JAMES S. MARLEN
Chairman of the Board and Chief Executive Officer

“Ameron achieved
the second highest net
income and earnings
per share in the
Company’s history."

"Ameron’s earnings
increased at a
compounded annual
growth rate of 42%
over the past five years.
Total shareholders
return over that
period totaled 78%,
far exceeding the
overall market indices"

"The Company has
the cash and capital
availability to support
current operations
and also to continue
to fund internal and
external growth
initiatives."

"While the current
global economic
environment is
challenging,
I am confident
in the Company’s
long-term prospects.
The Company is
well-positioned to
continue to grow
earnings as market
conditions
improve."

TO OUR SHAREHOLDERS

Despite a difficult economic climate worldwide, which worsened throughout the year, Ameron achieved the second highest net income and earnings per share in the Company’s history. Net income totaled $58.6 million in 2008, compared to the record net income of $67.2 million achieved in 2007, while earnings per share in 2008 totaled $6.39 versus the record $7.40 per share earned in 2007. The Company’s consolidated sales reached $667.5 million and Ameron’s unconsolidated joint-venture companies’ sales totaled $469.7 million in 2008.(1) Total consolidated and unconsolidated sales were $1,137.2 million, which represented an increase of 17%, from 2007.(1)

On a comparable basis, the financial results in 2008 actually exceeded the results in 2007. The earnings in 2007 included net income from discontinued operations of $6.1 million, or $.67 per share, and also included a non-recurring tax benefit of $5.3 million, associated with the liquidation of the Company’s wholly-owned subsidiary in the U.K. Excluding these two one-time items, normalized earnings per share for the Company in 2008 improved 4%, versus 2007.

The key objective for the Company is to achieve consistent earnings growth and to translate the earnings growth into creating value for our shareholders. In this regard, Ameron’s earnings increased at a compounded annual growth rate of 42% over the past five years. Total shareholders return over that period totaled 78%, far exceeding the overall market indices.

2008 REVIEW
The Company’s performance in 2008 was led by the significant growth of the Fiberglass-Composite Pipe Group which experienced strong demand in key segments worldwide, such as marine, offshore and onshore oilfield markets. Also, 2008 was the first full year of operation of Polyplaster in Brazil. Polyplaster proved to be a high-quality business and made immediate contributions to the Company’s earnings growth. The Water Transmission Group continued to be confronted with the cyclical downturn in the water infrastructure market in the western U.S., and, as a result, the water pipe business incurred a greater loss in 2008, compared to 2007. In addition, while the wind tower business made significant progress toward achieving the targeted productivity rates, the business incurred a loss, although less than in 2007. The Infrastructure Products Group experienced soft market conditions in both the Hawaii Division and the Pole Products Division which led to lower earnings. The construction sector on Oahu and Maui weakened across essentially all market segments, while the Pole Products Division continued to experience a significant decline in demand due to the national housing market crisis.

TAMCO, Ameron’s 50%-owned steel mini-mill, had record sales; however, earnings declined from a record level in 2007 due to pricing pressures and higher costs. In addition, TAMCO had a significant inventory write-down associated with the rapid decrease in rebar prices in the fourth quarter of 2008. Infrastructure spending in TAMCO’s key markets of California, Arizona and Nevada contracted severely in the later part of the year. The slowdown in infrastructure spending occurred in both private and public markets and was caused by recession concerns, the credit market crisis and governmental budget issues.

OUTLOOK
Ameron enters 2009, like most companies, without clear visibility of the direction of the overall worldwide economy or the timing of a recovery from the recession. There is also uncertainty about the impact a federal government economic stimulus package would have on the Company’s businesses and the timing of when targeted infrastructurerelated spending would commence. The Company expects that soft economic and market conditions will continue, and, as a result, that earnings will be under pressure throughout the year. The Fiberglass-Composite Pipe Group should continue to operate at a high level, although the business will unlikely match the record performance of 2008, due to oil-price volatility and general economic conditions. The Water Transmission Group should have increased profitability through improved productivity and better project execution, but bid activity and project margins are expected to remain low. The wind tower business should have higher sales volume and profitability based on beginning backlog, although there is a risk of a slowdown in the wind energy market due to a lack of project financing. We believe this is a strong, promising business; but in the short term, much will depend on the availability of credit for wind farm developers. The Infrastructure Products Group is expected to experience a slowdown in construction spending across all sectors with lower sales and income in 2009. TAMCO is expected to continue to be confronted with the economic slowdown that began to affect the business in the fourth quarter of 2008. Demand for steel rebar in TAMCO’s markets is not expected to recover in the short term, and, as a result, TAMCO’s sales and income are expected to be lower. In addition, pension costs will be higher due to investment losses of the Company’s defined benefit plans. The Company’s expectations for 2009 could improve if a global economic recovery occurs faster than currently anticipated, or if governmental stimulus programs are initiated and investment programs are targeted in the Company’s key markets such as wind energy, infrastructure spending and water and wastewater projects.

One of the Company’s strengths is its strong and liquid financial position. This is especially important in the current business cycle. The Company has the cash and capital availability to support current operations and to fund internal and external growth initiatives. As of November 30, 2008, the Company had cash in excess of outstanding debt of approximately $91 million and available credit lines of over $100 million. In addition, the Company’s capital structure represented a low leverage position, with a debt to total capital ratio of only 10%. The Company has the ability to sustain higher debt to capitalize on growth opportunities. During the economic downturn, the focus of management will be on cost reduction, productivity improvement, cash generation and cash conservation to maintain the Company’s strong capital position. Management will continue to focus on working capital reduction, maximizing cash flow from operations and selective capital investments. Commitments to capital investments will emphasize the same rigorous risk/reward evaluation process management has followed over the years. Strategic programs of a long-term nature will continue to be pursued and funded.

STRATEGIC PROGRAMS
During 2009 the Fiberglass-Composite Pipe Group will complete construction of a new plant in Texas that will be able to manufacture sand-core fiberglass pipe (Reinforced Polymer Mortar Pipe®) to serve the growing national municipal water and wastewater markets. The larger-diameter market segment has been targeted, and during 2009, a round, sand-core fiberglass pipe product and a proprietary, non-round configuration will be fully commercialized. The municipal sewer rehabilitation market represents a growth opportunity as the U.S. wastewater infrastructure continues to age and failures increase. The Fiberglass- Composite Pipe Group will also complete construction of two new plants in Brazil in 2009. A new Centron® plant, which is dedicated to the manufacture of fiberglass pipe for oilfield applications, should be operational in the first quarter. The plant primarily serves the South American oilfield market but would also be available to supplement worldwide capacity requirements. A new Bondstrand® plant will be utilized primarily for marine and offshore platform applications in South America and will also support chemical and industrial demand in the region. The Bondstrand® plant should be operational in the second half of 2009. Construction of the Centron® and Bondstrand® plants supports the strategy of investing in growing oil-producing regions that have strong fiberglass pipe demand. The Fiberglass-Composite Pipe Group will continue to execute this strategy and to evaluate other opportunities to grow the business. The Water Transmission Group will pursue a program to consolidate welded-steel pipe manufacturing plants to improve material flow and productivity. The program will also add new manufacturing capabilities and capacity. The plant consolidation will result in one plant being totally dedicated to wind tower production, which should improve wind tower productivity. In addition to completing the wind tower facility, a new rail loading system will be completed in 2009 which will expand the geographic reach of the wind tower business and provide a more competitive transportation cost structure. The Company’s wind tower business has quickly become a reliable, quality supplier to the fast growing wind energy industry. These are examples of investment projects and new product developments that are being pursued across all business units.

CONCLUSION
While the current global economic environment is challenging, I am confident in the Company’s long-term prospects. The Company is well-positioned to continue to grow earnings as market conditions improve. Each of the Company’s businesses hold leading positions in their markets, including the Fiberglass-Composite Pipe Group which is the leading fiberglass pipe supplier worldwide, the Water Transmission Group which is a leading supplier of large-diameter, high-pressure water transmission lines in California, Nevada, Arizona and northern Mexico and manufactures wind towers, Ameron Hawaii which is a leading supplier to the construction sector in Oahu and Maui, and Pole Products which is the leading supplier of decorative concrete poles for residential lighting. TAMCO also holds a leading position in key steel rebar markets, such as California, Arizona and Nevada. Again, I am optimistic and confident of the Company’s long-term growth potential.

I wish to extend my thanks to all of the Company’s employees and senior management for their contributions, and to the Board of Directors for their counsel and dedication.

JAMES S. MARLEN

Chairman of the Board and Chief Executive Officer