Inventories are valued at the lower of a first-in first-out cost or market. The most significant
component of the Company’s inventories is steel. Open market prices, which are subject to volatility, determine
the cost of steel for the Company. During periods when open market prices decline, the Company may need to
reduce the carrying value of the inventory. In addition, certain items in inventory become obsolete over time, and
the Company reduces the carrying value of these items to their net realizable value. These reductions are
determined by the Company based on estimates, assumptions and judgments made from the information
available at that time. See Note 1, Summary of Significant Accounting Policies, for a detailed description of the
process used by the Company to value inventories at the lower of first-in first-out cost or market. The Company
does not believe it is reasonably likely that the inventory values will materially change in the near future.