I couldn't help being a little amused several years back when the media were lavishing so much praise on foreign manufacturers. This was when steel and automobile producers overseas were capturing huge market shares from their U.S. counterparts. They were doing it by motivating their employees, maintaining stringent quality control systems to produce superior products, and taking customer service to a higher level. But I used to think: "At ACIPCO, we've been doing those things for the better part of 100 years." And I was right. The very first objectives listed in our corporate mission statement are to produce a premium-quality product and ship it on time at a fair price. Our mission statement further stipulates that AMERICAN will treat our customers the way we want to be treated, and that we will constantly improve our performance. I know. A lot of companies talk about superior quality. But few can back it up like we do. At AMERICAN, we strongly believe that quality-oriented employees are a company's most valuable assets. So, we start by creating an environment that fosters a motivated, qualified work force. In a book published a few years ago, The 100 Best Companies To Work For In America, AMERICAN was named one of the top 15 places to work in the United States. Our selection was based on such things as pay and benefits, career advancement opportunities, job security, work force pride, openness and fairness between management and employees, and camaraderie among employees. Anyone who works at AMERICAN will tell you that we do provide a great working environment. But they'll also tell you that we're not satisfied with anything but the best. Of course, having good people is a great place to start, but it isn't enough. Almost half of AMERICAN's work force at any given time is enrolled in technical training of some kind. We know that, now more than ever, continuous improvement is a must. And having the opportunity to improve and grow on the job tends to keep people motivated; roughly 75 percent of AMERICAN employees have more than 10 years of tenure and 37 percent have at least 20 years. Our belief in superior product quality is so strong that a few years ago AMERICAN applied for ISO 9000 certification. A major part of the certification process analyzes, in painstaking detail, virtually all aspects of a company's operation that can affect product quality. We were eager to apply for this certification to show our commitment to maintaining the highest-quality systems. AMERICAN qualified and was ISO-certified on the first attempt - a feat accomplished by only a few ISO applicants. For several years we were the only ISO 9000 certified producer of ductile iron pipe and fittings in North America. In addition to ISO 9000 certification, AMERICAN has instituted numerous other systems aimed at improving productivity and quality. Primarily because we have made the transition to more technologically advanced machinery and equipment, AMERICAN has seen a decrease of almost 50 percent since 1985 in man hours per ton of product manufactured. And we have some old-fashioned ways of creating productivity in our workplace. Since 1988, for example, we have paid employees more than $100,000 for cost-saving suggestions. This was money extremely well spent that has paid for itself many times over. Just as we went to the extra effort to become ISO 9000 certified, we are striving to make our centralized Customer Service Department the best anywhere, in any industry. That's the goal of our new Customer Service Department Manager Maury Gaston, and if you think that goal is a bit lofty, you don't know Maury. His 15 years' experience as an AMERICAN sales engineer and district manager have given him tremendous insight into knowing what the customer wants and needs. Under his direction, the Customer Service Department's Project Management program is establishing a communications and planning framework among our sales engineers, drafters, and customer service representatives like our industry has never seen. If you think our service is good now, wait until you see it down the road. Another major area in which AMERICAN is quality-oriented is customer affiliation. Just look at this issue of Pipe Progress. The cover story shows that our product is being used for the Hyperion Treatment Plant project in Los Angeles, certainly one of the most prestigious projects in America. And our Noteworthy Projects section is laced with the names of owners, engineers, and contractors known for their track records and contributions to the waterworks industry. We are proud to be associated with these entities and their people, and we work at forming partnerships with them every chance we get. Why? Because we want to associate ourselves with superior quality. One of the things the media pointed out several years ago was that service department representatives at Japanese auto dealerships bow to customers when they bring their cars in for maintenance. Well, I must admit that AMERICAN employees don't always bow, but we are bending over backwards to generate superior quality in all phases of our business. We'd like to hear from you. I invite you to write, call, or E-mail at anytime with questions or comments about our performance. All numbers and addresses you need are here and on our main website @ http://www.acipco.com. We welcome what you have to say because, here at AMERICAN, improvement is part of our quest for superior quality. Van L. Richey President & Chief Executive Officer

Van L. Richey President & C.E.O.