TO: ALL OMAHA STANDARD DISTRIBUTORS

RE: Steel Surcharges/New Price Sheets

As you are aware, we have already added surcharges to our product prices because of the unprecedented increases in the cost of steel.

The steel situation continues to worsen. The latest increases have been far greater than initially forecasted by our suppliers. For almost every type of steel we use we are now paying, or will be paying within the next 2-3 weeks, double what we were paying 4-5 months ago.

Based on information from our steel suppliers and media reports concerning the steel industry, it is our feeling that steel prices will stabilize in the near term at or about current levels. There is some speculation from these same sources that steel costs may actually begin to come down in the first quarter of 2005. However, no one foresees steel prices returning at anytime soon to where they were at the beginning of this year. In addition to the increases in the cost of steel, we have experienced increases in many of our other material costs, as well as our labor costs, insurance premiums, and other operating expenses.

As a result, we will be incorporating a portion of the earlier surcharges and other cost increases into new distributor prices which will be effective as to all products loaded/shipped on and after August 2, 2004. We will also retain a 6% steel surcharge on all products which we hope can be reduced or taken off completely in the future if steel prices are in fact lowered.

You will be sent new prices sheets the first week of July. Enclosed for your reference is a summary of the new distributor pricing and surcharge to be effective August 2nd. Click here to view surcharges...

Obviously, Omaha Standard and our distributors are not the only companies affected by the very substantial increases in steel prices and other operating costs. Our competition has also had to increase their prices and/or add surcharges which means that you are not at a price disadvantage.

We appreciate your understanding in this matter and will keep you informed of any changes in the situation.

Thank you for your business. We hope that we continue to deserve it in the future.