<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1997

                                       OR

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

           For the transition period from ___________ to ____________

                        Commission File Number 000-22715

                              SCHUFF STEEL COMPANY
             (Exact Name of Registrant as Specified in its Charter)

            DELAWARE                                       86-0318760
(State or Other Jurisdiction of Incorporation or        (I.R.S. Employer 
 Organization)                                          Identification No.)


           420 South 19th Avenue                               85009
              Phoenix, Arizona                               (Zip Code)
  (Address of Principal Executive Offices)

                                 (602) 252-7787
               Registrant's Telephone Number, Including Area Code

         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 [X] No [ ]

Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practical date: As of November 13, 1997, there were 7,000,000
shares of Common Stock, $.001 par value per share, outstanding.
<PAGE>   2
                              SCHUFF STEEL COMPANY

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page

<S>                                                                                                            <C>  
Part I:           Financial Information

     Item 1.      Financial Statements

                  Condensed Consolidated Balance Sheets  -
                  September 30, 1997 and December 31, 1996                                                       1

                  Condensed Consolidated Statements of Income  -
                  Three Months Ended September 30, 1997 and 1996 and
                  Nine Months Ended September 30, 1997 and 1996                                                  2

                  Condensed Consolidated Statements of Cash Flows  -
                  Nine Months Ended September 30, 1997 and 1996                                                  3

                  Notes to Condensed Consolidated Financial Statements                                           4

     Item 2.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                                           10

Part II:          Other Information

     Item 2.      Changes in Securities and Use of Proceeds                                                     20

     Item 6.      Exhibits and Reports on Form
8-K                                                                                                             21
</TABLE>
<PAGE>   3
                          PART I. FINANCIAL INFORMATION

Item 1.       Financial Statements

                              SCHUFF STEEL COMPANY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        September 30   December 31
                                                                            1997          1996
                                                                          ----------------------
                                                                          (Unaudited)
                                                                              (In thousands)
<S>                                                                       <C>           <C>  
ASSETS
Current assets:
   Cash and cash equivalents                                              $  6,454      $  7,253
   Restricted funds on deposit                                               2,005         2,249
   Receivables, net                                                         20,425        16,885
   Costs and recognized earnings in excess of billings on 
     uncompleted contracts                                                   1,560           871
   Inventories                                                               7,410        11,311
   Prepaid expenses                                                            876           178
   Deferred taxes                                                              408             -
                                                                          ----------------------
Total current assets                                                        39,138        38,747

Property and equipment, net                                                  6,023         5,116
Intangible pension asset                                                        95           106
Other assets                                                                   100             -
                                                                          ----------------------
                                                                          $ 45,356      $ 43,969
                                                                          ======================
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
   Accounts payable                                                       $  1,636      $  4,043
   Billings in excess of costs and recognized earnings on 
     uncompleted contracts                                                  13,060        19,623
     contracts
   Accrued payroll and employee benefits                                     2,086         1,539
   Other accrued liabilities                                                 1,470           367
   Stockholder distributions payable                                           630         4,555
   Income taxes payable                                                      1,213             -
   Current portion of long-term debt                                           304           144
                                                                          ----------------------
Total current liabilities                                                   20,399        30,271

Deferred income taxes                                                          294             -
Deferred rent expense                                                          166             -
Accrued pension cost                                                             -           263
Long-term debt, less current portion                                         2,324         2,753
                                                                          ----------------------
Total liabilities                                                           23,183        33,287

Commitments and contingent liabilities

Stockholders' equity:
   Preferred stock, $.001 par value - 1,000,000 shares authorized; no
     shares issued and outstanding
   Common stock, $.001 par value - 20,000,000 shares authorized;
     7,000,000 shares issued and outstanding                                     7             5
   Additional paid-in capital                                               14,013            15
   Unfunded pension losses                                                    (229)         (519)
   Retained earnings                                                         8,382        11,181
                                                                          ----------------------
Total stockholders' equity                                                  22,173        10,682
                                                                          ----------------------
                                                                          $ 45,356      $ 43,969
                                                                          ======================
</TABLE>



Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed consolidated financial statements.


                                                                               1
<PAGE>   4
                              SCHUFF STEEL COMPANY

             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


<TABLE>
<CAPTION>
                                                          Three months ended         Nine months ended
                                                             September 30                September 30
                                                          1997         1996          1997          1996
                                                       --------------------------------------------------
                                                                 (in thousands, except per share data)

<S>                                                    <C>           <C>           <C>           <C>     
Revenues                                               $ 35,439      $ 38,861      $ 98,123      $ 78,962
Cost of revenues                                         29,574        32,976        83,968        66,994
                                                       --------      --------      --------      --------
Gross profit                                              5,865         5,885        14,155        11,968

General and administrative expenses                       2,281         1,749         6,457         4,605
                                                       --------      --------      --------      --------
Operating income                                          3,584         4,136         7,698         7,363
Interest expense                                            (72)         (100)         (263)         (337)
Other income                                                146            75           414           207
                                                       --------      --------      --------      --------
Income before income tax expense                          3,658         4,111         7,849         7,233
Income tax expense                                        1,496             -         1,387             -
                                                       --------      --------      --------      --------
Net income                                             $  2,162      $  4,111      $  6,462      $  7,233
                                                       ========      ========      ========      ========

Pro forma, net income data:
   Net income, reported above                          $  2,162      $  4,111      $  6,462      $  7,233
   Pro forma provision for income taxes related to
     operations as S Corporation                              -         1,644         1,513         2,893
                                                       --------      --------      --------      --------
Pro forma net income                                   $  2,162      $  2,467      $  4,949      $  4,340
                                                       ========      ========      ========      ========

Pro forma net income per share                         $   0.31      $   0.41      $   0.77      $   0.71
                                                       ========      ========      ========      ========

Shares used in computation                                7,077         6,071         6,392         6,071
                                                       ========      ========      ========      ========
</TABLE>



See notes to condensed consolidated financial statements.



                                                                               2
<PAGE>   5
                              SCHUFF STEEL COMPANY

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

<TABLE>
<CAPTION>
                                                                      Nine months ended September 30
                                                                           1997          1996
                                                                         ----------------------
                                                                             (In thousands)
<S>                                                                      <C>           <C> 
OPERATING ACTIVITIES
Net income                                                               $  6,462      $  7,233
Adjustment to reconcile net income to net cash provided by operating
   activities:
     Depreciation and amortization                                          1,125           914
     Gain on disposal of property and equipment                               (21)          (34)
     Deferred taxes                                                          (114)            -
     Changes in operating assets and liabilities:
       Restricted funds on deposit                                            244        (1,190)
       Receivables                                                         (2,497)       (9,041)
       Costs and recognized earnings in excess of billings in
         uncompleted contracts                                                (91)         (167)
       Inventories                                                          3,997           381
       Prepaid expenses                                                      (606)           70
       Accounts payable                                                    (3,196)       (3,038)
       Billings in excess of costs and recognized earnings on
         uncompleted contracts                                             (6,570)       11,631
       Accrued payroll and employee benefits                                  522           849
       Other accrued liabilities                                            1,041         1,671
       Income taxes payable                                                 1,213             -
       Deferred rent expense                                                  166             -
       Accrued pension cost                                                    38          (104)
                                                                         ----------------------
           NET CASH PROVIDED BY OPERATING ACTIVITIES                        1,713         9,175

INVESTING ACTIVITIES
Repayment of receivables from stockholders                                      -            18
Acquisitions of property and equipment                                     (1,338)       (2,183)
Proceeds from disposals of property and equipment                              40           187
Increase in other assets                                                     (100)            -
Purchase of business                                                         (427)            -
                                                                         ----------------------
           NET CASH USED IN INVESTING ACTIVITIES                           (1,825)       (1,978)

FINANCING ACTIVITIES
Proceeds from revolving line of credit and long-term borrowings            17,777        33,565
Principal payments on revolving line of credit and long-term debt         (19,279)      (35,461)
Proceeds from issuance of common stock, net                                14,000             -
Cash distributions to stockholders                                        (13,185)       (2,093)
                                                                         ----------------------
           NET CASH USED IN FINANCING ACTIVITIES                             (687)       (3,989)

           INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  (799)        3,208
Cash and cash equivalents at beginning of period                            7,253           289
                                                                         ----------------------
           CASH AND CASH EQUIVALENTS AT END OF PERIOD                    $  6,454      $  3,497
                                                                         ======================
</TABLE>


See notes to condensed consolidated financial statements.



                                                                               3
<PAGE>   6
                              Schuff Steel Company

        Notes to Condensed Consolidated Financial Statements (Unaudited)

                               September 30, 1997




1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto of Schuff Steel
Company for the year ended December 31, 1996 which were included as part of the
Company's Registration Statement on Form S-1 (Registration No. 333-26711), as
declared effective by the Securities and Exchange Commission on June 26, 1997.

2. RECEIVABLES

Receivables consist of the following at:

<TABLE>
<CAPTION>
                                                   September 30        December 31
                                                       1997               1996
                                                 -----------------------------------
                                                            (in thousands)
<S>                                              <C>                     <C>
         Contract receivables:
            Contracts in progress                    $14,760              $11,566
            Unbilled retentions                        5,572                5,112
                                                 -----------------------------------
                                                      20,332               16,678
         Notes receivable                                 25                   65
         Other receivables                                68                  142
                                                 -----------------------------------
                                                     $20,425              $16,885
                                                 ===================================
</TABLE>



                                                                               4
<PAGE>   7
                              Schuff Steel Company

                    Notes to Condensed Consolidated Financial
                        Statements (Unaudited)(continued)





3. INVENTORIES

Inventories consist of the following at:

<TABLE>
<CAPTION>
                                     September 30     December 31
                                       1997              1996
                                    -----------------------------
                                           (in thousands)

<S>                                  <C>              <C>      
         Raw materials               $  1,768         $     665
         Fabrication in process         5,124            10,032
         Finished goods                   518               614
                                    -----------------------------
                                     $  7,410           $11,311
                                    =============================
</TABLE>


4. NET INCOME PER SHARE

Pro forma net income per share consists of the Company's historical net income
as an S Corporation, adjusted for additional income taxes that would have been
recorded had the Company operated as a C Corporation. This amount is divided by
the weighted average shares of common stock outstanding after giving retroactive
effect to the stock split described in Note 6, and increased to reflect the
assumed issuance of sufficient additional shares to pay a $7.0 million
distribution to shareholders from the Company's initial public offering
proceeds. All such additional shares are assumed to be issued at the offering
price of $8.00 per share, net of offering expenses.

Statement of Financial Accounting Standards No. 128 (FAS 128), "Earnings Per
Share," issued by the Financial Accounting Standards Board in February 1997, is
effective for periods ending after December 15, 1997. At that time, the Company
will be required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact is expected to result in an increase in pro forma
primary earnings per share for the year ended December 31, 1996 of $0.19 and the
three and nine month periods ended September 30, 1997 of $0.00 and $0.11,
respectively. The impact of FAS 128 on the calculation of fully diluted pro
forma earnings per share for these periods is not expected to be material.



                                                                               5
<PAGE>   8
                              Schuff Steel Company

                    Notes to Condensed Consolidated Financial
                        Statements (Unaudited)(continued)



5. INCOME TAXES

For the three and nine month periods ended September 30, 1996, the financial
statements of the Company do not include a provision for income taxes because
the taxable income of the Company was included in the income tax returns of the
stockholders under the S Corporation elections.

On June 26, 1997, the Company's stockholders elected to terminate the Company's
status as an S Corporation, and the Company became subject to federal and state
income taxes. Upon revocation of the S Corporation election, the Company
recorded a $300,000 credit to income as a deferred tax benefit. Prior to its
termination as an S Corporation, the Company declared a distribution of $7.0
million to its then current stockholders. The Company's retained earnings
includes the current period earnings, undistributed S Corporation earnings of
approximately $3,100,000 and certain C Corporation earnings prior to the
Company's election of subchapter S Corporation status in 1987.

Pro forma net income reflects the provision for income taxes that would have
been recorded had all of the Company's income been subject to income taxes as a
C Corporation for all periods assuming an effective tax rate of 40 percent.

The Company provides for income taxes using the liability method in accordance
with Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes."

Deferred tax assets and liabilities are comprised of the following at September
30, 1997:

                                                            (in thousands)
         Deferred tax assets:
            Vacation accrual                                     $209
            Revenue recognition on contracts in progress          134
            Deferred rent expense                                  28
            Other                                                 106
                                                            ------------
                                                                  477
         Deferred tax liabilities:
            Pension accrual                                       135
            Other                                                 228
                                                            ------------
                                                                  363
                                                            ------------
         Net deferred tax assets                                 $114
                                                            ============



                                                                               6
<PAGE>   9
                              Schuff Steel Company

                    Notes to Condensed Consolidated Financial
                        Statements (Unaudited)(continued)



5. INCOME TAXES (CONTINUED)

Significant components of the income tax expense for the three and nine month
periods ended September 30, 1997 are as follows:


<TABLE>
<CAPTION>
                                     Three Months     Nine Months Ended
                                        Ended            September 30
                                   September 30 1997         1997
                                 --------------------------------------
                                              (in thousands)
<S>                              <C>                  <C> 
         Current:
            Federal                      $1,114              $1,276
            State                           197                 225
                                 --------------------------------------
                                          1,311               1,501
         Deferred:
            Federal                         157                 (97)
            State                            28                 (17)
                                 --------------------------------------
                                            185                (114)
                                 --------------------------------------
                                         $1,496              $1,387
                                 ======================================
</TABLE>


The reconciliation of income tax computed at the U.S. federal statutory tax
rates to income tax benefit is as follows:

<TABLE>
<CAPTION>
                                                   Three months ended      Nine months ended
                                                   September 30, 1997      September 30, 1997
                                                  Actual     Pro forma     Actual    Pro forma
                                                  --------------------------------------------
                                                              (in thousands)

<S>                                               <C>         <C>         <C>          <C>    
Tax at U.S. federal statutory rates               $ 1,244     $ 1,244     $ 2,669      $ 2,669
State income taxes net of federal tax benefit         252         252         531          531
S Corporation termination                               -           -        (300)        (300)
Tax attributable to S Corporation portion of
   earnings                                             -           -      (1,513)           -
                                                  -------     -------     -------      -------
                                                  $ 1,496     $ 1,496     $ 1,387      $ 2,900
                                                  =======     =======     =======      =======
</TABLE>



                                                                               7
<PAGE>   10
                              Schuff Steel Company

                    Notes to Condensed Consolidated Financial
                        Statements (Unaudited)(continued)



6. STOCKHOLDERS' EQUITY

On May 8, 1997, the Company effected a 50,000 for one common stock split.
Accordingly, all shares of common stock have been restated in the financial
statements to reflect the effect of this stock split. At the same time, the
Company also reincorporated in Delaware and changed its authorized shares and
classes of stock. The information set forth in the condensed consolidated
financial statements reflect the authorized shares after having given effect to
the reincorporation.

On June 26, 1997, the Company's Registration Statement on Form S-1 (Registration
No. 333-26711) was declared effective by the Securities and Exchange Commission.
On July 1, 1997, the Company sold 2,000,000 common shares pursuant to the
registration statement, increasing the total shares outstanding to 7,000,000.
The Company received net proceeds from the sale of approximately $14,000,000 of
which approximately $7,000,000 was used to fund S Corporation distributions
payable to stockholders of record of the Company immediately prior to the
effective date of the Form S-1.

7. CONTINGENT MATTERS

The Company is involved from time to time through the ordinary course of
business in certain claims, litigation and assessments. Due to the nature of the
construction industry, the Company's employees from time to time become subject
to injury, or even death, while employed by the Company. The Company does not
believe there are any such contingencies at December 31, 1996 or September 30,
1997 for which the eventual outcome would have a material adverse impact on the
Company.

During 1996, the primary contractor on the Company's largest contract claimed
that the Company was liable under delay provisions and is seeking damages. While
the Company believes that the reasons for the delay should preclude any
liability, the Company has recorded reserves which they believe will adequately
provide for any liability due to this uncertainty.

During 1996, the Company was named as a defendant in a lawsuit relating to an
incident at one of its worksites whereby one of its employees was killed in a
crane accident. The Company believes the loss, if any, relating to the incident
will be fully insured and does not expect the ultimate outcome of the matter to
have a material adverse impact on its financial position.



                                                                               8
<PAGE>   11
                              Schuff Steel Company

                    Notes to Condensed Consolidated Financial
                        Statements (Unaudited)(continued)



7. CONTINGENT MATTERS (CONTINUED)

Relating to the incident set forth in the prior paragraph, the Company has been
named as a defendant in a lawsuit brought by the crane operator who claims he
was assaulted by employees of the Company after the incident. The Company's
insurance carrier has declined coverage. However, management does not expect the
amount of loss, if any, relating to the ultimate resolution of this matter to
have a material adverse impact on its financial position, regardless of whether
or not the insurance carrier ultimately provides coverage.



                                                                               9
<PAGE>   12

Item 2.   Management's Discussion and Analysis of Financial Condition and 
          Results of Operations

This discussion and analysis of financial condition and results of operations
should be read in conjunction with the unaudited condensed consolidated
financial statements and the related disclosures included elsewhere herein and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included as part of the Company's Registration Statement on Form S-1
(Registration No. 333-26711), as declared effective by the Securities and
Exchange Commission on June 26, 1997.

Results of Operations

Revenues decreased by 8.8 percent to $35.4 million for the three months ended
September 30, 1997 from $38.9 million for the three months ended September 30,
1996. The decrease in the three month period of 1997 revenues was largely
attributable to the third quarter of 1996 being the largest revenue quarter in
the Company's largely history. Revenues increased by 24.3 percent to $98.1
million for the nine months ended September 30, 1997 from $79.0 million for the
nine months ended September 30, 1996. The increase in the nine month period
revenues was attributable primarily to a greater number of large individual
contracts in 1997 as compared to 1996 and to lower revenue quarters in 1996 due
to the Company being in the early stages of large contracts for which revenue
recognition had not begun. The revenues for the three and nine month periods
ended September 30, 1997 also included $3.7 million and $8.2 million of
revenues, respectively, of B&K Steel following its acquisition by the Company on
January 31, 1997. The average revenues for the Company's ten largest revenue
generating projects in the three and nine month periods ended September 30, 1997
were $2.7 million and $6.7 million, respectively, versus $3.4 million and $5.9
million in the three and nine month periods ended September 30, 1996,
respectively. One contract, relating to Bank One Ballpark, produced revenues of
$6.6 million and $19.1 million for the three and nine month periods ended
September 30, 1997, respectively.

Gross profit was $5.9 million for the three month periods ended September 30,
1997 and 1996. Gross profit increased 18.3 percent to $14.2 million for the nine
month period ended September 30, 1997 from $12.0 million for the nine month
period ended September 30, 1996. The increase for the nine month period ended
September 30, 1997 was primarily attributable to a 24.3 percent increase in
revenues. As a percentage of revenues, gross profit was 16.6 percent and 14.5
percent for the three and nine month periods ended June 30, 1997, respectively,
and 15.2 percent for the three and nine month periods ended September 30, 1996.
The increase in gross profit as a percentage of revenues during the three month
period ended September 30, 1997 was primarily attributable to an increase of
revenues of approximately $300,000 which is the result of successful claims for
additional revenues from a contract for a project in California, and an increase
in revenues of approximately $500,000 which is the result of management
negotiations on the Company's largest contract to mitigate certain potential
delay provision liabilities which the Company had previously allowed for by the
reduction of expected revenues.



                                                                              10
<PAGE>   13
General and administrative expenses increased by 30.5 percent to $2.3 million
for the three months ended September 30, 1997 from $1.7 million for the three
months ended September 30, 1996. General and administrative expenses increased
by 40.2 percent to $6.5 million for the nine months ended September 30, 1997
from $4.6 million for the nine months ended September 30, 1996. General and
administrative expenses as a percentage of revenues increased to 6.5 percent for
the three months ended September 30, 1997 from 4.5 percent for the three months
ended September 30, 1996. General and administrative expenses as a percentage of
revenues increased to 6.6 percent for the nine months ended September 30, 1997
from 5.9 percent for the nine months ended September 30, 1996. The increases
were due primarily to increased administrative costs associated with the
acquisition of B&K Steel which has higher general and administrative costs as a
percentage of revenues than the Company and to increased lease expenses due to
contractual increases and assumption of additional space. General and
administrative expenses include those for contract bids, estimating, sales and
marketing, facilities, project management, and support services, none of which
increased in proportion to the increase in revenues, primarily because the
Company's higher average contracts during the period did not require
proportionately higher general and administrative expenses.

Interest expense decreased by 22.0 percent to $263,000 for the nine months ended
September 30, 1997 from $337,000 for the nine months ended September 30, 1996.
The decrease was attributable to the lower average line of credit borrowings,
which was made possible by the Company's ability to increase its billings in
excess of costs and recognized earnings on uncompleted contracts, and the
remaining proceeds generated from the initial public offering.

Other income increased 94.7 percent to $146,000 for the three month period ended
September 30, 1997 from $75,000 for the three month period ended September 30,
1996. Other income increased 100.0 percent to $414,000 for the nine month period
ended September 30, 1997 from $207,000 for the nine month period ended September
30, 1996. The increases in other income was primarily attributable to earnings
on funds invested.

Income tax expense for the three month period ended September 30, 1997 was $1.5
million which approximates a 40 percent effective tax rate. Income tax expense
for the nine month period ended September 30, 1997 was $1.4 million which
represents a 40 percent effective tax rate on earnings of the Company from the
date of its S Corporation status termination on June 26, 1997 offset by a
$300,000 credit to deferred taxes generated upon the revocation of the Company's
S Corporation status.

Backlog increased 45.2 percent to $77.2 million at September 30, 1997 from $53.2
million at June 30, 1997. Backlog at September 30, 1997 increased due to a
greater number of individual contracts at September 30, 1997 and to the receipt
of a $17.4 million contract and a $9.6 million contract which offset decreased
backlog from the Bank One Ballpark, which continues to move toward completion
and full recognition of revenues. These contracts produced backlog totaling
$27.0 million at September 30, 1997. The Company's backlog at September 30, 1997
also reflected approximately $23.0 million attributable to three projects for
one customer in Las Vegas, Nevada.



                                                                              11
<PAGE>   14
The Company has experienced, and is expected to continue to experience,
variations in quarterly and annual results of operations. Factors that may
affect these results include, among other things, the timing and terms of major
contract awards and the starting and completion dates of projects.

Liquidity and Capital Resources

The Company completed an initial public offering of 2,000,000 shares of
common stock on or about July 1, 1997, and closed such offering on July 7,
1997. The offering yielded $14.0 million in proceeds net of underwriting
discounts and other costs. The Company used approximately $7.0 million of the
proceeds to fund S Corporation distributions, and plans to use the remaining
proceeds to purchase specialized fabrication equipment and to fund general
corporate purposes including the acquisition of businesses complimentary to the
Company's business and growth strategy.

In the ordinary course of business, the Company attempts to structure the
payment arrangements under its contracts to match costs incurred under the
project. To the extent the Company is able to bill in advance of costs incurred,
it generates working capital through billings in excess of costs and recognized
earnings on uncompleted contracts. To the extent the Company is not able to bill
in advance of costs, it relies on its credit facilities to meet its working
capital needs. At September 30, 1997, the Company had no borrowings under its
line of credit due in large part to its billings in excess of costs and
recognized earnings on uncompleted contracts of $13.1 million. At such date, the
Company had working capital of approximately $18.7 million. The Company believes
that it has sufficient liquidity through its present resources, including the
remaining net proceeds of its initial public offering and its bank credit
facility, to meet its near term financial needs.

The Company's short-term cash needs are primarily for working capital to support
operations including receivables, inventories, and other costs incurred in
performing its contracts. Operating activities provided cash flows of $1.7
million and $9.2 million for the nine months ended September 30, 1997 and 1996,
respectively, and $14.4 million for the year ended December 31, 1996. For the
nine months ended September 30, 1997, operating cash flows were less than net
income due to increased working capital requirements which included a decrease
of $6.6 million in billings in excess of costs and recognized earnings on
uncompleted contracts. For the nine months ended September 30, 1996, operating
cash flows were greater than net income due largely to favorable billings
relating to contracts in process. Favorable billings also positively impacted
operating cash flows for 1996. Investing activities required $1.8 million and
$2.0 million for the nine months ended September 30, 1997 and 1996,
respectively, and $2.3 million during the year ended December 31, 1996,
substantially all of which were related to purchases of property and equipment
and the cash portion of the acquisition of B&K Steel. Financing activities
consumed $687,000 and $4.0 million for the nine months ended September 30, 1997
and 1996, respectively, and $5.1 million for the year ended December 31, 1996,
and were related to net draws and repayments of long-term debt and line of
credit balances, and distributions to stockholders for income taxes related to
the operations of the business and other stockholder distributions relating to
the Company's prior status as an S Corporation. These distributions totaled
$13.2 million and $2.1 million for the nine months ended September 30, 


                                                                              12
<PAGE>   15
1997 and 1996, respectively, and $2.3 million for the year ended December 31,
1996. Other than remaining S Corporation distributions, the Company does not
anticipate paying any future dividends.

The Company maintains a $10.0 million credit facility with a commercial bank
that is subject to renewal on June 30, 1999 and is collateralized by contract
receivables, equipment and inventory. The Company's credit facility requires
that the Company maintain minimum tangible net worth of $19.0 million, minimum
owners equity (the sum of capital, capital surplus and retained earnings divided
by total assets) of 33 percent, a minimum current ratio of 1.25 to 1.00, and a
minimum debt coverage ratio of 1.5 to 1.0 (net profit after tax plus
depreciation and amortization plus changes in deferred taxes divided by
long-term debt including current maturities). The security agreements pursuant
to which the Company's assets are pledged prohibit any further pledge of such
assets without the written consent of the Company's lender. Under this facility,
the Company may borrow up to an amount equal to the greater of a) 75 percent of
qualified contract receivables up to a maximum of $10 million, or b) a maximum
of $5 million based on the greater of i) 50 percent of the net book value of
fixed assets, or ii) 75 percent of the fair market value of fixed assets. The
Company's ability to borrow is also subject to, among other restrictions,
billings in excess of recognized earnings on uncompleted contracts. At September
30, 1997 there was $3.0 million credit available under the line for
future borrowings. The Company is seeking to modify its credit facility to
increase the amounts available.

The Company has two other long-term debt commitments that are related to its
property and equipment. One is a subordinated note payable to a limited
partnership comprised of two of the Company's principal stockholders and certain
of their family members, which requires monthly payments of $12,037 plus
interest and matures in 2003. The balance on this loan was approximately $1.8
million at September 30, 1997. The other long-term debt of the Company consists
of two notes in the aggregate principal amount of $796,250 incurred as part of
the consideration for the B&K Steel acquisition. Such notes are payable in five
equal annual installments ending in 2002.

The Company estimates that its capital expenditures for 1997 will be
approximately $2.2 million of which approximately $1.3 million had been expended
as of September 30, 1997. The Company estimates that its available funds, cash
generated by operating activities and funds available under its bank credit
facility will be sufficient to fund these capital expenditures and its working
capital needs. However, the Company may expand its operations through future
acquisitions and may require additional equity or debt financing.

Impact of Recently Issued Accounting Standards

Statement of Financial Accounting Standards No. 128 (FAS 128), "Earnings Per
Share," issued by the Financial Accounting Standards Board in February 1997, is
effective for periods ending after December 15, 1997. At that time, the Company
will be required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will 


                                                                              13
<PAGE>   16
be excluded. The impact is expected to result in an increase in pro forma
primary earnings per share for the year ended December 31, 1996 of $0.19 and the
three and nine month periods ended September 30, 1997 of $0.00 and $0.11,
respectively. The impact of FAS 128 on the calculation of fully diluted pro
forma earnings per share for these periods is not expected to be material.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Financial Reporting for Segments of a Business Enterprise," (SFAS No. 131)
which applies to all public business enterprises. SFAS No. 131 specifies the
computation, presentation, and disclosure requirements for business segment
information. SFAS No. 131 supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise," but retains the requirement to report
information about major customers. Statement 131 is effective for financial
statements for periods beginning after December 15, 1997. Management of the
Company does not expect the adoption of SFAS No. 131 will have a material impact
on the Company's financial statement disclosures.

Special Note Concerning Forward Looking Statements

This Quarterly Report on Form 10-Q, including the Notes to the Condensed
Consolidated Financial Statements and in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains forward
looking statements. Additional written or oral forward looking statements may be
made by the Company from time to time in filings with the Securities and
Exchange Commission, in its press releases, or otherwise. The words "believe,"
"expect," "anticipate," "intends," "forecast," "project," and similar
expressions identify forward looking statements. Such statements may include,
but not be limited to, the anticipated outcome of contingent events, including
litigation, projections of revenues, income or loss, capital expenditures, plans
for future operations, growth and acquisitions, financing needs or plans and the
availability of financing, and plans relating to services of the Company, as
well as assumptions relating to the foregoing. Such forward looking statements
are within the meaning of that term in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended.

Forward looking statements reflect the Company's current views with respect to
future events and financial performance and speak only as of the date the
statements are made. Such forward looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified. Future
events and actual results could differ materially from those set forth in,
contemplated by, or underlying the forward looking statements. Statements in
this Quarterly Report, including the Notes to the Condensed Consolidated
Financial Statements and in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations," describe factors, among others,
that could contribute to or cause such differences. Other factors that could
cause actual results to differ materially from those expressed in such forward
looking statements are set forth below under the caption "Factors That May
Affect Future Operating Results and Financial Condition." In addition, new
factors emerge from time to time and it is not possible for management to
predict all of such factors, nor can it assess the impact of each such factor on
the business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from forward looking statements. The



                                                                              14
<PAGE>   17
Company undertakes no obligation to publicly update or review any forward
looking statements, whether as a result of new information, future events, or
otherwise.

Factors That May Affect Future Operating Results and Financial Condition.

The Company's future operating results and financial condition are dependent on
a number of factors that the Company must successfully manage in order to
achieve favorable future operating results and financial condition. The
following potential risks and uncertainties, together with those mentioned
elsewhere herein, could affect the Company's future operating results, financial
condition, and the market price of its Common Stock.

Fluctuating Quarterly Results of Operations

The Company's future operating results and financial condition are dependent on
a number of factors that the Company must successfully manage in order to
achieve favorable future operating results and financial condition. The
following potential risks and uncertainties, together with those mentioned
elsewhere herein, could affect the Company's future operating results, financial
condition, and the market price of the Company's Common Stock.

The Company has experienced, and in the future is expected to continue to
experience, substantial variations in its results of operations as a result of a
number of factors, many of which are outside the Company's control. In
particular, the Company's operating results may vary because of downturns in one
or more segments of the building construction industry, changes in economic
conditions, the Company's failure to obtain, or delays in awards of, major
projects, the cancellation of major projects, the Company's failure to timely
replace projects that have been completed or are nearing completion, or declines
in the amount of the Company's billings in excess of costs and recognized
earnings on uncompleted projects. Any of these factors could result in the
periodic inefficient or underutilization of the Company's resources and could
cause the Company's operating results to fluctuate significantly from period to
period, including on a quarterly basis.

Large Fixed Price Contracts

A substantial portion of the Company's backlog consists of projects being
performed on a fixed price basis. In bidding on projects, the Company estimates
its costs, including projected increases in costs of labor, material and
services. Despite these estimates, costs and gross profit realized on a fixed
price contract may vary from estimated amounts because of unforeseen conditions
or changes in job conditions, variations in labor and equipment productivity
over the terms of contracts, higher than expected increases in labor or material
costs and other factors. These variations could have a material adverse effect
on the Company's business, financial condition and results of operations for any
period.



                                                                              15
<PAGE>   18
Dependence On Construction Industry

The Company earns virtually all of its revenues in the building construction
industry, which is subject to local, regional and national economic cycles. The
Company's revenues and cash flows depend to a significant degree on major
construction projects in various industries, including the hotel and casino,
retail shopping, health care, mining, computer chip manufacturing, public works
and other industries, each of which industries may be adversely affected by
general or specific economic conditions. If construction activity declines
significantly in the Company's principal markets, the Company's business,
financial condition and results of operations would be adversely affected.

Dependence On Subcontractors

The Company routinely relies on subcontractors to perform a significant portion
of its fabrication and project detailing to fulfill projects that the Company
cannot fulfill in-house due to capacity constraints or that are in markets in
which the Company has not established a strong local presence. With respect to
these projects, the Company's success depends on its ability to retain and
successfully manage these subcontractors. Any difficulty in attracting and
retaining qualified subcontractors on terms and conditions favorable to the
Company could have an adverse effect on the Company's ability to complete these
projects in a timely and cost effective manner.

Operating Risks; Litigation

Construction and heavy steel plate weldments involve a high degree of
operational risk. Natural disasters, adverse weather conditions, design,
fabrication and erection errors and work environment accidents can cause death
or personal injury, property damage and suspension of operations. The occurrence
of any of these events could result in loss of revenues, increased costs, and
liability to third parties. The Company is subject to litigation claims in the
ordinary course of business, including lawsuits asserting substantial claims.

Currently, the Company does not maintain any reserves for its ongoing
litigation, and expenses litigation costs as incurred. The Company periodically
reviews the need to maintain a litigation reserve. The Company maintains risk
management, insurance, and safety programs intended to prevent or mitigate
losses. There can be no assurance that any of these programs will be adequate or
that the Company will be able to maintain adequate insurance in the future at
rates that it considers reasonable.

Union Contracts

The Company currently is a party to a number of collective bargaining agreements
with various unions representing the Company's fabrication and erection
employees. These contracts expire or are subject to expiration at various times
in the future. The inability of the Company to renew such contracts could result
in work stoppages and other labor disturbances, which could disrupt the
Company's business and adversely affect the Company's results of operations.


                                                                              16
<PAGE>   19
Percentage Of Completion Accounting

The Company recognizes revenues using the percentage of completion accounting
method. Under this method, revenues are recognized based on the ratio that costs
incurred to date bear to the total estimated costs to complete the project.
Estimated losses on contracts are recognized in full when the Company determines
that a loss will be incurred. The Company frequently reviews and revises
revenues and total cost estimates as work progresses on a contract and as
contracts are modified. Accordingly, revenue adjustments based upon the revised
completion percentage are reflected in the period that estimates are revised.
Although revenue estimates are based upon management assumptions supported by
historical experience, these estimates could vary materially from actual
results. To the extent percentage of completion adjustments reduce previously
reported revenues, the Company would recognize a charge against operating
results, which could have a material adverse effect on the Company's results of
operations for the applicable period.

Geographic Concentration

The Company's fabrication and erection operations currently are conducted
primarily in Arizona and Nevada, states in which the construction industry has
experienced substantial growth during recent years. Because of this
concentration, future construction activity and the Company's business may be
adversely affected in the event of a downturn in economic conditions existing in
Arizona and Nevada and in the southwestern United States generally. Factors that
may affect economic conditions include increases in interest rates or
limitations in the availability of financing for construction projects,
decreases in the amount of funds budgeted for governmental projects, decreases
in capital expenditures devoted to the construction of plants, distribution
centers, industrial facilities, hotels and casinos, convention centers and other
facilities, the prevailing market prices of copper, gold and other metals that
impact related mining activity, and downturns in occupancy rates, office space
demand, tourism and convention related activity and population growth.

Variations In Backlog

The Company's backlog can be significantly affected by the receipt, or loss, of
individual contracts. In the event one or more large contracts were terminated
or their scope reduced, the Company's backlog would decrease substantially. The
Company's future business and results of operations may be adversely affected if
it is unable to replace significant contracts when lost or completed, or if it
otherwise fails to maintain a sufficient level of backlog.

Risks Of International Operations

The Company currently is expanding into international markets. The Company's
international operations are subject to certain political, economic and other
uncertainties, including risks of war, nationalization of assets, renegotiation
or nullification of existing contracts, changing political conditions, changing
laws and policies affecting trade and investment, and overlap of different tax
structures. Although the Company currently attempts to limit its exposure to



                                                                              17
<PAGE>   20
currency fluctuations by dealing solely in United States dollars, there can be
no assurance that the Company's international operations will escape the risks
of fluctuating currency values, hard currency shortages, or controls on currency
exchange.

Competition

Many small and various large companies offer fabrication, erection and related
services that compete with those provided by the Company. Local and regional
companies offer competition in one or more of the Company's geographic markets
or product segments. Out of state or international companies may provide
competition in any market. The Company competes for every project it obtains.

Although the Company believes customers consider, among other things, the
availability and technical capabilities of equipment and personnel, efficiency,
safety record and reputation, price competition usually is the primary factor in
determining which qualified contractor is awarded a contract. Competition has
resulted in pressure on pricing and operating margins, and the effects of
competitive pressure in the industry may continue. Some of the Company's
competitors have greater capital and other resources than the Company and are
well established in their respective markets. There can be no assurance that the
Company's competitors will not substantially increase their commitment of
resources devoted to competing aggressively with the Company or that the Company
will be able to compete profitably with its competitors.

Substantial Liquidity Requirements

The Company's operations require significant amounts of working capital to
procure materials for contracts to be performed over relatively long periods,
and for purchases and modifications of heavy-duty and specialized fabrication
equipment. In addition, the Company's contract arrangements with customers
sometimes require the Company to provide payment and performance bonds and, in
selected cases, letters of credit, to partially secure the Company's obligations
under its contracts, which may require the Company to incur significant
expenditures prior to receipt of payments. Furthermore, the Company's customers
often will retain a portion of amounts otherwise payable to the Company during
the course of a project as a guarantee of completion of that project. To the
extent the Company is unable to receive project payments in the early stages of
a project, the Company's cash flow would be reduced, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.

No Assurance Of Successful Acquisitions

The Company intends to consider acquisitions of and alliances with other
companies in its industry that could complement the Company's business,
including the acquisition of entities in diverse geographic regions and entities
offering greater access to industries and markets not currently served by the
Company. There can be no assurance that suitable acquisition or alliance
candidates can be identified or, if identified, that the Company will be able to
consummate such transactions. Further, there can be no assurance that the
Company will be able to integrate


                                                                              18
<PAGE>   21
successfully any acquired companies into its existing operations, which could
increase the Company's operating expenses.

Moreover, any acquisition by the Company may result in potentially dilutive
issuances of equity securities, incurrence of additional debt and amortization
of expenses related to goodwill and intangible assets, all of which could
adversely affect the Company's profitability. Acquisitions involve numerous
risks, such as diverting attention of the Company's management from other
business concerns, the entrance of the Company into markets in which it has had
no or only limited experience and the potential loss of key employees of the
acquired company, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations.

Dependence Upon Key Personnel

The Company's success depends on the continued services of the Company's senior
management and key employees as well as the Company's ability to attract
additional members to its management team with experience in the steel
fabrication and erection industry. Although the Company has implemented a stock
option plan designed to retain key management and other employees, and believes
that it offers competitive compensation to such personnel, the Company is not a
party to any employment agreements with its management personnel or other key
employees. The unexpected loss of the services of any of the Company's
management or other key personnel, or its inability to attract new management
when necessary, could have a material adverse effect upon the Company.

Potential Environmental Liability

The Company's operations and properties are affected by numerous federal, state
and local environmental protection laws and regulations, such as those governing
discharges to air and water and the handling and disposal of solid and hazardous
wastes. Compliance with these laws and regulations has become increasingly
stringent, complex and costly. There can be no assurance that such laws and
regulations or their interpretation will not change in a manner that could
materially and adversely affect the Company. Certain environmental laws, such as
the Comprehensive Environmental Response, Compensation and Liability Act and its
state law counterparts, provide for strict and joint and several liability for
investigation and remediation of spills and other releases of toxic and
hazardous substances. These laws may apply to conditions at properties currently
or formerly owned or operated by an entity or its predecessors, as well as to
conditions at properties at which wastes or other contamination attributable to
an entity or its predecessors come to be located.

Although the Company has not incurred any material environmental related
liability in the past and believes that it is in material compliance with
environmental laws, there can be no assurance that the Company, or entities for
which it may be responsible, will not incur such liability in connection with
the investigation and remediation of facilities it currently operates (or
formerly owned or operated) or other locations in a manner that could materially
and adversely affect the Company. 


                                                                              19
<PAGE>   22
Governmental Regulation

Many aspects of the Company's operations are subject to governmental regulations
in the United States and in other countries in which the Company operates,
including regulations relating to occupational health and workplace safety,
principally the Occupational Safety and Health Act and regulations thereunder.
In addition, the Company is subject to licensure and holds or has applied for
licenses in each of the states in the United States in which it operates and in
certain local jurisdictions within such states. Although the Company believes
that it is in material compliance with applicable laws and permitting
requirements, there can be no assurance that it will be able to maintain this
status. Further, the Company cannot determine to what extent future operations
and earnings of the Company may be affected by new legislation, new regulations
or changes in or new interpretations of existing regulations.

Possible Volatility Of Stock Price

The stock market has experienced price and volume fluctuations that have
affected the market for many companies and have often been unrelated to the
operating performance of such companies. The market price of the Common Stock
could also be subject to significant fluctuations in response to variations in
the Company's quarterly operating results, analyst reports, announcements
concerning the Company, legislative or regulatory changes or the interpretation
of existing statutes or regulations affecting the Company's business,
litigation, general trends in the industry and other events or factors.

                           Part II. Other Information

Item 2.       Changes in Securities and Use of Proceeds

Use of Proceeds

The Company sold 2,000,000 shares of common stock, par value $0.001 per share,
pursuant to a Registration Statement on Form S-1 (File No. 333-26711), which was
declared effective by the Securities and Exchange Commission on June 26, 1997
(the "Offering"). The Offering commenced on July 1, 1997. All registered
securities subject to this Offering were sold prior to the termination of the
Offering. The managing underwriters of the offering were Principal Financial
Securities, Inc., and Cruttenden Roth Incorporated. All securities were sold for
the account of the Company and there were no selling securityholders. The
aggregate gross proceeds of the Offering were $16,000,000. The Company's total
expenses in connection with the Offering from the effective date of the
registration statement through September 30, 1997 were approximately $2,000,000,
of which $1,120,000 was for underwriting discounts and commissions and
approximately $880,000 was for other expenses, all of which were paid to persons
other than directors or officers of the Company, persons owning more than 10
percent of any class of equity securities of the Company, or affiliates of the
Company. The Company's net proceeds from the Offering were approximately $14.0
million. As of September 30, 1997, the Company expended $7,000,000 on S
corporation distributions to certain of its stockholders prior to the Offering
(each of which stockholders own more than 10 percent of the Company's
outstanding common stock and are controlled by two directors and an executive
officer of the Company), and approximately $800,000 of such net 


                                                                              20
<PAGE>   23
proceeds for the purchase of specialized fabrication equipment. As of September
30, 1997, the Company had expended an aggregate of approximately $7,800,000 of
such net proceeds. As of September 30, 1997, the remaining net proceeds of
approximately $6,200,000 were invested in a yield enhancement account which is
largely invested in a U.S. government money market fund.

Item 6. Exhibits and Reports on Form 8-K

(a)    Exhibits

              Exhibit
              Number                          Description of Exhibit
              ------                          ----------------------


               10.1       Modification and Extension Agreement dated as of 
                          September 30, 1997 between Schuff Steel Company
                          and 19th Avenue/Buchanan Limited Partnership

               11         Statement Regarding Computation of Earnings Per Share

               27         Financial Data Schedule

(b) The Company filed no reports on Form 8-K during the quarter for which this
report is filed.

                                   SIGNATURES

Pursuant to the requirements 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.

                                     SCHUFF STEEL COMPANY

Date:  November 14, 1997             By: /s/ Kenneth F. Zylstra
                                         ----------------------
                                         Kenneth F. Zylstra
                                         Vice President and Chief Financial
                                           Officer
                                         (Principal Financial Officer
                                           and Duly Authorized Officer)



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