10-K

United States
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended November 30, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number 1-9102

AMERON INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	77-0100596
(State of Incorporation)	(I.R.S. Employer Identification No.)
245 South Los Robles Avenue Pasadena, CA 91101-3638
(Address and Zip Code of principal executive offices)
Registrant’s telephone number, including area code: (626) 683-4000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class	Name of each exchange on which registered
Common Stock $2.50 par value	New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes  ý  No  o

The aggregate market value of voting and non-voting common equity held by non-affiliates was approximately $273 million on May 30, 2003, based upon the last reported sales price of such stock on the New York Stock Exchange on that date.

On February 10, 2004 there were 8,214,563 shares of Common Stock, $2.50 par value, outstanding. No other class of Common Stock exists.

DOCUMENTS INCORPORATED BY REFERENCE

1. PORTIONS OF AMERON’S 2003 ANNUAL REPORT TO STOCKHOLDERS (PARTS I, II AND IV).

2. PORTIONS OF AMERON’S PROXY STATEMENT FOR THE 2004 ANNUAL MEETING OF STOCKHOLDERS (PART III).

PART I
AMERON INTERNATIONAL CORPORATION

AMERON INTERNATIONAL CORPORATION, a Delaware corporation, and its consolidated subsidiaries are collectively referred to herein as “Ameron”, the “Company”, the “Registrant” or the “Corporation” unless the context clearly indicates otherwise. The business of the Company has been divided into business segments in Item 1(c)(1). Substantially all activities relate to the manufacture of highly engineered products for sale to the industrial, chemical, energy and construction markets. All references to “the year” or “the fiscal year” pertain to the 12 months ended November 30, 2003.  All references to the “Annual Report” pertain to the Company’s  2003 Annual Report to Stockholders.  All references to the “Proxy Statement” pertain to the Company’s Proxy Statement filed on February 23, 2004 in connection with the 2004 Annual Meeting of Stockholders.

ITEM 1 - BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS.

Although the Company’s antecedents date back to 1907, it evolved directly from the merger of two separate firms in 1929, resulting in the incorporation of American Concrete Pipe Co. on April 22, 1929. Various name changes occurred between that time and 1942, at which time the Company’s name became American Pipe and Construction Co. By the late 1960’s the Company was almost exclusively engaged in manufacturing and had expanded its product lines to include not only concrete and steel pipe but also high-performance protective coatings, ready-mix concrete, aggregates and fiberglass pipe and fittings.  At the beginning of 1970, the Company’s name was changed to Ameron, Inc. In the meantime, other manufactured product lines were added, including concrete and steel poles for street and area lighting, and steel poles for traffic signals.  In 1996, the Company’s name was changed to Ameron International Corporation.

Further details or commentary on the year’s operations can be found in the Annual Report, which is Exhibit 13 to this report on Form 10-K, and which should be read in conjunction with this report.

(b) FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS.

The information contained in Notes (1), (5) and (18) of Notes to Consolidated Financial Statements on pages 36, 37, 38, 39, 47 and 48 of the Annual Report is incorporated herein by reference.

(c) NARRATIVE DESCRIPTION OF BUSINESS.

(1) For geographical and operational convenience, the Company is organized into divisions. These divisions are combined into groups serving various industry segments, as follows:

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a) The Performance Coatings & Finishes Group develops, manufactures and markets high-performance coatings and surfacer systems on a worldwide basis. These products are utilized for the preservation of structures, such as metallic and concrete facilities and equipment, to prevent degradation by corrosion, abrasion, marine fouling and other forms of chemical and physical attack. The primary markets served include marine, offshore, petrochemical, power generation, petroleum, chemical, steel, pulp and paper, railroad, bridge, mining, metal processing and original equipment manufacturing. These products are marketed by direct sales, as well as through manufacturers’ representatives, distributors and licensees. Competition is based upon quality, price and service. Manufacture of these products is carried out in the Company’s plant in Arkansas, by wholly-owned subsidiaries in the Netherlands, the United Kingdom, Australia and New Zealand, by a joint venture in Saudi Arabia and by various third-party licensees.

b) The Fiberglass-Composite Pipe Group develops, manufactures and markets filament-wound and molded fiberglass pipe and fittings. These products are used by a wide range of process industries, including industrial, petroleum, chemical processing and petrochemical industries, for service station piping systems, aboard marine vessels and offshore oil platforms, and are marketed as an alternative to metallic piping systems which ultimately fail under corrosive operating conditions. These products are marketed by direct sales, as well as through manufacturers’ representatives, distributors and licensees. Competition is based upon quality, price and service. Manufacture of these products is carried out in the Company’s plant in Texas, by its wholly-owned domestic subsidiary, Centron International Inc. (“Centron”), at its plant in Texas, by wholly-owned subsidiaries in the Netherlands, Singapore, and Malaysia, by a joint venture in Saudi Arabia and by third-party licensees.

c) The Water Transmission Group supplies products and services used in the construction of water pipelines. Five pipe manufacturing plants are located in Arizona and California. Also included within this group is American Pipe & Construction International, a wholly-owned subsidiary, with a plant in Colombia. These plants manufacture concrete cylinder pipe, prestressed concrete cylinder pipe, steel pipe and reinforced concrete pipe for water transmission, storm and industrial waste water and sewage collection. These products are marketed by direct selling using the Company’s own personnel and by competitive bidding. Customers include local, state and federal agencies, developers and general contractors. Normally no one customer or group of customers will account for sales equal to or greater than 10 percent of the Company’s consolidated revenue. However, occasionally, when more than one unusually large project is in progress, combined sales to all U.S. government agencies and/or general contractors for those agencies can reach those proportions. Besides competing with several other welded steel pipe and concrete pipe manufacturers located in the market area, alternative products such as ductile iron, plastic, and clay pipe compete with the Company’s concrete and steel pipe products, but ordinarily these other materials do not offer the full diameter range produced by the Company. Principal methods of competition are price, delivery schedule and service. The Company’s technology is used in the Middle East through affiliated companies. This segment also includes the manufacturing and marketing on a worldwide basis through direct sales and manufacturers’ representatives, of polyvinyl chloride and polyethylene sheet lining for the protection of concrete pipe and cast-in-place concrete structures from the corrosive effects of sewer gases, acids and industrial chemicals. Competition is based upon quality, price and service. Manufacture of this product is carried out in the Company’s plant in California. This segment also includes engineered design, fabrication and direct sale of specialized proprietary equipment which is outside the regular business of the other segments of the Company’s businesses. Competition for such work is based upon quality, price and service. Manufacture of such equipment is carried out in the Company’s plant in California.

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d) The Infrastructure Products Group supplies ready-mix concrete, crushed and sized basaltic aggregates, dune sand, concrete pipe and box culverts, primarily to the construction industry in Hawaii, and manufactures and markets concrete and steel poles for highway, street and outdoor area lighting and for traffic signals nationwide. Ample raw materials are available locally in Hawaii. As to rock products, the Company has exclusive rights to quarries containing many years’ reserves. There is only one major source of supply for cement in Hawaii. Within the market area there are competitors for each of the segment’s products. No single competitor offers the full range of products sold by the Company in Hawaii. An appreciable portion of the segment’s business is obtained through competitive bidding. Sales of poles are nationwide, but with a stronger concentration in the western states. Marketing is handled by the Company’s own sales force and by outside sales agents for poles. Competition for such products is mainly based on price and quality, but with some consideration for service and delivery. Poles are manufactured in two plants in California, as well as in plants in Washington, Oklahoma and Alabama.

e) The Company has four significant, partially-owned affiliated companies (“joint ventures”):  Ameron Saudi Arabia, Ltd. (“ASAL”), Bondstrand, Ltd. (“BL”), Oasis-Ameron, Ltd. (“OAL”) and TAMCO.  ASAL, owned 30% by the Company, manufactures and sells concrete pressure pipe and provides steel pipe lining and coating services to customers in Saudi Arabia.  BL, owned 40% by Ameron, manufactures and sells glass reinforced epoxy pipe and fittings in Saudi Arabia.  OAL, 40% owned by the Company, sells protective and architectural coatings in Saudi Arabia.  TAMCO, 50% owned by the Company, operates a steel mini-mill in California, used for the production of reinforcing bar sold into construction markets in the western U.S.  ASAL is included under the Water Transmission Group segment.  BL is in the Fiberglass-Composite Pipe Group, and OAL is in the Performance Coatings & Finishes Group.  TAMCO is not included in the four operating groups.

The Company benefits from the payment of dividends and license fees from its joint ventures.  Additionally, Ameron’s consolidated operations sell product into Middle Eastern markets, primarily fiberglass pipe, coatings and polyvinyl chloride sheeting.  While the joint ventures in Saudi Arabia and, to a limited extent, the Company’s direct sales of products into the Middle East are subject to political and economic conditions throughout the Middle East, the Company’s exposure is concentrated primarily in Saudi Arabia.  Significant unrest in the Middle East or Saudi Arabia could have a material impact on the Company.  Ameron’s and its joint ventures’ products have not been typically sold into Iraq.  Therefore, the war in Iraq has not had a material impact on the Company.

f) Except as individually shown in the above descriptions of industry segments, the following comments or situations apply to all segments:

(i) Because of the number of manufacturing locations and the variety of raw materials essential to the business, no critical situations exist with respect to supply of materials. The Company has multiple sources for raw materials. The effects of increases in costs of energy are being mitigated to the extent practical through conservation and through addition or substitution of equipment to manage the use and reduce consumption of energy.

(ii) The Company owns certain patents and trademarks, both U.S. and foreign, related to its products. The Company licenses its patents, trademarks, know-how and technical assistance to various of its subsidiary and affiliated companies and to various third-party licensees. It licenses these proprietary items to some extent in the U.S., and to a greater degree abroad. These patents, trademarks, and licenses do not constitute a material portion of the Company’s total business. No franchises or concessions exist.

(iii) Many of the Company’s products are used in connection with capital goods, water and sewage transmission and construction of capital facilities. Favorable or adverse effects on general sales volume and earnings can result from weather conditions. Normally, sales volume and earnings will be lowest in the first fiscal quarter. Seasonal effects typically accelerate or slow the business volume and normally do not bring about severe changes in full-year activity.

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(iv) With respect to working capital items, the Company does not encounter any requirements which are not common to other companies engaged in the same industries. No unusual amounts of inventory are required to meet seasonal delivery requirements. All of the Company’s industry segments turn their inventory between three and eight times annually. Average days’ sales in accounts receivable range between 39 and 146 for all segments.

(v) The value of backlog orders at November 30, 2003 and 2002 by industry segment is shown below. A substantial portion of the November 30, 2003 backlog is expected to be billed and recorded as sales during 2004.  The only noteworthy change in backlog relates to the Water Transmission Group.  The Water Transmission Group’s backlog increased by about $57 million at the end of 2002 due to the contract to provide steel pilings for the San Francisco/Oakland Bay Bridge.  Approximately half of the contract was produced in 2003, resulting in a partial reduction in backlog of approximately $25 million at the end of 2003.  The remaining reduction in the Water Transmission Group’s backlog related to a cyclical slowdown in the water market in the western U.S.

SEGMENT	2003		2002
	(in thousands)
Performance Coatings & Finishes Group	$	9,039	$	5,461
Fiberglass-Composite Pipe Group	26,145		32,687
Water Transmission Group	100,075		151,523
Infrastructure Products Group	25,597		26,495
Total	$	160,856	$	216,166

(vi) There was no significant change in competitive conditions or the competitive position of the Company in the industries and localities in which it operates. There is no knowledge of any competitive situation which would be material to an understanding of the business.

(vii) Sales contracts in all of the Company’s business segments normally consist of purchase orders, which in some cases are issued pursuant to master purchase agreements. Longer-term contracts seldom involve commitments of more than one year by the Company, and exceptions are not deemed material by management.  In those instances when the Company commits to sell products under longer-term contracts, the Company will typically contractually arrange to fix a portion of the associated costs.   Payment is normally due from 30 to 60 days after shipment, with progress payments prior to shipment in some circumstances. It is the Company’s practice to require letters of credit prior to shipment of foreign orders, subject to limited exceptions. The Company does not typically extend long-term credit to purchasers of its products.

(viii) A number of the Company’s operations operate outside the U.S. and are affected by changes in foreign exchange rates.  Sales, profits, assets and liabilities could be materially impacted by changes in foreign exchange rates.  The Company does not typically hedge anticipated sales or items subject to translation adjustments, such as long-term advances.

(2) a) Approximate expense during each of the last three fiscal years for Research and Development costs is shown under the caption in Note (1) of Notes to Consolidated Financial Statements on page 36 of the Annual Report, and is incorporated herein by reference.

b) The Company’s business is not dependent on any single customer or few customers, the loss of any one or more of whom would have a material adverse effect on its business.

c) For many years the Company has been consistently installing or improving devices to control or eliminate the discharge of pollutants into the environment. Accordingly, compliance with federal, state, and locally-enacted

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provisions relating to protection of the environment is not having, and is not expected to have, a material effect upon the Company’s capital expenditures, earnings, or competitive position.

d) At year-end the Company and its consolidated subsidiaries employed approximately 2,700 persons. Of those, approximately 600 were covered by labor union contracts. There are six separate bargaining agreements subject to renegotiation in 2004.  The Company announced on February 12, 2004, that workers at two of the Water Transmission Group’s plants in Southern California struck in the first week of February.  Separately, workers at the Infrastructure Products Group’s principal quarry and ready-mix operation on Oahu in Hawaii also struck.  The areas of disagreement differ by location and center principally on employee health care costs, pensions and wages.  Workers at one of the Water Transmission Group’s plants and the Company subsequently reached agreement.  The Company is unable to predict the length or impact of the other strikes.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES.

The information contained in Notes (1), (5) and (18) of Notes to Consolidated Financial Statements on pages 36, 37, 38, 39, 47 and 48 of the Annual Report is incorporated herein by reference.

Export sales in the aggregate from U.S. operations during the last three fiscal years were:

	In thousands
2003	$	25,095
2002	26,372
2001	35,952

(e) AVAILABLE INFORMATION

(1) The Company’s Internet address is www.ameron.com

(2) The Company makes available free of charge through its Internet website, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.

ITEM 2 - PROPERTIES

(a) The location and general character of principal plants and other materially important physical properties used in the Company’s operations are tabulated below. Property is owned in fee simple except where otherwise indicated by footnote. In addition to the property shown, the Company owns vacant land adjacent to or in the proximity of some of its operating locations and holds this property available for use when it may be needed to accommodate expanded or new operations. Properties listed do not include any temporary project sites which are generally leased for the duration of the respective projects or leased or owned warehouses that could be easily replaced. With the exception of the Kailua, Oahu property, shown under the Infrastructure Products Group industry segment, there are no material leases with respect to which expiration or inability to renew would have any material adverse effect on the Company’s operations. The lease term on the Kailua property extends to the year 2052. Kailua is the principal source of quarried rock and aggregates for the Company’s operations on Oahu, Hawaii; and, in management’s opinion, rock reserves are adequate for its requirements during the term of the lease.

(b) The Company believes that its existing facilities are adequate for current and presently foreseeable operations. Because of the cyclical nature of certain of the Company’s operations, and the substantial amounts involved in some individual orders, the level of utilization of particular facilities may vary significantly from time to time in the normal course of operations.

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INDUSTRY SEGMENT - GROUP

Division - Location	Description
PERFORMANCE COATINGS & FINISHES GROUP
Coatings Division - USA
Alpharetta, GA	*Office
Brea, CA	Office, Laboratory, Warehouse
Little Rock, AR	Office, Plant
Houston, TX	Warehouse
Ameron B.V.
Geldermalsen, the Netherlands	Office, Plant
Huthwaite, UK	Office, Plant
Ameron (UK) Limited
Hull, UK	Office, Plant
Ameron (Australia) Pty. Limited
Sydney, Australia	Office, Plant
Adelaide, Australia	Plant
Ameron (New Zealand) Limited
Auckland, New Zealand	Office, Plant
FIBERGLASS-COMPOSITE PIPE GROUP
Fiberglass Pipe Division - USA
Houston, TX	*Office
Burkburnett, TX	Office, Plant
Centron International, Inc.
Mineral Wells, TX	Office, Plant
Ameron B.V.
Geldermalsen, the Netherlands	Office, Plant
Ameron (Pte) Ltd.
Singapore	*Office, Plant
Ameron Malaysia Sdn. Bhd.
Malaysia	*Office, Plant
WATER TRANSMISSION GROUP
Rancho Cucamonga, CA	*Office
Etiwanda, CA	Office, Plant
Fontana, CA	Office, Plant
Lakeside, CA	Office, Plant
Phoenix, AZ	Office, Plant
Tracy, CA	Office, Plant
Protective Linings Division
Brea, CA	Office, Plant
Fabrication Plant
South Gate, CA	Office, Plant
American Pipe & Construction International
Bogota, Colombia	Office, Plant
INFRASTRUCTURE PRODUCTS GROUP
Hawaii Division
Honolulu, Oahu, HI	*Office, Plant
Kailua, Oahu, HI	*Plant, Quarry
Barbers Point, Oahu, HI	Office, Plant
Puunene, Maui, HI	*Office, Plant, Quarry

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Pole Products Division
Ventura, CA	*Office
Fillmore, CA	Office, Plant
Oakland, CA	*Plant
Everett, WA	*Office, Plant
Tulsa, OK	*Office, Plant
Anniston, AL	*Office, Plant
CORPORATE
Corporate Headquarters
Pasadena, CA	*Office
Corporate Research & Engineering
South Gate, CA	Office, Laboratory

*Leased

ITEM 3 - LEGAL PROCEEDINGS

The Company is one of numerous defendants in various asbestos-related personal injury lawsuits.  These cases generally seek unspecified damages for asbestos-related diseases based on alleged exposure to products previously manufactured by the Company and others, and at this time the Company is generally not aware of the extent of injuries allegedly suffered by the individuals or the facts supporting the claim that injuries were caused by the Company’s products.  Based upon the information available to it at this time, the Company is not in a position to evaluate its potential exposure, if any, as a result of such claims.  Hence, no amounts have been accrued for loss contingencies related to these lawsuits in accordance with SFAS No. 5, “Accounting for Contingencies.”  The Company continues to vigorously defend all such lawsuits.  As of November 30, 2003, the Company was a defendant in asbestos-related cases involving 17,447 claimants, compared to 8,382 claimants as of November 30, 2002.  The Company is not in a position to estimate the number of additional claims that may be filed against it in the future.  For the fiscal year ended November 30, 2003, there were new claims involving 9,279 claimants, dismissals and/or settlements involving 211 claimants and judgments involving 3 claimants.  Net costs and expenses incurred by the Company for the fiscal year ended November 30, 2003 in connection with asbestos-related claims were less than $600,000.

The Company is one of numerous defendants in various silica-related personal injury lawsuits.  These cases generally seek unspecified damages for silica-related diseases based on alleged exposure to products previously manufactured by the Company and others, and at this time the Company is not aware of the extent of injuries allegedly suffered by the individuals or the facts supporting the claim that injuries were caused by the Company’s products.  Based upon the information available to it at this time, the Company is not in a position to evaluate its potential exposure, if any, as a result of such claims.  Hence, no amounts have been accrued for loss contingencies related to these lawsuits in accordance with SFAS No. 5.  The Company continues to vigorously defend all such lawsuits.  As of November 30, 2003, the Company was a defendant in silica-related cases involving 6,847 claimants, compared to 48 claimants as of November 30, 2002.  The Company is not in a position to estimate the number of additional claims that may be filed against it in the future.  For the fiscal year ended November 30, 2003, there were new claims involving 6,880 claimants, dismissals and/or settlements involving 81 claimants and no judgments.  Net costs and expenses incurred by the Company  for the fiscal year ended November 30, 2003 in connection with silica-related claims were about $300,000.

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In addition, certain other claims, suits and complaints that arise in the ordinary course of business, have been filed or are pending against the Company. Management believes that these matters are either adequately reserved, covered by insurance, or would not have a material effect on the Company’s financial position or its results of operations if disposed of unfavorably.

The Company is subject to federal, state and local laws and regulations concerning the environment and is currently participating in administrative proceedings at several sites under these laws. While the Company finds it difficult to estimate with any certainty the total cost of remediation at the several sites, on the basis of currently available information and reserves provided, the Company believes that the outcome of such environmental regulatory proceedings will not have a material effect on the Company’s financial position or its results of operations.

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

There was no matter submitted during the fourth quarter of fiscal year 2003 to a vote of security holders.

Executive Officers of the Registrant

The following sets forth information with respect to individuals who served as executive officers as of November 30, 2003 and who are not directors of the Company. All executive officers are appointed by the Board of Directors to serve at the discretion of the Board of Directors.

Name	Age	Title and Year Elected as Officer
Ralph S. Friedrich	56	Vice President-Research & Engineering	2003
Thomas P. Giese	59	Vice President; Group President, Water Transmission Group	1997
James R. McLaughlin	56	Vice President-Treasurer & Controller	1997
Terrence P. O’Shea	57	Vice President-Human Resources	2003
Javier Solis	57	Senior Vice President of Administration, Secretary & General Counsel	1984
Gary Wagner	52	Senior Vice President & Chief Financial Officer	1990

All of the executive officers named above have held high level managerial or executive positions with the Company for more than the past five years.

PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock, $2.50 par value, of the Company, its only outstanding class of common equity, is traded on the New York Stock Exchange, the only exchange on which it is presently listed. On February 10, 2004, there were 1,147 stockholders of record of such stock. Information regarding stock compensation plans is contained in Note (12) on pages 42 and 43 of the Annual Report, and is incorporated herein by reference.

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Dividends have been paid each quarter during the prior two years. Information as to the amount of dividends paid during the reporting period and the high and low prices of the Company’s Common Stock during that period are set out in Note (17) on page 47 of the Annual Report, which information is incorporated herein by reference.

Terms of lending agreements which place restrictions on cash dividends are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations on pages 23 through 30 and Note (10) on pages 41 and 42 of the Annual Report, and is incorporated herein by reference.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit	(c) Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs
12/1/03 thru 12/31/03	—	N/A	—	N/A
1/1/04 thru 1/31/04	6,860*	36.66	—	**
2/1/04 thru 2/27/04	—	N/A	—	N/A

*Represents shares repurchased by the Company from certain restricted stock recipients to pay taxes applicable to their restricted stock.

**Shares may be repurchased by the Company in January 2005 and 2006 to pay taxes applicable to the vesting of employee’s restricted stock.  However, because neither the amount of such taxes nor the share price on the date of such repurchases are known at this time, it is not possible to estimate the numbers of such shares that would be so repurchased.

ITEM 6 - SELECTED FINANCIAL DATA

The information required by this item is contained in the Selected Consolidated Financial Information shown on page 22 of the Annual Report, and is incorporated herein by reference.

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations on pages 23 through 30 and Note (1) pages 36, 37 and 38 of the Annual Report, and is incorporated herein by reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is contained on page 29 of the Annual Report under the caption “Market Risks,” and is incorporated herein by reference.  At November 30, 2003, the Company had foreign currency forward contracts with an aggregate fair value and face value of $9,468,000 and $9,367,000, respectively. In January 2003, the Company finalized a three-year, floating rate, revolving credit facility which permits borrowings up to $100,000,000, and issued seven-year notes payable totaling $50,000,000 at a fixed rate of 5.36%.  Future debt maturities are as follows:

																			Total Outstanding As of November 30, 2003
	Expected Maturity Date																		Recorded			Fair
	2004			2005			2006			2007			2008			Thereafter			Value			Value
Liabilities
(US$ in thousands)
Long Term Debt:
Fixed rate secured notes, payable in US$	$	8,333		$	8,333		$	8,334		$	—		$	—		$	—		$	25,000		$	27,095
Average interest rate	7.92		%	7.92		%	7.92		%	—			—			—			7.92		%
Fixed rate secured notes, payable in US$	—			10,000			10,000			10,000			10,000			10,000			50,000			50,358
Average interest rate	—			5.36		%	5.36		%	5.36		%	5.36		%	5.36		%	5.36		%
Variable-rate, foreign bank revolving credit facilities, payable in Euros	—			—			3,677			—			—			—			3,677			3,677
Average interest rate	—			—			4.75		%	—			—			—			4.75		%
Variable-rate industrial development bonds, payable in US$	—			—			—			—			—			7,200			7,200			7,200
Average interest rate	—			—			—			—			—			1.20		%	1.20		%
Variable-rate industrial development bonds, payable in US$	—			—			—			—			—			8,500			8,500			8,500
Average interest rate	—			—			—			—			—			1.35		%	1.35		%

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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements as of November 30, 2003 and for the year ended November 30, 2003 and the report thereon of PricewaterhouseCoopers LLP dated February 4, 2004, comprising pages 31 through 49 of the Annual Report, are incorporated herein by reference. Additionally, the last sentence on page 45 of the Annual Report, as incorporated herein, should be replaced with the following:  “The Company expects to contribute $3,547,000 to the U.S. pension plans by August 15, 2004, and also expects to contribute $1,105,000 each quarter beginning March 15, 2004.”  The Consolidated Financial Statements for the years ended November 30, 2002 and 2001 are also included on pages 31 through 49 of the Annual Report and are incorporated herein by reference.  The report of Deloitte & Touche LLP dated February 3, 2003, (February 24, 2004 as to the effects of the stock split described in Note 16) on such 2002 and 2001 financial statements, is included herein as Exhibit 99.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Effective May 21, 2003, the Company replaced Deloitte & Touche LLP (“DT”) as its independent accountants.

The reports of DT on the Company’s financial statements for fiscal years 2002 and 2001 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

The decision to replace DT was recommended by the Company’s Audit Committee and approved by its Board of Directors.

During fiscal years 2002 and 2001 and the subsequent interim period, there were no disagreements with DT on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of DT would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report.

During fiscal years 2002 and 2001 there were no reportable events (as defined in Item 304(a)(1)(v) of Securities and Exchange Commission Regulation S-K).

Effective, May 21, 2003, the Board of Directors of the Company engaged PricewaterhouseCoopers LLP as the independent accountants to audit the Company’s financial statements for the fiscal year ended November 30, 2003. No other event requiring disclosure has occurred.

ITEM 9A - CONTROLS AND PROCEDURES

The consolidated financial statements included in the Annual Report and incorporated by reference herein were prepared by management, which is responsible for their fairness, integrity, and objectivity.  The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and include amounts based on management’s reasonable estimates and judgments.  The other financial information contained in this report has been prepared in a manner consistent with the preparation of the consolidated financial statements.

Management  has established, maintains and necessarily relies on the Company’s system of internal controls and disclosure controls. This system is designed to provide reasonable, but not absolute, assurance that a) the Company’s transactions are properly authorized, b) the Company’s assets are safeguarded against unauthorized or improper use, and c) the Company’s transactions are properly recorded and reported.  The concept of reasonable assurance is based on the recognition that in any system of controls there are certain inherent limitations and that the cost of such systems should not exceed the benefits to be derived.

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A control system, no matter how well conceived and operated, cannot provide absolute assurance that the objectives of the control system will be met. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company will be detected. Judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, any control can be circumvented by the individual acts of some persons, by collusion, or by management override of the control. Any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any system of controls will succeed under all potential future conditions. Controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company’s periodic filings made in accordance with the rules and regulations promulgated by the U.S. Securities and Exchange Commission (the “Commission”) is (a) recorded, processed, accumulated and summarized within the time periods specified by the Commission, (b) communicated to the Company’s management, including its chief executive and financial officers, as appropriate to allow timely decisions regarding required disclosure, and (c) presented in the Company’s periodic filings in a manner that fairly portrays the information being presented (i) in light of all available facts and circumstances relating to the matters disclosed, and (ii) in conformity with the disclosure requirements promulgated by the Commission.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the Company’s disclosure controls and procedures as of November 30, 2003 pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic Securities and Exchange Commission filings. No significant changes were made in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to November 30, 2003.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to the directors is set forth under the section entitled, “Election of Directors” in the Company’s Proxy Statement. Such information is incorporated herein by reference.  The Board of Directors of the Company has a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Securities Exchange Act.  The members of that audit committee are identified in the Company’s Proxy Statement under the section captioned “The Board and its Committees”.  Such information is incorporated herein by reference.  The Board of Directors has not determined that any of the members of its audit committee is an “audit committee financial expert” as defined in Item 401(h)(2) of Regulation S-K.

Information with respect to the executive officers who are not directors of the Company is located in Part I, Item 4 of this report.

Information regarding delinquent filers pursuant to Item 405 of Regulation S-K is contained in the Company’s Proxy Statement.  Such information is incorporated herein by reference.

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The Company has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to directors, officers and employees of the Company, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.  Copies of the Code, as well as each of the Company’s Corporate Governance Guidelines and charters of the Audit, the Compensation & Stock Option and Nominating & Corporate Governance committees of its Board of Directors are available on the Company’s website, located at www.ameron.com, and are available in print to stockholders upon written request to the Secretary of the Company at the Company’s headquarters address.

ITEM 11 - EXECUTIVE COMPENSATION*

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS*

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*

ITEM 14 - PRINCIPAL ACCOUNTANT’S FEES AND SERVICES *

*The information required by Items 11, 12, 13 and 14 is contained in the Company’s Proxy Statement. Such information is incorporated herein by reference.

PART IV

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

(a) (1) FINANCIAL STATEMENTS:

The financial statements to be filed hereunder are cross-referenced, in the index immediately following, to the Annual Report, as to sections incorporated herein by reference.

INDEX TO FINANCIAL STATEMENTS

Statement	Page Reference To Annual Report
Consolidated Statements of Income for the years ended November 30, 2003, 2002 and 2001	31
Consolidated Balance Sheets as of November 30, 2003 and 2002	32-33
Consolidated Statements of Stockholders’ Equity for the years ended November 30, 2003, 2002 and 2001	34
Consolidated Statements of Comprehensive Income for the years ended November 30, 2003, 2002 and 2001	34
Consolidated Statements of Cash Flows for the years ended November 30, 2003, 2002 and 2001	35
Notes to Consolidated Financial Statements	36-48
Report of Independent Auditors	49

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(a) (2) FINANCIAL STATEMENT SCHEDULES:

The following additional financial data should be read in conjunction with the consolidated financial statements in the Annual Report. Schedules not included with this additional financial data have been omitted because they are either not applicable, not required, not significant, or the required information is provided in the consolidated financial statements in the Annual Report.

SCHEDULE		SCHEDULES OF AMERON
	I	Report of Independent Auditors on Financial Statement Schedule
	II	Valuation and Qualifying Accounts and Reserves

(a) (3) EXHIBITS

EXHIBIT		EXHIBITS OF AMERON
	3(i)	Certificate of Incorporation
	3(ii)	Bylaws
	4	Instruments Defining the Rights of Security Holders, Including Indentures
	10	Material Contracts
	13	Annual Report
	21	Subsidiaries of the Registrant
	23.1	Consent of PricewaterhouseCoopers LLP
	23.2	Consent of Deloitte & Touche LLP
	31.1	Section 302 Certification of Chief Executive Officer
	31.2	Section 302 Certification of Chief Financial Officer
	32	Section 906 Certification of Chief Executive Officer and Chief Financial Officer
	99	Reports of Previous Independent Public Accountants

b) REPORTS ON FORM 8-K

Two reports on Form 8-K were filed by the Company during the last quarter of the fiscal year ended November 30, 2003 as follows:

September 24, 2003 reporting under Item 5, the declaration of a quarterly dividend of 20 cents per share of common stock for the Company’s third quarter ended August 31, 2003.

September 25, 2003 reporting under Item 7, the financial results for the Company’s third quarter ended August 31, 2003.

SCHEDULE I - REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders of Ameron International Corporation:

Our audit of the consolidated financial statements referred to in our report dated February 4, 2004 appearing in the 2003 Annual Report to Stockholders of Ameron International Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule for the year ended November 30, 2003 listed in Item 15(a)(2) of this Form 10-K.  In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/PricewaterhouseCoopers LLP

Los Angeles, California

February 4, 2004

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AMERON INTERNATIONAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 2003

(In thousands)

Classification	Balance at Beginning of Year		Additions Charged to Costs and Expense			Deductions, Payments and Write-offs			Reclassifications and Other		Balance at End of Year
DEDUCTED FROM ASSET ACCOUNTS
Allowance for doubtful accounts	$	6,652	$	3,071		$	(1,668	)	$	113	$	8,168
INCLUDED IN CURRENT LIABILITIES
Reserve for pending claims and litigation	$	1,051	$	557		$	(162	)	$	3,101	$	4,547
Reserve for product warranty	4,257		2,631			(3,158		)	40		3,770
Other reserves	236		(31		)	(41		)	12		176
Reserve for self-insured programs	14,222		5,204			(4,935		)	497		14,988

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AMERON INTERNATIONAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 2002

(In thousands)

Classification	Balance at Beginning of Year		Additions Charged to Costs and Expense		Deductions, Payments and Write-offs			Reclassifications and Other		Balance at End of Year
DEDUCTED FROM ASSET ACCOUNTS
Allowance for doubtful accounts	$	6,699	$	1,300	$	(1,496	)	$	149	$	6,652
INCLUDED IN CURRENT LIABILITIES
Reserve for pending claims and litigation	$	8,227	$	210	$	(3,170	)	$	41	$	5,308
Other reserves	292		—		(66		)	10		236
Reserve for self-insured programs	14,223		3,833		(3,834		)	—		14,222

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AMERON INTERNATIONAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED NOVEMBER 30, 2001
(In thousands)

Classification	Balance at Beginning of Year		Additions Charged to Costs and Expense		Deductions, Payments and Write-offs			Reclassifications and Other			Balance at End of Year
DEDUCTED FROM ASSET ACCOUNTS
Allowance for doubtful accounts	$	6,616	$	1,738	$	(1,649	)	$	(6	)	$	6,699
INCLUDED IN CURRENT LIABILITIES
Reserve for pending claims and litigation	$	13,744	$	1,362	$	(6,864	)	$	(15	)	$	8,227
Other reserves	217		151		(75		)	(1		)	292
Reserve for self-insured programs	12,620		5,047		(3,438		)	(6		)	14,223

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Pursuant to the requirements of Section 13 or 15(d) 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.

AMERON INTERNATIONAL CORPORATION

By:	/s/ Javier Solis
	Javier Solis, Senior Vice President & Secretary

Date: February 24, 2004

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

Date: 2–24–04	/s/ James S. Marlen	Director, Chairman of the Board,
	James S. Marlen	President and Chief Executive
		Officer (Principal Executive
		Officer)
Date: 2–24–04	/s/ Gary Wagner	Senior Vice President & Chief
	Gary Wagner	Financial Officer (Principal
		Financial & Accounting Officer)
Date: 2–  –04		Director
	Peter K. Barker
Date: 2–26–04	/s/ David Davenport	Director
	David Davenport
Date: 2–24–04	/s/ Michael Hagan	Director
	J. Michael Hagan
Date: 2–23–04	/s/ Terry Haines	Director
	Terry L. Haines
Date: 2–23–04	/s/ John King	Director
	John F. King
Date: 2–  –04		Director
	Thomas L. Lee
Date: 2–24–04	/s/ John Peppercorn	Director
	John E. Peppercorn
Date: 2–  –04		Director
	Dennis C. Poulsen

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EX-3.(I)

EXHIBIT 3(i)

CERTIFICATE OF INCORPORATION

Exhibit 3(i) is the Certificate of Incorporation as amended through April 16, 1996, which document is incorporated by reference to Annual Report on Form 10-K filed with the Commission for Registrant’s fiscal year ended November 30, 1996.

EX-3.(II)

EXHIBIT 3(ii)

BYLAWS

Exhibit 3(ii) is the Corporation’s Bylaws as amended through January 21, 2004.

AMERON INTERNATIONAL CORPORATION

(a Delaware corporation)

BYLAWS

(Restated with amendments
through January 21, 2004 )

ARTICLE I

Offices

SECTION 1.01.  Registered Office.  The registered office of AMERON INTERNATIONAL CORPORATION (hereinafter called the Corporation) in the State of Delaware shall be at 1209 Orange Street, City of Wilmington, County of New Castle, and the name of the registered agent in charge thereof shall be The Corporation Trust Company.

SECTION 1.02.  Other Offices.  The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors (hereinafter called the Board) may from time to time determine or as the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

SECTION 2.01.  Annual Meetings.  Annual Meetings of the stockholders of the Corporation for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings may be held at such time, date and place as the Board shall determine by resolution.

SECTION 2.02.  Special Meetings.  Special meetings of the stockholders of the Corporation for any purpose may only be called in accordance with the provisions of the Certificate of Incorporation.

SECTION 2.03.  Place of Meetings.  All meetings of the stockholders shall be held at such places, within or without the State of Delaware, as may be designated by the Board.

SECTION 2.04.  Notice of Meetings.  Except as otherwise required by law, notice of each meeting of the stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him at his post office address furnished by him to the Secretary of the Corporation for such purpose or, if he shall not have furnished to the Secretary his address for such purpose, then at his post office address last known to the Secretary, or by transmitting a notice thereof to him at such address by telegraph, cable, or wireless.  Except as otherwise expressly required by law, no publication of any notice of a meeting of the stockholders shall be required.  Every notice of a meeting of the stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose or purposes for which the meeting is called.  Notice of any meeting of stockholders shall not be required to be given to any stockholder to whom notice may be omitted pursuant to applicable Delaware law or who shall have waived such notice and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except as a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.  Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken.

SECTION 2.05.  Quorum.  Except as otherwise required by law, the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders of the Corporation or any adjournment thereof.  In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time.  At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called.

SECTION 2.06.  Voting.

(a)  Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by him and registered in his name on the books of the Corporation:

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(i)  on the date fixed pursuant to Section 6.05 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or

(ii)  if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which the meeting shall be held.

(b)  Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes.  Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock.  Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledges to vote thereon, in which case only the pledges, or his proxy, may represent such stock and vote thereon.  Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants in common, tenants by entirety or otherwise, or with respect to which two or more persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware.

(c)  Any such voting rights may be exercised by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period.  The attendance at any meeting of a stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he shall in writing so notify the secretary of the meeting prior to the voting of the proxy.  At any meeting of the stockholders all matters, except as otherwise provided in the Certificate of Incorporation, in these Bylaws or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat and thereon, a quorum being present.  The vote at any meeting of the stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting.  On a vote by ballot each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and it shall state the number of shares voted.

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SECTION 2.07.  List of Stockholders.  The Secretary of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held.  The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

SECTION 2.08.  Judges.  If at any meeting of the stockholders a vote by written ballot shall be taken on any question, the chairman of such meeting may appoint a judge or judges to act with respect to such vote.  Each judge so appointed shall first subscribe an oath faithfully to execute the duties of a judge at such meeting with strict impartiality and according to the best of his ability.  Such judges shall decide upon the qualifications of the voters and shall report the number of shares represented at the meeting and entitled to vote on such question, shall conduct and accept the votes, and, when the voting is completed, shall ascertain and report the number of shares voted respectively for and against the question.  Reports of judges shall be in writing and subscribed and delivered by them to the Secretary of the Corporation.  The judges need not be stockholders of the Corporation, and any officer of the Corporation may be a judge on any question other than a vote for or against a proposal in which he shall have a material interest.

SECTION 2.09.  Action Without Meeting.  No action shall be taken by the stockholders except at an annual or special meeting of stockholders.  No action shall be taken by stockholders by written consent.

SECTION 2.10  Notice of Stockholder Business.  At any annual stockholders’ meeting, only such business shall be conducted as shall have been properly brought before the meeting.  To be properly brought before an annual stockholders’ meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of  Directors; (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors; or (iii) otherwise properly brought before the meeting by a stockholder.  For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation.  To be timely, a stockholder’s notice must be received at the principal office of the Corporation not less

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than sixty (60) days nor more than one hundred and twenty (120) days prior to the meeting; provided, however, that in the event that the first public disclosure (whether by mailing of a notice to shareholders, press release or otherwise) of the date of the meeting is made less than sixty-five (65) days prior to the date of the meeting, notice by the stockholder will be timely if received not later than the close of business on the tenth day following the day on which such first public disclosure was made.  A stockholder’s notice to the Secretary shall set forth, as to each matter the stockholder proposes to bring before the annual meeting, (i) the reasons for conducting such business at the annual meeting; (ii) the name and address as they appear on the Corporation’s stock register, of the stockholder proposing such business; (iii) the number of shares of capital stock of the Corporation which are beneficially owned by the stockholder; and (iv) any material interest of the stockholder in such business.  Notwithstanding any other provision of these Bylaws, no business shall be conducted at an annual stockholders’ meeting except in accordance with the procedures set forth in this Section 2.10.  If the presiding officer of an annual stockholders’ meeting determines and declares that business was not properly brought before the meeting in accordance with this Section 2.10, any such business shall not be transacted.

ARTICLE III

Board of Directors

SECTION 3.01.  General Powers.  The property, business and affairs of the Corporation shall be managed by the Board.

SECTION 3.02.  Number and Term of Office.  The number of directors shall not be less than six (6) nor more than eleven (11),  the exact number of which shall be fixed by Bylaw duly adopted by the Board.  The number of directors of the Corporation shall be nine (9).  The Board shall be divided into three classes, Class I, Class II and Class III.  Such classes shall be as nearly equal in number of directors as possible.  Each director shall serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to Class I shall serve for a term ending at the annual meeting to be held in 1987, the directors first elected to Class II shall serve for a term ending at the annual meeting to be held in 1988 and the directors first elected to Class III shall serve for a term ending at the annual meeting to be held in 1989.  Directors need not be stockholders.  Each of the directors of the Corporation shall hold office until his successor shall have been duly elected and shall qualify or until he shall resign or shall have been removed in the manner hereinafter provided.

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SECTION 3.03.  Election of Directors.  In any election of directors of the Corporation, a holder of any class or series of stock then entitled to vote in such election shall be entitled to as many votes as shall equal (i) the number of votes which (except for this Section as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by (ii) the number of directors to be elected in the election in which his class or series of shares is entitled to vote, and each stockholder may cast all of such votes for a single director or for any two or more of them as he may see fit.

SECTION 3.04.  Resignations.  Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation.  Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 3.05.  Vacancies.  Except as otherwise provided in the Certificate of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum.  Each director so chosen to fill a vacancy shall hold office for the unexpired term of his predecessor or until his successor shall have been elected and shall qualify or until he shall resign or shall have been removed in the manner hereinafter provided.

SECTION 3.06.  Place of Meeting, Etc.  The Board may hold any of its meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting.  Directors may participate in any regular or special meeting of the Board by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting.

SECTION 3.07.  First Meeting.  The Board shall meet as soon as practicable after each annual election of directors and notice of such first meeting shall not be required.

SECTION 3.08.  Regular Meetings.  Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine.  If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday.  Except as provided by law, notice of regular meetings need not be given.

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SECTION 3.09.  Special Meetings.  Special meetings of the Board shall be held whenever called by the Chairman of the Board, the President or a majority of the authorized number of directors.  Except as otherwise provided by law or by these Bylaws, notice of the time and place of each such special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least five (5) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegraph or cable or be delivered personally not less than twenty-four (24) hours before the time at which the meeting is to be held.  Except where otherwise required by law or by these Bylaws, notice of the purpose of a special meeting need not be given.  Notice of any meeting of the Board shall not be required to be given to any director who is present at such meeting, except a director who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

SECTION 3.10.  Quorum and Manner of Acting.  Except as otherwise provided in these Bylaws or by law, the presence of a majority of the number of directors then currently specified as the size of the Board pursuant to Section 3.02 of these Bylaws shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present.  In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present.  Notice of any adjourned meeting need not be given.  The directors shall act only as a Board, and the individual directors shall have no power as such.

SECTION 3.11.  Action by Consent.  Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee.

SECTION 3.12.  Removal of Directors.  Subject to the provisions of the Certificate of Incorporation, a director may be removed at any time, for cause only.

SECTION 3.13.  Compensation.  The directors shall receive only such compensation for their services as directors as may be allowed by resolution of the Board.  The Board may also provide that the Corporation shall reimburse each such director for any expense incurred by him on account of his attendance at any meetings of the Board or Committees of the Board.  Neither the payment of such compensation nor the reimbursement of such expenses shall be construed to preclude any director from serving the Corporation or its subsidiaries in any other capacity and receiving compensation therefor.

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SECTION 3.14.  Committees.  The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation.  Any such committee, to the extent provided in the resolution of the Board and except as otherwise limited by law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it.  Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board.  In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of such absent or disqualified member.

SECTION 3.15.  Notice of Director Nominations.  Only persons who are nominated in accordance with the procedures set forth in this Section 3.15 shall be eligible for election as Director at annual meeting of the stockholders.  Nominations of candidates for election to the Board of Directors of the Corporation at any annual meeting may be made only by or at the direction of the Board of Directors or by a stockholder entitled to vote at such annual meeting.  All such nominations, except those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation of the stockholder’s intention to make such nomination.  To be timely, any such notice must be received at the principal office of the Corporation not less than sixty (60) no more than one hundred twenty (120) days prior to the date of such annual meeting; provided, however, that in the event that the first public disclosure (whether by mailing of a notice to stockholders, press release or otherwise) of the date of such annual meeting is made less than sixty-five (65) days prior to the date of such annual meeting, notice by the stockholder will be timely if received not later than the close of business on the tenth day following the day on which such first public disclosure was made.  Such stockholder’s notice with respect to a proposed nomination shall set forth (i) the name, age, business and residence address and principal occupation or employment of each nominee proposed in such notice; (ii) the name and address of the stockholder giving the notice as the same appears in the Corporation’s stock register; (iii) the number of shares of capital stock of the Corporation which are beneficially owned by each such nominee and by such stockholder; and (iv) such other information concerning each such nominee as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee.  Such notice must also include a signed consent of each such nominee to serve as a director of the Corporation, if elected.

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In the event that a person is validly designated as a nominee in accordance with the procedures specified above and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee; provided, however, that in the case of persons not nominated by the Board of Directors, such a substitution may only be made if notice as provided above in this Section 3.15 is received at the principal office of the Corporation not later than the later of (i) thirty (30) days prior to the date of the annual meeting or (ii) five (5) days after the stockholder proposing the original nominee first learned that such original nominee has become unable or unwilling to stand for election.

ARTICLE IV

Officers

SECTION 4.01.  Officers, Election and Removal.  The officers of the Corporation shall be a President, a Vice President, a Secretary, and a Treasurer.  The Corporation may also have at the discretion of the Board of Directors an Executive Vice President, one or more additional Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be elected by the Board of Directors.  Any two or more offices may be held by the same person except that the office of President and the office of Secretary may not be held by the same person.

The officers of the Corporation shall be elected annually by the Board of Directors at their first meeting after the annual meeting of the stockholders and, unless they shall sooner resign, be removed or become disqualified, shall hold office until their respective successors shall be elected and qualify.

The Chairman of the Board and the President shall be elected from among the Directors but the other officers need not be Directors.

Any officer may be removed either with or without cause by a majority of the Directors at the time in office at any regular or special meeting of the Board of Directors.

SECTION 4.02.  Chairman of the Board.  The Chairman of the Board, if there shall be one, shall preside at all meetings of the stockholders and of the Board of Directors.  He shall, ex officio, be a member of the Executive Committee, if there be one.

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SECTION 4.03.  President, Executive Vice President and Vice President.  The President shall be responsible to the Board of Directors for all actions and activities of the Corporation.

The Executive Vice President, if there shall be one, shall act for the President in the President’s absence.  He shall have such other powers and be required to perform such other duties as the President and the Board of Directors shall prescribe.

The Vice President, or if there shall be more than one such officer elected, shall have such powers and perform such duties as may be delegated to him or them by the President or the Board of Directors.

SECTION 4.04.  Secretary.  The Secretary shall issue notices for all meetings, shall keep their minutes, shall have charge of the seal and the Corporate books, and shall make such reports and perform such other duties as are incident to his office, or are properly required of him by the Board of Directors.  He shall also keep at the principal office of the corporation or cause to be kept at the office of the Corporation’s transfer agent, a stock transfer book, and he shall keep or cause to be kept by the Corporation’s registrar, a share registry book.  The Secretary may be required to perform such duties of the Treasurer as may be assigned to him from time to time.

SECTION 4.05.  Treasurer.  The Treasurer shall have the custody of all moneys and securities of the Corporation and shall keep regular books of account.  He shall disburse the funds of the Corporation in payment of the just demands against the Corporation or as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and to the Board of Directors from time to time as may be required of him, an account of all his transactions as Treasurer and of the financial condition of the Corporation.  He shall perform all other duties incident to his office or that are properly required of him by the Board.  He shall give the Corporation a bond, if required by the Board of Directors, in a sum, and with one or more sureties, satisfactory to the Board of Directors, for the faithful performance of the duties of his office, and for the restoration to the Corporation, in case of his death, resignation, retirement, or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

SECTION 4.06.  Incapacity.  In case of the absence or inability of any officer of the Corporation to act and of any person herein authorized to act in his place, the Board of Directors may from time to time delegate the powers or duties of such officer to any other officer or any Director or other person whom they may select.

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SECTION 4.07.  Vacancies.  Vacancies in any office arising from any cause may be filled by the Directors at any regular or special meeting.

SECTION 4.08.  Other officers.  The Board of Directors may appoint such other officers and agents as it shall deem necessary or expedient, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

SECTION 4.09.  Salaries.  The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.  Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary corporation, in any other capacity and receiving proper compensation therefor.

ARTICLE V

Contracts, Checks, Drafts, Bank Accounts, Etc.

SECTION 5.01.  Execution of Contracts.  The Board, except as in these Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by these Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.

SECTION 5.02.  Checks, Drafts, Etc.  All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board.  Each such officer, assistant, agent or attorney shall give such bond, if any, as the Board may require.

SECTION 5.03.  Deposits.  All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board and shall be drawn out only by check signed by persons designated, from time to time, by resolution of the Board of Directors.

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SECTION 5.04.  General and Special Bank Accounts.  The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board.  The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

ARTICLE VI

Shares and Their Transfer

SECTION 6.01.  Certificates for Stock.  Every owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by him.  The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the President or a Vice President, and by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer.  Any of or all of the signatures on the certificates may be a facsimile.  In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, any such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue.  A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation.  Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04.

SECTION 6.02.  Transfers of Stock.  Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 6.03, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon.  The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation.  Whenever any transfer of shares shall be made for collateral security, and

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not absolutely, such fact shall be so expressed in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so.

SECTION 6.03.  Regulations.  The Board may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation.  It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.

SECTION 6.04.  Lost, Stolen, Destroyed, and Mutilated Certificates.  In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do.

SECTION 6.05.  Fixing Date for Determination of Stockholders of Record.  In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.  If in any case involving the determination of stockholders for any purpose other than notice of or voting at a meeting of stockholders, the Board shall not fix such a record date, the record date for determining stockholders for such purpose shall be the close of business on the day on which the Board shall adopt the resolution relating thereto.  A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

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ARTICLE VII

Indemnification

SECTION 7.01.  (DELETED MARCH 30, 1987)

ARTICLE VIII

Executive Committee

SECTION 8.01.  Members and Powers.  The Board, by resolution adopted by majority of its total number, may annually elect three or more of its number to constitute an Executive Committee of the Board to have authority to exercise to the extent permitted by law, in the intervals between meetings of the Board, all powers of the Board, except to amend or repeal these Bylaws, or to fill vacancies in its own membership or in the Board, or to declare dividends.  The actions of the Executive Committee shall be ratified at the next succeeding meeting of the Board.

SECTION 8.02.  Meetings.  The Executive Committee may adopt rules governing the method of the notice of the time and place of its meetings and the conduct of the proceedings thereat; but, in the absence of such rules, meetings of the Executive Committee may be called by any member of the Committee.  Notice to each member, regarding the time and place of holding the proposed meeting, shall be given to each member verbally or by mail at least twenty-four (24) hours before the time of the meeting.  No notice of a meeting will be required if all members of the Committee are in attendance, or if notice is waived.  The Executive Committee shall keep a record of its acts and proceedings.

SECTION 8.03.  Quorum.  To constitute a quorum of the Executive Committee for the transaction of business at any meeting, a majority shall be present and the act of a majority of the whole Committee shall be necessary to constitute the act of the Committee.

SECTION 8.04.  Removal of Members.  Any member of the Executive Committee may be removed with or without cause by resolution of the Board, adopted by a majority of its total number then in office.

SECTION 8.05.  Vacancies.  Vacancies in the Executive Committee shall be filled in the same manner as for the original appointment to membership.

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ARTICLE IX

Miscellaneous

SECTION 9.01.  Seal.  The Corporate seal of the Corporation shall consist of two concentric circles, between which is the name of the Corporation, and in the center shall be inscribed the year of its incorporation and the words, “Corporate Seal, Delaware.”

SECTION 9.02.  Waiver of Notices.  Whenever notice is required to be given by these Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice.

SECTION 9.03.  Amendments.  Except as otherwise provided herein or in the Certificate of Incorporation, these Bylaws or any of them, may be altered, amended, repealed or rescinded and new Bylaws may be adopted, (i) by the Board, or (ii) by the stockholders, at any annual meeting of stockholders, or at any special meeting of stockholders, provided that notice of such proposed alteration, amendment, repeal, rescission or adoption is given in the notice of meeting.

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EX-4

EXHIBIT 4

INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES

Exhibit 4 is:

Amended and Restated Note Purchase Agreement dated January 24, 2003, re: $50,000,000 7.92% Senior Secured Notes due September 1, 2006.

Amended and Restated Rights Agreement dated December 16, 1996, which document is incorporated by reference to Form 8-A/A, Amendment No. 3 filed with the Commission on February 5, 1997.

Industrial Development Revenue Bonds dated April 1, 2001, maturing April 1, 2021.

Industrial Development Revenue Bonds dated May 1, 1996, maturing May 1, 2016.

Note Purchase Agreement dated January 24, 2003, re: $50,000,000 5.36% Senior Secured Notes due November 30, 2009.

The Company agrees to provide to the Securities and Exchange Commission, on request, copies of instruments defining the rights of security holders of long-term debt of the Company.

EX-10

EXHIBIT 10

MATERIAL CONTRACTS

Exhibit 10 is:

(1) Amended and Restated Employment Agreement between James S. Marlen and the Company.

(2) Change of Control Agreement between Javier Solis and the Company.

(3) Change of Control Agreement between Gary Wagner and the Company.

(4) Change of Control Agreement between James R. McLaughlin and the Company.

(5) 2001 Stock Incentive Plan.

Exhibit 10, Items (2) and (3) are incorporated by reference to Annual Report on Form 10-K filed with the Commission for Registrant’s fiscal year ended November 30, 1998.

Exhibit 10, Item (4) is incorporated by reference to Annual Report on Form 10-K filed with the Commission for Registrant’s fiscal year ended November 30, 2000.

Exhibit 10, Item (5) is incorporated by reference to Registration Statement No. 333-61816 on Form S-8 filed with the Commission on May 29, 2001

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This amended and restated employment agreement (“Agreement”) is made effective as of January 22, 2003, by and between Ameron International Corporation, a Delaware corporation (the “Company”), and James S. Marlen (“Employee”).  It supersedes and replaces the Employment Agreement previously entered into between the Company and Employee which was effective as of June 11, 1996, and was amended effective as of May 15, 1998 and May 16, 2001.

In consideration of the mutual promises and agreements set forth herein, the Company and Employee agree as follows:

1.Term.

1.1The term of this Agreement shall commence on January 22, 2003, and shall be automatically extended from day to day so that it always has a remaining term of three years and six months or until Employee attains age 67½, if sooner (the “Term”), subject to earlier termination in accordance with the provisions of section 10 hereinbelow.  In no event shall the Term of this Agreement extend beyond the date when Employee attains age 67½, unless the Company and Employee hereafter expressly agree in writing to extend the Term of this Agreement beyond such date.

2.Position and Title.

2.1The Company hereby employs Employee as its Chairman of the Board, President and Chief Executive Officer, and Employee hereby accepts such employment.

2.2Employee shall devote substantially all of his efforts on a full time basis to the business and affairs of the Company and to its subsidiaries and affiliates.  Employee shall not engage in any business or perform any services in any capacity whatsoever adverse to the interests of the Company.

2.3Employee shall at all times faithfully, industriously, and to the best of his ability, experience and talents, perform all of the duties of the office of Chairman of the Board, President and Chief Executive Officer of the Company.

2.4As President and Chief Executive Officer, Employee shall be responsible to the Board of Directors for all actions and activities of the Company.

3.(Deleted)

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4.Base Salary.

4.1As of January 22, 2003, Employee’s base salary is $714,000 per year.  Employee’s base salary and performance shall be reviewed annually during the Term by the Board of Directors of the Company and may be increased from time to time at the discretion of, and by, such Board based on merit or such other considerations as such Board shall deem appropriate.

5.Short-Term Incentive Bonus.

5.1The Company has adopted a management incentive bonus plan for its executives, which plan is currently known as the “Management Incentive Compensation Plan” (herein the “MIC Plan”), and a Key Executive Long-Term Cash Incentive Plan (herein the “LTIP”).

5.2Employee shall be deemed to be a participant under the MIC Plan and the LTIP, as well as any successor management incentive bonus plans adopted by the Company for its executives.  Individual goals and guidelines for bonus payable to Employee under the MIC Plan and the LTIP, and any successor plans, shall be subject to review and approval by the Board of Directors of the Company.

5.3Employee’s participation in the MIC Plan and the LTIP shall be in accordance with the terms and conditions of those plans and other compensation arrangements as agreed to herein.  In the event of Employee’s termination of employment other than for cause (as defined in paragraph 10.1 hereinbelow), Employee shall be entitled to a pro-rata portion of the award he would have been entitled to receive under the MIC Plan in respect of the fiscal year in which Employee’s termination date occurs had he continued in employment until the end of such fiscal year.

5.4The Company shall consider in good faith any recommendations of Employee with respect to any management incentive bonus plans subsequent to the MIC Plan and the LTIP.

6.Stock Grants & Options.

6.1(Deleted)

6.2(Deleted)

6.3Stock option and/or restricted stock grants may be granted from time to time at the sole discretion of, and by, the Board of Directors of the Company.  The Board of Directors of the Company shall consider in good faith any recommendations of Employee with respect to any alternative formulas or plans for stock options.

7.(Deleted).

8.Pension.

8.1During the Term, the Company shall provide pensions benefits to Employee in accordance with

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the terms and conditions of Company’s Pension Plan for Salaried Employees and its Supplemental Executive Retirement Plan as in effect as of March 20, 2002.

8.2In addition to the pension benefits described in paragraph 8.1 hereinabove, the Company shall provide the following additional pension benefits to Employee.  Those additional benefits shall be calculated by crediting Employee with twenty-five (25) years of service under the Supplemental Executive Retirement Plan (the “SERP”) described in paragraph 8.1 hereinabove at age 60, and with an additional year of service under the SERP for each actual year of service during his employment with the Company between ages 60 and 65 so that Employee will be credited with thirty (30) years of service under the SERP at age 65.

8.3Vesting of the pension benefits described in paragraphs 8.1 and 8.2 hereinabove began as of June 11, 1993.

8.4In the event that Employee’s employment is terminated by the Company without cause (as defined in paragraph 10.2 hereinbelow) and/or due to or following a Change of Control (as defined in paragraph 10.5 hereinbelow) during the Term, Employee shall be entitled to continue to accrue the pension benefits described in paragraphs 8.1, 8.2 and 8.3 hereinabove for the additional period starting from the date of such termination of employment with the Company and continuing until the effective date of his obtaining of new employment, if any; provided however that such additional period for the accrual of those pension benefits shall not exceed three (3) years from the date of termination of employment with the Company.

9.Additional Employee Benefits.

9.1The Company shall provide Employee the right to participate in its Executive Life Insurance plan, together with all other fringe benefit programs in which executive officers of the Company generally participate so long as such programs are continued by the Company, and all other fringe benefit programs which may hereafter be adopted by the Company for its executive officers.

9.2The Company shall provide Employee the right to participate in its medical and dental insurance plans.

9.3In the event that Employee should voluntarily resign or is terminated without cause (as defined in paragraph 10.2 hereinbelow) by the Company during the Term, the Company shall provide Employee with substantially the same level of health and medical benefits in effect for Employee as of the date of such resignation or termination, with Employee remaining obligated to continuing to pay employee contributions towards such coverage at the same level as in effect as of such date, until the earlier of (1) the second anniversary of such date of resignation or termination, or (2) the date Employee becomes employed by another party.

9.4The Company shall provide Employee the right to participate in its long-term disability insurance plan, which as of this date generally provides that in the event of total disability, the plan will provide an annual benefit equal to 60% of the sum of (i) Employee’s annual base salary plus (ii) the average of the three highest annual bonuses paid to Employee (but not less than 60% of

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Employee’s annual base salary), less any income received by Employee from other sources, such as by way of example and not limitation, Social Security and worker’s compensation.

9.5The Company shall provide Employee the right to participate in its 401(k) Savings Plan.

9.6The Company shall reimburse Employee for dues and assessments for membership at the Annandale Country Club, the California Club and the Los Angeles Country Club.

9.7The Company shall provide Employee with the use of a company car substantially equivalent to a Cadillac STS, together with normal maintenance, insurance and operating expenses.

9.8Employee shall be entitled to vacation in accordance with the customary practice of the Company with regard to its executives, which is currently four (4) weeks annually.

9.9Employee shall be reimbursed for financial/tax consulting services provided by The AYCO Company, L.P. through participation in the Financial and Tax Services Program for Key Executives which was approved (with a tax gross-up feature) by the Board of Directors on November 20, 2002.

9.10The Company shall reimburse Employee for fees actually paid by Employee to his legal counsel in connection with legal review of this employment agreement, provided that such reimbursement shall not exceed $5,000.

9.11The Company agrees that in the event of an audit of Employee’s tax returns by the Internal Revenue Service with respect to issues arising under this Agreement (including, but not limited to, Section 10.5 hereof), Employee will have the right to select his own professional advisors to represent Employee in the audit proceedings, and the reasonable expenses thereof shall be borne by the Company.

10.Termination; Extension.

10.1During the Term of this Agreement, the Company’s Board of Directors may terminate Employee’s employment herein at any time for cause as contemplated by Section 2924 of the California Labor Code (copy of which in effect as of the date hereof is attached hereto as Exhibit “E” and made a part hereof), or as a result of a material breach by Employee of his obligations under this Agreement, provided however that Company shall provide Employee with not less than sixty (60) days prior written notice describing the behavior or conduct which is alleged by the Company to constitute cause for termination and Employee shall be provided with reasonable opportunity to correct such behavior or conduct within that notice period.

10.2In the event that the Company terminates Employee’s employment for any cause other than the causes set forth in paragraph 10.1 hereinabove, such shall be considered to be termination “without cause.”  Removal from Employee of the title of “President, Chief Executive Officer and Chairman of the Board” during the Term, without Employee’s consent, shall be deemed to be termination without cause.

10.3In the event that the Company terminates Employee’s employment without cause at any time

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during the Term of this Agreement, except for termination without cause due to or following a Change of Control (as that term is defined in paragraph 10.5 hereinbelow), then:

(1)the Company shall pay Employee a lump-sum severance amount within thirty (30) days following termination equal to 3.5 (or the number of years and fractional years remaining in the Term, if the remaining Term of this Agreement is less than three years and six months as of the date of the termination) times the sum of (i) Employee’s annual base salary in effect as of the date of termination, and (ii) the highest management incentive bonus paid to Employee during the three and one-half years preceding termination (but not less than one hundred percent (100%) times Employee’s annual base salary determined as of the date of termination);

(2)all unvested restricted stock grants and stock options granted to Employee shall automatically vest in full; and

(3)Employee shall be entitled to the benefits described in paragraphs 8.3, 8.4 and 9.3 hereinabove.

Employee shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Employee under any of the provisions of this Agreement.

10.4The Term of this Agreement shall be automatically extended from day to day so that it always has a remaining term of three years and six months (or until Employee attains age 67½, if sooner) until the Company or Employee shall give written notice to the other that the Term shall not be further extended.  In such event the Term shall end three years and six months after delivery of such written notice in the manner provided in paragraph 12.3 hereinbelow (or when Employee attains age 67½, if sooner).  If the Company notifies Employee that the Term shall not be further extended, then Employee may elect within 90 days after receipt of such notice to terminate employment and consider his employment to have been terminated by the Company without cause, in which case Employee shall be entitled to those termination benefits described in paragraph 10.3 hereinabove.

10.5In the event of a Change of Control at any time during the Term of this Agreement:

(1)All unvested restricted stock grants and stock options granted to Employee shall automatically vest in full upon a Change of Control.

(2)In the event that the Company terminates Employee’s employment without cause at any time during the Term of this Agreement within the period of twelve (12) months following the date of a Change of Control, then Employee shall be entitled to the termination benefits described in paragraph 10.3 hereinabove; provided that the lump-sum severance amount paid to Employee under this paragraph 10.5(2) which is calculated based on paragraph 10.3(1) hereinabove (i) shall be reduced to equal the present value, determined in accordance with IRC 280G(d)(4), of the lump-sum severance amount which would otherwise be payable under paragraph 10.3(1), and (ii) shall be reduced to offset compensation and other earned income earned by Employee in the manner provided in paragraphs 10.5(3) and (4) below.

(3)The amount of the lump-sum severance amount payable to Employee under paragraph 10.5(2)

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which is calculated based on paragraph 10.3(1) shall be reduced by one hundred percent (100%) of any compensation and other earned income (within the meaning of Section 911(d)(2)(A) of the Internal Revenue Code (“IRC”)) which is earned by Employee for services rendered to persons or entities other than the Company or its affiliates during the remaining Term of this Agreement as of the date of termination.  Health and medical benefits shall be offset as provided in paragraph 9.3.

(4)Not less frequently than annually (by December 31 of each year), Employee shall account to the Company with respect to all compensation and other earned income earned by Employee which is required hereunder to be offset against the lump-sum severance amount received by Employee from the Company under paragraph 10.5(2) which is calculated based on paragraph 10.3(1).  If the Company has paid a lump-sum severance amount in excess of the amount to which Employee is entitled (after giving effect to the offsets provided above), Employee shall reimburse the Company for such excess by December 31 of such year.  The requirements imposed under this paragraph shall terminate on December 31 of the last calendar year which begins during the remaining term of this Agreement as of the date of termination.

Notwithstanding any other provisions in this Agreement or any other agreement, plan or arrangement, if any payment or benefit received or to be received by Employee, whether under the terms of this Agreement, or any other agreement, plan or arrangement with the Company or any person affiliated with the Company (all such payments and benefits being hereinafter referred to as “Total Payments”) would be subject, in whole or in part, to taxes imposed by IRC Section 4999, then an additional gross-up payment shall be made to Employee in accordance with the provisions of Exhibit “T” hereof, the provisions of which Exhibit are hereby fully incorporated herein by reference, such that, after payment of all Federal, state and local income, employment and excise taxes, Employee will be in the same after-tax position as if no excise taxes (or interest or penalties thereon) had been imposed.

As used herein, the term “Change of Control” means either:  (i) the dissolution or liquidation of the Company; (ii) a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation; (iii) approval by the stockholders of the Company of any sale, lease, exchange or other transfer (in one or a series of transactions) of all or substantially all of the assets of the Company; (iv) approval by the stockholders of the Company of any merger or consolidation of the Company in which the holders of voting stock of the Company immediately before the merger or consolidation will not own fifty percent (50%) or more of the outstanding voting shares of the continuing or surviving corporation immediately after such merger or consolidation; or (v) a change of 25% (rounded to the next whole person) in the membership of the Board of Directors of the Company within a 12-month period, unless the election or nomination for election by stockholders of each new director within such period was approved by the

6

vote of 85% (rounded to the next whole person) of the directors then still in office who were in office at the beginning of the 12-month period.

10.6In the event that Employee should voluntarily resign or is terminated for cause by the Company during the Term, Employee shall not be entitled to any of the termination benefits described in this section 10, other than any payment which may be due pursuant to paragraph 9.3 or 10.5 hereinabove.

10.7In the event that Employee should die or become disabled or incapacitated for an uninterrupted period in excess of six (6) months during the Term, then (1) all unvested restricted stock grants and stock options granted to Employee shall automatically vest in full, and (2) Employee shall remain eligible (or entitled as the case may be) for a prorated management incentive or bonus award for the period prior to Employer’s death or disability.

11.Covenants.

11.1Employee agrees that any and all confidential knowledge or information, including but not limited to customer lists, books, records, data, formulae, specifications, inventions, processes and methods, developments and improvements, which has or have been or may be obtained or learned by him in the course of his employment with the Company, will be held confidential by him and that he will not disclose the same to any person outside of the Company either during his employment or after his employment by the Company has terminated.

11.2Employee agrees that upon termination of his employment with the Company he will immediately surrender and turn over to the Company all books, records, forms specifications, formulae, data and all papers and writings relating to the business of the Company and all other property belonging to the Company, it being understood and agreed that the same are the sole property of the Company and that Employee will not make or retain any copies thereof.

11.3Employee agrees that all inventions, development or improvements which he may make, conceive, invent, discover or otherwise acquire during his employment by the Company in the scope of his responsibilities or otherwise shall become the sole property of the Company.

12.Miscellaneous.

12.1All terms and conditions of this Agreement are set forth herein, and there are no warranties, agreements or understandings, express or implied, except those expressly set forth herein.

12.2Any modification of this Agreement shall be binding only if evidenced in writing signed by both parties hereto.

12.3Any notice or other communication required or permitted to be given hereunder shall be deemed properly given if personally delivered or deposited in the United States mail, registered or certified and postage prepaid, addressed to the Company at 245 S. Los Robles Ave., Pasadena, CA 91101, or to Employee at 750 Chester Avenue, San Marino, CA 91108, or at such other addresses as may from time to time be designated by the respective parties in writing.

7

12.4The laws of the State of California shall govern the validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties.

12.5In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable, the same shall not be affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never been contained herein.

12.6This Agreement shall be binding upon, and inure to the benefit of, the successors and assigns of the Company and the personal representatives, heirs and legatees of Employee.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first above written.

AMERON INTERNATIONAL CORPORATION

By:
	John E. Peppercorn
	Chairman-elect, Compensation & Stock Option Committee
	of the Board of Directors
EMPLOYEE
James S. Marlen

8

EXHIBIT E

DEERING’S CALIFORNIA CODES

labor code

Annotated

OF THE STATE OF CALIFORNIA

Adopted April 24, 1937
with amendments through the
First Extraordinary Session of the 1989-1990 Legislature

§ 2924.  Employment for specified term; Grounds for termination by employer.

An employment for a specified term may be terminated at any time by the employer in case of any willful breach of duty by the employee in the course of his employment, or in case of his habitual neglect of his duty or continued incapacity to perform it.

Enacted 1937.  Amended Stats 1969, ch 1529 § 3; Stats 1971, ch 1580 § 2, ch 1607 § 3.

EXHIBIT T

Exhibit “T”

(Page 1 of 1)

If any portion of the Total Payments (as defined in Paragraph 10.5 of the Agreement) shall be subject to excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, or any successor or similar provision thereto, or comparable state or local tax laws, the Company shall pay to the Employee such additional compensation as is necessary (after taking into account all Federal, state and local income, employment and excise taxes payable by the Employee as a result of the receipt of such additional compensation) to place the Employee in the same after-tax position he would have been in had no such excise tax (or any interest or penalties thereon) been paid or incurred.  The Company shall pay additional compensation upon the earlier of (i) the time at which the Company withholds such excise tax from any payments to the Employee or (ii) 30 days after the Employee notifies the Company that the Employee has filed a tax return which takes the position that such excise tax is due and payable in reliance on a written opinion of the Employee’s tax counsel or accountant that it is more likely than not that such payment with respect to any such excise tax is due and payable.  If the Employee makes any payment with respect to any such excise tax as a result of an adjustment to the Employee’s tax liability by any Federal, state or local authority, the Company will pay such additional compensation within 30 days after the Employee notifies the Company of such payment.  Without limiting the obligation of the Company hereunder, the Employee agrees, in the event that Employee makes any payment pursuant to the preceding sentence, to negotiate with the Company in good faith with respect to procedures reasonably requested by the Company which would afford the Company the ability to contest the imposition of such excise tax; provided, however that the Employee will not be required to afford the Company any right to contest the applicability of any such excise tax to the extent that the Employee reasonably determines that such contest is inconsistent with the overall tax interests of the Employee.  The Company agrees to hold in confidence and not to disclose, without the Employee’s prior written consent, any information with regard to the Employee’s tax position which the Company obtains pursuant to this Exhibit T.

EX-13

EXHIBIT 13

ANNUAL REPORT

Exhibit 13 is the Corporation’s 2003 Annual Report to Stockholders.

This 10-K Report should be read only in conjunction with that Annual Report.

In the event you do not already have a copy of the Annual Report, one may be obtained by contacting Ameron, attention; Corporate Secretary, Post Office Box 7007, Pasadena, California 91109-7007. The telephone number is (626) 683-4000.

Shareholders may also obtain a copy of the Form 10-K by accessing the Company website at www.ameron.com.

2003
FINANCIAL
SECTION

Selected Consolidated Financial Information	22
Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Consolidated Statements of Income	31
Consolidated Balance Sheets	32
Consolidated Statements of Stockholders’ Equity	34
Consolidated Statements of Comprehensive Income	34
Consolidated Statements of Cash Flows	35
Notes to Consolidated Financial Statements	36
Report of Independent Auditors	49
Management’s Letter	49

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

	Year ended November 30,
(Dollars in thousands, except per share data)	2003			2002			2001			2000			1999
PER COMMON SHARE DATA(1)
Net income—basic	$	3.77		$	3.61		$	3.58		$	3.21		$	2.79
Net income—diluted	3.67			3.49			3.45			3.21			2.77
Dividends	.76			.64			.64			.64			.64
Weighted-average shares (basic)	7,925,229			7,772,032			7,742,690			7,893,132			7,992,474
Weighted-average shares (diluted)	8,149,460			8,052,164			8,048,588			7,905,026			8,046,496
Stock price – high	35.53			38.74			38.94			21.50			23.88
Stock price – low	24.89			22.26			17.03			16.10			17.35
Price/earnings ratio (range)	10-7			11-6			11-5			7-5			9-7
OPERATING RESULTS
Sales	$	600,495		$	539,473		$	551,396		$	550,661		$	545,081
Gross profit	166,488			141,883			138,084			139,792			142,982
Interest expense, net	(6,645		)	(6,836		)	(10,213		)	(12,244		)	(12,938		)
Provision for income taxes	(14,070		)	(14,454		)	(10,850		)	(8,448		)	(10,482		)
Net income	29,900			28,059			27,741			25,345			22,273
Net income/sales	5.0		%	5.2		%	5.0		%	4.6		%	4.1		%
Return on equity	12.8		%	13.5		%	14.3		%	14.1		%	12.9		%
FINANCIAL CONDITION AT YEAR-END
Working capital	$	177,009		$	149,205		$	155,356		$	135,626		$	123,748
Property,  plant and equipment, net	150,586			145,242			145,801			145,196			149,597
Investments in joint ventures
Equity method	13,064			12,940			12,793			15,786			17,126
Cost method	5,479			5,987			5,987			5,987			5,920
Total assets	533,492			462,942			485,080			478,449			470,569
Long-term debt, less current portion	86,044			102,823			137,197			140,718			135,237
CASH FLOW
Expenditures for property, plant and equipment	$	17,107		$	14,514		$	19,297		$	21,050		$	19,672
Depreciation and amortization	18,371			18,572			18,633			18,022			18,986

(1) Share and per share data reflect a two-for-one stock split declared in 2003.

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

Ameron International Corporation (“Ameron” or the “Company”) is a multinational manufacturer of highly-engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets. Ameron is a leading producer of water transmission lines; high-performance coatings and finishes for the protection of metals and structures; fiberglass-composite pipe for transporting oil, chemicals and corrosive fluids and specialized materials and products used in infrastructure projects. The Company operates businesses in North America, South America, Europe, Australasia and Asia. The Company has four operating segments. The Performance Coatings & Finishes Group manufactures and markets high-performance industrial and marine coatings. The Fiberglass-Composite Pipe Group manufactures and markets filament-wound and molded composite fiberglass pipe, tubing, fittings and well screens. The Water Transmission Group manufactures and supplies concrete and steel pressure pipe, concrete non-pressure pipe, protective linings for pipe, and fabricated steel products. The Infrastructure Products Group manufactures and sells ready-mix concrete, sand and aggregates, concrete pipe and culverts, and concrete and steel lighting and traffic poles. The markets served by the Performance Coatings & Finishes Group and the Fiberglass-Composite Pipe Group are worldwide in scope. The Water Transmission Group serves primarily the western U.S. The Infrastructure Products Group’s quarry and ready-mix business operates exclusively in Hawaii, and poles are sold throughout the U.S. Ameron also participates in several joint-venture companies, directly in the U.S. and Saudi Arabia, and indirectly in Kuwait and Egypt.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Liquidity and Capital Resources and Results of Operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

The Company’s significant accounting policies are disclosed in Note 1 of Notes to Consolidated Financial Statements in the Company’s 2003 Annual Report. Management believes the following accounting policies affect the more significant estimates used in preparing the consolidated financial statements.

The consolidated financial statements include the accounts of Ameron and all wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. The functional currencies for the Company’s foreign operations are the applicable local currencies. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate during the period. The resulting translation adjustments are recorded in accumulated other comprehensive loss. The Company advances funds to certain foreign subsidiaries that are not expected to be repaid in the foreseeable future. Translation adjustments arising from these advances are also included in accumulated other comprehensive loss. The timing of repayments of intercompany advances could impact the components of equity on the Company’s consolidated balance sheets but would not be expected to impact consolidated income statements. Additionally, earnings of foreign subsidiaries are often reinvested outside the U.S. Repatriation of such earnings could result in unrecognized U.S. tax liability. Gains or losses resulting from foreign currency transactions are included in other income.

Revenue for the Performance Coatings & Finishes, Fiberglass-Composite Pipe and Infrastructure Products segments is recognized when risk of ownership and title pass, primarily at the time goods are shipped, provided that an agreement exists between the customer and the Company, the price is fixed or determinable and collection is reasonably assured. In limited circumstances within the Performance Coatings & Finishes Group, revenue recognition associated with shipment of coatings for marine dry dockings is delayed until product returns are processed. Revenue is recognized for the Water Transmission Group primarily under the percentage-of-completion method, typically based on completed units of production, since products manufactured under enforceable and binding construction contracts typically are designed for specific applications, are not interchangeable between projects, and are not manufactured for stock. In some cases, if products are manufactured for stock or are not related to specific construction contracts, revenue is recognized under the same criteria used by the other three segments. Revenue under the percentage-of-completion method is subject to a greater level of estimation, which affects the timing of revenue recognition, costs and profits. Estimates are reviewed on a consistent basis and are adjusted periodically to reflect current expectations.

The Company expenses environmental clean-up costs related to existing conditions resulting from past or current operations on a site-by-site basis. Liabilities and costs associated with these matters, as well as other pending litigation and asserted claims arising in the ordinary course of business, require estimates of future costs and judgements based on the knowledge and experience of management and its legal counsel. When estimates of the Company’s exposure can be reasonably estimated and are probable, liabilities and expenses are recorded. The ultimate resolution of any such exposure to the Company may differ due to subsequent developments.

Inventories are stated at the lower of cost or market with cost determined principally on the first-in, first-out (FIFO) method. Certain steel inventories used by the Water Transmission Group are valued using the last-in, first-out (LIFO) method. Reserves are established for excess, obsolete and rework inventories based on age, estimates of salability and forecasted future demand. Management records an allowance for doubtful accounts receivable based on historical experience and expected trends. A significant reduction in demand or significant worsening of customer credit quality could materially impact the Company’s consolidated financial statements. Property, plant and equipment is stated

23

on the basis of cost and depreciated principally on a straight-line method based on the estimated useful lives of the related assets, generally two to 40 years.

Investments in unconsolidated joint ventures or affiliates (“joint ventures”) over which the Company has significant influence are accounted for under the equity method of accounting, whereby the investment is carried at the cost of acquisition, plus the Company’s equity in undistributed earnings or losses since acquisition. Investments in joint ventures over which the Company does not have the ability to exert significant influence over the investee’s operating and financing activities are accounted for under the cost method of accounting. The Company’s investment in TAMCO is accounted for under the equity method. Investments in Ameron Saudi Arabia, Ltd., Bondstrand, Ltd. and Oasis-Ameron, Ltd. are accounted for under the cost method due to management’s current assessment of the Company’s influence over these joint ventures.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If the estimated future, undiscounted cash flows from the use of an asset are less than its carrying value, a write-down is recorded to reduce the related assets to estimated fair value.

The Company is self insured for a portion of the losses and liabilities primarily associated with workers’ compensation claims and general, product and vehicle liability. Losses are accrued based upon the Company’s estimates of the aggregate liability for claims incurred using historical experience and certain actuarial assumptions followed in the insurance industry. The estimate of self insurance liability includes an estimate of incurred but not reported claims, based on data compiled from historical experience. Actual experience could differ significantly from these estimates and could materially impact the Company’s consolidated financial statements.

The Company follows the guidance of Statement of Financial Accounting Standards (“SFAS”) No. 87, “Employers’ Accounting for Pensions,”and SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” when accounting for pension and other postretirement benefits. Under these accounting standards, assumptions are made regarding the valuation of benefit obligations and, in certain cases the performance of plan assets that are controlled and invested by third-party fiduciaries. Delayed recognition of differences between actual results and expected or estimated results is a guiding principle of these standards. Such delayed recognition provides a gradual recognition of benefit obligations and investment performance over the working lives of the employees who benefit under the plans, based on various assumptions. Unforecasted program changes, including termination, freezing of benefits or acceleration of benefits, could result in an immediate recognition of unrecognized benefit obligations; and such recognition could materially impact the Company’s consolidated financial statements. Assumed discount rates are used to calculate the present value of benefit payments which are projected to be made in the future, including projections of increases in employees’ annual compensation and health care costs. Management also projects the future return on invested assets based principally on prior performance and future expectations. These projected returns reduce the net benefit costs the Company records in the current period. Management consults with actuaries when determining these assumptions.

During 2003, the Company changed the assumed discount rate, expected rate of return on assets and projected rates of increase in compensation levels and health care costs. The discount rate is based on market interest rates. At November 30, 2003, the Company decreased the discount rate from 6.75% to 6.00% as a result of the then current market interest rates on long-term, fixed-income debt securities of highly-rated corporations. In estimating the expected return on assets, the Company considers past performance and future expectations for various types of investments as well as the expected long-term allocation of assets. At November 30, 2003, the Company reduced the expected long-term rate of return on assets assumption from 9.75% to 8.75% to reflect reduced expectations for future returns in the equity markets. In projecting the rate of increase in compensation levels, the Company considers movements in inflation rates as reflected by market interest rates. At November 30, 2003, the Company decreased the assumed annual rate of compensation increase from 4.25% to 3.50%. In selecting the rate of increase in health care costs, the Company considers past performance and forecasts of future health care cost trends. At November 30, 2003, the Company increased the rate of increase in health care costs from 9.00% to 10.00%, decreasing ratably until reaching 5.00% in 2008 and beyond.

Different assumptions would impact the Company’s projected benefit obligations and annual net periodic benefit costs related to pensions, and the accrued other benefit obligations and benefit costs related to postretirement benefits. The following reflects the impact associated with a change in certain assumptions (in thousands):

	1% Increase						1% Decrease
	Increase (Decrease) in Benefit Obligations			Increase (Decrease) in Benefit Costs			Increase (Decrease) in Benefit Obligations			Increase(Decrease)in BenefitCosts
Discount Rate:
Pensions	$	(24,989	)	$	(3,130	)	$	30,639		$	3,849
Other postretirement benefits	(272		)	(13		)	319			(3		)
Expected rate of return on assets	Not Applicable			(1,303		)	Not Applicable			1,303
Rate of increase in compensation levels	4,731			1,032			(4,274		)	(889		)
Rate of increase in health care costs	111			16			(96		)	(18		)

Additional information regarding pensions and other postretirement benefits is disclosed in Note 15 of Notes to Consolidated Financial Statements in the Company’s 2003 Annual Report.

Management incentive compensation is accrued based on current estimates of the Company’s ability to achieve short-term and long-term performance targets.

Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and

24

liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. No deferred taxes have been provided for the undistributed earnings of Ameron’s foreign subsidiaries that are expected to be permanently reinvested offshore. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. Quarterly income taxes are estimated based on the mix of income by jurisdiction forecasted for the full fiscal year. The Company believes that it has adequately provided for tax-related matters. The Company is subject to examination by taxing authorities in various jurisdictions. Matters raised upon audit may involve substantial amounts and could be material. Management considers it unlikely that resolution of any such matters would have a material adverse effect upon the Company’s consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

During 2003, the Company generated $43.2 million of cash from operating activities compared to $54.6 million in the same period in 2002. The lower operating cash flow in 2003 was due to an increase in operating assets partially offset by an increase in operating liabilities. Much of the asset change came from higher receivables and higher other assets. Receivables grew due to increased sales and the timing of collections. Other assets rose due to an increase in the cash surrender value of life insurance policies related to executive benefit plans and prepaid costs related to pensions. Operating liabilities increased due partly to higher pension liabilities and also to deferred payments associated with the settlement of the Central Arizona Project lawsuits reached in January 2003.

Net cash used in investing activities totaled $13.9 million in 2003, compared to $14.0 million in 2002. Net cash used in investing activities consisted of proceeds from the sale of assets, including $3.0 million from the sale of the Company’s interest in a Mexican coatings venture in 2003, offset by capital expenditures which were primarily for normal replacement and upgrades of machinery and equipment. Additionally, a coatings distribution warehouse was purchased in 2003 for $1.3 million. During the fiscal year ending November 30, 2004, the Company anticipates spending between $20 and $30 million on capital expenditures. Capital expenditures are expected to be funded by existing cash balances, cash generated from operations or additional borrowings.

Net cash used in financing activities was $19.8 million in 2003, compared to $41.9 million in 2002. The net cash used in 2003 consisted of the net repayment of debt of $18.8 million, debt issuance costs of $1.6 million, payment of common stock dividends totaling $6.1 million, offset by $6.6 million from the issuance of common stock related to the exercise of stock options.

In January 2003, the Company finalized a three-year, $100 million revolving credit facility with six banks (the “Revolver”). Under the Revolver, the Company may, at its option, borrow at floating interest rates based on specified margins over money market rates, at any time until January 2006, when all borrowings under the Revolver must be repaid. Also in January 2003, the Company issued $50 million of notes payable to an insurance company at a fixed rate of 5.36%. These fixed-rate notes are payable $10 million per year beginning in November 2005, with a final maturity in November 2009. The Revolver and the 5.36% notes payable replaced a $150 million revolving credit facility that was maintained at November 30, 2002.

The lending agreements contain various restrictive covenants, including the requirement to maintain specified amounts of net worth and restrictions on cash dividends, borrowings, liens, investments and guarantees. The Company is required to maintain consolidated net worth of $181.5 million plus 50% of net income and 75% of proceeds from any equity issued after January 24, 2003. The Company’s consolidated net worth exceeded the covenant amount by $71.1 million as of November 30, 2003. The Company is required to maintain a consolidated leverage ratio of consolidated funded indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”) of no more than 3 times. As of November 30, 2003, the Company maintained a consolidated leverage ratio of 1.43 times EBITDA. The Revolver and the notes payable require that the Company maintain qualified consolidated tangible assets at least equal to the outstanding secured funded indebtedness. As of November 30, 2003 qualifying tangible assets equaled 1.89 times funded indebtedness. Under the most restrictive fixed charge coverage ratio, the sum of EBITDA, rental expense and cash taxes must be at least 1.5 times the sum of interest expense, rental expense, dividends and scheduled funded debt payments. As of November 30, 2003, the Company maintained a ratio of 2.38.

Cash and cash equivalents at November 30, 2003 totaled $20.4 million, an increase of $10.0 million from November 30, 2002. At November 30, 2003, the Company had total debt outstanding of $94.4 million and approximately $104 million in unused committed and uncommitted credit lines available from foreign and domestic banks. The Company’s highest borrowing and the average borrowing levels during 2003 were $166.6 million and $107.7 million, respectively. The highest borrowing was $50.0 million higher than necessary to fund operations due to the refinancing in 2003, as the new debt was issued prior to the repayment of the replaced debt.

Management believes that cash flows from operations and current cash balances, together with currently available lines of credit will be sufficient to meet operating requirements in 2004. Cash available from operations could be affected by any general economic downturn or any downturn or adverse changes in the Company’s business, such as loss of customers or significant raw material price increases. Management believes it is unlikely that business or economic conditions will worsen or that costs will increase sufficiently to impact short-term liquidity.

25

The Company’s contractual obligations and commercial commitments at November 30, 2003 are summarized as follows (in thousands):

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Long-Term Debt (a)	$	94,377	$	8,333	$	40,344	$	20,000	$	25,700
Operating Leases	36,963		4,694		6,385		4,147		21,737
Total Contractual Obligations (b)	$	131,340	$	13,027	$	46,729	$	24,147	$	47,437

	Commitments Expiring Per Period
Commercial Commitments	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Standby Letters of Credit (c)	$	2,150	$	2,150	$	—	$	—	$	—
Total Commercial Commitments (b)	$	2,150	$	2,150	$	—	$	—	$	—

(a)Included in long-term debt is $3,677 outstanding under a revolving credit facility, due in 2006, supported by the Revolver.

(b)The Company has no capitalized lease obligations, unconditional purchase obligations, or standby repurchase obligations.

(c)Not included are standby letters of credit totaling $16,065 supporting industrial development bonds with a principal of $15,700. The principal amount of the industrial development bonds is included in long-term debt.

RESULTS OF OPERATIONS: 2003 COMPARED WITH 2002

General

Net income totaled $29.9 million, or $3.67 per diluted share, on sales of $600.5 million for the year ended November 30, 2003, compared to net income of $28.1 million, or $3.49 per diluted share, on sales of $539.5 million for the same period in 2002. All operating segments had higher sales. The Performance Coatings & Finishes and Fiberglass-Composite Pipe Groups had higher segment income, while the Water Transmission and Infrastructure Products Groups had lower segment income. The increase in net income came from higher sales and higher gross profit, offset by higher selling, general and administrative expenses and lower equity in earnings of TAMCO.

Sales

Sales increased by $61.0 million in 2003. While all operating segments improved, the largest gains came from the Company’s Fiberglass-Composite Pipe and the Water Transmission businesses. The Fiberglass-Composite Pipe Group benefited from strong demand in Asia for fiberglass piping for construction of offshore oil and marine vessels, and the Water Transmission Group’s increase came from the fabrication of steel pilings for the San Francisco/Oakland Bay Bridge.

Performance Coatings & Finishes’ sales increased by $7.0 million due to the appreciation of foreign currencies relative to the U.S. dollar. Sales in local currencies by operations outside the U.S. were relatively flat, while sales in the U.S. were lower.  Sales of protective coatings in the U.S. declined due to continued sluggishness in U.S. chemical, industrial and marine markets caused by general economic conditions. The industrial markets in Europe were similarly sluggish. However, the international demand for offshore and marine coatings improved in 2003. Future improvements by the group remain dependent on increased spending in worldwide industrial, marine and offshore markets, which appear to be strengthening. A market improvement should bode well for the Performance Coatings & Finishes Group.

Fiberglass-Composite Pipe’s sales increased by $26.2 million due primarily to the strength of Asian operations and partly to the impact of favorable foreign exchange rates. Asian operations benefited from the strong worldwide demand for oil tankers and offshore production vessels driven by high oil prices. The industrial markets in the U.S. and Europe remained depressed due to general economic conditions. Sales of onshore oilfield piping improved during 2003 as oil prices remained at a relatively high level and oilfield spending increased. The outlook for the Fiberglass-Composite Pipe Group is positive and improving.

The Water Transmission Group’s sales increased in 2003 by $20.5 million due to sales of steel pilings for the San Francisco/Oakland Bay Bridge. Sales of concrete and steel pipe for fresh and waste water applications declined during the year due to a cyclical slowdown in the water market in the western U.S. Revenue is recognized in the Water Transmission Group primarily under the percentage-of-completion method and is subject to a certain level of estimation, which affects the timing of revenue recognition, costs and profits. Estimates are reviewed on a consistent basis and are adjusted when actual results are expected to significantly differ from those estimates. Water Transmission’s year-end backlog was lower than at the end of 2002, reflecting the recent lull in water projects in the western U.S.  The business may be unable to sustain the unusually high level of the last several years in 2004; however, the future outlook for the Water Transmission Group remains positive.

26

Infrastructure Products’ sales increased by $6.9 million due to strong housing and commercial construction spending, which was spurred by low interest rates. Ameron’s Hawaiian operations benefited from improved demand for ready-mix concrete and concrete pipe used for public infrastructure, housing and military construction. Ameron’s pole business had higher sales of concrete poles used in street lighting, primarily associated with housing starts. Sales of steel traffic poles declined due to the lack of steel tubes. The outlook for the Infrastructure Products Group remains favorable.

Gross Profit

Gross profit in 2003 was $166.5 million, or 27.7% of sales, compared to gross profit of $141.9 million, or 26.3% of sales, in 2002. Gross profit increased $24.6 million due to higher sales and improved margins. Overall margins improved primarily due to a change in product mix as the proportion of higher-margin fiberglass-pipe sales increased.

Gross profit of the Performance Coatings & Finishes Group increased by $2.8 million, with $2.0 million from higher profit on increased sales and $.8 million from higher margins. Margins improved due to better inventory management in 2003, with lower reserves needed for obsolete and slow-moving inventory.

The Fiberglass-Composite Pipe Group’s gross profit increased $14.3 million in 2003. The increase was based almost equally on higher sales and higher margins. Gross profit margins improved due to lower raw material costs of $2.0 million, and improved plant efficiencies of $5.2 million. Plant efficiencies improved due to more balanced use of capacity and cost containment programs initiated in 2002.

Gross profit of the Water Transmission Group increased $4.2 million due to higher sales. However, profit margins decreased, offsetting the increase in gross profit by approximately $1.0 million. Margins were impacted by a change in product mix in 2003 due to the higher level of lower-margin steel pilings. The supply of steel pilings for the San Francisco/Oakland Bay Bridge is roughly 50% completed. The balance of the pilings are expected to be supplied in 2004, thus margins in 2004 are expected to be similarly impacted as in 2003.

The Infrastructure Products Group’s gross profit increased $1.1 million, on slightly lower margins, due to higher sales. Margins declined as the mix of concrete pole sales included a higher proportion of lower-margin, smaller poles.

Additionally, gross profit was $2.1 million higher in 2003 due primarily to the establishment in 2002 of reserves associated with LIFO accounting of certain steel inventories and certain slow-moving fiberglass-pipe inventories which did not repeat in 2003.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses totaled $127.4 million, or 21.2% of sales, in 2003, compared to $105.9 million, or 19.6%, in 2002. SG&A increased $21.5 million due to higher pension costs of $9.6 million and higher costs for third-party insurance coverage of $2.9 million. Additionally, SG&A in 2003 included higher new product development and marketing costs of $3.5 million, higher employee benefit costs of $2.8 million, higher legal fees of $1.4 million and higher marketing costs associated with higher sales of $.7 million. The appreciation of foreign currencies increased SG&A of the Company’s foreign operations by about $4.7 million in 2003; however, the increase was more than offset by the estimated impact of cost reduction programs initiated in 2002. Legal fees were higher due to asbestos and silica claims and due to lower recovery related to the Central Arizona Project lawsuits. In 2003, $1.0 million was recovered representing amounts agreed to be reimbursed to the Company by its own and a supplier’s insurance companies for past legal fees and costs in excess of the negotiated settlement of the Central Arizona Project lawsuits reached in January 2003. The resolution of the lawsuit enabled the reversal in 2002 of reserves totaling $1.7 million. Pension and insurance costs are expected to be stable in 2004.

Equity in Earnings of Joint Venture and Other Income

Equity in earnings of joint venture decreased to $.7 million in 2003 from $3.6 million in 2002. Equity income declined due to TAMCO, Ameron’s 50%-owned mini-mill in California. Ameron’s equity in TAMCO’s earnings decreased as TAMCO suffered throughout 2003 from higher energy and scrap costs. Energy costs reflected the lingering impact of California’s electricity crisis. Scrap costs rose due to demand for Asian consumption. TAMCO is increasing pricing to recoup these cost increases, and operating results for TAMCO are expected to improve in 2004.

Other income increased to $10.9 million in 2003 from $9.8 million in 2002. Other income included earnings from investments accounted for under the cost method, royalties and fees from licensees, foreign currency transaction gains and losses, and other miscellaneous income. Included in 2003 was a gain of $2.5 million on the sale of Ameron’s minority interest in a Mexican coatings venture. Income from investments accounted for under the cost method increased from $5.9 million in 2002 to $6.3 million in 2003. The increase was due primarily to higher dividends received from Ameron’s fiberglass-pipe joint venture in Saudi Arabia. The near-term outlook for Ameron’s Saudi Arabian joint ventures is uncertain given the competitive environment facing each business.

Interest

Interest expense totaled $6.6 million in 2003, compared to $6.8 million in 2002. The decrease reflected lower average borrowing levels in 2003 offset by the higher interest on the fixed-rate notes placed early in 2003.

Provision for Income Taxes

The provision for income taxes in 2003 was $14.1 million, a decrease of $.4 million from 2002. The effective tax rate decreased to 32% in 2003 from 34% in 2002. The effective tax rate was lower due to the increase of foreign profits, especially from Asia, and lower foreign income tax rates.

27

RESULTS OF OPERATIONS: 2002 COMPARED WITH 2001

General

Net income totaled $28.1 million, or $3.49 per diluted share, on sales of $539.5 million for the year ended November 30, 2002, compared to net income of $27.7 million, or $3.45 per diluted share, on sales of $551.4 million for the same period in 2001. Higher segment income from the Infrastructure Products Group more than offset lower segment income from the other three groups. The overall improvement in net income came primarily from higher operating margins, higher equity income and lower interest expense.

Sales

Sales decreased by $11.9 million in 2002 primarily due to the sluggishness in U.S. and European chemical and industrial markets, as well as softening in the worldwide oilfield market, that negatively impacted the Company’s Fiberglass-Composite Pipe and Performance Coatings & Finishes Groups. The strong U.S. housing market and continued infrastructure spending helped boost sales of the Water Transmission and Infrastructure Products Groups.

Performance Coatings & Finishes’ sales decreased by $5.4 million because of the decline in sales of high-performance protective coatings by the Company’s U.S. and European operations due to general economic conditions. Market demand remained weak throughout 2002. Sales of light-industrial finishes in Australia and New Zealand were higher, reflecting improved economic conditions.

The Fiberglass-Composite Pipe Group’s sales decreased by $18.5 million in 2002, compared to 2001, due to sluggishness in domestic and European industrial and fuel-handling markets, as well as softening in the worldwide oilfield market. Demand for oilfield piping remained lower throughout the year because of lower spending associated with uncertainty regarding the sustainability of oil prices. Additionally, Ameron’s U.S. industrial business completed deliveries of a large water pipeline for a project in California during 2001 that did not repeat in 2002.

The Water Transmission Group had $1.8 million higher sales in 2002 than in 2001, primarily as a result of a major sewer pipe project in Southern California and demand for water piping to meet the needs of population growth, infrastructure rehabilitation and the energy markets. During 2002, the Water Transmission Group received a $57 million contract to provide steel pilings for the renovation of the San Francisco / Oakland Bay Bridge. The project did not materially impact 2002.

The Infrastructure Products Group completed 2002 with $9.8 million higher sales. Ameron’s Hawaiian operations benefited from the continued strength of residential, military and road construction in Hawaii. Sales of poles increased as low interest rates continued to drive the strong U.S. housing market.

Gross Profit

Gross profit in 2002 was $141.9 million or 26.3% of sales, compared to gross profit of $138.1 million or 25.0% of sales in 2001. Gross profit would have declined an estimated $3.0 million due to lower sales; however, the decline was more than offset by profits associated with higher margins, totaling about $6.8 million. Gross margins increased due a to change in product and project mix, lower raw material costs and improved plant utilization.

Performance Coatings & Finishes’ benefited from productivity enhancements, as well as favorable raw material costs. Likewise, margins of the Fiberglass-Composite Pipe Group improved as a result of profitability enhancements, favorable product and project mix and lower raw material costs. Margins of the Water Transmission Group declined due to unfavorable product and project mix and production delays associated with the San Francisco/Oakland Bay Bridge. Infrastructure Products had higher margins as a result of the better product mix, increased plant utilization and more consistent production by the new concrete pole plant in Alabama.

Selling, General and Administrative Expenses

Selling, general and administrative expenses totaled $105.9 million or 19.6% of sales in 2002, compared to $101.8 million or 18.5% in 2001. The $4.1 million increase in expenses was due primarily to higher pension costs of approximately $4.9 million, and severance and productivity enhancement costs for the U.S. and European Fiberglass-Composite Pipe operations and U.S. Performance Coatings & Finishes operation of $2.1 million . Partially offsetting the increases was a reversal of $1.7 million of reserves previously established for the Central Arizona Project lawsuit, based on the settlement reached in early 2003.

Equity in Earnings of Joint Venture and Other Income

Equity in earnings of joint venture increased to $3.6 million in 2002 from $2.3 million in 2001. Equity income improved as TAMCO benefited from continued demand for rebar in the western U.S. and stable energy supplies.

Other income included earnings from investments accounted for under the cost method, royalties and fees from licensees, foreign currency transaction gains and losses, and other miscellaneous income. Other income decrease to $9.8 million from $10.3 million in 2001 primarily due to lower royalties and fees. Income from investments accounted for under the cost method decreased from $6.3 million in 2001 to $5.9 million in 2002. The decrease was due primarily to reduced dividends from Ameron’s coatings ventures in Mexico and Saudi Arabia.

Interest

Interest expense totaled $7.0 million in 2002, compared to $10.5 million in 2001. The decrease reflected lower rates and lower average borrowing levels in 2002 than in 2001.

Provision for Income Taxes

The effective tax rate increased to 34% in 2002 from 28% in 2001. The provision for income taxes in 2002 was $14.5 million, an increase of $3.6 million from 2001. In 2001, the Company recorded a $4.0 million benefit from research and development credits related to the 1990 through 2000 tax years, which did not repeat in 2002.

28

OFF-BALANCE SHEET FINANCING

The Company does not have any off-balance sheet financing, other than listed in the liquidity and capital resources section herein. All the Company’s subsidiaries are included in the financial statements, and the Company does not have relationships with any special purpose entities.

MARKET RISKS

Foreign Currency Risk

The Company operates internationally, giving rise to exposure to market risks from changes in foreign exchange rates. From time to time, the Company borrows in various currencies to reduce the level of net assets subject to changes in foreign exchange rates. In addition, the Company purchases foreign exchange forward and option contracts to hedge firm commitments, such as receivables and payables, denominated in foreign currencies. The Company does not use the contracts for speculative or trading purposes. At November 30, 2003, the Company had 27 foreign currency forward contracts expiring at various dates through May 2004, with an aggregate face value and fair value of $9.4 million and $9.5 million, respectively. Such instruments are carried at fair value, with related adjustments recorded within other income.

Debt Risk

The Company has variable-rate, short-term and long-term debt as well as fixed-rate, long-term debt. The fair value of the Company’s fixed-rate debt is subject to changes in interest rates. The estimated fair value of the Company’s variable-rate debt approximates the carrying value of the debt since the variable interest rates are market-based, and the Company believes such debt could be refinanced on materially similar terms. The Company is subject to the availability of credit to support new requirements, to refinance amortizing long-term debt and to refinance short-term debt.

As of November 30, 2003, the estimated fair value of notes payable by the Company totaling $25.0 million, with a fixed rate of 7.92%, was $27.1 million. The Company is required to repay these notes in annual installments of $8.3 million from 2004 to 2006, inclusive. As of November 30, 2003, the estimated fair value of notes payable by the Company totaling $50.0 million, with a fixed rate of 5.36%, was $50.4 million. The Company is required to repay these notes in annual installments of $10.0 million from 2005 to 2009, inclusive. The Company had $7.2 million of variable-rate industrial development bonds payable at a rate of 1.20% as of November 30, 2003, payable in 2016. The Company also had $8.5 million of variable-rate industrial development bonds payable at a rate of 1.35% as of November 30, 2003, payable in 2021. As of November 30, 2003, the Company borrowed $3.7 million under a revolving credit facility supported by the Revolver which permits borrowings up to $100 million through January, 2006. The average interest rate of such borrowings was 4.75% as of November 30, 2003.

CONTINGENCIES

The Company is one of numerous defendants in various asbestos-related personal injury lawsuits. These cases generally seek unspecified damages for asbestos-related diseases based on alleged exposure to certain products previously manufactured by the Company and others, and at this time the Company is generally not aware of the extent of injuries allegedly suffered by the individuals or the facts supporting the claim that injuries were caused by the Company’s products. Based upon the information available to it at this time, the Company is not in a position to evaluate its potential exposure, if any, as a result of such claims. Hence, no amounts have been accrued for loss contingencies related to these lawsuits in accordance with SFAS No. 5, “Accounting for Contingencies.” The Company continues to vigorously defend all such lawsuits. As of November 30, 2003, the Company was a defendant in asbestos-related cases involving 17,447 claimants, compared to 8,382 claimants as of November 30, 2002. The Company is not in a position to estimate the number of additional claims that may be filed against it in the future. For the fiscal year ended November 30, 2003, there were new claims involving 9,279 claimants, dismissals and/or settlements involving 211 claimants and judgments involving 3 claimants. Net costs and expenses incurred by the Company for the fiscal year ended November 30, 2003 in connection with asbestos-related claims were less than $.6 million.

The Company is one of numerous defendants in various silica-related personal injury lawsuits. These cases generally seek unspecified damages for silica-related diseases based on alleged exposure to certain products previously manufactured by the Company and others, and at this time the Company is not aware of the extent of injuries allegedly suffered by the individuals or the facts supporting the claim that injuries were caused by the Company’s products. Based upon the information available to it at this time, the Company is not in a position to evaluate its potential exposure, if any, as a result of these claims. Hence, no amounts have been accrued for loss contingencies related to these lawsuits in accordance with SFAS No. 5. The Company continues to vigorously defend all such lawsuits. As of November 30, 2003, the Company was a defendant in silica-related cases involving 6,847 claimants, compared to 48 claimants as of November 30, 2002. The Company is not in a position to estimate the number of additional claims that may be filed against it in the future. For the fiscal year ended November 30, 2003, there were new claims involving 6,880 claimants, dismissals and/or settlements involving 81 claimants and no judgments. Net costs and expenses incurred by the Company for the fiscal year ended November 30, 2003 in connection with silica-related claims were about $.3 million.

In addition, certain other claims, suits and complaints that arise in the ordinary course of business, have been filed or are pending against the Company. Management believes that these matters are either adequately reserved, covered by insurance, or would not have a material effect on the Company’s financial position or its results of operations if disposed of unfavorably.

The Company is subject to federal, state and local laws and regulations concerning the environment and is currently participating in administrative proceedings at several sites under these laws. While the Company finds it difficult to estimate with any certainty the total cost of remediation at the several sites, on the basis of currently available information and reserves provided, the Company believes that the outcome of such environmental regulatory proceedings will not have a material effect on the Company’s financial position or its results of operations.

29

CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of November 30, 2003 pursuant to Exchange Act Rule 13a-14.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic Securities and Exchange Commission filings.  No significant changes were made in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to November 30, 2003.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities” in January 2003, and issued a revision in December 2003. FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” and addresses consolidation by business enterprises of variable interest entities. FIN No. 46 requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risk among the parties involved. FIN No. 46 also enhances the disclosure requirements related to variable interest entities. This statement is effective for the Company for variable interest entities in the quarter ending May 31, 2004. The adoption of FIN No. 46 is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 requires that contracts with comparable characteristics be accounted for similarly. In particular, SFAS No. 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative discussed in paragraph 6(b) of SFAS No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FIN No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” and (4) amends certain other existing pronouncements. SFAS No. 149 will result in more consistent reporting of contracts as either derivatives or hybrid instruments. SFAS No. 149 is effective prospectively for contracts entered into or modified after June 30, 2003, except in certain circumstances, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company’s consolidated financial statements.

On May 15, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” which was effective May 31, 2003 for all new and modified financial instruments. SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. SFAS No. 150 requires that those instruments be classified as liabilities (or assets in some circumstances). The adoption of SFAS No. 150 did not have a material impact on the Company’s consolidated financial statements.

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Any of the statements contained in this Annual Report that refer to the Company’s estimated or anticipated future results are forward-looking and reflect the Company’s current analysis of existing trends and information. Actual results may differ from current expectations based on a number of factors affecting Ameron’s businesses, including competitive conditions and changing market conditions. In addition, matters affecting the economy generally, including the state of economies worldwide, can affect the Company’s results. These forward-looking statements represent the Company’s judgment only as of the date of this Annual Report. Since actual results could differ materially, the reader is cautioned not to rely on these forward-looking statements. Moreover, the Company disclaims any intent or obligation to update these forward-looking statements.

30

CONSOLIDATED STATEMENTS OF INCOME

	Year ended November 30,
(Dollars in thousands, except per share data)	2003			2002			2001
Sales	$	600,495		$	539,473		$	551,396
Cost of sales	(434,007		)	(397,590		)	(413,312		)
Gross profit	166,488			141,883			138,084
Selling, general and administrative expenses	(127,392		)	(105,898		)	(101,828		)
Equity in earnings of joint venture	667			3,597			2,279
Other income, net	10,852			9,767			10,269
Income before interest and income taxes	50,615			49,349			48,804
Interest expense, net	(6,645		)	(6,836		)	(10,213		)
Income before income taxes	43,970			42,513			38,591
Provision for income taxes	(14,070		)	(14,454		)	(10,850		)
Net income	$	29,900		$	28,059		$	27,741
Net income per share (basic)	$	3.77		$	3.61		$	3.58
Net income per share (diluted)	$	3.67		$	3.49		$	3.45
Weighted-average shares (basic)	7,925,229			7,772,032			7,742,690
Weighted-average shares (diluted)	8,149,460			8,052,164			8,048,588

The accompanying notes are an integral part of these consolidated financial statements.

31

CONSOLIDATED BALANCE SHEETS

	As of November 30,
(Dollars in thousands, except per share data)	2003			2002
ASSETS
Current assets
Cash and cash equivalents	$	20,390		$	10,360
Receivables, less allowances of $8,168 in 2003 and $6,652 in 2002	155,629			131,283
Inventories	91,371			88,020
Deferred income taxes	19,241			16,528
Prepaid expenses and other current assets	8,882			6,671
Total current assets	295,513			252,862
Investments in joint ventures
Equity method	13,064			12,940
Cost method	5,479			5,987
Property, plant and equipment
Land	37,787			35,730
Buildings	84,426			75,147
Machinery and equipment	283,123			267,607
Construction in progress	6,169			4,400
Total property, plant and equipment at cost	411,505			382,884
Accumulated depreciation	(260,919		)	(237,642		)
Total property, plant and equipment, net	150,586			145,242
Deferred income taxes	6,744			—
Intangible assets, net of accumulated amortization of $9,738 in 2003 and $8,551 in 2002	13,526			13,013
Other assets	48,580			32,898
Total assets	$	533,492		$	462,942

The accompanying notes are an integral part of these consolidated financial statements.

32

	As of November 30,
	2003			2002
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	—		$	1,009
Current portion of long-term debt	8,333			8,333
Trade payables	47,512			46,295
Accrued liabilities	53,091			45,994
Income taxes payable	9,568			2,026
Total current liabilities	118,504			103,657
Long-term debt, less current portion	86,044			102,823
Other long-term liabilities	72,832			44,636
Total liabilities	277,380			251,116
Commitments and contingencies
Stockholders’ equity
Common stock, par value $2.50 a share, authorized 12,000,000 shares, outstanding 8,214,563 shares in 2003 and 3,945,662 shares in 2002, net of treasury shares	27,186			13,198
Additional paid-in capital	16,443			23,950
Unearned restricted stock	(1,481		)	(2,164		)
Retained earnings	294,255			270,449
Accumulated other comprehensive loss	(31,768		)	(44,948		)
Treasury stock (2,659,810 shares in 2003 and 1,333,655 in 2002)	(48,523		)	(48,659		)
Total stockholders’ equity	256,112			211,826
Total liabilities and stockholders’ equity	$	533,492		$	462,942

33

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock			Additional Paid-in Capital				Unearned Restricted Stock			Retained Earnings			AccumulatedOther Comprehensive Loss				Treasury Stock			Total
(Dollars in thousands)	Shares Outstanding	Amount
December 1, 2000 balance	3,869,357	$	13,007	$	17,857			$	—		$	224,620		$	(24,382		)	$	(48,672	)	$	182,430
Net income — 2001											27,741										27,741
Exercise of stock options	3,650	10		120																	130
Foreign currency translation adjustment														95							95
Comprehensive loss from joint venture														(2,687			)				(2,687		)
Cash dividends on common stock											(4,955		)								(4,955		)
Treasury stock adjustment																		13			13
Stock compensation expense				1,480																	1,480
November 30, 2001 balance	3,873,007	13,017		19,457				—			247,406			(26,974			)	(48,659		)	204,247
Net income — 2002											28,059										28,059
Exercise of stock options	32,655	81		1,146																	1,227
Foreign currency translation adjustment														7,182							7,182
Minimum pension liability adjustment, net of tax														(25,171			)				(25,171		)
Comprehensive income from joint venture														15							15
Cash dividends on common stock											(5,016		)								(5,016		)
Stock compensation expense				713																	713
Issuance of restricted stock	40,000	100		2,634				(2,734		)											—
Amortization of restricted stock								570													570
November 30, 2002 balance	3,945,662	13,198		23,950				(2,164		)	270,449			(44,948			)	(48,659		)	211,826
Net income — 2003											29,900										29,900
Stock dividends	3,945,662	13,224		(13,224			)														—
Exercise of stock options	323,239	764		5,722														136			6,622
Foreign currency translation adjustment														14,847							14,847
Minimum pension liability adjustment, net of tax														(2,399			)				(2,399		)
Comprehensive income from joint venture														732							732
Cash dividends on common stock											(6,094		)								(6,094		)
Stock compensation expense				(5			)														(5		)
Amortization of restricted stock								683													683
November 30, 2003 balance	8,214,563	$	27,186	$		16,443		$	(1,481	)	$	294,255		$		(31,768	)	$	(48,523	)	$	256,112

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year ended November 30,
(In thousands)	2003			2002			2001
Net income	$	29,900		$	28,059		$	27,741
Foreign currency translation adjustment	14,847			7,182			95
Minimum pension liability adjustment, net of tax	(2,399		)	(25,171		)	—
Comprehensive income (loss) from joint venture	732			15			(2,687		)
Comprehensive income	$	43,080		$	10,085		$	25,149

The accompanying notes are an integral part of these consolidated financial statements.

34

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended November 30,
(In thousands)	2003			2002			2001
OPERATING ACTIVITIES
Net income	$	29,900		$	28,059		$	27,741
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	18,093			18,032			17,820
Amortization	278			540			813
(Benefit) provision for deferred income taxes	(4,654		)	5,960			8,865
Net earnings and distributions from joint ventures	609			(132		)	306
(Gain) loss from sale of investment,  property,
plant and equipment	(2,385		)	(71		)	56
Stock compensation expense	678			1,283			1,480
Other, net	401			—			—
Changes in operating assets and liabilities:
Receivables	(16,457		)	8,194			3,905
Inventories	125			6,249			(10,312		)
Prepaid expenses and other current assets	(1,973		)	105			(352		)
Other assets	(14,113		)	(1,635		)	(8,103		)
Trade payables	(1,343		)	(2,147		)	5,573
Accrued liabilities and income taxes payable	12,963			(3,134		)	(22,029		)
Other long-term liabilities	21,104			(6,669		)	1,969
Net cash provided by operating activities	43,226			54,634			27,732
INVESTING ACTIVITIES
Proceeds from sale of investment, property, plant and equipment	3,224			504			867
Additions to property, plant and equipment	(17,107		)	(14,514		)	(19,297		)
Net cash used in investing activities	(13,883		)	(14,010		)	(18,430		)
FINANCING ACTIVITIES
Net change in short-term borrowings	(1,752		)	(3,298		)	(954		)
Issuance of debt	61,416			4,123			11,808
Repayment of debt	(78,456		)	(38,918		)	(15,492		)
Debt issuance costs	(1,581		)	—			—
Dividends on common stock	(6,094		)	(5,016		)	(4,955		)
Issuance of common stock	6,486			1,227			130
Change in treasury stock	136			—			13
Net cash used in financing activities	(19,845		)	(41,882		)	(9,450		)
Effect of exchange rate changes on cash and cash equivalents	532			303			(51		)
Net change in cash and cash equivalents	10,030			(955		)	(199		)
Cash and cash equivalents at beginning of year	10,360			11,315			11,514
Cash and cash equivalents at end of year	$	20,390		$	10,360		$	11,315

The accompanying notes are an integral part of these consolidated financial statements.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Ameron International Corporation and all wholly-owned subsidiaries (“Ameron” or the “Company”). All material intercompany accounts and transactions have been eliminated.

Reclassifications

Certain prior year balances have been reclassified to conform with the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates include revenue and costs recorded under percentage of completion accounting, assumptions related to benefit plans, goodwill, and reserves associated with management incentives, receivables, inventories, income taxes, self insurance and environmental and legal contingencies. Actual results could differ from those estimates.

Revenue Recognition

Revenue for the Performance Coatings & Finishes, Fiberglass-Composite Pipe and Infrastructure Products segments is recognized when risk of ownership and title pass, primarily at the time goods are shipped, provided that an agreement exists between the customer and the Company, the price is fixed or determinable and collection is reasonably assured. In limited circumstances within the Performance Coatings & Finishes Group, revenue recognition associated with shipment of coatings for marine dry dockings is delayed until product returns are processed. Revenue is recognized for the Water Transmission Group primarily under the percentage-of-completion method, typically based on completed units of production, since products manufactured under enforceable and binding construction contracts typically are designed for specific applications, are not interchangeable between projects, and are not manufactured for stock. In some cases, if products are manufactured for stock or are not related to specific construction contracts, revenue is recognized under the same criteria used by the other three segments.  Revenue under the percentage-of-completion method is subject to a greater level of estimation, which affects the timing of revenue recognition, costs and profits. Estimates are reviewed on a consistent basis and are adjusted periodically to reflect current expectations.

Research and Development Costs

Research and development costs, which relate primarily to the development, design and testing of products, are expensed as incurred. Such costs, which are included in selling, general and administrative expenses, were approximately $5,653,000 in 2003, $4,356,000 in 2002, and $5,550,000 in 2001.

Environmental Clean-up Costs

The Company expenses environmental clean-up costs related to existing conditions resulting from past or current operations. The Company determines its liability on a site-by-site basis and records a liability at the time when assessments and/or remediation are probable and can be reasonably estimated.

Income Taxes

Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized.

Net Income Per Share

Basic net income per share is computed on the basis of the weighted average number of common shares outstanding during the periods presented. Diluted net income per share is computed on the basis of the weighted average number of common shares outstanding plus the effect of outstanding stock options and restricted stock, using the treasury stock method.

Cash and Cash Equivalents

Cash equivalents represent liquid investments with maturities of three months or less when purchased.

Inventory Valuation

Inventories are stated at the lower of cost or market with cost determined principally on the first-in, first-out (FIFO) method. Certain steel inventories used by the Water Transmission Group are valued using the last-in, first-out (LIFO) method. Reserves are established for excess, obsolete and rework inventories based on age, estimates of salability and forecasted future demand.

Joint Ventures

Investments in unconsolidated joint ventures or affiliates (“joint ventures”) over which the Company has significant influence are accounted for under the equity method of accounting, whereby the investment is carried at the cost of acquisition, plus the Company’s equity in undistributed earnings or losses since acquisition. Investments in joint ventures over which the Company does not have the ability to exert significant influence over the investee’s operating and financing activities are accounted for under the cost method of accounting. The Company’s investment in TAMCO is accounted for under the equity method. Investments in Ameron Saudi Arabia, Ltd., Bondstrand, Ltd. and Oasis-Ameron, Ltd. are accounted for under the cost method due to management’s current assessment of the Company’s influence over these joint ventures.

Property, Plant and Equipment

Items capitalized as property, plant and equipment, including improvements to existing facilities, are recorded at cost. Construction in progress represents capital expenditures incurred for assets not yet placed in service. Capitalized interest was not material for the periods presented.

Depreciation is computed principally using the straight-line method based on estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the life of the improvement or the term of the lease. Useful lives are as follows:

	Useful Lives in Years
Buildings	10-40
Machinery and equipment
Autos, trucks and trailers	2-15
Cranes and tractors	7-10
Manufacturing equipment	3-15
Other	2-20

36

Goodwill and Intangible Assets

Intangible assets are amortized on a straight-line basis over periods ranging from three to 15 years.

The cost of an acquired business is allocated to the net assets acquired based on the estimated fair values at the date of acquisition. The excess of the cost of an acquired business over the aggregate fair value is recorded as goodwill. Goodwill is not amortized, but instead tested for impairment at least annually. Such tests require managment to make estimates about future cash flows and other factors to determine the fair value of the respective assets. Prior to 2003, goodwill was amortized using the straight-line method over periods ranging up to 40 years.

The Company reviews the recoverability of intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If the estimated future, undiscounted cash flows from the use of an asset are less than its carrying value, a write-down is recorded to reduce the related asset to estimated fair value.

Self Insurance

The Company typically utilizes third party insurance subject to varying retention levels or self insurance. The Company is self insured for a portion of the losses and liabilities primarily associated with workers’ compensation claims and general, product and vehicle liability. Losses are accrued based upon the Company’s estimates of the aggregate liability for claims incurred using historical experience and certain actuarial assumptions followed in the insurance industry. The estimate of self insurance liability includes an estimate of incurred but not reported claims, based on data compiled from historical experience.

Foreign Currency Translation

The functional currencies for the Company’s foreign operations are the applicable local currencies. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate during the period. The resulting translation adjustments are recorded in accumulated other comprehensive loss. The Company advances funds to certain foreign subsidiaries that are not expected to be repaid in the foreseeable future. Translation adjustments arising from these advances are also included in accumulated other comprehensive loss. Gains or losses resulting from foreign currency transactions are included in other income.

Derivative Financial Instruments and Risk Management

The Company operates internationally, giving rise to exposure to market risks from changes in foreign exchange rates. Derivative financial instruments, primarily foreign exchange contracts, are used by the Company to reduce those risks. The Company does not hold or issue financial or derivative financial instruments for trading or speculative purposes. As of November 30, 2003 and 2002 the Company had foreign currency forward contracts with an aggregate face value of approximately $9,367,000 and $6,623,000, respectively.

Fair Value of Financial Instruments

The fair value of financial instruments, other than long-term debt, approximates the carrying value because of the short-term nature of such instruments.

Concentration of Credit Risk

Financial instruments that subject the Company to credit risk consist primarily of cash equivalents, trade accounts receivable, and forward foreign exchange contracts. Credit risk with respect to trade accounts receivable is generally distributed over a large number of entities comprising the Company’s customer base and is geographically dispersed. The Company performs ongoing credit evaluations of its customers, maintains an allowance for potential credit losses and, in certain instances, maintains credit insurance. The Company actively evaluates the creditworthiness of the financial institutions with which it conducts business.

Stock-Based Compensation

The Company recognizes compensation expense associated with stock-based awards under the recognition and measurement principles of Accounting Principles Board (“APB”) No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. Accordingly, compensation cost is measured by the excess of the quoted market price of the stock over the option price on the grant date. No compensation expense associated with a stock-based award is recorded if the stock option exercise price equals the market price of the Company’s stock on the date of the grant.

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosures.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” and provides alternative methods of transition for a voluntary change to the fair-value-based method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure requirements of SFAS No. 123 to include pro forma presentation of net income and earnings per share as if the Company recorded compensation expense based on the fair value of stock-based awards. The Company has adopted the disclosure-only provisions of SFAS No. 123. (See Note 12.)

Accounting Changes

Effective December 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” In accordance with SFAS No. 142, goodwill is no longer amortized, but instead tested for impairment at least annually. Prior to 2003, goodwill was amortized using the straight-line method over its estimated period of benefit.

Effective December 1, 2002, the Company adopted SFAS No. 143, “Accounting for Asset Retirement Obligations.” The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The statement requires that the fair value of the liability for an asset retirement obligation be recorded when incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. If the liability is settled for an amount other than the recorded balance, either a gain or loss will be recognized at settlement. The adoption of SFAS No. 143 did not have a material impact on the Company’s consolidated financial statements.

37

Effective December 1, 2002, the Company adopted SFAS No. 144, “Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets, provides guidance on implementation issues related to SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and addresses the accounting for a segment of a business accounted for as a discontinued operation. The adoption of SFAS No. 144 did not have a material impact on the Company’s consolidated financial statements.

Effective December 1, 2002, the Company adopted SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds both SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” and SFAS No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.” In so doing, SFAS No. 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated, and, if material, classified as an extraordinary item, net of the related income tax effect, unless the criteria in APB Opinion No. 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” are met. SFAS No. 145 amends SFAS No. 13, “Accounting for Leases,” to require that certain lease modifications that have economic effects similar to sale-leaseback transactions are accounted for in the same manner as sale-leaseback transactions. The adoption of SFAS No. 145 did not have a material impact on the Company’s consolidated financial statements.

The Company adopted SFAS No. 146, “Accounting for Exit or Disposal Activities,” during the quarter ended February 28, 2003.  SFAS No. 146 addresses issues regarding the recognition, measurement and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force has set forth in Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material impact on the Company’s consolidated financial statements.

In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees. FIN No. 45 also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. FIN No. 45 specifically identifies certain obligations that are excluded from the provisions related to recognizing a liability at inception; however, these guarantees are subject to the disclosure requirements of FIN No. 45. The initial recognition and measurement provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company’s disclosure of guarantees is included in Note 7, herein. The adoption of the recognition and measurement provisions of FIN No. 45 did not have a material impact on the Company’s consolidated financial statements.

New Accounting Pronouncements

FIN No. 46, “Consolidation of Variable Interest Entities” was issued in January 2003 and revised in December 2003. FIN clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” and addresses consolidation by business enterprises of variable interest entities. FIN No. 46 requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risk among the parties involved. FIN No. 46 also enhances the disclosure requirements related to variable interest entities. This statement is effective for the Company for variable interest entities in the quarter ending May 31, 2004. The adoption of FIN No. 46 is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 requires that contracts with comparable characteristics be accounted for similarly. In particular, SFAS No. 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative discussed in paragraph 6(b) of Statement No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FIN No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” and (4) amends certain other existing pronouncements. SFAS No. 149 will result in more consistent reporting of contracts as either derivatives or hybrid instruments. SFAS No. 149 is effective prospectively for contracts entered into or modified after June 30, 2003, except in certain circumstances, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company’s consolidated financial statements.

On May 15, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” which was effective May 31, 2003 for all new and modified financial instruments. SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. SFAS No. 150 requires that those instruments be classified as liabilities (or assets in some circumstances). The adoption of SFAS No. 150 did not have a material impact on the Company’s consolidated financial statements.

Supplemental Cash Flow Information

(In thousands)	2003		2002		2001
Interest paid	$	4,997	$	6,996	$	10,810
Income taxes paid	10,268		8,457		15,939

38

NOTE 2  Other Income

Other income was as follows for the years ended November 30:

(In thousands)	2003			2002			2001
Income from joint ventures- cost method	$	6,311		$	5,900		$	6,250
Royalties, fees and other income	2,866			2,962			4,437
Gain on sale of investment	2,477			—			—
Foreign currency loss	(269		)	(539		)	(927		)
Gain (loss) on sale of property, plant and equipment	(92		)	71			(56		)
Miscellaneous	(441		)	1,373			565
	$	10,852		$	9,767		$	10,269

NOTE 3  Receivables

Receivables were as follows at November 30:

(In thousands)	2003			2002
Trade	$	153,041		$	127,874
Joint ventures	2,461			2,653
Other	8,295			7,408
Allowances	(8,168		)	(6,652		)
	$	155,629		$	131,283

The Company’s provision for bad debts was $3,071,000 in 2003, $1,300,000 in 2002, and $1,738,000 in 2001. Trade receivables included unbilled receivables related to the percentage-of-completion method of revenue recognition of $25,371,000 and $11,928,000 at November 30, 2003 and 2002, respectively.

NOTE 4  Inventories

Inventories were as follows at November 30:

(In thousands)	2003		2002
Finished products	$	52,821	$	52,359
Materials and supplies	22,037		20,373
Products in process	16,513		15,288
	$	91,371	$	88,020

Certain steel inventories are valued using the last-in, first-out  method. These items comprised 13.3% and 2.7% of consolidated inventories at November 30, 2003 and 2002, respectively. If such inventories had been valued using the first-in, first-out method, total inventories would have increased by $630,000 and $1,164,000 at November 30, 2003 and 2002, respectively.

NOTE 5  Joint Ventures

Investments, advances and equity in undistributed earnings of joint ventures were as follows at November 30:

(In thousands)	2003		2002
Investment—equity method	$	13,064	$	12,940
Investments—cost method	5,479		5,987
	$	18,543	$	18,927

The Company’s ownership of joint ventures is summarized below:

Products	Joint Ventures	Ownership Interest
Coatings	Oasis-Ameron, Ltd.	40	%
Fiberglass pipe	Bondstrand, Ltd.	40	%
Concrete pipe	Ameron Saudi Arabia, Ltd.	30	%
Steel products	TAMCO	50	%

Investments in joint ventures and the amount of undistributed earnings were as follows:

(In thousands)	Coatings		Fiberglass Pipe		Concrete Pipe		Steel Products			Total
Cost	$	1,695	$	3,784	$	—	$	8,482		$	13,961
Comprehensive loss from joint venture	—		—		—		(1,941		)	(1,941		)
Accumulated equity in undistributed earnings, net of reserves	—		—		—		6,523			6,523
Investment, November 30, 2003	$	1,695	$	3,784	$	—	$	13,064		$	18,543
Dividends received in 2003	$	636	$	3,042	$	2,633	$	1,276		$	7,587
Cost	$	2,203	$	3,784	$	—	$	8,482		$	14,469
Comprehensive loss from joint venture	—		—		—		(2,672		)	(2,672		)
Accumulated equity in undistributed earnings, net of reserves	—		—		—		7,130			7,130
Investment, November 30, 2002	$	2,203	$	3,784	$	—	$	12,940		$	18,927
Dividends received in 2002	$	327	$	2,263	$	3,310	$	3,465		$	9,365

In 2003, the Company sold its 25% ownership of Amercoat Mexicana for a pretax gain of $2,477,000. Income from Amercoat Mexicana totaled $312,000, $327,000 and $535,000 in the years ended November 30, 2003, 2002 and 2001, respectively.

The Company provides for income taxes on the undistributed earnings of its joint ventures to the extent such earnings are included in the consolidated statements of income.

The investment in TAMCO was recorded based on audited financial statements as of November 30, 2003. Condensed financial data of TAMCO, an investment which is accounted for under the equity method, were as follows:

Financial Condition

(In thousands)	2003		2002
Current assets	$	39,412	$	39,344
Noncurrent assets	30,862		36,943
	$	70,274	$	76,287
Current liabilities	$	17,598	$	20,351
Noncurrent liabilities	10,808		14,312
Stockholders’ equity	41,868		41,624
	$	70,274	$	76,287

Results of Operations

(In thousands)	2003		2002		2001
Net sales	$	163,277	$	130,893	$	120,822
Gross profit	8,658		21,924		20,142
Net income	1,333		6,745		4,907

In 2001, TAMCO entered into a swap agreement intended to hedge expected cash flows related to the purchase of natural gas used in its manufacturing process. The Company recognized $1,941,000 and $2,672,000 in accumulated other comprehensive loss at November 30, 2003 and 2002, respectively, which represents its proportionate share of amounts recognized by TAMCO to record the fair value of the swap agreement.

Sales to joint ventures totaled $4,004,000 in 2003, $4,848,000 in 2002, and $7,747,000 in 2001.

39

NOTE 6  Other Assets

Other assets were as follows at November 30:

(In thousands)	2003		2002
Cash surrender value of insurance policies	$	29,312	$	26,415
Pension related assets	15,134		5,515
Other	4,134		968
	$	48,580	$	32,898

NOTE 7  Accrued Liabilities

Accrued liabilities were as follows at November 30:

(In thousands)	2003		2002
Compensation and benefits	$	19,909	$	18,907
Self insurance reserves	14,988		14,222
Reserves for pending claims and litigation	4,547		1,051
Product warranties and guarantees	3,770		4,257
Taxes (other than income taxes)	3,196		2,450
Interest	1,937		826
Commissions and royalties	1,490		1,250
Advances from customers	1,254		464
Other	2,000		2,567
	$	53,091	$	45,994

The Company’s product warranty accrual reflects management’s estimate of probable liability associated with product warranties.  Management establishes product warranty accruals based on historical experience and other currently available information. Changes in the product warranty accrual for the year ended November 30, 2003 were as follows (in thousands):

Balance, beginning of period	$	4,257
Payments made	(3,158		)
Change in liability for warranties issued during the period	2,671
Balance, end of period	$	3,770

NOTE 8  Other Long-Term Liabilities

Other long-term liabilities were as follows at November 30:

(In thousands)	2003		2002
Accrued pension cost	$	63,320	$	39,128
Compensation and benefits	5,289		4,422
Deferred income tax liabilities	3,931		662
Other	292		424
	$	72,832	$	44,636

NOTE 9  Income Taxes

The provision for income taxes included the following for the years ended November 30:

(In thousands)	2003			2002			2001
Current
Federal	$	11,139		$	4,587		$	67
Foreign	5,445			3,508			2,402
State	2,140			399			(484		)
	18,724			8,494			1,985
Deferred
Federal	(4,015		)	5,104			7,436
Foreign	20			(99		)	36
State	(659		)	955			1,393
	(4,654		)	5,960			8,865
	$	14,070		$	14,454		$	10,850

Deferred income tax assets and (liabilities) consisted of the following as of November 30:

(In thousands)	2003			2002
Noncurrent deferred income taxes
Net operating loss carry-overs	$	13,035		$	11,293
Prepaid pension benefit costs	13,251			10,415
Employee benefits	5,834			4,382
Investments	3,280			3,220
Valuation allowances	(14,035		)	(12,101		)
Property, plant and equipment	(17,412		)	(17,572		)
Other	(1,140		)	(299		)
Net noncurrent deferred income tax assets (liabilities)	2,813			(662		)
Current deferred income taxes
Self-insurance/claims reserves	11,558			10,377
Inventories	4,667			4,784
Employee benefits	3,037			2,554
Accounts receivable	1,921			1,722
Valuation allowances	(1,713		)	(1,359		)
Other	(229		)	(1,550		)
Net current deferred income tax assets	19,241			16,528
Net deferred income tax assets	$	22,054		$	15,866

As of November 30, 2003, the Company had foreign net operating loss carry-overs of approximately $38,600,000. The valuation allowance for deferred income tax assets, which relates primarily to foreign net operating loss carry-overs and net deductible temporary differences, increased by $2,288,000 in 2003 and by $4,092,000 in 2002.

40

The tax provision represents effective tax rates of 32%, 34% and 28% of income before income taxes for the years ended November 30, 2003, 2002 and 2001, respectively.  A reconciliation of income taxes provided at the effective income tax rate and the amount  computed at the federal statutory income tax rate of  35% is as follows for the years ended November 30:

(In thousands)	2003			2002			2001
Domestic pretax income	$	25,799		$	37,708		$	39,146
Foreign pretax income	18,171			4,805			(555		)
	$	43,970		$	42,513		$	38,591
Taxes at federal statutory rate	$	15,390		$	14,880		$	13,507
State taxes (net of federal tax benefit)	980			1,335			1,701
Foreign losses with no federal benefit	317			3,306			3,669
Foreign income taxed at lower rates	(2,089		)	(2,414		)	(1,575		)
Foreign tax credit	(1,485		)	(1,432		)	(2,004		)
Foreign branch and withholding taxes	1,114			833			999
Equity in earnings of joint venture	(187		)	(996		)	(638		)
Percentage depletion	(375		)	(364		)	(382		)
Research and development credits	(584		)	(598		)	(4,008		)
Other, net	989			(96		)	(419		)
	$	14,070		$	14,454		$	10,850

In 2001, the U.S. Internal Revenue Service (“IRS”) completed the examination of the Company’s 1993  through 1995 federal income tax returns and issued an assessment.  The Company agreed with the IRS regarding the assessment. The assessment was not material to the Company’s financial statements and was paid in 2002.

The 1996 through 1998 federal income tax returns are currently under examination by the IRS. No assessments have been issued to date. Although it cannot predict with certainty the ultimate outcome of this examination, the Company believes it has adequately provided for any potential liabilities that may result.

In 2001, the Company filed federal and state income tax claims for research and development credits for tax years 1990 through 2000.  The claims are currently under IRS examination.

Appropriate U.S. and foreign income taxes have been provided for earnings of foreign subsidiary companies that are expected to be remitted in the near future. The cumulative amount of undistributed earnings of foreign subsidiaries that Ameron intends to permanently invest and upon which no deferred U.S. income taxes have been provided is $ 65,756,000 at November 30, 2003. The additional U.S. income tax on the unremitted foreign earnings, if repatriated, would be offset in whole or in part by foreign tax credits.

NOTE 10  DEBT

Short-term borrowings consisted of loans payable under bank credit lines.  There were no short-term borrowings outstanding at November 30, 2003 and $1,009,000 as of November 30, 2002.  At November 30, 2003, the equivalent of $11,775,000 was available under these short-term credit lines. The effective interest rate on the outstanding loans at November 30, 2002 was 5.90%.

Domestically, as of November 30, 2003, the Company maintained a $100,000,000 revolving credit facility with six banks (the “Revolver”).  At November 30, 2003, $18,215,000 was utilized for standby letters of credit under the Revolver; therefore, $81,785,000 was available.  Under the Revolver, the Company may, at its option, borrow at floating interest rates based on specified margins over money market rates, at anytime until January 2006, when all borrowings under the Revolver must be repaid.

Foreign subsidiaries also maintain unsecured revolving credit facilities and short-term facilities with banks. Foreign subsidiaries may borrow in various currencies, at interest rates based upon specified margins over money market rates. The equivalent of $5,000,000 may be borrowed at any time through March 2005 under one facility. Other short-term lines permit borrowings up to $9,300,000. At November 30, 2003, $3,677,000 was borrowed under these facilities.

Borrowings under certain bank facilities by the Company and its foreign subsidiaries are supported by the Revolver and, accordingly, have been classified as long-term debt and are considered payable when the Revolver is due.

Long-term debt consisted of the following as of November 30:

(In thousands)	2003			2002
Fixed-rate notes:
7.92%, payable in annual principal installments of $8,333	$	25,000		$	33,333
5.36%, payable in annual principal installments of $10,000	50,000			—
Variable-rate industrial development bonds,
payable in 2016 (1.20% at November 30, 2003)	7,200			7,200
payable in 2021 (1.35% at November 30, 2003)	8,500			8,500
Variable-rate bank
revolving credit facilities - domestic	—			58,000
Variable-rate bank
revolving credit facilities - foreign (4.75% at November 30, 2003)	3,677			4,123
	94,377			111,156
Less current portion	(8,333		)	(8,333		)
	$	86,044		$	102,823

Future maturities of long-term debt were as follows as of November 30, 2003:

(In thousands)	Years ending November 30,	Amount
	2004	$	8,333
	2005	18,333
	2006	22,011
	2007	10,000
	2008	10,000
	Thereafter	25,700
		$	94,377

The lending agreements contain various restrictive covenants, including the requirement to maintain specified amounts of net worth and restrictions on cash dividends, borrowings, liens, investments and guarantees, and meet certain financial ratios. Under the most restrictive provisions of the Company’s lending agreements, approximately $20,091,000 of retained earnings were not restricted as of November 30, 2003, as to the declaration of cash dividends or the repurchase of Company stock. At November 30, 2003, the Company was in compliance with all covenants.

41

The Revolver, the 5.36% term notes and the 7.92% term notes are collateralized by substantially all of the Company’s assets. The industrial revenue bonds are supported by standby letters of credit that are issued under the Revolver.  Certain note agreements contain provisions regarding the Company’s ability to grant security interests or liens in association with other debt instruments. If the Company grants such a security interest or lien, then such notes will be collateralized equally and ratably as long as such other debt shall be collateralized.

Interest income and expense were as follows for the years ended November 30:

(In thousands)	2003			2002			2001
Interest expense	$	6,793		$	7,024		$	10,471
Interest income	(148		)	(188		)	(258		)
Interest expense, net	$	6,645		$	6,836		$	10,213

The following disclosure of the estimated fair value of the Company’s debt is made in accordance with the requirements of SFAS 107, “Disclosures about Fair Value of Financial Instruments.” The estimated fair-value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required to develop the estimated fair value, thus the estimates provided herein are not necessarily indicative of the amounts that could be realized in a current market exchange.

(In thousands)	Carrying Amount		Fair Value
November 30, 2003
Fixed-rate, long-term debt	$	75,000	$	77,453
Variable-rate, long-term debt	19,377		19,377
November 30, 2002
Short-term borrowings	1,009		1,009
Fixed-rate, long-term debt	33,333		35,577
Variable-rate, long-term debt	77,823		77,823

The estimated fair value of the Company’s variable-rate debt approximates the carrying value of the debt since the variable interest rates are market-based, and the Company believes such debt could be refinanced on materially similar terms. The estimated fair value of the Company’s fixed-rate, long-term debt is based on U.S. government notes at November 30, 2003 plus an estimated spread for similar securities with similar remaining maturities.

NOTE 11  LEASE COMMITMENTS

The Company leases facilities and equipment under non-cancelable operating leases. Rental expense under long-term operating leases of real property, vehicles and other equipment was $4,773,000 in 2003, $5,071,000 in 2002 and $5,687,000 in 2001. Future rental commitments were as follows as of November 30, 2003:

(In thousands)	Years ending November 30,	Amount
	2004	$	4,694
	2005	3,901
	2006	2,484
	2007	2,088
	2008	2,059
	Thereafter	21,737
		$	36,963

Future rental commitments for leases are not reduced by minimum non-cancelable sublease rentals aggregating $2,741,000 at November 30, 2003.

NOTE 12  INCENTIVE STOCK COMPENSATION PLANS

The Company has adopted the disclosure only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.”

In 2001, the 2001 Stock Incentive Plan (“2001 Plan”) was approved by the stockholders of the Company. The 2001 Plan serves as the successor to both the 1992 Incentive Stock Compensation Plan and the 1994 Non-Employee Director Stock Option Plan and supercedes those plans.Under the terms of the 2001 Plan, 380,000 new shares of common stock were made available for awards both to non-employee directors and to key employees of the Company.  Awards to key employees may include, but are not limited to, stock options, restricted stock, performance shares and performance unit awards; however, no more than 80,000 of such shares were made available for issuance as either restricted stock, performance stock, performance shares or performance units.  Restrictions may limit the sale, transfer, voting rights and dividends on these shares. At November 30, 2003, 60,000 restricted shares were outstanding. With respect to non-employee directors, on the first business day following the date of the annual meeting of stockholders of the Company, each non-employee director receives an option to purchase 3,000 shares of common stock.

At November 30, 2003, the Company had 838,119 non-qualified stock options outstanding with terms of from 10 to 15 years from the date of grant, and 234,000 shares available for future grants under the 2001 plan. The exercise price for such outstanding stock options is generally the fair market value of the Company’s stock on the date of the original grant. Such options vest in equal annual installments over four years. Certain options have a cashless exercise feature

SFAS No. 123 requires pro forma information regarding net income and earnings per share as if compensation cost for stock options had been determined based on the fair value of the options on the grant date. The Company estimates the fair value of stock options at the grant date by using the Black Scholes option pricing model with the following weighted-average assumptions used for grants in 2001, 2002 and 2003, respectively: dividend yields of 3.47%, 2.01% and 2.21%; an expected volatility of 25.5%, 35.08% and 36.92%; risk-free rates of 4.90%, 4.84% and 2.93%; and an expected life of five years for all years.

Under the accounting provisions of SFAS No. 123, the Company’s net income and earnings per share would have been as indicated below for the years ended November 30:

(In thousands, except per share data)	2003			2002			2001
Reported net income	$	29,900		$	28,059		$	27,741
Add: Stock-based employee compensation expense included in reported net income, net of tax	461			847			1,066
Deduct: Stock-based employee compensation expense determined under SFAS No.123, net of tax	(832		)	(925		)	(1,287		)
Pro forma net income	$	29,529		$	27,981		$	27,520
Earning per share (basic)
As reported	$	3.77		$	3.61		$	3.58
Pro forma	3.73			3.60			3.55
Earning per share (diluted)
As reported	3.67			3.49			3.45
Pro forma	3.62			3.47			3.42

42

A summary of the Company’s stock options as of November 30, 2001, 2002 and 2003, and changes during the years then ended, follows:

	Number of Options		Weighted-Average Exercise Price
Outstanding at November 30, 2000	1,007,818		$	20.95
Granted	205,000		20.55
Exercised	(7,300	)	17.75
Forfeited	(11,000	)	25.14
Outstanding at November 30, 2001	1,194,518		20.86
Options exercisable at November 30, 2001	770,018		20.98
Weighted-average fair value of options granted during 2001			4.35
Outstanding at November 30, 2001	1,194,518		20.86
Granted	21,000		35.28
Exercised	(65,310	)	18.80
Outstanding at November 30, 2002	1,150,208		21.24
Options exercisable at November 30, 2002	863,708		21.29
Weighted-average fair value of options granted during 2002			11.31
Outstanding at November 30, 2002	1,150,208		21.24
Granted	24,000		27.95
Exercised	(323,239	)	19.41
Forfeited	(12,850	)	20.54
Outstanding at November 30, 2003	838,119		22.15
Options exercisable at November 30, 2003	665,119		22.02
Weighted-average fair value of options granted during 2003			8.31

The following summarizes information about stock options outstanding as of November 30, 2003:

Range of Exercise Prices	Options Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$15.00 to $25.00
25.00 to   35.00	652,119	8.14	$	20.13
35.00 to   45.00	165,000	9.24	28.43
15.00 to   45.00	21,000	8.30	35.28
	838,119	8.37	22.15

Range of Exercise Prices	Options Exercisable	Weighted Average Exercise Price
$15.00 to $25.00	518,869	$	20.12
25.00 to   35.00	141,000	28.51
35.00 to   45.00	5,250	35.28
15.00 to   45.00	665,119	22.02

NOTE 13  Goodwill and Other Intangible Assets

In July 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values. The Company adopted SFAS No. 142 effective December 1, 2002.

During 2003, the Company completed the required transitional goodwill and intangible asset impairment tests. No impairment losses were identified as a result of these tests. The changes in the carrying amount of goodwill by business segment were as follows:

(In thousands)	November 30, 2002		Foreign Currency Translation Adjustments		November 30, 2003
Business Segment:
Performance Coatings & Finishes	$	10,701	$	772	$	11,473
Fiberglass-Composite Pipe	1,440		—		1,440
Water Transmission	—		—		—
Infrastructure Products	201		—		201
Total	$	12,342	$	772	$	13,114

The Company’s intangible assets and related accumulated amortization consisted of the following at November 30:

	2003					2002
(In thousands)	Gross Intangible Assets		Accumulated Amortization			Gross Intangible Assets		Accumulated Amortization
Trademarks	$	2,076	$	(1,975	)	$	1,961	$	(1,804	)
Non-Compete Agreements	2,105		(1,794		)	2,105		(1,591		)
Patents	212		(212		)	212		(212		)
Leasehold Interests	1,930		(1,930		)	1,930		(1,930		)
Total	$	6,323	$	(5,911	)	$	6,208	$	(5,537	)

Amortization expense related to intangible assets for the fiscal years ended November 30, 2003, 2002, and 2001 were $278,000, $540,000, and $813,000, respectively. At November 30, 2003, estimated future amortization expense for each of the years in the four-year period ending November 30, 2007 was as follows: $209,000 for 2004, $169,000 for 2005, $29,000 for 2006, and $5,000
for 2007.

43

The following is a summary of net income and earnings per share for the years ended November 30, 2003, 2002 and 2001, as adjusted to remove the amortization of goodwill.

(In thousands, except per share data)	2003		2002		2001
Reported net income	$	29,900	$	28,059	$	27,741
Add: Goodwill amortization, net of tax	—		168		242
Pro forma net income	$	29,900	$	28,227	$	27,983
Basic net income per share
As reported	$	3.77	$	3.61	$	3.58
Pro forma	3.77		3.63		3.61
Diluted net income per share
As reported	3.67		3.49		3.45
Pro forma	3.67		3.51		3.48

NOTE 14  COMMITMENTS AND CONTINGENCIES

The Company is one of numerous defendants in various asbestos-related personal injury lawsuits. These cases generally seek unspecified damages for asbestos-related diseases based on alleged exposure to products previously manufactured by the Company and others, and at this time the Company is generally not aware of the extent of injuries allegedly suffered by the individuals or the facts supporting the claim that injuries were caused by the Company’s products. Based upon the information available to it at this time, the Company is not in a position to evaluate its potential exposure, if any, as a result of such claims. Hence, no amounts have been accrued for loss contingencies related to these lawsuits in accordance with SFAS No. 5, “Accounting for Contingencies.” The Company continues to vigorously defend all such lawsuits. As of November 30, 2003, the Company was a defendant in asbestos-related cases involving 17,447 claimants, compared to 8,382 claimants as of November 30, 2002. The Company is not in a position to estimate the number of additional claims that may be filed against it in the future. For the fiscal year ended November 30, 2003, there were new claims involving 9,279 claimants, dismissals and/or settlements involving 211 claimants and judgments involving 3 claimants. Net costs and expenses incurred by the Company for the fiscal year ended November 30, 2003 in connection with asbestos-related claims were less than $600,000.

The Company is one of numerous defendants in various silica-related personal injury lawsuits. These cases generally seek unspecified damages for silica-related diseases based on alleged exposure to products previously manufactured by the Company and others, and at this time the Company is not aware of the extent of injuries allegedly suffered by the individuals or the facts supporting the claim that injuries were caused by the Company’s products. Based upon the information available to it at this time, the Company is not in a position to evaluate its potential exposure, if any, as a result of such claims. Hence, no amounts have been accrued for loss contingencies related to these lawsuits in accordance with SFAS No. 5. The Company continues to vigorously defend all such lawsuits. As of November 30, 2003, the Company was a defendant in silica-related cases involving 6,847 claimants, compared to 48 claimants as of November 30, 2002. The Company is not in a position to estimate the number of additional claims that may be filed against it in the future. For the fiscal year ended November 30, 2003, there were new claims involving 6,880 claimants, dismissals and/or settlements involving 81 claimants and no judgments. Net costs and expenses incurred by the Company for the fiscal year ended November 30, 2003 in connection with silica-related claims were about $300,000.

In addition, certain other claims, suits and complaints that arise in the ordinary course of business, have been filed or are pending against the Company. Management believes that these matters are either adequately reserved, covered by insurance, or would not have a material effect on the Company’s financial position or its results of operations if disposed of unfavorably.

The Company is subject to federal, state and local laws and regulations concerning the environment and is currently participating in administrative proceedings at several sites under these laws. While the Company finds it difficult to estimate with any certainty the total cost of remediation at the several sites, on the basis of currently available information and reserves provided, the Company believes that the outcome of such environmental regulatory proceedings will not have a material effect on the Company’s financial position or its results of operations.

NOTE 15  Employee Benefit Plans

The Company has a qualified, defined benefit, noncontributory pension plan for certain U.S. employees not covered by union pension plans. The Company’s subsidiary in the Netherlands provides defined retirement benefits to its employees. The Company has a supplemental non-qualified, non-funded retirement plan (“SERP”) for certain U.S. executives. The Company also provides health and life insurance to a limited number of eligible retirees and eligible survivors of retirees.

Benefits paid to participants are based upon age, years of credited service and average compensation or negotiated benefit rates. For purposes of the qualified pension plan, compensation is base  monthly salary, exclusive of overtime, severance, bonuses, commissions or deferral amounts. The U.S. Internal Revenue Code limits the amount per year on which benefits are based and the aggregate amount of the annual pension which may be paid by an employer from a plan which is qualified under the Internal Revenue Code for U.S. federal income tax  purposes. The SERP provides for supplemental payments to be made to certain eligible executives in amounts sufficient to maintain total benefits upon retirement had there been no such Internal Revenue Code limitations, and, among other features, expands annual compensation to include bonuses and deferred compensation, calculated based upon the highest five of the last ten years of earnings prior to retirement. Such supplemental payments are typically made in the form of straight-life annuities paid over the life of retired executives, however, future payments can be accelerated at any time, including in-service lump-sum payments, subject to certain reductions.

Assets of the Company’s U.S. defined benefit plan are invested in a directed trust. Assets in the trust are invested in domestic and foreign equity securities of corporations (including $3,686,000 of the Company’s common stock at November 30, 2003), U.S. government obligations, derivative securities, corporate bonds and money market funds. The Dutch subsidiary contracts with a third-party insurance company to pay benefits to retirees.

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The following sets forth the change in benefit obligations, change in plan assets, funded status and amounts recognized in the balance sheet as of November 30, 2003 and 2002 for the Company’s U.S. defined benefit retirement plans and postretirement health care and life insurance benefits:

(In thousands)	U.S. Pension Benefits						U.S. Postretirement Health Care
	2003			2002			2003			2002
Change in Benefit Obligation
Projected benefit obligation-beginning of year	$	158,708		$	146,174		$	2,903		$	2,765
Service cost	2,851			2,506			105			98
Interest cost	10,648			10,353			191			192
Benefit adjustments	2,191			393			—			—
Foreign currency translation adjustment	—			—			—			—
Actuarial loss (gain)	16,988			9,127			501			(5		)
Participant contributions	—			—			—			—
Benefit payments	(10,106		)	(9,845		)	(220		)	(147		)
Projected benefit obligation-end of year	$	181,280		$	158,708		$	3,480		$	2,903
Change in Plan Assets
Plan assets at fair value-beginning of year	$	113,738		$	135,171		$	354		$	338
Actual return on plan assets	19,287			(11,834		)	13			19
Employer contributions	248			246			201			144
Participant contributions	—			—			—			—
Foreign currency translation adjustment	—			—			—			—
Benefit payments	(10,106		)	(9,845		)	(220		)	(147		)
Plan assets at fair value-end of year	$	123,167		$	113,738		$	348		$	354
Funded Status
Funded Status	$	(58,113	)	$	(44,970	)	$	(3,132	)	$	(2,549	)
Unrecognized actuarial loss	52,923			51,081			868			374
Unrecognized transition obligation	—			—			700			785
Unrecognized prior service cost	2,805			1,540			(120		)	(134		)
Net amount recognized	$	(2,385	)	$	7,651		$	(1,684	)	$	(1,524	)
Balance Sheet Amounts
Prepaid cost	$	—		$	—		$	49		$	35
Accrued cost	(50,387		)	(34,855		)	(1,733		)	(1,559		)
Intangible asset	2,805			1,242			—			—
Accumulated other comprehensive loss, pretax	45,197			41,264			—			—
Net amount recognized	$	(2,385	)	$	7,651		$	(1,684	)	$	(1,524	)

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $181,280,000, $173,554,000, and $123,167,000, respectively, as of November 30, 2003, and $158,708,000, $148,593,000, and $113,738,000, respectively, as of November 30, 2002.

The Company’s policy is to make pension plan contributions to the extent such contributions are mandatory, actuarially determined and tax deductible. The Company expects to contribute $3,547,000 to the U.S. pension plans in 2004.

45

Net periodic benefit costs for the Company’s defined benefit retirement plans and postretirement health care and life insurance benefits for 2003, 2002 and 2001 included the following components:

(In thousands)	U.S. Pension Benefits									U.S. Postretirement Health Care
	2003			2002			2001			2003			2002			2001
Service cost	$	2,851		$	2,506		$	2,289		$	105		$	98		$	93
Interest cost	10,648			10,353			10,168			191			192			184
Expected return on plan assets	(9,521		)	(12,711		)	(15,343		)	(33		)	(33		)	—
Amortization of unrecognized prior service cost	925			520			382			(14		)	(14		)	—
Amortization of unrecognized net transition (asset) obligation	—			(35		)	(115		)	71			71			71
Amortization of accumulated loss (gain)	5,379			671			(971		)	21			25			15
Net periodic cost (benefit)	$	10,282		$	1,304		$	(3,590	)	$	341		$	339		$	363

The following table provides the weighted-average assumptions used to compute the actuarial present value of projected benefit obligations:

	U.S. Pension Benefits						U.S. Postretirement Health Care
	2003		2002		2001		2003		2002		2001
Weighted-average discount rate	6.00	%	6.75	%	7.25	%	6.00	%	6.75	%	7.25	%
Expected long-term rate of return on plan assets	8.75	%	9.75	%	9.75	%	N/A		N/A		N/A
Rate of increase in compensation levels	3.50	%	4.25	%	4.75	%	3.50	%	4.25	%	4.75	%

The assumed health care cost trend was increased from 9% to 10% in 2003; it is assumed that the rate will decline gradually to 5% by 2008 and beyond. The effect of a one-percentage-point change in the assumed health care cost trend would have altered the amounts of the benefit obligation and the sum of the service cost and interest cost components of postretirement benefit expense for 2003, as follows:

(In thousands)	Increase		Decrease
Effect on total of service and interest cost components of net periodic expense	$	16	$	(18	)
Effect on postretirement benefit obligation	111		(96		)

For the Dutch pension plan, the projected benefit obligation and plan assets at November 30, 2003 were $32,239,000 and $23,433,000, respectively. A net accrued pension liability of $651,000 was recorded as of November 30, 2003. The projected benefit obligation and plan assets at November 30, 2002 were $24,428,000 and $18,123,000, respectively.

Approximately 19% of the Company’s employees are covered by union-sponsored, collectively-bargained, multi-employer pension plans.  Related to these plans, the Company contributed and charged to expense $2,340,000, $2,242,000 and $4,009,000 in 2003, 2002 and 2001, respectively. These contributions are determined in accordance with the provisions of negotiated labor contracts and generally are based on the number of hours worked. The Company has no intention of withdrawing from any of these plans, nor is there any intention to terminate such plans.

The Company has a deferred compensation plan providing eligible executives with the opportunity to participate in an unfunded, deferred compensation program. Under the program, participants may defer base compensation and bonuses and earn interest on their deferred amounts.  The program is not qualified under Section 401 of the U.S. Internal Revenue Code. The total of participant deferrals and earnings thereon was $2,025,000 at November 30, 2003 and $2,331,000 at November 30, 2002.  The participant deferrals earn interest at a rate based on the rate on U.S. government obligations. The interest expense related to this plan was $133,000 in 2003, $302,000 in 2002 and $667,000 in 2001.

The Company has a life insurance plan which provides eligible executives with life insurance protection equal to three times base salary. Upon retirement, the executive is provided with life insurance protection equal to final base salary. Benefits may be paid as a lump sum or as an annual income to the identified survivor over ten years. The expense related to this plan was $264,000 in 2003, $148,000 in 2002 and $230,000 in 2001.

In connection with the SERP and the above two plans, whole life insurance policies are purchased on the related participants. At November 30, 2003, the cash surrender value of these policies was $29,312,000; and at November 30, 2002 the cash surrender value of these policies was $26,415,000, net of loans of $1,000,000. The Company is the sole owner of such policies.

The Company has severance agreements with certain key employees that could provide benefits upon termination of up to 3.5 times total annual compensation of such employees.

The Company provides to certain employees a savings plan under Section 401(k) of the U.S. Internal Revenue Code. The savings plan allows for deferral of income up to a certain percentage through contributions to the plan, within certain restrictions. Company matching contributions are in the form of cash. In 2003, 2002 and 2001, the Company recorded expense for matching contributions of $880,000, $602,000 and $883,000, respectively.

46

NOTE 16Capital Stock

The Company is incorporated in Delaware. The articles of incorporation authorize 12,000,000 shares of $2.50 par value common stock, 1,000,000 shares of $1.00 par value preferred stock and 100,000 shares of $1.00 par value series A junior participating cumulative preferred stock. The preferred stock may be issued in series, with the rights and preferences of each series to be established by the Board of Directors. As of November 30, 2003, no shares of preferred stock or series A junior participating cumulative preferred stock were outstanding.

On March 26, 2003 the Company’s Board of Directors declared a two-for-one stock split in the form of a stock dividend of one additional common share for every outstanding common share held by stockholders of record on May 1, 2003, payable May 27, 2003. The weighted-average number of shares and per share information presented herein reflect the Company’s shares and earnings and dividends per share on a post-split basis.

As of November 30, 2003, 8,214,563 shares of common stock were issued and outstanding, including 60,000 restricted shares which were granted on January 23, 2002. Restrictions limit the sale and transfer on these shares. On each anniversary of the grant date, 20,000 of the shares become unrestricted.

The Company has a Stockholders’ Rights Plan, which, among other things, entitles stockholders to purchase common stock at a significant discount if a party acquires 15% or more of the Company’s common stock or announces a tender offer for at least 15% of the Company’s common stock outstanding.

NOTE 17  Quarterly Financial Data (unaudited)

Summarized quarterly financial data for the years ended November 30, 2003 and 2002, follow:

(In thousands, except per share data)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2003
Sales	$	130,621	$	147,844	$	155,174	$	167,856
Gross profit	32,665		40,317		42,444		51,062
Net income	2,175		7,825		7,711		12,189
Diluted net income per share	.27		.97		.94		1.47
Stock price per share-high	30.99		35.53		35.35		34.93
Stock price per share-low	24.89		25.05		30.00		28.49
Dividends per share	.16		.20		.20		.20
2002
Sales	$	120,702	$	138,099	$	138,813	$	141,859
Gross profit	30,439		35,564		36,553		39,327
Net income	1,771		7,562		8,711		10,015
Diluted net income per share	.21		.91		1.06		1.27
Stock price per share-high	35.79		38.74		36.45		28.51
Stock price per share-low	31.30		33.53		24.63		22.26
Dividends per share	.16		.16		.16		.16

The Company traditionally experiences lower sales during the first fiscal quarter because of seasonal patterns associated with weather and contractor schedules.

NOTE 18  Segment Information

The Company adopted SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information.” SFAS No. 131 requires disclosure of certain information about operating segments, geographic areas in which the Company operates, major customers, and products and services. In accordance with SFAS No. 131, the Company has determined it has four operating segments. The Performance Coatings & Finishes Group manufactures and markets high-performance industrial and marine coatings. The Fiberglass-Composite Pipe Group manufactures and markets filament-wound and molded composite fiberglass pipe, tubing, fittings and well screens. The Water Transmission Group manufactures and supplies concrete and steel pressure pipe, concrete non-pressure pipe, protective linings for pipe, and fabricated products. The Infrastructure Products Group manufactures and sells ready-mix concrete, sand and aggregates, concrete pipe and culverts, and concrete and steel lighting and traffic poles. Each of these segments has a dedicated management team and is managed separately, primarily because of differences in products.

The markets served by the Performance Coatings & Finishes Group and the Fiberglass-Composite Pipe Group are worldwide in scope. The Water Transmission Group serves primarily the western United States. The Infrastructure Products Group’s quarry and ready-mix business operates exclusively in Hawaii, and poles are sold throughout the U.S. Sales for export or to any individual customer did not exceed 10% of consolidated sales in 2003, 2002, or 2001.

In accordance with SFAS No. 131, the following table presents information related to each operating segment included in, and in a manner consistent with, internal management reports. The Company allocates certain selling, general and administrative expenses to operating segments utilizing assumptions believed to be appropriate in the circumstances.

Inter-segment sales were not significant. Income from reportable segments is exclusive of certain unallocated income and expenses, interest expense and income taxes. Total assets by segment are those assets that are used exclusively by such segment.  Unallocated assets are principally cash, corporate property and equipment, and investments. Long-lived assets consist of all long-term assets, excluding investments and deferred tax assets.

47

	SEGMENT INFORMATION
(In thousands)	Performance Coatings & Finishes		Fiberglass- Composite Pipe		Water Transmission		Infrastructure Products		Other			Eliminations			Total
2003
Sales	$	190,280	$	114,613	$	165,497	$	130,493	$	—		$	(388	)	$	600,495
Income before interest and income taxes	9,383		21,881		26,634		15,509		(22,792		)	—			50,615
Equity in earnings of joint venture	—		—		—		—		667			—			667
Income from joint ventures-cost method	636		3,042		2,633		—		—			—			6,311
Investments in joint ventures
Equity method	—		—		—		—		13,064			—			13,064
Cost method	1,695		3,784		—		—		—			—			5,479
Long-lived assets	54,921		26,141		39,470		40,323		51,837			—			212,692
Total assets	164,399		147,326		125,501		70,202		184,839			(158,775		)	533,492
Capital expenditures	5,901		2,542		2,656		5,041		967			—			17,107
Depreciation and amortization	5,206		3,940		4,124		4,382		719			—			18,371
2002
Sales	$	183,311	$	88,393	$	145,024	$	123,610	$	—		$	(865	)	$	539,473
Income before interest and income taxes	9,122		10,862		27,347		17,019		(15,001		)	—			49,349
Equity in earnings of joint venture	—		—		—		—		3,597			—			3,597
Income from joint ventures-cost method	327		2,263		3,310		—		—			—			5,900
Investments in joint ventures
Equity method	—		—		—		—		12,940			—			12,940
Cost method	2,203		3,784		—		—		—			—			5,987
Long-lived assets	49,314		28,338		40,966		39,694		32,841			—			191,153
Total assets	138,616		138,712		115,078		68,272		140,233			(137,969		)	462,942
Capital expenditures	3,697		1,642		4,331		3,696		1,148			—			14,514
Depreciation and amortization	5,224		4,002		4,160		4,367		819			—			18,572
2001
Sales	$	188,759	$	106,872	$	143,226	$	113,824	$	—		$	(1,285	)	$	551,396
Income before interest and income taxes	9,831		12,125		29,011		13,089		(15,252		)	—			48,804
Equity in earnings of joint venture	—		—		—		—		2,279			—			2,279
Income from joint ventures-cost method	855		2,070		3,325		—		—			—			6,250
Investments in joint ventures
Equity method	—		—		—		—		12,793			—			12,793
Cost method	2,203		3,784		—		—		—			—			5,987
Long-lived assets	45,240		28,140		41,146		40,474		45,592			—			200,592
Total assets	133,332		133,267		123,175		65,518		168,697			(138,909		)	485,080
Capital expenditures	3,037		5,013		2,047		8,596		604			—			19,297
Depreciation and amortization	5,448		3,774		4,210		4,298		903			—			18,633		.

	GEOGRAPHIC AREAS
(In thousands)	United States		Europe		Asia		Other		Eliminations			Total
2003
Sales to external customers	$	422,091	$	92,104	$	51,228	$	35,072	$	—		$	600,495
Long-lived assets	156,676		31,001		10,692		14,323		—			212,692
Total assets	464,548		106,637		80,826		40,256		(158,775		)	533,492
2002
Sales to external customers	$	396,668	$	77,429	$	34,309	$	31,067	$	—		$	539,473
Long-lived assets	136,712		31,690		10,715		12,036		—			191,153
Total assets	415,709		88,547		69,358		27,297		(137,969		)	462,942
2001
Sales to external customers	$	413,112	$	80,277	$	28,451	$	29,556	$	—		$	551,396
Long-lived assets	151,290		26,617		10,986		11,699		—			200,592
Total assets	456,171		81,148		59,196		27,474		(138,909		)	485,080

48

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Ameron International Corporation:

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of stockholders’ equity, of  comprehensive income, and of cash flows present fairly, in all material respects, the financial position of Ameron International Corporation and its subsidiaries at November 30, 2003, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for goodwill effective December 1, 2002.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

February 4, 2004

MANAGEMENT’S LETTER

We have prepared the accompanying consolidated financial statements and related financial information of Ameron International Corporation and subsidiaries in conformity with accounting principles generally accepted in the United States of America. Management is responsible for the integrity of the financial information included in this Annual Report. In preparing the financial statements, management makes estimates as necessary based upon currently available information and judgments of current conditions and circumstances.

Ameron maintains a system of internal controls supported by documentation to provide reasonable assurance that assets are safeguarded and the accounting records reflect the authorized transactions of the Company. We believe the Company’s system provides this appropriate balance in accordance with established policies and procedures as implemented by qualified personnel.

The independent auditors, PricewaterhouseCoopers LLP, appointed by the Board of Directors, are responsible for expressing their opinion as to whether the consolidated financial statements present fairly, in all material respects, the financial position, operating results and cash flows of the Company. In this process, they consider the system of internal control, in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements. Their opinion appears on this page.

The Audit Committee of the Board of Directors is composed of four directors who are not officers or employees of the Company. They meet periodically with management, PricewaterhouseCoopers LLP and the internal auditors to review the audit scope and results, discuss internal controls and financial reporting subjects, and review management actions on these matters. PricewaterhouseCoopers LLP and the internal auditors have full and free access to the members of the Audit Committee.

/s/ James S. Marlen	/s/ Gary Wagner
JAMES S. MARLEN	GARY WAGNER
Chairman of the Board, President & Chief Executive Officer	Senior Vice President, Chief Financial Officer

49

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Parents

None

Subsidiaries Consolidated	Jurisdiction of Incorporation	Percent of Stock Owned
Amercoat Japan Company, Limited	Japan	100
American Pipe & Construction International	California	100
Ameron (Australia) Pty. Limited	Australia	100
Ameron  B.V.	the Netherlands	100
Ameron Composites Inc.	Delaware	100
Ameron (Hong Kong) Ltd.	Hong Kong	100
Ameron Malaysia Sdn. Bhd.	Malaysia	100
Ameron (New Zealand) Limited	New Zealand	100
Ameron (Pte) Ltd.	Singapore	100
Ameron (UK) Limited	United Kingdom	100
Centron International, Inc.	Delaware	100
Island Ready-Mix Concrete, Inc.	Hawaii	100

Subsidiaries Not Consolidated and Fifty-Percent or Less Owned Companies
TAMCO	California	50
Bondstrand, Ltd.	Saudi Arabia	40
Oasis-Ameron, Ltd.	Saudi Arabia	40
Ameron Saudi Arabia, Ltd.	Saudi Arabia	30

Names of other consolidated subsidiaries and subsidiaries not consolidated and fifty-percent or less owned companies are omitted because when considered in the aggregate as a single subsidiary they do not constitute a significant subsidiary.

1

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-57308, No. 33-59697, No. 333-36497 and No. 333-61816) of Ameron International Corporation of our report dated February 4, 2004 relating to the financial statements, which appears in the Annual Report to Stockholders, which is incorporated in this Annual Report on Form 10-K.  We also consent to the incorporation by reference of our report dated February 4, 2004 relating to the financial statement schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

February 24, 2004

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in Registration Statement No. 33-57308, No. 33-59697, No. 333-36497 and No. 333-61816 of Ameron International Corporation on Form S-8 of our reports dated February 3, 2003 (February 24, 2004 as to the effects of the stock split described in Note 16), appearing in this Annual Report on Form 10-K of Ameron International Corporation for the year ended November 30, 2003.

/s/ Deloitte & Touche LLP

Los Angeles, California

February 24, 2004

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James S. Marlen, certify that:

1. I have reviewed this annual report on Form 10-K of Ameron International Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures; and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and;

c) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls.

February 24, 2004
	/s/ James S. Marlen
	James S. Marlen
	Director, Chairman of the Board,
	President & Chief Executive Officer

1

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Gary Wagner, certify that:

1. I have reviewed this annual report on Form 10-K of Ameron International Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures; and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and;

c) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls.

February 24, 2004
	/s/ Gary Wagner
	Gary Wagner
	Senior Vice President &
	Chief Financial Officer

1

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Ameron International Corporation (the “Company”) on Form 10-K for the fiscal year ended November 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James S. Marlen, President, Chief Executive Officer of the Company and I, Gary Wagner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ James S. Marlen
	James S. Marlen
Director, Chairman of the Board,
President & Chief Executive Officer
	February 24, 2004
	/s/ Gary Wagner
	Gary Wagner
	Senior Vice President &
	Chief Financial Officer
	February 24, 2004

1

EX-99

EXHIBIT 99

OTHER EXHIBITS

Exhibit 99 includes the reports of Deloitte & Touche LLP relating to their audit of Ameron’s financial statements for the periods ended November 30, 2002 and 2001.

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Ameron International Corporation:

We have audited the accompanying consolidated balance sheet of Ameron International Corporation and subsidiaries (the “Company”) as of November 30, 2002, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended November 30, 2002.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2002, and the results of its operations and its cash flows for each of the two years in the period ended November 30, 2002, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Los Angeles, California

February 3, 2003 (February 24, 2004 as to the effects of the stock split described in Note 16)

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Ameron International Corporation:

We have audited the consolidated financial statements of Ameron International Corporation and subsidiaries (the “Company”) as of November 30, 2002, and for each of the two years in the period ended November 30, 2002, and have issued our report thereon dated February 3, 2003 (February 24, 2004 as to the effects of the stock split described in Note 16).  Such report is included in this Annual Report on Form 10-K.  Our audits also included the financial statement schedule listed in Item 15(a)2.  This financial statement schedule is the responsibility of the Company’s management.  Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Deloitte & Touche LLP

Los Angeles, California

February 3, 2003

1