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|TABLE OF CONTENTS | 
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UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

###### FORM 10-Q

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------

For
the quarter ended September 30, 2001

or

|o |  | 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 0-18050


|PW EAGLE, INC.(Exact name of registrant as specified in its Charter)                           
|-----------------------------------------------------------------------------------------------
|MINNESOTA(State of incorporation)                                                              
|                                                                                               
|22 SOUTH NINTH STREET, SUITE 2880MINNEAPOLIS,
MINNESOTA(Address of principal executive offices)
|                                                                                               
|(612) 305-0339(Registrants telephone number, including area code)                             

NOT APPLICABLE(Former name, former address and former fiscal year, if changed since last report)

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  o


As of November 8, 2001 there were 6,885,875 shares of PW Eagle, Inc. Common Stock outstanding.(Indicate the number of
shares outstanding of each of the issuers classes of common stock, as of the latest practical date.)

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PW EAGLE, INC.

INDEX

|PART I.    | FINANCIAL INFORMATION |                                                                                      
|---------- | --------------------- | -------------------------------------------------------------------------------------
|           |                       |                                                                                      
|           | ITEM 1.               | Condensed Financial Statements                                                       
|           |                       |                                                                                      
|           |                       |                                                                                      
|           |                       |                                                                                      
|           |                       |                                                                                      
|           |                       |                                                                                      
|           |                       |                                                                                      
|           | ITEM 2.               | Managements Discussion and Analysis of Financial Condition and Results of Operations
|           |                       |                                                                                      
|           | ITEM 3.               | Quantitative and Qualitative Disclosures About Market Risk                           
|           |                       |                                                                                      
|PART II.   | OTHER INFORMATION     |                                                                                      
|           |                       |                                                                                      
|           | ITEM 1.               | Legal Proceedings                                                                    
|           |                       |                                                                                      
|           | ITEM 2.               | Changes in Securities                                                                
|           |                       |                                                                                      
|           | ITEM 3.               | Defaults Upon Senior Securities                                                      
|           |                       |                                                                                      
|           | ITEM 4.               | Submission of Matters to a Vote of Security Holders                                  
|           |                       |                                                                                      
|           | ITEM 5.               | Other Information                                                                    
|           |                       |                                                                                      
|           | ITEM 6.               | Exhibits and Reports on Form 8-K                                                     
|           |                       |                                                                                      
|SIGNATURES |                       |                                                                                      

|2
|-
| 
| 

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PART I.             FINANCIAL INFORMATION

ITEM 1.            CONDENSED FINANCIAL STATEMENTS

PW EAGLE, INC.

Condensed Statements of Operations  Three and Nine Months Ended September 30, 2001 and 2000  (Unaudited)(In thousands, except per share amounts)

|                                                    |  | Three months ended September 30, |        |   | Nine months ended September 30, |  
|--------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | -
|                                                    |  | 2001                             |        |   | 2000                            |  
|Net sales                                           |  | $                                | 65,510 |   |                                 | $
|                                                    |  |                                  |        |   |                                 |  
|Cost of goods sold                                  |  |                                  | 61,535 |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Gross profit                                        |  |                                  | 3,975  |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Operating expenses                                  |  |                                  |        |   |                                 |  
|Selling expenses                                    |  |                                  | 6,487  |   |                                 |  
|General and administrative expenses                 |  |                                  | 1,733  |   |                                 |  
|Nonrecurring expenses (benefit)                     |  |                                  | 1,185  |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|                                                    |  |                                  | 9,405  |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Operating income                                    |  |                                  | (5,430 | ) |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Other expenses (income)                             |  |                                  |        |   |                                 |  
|Interest expense                                    |  |                                  | 2,823  |   |                                 |  
|Other, net                                          |  |                                  | 341    |   |                                 |  
|Nonrecurring expenses                               |  |                                  |       |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|                                                    |  |                                  | 3,164  |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Income (loss) before income taxes                   |  |                                  | (8,594 | ) |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Income tax expense (benefit)                        |  |                                  | (3,291 | ) |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Net income (loss)                                   |  | $                                | (5,303 | ) |                                 | $
|                                                    |  |                                  |        |   |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Net income (loss) per common share                  |  |                                  |        |   |                                 |  
|Basic                                               |  | $                                | (0.79  | ) |                                 | $
|Diluted                                             |  |                                  | (0.79  | ) |                                 |  
|                                                    |  |                                  |        |   |                                 |  
|Weighted average number of common sharesoutstanding |  |                                  |        |   |                                 |  
|Basic                                               |  |                                  | 6,703  |   |                                 |  
|Diluted                                             |  |                                  | 6,703  |   |                                 |  

The accompanying notes are an integral part of the unaudited condensed financial statements.

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PW EAGLE, INC.

Condensed Balance Sheets  September 30, 2001 and December 31, 2000(In thousands, except per share amounts)

|                                           |                                                                                                                                                                                          |                            |         | September 30,2001 |         |   | Dec. 31,2000 |        |        
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ----------------- | ------- | - | ------------ | ------ | -------
|                                           |                                                                                                                                                                                          |                            |         | (Unaudited)       |         |   |              |        |        
|ASSETS                                     |                                                                                                                                                                                          |                            |         |                   |         |   |              |       
|Current assets                             |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           | Cash and cash equivalents                                                                                                                                                                |                            | $       | 899               |         |   | $            | 816    |        
|                                           | Accounts receivable, net                                                                                                                                                                 |                            |         | 24,854            |         |   |              | 18,246 |        
|                                           | Inventories                                                                                                                                                                              |                            |         | 39,535            |         |   |              | 44,391 |        
|                                           | Income tax receivable                                                                                                                                                                    |                            |         | 5,144             |         |   |              | 3,376  |        
|                                           | Other                                                                                                                                                                                    |                            |         | 7,562             |         |   |              | 3,782  |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           |                                                                                                                                                                                          | Total current assets       |         |                   | 77,994  |   |              |        | 70,611 
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|Property and equipment, net                |                                                                                                                                                                                          |                            | 72,055  |                   |         |   | 76,589       |        |        
|Other assets                               |                                                                                                                                                                                          |                            | 7,371   |                   |         |   | 11,179       |        |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           |                                                                                                                                                                                          | Total assets               |         | $                 | 157,420 |   |              | $      | 158,379
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|Current liabilities                        |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           | Borrowings under revolving credit facility                                                                                                                                               |                            | $       | 36,227            |         |   | $            | 16,458 |        
|                                           | Current maturities and reclassification of long-term debt                                                                                                                                |                            |         | 59,480            |         |   |              | 10,408 |        
|                                           | Accounts payable                                                                                                                                                                         |                            |         | 18,330            |         |   |              | 7,839  |        
|                                           | Accrued liabilities                                                                                                                                                                      |                            |         | 9,254             |         |   |              | 16,447 |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           |                                                                                                                                                                                          | Total current liabilities  |         |                   | 123,291 |   |              |        | 51,152 
|Other long-term liabilities                |                                                                                                                                                                                          |                            | 4,532   |                   |         |   | 3,793        |        |        
|Long-term debt, less current maturities    |                                                                                                                                                                                          |                            |        |                   |         |   | 27,500       |        |        
|Senior subordinated debt                   |                                                                                                                                                                                          |                            |        |                   |         |   | 28,068       |        |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           |                                                                                                                                                                                          | Total liabilities          |         | $                 | 127,823 |   |              | $      | 110,513
|Commitments and contingencies              |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|Stock warrants                             |                                                                                                                                                                                          |                            |        |                   |         |   | 5,887        |        |        
|Stockholders equity                       |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           | Series A preferred stock; 7% cumulative dividend; convertible; $2 per        share liquidation preference; no par value;
2,000,000 shares authorized;        none issued and outstanding |                            |         |                  |         |   |              |       |        
|                                           | Undesignated stock; $.01 par value; 14,490,000 shares authorized; none issued        and outstanding                                                                                     |                            |         |                  |         |   |              |       |        
|                                           | Common stock; $.01 par value; 30,000,000 shares authorized; issued and        outstanding 6,885,875 and 8,069,675 shares,
respectively                                                   |                            |         | 69                |         |   |              | 81     |        
|                                           | Class B common stock; $.01 par value; 3,500,000 shares authorized; none issued         and outstanding                                                                                   |                            |         |                  |         |   |              |       |        
|                                           | Additional paid-in capital                                                                                                                                                               |                            |         | 29,755            |         |   |              | 40,521 |        
|                                           | Stock warrants                                                                                                                                                                           |                            |         | 5,887             |         |   |              |       |        
|                                           | Unearned compensation                                                                                                                                                                    |                            |         | (470              | )       |   |              | (473   | )      
|                                           | Notes receivable from officers and employees on common stock purchases                                                                                                                   |                            |         | (1,095            | )       |   |              | (1,181 | )      
|                                           | Accumulated other comprehensive loss                                                                                                                                                     |                            |         | (366              | )       |   |              |       |        
|                                           | Retained earnings                                                                                                                                                                        |                            |         | (4,183            | )       |   |              | 3,031  |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |              |        |        
|                                           |                                                                                                                                                                                          | Total stockholders equity |         |                   | 29,597  |   |              |        | 41,979 
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |             
|Total liabilities and stockholders equity |                                                                                                                                                                                          | $                          | 157,420 |                   |         | $ | 158,379      |        |        
|                                           |                                                                                                                                                                                          |                            |         |                   |         |   |             

The accompanying notes are an integral part of the unaudited condensed financial statements.

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PW EAGLE, INC.

Condensed Statements of Cash Flows  Nine Months Ended September 30, 2001 and 2000 (Unaudited)(In thousands)

|                                                                                          | Nine months ended  September 30,
|----------------------------------------------------------------------------------------- | --------------------------------
|                                                                                         
|Cash flows from operating activities                                                      |                                 
|Net income (loss)                                                                         |                                 
|Adjustments to reconcile net income to net cash (used in) provided byoperating activities |                                 
|Gain on sale of land held for sale                                                        |                                 
|Loss on disposal of fixed assets                                                          |                                 
|Depreciation and amortization                                                             |                                 
|Amortization of debt issue costs, discounts and premiums                                  |                                 
|Receivable provisions                                                                     |                                 
|Deferred income taxes                                                                     |                                 
|Non-cash compensation                                                                     |                                 
|Change in operating assets and liabilities                                                |                                 
|                                                                                          |                                 
|Net cash provided by operating
activities                                                 |                                 
|                                                                                          |                                 
|Cash flows from investing activities                                                      |                                 
|Purchases of property and equipment                                                       |                                 
|Proceeds from sale of land held for sale                                                  |                                 
|Payments on notes receivable                                                              |                                 
|Purchase price reduction, litigation recovery                                             |                                 
|                                                                                          |                                 
|Net cash used in investing activities                                                     |                                 
|                                                                                          |                                 
|Cash flows from financing activities                                                      |                                 
|Change in cash overdraft                                                                  |                                 
|Borrowings under revolving credit facility                                                |                                 
|Repayment of long-term debt                                                               |                                 
|Repurchase of common stock                                                                |                                 
|Issuance of common stock through exercise of stock options                                |                                 
|                                                                                          |                                 
|Net cash provided by (used in) financing
activities                                       |                                 
|                                                                                          |                                 
|Net change in cash and cash equivalents                                                   |                                 
|Cash and cash equivalents at beginning of period                                          |                                 
|                                                                                          |                                 
|Cash and cash equivalents at end of period                                                |                                 
|                                                                                          |                                 
|                                                                                          |                                 
|SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION                                        |                                 
|Non-cash activities                                                                       |                                 
|Preferred stock exchanged for common stock                                                |                                 
|Issuance of subordinated debt for interest payment                                        |                                 
|Additional paid in capital-stock compensation                                             |                                 
|Tax benefits related to stock options                                                     |                                 
|Cancellation of restricted stock                                                          |                                 
|Issuance of restricted stock                                                              |                                 
|Issuance of common stock in exchange for notes receivable                                 |                                 
|                                                                                          |                                 

The accompanying notes are an integral part of the condensed unaudited financial statements.

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PW EAGLE, INC.

Notes to Condensed Financial Statements (Unaudited)

1.            Presentation

In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position of the Company at September 30, 2001, and the results of its operations for the three- and nine-month periods ended September 30, 2001 and 2000 and its cash flows for the
nine-month periods ended September 30, 2001 and 2000.  The results of operations and cash flows for any interim period are not necessarily indicative of the results of operations and cash flows for the full year.  Certain information and
disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission.  Although the Companys management believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these condensed financial statements be read in conjunction with the
financial statements of the Company included with its Annual Report on Form 10-K for the year ended December 31, 2000.

Certain reclassifications were made to the prior year financial statements to conform to the September 30, 2001 presentation.  Such reclassifications have no
effect on net income or stockholders equity as previously stated.

2.         New Accounting Pronouncements

Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended and interpreted (FAS 133).  FAS 133 requires that all derivative instruments, such as interest rate swap contracts, be recognized in the financial statements and measured at their fair market
value.  Changes in the fair market value of derivative instruments are recognized each period in current earnings or shareholders equity (as a component of other comprehensive income), depending on whether a derivative is designated as a
part of a hedge transaction and, if it is, the type of hedge transaction.  The adoption of FAS 133 did not have a material impact on the Companys primary financial statements, but did result in the recording of an unrealized loss as of
September 30, 2001 of approximately $132,000, net of tax, in other comprehensive income.

The Companys objective in
managing its exposure to interest rates is to decrease the volatility that changes in interest rates might have on earnings and cash flows.  To achieve this objective, the Company uses a fixed rate agreement to adjust a portion of total debt,
as determined by management, that is subject to variable interest rates.  The Company designates this instrument as a cash flow hedge.  Under the fixed rate agreement, the Company agrees to pay a fixed rate of interest.  This contract
is considered to be a hedge against changes in the amount of future cash flows associated with the Companys interest payments related to a portion of its variable rate debt obligations.  Accordingly, the fixed rate agreement is reflected
at fair value in the Companys balance sheet and the related gains or losses on this contract are deferred in shareholders equity as a component of comprehensive income.  However, to the extent that this contract is not effective in
offsetting the change in interest cash flows being hedged, the ineffective portion is immediately recognized in earnings.

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In the normal course of business, the Company is exposed to changes in interest rates.  The Company
has established policies and procedures that govern the management of these exposures through the use of financial instruments.  By policy, the Company does not enter into such contracts for the purpose of speculation.  In November 1999,
under covenants of our Senior Credit Facility, the Company entered into a fixed rate agreement on 50% of the outstanding term debt for three years with a LIBOR rate of 6.46%.

At September 30, 2001, the Company had a fixed rate agreement to pay a 6.46% fixed rate of interest and receive a variable rate of interest based on the one-month LIBOR
rate (ranging from 6.875 to 3.625 during the first nine months of fiscal 2001) on a $15.0 million notional amount of indebtedness.  This notional amount decreases until the fixed rate agreement terminates in September 2002.  Total net loss
recorded in other comprehensive income, net of taxes, was $(307,000) at September 30, 2001.

In July 2001, the FASB issued
SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets."  The statements eliminate the pooling-of-interests method of accounting for business combinations and eliminate the amortization of
goodwill and certain intangibles.  Instead, these assets will be reviewed under an impairment-only approach, with any related impairments recognized in earnings when incurred.  The statements will be effective for the Company for business
combinations completed after June 30, 2001, and January 1, 2002 for existing goodwill and intangible assets.  The Company expects implementation of SFAS No. 142 will not have a material impact on the financial statements.  The carrying
value of goodwill will be evaluated at the date of implementation of SFAS 142 and as required in periods thereafter with respect to the new accounting pronouncement impairment testing requirements.  Management does not foresee any associated
impairment charges from the adoption of SFAS 142, or thereafter, based on current information.

In July 2001, the FASB issued
SFAS 143, "Accounting for Asset Retirement Obligations" requiring the recognition of a liability for an asset retirement obligation in the period in which it is incurred.  When the liability is initially recorded, the carrying amount
of the related long-lived asset is correspondingly increased.  Over time, the liability is accreted to its present value and the related capitalized charge is depreciated over the useful life of the asset.  SFAS 143 is effective for fiscal
years beginning after June 15, 2002.  Management does not foresee any charges from the adoption of SFAS 143, or thereafter, based on current information.

In October 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets".  This statement will require long-lived
assets to be measured at the lower of carrying amount or fair value less cost to sell whether reported in continuing operations or in discontinued operations.  This statement is effective for fiscal years beginning after December 15, 2001.
Management does not foresee any associated impairment charges from the adoption of SFAS 144, or thereafter, based on current information.

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3.            Comprehensive Income

Comprehensive income for the Company includes net income, transition adjustment for the adoption of SFAS 133, changes in fair market value of financial instruments
designated as hedges of interest rate exposure and the unrealized gains/losses on securities from non-qualified deferred compensation plans.  Comprehensive income for the three and nine months ended September 30, 2001 and 2000 was as
follows:

(in thousands)

|                                                                                                                                                               |  | Three months ended |        |   |                 | Nine months ended
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | --------------- | -----------------
|                                                                                                                                                               |  | Sept. 30,  2001    |        |   | Sept. 30,  2000 |                  
|Net income (loss)                                                                                                                                              |  | $                  | (5,303 | ) |                 | $                
|Other comprehensive income                                                                                                                                     |  |                    |        |   |                 |                  
|Transition adjustment relating to the adoption of FAS 
                    133, net of taxes                                                                   |  |                    |       |   |                 |                  
|Changes in fair market value of financial instrument 
                     designated as a hedge of interest rate exposure, 
                     net of taxes |  |                    | (80    | ) |                 |                  
|Unrealized gain on securities from non-qualified 
                     deferred compensation plans                                                             |  |                    | (96    | ) |                 |                  
|                                                                                                                                                               |  |                    |        |   |                 |                  
|Total comprehensive income (loss)                                                                                                                              |  | $                  | (5,479 | ) |                 | $                
|                                                                                                                                                               |  |                    |        |   |                 |                  

4.            Inventory

(in thousands)

|               |  | September 30, 2001 |        | December 31, 2000
|-------------- |  | ------------------ | ------ | -----------------
|Raw materials  |  | $                  | 9,281  |                  
|Finished goods |  |                    | 30,254 |                  
|               |  |                    |        |                  
|               |  | $                  | 39,535 |                  
|               |  |                    |        |                  

An inventory writedown of $1.4
million was recorded in the third quarter of 2001 to reduce inventories to estimated market value.

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5.         Earnings per Common Share

The following tables reflect the calculation of basic and diluted earnings per common share ("EPS").

(In
thousands except per share amounts)

|                                                             |  | Three months ended |        |   | Nine months ended
|------------------------------------------------------------ |  | ------------------ | ------ | - | -----------------
|                                                             |  | Sept. 30,   2001   |        |   | Sept. 30,2000    
|Net Income (Loss)                                            |  | $                  | (5,303 | ) |                  
|                                                             |  |                    |        |   |                  
|Weighted average shares used for basic earnings per share    |  |                    | 6,703  |   |                  
|Effect of dilutive securities                                |  |                    |       |   |                  
|                                                             |  |                    |        |   |                  
|Weighted average shares used for dilutive earnings per share |  |                    | 6,703  |   |                  
|                                                             |  |                    |        |   |                  
|Net earnings per share-basic                                 |  | $                  | (0.79  | ) |                  
|Net earnings per share-diluted                               |  | $                  | (0.79  | ) |                  

Options to purchase 1,073,251 shares of common stock, warrants to purchase 1,940,542 shares of common stock, and 182,500 shares of unvested restricted stock were
outstanding at September 30, 2001, but were not included in the computation of diluted EPS because inclusion of these shares would be anti-dilutive.  Therefore, for the periods ended September 30, 2001, both basic and diluted EPS were computed
by dividing net income (loss) by weighted average common shares outstanding.

6.         Debt

In connection with the acquisition of PWPipe, on September 20, 1999, the Company entered into a second amended and restated loan and security agreement to obtain a
$100.0 million Senior Credit Facility. The Senior Credit Facility consists of a (i) Term Note A in the principal amount of $35.0 million; (ii) Term Note B in the principal amount of $15.0 million, and a (iii) $50.0 million Revolving Credit Facility
($60.0 million from March 15, 2000 through June 15, 2000 and $50.0 million at all other times, as amended on March 13, 2000).  The Senior Credit Facility is collateralized by substantially all our assets.  Term Note A bears interest at a
rate equal to the LIBOR plus 2.75%.  Term Note B bears interest at a rate equal to the LIBOR plus 3.25%.  In November 1999, under covenants of our Senior Credit Facility, we entered into an interest rate swap agreement for three years with
a LIBOR rate of 6.46% for one half of the outstanding principal of Term Loan A and Term Loan B.  Principal on the term notes is due and payable quarterly in $1.25 million installments beginning on December 31, 1999, and continuing on the last
day of each March, June, September and December thereafter until paid in full on September 20, 2004.  Outstanding notes issued pursuant to the Revolving Facility bear interest at a rate equal to the LIBOR plus 2.5%.  The Company is
required to pay a fee equal to 0.5% of the unused portion of the Revolving Credit Facility.

Also on September 20,
1999, the Company issued Senior Subordinated Notes totaling $32.5 million ($26.4 million recorded amount, net of debt discount described below) with detachable stock purchase warrants to purchase an aggregate of 1,940,542 shares of our common
stock.  Interest on the Senior Subordinated Notes is payable at a fixed rate per annum equal to 14% beginning on December 20, 1999, and on the 20th day of each March, June, September and December thereafter until the entire principal
and interest is paid in full on September 20, 2007.  Of this interest, 12% is payable in cash and an additional 2% accrues annually.  Principal is paid in three equal installments on each September 20th of 2005, 2006 and
2007.  A debt discount totaling $6.1 million has been recorded associated with the issuance of the Senior Subordinated Notes, based on the collective estimated fair value of the Senior

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Subordinated Notes and warrants on the date of issue.  The discount is being amortized using an interest method as a yield adjustment over their
term.

Under the Senior Credit Facility and Senior Subordinated Notes, the Company is required to comply with certain
restrictive financial ratios and covenants relating to minimum net worth, minimum fixed charge coverage, minimum interest coverage, funded debt to EBITDA, and maximum capital expenditures, as well as other customary covenants, representations and
warranties, funding conditions and events of default.  As of December 31, 2000 and March 31, 2001, the Company was in compliance with the covenant requirements, as amended.  The Company was in violation of financial covenants as of June
30, 2001.  The Companys lenders have since waived compliance with these covenants for the second quarter.

As of
September 30, 2001, the Company was not in compliance with the covenants under the Senior Credit Facility and Senior Subordinated Notes, which require the Company to achieve minimum ratios for fixed charge coverage, interest coverage and funded debt
to EBITDA.  The Company has made all of its required principal and interest payments.  Nevertheless, an "event of default" has occurred under the Senior Credit Facility and the Senior Subordinated Notes and the holders of that
debt have the right to terminate their respective agreements and demand immediate payment of all amounts owing.  Should payment demand occur, the Company would be required to immediately record, as a charge to operations, unamortized debt
issuance costs of $3.7 million and unamortized debt discounts of $4.7 million as additional financing costs (hereafter referred to as the deferred charges).  Accordingly, the balances outstanding under the two Term Notes of the Senior Credit
Facility totaling $30 million and the Senior Subordinated Notes totaling $29.1 million, net of unamortized debt discounts of $4.7 million, have been classified as current liabilities and related unamortized debt issuance and amendment costs of $3.7
as current assets as of September 30, 2001.  However, the financial statements do not include any adjustments associated with the deferred charges discussed above that might result from the outcome of this uncertainty.

The Company has entered into discussions with the lenders on the Senior Credit Facility and holders of the Senior Subordinated Notes as well as
other parties with respect to revising the Companys capital structure and eliminating the current defaults.  The Companys goal is to reduce its annual fixed charges (principal, interest, taxes and capital expenditures) to a level
that even if the unfavorable economic conditions that have existed in 2001 continue indefinitely, the Company will be able to pay all of its fixed charges.  The Company is exploring a variety of alternatives to accomplish this goal, including a
sale and leaseback of certain of its assets, mortgaging certain of its real estate assets, changing its Senior Credit Facility and issuing additional subordinated debt or equity.  At this time, the Company has received a proposal from its
Senior Credit Facility lenders with respect to the modification of its Senior Credit Facility and a proposal from a party that would purchase certain of the Companys facilities and lease them back to the Company which together provide a
framework to accomplish the Companys goal.  The Company is also pursuing other alternatives to achieve its goal.  The Company expects to enter into definitive agreements that will eliminate the current defaults under the Senior
Credit Facility and Senior Subordinated Notes within the next three months.  The Company also believes that these agreements will permit the Company to achieve its goal of reducing its annual fixed charges to a level that the Compnay can pay
even if the current unfavorable economic conditions continue indefinitely.

The fair market value of borrowings under the
Senior Credit Facility fixed rate agreement and Senior Subordinated Notes continue to approximate their carrying value at September 30, 2001, as their applicable interest rates approximate current market rates.

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7.         Equity

Incentive stock options to purchase 90,000 shares of the Companys common stock were issued to certain officers of the Company on March 9, 2001.  These
options were issued at fair market value on the date of grant and vest over five years.  Incentive stock options to purchase 72,500 shares of the Companys common stock lapsed during the second quarter of fiscal 2001.

On May 4, 2001, the Company completed its modified "Dutch Auction" tender offer. Pursuant to the tender offer, 1,197,800 shares of
common stock were properly tendered at $9.00 per share; 86,689 more than the 1,111,111 shares the Company offered to purchase.  The tender offer began April 3, 2001.  Under terms of the offer, the Company offered to purchase up to
1,111,111 shares of its common stock within a price range of $7.50 to $9.00 per share.  The tender offer included a provision for the Company to purchase up to a maximum of 162,190 additional shares if the tender offer was oversubscribed. 
The Company elected to exercise this right and purchased all 1,197,800 shares tendered for approximately $10.8 million, using funds provided by its current revolving credit facility.

On March 20, 2001, the Company signed an agreement with the holders of its outstanding warrants to purchase 1,940,542 shares of common stock, whereby the warrant
holders have agreed to cancel their right to require the Company to purchase their warrants (the "Put Rights") upon a change of control of the Company.  Due to the cancellation of the Put Rights, the Company reclassified the stock
warrants, which were previously excluded from permanent equity in the condensed balance sheet with a value of $5,887,000, as an addition to stockholders equity in its June 30, 2001 balance sheet.

In March 2001, the Company issued a restricted stock grant of 25,000 shares to an officer of the Company.  These shares carry dividend and voting rights. 
Sales of these shares are restricted prior to vesting.  Additionally, the Company sold 15,000 shares of its common stock to an officer and accepted a Promissory Note as partial payment for these shares.  The promissory note bears interest
at the rate of the Companys Revolving Credit Facility.  Shares issued were recorded at fair market value on the date of grant with the corresponding deferred charge as part of shareholders equity.  In addition, during the three
months ended March 31, 2001, 43,500 shares of restricted stock were cancelled.

The Company granted incentive stock options to
purchase 61,125 shares and conditionally approved restricted stock grants of 142,625 shares on August 20, 2001 to officers and directors. On October 17, 2001, the Company received consents and waivers permitting the Company to issue the restricted
stock and grant the stock options from the holders of the warrants issued by the Company in connection with the issuance of its subordinated debt.  The options and restricted stock will be issued at fair market value effective October 17, 2001
and vest over four and five years, respectively.  The restricted stock grants are conditioned on the Company obtaining approval of the grants from its shareholders.  The Company relied on the exemption from registration provided by section
4(2) of the Securities Act of 1933 to issue the restricted stock.  The certificates representing the shares bear a standard restrictive securities legend.

8.             Nonrecurring Charges

On July 26,
2001, PW Eagle, Inc. announced a restructuring plan to align the Companys operations with market conditions and improve profitability.  Major actions taken under the plan include:

| | 1. |  | Permanently closing and marketing the Hillsboro, Oregon manufacturing facility.                                                     
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------
| | 2. |  | Temporarily suspending operations in the Phoenix, Arizona manufacturing facility until customer demand requires additional capacity.
| | 3. |  | Initiating focused cost reduction programs.                                                                                         

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The Company is currently marketing the Hillsboro production facility and has relocated certain equipment
to other facilities, and based on current analysis anticipates recovery of the carrying value of the associated facility and equipment.

The restructuring plan includes the elimination of 94 positions, or approximately 11% of the Companys workforce.  As of September 30, 2001, severance
payments of approximately $0.3 million have been paid to employees, with the remaining employees to receive severance payments under contracts extending through April 2004.  Of the $1.2 million in restructuring costs, approximately 90% will be
paid by the Company within one year.

The restructuring charge of $1.2 million is recorded as nonrecurring expense in the
Companys results of operations.  The restructuring plan is expected to produce annual savings in excess of $7 million, with the majority of these cost savings occurring in cost of goods sold.

|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIALCONDITION
AND RESULTS OF OPERATIONS
|------- |  | ------------------------------------------------------------------------------------

PW EAGLE, INC.

The following table sets forth items from our Statement of
Operations as a percentage of net sales:

|                                  |  |  | Three months ended Sept. 30, |    |  | Nine months ended Sept. 30,
|--------------------------------- |  |  | ---------------------------- | -- |  | ---------------------------
|                                  |  |  | 2001                         |    |  | 2000                       
|Net sales                         |  |  | 100.0                        | %  |  |                            
|Cost of goods sold                |  |  | 93.9                         |    |  |                            
|Gross profit                      |  |  | 6.1                          |    |  |                            
|Operating expenses                |  |  | 14.4                         |    |  |                            
|Operating income                  |  |  | (8.3                         | )  |  |                            
|Non-operating expense             |  |  | 4.8                          |    |  |                            
|Income (loss) before income taxes |  |  | (13.1                        | )  |  |                            
|Income tax expense (benefit)      |  |  | (5.0                         | )  |  |                            
|Net income (loss)                 |  |  | (8.1                         | )% |  |                            

We posted net sales of $66 million and $198 million for the three- and nine-month periods ending September 30, 2001, respectively.  This is
a decrease of 24% and 31%, respectively, compared to the same periods in 2000.  Reduced product prices because of an oversupply of finished goods, and reduced raw material costs were the major causes of the decrease in net sales.  Pipe
prices for the three- and nine-month periods ending September 30, 2001, decreased 32% and 29%, respectively, as compared to the same periods in 2000.  In addition, pipe pounds sold increased 12% for the three-month period ending September 30,
2001, as compared to the same period in 2000.  However, pipe pounds sold decreased 3% for the nine-month period ending September 30, 2001, as compared to the same period in 2000.

Gross profit, as a percentage of net sales, decreased for the three- and nine-month periods ending September 30, 2001, by 19% and 18%, respectively, as compared to the
same periods in 2000.  Gross profit exceeded 30% in the first nine months of 2000, due to a combination of strong demand for pipe and rising PVC resin and pipe prices.  PVC resin prices increased in the first half of 2000, due to a strong
demand for resin and increasing raw material costs.  The strong demand for pipe in 2000 allowed us to increase pipe prices at a greater rate than resin price increases during that period.  Adverse conditions originating in the second half
of last year continued to negatively affect our results of operations in the third quarter of 2001.  During the second half of last year a weakened demand for pipe and decreasing PVC resin and pipe prices decreased our gross profits.  The
demand for pipe was reduced by the reluctance of distributors to purchase pipe for inventory when pipe prices were dropping, and market conditions caused pipe prices to drop at a faster rate than resin prices.  Pounds of product sold decreased
3% for the nine months ending September 30, 2001, and we were not able to increase pipe prices.  While pounds of product sold increased 12% during the third quarter of this year compared to the third quarter of last year, the supply of pipe is
still greater than demand.  This excess supply of pipe has resulted in decreased product prices and continued weak margins in the third quarter of 2001.

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The increase in operating expenses, as a percentage of net sales, for the three- and nine-month periods
ending September 30, 2001, as compared to the same periods in 2000, is the result of decreased sales in combination with certain fixed operating expenses.  Actual operating expenses, including the $1.2 million restructuring cost recorded in the
third quarter, have decreased 6% and 18%, respectively, for the three- and nine-month periods ending September 30, 2001, as compared to the same periods in 2000.

The decrease in other non-operating expenses is primarily attributable to a decrease in the interest rates for the unhedged portion of debt, continued payments on the
long-term debt and the absence of non-recurring expenses related to a change in estimate to terminated acquisition costs during the third quarter of 2000.  These expense savings were partially offset by an increase in the Revolver Credit
balance of the Company's Senior Credit Facility due to the repurchase of stock in connection with the Companys modified Dutch Auction and a loss resulting from the write-off of non-productive assets in the third quarter of 2001.

The income tax provisions for the nine months ended September 30, 2001 and 2000 were calculated based on managements
then-current estimates of the annual effective rate for the year.  The estimated effective tax rate was approximately 38% for both periods presented.

Financial Condition

Our financial condition has deteriorated during the nine month period ending September 30, 2001 compared to 2000.  In addition as
of September 30, 2001, we had negative working capital of $45.3 million resulting from our default under the Senior Credit Facility and Senior Subordinated Notes.  As a result of our default, we are required to reclassify $49.1 million,
representing the "long-term debt" portions of the Term Notes of the Company's Senior Credit Facility and Senior Subordinated Notes, as "Current Maturities of Long Term Debt" on the Companys balance sheet.  This amount
is offset by the reclassification of deferred financing costs of $3.7 million at September 30, 2001.  See Note 6 to the Condensed Financial Statements in Item 1., and Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 2. for further discussion.

The Company has limited sources of liquidity available.  In addition, the
Company is not generating a sufficient amount of cash from operations to regain compliance with its lending covenants.  Cash provided by operating activities was $1.0 million in the first nine months of 2001, compared to $20.1 million in cash
provided from operating activities in the first nine months of 2000.  The primary source of cash was cash generated from operations.  Net changes to operating assets and liabilities were negligible in the nine months ended September 30,
2001.

The Company is exploring all available options to improve its financial condition.  The Company has entered into
discussions with the lenders on the Senior Credit Facility and holders of the Senior Subordinated Notes as well as other parties with respect to revising the Companys capital structure and eliminating the current defaults.  The
Companys goal is to reduce its annual fixed charges (principal, interest, taxes and capital expenditures) to a level that even if the unfavorable economic conditions that have existed in 2001 continue indefinitely, the Company will be able to
pay all of its fixed charges.  The Company is exploring a variety of alternatives to accomplish this goal, including a sale and leaseback of certain of its assets, mortgaging certain of its real estate assets, changing its Senior Credit
Facility and issuing additional subordinated debt or equity.  At this time, the Company has received a proposal from its Senior Credit Facility lenders with respect to the modification of its Senior Credit Facility and a proposal from a party
that would purchase certain of the Companys facilities and lease them back to the Company

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which together provide a framework to accomplish the Companys goal.  The Company is also pursuing other alternatives to achieve its goal.  The Company expects
to enter into definitive agreements that will eliminate the current defaults under the Senior Credit Facility and the Senior Subordinated Notes within the next three months.  The Company also believes that these agreements will permit the
Company to achieve its goal of reducing its annual fixed charges to a level that the Company can pay even if the current unfavorable economic conditions continue indefinitely.  There is no assurance that the Company will successfully enter into
new or revised financing alternatives.  The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

On July 26, 2001 the Company announced a restructuring plan that includes permanently closing the Companys Hillsboro, Oregon manufacturing facility, temporarily
ceasing operations at the Companys Phoenix, Arizona manufacturing facility until product demand requires the additional capacity, and initiating further cost reduction and product improvement programs.  The Company is currently marketing
the Hillsboro production facility and associated equipment and is analyzing the possibility of relocating certain equipment to other facilities, and based on current analysis anticipates recovery of the carrying value of the associated facility and
equipment.  The restructuring plan will eliminate 94 jobs or about 11% of the Companys workforce and is expected to produce annual savings in excess of $7 million.  The Company recorded a restructuring charge of $1.2 million in the
third quarter.  The restructuring charge of $1.2 million is $0.9 million less than the original forecast of $2.1 million due to changes made to the Companys original assumptions.

We used $3.2 million and $7.0 million for investing activities for the nine months ended September 30, 2001 and 2000, respectively, primarily for capital
improvements.

Cash provided (used) in financing activities was $2.3 and $(13.7) million for the nine months ended September
30, 2001 and 2000, respectively.  Borrowings of $19.8 million under the Revolving Credit Facility were used to fund the repurchase of 1,197,800 shares of the Companys common stock at $9 per share and the repayment of $7.5 million in
long-term debt.

We had commitments for capital expenditures of approximately $0.5 million at September 30, 2001, which the
Company intends to fund from its Revolving Credit Facility.

In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets."  The statements eliminate the pooling-of-interests method of accounting for business
combinations and eliminate the amortization of goodwill and certain intangibles.  Instead, these assets will be reviewed under an impairment-only approach, with any related impairment recognized in earnings when incurred.  The statements
will be effective for the Company for business combinations completed after June 30, 2001, and January 1, 2002, for existing goodwill and intangible assets.  The Company expects implementation of SFAS 142 will not have a material impact on the
financial statements.  The carrying value of goodwill will be evaluated at the date of implementation of SFAS 142 and as required in periods thereafter with respect to the new accounting pronouncement impairment testing requirements. Management
does not foresee any associated impairment matters arising from the adoption of SFAS 142, or thereafter, based on current information.

In July 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations" requiring the recognition of a liability for an asset retirement
obligation in the period in which it is incurred.  When the liability is initially recorded, the carrying amount of the related long-lived asset is correspondingly increased.  Over time, the liability is accreted to its present value and
the related capitalized charge is depreciated over the useful life of the asset.  SFAS 143 is effective for fiscal years beginning after June 15, 2002.  Management does not foresee any charges from the adoption of SFAS 143, or thereafter,
based on current information.

In October 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets".  This statement will require long-lived assets to be measured at the lower of carrying amount or fair value less cost to sell whether reported in continuing operations or in discontinued operations.  This
statement is effective for fiscal years beginning after December 15, 2001. Management does not foresee any associated impairment charges from the adoption of SFAS 144, or thereafter, based on current information.

On May 4, 2001, the Company completed its modified "Dutch Auction" tender offer. Pursuant to the tender offer, 1,197,800 shares of
common stock were properly tendered at $9.00 per share; 86,689 more than the 1,111,111 shares the Company offered to purchase. The tender offer began April 3, 2001. Under terms of the offer, the Company offered to purchase up to 1,111,111 shares of
its common stock within a price range of $7.50 to $9.00 per share. The tender offer included a provision for the Company to purchase up to a maximum of 162,190 additional shares if the tender offer is over-subscribed.  The Company elected

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to exercise this right and purchased all 1,197,800 shares tendered for approximately $10.8 million, using funds provided by its current revolving credit facility.

Outlook

INFORMATION IN THIS OUTLOOK SECTION AND OTHER STATEMENTS IN THIS FORM 10-Q ARE FORWARD LOOKING INFORMATION  ACTUAL RESULTS MAY
DIFFER.

The statements contained above in:  (a) Part 1 "Financial Information, including notes to the Condensed
Financial Statements; (b) Management's Discussion and Analysis of Financial Condition and Results of Operations that are not strictly historical, including (i) the Companys expectation that it will enter into definitive agreements with third
parties that will eliminate the current defaults under Senior Credit Facility and Senior Subordinated Notes within the next three months; (ii) its belief that these agreements will permit the Company to achieve its goal of reducing its annual fixed
charges (principal, interest, taxes and capital expenditures) to a level that even if the unfavorable economic conditions that have existed in 2001 continue indefinitely, the Company will be able to pay all of its fixed charges; and (iii) the
Companys belief that it will be able to fund its commitments for capital expenditures with available funds under its Revolving Credit Facility are forward-looking statements made under the safe harbor provisions of the Private Securities
Litigation Reform Act.  The statements set forth in this Outlook section are also forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act.  These statements reflect our expectations
and beliefs as of November 8, 2001, and are based on reasonable assumptions as of that date.  These forward-looking statements involve known and unknown business risks and uncertainties, many of which are stated at the end of this outlook
section, that may cause results to differ materially from our expectations and beliefs stated herein.

The Company is
exploring all available options to improve its financial condition.  The Company has entered into discussions with the holders of its Senior and subordinated debt as well as other parties with respect to revising the Companys capital
structure and eliminating the current defaults.  The Companys goal is to reduce its annual fixed charges (principal, interest, taxes and capital expenditures) to a level that even if the unfavorable economic conditions that have existed
in 2001 continue indefinitely, the Company will be able to pay all of its fixed charges.  The Company is exploring a variety of alternatives to accomplish this goal, including a sale and leaseback of certain of its assets, mortgaging certain of
its real estate assets, changing its senior credit facility and issuing additional subordinated debt or equity.  At this time, the Company has received a proposal from its senior lenders with respect to the modification of its Senior Credit
Facility and a proposal from a party that would purchase certain of the Companys facilities and lease them back to the Company which together provide a framework to accomplish the Companys goal.  The Company is also pursuing other
alternatives to achieve its goal.  The Company expects to enter into definitive agreements that will eliminate the current defaults under its current Senior Credit Facility and Senior Subordinated Debt agreements within the next three
months.  The Company also believes that these agreements will permit the Company to achieve its goal.  However, the nations poor economic condition, the fact that the Company has only generated approximately $1.0 million in cash from
operations for the nine month period ending September 30, 2001 and the uncertain future of the nations economy pose risks to the Company and its ability to achieve its goal.  In addition, these risks may also effect the Companys
ability to secure new financing on terms most benefical to the Company.

Over time, we expect the demand for plastic pipe to
grow as acceptance of plastic pipe over metal pipe continues to grow and the overalleconomy recovers and begins to grow.  Industry growth projections call for sales growth rates for plastic pipe of three percent or
greater per year through 2003.  The actual growth rate in each year may be less than or greater than three percent based on short-term economic conditions.  We have historically been able to, and expect in the future to be able to, grow at
rates in excess of the industry averages due to our emphasis on customer satisfaction and product quality.  Our

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strategy has been, and continues to be, to concentrate growth initiatives in higher profit products and geographic regions.

Our gross margin percentage is sensitive to PVC and PE raw material resin prices and the demand for PVC and PE pipe.  Historically, when resin prices are rising or
stable, our margins and sales volume have been higher.  Conversely, when resin prices are falling, our sales volumes and margins have been lower.  Gross margins also suffer when the supply of PVC and PE pipe in the market increases faster
than demand.  We believe that the supply of plastic pipe in our industry currently exceeds demand.  We also believe that the supply of PVC resin currently exceeds demand.  Because no new capacity has been initiated for some raw
materials used in the manufacture of PVC resin, such as vinyl chloride monomer and chlorine, the production of PVC resin may be limited during the latter part of 2002 and in 2003, if the economic climate improves.

Due to the commodity nature of PVC resin and PVC pipe and the dynamic supply and demand factors worldwide, historically, the markets for both PVC
resin and PVC pipe have been very cyclical with significant fluctuations in prices and gross margins.  Generally, after a period of rising or stable prices, capacity has increased to exceed demand with a resulting decrease in prices and gross
margins.  Over the last ten years, there have been consolidations in both markets, particularly with respect to PVC resin manufacturers.  During the same period, the capacity of the PVC resin producers has increased from just over 9
billion pounds to almost 16 billion pounds today.  Published PVC resin prices have fluctuated from a high of about $0.44 per pound in 1988 to about $0.26 per pound in 1992 to almost $0.40 per pound in 1995 to a low of about $0.25 per pound in
1999 to a high of $0.40 in 2000 to about $0.32 per pound at the end of September 2001.

While we expect the demand for PVC
pipe to continue to increase over the long term, we also expect that the industry will continue to be subject to cyclical fluctuations and times when supply will exceed demand, driving prices and gross margins down.  These conditions could
result from a general economic slowdown, either domestically or elsewhere in the world, or capacity increases in either the PVC resin or PVC pipe markets.  As a result of the size of both the PVC resin and PVC pipe markets, and the
consolidation that has occurred in these industries, we believe that fluctuations in prices from capacity increases are likely to be less extreme than they have been historically.  General economic conditions both in the United States and
abroad will, however, continue to have a significant impact on our prices and gross margins.

For financial reporting
purposes, the Companys cumulative deferred tax asset recorded in prior years totaling approximately $13.5 million associated with net operating loss carryforwards, has been fully utilized, including approximately $4.0 million in the first half
of 2000.  We have evaluated tax-reporting compliance relating to the past and fiscal 2000 utilization of the net operating loss carryforwards, and believe we have complied in all respects.  A failure to meet the requirements could result
in a loss or limitation of the utilization of carryforwards, which could have a material adverse effect on our financial position and results of operations in future periods.

PW Eagle, Inc.s statements under the caption "Outlook", and those that are not strictly historical in this Form 10-Q for the quarter ended September 30,
2001, are all forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act.  These statements involve known and unknown risks and uncertainties that may cause the actual results to differ
materially from those expected and forecasted in this Outlook section and Form 10-Q.  Actual results could differ as a result of:  (i) a further slowdown of the economy in the United States, particularly west of the Mississippi; (ii) the
failure of the Gross Domestic Product to grow beyond its third quarter level; (iii) an increase in interest rates or the failure of the Federal Reserve to lower interest rates further; (iv) a decline in the construction of commercial and residential
building; (v) a decline in our raw material prices; (vi) a greater supply of PVC and PE pipe than market demand for such products caused by cyclical fluctuations in the supply and

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demand for pipe; (vii) adverse weather conditions, and, (viii) other risks described from time to time in our periodic reports.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are
exposed to certain market risks on outstanding interest rate debt obligations totaling $51.2 of our $66.2 million of variable rate debt at September 30, 2001.  Market risk is the potential loss arising from adverse changes in market rates and
prices, such as interest rates.  Market risk is estimated, as the potential increase in fair value resulting from a hypothetical one-percent increase in interest rates, which would result in an annual interest expense increase of approximately
$512,000.

We do not enter into derivatives or other financial instruments for trading or speculative purposes.  We only
enter into financial instruments to manage and reduce the impact of changes in interest on our credit facility.  In November 1999, under covenants of our Senior Credit Facility, we entered into a fixed rate agreement ("the Contract")
for three years with a LIBOR rate of 6.46%.  At September 30, 2001, the Contract had a notional amount of $15 million.  This notional amount decreases until the fixed rate agreement terminates in September 2002.

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PART II.        OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

None.

ITEM 2.         CHANGES IN SECURITIES

| | The Company granted incentive stock options to purchase 61,125 shares and conditionally approved restricted stock grants of 142,625 shares
on August 20, 2001 to officers and directors. On October 17, 2001, the Company received consents and waivers permitting the Company to issue the restricted stock and grant the stock options from the holders of the warrants issued by the Company in
connection with the issuance of its subordinated debt.  The options and restricted stock will be issued at fair market value effective October 17, 2001 and vest over four and five years, respectively.  The restricted stock grants are
conditioned on the Company obtaining approval of the grants from its shareholders.  The Company relied on the exemption from registration provided by section 4(2) of the Securities Act of 1933 to issue the restricted stock.  The
certificates representing the shares bear a standard restrictive securities legend.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 3.         DEFAULTS UPON SENIOR SECURITIES

| | The Company was not in compliance with the covenant requirements of its senior notes and subordinated debt at September 30, 2001. 
The Company has made all of its principal and interest payments in a timely manner.  See Note 6 to the Condensed Financial Statements in Item 1., and Managements Discussion and Analysis of Financial Condition and Results of Operations in
Item 2. for further discussion.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.         OTHER INFORMATION

None.

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ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

(a)       ExhibitsSee Exhibit Index on the page following the signatures.

(b)        Reports on Form 8-K

We filed the following reports on Form 8-K during the third quarter of
2001:

| | On August 20, 2001, the Company filed a Form 8-K reporting its financial results for the second quarter ending June 30, 2001.
| | -----------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                              
| | On July 26, 2001, the Company filed a Form 8-K announcing its restructuring plan.                                            

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PW EAGLE, INC.

|By | /s/ William H. Spell                        
|-- | --------------------------------------------
|   | William H. Spell                            
|   | Chief Executive Officer                     
|   |                                             
|By | /s/ Roger R. Robb                           
|   | Roger R. Robb                               
|   | Chief Financial Officer                     
|   | (Principal Financial and Accounting Officer)

Dated: November 14, 2001

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EXHIBIT INDEX

|Number |  | Description                                                                                                                                                                  
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                              
|10.1   |  | Second Amendment to the Employment Agreement executed September 16, 1999 between the Registrant and William H. Spell, Chief Executive Officer.                               
|       |  |                                                                                                                                                                              
|10.2   |  | Second Amendment to the Employment Agreement executed September 16, 1999 between the Registrant and Dobson West, Chief Administrative Officer, General Counsel and
Secretary.
|       |  |                                                                                                                                                                              
|10.3   |  | Second Amendment to the Employment Agreement executed September 16, 1999  between the Registrant and Larry Fleming, President.                                               
|       |  |                                                                                                                                                                              
|10.4   |  | Second Amendment to the Employment Agreement executed September 16, 1999  between the Registrant and Roger Robb, Chief Financial Officer.                                    
|       |  |                                                                                                                                                                              
|10.5   |  | Second Amendment to the Employment Agreement executed September 16, 1999  between the Registrant and John R. Cobb, Senior Vice
President-Operations.                         
|       |  |                                                                                                                                                                              
|10.6   |  | Second Amendment to the Employment Agreement executed September 16, 1999  between the Registrant and Keith H. Steinbruck, Vice President Technical Director.                 
|       |  |                                                                                                                                                                              
|10.7   |  | Second Amendment to the Employment Agreement executed September 16, 1999 between the Registrant and Neil R. Chinn, Vice President of Human Resources.                        
|       |  |                                                                                                                                                                              
|10.8   |  | Amendment Number 2 to the Securities Purchase Agreement dated August 14, 2001.                                                                                               
|       |  |                                                                                                                                                                              
|10.9   |  | Ninth Amendment to Second Amended and Restated Loan and Security agreement dated August 21, 2001.                                                                            
|       |  |                                                                                                                                                                              
|10.10  |  | Amended and Restated Office Sharing Agreement dated August 20, 2001 between the Registrant and Spell Capital Partners, LLC., an affiliate of the Registrant.                 

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