                21
--------------------------------------------------------------------------
                                                   8,176             9,763
Less current portion                              (1,408)           (1,283)
--------------------------------------------------------------------------
                                               $   6,768         $   8,480
==========================================================================


LONG-TERM DEBT. In September 2003, the Company amended a three-year bank credit
agreement that was scheduled to expire in June 2004 and extended its maturity to
January 1, 2005. Subject to borrowing base limitations, the amended agreement
provides a (i) a $7,000,000 maximum revolving credit facility for working
capital and general corporate purposes, (ii) a $1,911,924 term note and (iii) a
$2,833,332 advancing construction note.

At the December 31, 2003, the Company had additional borrowing capacity of
$1,712,000, net of outstanding irrevocable letters of credit, under the bank
revolving line of credit based on the borrowing base calculated under the
agreement. At December 31, 2003, the Company had outstanding irrevocable letters
of credit for workers' compensation claims totaling $400,000.

Substantially all of the Company's accounts receivable, inventories, fixed
assets and the common stock of its subsidiary are pledged as collateral under
the agreement, and the credit agreement is secured by a full and unconditional
guaranty from NAG. Amounts borrowed under the agreement bear interest at the
prime rate of Bank One, Oklahoma or the LIBOR rate, at the option of the
Company, subject to a rate margin adjustment determined by the Company's
consolidated debt service ratio. In the event the Company fails to maintain a
consolidated debt service coverage ratio for any fiscal quarter of at least 1.25
to 1.00, the

                                      FS-26
<PAGE>

Applicable LIBOR Rate Margin will be increased to 5.75% and the Applicable Prime
Rate Margin will be increased to 3.00%. Thereafter, the increased rate margin
will remain in effect until such time as the Company has maintained a
consolidated debt service coverage ratio greater than or equal to 1.25 to 1.00
for a subsequent fiscal quarter.

In the event the Company fails to maintain a consolidated capital expenditures
to EBITDA ratio for any fiscal quarter of at least 1.00 to 1.00, the increase in
the Applicable LIBOR Rate Margin ranges from 3.75% to 5.75%, and the increase in
the Applicable Prime Rate Margin ranges from 1.00% to 3.00%.

Amounts borrowed under the bank credit facilities bore interest ranging from
4.13% to 9.25% during the three years ended December 31, 2003, and an effective
rate of 4.2% at December 31, 2003 and 4.50% at December 31, 2002. Interest
expense capitalized in connection with construction in progress was $148,641 and
$15,979 in 2002 and 2001, respectively.

Term loan payments are based on thirty-five (35) installments with equal monthly
payments of principal and interest, and the loan may be prepaid without penalty.
The revolving line of credit may be paid down without penalty, or additional
funds may be borrowed up to the revolver limit. Construction loan payments are
based on one hundred eight (108) installments of equal monthly payments of
principal, plus interest at the prime rate of Bank One: interest is subject to a
rate margin adjustment determined by the Company's consolidated debt service
ratio. The credit agreement requires the Company to maintain compliance with
covenant limits for current ratio, debt to tangible net worth ratio, debt
service coverage ratio and a capital expenditures ratio. The Company was in
compliance with the covenants or had waivers for events of non-compliance at
December 31, 2003

Aggregate maturities of long-term debt of $8,176,000, exclusive of subordinated
notes and bonds are payable as follows: $1,408,000 (2004), $6,749,000 (2005),
$1,000 (2006), $1,000 (2007), $1,000 (2008) and $14,000 (thereafter).

(4) BONDS PAYABLE
During the first quarter of 2000, the Company issued $9,050,000 of Harris County
Industrial Development Corporation Adjustable Rate Industrial Development Bonds,
Series 2000 (the "Bonds"). The Bonds are senior to other debt of the Company.
All of the bond proceeds, which were held in trust by Bank One Trust Company,
N.A. ("Trustee"), were used by NAG for the purchase of land and construction of
a hot dip galvanizing plant in Harris County, Texas. The galvanizing plant was
completed and began operation in the first quarter of 2001. The principal amount
outstanding on these bonds was $7,282,500 at December 31, 2003. In accordance
with the bond agreement, the Company is obligated to make principal payments to
a sinking fund on the following schedule: 2004 $656,250; 2005 $692,500; 2006
$731,250; 2007 $767,500, 2008 $806,250 and 2009 to 2012 $3,628,750. The Bonds
are senior to other debt of the Company.

The Bonds bear interest at a variable rate that can be converted to a fixed rate
upon certain conditions outlined in the bond agreement. In September 2003, the
Reimbursement Agreement with the bank trustee was amended (a) to adjust the
variable interest rate on the Company's interest deposits from 5.25% to 3.5% on
the principal amount of Bonds until such time as the trustee determines that a
subsequent adjustment is warranted and (b) to permit the Company to withdraw
excess interest from the trustee's Interest Account on or about March 31, June
30, September 30 and December 31 of each year, commencing September 30, 2003. On
September 30, 2003, the Company withdrew excess interest of $311,000 from

                                      FS-27
<PAGE>

the Interest Account and applied the proceeds to pay-down the outstanding
balance on its bank revolving credit facility. At December 31, 2003, the Company
determined, in accordance with the amended Reimbursement Agreement, that the
trustee's interest account held excess interest in the amount of $43,000, which
the Company recorded as a current asset.

The Bonds are subject to annual sinking fund redemption, which was $617,500 in
2003 and increases annually thereafter to a maximum redemption of $960,000 on
June 15, 2012. The Company makes monthly payments of principal and interest of
approximately $74,000 into a sinking fund. The final maturity date of the Bonds
is June 15, 2013. The Company has the option of early redemption of the Bonds at
par unless the bonds are converted to a fixed interest rate, in which case they
are redeemable at a premium during a period specified in the bond agreement. The
Company's obligation under the bond agreement is secured through a letter of
credit with a bank which must remain in effect as long as any Bonds are
outstanding. The letter of credit is collateralized by substantially all the
assets of the Company.

(5) SUBORDINATED DEBT
In February 2001, the Company completed a $1,000,000 Private Placement of
unsecured subordinated debt. The Company utilized the proceeds to partially fund
construction of a new galvanizing facility in St. Louis, Missouri. Participation
in the Private Placement was offered to accredited investors, which included the
Company's directors and eligible stockholders holding a minimum of 100,000
shares of common stock. The amount outstanding on these notes, net of discount,
was $957,000 and $937,000 at December 31, 2003 and 2002, respectively. The
notes, which mature February 17, 2006 and bear interest at 10% payable annually,
were issued with warrants to purchase 666,666 shares of common stock of the
Company. Terms of the warrants, which expire February 17, 2008, permit the
holder to purchase shares of the Company's common stock at any time prior to the
expiration date. The exercise price of $.856 per share reflects the fair value
of the Company's common stock at the time the warrants were issued, as
determined by an independent financial advisor.

(6) COMMITMENTS
The Company leases its headquarters office, and certain manufacturing buildings
and equipment under non-cancelable operating leases. The Company also leases
certain facilities to third parties under non-cancelable operating leases. These
operating leases generally provide for renewal options and periodic rate
increases and are typically renewed in the normal course of business. Lease
expense was $673,000 in 2003, $629,000 in 2002 and $653,000 in 2001.

Minimum annual rental commitments at December 31, 2003 are payable as follows:

                                                Operating
       (DOLLARS IN THOUSANDS)                     Leases
---------------------------------------------------------
                2004                               $623
                2005                                586
                2006                                481
                2007                                433
                2008                                 84
                Thereafter                          315
=========================================================
                                                 $2,522

                                      FS-28
<PAGE>

The Company has commitments with domestic and foreign zinc producers to purchase
zinc used in its hot dip galvanizing operations. Commitments for the future
delivery of zinc either reflect rates then quoted on the London Metals Exchange
and are not subject to price adjustment. These zinc purchase commitments are
considered to be derivatives and are accounted for as normal purchases. At
December 31, 2003, the aggregate commitments for the procurement of zinc at
fixed prices were $1.4 million. The Company reviews these fixed price contracts
for losses using the same methodology employed to estimate the market value of
its zinc inventory.

(7) CONTINGENCIES
NAG was notified in 1997 by the Illinois Environmental Protection Agency
("IEPA") that it was a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Information System (CERCLIS)
in connection with cleanup of an abandoned site formerly owned by Sandoval Zinc
Co. ("Sandoval"). The IEPA notice includes NAG as one of 59 organizations which
arranged for the treatment and disposal of hazardous substances at Sandoval.
Based on current information and the preliminary stage of investigation, NAG's
share of any probable future costs cannot be estimated at this time.

The Company will continue to have additional environmental compliance costs
associated with operations in the galvanizing business. The Company is committed
to complying with the environmental legislation and regulations affecting its
operations. Due to the uncertainties associated with future environmental
technologies, regulatory interpretations, and prospective legislative activity,
management cannot reasonably quantify the Company's potential future costs in
this area.

Various litigation arising in the ordinary course of business is pending against
the Company. Management believes that resolution of the Company's litigation and
environmental matters should not materially affect the Company's consolidated
financial position or liquidity. Should future developments cause the Company to
record an additional liability for environmental matters, litigation or customer
claims, the recording of such a liability could have a material impact on the
results of operations and cash flows for the period involved.

(8) INCOME TAXES
The provision for income taxes consists of the following:

                                               Years Ended December 31,
----------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                     2003          2002          2001
----------------------------------------------------------------------------
Current                                 $    250      $    211      $    100
Deferred                                    (715)          507           109
----------------------------------------------------------------------------
Income tax expense(benefit)             $   (465)     $    718      $    209
============================================================================

The 2003 income tax benefit of $465,000 includes $488,000 related to
discontinued operations net of $23,000 income tax expense in continuing
operations.

                                      FS-29
<PAGE>

The reconciliation of income taxes at the federal statutory rate to the
Company's effective tax rate is as follows:

                                               Years Ended December 31,
----------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                     2003          2002          2001
----------------------------------------------------------------------------
Taxes at statutory rate                 $   (502)     $    622      $    169
State tax net of federal benefit              59            73            20
Goodwill amortization                        --            --             71
Adjustment to the estimate of
   the deferred tax asset                     70           --            --
Other                                         26            23           (51)
----------------------------------------------------------------------------
Taxes at effective tax rate             $   (465)     $    718      $    209
----------------------------------------------------------------------------

At December 31, 2003, alternative minimum tax credit carry-forwards of
approximately $352,000 are available as carry-forwards to future years.

The tax effects of significant items comprising the Company's net deferred tax
asset (liability) consist of the following:

                                              December 31,
--------------------------------------------------------------
(DOLLARS IN THOUSANDS)                     2003          2002
--------------------------------------------------------------
Deferred tax assets:
    Net operating loss carryback        $    325      $    --
    Alternative minimum tax                  352           461
    Reserves not currently deductible        421           443
--------------------------------------------------------------
                                        $  1,098      $    904
==============================================================

Deferred tax liabilities:
    Differences between book and
    tax basis of property                  1,126         1,647
--------------------------------------------------------------
                                        $    (28)     $   (743)
==============================================================


As reported in the balance sheet:
     Deferred tax assets                $    746      $    444
     Deferred tax liabilities                774         1,187
--------------------------------------------------------------
                                        $    (28)     $   (743)
==============================================================

(9) STOCK OPTION PLANS
At December 31, 2003 and 2002, 1,042,000 shares of the Company's common stock
were reserved for issuance under the terms of the stock option plans for key
employees and directors. The plans generally provide options to purchase Company
stock at fair value as of the date the option is granted. Options generally
become exercisable in installments specified by the applicable plan and must be
exercised within ten years of the grant date

                                         Number       Weighted-Avg.
Under Option                           of Shares     Exercise Price
------------                           ---------     --------------

Balance at Jan. 1, 2001                  407,333          2.70
    Granted                               30,000          1.05
    Canceled                             (60,000)         3.50
                                        --------
Balance at Dec. 31, 2001                 377,333          2.44
    Granted                               75,000          1.26
                                        --------
Balance at Dec. 31, 2002                 452,333          2.24
    Granted                               80,000          1.44
                                        --------         -----
Balance at Dec. 31, 2003                 532,333         $2.12
                                        ========         =====

                                      FS-30
<PAGE>

At December 31, 2003, 2002 and 2001, options for 407,333, 377,333 and 347,333
shares, respectively, were exercisable.

Information about stock options as of December 31, 2003:

                               Options Outstanding
--------------------------------------------------------------------------------
                                            Weighted-Avg.
   Range of               Number             Remaining             Weighted-Avg.
Exercise Prices        Outstanding        Contractual Life        Exercise Price
---------------        -----------        ----------------        --------------
$1.00 to $1.39           163,333                7.9 years             $1.19
$1.50                     50,000                9.1                    1.50
$2.00                     15,000                5.5                    2.00
$2.50 to $3.00           234,500                2.0                    2.50
$3.06 to $3.50            62,000                3.4                    3.30
$4.50                      7,500                0.2                    4.50
                        --------
                         532,333
                        ========


   Options Exercisable at December 31, 2003
   ----------------------------------------
       Weighted-Avg.            Number
      Exercise Price          Exercisable
      --------------          -----------
           $1.05                 30,000
            1.06                  7,708
            1.25                    625
            1.31                 20,000
            1.39                 30,000
            2.00                 15,000
            2.50                233,000
            3.00                  1,500
            3.06                 15,000
            3.25                 15,000
            3.38                 15,000
            3.50                 17,000
            4.50                  7,500
                               --------
                                407,333
                               ========


                                      FS-31
<PAGE>

10) EARNINGS PER SHARE RECONCILIATION

For the Year Ended                      Income          Shares        Per Share
December 31                           (Numerator)    (Denominator)      Amount
-------------------------------------------------------------------------------

2001

  Net Income                           $289,000              --           --
  Basic EPS                                 --         6,698,972         $.04
  Effect of dilutive
    stock options and warrants              --           666,666          --
-------------------------------------------------------------------------------
 Diluted EPS                           $289,000        7,365,638         $.04
-------------------------------------------------------------------------------

2002

  Net Income            `            $1,110,000              --           --
  Basic EPS                                            6,717,088         $.17
  Effect of dilutive stock
    options and warrants                    --           671,996         (.02)
-------------------------------------------------------------------------------
  Diluted EPS                        $1,110,000        7,389,084         $.15
-------------------------------------------------------------------------------

2003

  Net Loss                          $(1,013,000)             --           --
  Basic & Diluted EPS                                  6,762,587        $(.15)
-------------------------------------------------------------------------------
  Diluted EPS                       $(1,013,000)       7,437,789        $(.15)
-------------------------------------------------------------------------------

The Company had a net loss for the year ended December 31, 2003 and the effect
of including dilutive securities in the earnings per common share would have
been anti-dilutive. Accordingly, all options to purchase common shares were
excluded from the calculation of diluted loss per share for the year ended
December 31, 2003. The number of options excluded from the calculation of
diluted earnings per share due to the option price exceeding the share market
price are 319,000 and 347,333, at December 31, 2002 and 2001, respectively.

(11) EMPLOYEE BENEFIT PLAN
The Company offers a 401(k) defined contribution plan to its eligible employees.
Employees not covered by a bargaining contract become eligible to enroll in this
benefit plan after one year of service with the Company. Company contributions
to this benefit plan were $204,000 in 2003, $233,000 in 2002 and $205,000 in
2001. Assets of the defined contribution plan consisted of short-term
investments, intermediate bonds, long-term bonds and listed stocks.

(12) STOCKHOLDERS' EQUITY
In August 1998, the Board of Directors authorized the Company to repurchase up
to $1,000,000 of its common stock in open market transactions. Repurchases of
the Company's common stock totaled 50,000 shares at a cost of $49,000 in 2001
and 55,321 shares at a cost of $139,000 in 1999. In 2003 and 2002, Directors of
the Company could elect to receive shares of the Company's common stock for up
to all of their fee for board service. Under this program, the Company issued
46,218 and 56,094 shares from Treasury Stock in 2003 and 2002, respectively, in
lieu of cash payments of $65,000 for each year. In 2003, the Company recorded
other comprehensive income of $6,000 to reflect the unrealized gain on an
investment related to available-for-sale equity securities acquired during 2003.

                                      FS-32
<PAGE>

(13) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments included in current assets and
liabilities approximates fair value. The fair value of the Company's long-term
debt is estimated to approximate carrying value based on the borrowing rates
currently available to the Company for loans with similar terms and average
maturities.

(14) UNION CONTRACTS
NAG's one-year labor agreement with the United Steel Workers Union covering
production workers at its Tulsa galvanizing plants expired March 31, 2003. In
October 2003, the union employees ratified a new three-year labor agreement,
effective November 1, 2003. The new agreement re-defines eligibility for payment
of over-time, requires employee contributions for family coverage under the
Company's group medical insurance program and grandfathers vacation benefits for
certain long-term employees.

(15) SEGMENT DISCLOSURES
The Company's sole business is hot dip galvanizing and coatings, which is
conducted through its wholly owned subsidiary, North American Galvanizing
Company.










                                      FS-33
<PAGE>

                          QUARTERLY RESULTS (UNAUDITED)

Quarterly Results of Operations for the Years Ended December 31, 2003 and 2002
were:
<TABLE><CAPTION>
                                                                               2003
-------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)       Mar 31      Jun 30      Sep 30      Dec 31       Total
-------------------------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>         <C>         <C>         <C>
SALES                                                $  8,040    $  8,398    $  8,516    $  8,246    $ 33,200
GROSS PROFIT                                            2,038       2,563       2,394       2,372       9,367
-------------------------------------------------------------------------------------------------------------
   Income (loss) from continuing operations              (286)         73          90         (59)       (182)
   Loss from discontinued operations                      (41)       (790)        --          --         (831)
-------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                    $   (327)   $   (717)   $     90    $    (59)   $ (1,013)
=============================================================================================================

INCOME (LOSS) PER COMMON SHARE
Continuing Operations:
   Basic and Diluted                                     (.04)        .01         .01        (.01)       (.03)
Discontinued Operations:
   Basic and Diluted                                      --         (.12)        --          --         (.12)
-------------------------------------------------------------------------------------------------------------
Net Income (Loss):
   Basic and Diluted                                 $   (.04)   $   (.11)   $    .01    $   (.01)   $   (.15)
=============================================================================================================


                                                                               2002
-------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)       Mar 31      Jun 30      Sep 30      Dec 31       Total
-------------------------------------------------------------------------------------------------------------

SALES                                                $  9,217    $ 10,103    $  9,915    $  8,943    $ 38,178
GROSS PROFIT                                            2,858       3,245       3,115       2,752      11,970
-------------------------------------------------------------------------------------------------------------
   Income (loss) from continuing operations               273         440         393         209       1,315
   Loss from discontinued operations                      (49)        (48)        (55)        (53)       (205)
-------------------------------------------------------------------------------------------------------------
NET INCOME                                           $    224    $    392    $    338    $    156    $  1,110
=============================================================================================================

INCOME (LOSS) PER COMMON SHARE
Continuing Operations:
   Basic                                                  .04         .06         .06         .04         .20
   Diluted                                                .04         .05         .06         .03         .18
Discontinued Operations:
   Basic and Diluted                                     (.01)        --         (.01)       (.01)       (.03)
-------------------------------------------------------------------------------------------------------------
Net Income (Loss):
   Basic                                             $    .03    $    .06    $    .05    $    .03    $    .17
   Diluted                                           $    .03    $    .05    $    .05    $    .02    $    .15
=============================================================================================================
</TABLE>

The Company typically experiences increased galvanizing activity and sales in
the second and third quarters due to increased construction activity in those
periods. Changes in gross profit and gross profit margin reflect sales volume,
as well the impact of fixed costs in the Company's cost structure and also
product mix.


                                      FS-34
<PAGE>

                          SELECTED FINANCIAL HIGHLIGHTS


The following is a summary of selected financial data of the Company (Dollars in
Thousands, Except per Share Amounts)
<TABLE><CAPTION>

FOR THE YEARS ENDED DECEMBER 31,                  2003*         2002**        2001          2000          1999
-----------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>           <C>
Sales                                          $   33,200    $   38,178    $   35,039    $   33,955    $   32,650

Operating income                               $      495    $    3,038    $    1,990    $    1,605    $      948
   percent of sales                                   1.5%          8.0%          5.7%          4.8%         2.9%

Net Earnings (Loss)                            $   (1,013)   $    1,110    $      289    $   (1,240)   $      797

Basic Earnings (Loss) per common share         $     (.15)   $      .17    $      .04    $     (.19)   $      .12
Diluted Earnings (Loss) per common share       $     (.15)   $      .15    $      .04    $     (.19)   $      .12

Capital Expenditures                           $      901    $    5,880    $    3,297    $    9,463    $    5,264

Depreciation & Amortization                    $    2,880    $    3,027    $    3,181    $    2,658    $    2,346

Weighted average shares outstanding*            7,437,789     7,389,084     7,365,638     6,712,212     6,723,903



AT DECEMBER 31,                                   2003          2002          2001          2000          1999
-----------------------------------------------------------------------------------------------------------------
Working Capital                                $    6,607    $    7,032    $    7,606    $    7,639    $    8,607

Total Assets                                   $   37,367    $   41,431    $   39,092    $   40,676    $   33,117

Long-Term Obligations                          $   14,351    $   16,700    $   16,178    $   17,907    $    9,985

Stockholders' Equity                           $   17,885    $   18,828    $   17,653    $   17,313    $   18,553

Book Value Per Share                           $     2.64    $     2.79    $     2.64    $     2.58    $     2.76

Common Shares Outstanding                       6,783,137     6,736,919     6,680,825     6,712,209     6,712,219
</TABLE>


* Weighted average shares outstanding include the dilutive effect of stock
options and warrants, if applicable. All amounts for all years presented prior
to 2003 have been restated to reflect discontinued operations.

** On January 1, 2002, the Company adopted SFAS 142 "Goodwill and Other
Intagible Assets" and ceased amortizing goodwill. In each of the three years
ended December 31, 2001, the Company recorded goodwill amortization of
approximately $188,000 after tax.

                                      FS-35