<PAGE>   1
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                   FORM 10-K
 
(MARK ONE)
 
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
 
                                       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)
 
<TABLE>
<S>                                         <C>
                 DELAWARE                                   86-0318760
      (STATE OR OTHER JURISDICTION OF          (I.R.S. EMPLOYER IDENTIFICATION NO.)
      INCORPORATION OR ORGANIZATION)
</TABLE>
 
<TABLE>
<S>                                         <C>
         1841 WEST BUCHANAN STREET                             85009
             PHOENIX, ARIZONA                               (ZIP CODE)
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
 
                                 (602) 252-7787
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
 
       SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE.
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 
                    COMMON STOCK, $0.001 PAR VALUE PER SHARE
 
     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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]
 
     At March 9, 1999, the aggregate market value of voting stock held by
non-affiliates of the Registrant was $12,662,000 based on the closing market
price of the Common Stock on such date, as reported by the Nasdaq National
Market.
 
     The number of shares of the Registrant's Common Stock outstanding at March
9, 1999 was 7,027,173.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT RELATING TO ITS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 21, 1999, ARE INCORPORATED BY
REFERENCE INTO PART III HEREOF TO THE EXTENT PROVIDED HEREIN. EXCEPT AS
SPECIFICALLY INCORPORATED BY REFERENCE HEREIN, THE PROXY STATEMENT IS NOT DEEMED
FILED AS PART OF THIS ANNUAL REPORT ON FORM 10-K.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                      PAGE
                                                                                      ----
<S>       <C>      <C>  <C>                                                           <C>
PART I
          Item 1   --   Business....................................................     3
          Item 2   --   Properties..................................................    14
          Item 3   --   Legal Proceedings...........................................    15
          Item 4   --   Submission of Matters to a Vote of Security Holders.........    15
 
PART II
          Item 5   --   Market for the Registrant's Common Equity Securities and
                        Related Stockholder Matters.................................    15
          Item 6   --   Selected Financial Data.....................................    17
          Item 7   --   Management's Discussion and Analysis of Financial Condition
                        and Results of Operations...................................    19
          Item 7A  --   Quantitative and Qualitative Disclosures About Market
                        Risk........................................................    32
          Item 8   --   Financial Statements and Supplementary Data.................    32
          Item 9   --   Changes In and Disagreements With Accountants on Accounting
                        and Financial Disclosure....................................    32
 
PART III
          Item 10  --   Directors and Executive Officers of the Registrant..........    33
          Item 11  --   Executive Compensation......................................    33
          Item 12  --   Security Ownership of Certain Beneficial Owners and
                        Management..................................................    33
          Item 13  --   Certain Relationships and Related Transactions..............    33
 
PART IV
          Item 14  --   Exhibits, Financial Statement Schedules, and Reports on Form
                        8-K.........................................................    33
</TABLE>
 
                                        2
<PAGE>   3
 
                                     PART I
 
                               ITEM 1 -- BUSINESS
 
GENERAL
 
     Schuff Steel Company (the "Company") is a fully integrated fabricator and
erector of structural steel and heavy steel plate. The Company fabricates and
erects structural steel for commercial and industrial construction projects such
as high and low rise buildings and office complexes, hotels and casinos,
convention centers, sports arenas, shopping malls, hospitals, dams, bridges,
mines and power plants. The Company also manufactures short and long span
joists, trusses and girders as well as specializes in the fabrication and
erection of heavy steel plate, including large diameter water pipe, water
storage tanks, pollution control scrubbers, tunnel liners, pressure vessels,
strainers, filters, separators and a variety of customized projects. The Company
seeks to differentiate its operations by offering complete, turnkey steel
construction services featuring engineering, detailing, shop fabrication and
field erection. By offering an integrated package of steel construction services
from a single source, the Company is able to respond more efficiently to the
design and construction challenges associated with large, complex, "fast track"
construction projects.
 
     The Company currently operates primarily in the southwestern and
southeastern United States with a concentration in Arizona, Nevada, Texas,
Florida, Georgia and southern California, with international operations in South
America and Mexico. The Company has experienced significant growth in revenues
over the past five years. Revenues have grown from $58.6 million in 1993 to
$189.9 million in 1998.
 
     The Company provides its integrated steel services primarily to general
contractors and engineering firms, including, among others, Fluor Daniel, Inc.,
Bechtel Group Inc. and Perini Corporation, that focus on a wide variety of
projects, including hotels and casinos, office complexes, hospitals, mining
facilities, manufacturing plants, shopping malls and centers, sports stadiums,
large diameter water pipes, power plants, dams, bridges, restaurants, convention
facilities, entertainment complexes, airports, schools, churches and warehouses.
Representative projects include: Bank One Ballpark, a state-of-the-art baseball
stadium featuring a fully retractable steel roof constructed for Major League
Baseball's Arizona Diamondbacks franchise; Atlas Missile Launch Complex at
Vandenberg Air Force Base in California; MGM Grand Hotel & Casino in Las Vegas,
the world's largest hotel and casino; Paris Hotel and Casino, a hotel and casino
with a scale replica of the Eiffel Tower; several projects for Walt Disney World
and Universal Studios in Orlando, Florida; and Bajo de la Alumbrera in
Argentina, one of the largest copper and gold mines in the world. The Company
maintains relationships with a number of national and multi-national general
contracting and engineering firms and is a preferred subcontractor to companies
such as PETsMART, Inc. and Albertson's, Inc.
 
     The Company was incorporated in Arizona in 1976 and was reincorporated in
Delaware in 1997. The Company's principal executive offices are located at 1841
West Buchanan Street, Phoenix, Arizona 85009, and its telephone number is (602)
252-7787.
 
     On June 4, 1998, the Company acquired all of the capital stock of Addison
Structural Services, Inc. ("Addison"), a privately-held holding company
headquartered in Albany, Georgia. Addison, through its wholly owned operating
subsidiaries, provides structural steel fabrication and detailing services and
manufactures short and long span joists, trusses and girders for commercial and
light industrial projects. Addison operates primarily in the southeastern United
States with a concentration in Florida and Georgia, and maintains two steel
fabrication plants in Lockhart, Florida and Albany, Georgia, and a steel joist
manufacturing plant in Quincy, Florida. The aggregate purchase price was $59.5
million, of which approximately $56.3 million was paid in cash at closing and
$3.2 million was paid in the form of a promissory note. Addison had revenues of
$63.6 million in its fiscal year ended June 30, 1997.
 
     On August 31, 1998, the Company acquired all of the capital stock of Six
Industries, Inc. ("Six"), a privately-held company headquartered in Houston,
Texas. Six and its subsidiary, Aitken, Inc., offer a wide array of steel
fabrication services and products to the oil, gas, and petro chemical
industries, which include structural steel for large industrial contractors in
Houston and other locations situated near the Gulf of Mexico; strainers,
filters, separators and other types of measuring equipment; and pressure
vessels. The
 
                                        3
<PAGE>   4
 
aggregate purchase price was $18.2 million, of which $16.7 million was paid in
cash at closing and $1.5 million was paid in the form of a promissory note. Six
had revenues of $19.8 million in its fiscal year ended March 31, 1998.
 
     On October 15, 1998, the Company acquired all of the capital stock of
Bannister Steel, Inc. ("Bannister"), a privately-held company headquartered in
National City, California. Bannister provides structural steel fabrication
services for industrial and commercial projects in the southern California
construction market. The aggregate purchase price was $16.8 million, of which
$15.8 million was paid in cash at closing and $1.0 million was paid in the form
of a promissory note. Bannister had revenues of $21.4 million in its fiscal year
ended December 31, 1997.
 
     The acquisitions have enabled the Company to broaden its geographic reach,
access joist manufacturing, increase its customer base, leverage operating
capabilities and acquire growing revenue streams.
 
OVERVIEW OF INDUSTRY
 
     Companies engaged in the steel fabrication and erection industry prepare
detailed shop drawings, fabricate and erect structural steel and steel plate
weldments, and perform related engineering services for the construction of
various facilities. The primary customers for these services include private
developers, general contractors, engineering firms and governmental agencies
involved in a variety of large scale construction projects. Historically, these
customers have relied on multiple subcontractors to perform various services to
complete a single project, primarily because few companies in this industry
offer fully integrated engineering, detailing, fabrication and erection
services.
 
     The Company believes that there is an increasing trend in the construction
industry toward complex, fast track, "design-as-you-go" projects. This trend is
largely driven by the desire of project owners to more quickly secure the
benefits of revenue producing projects, such as casinos, mines and computer chip
plants. These projects require that all phases of construction be accomplished
in accordance with compressed time schedules. Further, because many construction
activities are dependent on the progress of steel fabrication and erection,
timely completion of these phases is critical. These projects also are
characterized by numerous design changes requiring that all construction
participants coordinate their efforts in order to respond quickly and
efficiently in implementing these changes. These trends have created a demand
for fully integrated fabrication and erection contractors that can (i) avoid the
coordination difficulties inherent in the use of multiple subcontractors and
(ii) implement rapid and multiple design changes in a coordinated and timely
manner, preventing project delays and reducing costs to the general contractor
or owner. The Company believes that it has gained a reputation in the industry
as a reliable, fully integrated provider of engineering, detailing, fabrication
and erection services with the ability to complete large, complex projects on a
timely, cost efficient basis.
 
     The Company also believes that the steel fabrication and erection industry
is highly fragmented and that many of its competitors are small businesses
operating in local or regional markets. Given the trend toward the use of fully
integrated contractors and the large number of smaller companies engaged in this
industry, the Company believes the industry may experience consolidation.
 
BUSINESS STRATEGY
 
     The Company's objective is to achieve and maintain a leading position in
the geographic and project markets in which it competes by providing timely,
high quality services to its customers, continuing to grow internally and making
selected strategic and consolidating acquisitions. The Company is pursuing this
objective with a strategy comprised of the following components:
 
     Pursue Design-As-You-Go Projects.  The Company pursues fast track,
design-as-you-go projects as a significant portion of its overall business. The
Company's unique ability to offer a full range of steel services and project
management capabilities makes it a preferred subcontractor for fast track
projects in the markets it serves. This capability often enables the Company to
compete against a few, select firms in a less traditional,
 
                                        4
<PAGE>   5
 
more negotiated selection process on such projects, thereby allowing the Company
to realize attractive margins while providing overall cost savings and project
flexibility and efficiencies to its customers.
 
     Expand Revenue Base.  The Company is seeking to expand its revenue base by
leveraging its long-term relationships with national and multi-national
construction and engineering firms, national and regional accounts and other
customers. The Company also intends to continue to grow its operations by
developing new project capabilities and services and by targeting specific types
of projects in which it has an existing reputation for expertise, such as
semiconductor facilities, sports stadiums, airports, hotels and casinos and
specialty projects such as large diameter water pipes. The Company believes that
continuing to diversify its revenue base will reduce the impact of periodic
adverse market or economic conditions.
 
     Manage Capacity Through Outsourcing.  The Company increases its project
capacity by outsourcing certain amounts of its detailing, fabrication and
erection work to reputable subcontractors. Outsourcing has enabled the Company
to effectively increase the capacity of its fabrication facilities while
maintaining margins comparable to in-house services. The Company believes
outsourcing will play a key role in its strategy to continue to expand its
presence in selected international markets, where it typically provides design
engineering and project management services and utilizes local subcontractors
for fabrication and erection. The ability to expand or contract capacity through
the use of outsourcing provides the Company flexibility to meet changing market
demands in a cost-effective manner.
 
     Make Strategic and Consolidating Acquisitions.  The Company intends to
continue to evaluate selected acquisitions that offer the Company (i)
strategically located facilities, (ii) expansion into new geographic markets,
(iii) access to new domestic and international customers and (iv) penetration of
new product market segments. Such acquisitions may also provide the additional
benefits of increasing purchasing efficiencies with respect to steel and other
raw materials, bonding and insurance, more efficiently allocating and utilizing
its resources and integrating the "best practices" of the Company and acquired
companies throughout the combined organization.
 
     Maintain Entrepreneurial Environment.  The Company believes its management
and operating structure, which emphasizes quality, innovation, flexibility,
performance and safety, has contributed significantly to profitability and the
ability to develop new business in competitive or difficult economic
environments. The Company's operating structure provides incentives to employees
at all levels to focus on pursuing profitable growth opportunities, attaining
financial objectives and delivering superior customer service.
 
     Emphasize Innovative Services.  The Company focuses its engineering,
detailing, fabrication and erection expertise on distinct product segments
requiring unique or innovative techniques, where the Company typically
experiences less competition and more advantageous negotiated contract
opportunities. The Company has extensive experience in providing services
requiring complex fabrication and erection techniques and other unusual project
needs, such as specialized transportation, steel treatment or specialty coating
applications. These service capabilities have enabled the Company to address
such design sensitive projects as computer chip manufacturing facilities, large
diameter underground water pipes, and uniquely designed hotels and casinos.
 
     Diversify Customer and Product Base.  Although the Company seeks to garner
a leading share of the geographic and product markets in which it competes, it
also seeks to diversify its construction projects across
 
                                        5
<PAGE>   6
 
a wide range of commercial, industrial, and specialty projects. The following
chart sets forth the percentage of revenues attributable to the Company's
various principal geographic and project markets for 1998 and 1997:
 
<TABLE>
<CAPTION>
                                             COMMERCIAL      INDUSTRIAL        OTHER
                                            ------------    ------------    ------------
                                            1998    1997    1998    1997    1998    1997
                                            ----    ----    ----    ----    ----    ----
<S>                                         <C>     <C>     <C>     <C>     <C>     <C>
Arizona...................................  17.6%   38.6%   0.6%    9.1%    1.1%    1.4%
California................................   8.9%    7.6%   2.3%    0.6%    0.0%    0.0%
Florida/Georgia...........................  25.1%    0.0%   0.0%    0.0%    0.0%    0.0%
Nevada....................................  23.5%   38.0%   0.2%    0.4%    0.1%    0.0%
New Mexico................................   0.0%    0.0%   1.3%    0.7%    0.0%    0.0%
Texas.....................................   0.0%    0.0%   2.9%    0.0%    0.0%    0.0%
Utah......................................  11.6%    0.0%   0.0%    0.0%    0.0%    0.0%
International.............................   0.0%    0.0%   4.8%    3.6%    0.0%    0.0%
</TABLE>
 
     For additional information regarding the breakdown of revenues and
operating results for the Company and its subsidiaries, see Note 14 to the
Consolidated Financial Statements appearing elsewhere in this report.
 
     In recent periods, the Company has focused efforts on diversifying into
international markets. Accordingly, the Company believes that its combined
diversification into new geographic, specific product and international markets
has enabled and will continue to enable it to expand its revenue base and to
reduce the impact of periodic market or economic conditions adversely impacting
one or more of its market segments. To date, international operations have been
primarily in South America and Mexico and have been less than 10% of revenues.
The contracts have been based in U.S. dollar amounts and are with known general
contractors, therefore, the Company has not experienced any unusual financial
risks.
 
GROWTH STRATEGY
 
     The Company believes that the steel fabrication and erection industry will
continue to be characterized by large, complex, fast track projects. The
complexity and size of these projects requires companies with extended financial
and operational capabilities. With its integrated service capabilities and
financial and management strength, the Company intends to take advantage of this
trend. Additionally, the fragmented nature of the industry provides the Company
opportunities for growth. The Company seeks to achieve continued growth and
diminish the impact of business and economic cycles by pursuing a growth
strategy consisting of the following components:
 
     Acquire Synergistic Businesses.  In addition to Addison, Six and Bannister,
the Company intends to pursue selective acquisitions of steel detailing,
fabrication and erection companies that offer the Company increased plant
facilities, opportunities to increase market share in selected geographic
markets, penetration of new product market segments and access to domestic and
international markets targeted by the Company for geographic expansion. Such
acquisitions may also provide the continued and additional benefits of increased
purchasing efficiencies with respect to steel and other raw materials, payment
and performance bonding and insurance premiums, and more efficient allocation
and utilization of labor resources among projects within its geographic markets.
The Company believes that many of its competitors operate primarily on a local
or limited geographic basis and, while having established relationships in those
markets, lack the resources to compete for large or more complex projects. In
addition, the industry is highly fragmented with many of the Company's
competitors being closely or family held entities.
 
     Promote Internal Growth.  The Company intends to pursue continued internal
growth by adding sales and marketing personnel to dedicated, fast growing
markets in which the Company is actively pursuing new projects, by further
developing its engineering and design capabilities and fabrication capacity, and
by continually updating its fabrication and detailing equipment and
technologies. The Company believes that these efforts will enhance its market
share, revenues, and operating income in its existing and targeted principal
markets and improve its operating capacity. In 1997, the Company secured
additional office and administrative facilities, which permitted the expansion
of its existing detailing, estimating and other project operations. The Company
also invested $2.3 million in 1998, and intends to invest approximately $3.5
million
 
                                        6
<PAGE>   7
 
in 1999, in new fabrication equipment and technologies. The Company is also
considering the expansion of certain of its facilities and production
capacities, which would increase the 1999 estimated capital expenditures.
 
     Create Additional Project Opportunities.  The Company believes that its
ability to efficiently coordinate and implement numerous design and logistical
changes on large or more complex fast track projects, combined with its
established long term relationships with key national and multi-national general
contractors and other customers, will provide the Company with opportunities to
market its services in a number of markets in which the Company has not yet
achieved a leading position or conducted significant operations. Domestically,
the Company plans to expand into markets in which it believes it can leverage
its existing expertise to achieve a significant share of such markets. Among the
regions targeted by the Company for domestic expansion are the Pacific
Northwest, which presents several opportunities in the expanding computer chip
manufacturing industry. The Company also will seek to capture significant market
share in selected product markets. Among other markets, the Company is seeking
to increase its participation in the construction of sports stadiums, airports,
mining and smaller commercial construction markets. The Company plans to
participate in these markets through the acquisition of existing participants,
expansion of strategic customer relationships into new markets, and through
increased sales and marketing efforts generally.
 
     Expand Internationally and Develop Strategic Alliances.  The Company
recently has developed its presence in selected international markets, including
Chile, Argentina and Mexico and is pursuing opportunities in Southeast Asia.
Each of these international markets is expected to have a growing demand for
services offered by the Company. In Argentina, the Company recently completed
fabrication and erection coordination services for mill facilities at one of the
largest copper mines in the world. The Company also completed a large mining
project in Chile. In addition, the Company will seek to expand internationally
by partnering with existing multi-national customers such as Fluor Daniel, Inc.
and Bechtel Group, Inc., as well as other international structural and design
engineering firms, and by entering into strategic alliances with leading foreign
fabricators and erectors in the Company's targeted international markets. The
Company believes that its international alliances also will help to reduce its
risk of entry into foreign markets by partnering with entities having an
established presence and experience in such markets.
 
PRIMARY MARKETS AND PRODUCTS
 
     The Company's current principal geographic markets include the southwestern
United States, primarily Arizona, Nevada, Texas and southern California, and the
southeastern United States, primarily Florida and Georgia.
 
     The Company currently is expanding into other regions of the western United
States, such as Utah and Colorado and into selected international markets.
 
     Southwestern and Western U.S. Markets.  The Company is the leading steel
fabrication and erection firm in Arizona and has been a prominent participant in
many of Arizona's largest and most visible public and private projects. The
Company has completed projects in Arizona in a variety of industries, including
the semiconductor and computer chip industry and the copper and other mining
industries. In Nevada, the Company is the leading steel fabricator and erector
in the hotel, entertainment and gaming construction industry, which has
experienced rapid expansion over the past several years and is expected to
continue its expansion for the foreseeable future. The Company also has
maintained a strong presence in the California market and intends to achieve a
greater share of this geographic market with its recent acquisition of Bannister
and as it experiences an increase in new construction activity. The Company's
typical projects in California include the fabrication and erection of new and
expanded hospital facilities, large shopping malls, commercial and industrial
manufacturing, distribution and warehouse facilities, including those for
several national and multinational customers.
 
     Within the southwestern and western United States geographic markets, the
Company has also developed a market share in distinct product segments,
particularly in the construction of large diameter water pipes used in
governmental aqueduct systems. These projects require the complex formation and
welding of steel plate into large diameter pipe sections that are used to
transport water from major supply sources to
                                        7
<PAGE>   8
 
various population centers. The Company has developed in-house specialized
fabrication equipment used to construct and weld these pipe sections, a unique
coal tar and fiberglass enamel application system used to coat the pipe and
customized transportation equipment necessary to deliver the system to its
ultimate destination. With the Six acquisition in Texas, the Company has
developed a market share in the oil, gas, and petro-chemical industries by
providing structural steel; strainers, filters, separators and other types of
measuring equipment; and pressure vessels. The Company has also expanded its
market share into Utah with the fabrication and erection of the new assembly
building for the Church of Jesus Christ of Latter Day Saints and into Colorado
with the Company recently being awarded the contract for fabrication and
erection services for the New Mile High Stadium.
 
     Southeastern U.S. Markets.  The Company is a leading steel fabrication,
erection and joist manufacturing firm in Central Florida and Georgia. Many of
the Company's projects in these areas are in the commercial and industrial
markets and typically range in size from $50,000 to $1.0 million for structural
steel fabrication projects and from $5,000 to $500,000 for steel joist
manufacturing products. The Company has completed several steel fabrication and
erection and joist manufacturing projects, both in the southeastern United
States and nationwide, for a variety of national and regional retail, grocery,
restaurant and similar customers.
 
     International Markets.  The Company recently has focused its expansion into
selected international markets such as South America and Mexico. In South
America, the Company's projects have been focused on large copper, gold and
aluminum mining and related projects, primarily in Argentina and Chile. In
addition, the Company has completed construction of several airport concourse
and terminal facilities in the Caribbean.
 
REPRESENTATIVE PROJECTS
 
     Among the Company's noteworthy or recently completed or awarded projects
and key national and regional customers are the following:
 
     - Bank One Ballpark.  In 1995, the Company was awarded a contract to
       provide steel fabrication and erection services for the Bank One Ballpark
       in Phoenix, a state of the art baseball stadium for Major League
       Baseball's Arizona Diamondbacks franchise that features a fully
       retractable roof consisting of steel components detailed, fabricated and
       erected by the Company. The stadium contract represented a total of
       approximately $61 million in revenues to the Company. The stadium
       required over 20,000 tons of structural steel and employed approximately
       160 iron workers at the peak of construction.
 
     - Atlas Missile Launch Complex.  The Company provided the steel fabrication
       and erection services for the Atlas Missile Launch Complex at Vandenberg
       Air Force Base in California.
 
     - Bajo de la Alumbrera.  The Company provided the design consultation,
       fabrication and delivery of approximately 7,200 tons of structural steel
       for the Bajo de la Alumbrera mining project in Argentina, which is one of
       the largest copper mines in the world.
 
     - MGM Grand Hotel and Casino and Convention Center Renovation.  This
       structure is presently the world's largest hotel and casino with 5,005
       hotel rooms and one million square feet of retail and casino space. The
       Company's participation includes the fabrication and erection of the main
       hotel and casino as well as the completion of a facade renovation and the
       provision of fabrication and erection services for the new MGM Convention
       Center, which consists of over 250,000 square feet of convention area.
 
     - New York, New York Hotel and Casino.  The Company was the fabricator and
       erector for the New York, New York Hotel and Casino, which required
       approximately 6,500 tons of structural steel. The hotel was constructed
       to resemble the New York City skyline, including replicas of the Statue
       of Liberty, the Brooklyn Bridge and other New York City landmarks.
 
     - Paris Hotel & Casino.  The Company was awarded two contracts for the
       fabrication and erection of the structural steel for the 1.2 million
       square foot low-rise area and the 34-story tower of the new Paris Hotel
       and Casino in Las Vegas, which will include hotel, casino, showroom,
       convention center and retail shopping areas. The project also entails the
       fabrication and erection by the Company of a 540
 
                                        8
<PAGE>   9
 
       foot tall scale replica of the Eiffel Tower which will be built over and
       penetrate into the casino based on the original engineering drawings for
       the Eiffel Tower.
 
     - Riverside Badlands Tunnel.  The Company was recently awarded a contract
       for the fabrication of 7 1/2 miles of 12-foot diameter pipe for the
       Riverside Badlands Tunnel Project of the Metropolitan Water District of
       Southern California.
 
     - Salt River Siphon Replacement Project.  The Company served as the
       fabricator and erector for the Salt River Siphon Replacement project, a
       project requiring the fabrication of over 8,500 feet of 21-foot diameter
       pipe for the U.S. Bureau of Reclamation. The system transports water from
       the Salt River near Phoenix, Arizona to the major population centers of
       Arizona.
 
     - Walt Disney World Projects.  The Company has provided the structural
       steel fabrication and erection services for several Walt Disney World
       projects in Orlando, Florida, including the United Kingdom and Canada
       Pavilion's at Epcot Center, the Splash Mountain amusement park ride and
       the Planet Hollywood Restaurant and Bar, which involved the fabrication
       of a unique multi-leg spherical steel crown covering the main building.
 
     - Orange County, Florida Convention Center.  The Company provided the steel
       fabrication and erection services and manufactured and erected the steel
       joists and trusses for Phases II and III of this one million square foot
       modern convention center, a complex multi-level facility recently
       constructed in the Orlando, Florida area.
 
     - Tropicana Storage Facility.  The Company provided the fabrication and
       erection of the structural steel housing facility for several one-million
       gallon steel fruit juice storage tanks for Tropicana Products, Inc.'s
       juice storage center in Fort Pierce, Florida.
 
     - Universal Studios.  The Company was a steel fabricator and joist
       manufacturer for the Universal Studios complex in Orlando, Florida, a
       large working movie studio and tourist attraction.
 
     - National and Regional Customers.  The Company is a preferred
       subcontractor for steel fabrication and erection services and joist
       products on a variety of projects for several national and regional
       customers, including PETsMART, Inc. and Albertson's, Inc.
 
BUSINESS OPERATIONS
 
     The primary services provided by the Company are engineering and
preparation of detail drawings, shop fabrication, and field erection. Following
is a description of the Company's principal services.
 
     Engineering and Detailing.  The Company maintains significant in-house
structural engineering and detailing capabilities which enable it to implement
and coordinate with its shop and field personnel changes to building and
structural designs sought by project owners or general contractors, and to help
influence critical determinations as to the most cost effective systems,
designs, connections, and erection procedures for a particular project. The
Company's detailers prepare detail shop drawings of the dimensions, positions,
locations, and connections, and the fabrication and erection sequences of, each
piece of steel utilized in a project, and continually update these drawings to
accommodate design and other changes. The Company has a Stru-CAD automated
detailing system that interacts electronically with the Company's numerically
controlled fabrication equipment and produces updated detail drawings
electronically, which are delivered to each of the Company's domestic and
foreign field locations. The Company's detailing division initially prepares
advance materials bills by size and length of each steel piece within
pre-defined areas or sequences of erection for each project. Detailers
coordinate directly with customers and the Company's fabrication and erection
teams to determine and plan the order of fabrication and erection of a project
and associated personnel and equipment requirements.
 
     Shop Fabrication.  The Company's fabrication services consist of the
procurement from steel producers of raw steel shapes in different sizes and
lengths. These shapes vary in cross-section from I-beams to angle, channel,
tube, pipe, and plate. Upon delivery of these steel shapes, and prior to
fabrication, the Company prepares load lists that identify the sequence and date
that each individual piece of steel is required on a
                                        9
<PAGE>   10
 
project, a procedure that reduces the handling of and the need to store
materials in the field. Upon completion of detail shop drawings, the Company's
fabrication shop cuts the raw steel pieces to length, drills and punches holes
through the use of numerically controlled beam lines, and completes coping and
beveling with its numerically controlled machinery and automated burning
equipment. The Company then fabricates fittings and completes welding and
inspection of each finished structural piece. The Company utilizes advanced
technologies to inspect weld seams, which significantly reduces costs,
fabrication hours, and the likelihood of structural defects. After the
completion of processing to customer specifications, finished pieces are loaded
for shipment to the construction site, often pursuant to just-in-time delivery
schedules. The Company also manufactures steel joists and girders in lengths
ranging from five to 300 feet with a highly efficient and computerized process.
The steel joist system is the one of the most economical roof systems for most
buildings including office buildings, schools, churches, shopping centers,
warehouses and etc.
 
     Field Erection.  The erection process typically consists of pre-assembly of
steel component parts at the project site, the lifting of components by crane to
the appropriate location at the site and the final assembly of major components
to form the steel backbone of the project. The Company's field erection crews
erect fabricated steel components in accordance with erection drawings prepared
and updated by the Company's detailers. The erection process for each project is
managed by experienced field supervisors and the Company employs local union
erection personnel on an as needed basis in areas near the project sites.
 
PROJECT MANAGEMENT
 
     All contract awards to the Company are assigned a project number which is
used to track each steel component and man-hour associated with the project
through the entire construction process. All project drawings, specifications,
and completion schedules on a project are reviewed by the Company's Vice
President of Project Coordination and all projects are assigned to one or more
Project Managers who assume primary responsibility for all aspects of the
project. Often a Project Manager assigned to a given project will have
significant experience in similar projects. A Project Manager generally will be
responsible for one to five projects in various stages of completion at any
given time, depending on the scope, complexity, and geographic location of such
projects. Each project is divided into critical sequences of steel groups that
follow the anticipated erection or fabrication path. Each sequence follows a
timeline and the status is continually monitored. The Vice President of Project
Coordination and Project Manager for each project coordinate and manage design
changes or other changes in scheduled completion deadlines in an effort to
minimize overall project delays. The Company provides production bonuses to its
Project Managers based on, among other factors, the achievement of lower costs
on a project than the estimated costs used to formulate the initial bid or price
or prices of subsequent change orders, and the ability to minimize costs or cost
overruns on particularly complex projects or on projects that exceed initial
cost estimates.
 
     The Company believes that a key factor in its success has been its ability
to provide through its in-house personnel valuable input and assistance to
general contractors, engineering firms, and other customers with respect to
overall project design of fabrication and erection sequences and other critical
project decisions. This often results in overall project cost savings and
efficiencies and helps to solidify key customer relationships. In addition to
its centralized project management, the Company also uses a high percentage of
skilled erection employees local to projects and utilizes advanced scheduling
systems to enhance its ability to provide project management services to
customers complementary to its core engineering, detail drawing, shop
fabrication, and field erection services.
 
SAFETY AND QUALITY ASSURANCE
 
     The Company has adopted and maintains important safety policies that are
administered and enforced by the Company's top management. The Company considers
workplace accident prevention to be of primary importance in all phases of its
operations and provides continual training on safety procedures and techniques
to all of its shop and field personnel.
 
     The Company uses advanced welding and fabrication technologies and all of
the Company's products are fabricated in accordance with applicable industry and
specific customer standards and specifications. The
 
                                       10
<PAGE>   11
 
Company has achieved and maintains a level three certification by the American
Institute of Steel Construction (AISC) with respect to its fabrication
operations, the highest level of certification available from AISC. In addition,
the Company's welding employees are certified in accordance with the American
Society of Mechanical Engineers (ASME) Section IX, Non-Destructive Examination
Inspector Certification to Society Non-Destructive Testing TC-IA Standards. The
Company has developed project-specific and Company-wide quality assurance and
quality control programs, and utilizes sophisticated x-ray and ultra-sonic
systems to inspect weld seams. Substantially all joist manufacturing projects
require companies to be members of the Steel Joist Institute (SJI). The Company
is one of only 16 companies nationwide that belong to the SJI.
 
SALES AND ESTIMATING
 
     The Company's domestic sales and marketing efforts are led by sales
managers. Each sales manager is responsible primarily for the Company's sales
and marketing efforts in defined geographic areas, including the emerging South
American and Mexican markets. In addition, the Company employs full-time project
estimators and chief estimators. The Company's sales representatives maintain
relationships with and make personal and other sales calls on general
contractors, architects, engineers, and other potential sources of business to
determine potential new projects under consideration, which provides the Company
with valuable market information and new project opportunities. The Company
maintains future projects reports in order to track the weekly progress of new
opportunities. The Company's sales efforts are further supported by most of its
executive officers and by its engineering personnel, who have substantial
experience in the design, fabrication, and erection of structural steel and
heavy steel plate.
 
     The Company competes for new project opportunities through its
relationships and interaction with its active and prospective customer base,
which provides the Company with valuable current market information and sales
opportunities. In addition, the Company frequently is contacted by governmental
agencies in connection with public construction projects, and by large private
sector project owners and by general contractors and engineering firms in
connection with new building projects such as plants, warehouse and distribution
centers, and other industrial and commercial facilities.
 
     Upon selection of projects to bid or price, the Company's estimating
division reviews and prepares projected costs of shop, field, detail drawing
preparation and crane hours, steel and other raw materials, and other costs. On
bid projects, a formal bid is prepared detailing the specific services and
materials to be provided by the Company, payment terms and project completion
timelines. Upon acceptance, the Company's bid proposal is finalized in a
definitive contract.
 
CONTRACTING METHODS AND PERFORMANCE BONDING
 
     The Company's projects are awarded through a competitive bid process or are
obtained through negotiation, in either case generally using one of three types
of contract pricing approaches: fixed price, cost-plus pricing or unit cost
pricing. Under the fixed price approach, the Company receives the price fixed in
the contract, subject to adjustment only for change orders placed by the
customer. As a result, the Company retains all cost savings but is also
responsible for cost overruns. Under the cost-plus arrangement, the Company
receives a specified fee in excess of its direct labor and material cost, up to
a maximum amount, and thus seeks to gain protection against cost overruns and
sometimes benefits directly from cost savings. Historically, a substantial
majority of the Company's contracts have been fixed price arrangements. Under
unit cost pricing, the Company receives a specified fee based on pounds or tons
of fabricated steel shipped. Such fee includes all material, labor, overhead and
profit mark-ups to prepare the steel to the customer's requirements. Steel
fabricated and shipped in excess of quantities quoted is billed to the customer
at the original unit cost price per pound or ton.
 
     While customers may consider a number of factors, including availability,
capability, reputation, and safety record, price and the ability to meet
customer imposed project schedules are the principal factors on which the
Company obtains contracts. Generally, the Company's contracts and projects vary
in length from
 
                                       11
<PAGE>   12
 
one to twelve months depending on the size and complexity of the project,
project owner demands, and other factors.
 
     The Company's contract arrangements with customers sometimes require the
Company to provide payment and performance bonds and, in selected cases
typically associated with international projects, letters of credit, to
partially secure the Company's obligations under its contracts. Bonding
requirements typically arise in connection with public works projects and
sometimes with respect to certain private contracts. The Company's payment and
performance bonds are obtained through surety companies and typically cover the
entire contract price on a project. The Company believes that its bonding
capacity provides a competitive advantage in some cases due to the Company's
ability to obtain large bonds and to negotiate more favorable pricing of bonds.
 
BACKLOG
 
     The Company considers backlog an important indicator of its operating
condition because its engineering, detailing, fabrication, and erection services
are characterized by long lead times for projects and orders. The Company
defines its backlog of contract commitments as the potential future revenues to
be recognized upon performance of contracts awarded to the Company. Backlog
increases as new contract commitments are obtained, decreases as work is
performed and the related revenues are recognized, and increases or decreases as
modifications in work are performed under a contract. As of December 31, 1998,
the Company's backlog was $132.9 million, of which approximately $23.7 million
was attributable to one project for a single customer in California, and
approximately $6.5 million was attributable to one project in Utah. Backlog
increased to $132.9 million at December 31, 1998 compared to $56.8 million at
December 31, 1997 as a result of additional backlog of approximately $40.6
million generated from Addison, Six, and Bannister. The Company expects
approximately 90% of its backlog as of December 31, 1998 to be recognized as
revenues in 1999.
 
COMPETITION
 
     The principal geographic and product markets served by the Company are
highly competitive. The Company competes with other contractors on a local,
regional, or national basis, and in certain cases, on an international basis.
The Company has different competitors for each of its services and product
segments and within each geographic market served by the Company. The Company
believes that it can compete effectively for new projects both nationally and
internationally and that it is among the largest competitors in its industry.
Among the principal competitive factors within the industry are price,
timeliness of completion of projects, quality, reputation, and the desire of
customers to utilize specific contractors with whom they have favorable
relationships and prior experience. Certain of the Company's competitors have
financial and operating resources greater than those of the Company.
 
GOVERNMENTAL REGULATION
 
     The Company's operations are governed by and subject to government
regulations in the United States and in foreign countries in which the Company
operates, including laws and regulations relating to workplace safety and worker
health, principally the Occupational Safety and Health Act and regulations
thereunder in the United States. With respect to its international operations,
the Company is subject to a number of laws and regulations, including those
relating to taxation of its earnings and earnings of its personnel and its use
of local personnel and suppliers. The Company's operations are subject to the
risk of changes in federal, state, and local laws and policies which may impose
restrictions on the Company, including trade restrictions, expropriation or
nationalization decrees, confiscatory tax systems, primary or secondary boycotts
or embargoes directed at specific countries, import restrictions or other trade
barriers, and mandatory sourcing rules, any of which could, if adopted or
implemented, materially and adversely affect the Company. The Company believes
that it is in material compliance with the laws and regulations under which it
and its operations are currently governed and does not believe that future
compliance with such laws and regulations will have a material and adverse
effect on it. The Company cannot determine, however, 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.
                                       12
<PAGE>   13
 
     The Company is subject to licensure and holds licenses in each of the
states in the United States in which it operates and in certain local
jurisdictions within such states. The Company believes that it is in material
compliance with all contractor licensing requirements in the various states in
which it operates. The loss or revocation of any license or the limitation on
any of the Company's primary services thereunder in any state in which the
Company conducts substantial operations could prevent the Company from
conducting further operations in such jurisdiction and would have a material
adverse effect on the Company.
 
ENVIRONMENTAL REGULATION
 
     The Company's operations and properties are affected by numerous federal,
state, and local environmental protection laws and regulations, such as those
governing discharges into air and water, and the handling and disposal of solid
and hazardous waste. The requirements of these laws and regulations have become
increasingly stringent, complex, and costly to comply with. In addition, the
Company may be subject to claims alleging personal injury or property damage as
a result of alleged exposure to hazardous substances. The Company is not aware
of any non-compliance with environmental laws that could have a material adverse
effect on the Company's business or operations. There can be no assurance,
however, that such laws, regulations, or their interpretation will not change in
the future in a manner that could materially and adversely affect the Company.
 
     Certain environmental laws, such as CERCLA, provide for strict and joint
and several liability for investigation and/or remediation of spills and other
releases of hazardous substances. Such laws may apply to conditions at
properties presently owned or operated by the Company or its predecessors, as
well as to conditions at properties at which waste or other contamination
attributable to an entity or its predecessors come to be located. The Company's
facilities have been operated for many years, and substances that are or might
be considered hazardous were used at such locations. The Company does not
anticipate incurring material capital expenditures for environmental controls or
for investigation or remediation of environmental conditions during the current
or succeeding fiscal year. Nevertheless, the Company can give no assurance that
it, or entities for which it may be responsible, will not incur liability in
connection with the investigation and remediation of facilities it currently
owns or operates or other locations in a manner that could materially and
adversely affect the Company.
 
EMPLOYEES
 
     As of December 31, 1998, the Company employed approximately 1,375 people.
The number of persons employed by the Company on an hourly basis fluctuates
directly in relation to the amount of business performed by the Company. Certain
of the fabrication and erection personnel employed by the Company are
represented by the United Steelworkers of America, the International Association
of Bridge, Structural and Ornamental Iron Workers Union, the International Union
of Operating Engineers, and the International Brotherhood of Boilermakers, Iron
Shipbuilders, Blacksmiths, Forgers and Helpers Union. The Company is a party to
several separate collective bargaining agreements with such unions in certain of
the Company's current operating regions, which expire (if not renewed) at
various times in the future. Most of the Company's collective bargaining
agreements are subject to automatic annual or other renewal unless either party
elects to terminate the agreement on the scheduled expiration date. The Company
considers its relationship with its employees to be good and, other than
sporadic and unauthorized work stoppages of an immaterial nature, none of which
have been related to the Company's own labor relations, the Company has not
experienced a work stoppage or other labor disturbance.
 
     The Company utilizes third-party fabrication and erection subcontractors on
many of its projects and also subcontracts detailing services from time to time
when it lacks available in-house capacity for such services. The Company's
inability to engage fabrication, erection and detailing subcontractors on terms
favorable to the Company could limit the Company's ability to complete projects
in a timely manner or compete for new projects and could have a material adverse
effect on the Company.
 
                                       13
<PAGE>   14
 
SUPPLIERS
 
     The Company currently purchases a majority of its steel and steel
components from several domestic and foreign steel producers and suppliers.
However, steel is readily available from numerous foreign and domestic steel
producers and the Company is not dependent on any one supplier. The Company
believes that its relationships with its suppliers are good and has no long-term
commitments with any of its suppliers. In recent periods, there has been an
increased demand for steel from domestic mills and the Company has purchased a
portion of its steel requirements from Asian producers.
 
                              ITEM 2 -- PROPERTIES
 
     The Company's manufacturing facilities and executive and administrative
offices are located at the following sites:
 
<TABLE>
<CAPTION>
           LOCATION              SIZE (SQ. FT.)   OWNED/LEASED                PRODUCTS/SERVICES
           --------              --------------   ------------    -----------------------------------------
<S>                              <C>              <C>             <C>
Phoenix, Arizona                    400,000          Leased(1)    Fabrication shop; operations, erection,
                                                                  engineering and detailing offices
Gilbert, Arizona                    145,000          Leased(2)    Fabrication shop
Phoenix, Arizona                     22,000          Leased(3)    Executive, finance, administration,
                                                                  estimating and sales offices
Lockhart, Florida                   144,000           Owned       Fabrication shop; sales, executive and
                                                                  operations offices; maintenance yard;
                                                                  steel truss plant
Albany, Georgia                     102,000           Owned       Fabrication shop; executive, operations
                                                                  and estimating offices
Quincy, Florida                     140,000           Owned       Steel joist and long span truss
                                                                  manufacturing plant
Houston, Texas                       43,000           Owned       Fabrication shop; sales, estimating,
                                                                  operation and administrative offices
Houston, Texas                          974          Leased       Detailing office
National City, California            26,000           Owned       Fabrication shop; operations, sales,
                                                                  estimating and administrative offices
Dothan, Alabama                       2,850          Leased       Detailing office
Montgomery, Alabama                   1,200          Leased       Detailing office
</TABLE>
 
---------------
(1) Leased by the Company from a partnership, the general partners of which are
    David A. Schuff, Nancy A. Schuff and Scott A. Schuff and the limited
    partners of which are family trusts of Mr. Scott A. Schuff and certain of
    his siblings (the "Schuff Partnership"). This lease expires on February 28,
    2017. Annual rent under the lease totaled $414,000 in 1998, and will be
    $556,000 in 1999, $601,000 in 2000, and $605,000 in each year thereafter
    during the remaining term of the lease, subject to increase every five years
    commencing in 2002 pursuant to a Consumer Price Index formula.
 
(2) Leased by the Company from the Schuff Partnership expiring on February 28,
    2017. Annual rent under the lease is $340,000, subject to increase every
    five years commencing in 2002 based on a Consumer Price Index formula.
 
(3) Leased by the Company from the Schuff Partnership expiring April 30, 2017.
    Annual rent under the lease is $135,000, subject to increase every five
    years based on a Consumer Price Index formula. The Company subleases a
    portion of the premises.
 
     Under each of the foregoing leases, the Company also is obligated to pay
all taxes, insurance and maintenance costs.
 
                                       14
<PAGE>   15
 
                          ITEM 3 -- LEGAL PROCEEDINGS
 
     Construction in general and the fabrication and erection of structural
steel and heavy steel plate in particular involve a high degree of operational
risk. Adverse weather conditions, operator and other error, and other unforeseen
factors can cause personal injury or loss of life, severe damage to or
destruction of property and equipment, and suspension of operations. Litigation
arising from such occurrences may result in the Company being named as a party
to lawsuits asserting substantial claims or to administrative or criminal
actions that may involve substantial monetary penalties or the restriction of
the Company's operations in one or more jurisdictions. The Company is a
defendant in lawsuits from time to time, including lawsuits arising in the
normal course of its business. While it is impossible at this time to determine
with certainty the ultimate outcome of these lawsuits, the Company's management
believes that the ultimate outcome will not have a material adverse effect to
the operations or liquidity of the Company.
 
     The Company maintains workers compensation insurance that provides full
coverage of statutory workers compensation benefits. The Company also maintains
employer liability insurance in its principal geographic markets in amounts of
$1,000,000 per accident for bodily injury by accident and $1,000,000 per
employee (and as a policy limit) for bodily injury by disease and contractors
commercial general liability insurance in the amount of $1,000,000. In addition,
the Company maintains umbrella coverage limits of $36,000,000. The Company also
maintains insurance against property damage caused by fire, flood, explosion and
similar catastrophic events that may result in physical damage or destruction of
the Company's facilities and property. All policies are subject to various
deductibles and coverage limitations. Although management of the Company
believes that the Company's insurance is adequate for its present needs, there
can be no assurance that the Company will be able to maintain adequate insurance
at premium rates that management considers commercially reasonable, nor can
there be any assurance that such coverage will be adequate to cover all claims
that may arise.
 
     Currently, the Company does not maintain any reserves for its ongoing
litigation. The Company periodically reviews the need to maintain a litigation
reserve. The Company seeks to mitigate the effects of loss or damage through the
maintenance of risk management, insurance, and safety programs. There can be no
assurance, however, that the Company's efforts to mitigate losses will be
successful or that any losses incurred will not exceed the Company's insurance
or estimated reserves thereon.
 
     During 1998, the Company filed a claim in the Superior Court of the State
of Arizona for the County of Maricopa against the Arizona Professional Baseball
Team Limited Partnership and related parties for approximately $8.6 million for
additional reimbursement for work the Company believes is billable under the
terms of the related contract with respect to changes made in completing certain
aspects of the Bank One Ballpark project. The Company has already incurred and
expensed all of the costs related to this claim. While management believes it
has a right to collect the full amount of the claim, no revenue has been
recognized given the uncertainty of the related negotiations, arbitration,
and/or litigation that will be required to resolve the ultimate payment due the
Company. The Company's claim was filed with that of the general contractor of
the project, Perini/Tutor-Saliba, along with several other project
subcontractors.
 
         ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     The Company did not submit any matter to a vote of its security holders
during the fourth quarter of 1998.
 
                                    PART II
 
         ITEM 5 -- MARKET FOR THE REGISTRANT'S COMMON EQUITY SECURITIES
                        AND RELATED STOCKHOLDER MATTERS
 
     The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "SHUF." The Common Stock commenced public trading on July 1, 1997 in
connection with the Company's initial public offering. As a result, high and low
market price information is not available for periods prior to the third
 
                                       15
<PAGE>   16
 
quarter of fiscal 1997. The following table sets forth the high and low last
sale prices of the Common Stock, as reported by the Nasdaq National Market, for
the periods indicated:
 
<TABLE>
<CAPTION>
                                                                MARKET PRICE
                                                              -----------------
                                                               HIGH       LOW
                                                              -------    ------
<S>                                                           <C>        <C>
FISCAL YEAR 1997
Third Quarter (from July 1, 1997)...........................  $11.125    $    7.50
Fourth Quarter..............................................  $11.875    $    8.625
 
FISCAL YEAR 1998
First Quarter...............................................  $14.375    $    8.875
Second Quarter..............................................  $15.375    $   13.6875
Third Quarter...............................................  $15.625    $    4.375
Fourth Quarter..............................................  $ 7.75     $    3.25
 
FISCAL YEAR 1999
First Quarter (through March 9, 1999).......................  $ 7.625    $    5.4375
</TABLE>
 
     As of March 9, 1999, there were approximately 55 holders of record of the
Company's Common Stock.
 
     Except for certain distributions to its then current shareholders while the
Company was subject to taxation under subchapter S of the Internal Revenue Code
of 1986 and certain other distributions, including those made in connection with
the closing of the Company's initial public offering in July 1997 to the
Company's shareholders prior to the offering, the Company has not made
distributions or declared dividends on its Common Stock and does not anticipate
doing so in the foreseeable future. It is the current policy of the Company's
Board of Directors to retain its earnings, if any, to finance the operation and
expansion of the Company's business. See Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
 
FACTORS THAT MAY AFFECT FUTURE STOCK PERFORMANCE
 
     The performance of the Company's Common Stock is dependent upon several
factors including those set forth below and in Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Factors That
May Affect Future Results and Financial Condition."
 
  Control by Majority Shareholders; Ability to Issue Preferred Stock
 
     Mr. David A. Schuff, the Company's Chairman and co-founder, and Mr. Scott
A. Schuff, the Company's President, Chief Executive Officer, co-founder and a
member of its Board of Directors, collectively control the voting of
approximately 71.3% of the outstanding Common Stock. As a result, these
individuals control the vote on all matters requiring approval of the
stockholders, including causing or restricting the sale or merger of the
Company. In addition, the Company's Certificate of Incorporation authorizes the
Company to issue shares of "blank check" preferred stock, the designation,
number, voting powers, preferences, and rights of which may be fixed or altered
from time to time by the Board of Directors. Accordingly, the Board of Directors
has the authority, without stockholder approval, to issue preferred stock with
rights that could adversely affect the voting power or other rights of the
holders of the Common Stock.
 
  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 is
also 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. In July 1997, the Company
completed an initial public offering of its Common Stock for $8 per share. Since
that time, the Company's Common Stock has
 
                                       16
<PAGE>   17
 
traded as low as $3.25 per share and as high as $15.625 per share. The market
price for the Company's Common Stock remains volatile and there is no assurance
that the market price will not experience significant changes in the future.
 
  Shares Eligible for Future Sale
 
     There were 7,027,173 shares of Common Stock outstanding as of March 9,
1999. Of these shares, 2,027,173 shares of Common Stock are freely tradable. The
5,000,000 remaining shares of Common Stock are beneficially held by Messrs.
David A. Schuff and Scott A. Schuff and are "restricted securities" as that term
is defined under Rule 144 promulgated under the Securities Act of 1933 (the
"Securities Act"). In general, under Rule 144 as currently in effect, subject to
the satisfaction of certain other conditions, if one year has elapsed since the
later of the date of acquisition of restricted shares from either an issuer or
an affiliate of an issuer, the acquirer or subsequent holder is entitled to sell
in the open market, within any three-month period, a number of shares that does
not exceed the greater of one percent of the outstanding shares of the same
class or the average weekly trading volume during the four calendar weeks
preceding the filing of the required notice of sale. Of the "restricted
securities" outstanding, all of these shares have been held for the one-year
holding period required under Rule 144. No predictions can be made with respect
to the effect, if any, that sales of Common Stock in the market or the
availability of shares of Common Stock for sale under Rule 144 will have on the
market price of Common Stock prevailing from time to time. Sales of substantial
amounts of Common Stock in the open market could adversely affect the prevailing
market price of the Common Stock and may make it more difficult for the Company
to sell its equity securities in the future on terms it deems appropriate.
 
                       ITEM 6 -- SELECTED FINANCIAL DATA
 
     The following sets forth selected historical consolidated financial data of
the Company for each of the years in the five-year period ended December 31,
1998. The selected annual historical consolidated financial data is derived from
the Company's Consolidated Financial Statements audited by independent auditors.
For additional information, see the Consolidated Financial Statements of the
Company and Notes thereto included elsewhere in this report. The following table
should be read in conjunction with Item 7. "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and is qualified by reference
thereto and to the Company's Consolidated Financial Statements and Notes
thereto.
 
                                       17
<PAGE>   18
 
<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31
                                        ------------------------------------------------------
                                         1994       1995        1996      1997(1)     1998(2)
                                        -------    -------    --------    --------    --------
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                     <C>        <C>        <C>         <C>         <C>
STATEMENT OF INCOME DATA
Revenues..............................  $68,199    $62,090    $103,912    $138,218    $189,940
Cost of revenues......................   58,874     54,222      86,998     117,955     160,647
                                        -------    -------    --------    --------    --------
  Gross profit........................    9,325      7,868      16,914      20,263      29,293
General and administrative expenses...    4,915      5,284       6,715       8,880      15,509
Goodwill amortization.................       --         --          --          --         931
                                        -------    -------    --------    --------    --------
  Operating income....................    4,410      2,584      10,199      11,383      12,853
Interest expense......................     (718)      (752)       (452)       (348)     (6,812)
Other income..........................       67        618         303         520       1,733
                                        -------    -------    --------    --------    --------
Income before income taxes............    3,759      2,450      10,050      11,555       7,774
Provision for income taxes............       --         --          --       2,823       3,453
                                        -------    -------    --------    --------    --------
Net income............................    3,759      2,450      10,050       8,732       4,321
Pro forma income taxes(3).............    1,500        980       4,020       1,513          --
                                        -------    -------    --------    --------    --------
Pro forma net income(3)...............  $ 2,259    $ 1,470    $  6,030    $  7,219    $  4,321
                                        =======    =======    ========    ========    ========
Pro forma net income per share(3):
  -- basic............................                        $   1.02    $   1.12    $   0.62
  -- diluted..........................                        $   1.02    $   1.10    $   0.60
Shares used in computation:
  -- basic............................                           5,941       6,457       7,014
  -- diluted..........................                           5,941       6,556       7,169
OPERATING DATA
Backlog(4)............................  $22,544    $80,834    $ 67,335    $ 56,793    $132,940
BALANCE SHEET DATA
Cash and cash equivalents.............  $    63    $   289    $  7,253    $    197    $ 15,431
Restricted funds on deposit(5)........       --        220       2,249       2,096       2,574
Costs and recognized earnings in
  excess of billings on uncompleted
  contracts(6)........................      777      1,076       3,331       3,982      11,861
Billings in excess of costs and
  recognized earnings on uncompleted
  contracts(6)........................    6,506      5,940      12,051       3,758       7,025
Property and equipment, net...........    4,666      4,222       5,116       7,415      20,850
Total assets..........................   26,244     25,260      36,397      42,038     165,588
Long term debt, excluding current
  portion.............................    7,057      5,271       2,753       4,927     103,870
Stockholders' equity..................  $ 6,032    $ 6,768    $ 10,682    $ 24,673    $ 29,135
</TABLE>
 
---------------
(1) Gives effect to the Company's acquisition of B&K Steel Fabrications, Inc.
    ("B&K Steel") on January 31, 1997, which was accounted for under the
    purchase method of accounting. Financial information relating to B&K Steel
    has not been included in periods prior to the acquisition.
 
(2) Gives effect to the Company's acquisitions of Addison on June 4, 1998, Six
    on August 31, 1998, and Bannister on October 15, 1998, which were accounted
    for under the purchase method of accounting. Financial information relating
    to Addison, Six and Bannister has not been included in periods prior to the
    acquisitions.
 
(3) Prior to the completion of its initial public offering in July 1997, the
    Company elected to be treated as an S corporation under the Internal Revenue
    Code of 1986. As an S corporation, the Company was not subject to income
    taxes. Pro forma net income reflects the provision for income taxes that
    would have been recorded had the Company been subject to income taxes as a C
    corporation for all periods, assuming an effective tax rate of 40%.
    Provision for income taxes for 1997 includes credits of $300,000 to income
    recorded upon revocation of the Company's S corporation election in June
    1997.
 
                                       18
<PAGE>   19
 
(4) Backlog is the amount of potential future revenues to be recognized upon
    performance of contracts awarded to the Company. Backlog increases as new
    contract commitments are received, decreases as revenues are recognized, and
    increases or decreases to reflect modifications in the work to be performed
    under a contract. Of the Company's $132.9 million backlog as of December 31,
    1998, approximately $23.7 million was attributable to one project for a
    single customer in California and approximately $6.5 million was
    attributable to one project in Utah.
 
(5) Restricted funds on deposit represent funds on deposit in interest bearing
    escrow accounts which are maintained in lieu of retention for specific
    contracts. Retentions on contract receivables are amounts due which are
    withheld until the completed project has been accepted by the customer in
    accordance with the contract. See Note 1 to the Consolidated Financial
    Statements appearing elsewhere in this report.
 
(6) The Company recognizes revenues and costs from construction projects using
    the percentage of completion accounting method. Under this method, revenues
    are recognized based upon the ratio of the costs incurred to date to the
    total estimated costs to complete the project, commencing when progress is
    sufficient to estimate final results with reasonable accuracy, which
    typically occurs when fabricated product is shipped to the project site or
    when erection of the project commences. Construction contracts with
    customers generally provide that billings are to be made monthly in amounts
    which are commensurate with the extent of performance under the contracts.
    Costs and recognized earnings in excess of billings on uncompleted contracts
    primarily represent revenues earned under the percentage of completion
    method which have not been billed, and also include costs incurred in excess
    of billings on contracts for which sufficient work has not been performed to
    allow for recognition of revenues. Billings in excess of costs and
    recognized earnings on uncompleted contracts represent amounts billed on
    contracts in excess of the revenues allowed to be recognized under the
    percentage of completion method on those contracts, or the costs incurred on
    contracts for which sufficient work has not been performed to allow for
    recognition of revenues.
 
     ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
 
     The following discussion and analysis provides information regarding the
Company's financial position as of December 31, 1997 and 1998, and its results
of operations for the years ended December 31, 1996, 1997, and 1998. This
discussion should be read in conjunction with the preceding "Selected Financial
Data" and the Company's Consolidated Financial Statements and related Notes
thereto appearing elsewhere in this report.
 
INTRODUCTION
 
     The Company's results of operations are affected primarily by (i) the level
of commercial and industrial construction in its principal markets, (ii) the
Company's ability to win project contracts, (iii) the amount and complexity of
project changes requested by customers or general contractors, (iv) the
Company's success in utilizing its resources at or near full capacity, and (v)
the Company's ability to complete contracts on a timely and cost effective
basis. The level of commercial and industrial construction activity is related
to several factors, including local, regional and national economic conditions,
interest rates, availability of financing, and the supply of existing facilities
relative to demand.
 
     The Company believes that there is an increasing trend in the steel
fabrication and erection industry to design and build large, complex projects
according to accelerated time schedules. With many projects, only a portion of
the detail design drawings are completed when construction begins. The remaining
drawings are completed, with numerous design changes being implemented,
throughout the construction process. These fast track, "design-as-you-go"
projects are well-suited to integrated contractors that can (i) reduce the
logistical and coordination problems inherent in the use of multiple
subcontractors to complete a large, complex project and (ii) more efficiently
respond to rapid and multiple design changes while minimizing project delays and
cost overruns commonly associated with such changes. The complexity and size of
these projects require subcontractors possessing extended financial and
operational capabilities. Typically, these projects offer greater potential
profit than small, less complex projects because project management and
 
                                       19
<PAGE>   20
 
overhead requirements for large projects usually are proportionately less.
Individual large projects can have a substantial impact upon the Company's
results of operations and cause significant fluctuations from quarter to
quarter.
 
     The Company obtains contracts through competitive bidding or negotiation,
which generally are either fixed price, cost-plus or unit cost arrangements.
During 1997 and 1998, approximately $133.8 million (96.8%) and $148.7 million
(78.3%), respectively, of the Company's revenues were derived from projects
performed pursuant to fixed price contracts. In bidding or negotiating
contracts, the Company must estimate its costs, including projected increases in
labor, material, and service costs. Project duration typically lasts from one to
twelve months.
 
     The Company recognizes revenues using the percentage of completion
accounting method. Under this method, revenues are recognized based upon the
ratio of costs incurred to date to the estimated total cost to complete the
project. Revenue recognition begins when progress is sufficient to estimate
final results with reasonable accuracy, which typically occurs when fabricated
product is shipped to the project site or when erection of the project
commences. Revenues relating to changes in the scope of a contract are
recognized when the customer has authorized the change, the work is commenced
and the Company has made an estimate of the amount that will be paid for the
change. The cumulative impact of revisions in total cost estimates during the
progress of work is reflected in the period in which these revisions become
known. Estimated losses on contracts are recognized in full when it is
determined that a loss will be incurred on a contract.
 
     Cost of revenues consists of the costs of materials, equipment, direct
labor, fringe benefits, and indirect costs associated with detailing,
fabrication and erection, including rent, depreciation and supervisory labor.
Other costs not associated with specific projects are included in general and
administrative expenses.
 
     Gross profit margins can be positively affected by large, more complex
projects, the percentage of negotiated contracts relative to competitively bid
contracts, the number and scope of contract modifications and improvements in
operating efficiencies. Gross profit margins can be adversely affected by
construction delays, inefficient or underutilization of the Company's resources,
availability and cost of materials and labor, the timing and performance of work
by other contractors, weather conditions and construction site conditions.
 
     Backlog increases as contract commitments are obtained, decreases as
revenues are recognized, and increases or decreases to reflect modifications in
the work to be performed under the contract. The timing of contract commitments,
the size of projects and other factors beyond the Company's control can cause
significant fluctuation in backlog outstanding at any given date.
 
     Prior to the completion of the Company's initial public offering in July
1997, the Company was taxed as an S corporation for income tax purposes.
Accordingly, its income was taxed directly to its stockholders. Immediately
prior to the initial public offering, the Company's S corporation election was
revoked and the Company became subject to income tax as a C corporation. For
purposes of the financial information contained in this section, pro forma
income tax expense has been included assuming an income tax rate of 40%, and pro
forma net income reflects this provision.
 
     On June 4, 1998, the Company acquired all of the issued and outstanding
capital stock of Addison. As a result of such purchase, the Company acquired
indirect ownership of the assets of Addison's wholly owned operating
subsidiaries, Addison Steel, Inc. and Quincy Joist Company. The aggregate
purchase price was approximately $59.5 million, of which approximately $56.3
million was paid in cash and $3.2 million was paid in the form a promissory note
secured by a letter of credit. On August 31, 1998, the Company acquired all of
the issued and outstanding capital stock of Six. The aggregate purchase price
was approximately $18.2 million, of which approximately $16.7 million was paid
in cash and $1.5 million was paid in the form of a promissory note. On October
15, 1998, the Company acquired all of the issued and outstanding capital stock
of Bannister. The aggregate purchase price was approximately $16.8 million, of
which approximately $15.8 million was paid in cash and a $1.0 million in the
form of a promissory note secured by a letter of credit.
 
     The acquisitions have been accounted for using the purchase method of
accounting, and accordingly, the purchase prices have been allocated to the
assets and liabilities acquired based on the fair value at the date of
                                       20
<PAGE>   21
 
the acquisition. The operating results of Addison, Six, and Bannister have been
included in the Company's Consolidated Financial Statements from the closing
date of each of the acquisitions.
 
RESULTS OF OPERATIONS
 
     The following table sets forth for the periods indicated certain financial
data as a percentage of revenues:
 
<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                              --------------------------
                                                               1996      1997      1998
                                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
Revenues....................................................  100.0%    100.0%    100.0%
Cost of revenues............................................   83.7      85.3      84.6
                                                              -----     -----     -----
  Gross profit..............................................   16.3      14.7      15.4
General and administrative expenses.........................    6.5       6.4       8.2
Goodwill amortization.......................................     --        --       0.5
                                                              -----     -----     -----
  Operating income..........................................    9.8       8.3       6.7
Interest expense............................................   (0.4)     (0.3)     (3.5)
Other income................................................    0.3       0.4       0.9
                                                              -----     -----     -----
Income before income taxes..................................    9.7       8.4       4.1
Provision for income taxes..................................     --       2.1       1.8
Pro forma income taxes......................................    3.9       1.1        --
                                                              -----     -----     -----
Pro forma net income........................................    5.8%      5.2%      2.3%
                                                              =====     =====     =====
</TABLE>
 
     YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
 
     Revenues.  Revenues increased by 37.4% to $189.9 million in 1998 from
$138.2 million in 1997. The increase in revenues was primarily a result of an
additional $58.8 million of revenues being generated by Addison, Six, and
Bannister following their acquisitions by the Company in June 1998, August 1998,
and October 1998, respectively. The average revenues for the Company's ten
largest revenue generating projects was $8.4 million in 1998 versus $9.3 million
in 1997.
 
     Gross profit.  Gross profit increased 44.6% to $29.3 million in 1998 from
$20.3 million in 1997 due to the 37.4% increase in revenues. As a percentage of
revenues, gross profit increased to 15.4% in 1998 from 14.7% in 1997. The
increase as a percentage of revenues was primarily attributable to higher
average margins of approximately 24% achieved by recently-acquired Addison and
Six during 1998.
 
     General and administrative.  General and administrative expenses increased
by 74.6% to $15.5 million in 1998 from $8.9 million in 1997. Of the $6.9 million
increase in 1998, $4.9 million was attributable to additional general and
administrative costs resulting from recently-acquired Addison, Six, and
Bannister. General and administrative expenses as a percentage of revenues
increased to 8.2% in 1998 from 6.4% in 1997. The increases in general and
administrative costs as a percentage of revenues were due primarily to increased
administrative costs associated with the Company's acquisitions and the addition
of general and administrative costs of the acquired companies which had higher
general and administrative costs as a percentage of revenues than the Company
prior to the acquisition. General and administrative expenses include those for
contract bids, estimating, sales and marketing, facilities, project management,
and support services.
 
     Goodwill amortization.  Goodwill amortization was $931,000 in 1998 and
represents the amortization of the excess of cost over the fair value of net
assets acquired from the Addison, Six, and Bannister business combinations. The
goodwill is amortized on a straight-line basis over 25 years. There was no
amortization in 1997 as the Company had no goodwill.
 
     Interest expense.  Interest expense increased to $6.8 million in 1998 from
$348,000 in 1997. The increase in interest expense was attributable primarily to
the interest costs related to the Company's $100.0 million 10 1/2% Senior Notes
issued in June 1998.
 
                                       21
<PAGE>   22
 
     Other income.  Other income increased to $1.7 million in 1998 from $520,000
in 1997. The increase in other income was attributable primarily to earnings on
funds invested from the cash proceeds of the Company's $100.0 million 10 1/2%
Senior Notes issued in June 1998.
 
     Income tax expense.  Income tax expense for 1998 was $3.5 million which
represents an effective tax rate of approximately 44% compared to $2.8 million
in 1997 which represents a 40% effective tax rate on earnings of the Company
from the date of its S corporation status termination on June 26, 1997. The
increase in the effective tax rate was due primarily to goodwill amortization of
$931,000 resulting from the Company's acquisitions of Addison, Six, and
Bannister, and which is not deductible for tax purposes. The 1997 expense is
offset by a $300,000 credit to deferred taxes generated upon the revocation of
the Company's S corporation status for the effect of cumulative temporary
differences as of the date of the S corporation termination.
 
     Pro forma net income.  Pro forma net income decreased by 40.1% to $4.3
million in 1998 from $7.2 million in 1997.
 
     Backlog.  Backlog increased to $132.9 million at December 31, 1998 compared
to $56.8 million at December 31, 1997. The increase in backlog compared to
December 31, 1997 was the result of additional backlog of approximately $40.6
million generated from Addison, Six, and Bannister. Of the backlog at December
31, 1998, approximately $23.7 million was attributable to one project in
California and approximately $6.5 million was attributable to one project in
Utah.
 
     YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
 
     Revenues.  Revenues increased by 33.0% to $138.2 million in 1997 from
$103.9 million in 1996. The increase was largely attributable to an increase in
revenues generated from the Bank One Ballpark project of $19.2 million to $39.0
million in 1997 from revenues of $19.8 million in 1996. Revenues for 1997 also
include $10.1 million of revenues of B&K Steel following its acquisition by the
Company on January 31, 1997 for which there were no respective revenues in 1996.
The average revenues for the Company's ten largest revenue generating projects
was $9.3 million in 1997 versus $7.8 million in 1996, which represents a 19.2%
increase.
 
     Gross profit.  Gross profit increased 19.8% to $20.3 million in 1997 from
$16.9 million in 1996 primarily due to the 33.0% increase in revenues. As a
percentage of revenues, gross profit decreased to 14.7% in 1997 from 16.3% in
1996. The decrease as a percentage of revenues was primarily attributable to
above average 1996 margins resulting from higher than anticipated revenues from
requested contract modifications and higher then expected costs on the Company's
largest contract as a result of increased efforts on the project for which the
Company is not assured of being reimbursed.
 
     General and administrative expenses.  General and administrative expenses
increased by 32.2% to $8.9 million in 1997 from $6.7 million in 1996. Of the
$2.2 million increase in 1997, $1.7 million was attributable to additional
general and administrative costs resulting from the B&K Steel acquisition and
the remaining $500,000 was attributable to increases required to support the
increased revenues in 1997. General and administrative expenses as a percentage
of revenues remained relatively constant at 6.4% in 1997 compared to 6.5% in
1996. 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.  Interest expense decreased by 23.0% to $348,000 in 1997
from $452,000 in 1996. The decrease was attributable largely to the lower
average monthly line of credit borrowings and more favorable interest rate
terms.
 
     Other income.  Other income increased 71.6% to $520,000 in 1997 from
$303,000 in 1996. The increases in other income was primarily attributable to
earnings on funds invested.
 
     Income tax expense.  Income tax expense for 1997 was $2.8 million, which
represents a 40% effective tax rate on earnings of the Company from the date of
its S Corporation status termination on June 26, 1997.
 
                                       22
<PAGE>   23
 
The 1997 expense is offset by a $300,000 credit to deferred taxes generated upon
the revocation of the Company's S Corporation status for the effect of
cumulative temporary differences as of the date of the S Corporation
termination. Prior to 1997, the Company was an S corporation and the related S
Corporation earnings were taxed directly to the stockholders.
 
     Pro forma net income.  Pro forma net income increased by 19.7% to $7.2
million in 1997 from $6.0 million in 1996.
 
     Backlog.  Backlog decreased 15.6% to $56.8 million at December 31, 1997
from $67.3 million at December 31, 1996. The $10.5 million net decrease is due
to a decrease of backlog of $32.4 million to $1.9 million in 1997 from $34.3
million in 1996 relating to the Bank One Ballpark project. This decrease was
offset by an increase in backlog related to three significant projects awarded
in 1997 for which backlog is approximately $21.6 million on total contract
amounts of $31.5 million. Of the backlog at December 31, 1997, approximately
$12.2 million was attributable to two projects for a single customer in Las
Vegas, Nevada, and approximately $9.4 million was attributable to one project in
Phoenix, Arizona.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     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 December
31, 1998, the Company had $1.4 million of borrowings under its line of credit
and working capital of approximately $55.4 million. The Company believes that it
has sufficient liquidity through its present resources and the existence of its
bank credit facility to meet its near term operating 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
$232,000 for the year ended December 31, 1998 and required cash flows of $4.5
million for the year ended December 31, 1997. For the year ended December 31,
1998, operating cash flows were less than net income primarily due to a $2.3
million increase in costs and recognized earnings in excess of billings on
uncompleted contracts, a $2.4 million increase in receivables resulting from
increased revenues, and a $3.2 million decrease in accounts payable and other
accrued liabilities resulting from timing requirements of payments as compared
to prior years. Such working capital changes were offset by $3.6 million of
depreciation and amortization and other changes in working capital. For the year
ended December 31, 1997, operating cash flows were less than net income
(excluding pro forma taxes) due to the $8.3 million decrease in billings in
excess of costs and recognized earnings on uncompleted contracts, a $6.6 million
increase in receivables and other net working capital fluctuations. Investing
activities required $77.9 million for the year ended December 31, 1998 and $3.6
million for the year ended December 31, 1997, substantially all of which related
to the acquisitions of Addison, Six and Bannister in 1998 for $78.7 million (net
of cash acquired) and purchases of property and equipment of $2.3 million in
1998 and $3.2 million in 1997. Financing activities provided $92.9 million for
the year ended December 31, 1998 and provided $1.1 million for the year ended
December 31, 1997. Cash provided by financing activities in 1998 was primarily a
result of $96.0 million in net proceeds from the $100.0 million private
placement of the Company's 10 1/2% Senior Notes, of which $3.3 million was used
to pay existing indebtedness of the Company. Cash provided by financing
activities in 1997 was primarily a result of $14.0 million in net proceeds from
the issuance of 2 million additional shares of Common Stock offset by $13.8
million in S corporation stockholder distributions, of which $7.0 million was
distributed on the effective date of the offering.
 
     The Company maintains a $25.0 million credit facility with a bank that
matures on June 30, 2001, which is available for working capital and general
corporate purposes. The credit facility is secured by a first priority,
perfected security interest in all assets of the Company and its present and
future subsidiaries. The Company will be eligible for reductions in the interest
rates on the credit facility if the Company achieves certain leverage ratio
targets. The interests rates, based on the leverage ratio achieved, can range
from a minimum of prime or LIBOR plus 2.00% to a maximum of prime plus 1.00% or
LIBOR plus 3.00%. At December 31,
 
                                       23
<PAGE>   24
 
1998, there was approximately $21.6 million of credit available under the credit
facility for borrowings, which has been reduced by approximately $2.1 million of
outstanding letters of credits under which the Company is committed.
 
     The credit facility also requires that the Company maintain specified
leverage ratios, interest coverage ratios, fixed charge coverage ratios and a
specified minimum EBITDA. The credit facility also contains other covenants
that, among other things, limit the Company's ability to pay cash dividends or
make other distributions, change its business, merge, consolidate or dispose of
material portions of its assets. 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 bank.
 
     On June 4, 1998, the Company completed a private placement pursuant to Rule
144A of the Securities Act of 1933 of $100.0 million in principal amount of its
10 1/2% Senior Notes due 2008 ("Senior Notes"). Net proceeds of the Senior Notes
were used to repay certain indebtedness of the Company and to pay the cash
portions of the purchase price for the Company's acquisitions of Addison, Six
and Bannister. The Senior Notes are redeemable at the option of the Company in
whole or in part, beginning in 2003 at a premium declining ratably to par by
2006. By 2001, the Company may redeem up to 35.0% of the Senior Notes at a
premium with the proceeds of an equity offering, provided that at least 65.0% of
the aggregate amount of the Senior Notes originally outstanding remain
outstanding. The Senior Notes contain covenants that, among other things,
provide limitations on additional indebtedness, sale of assets, change of
control and dividend payments. The Senior Notes are fully and unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by the
Company's current and future, direct and indirect subsidiaries.
 
     The Company has four other long-term debt commitments that are related to
notes payable generated from the Company's acquisitions in 1997 and 1998. The
balance of these notes was $6.4 million at December 31, 1998 with interest rates
ranging from 5.73% to prime and maturing in the years 2000 through 2002. Two of
the notes payable are secured by letters of credit totaling an aggregate of $2.1
million. See Note 6 to the Consolidated Financial Statements appearing elsewhere
in this report.
 
     The Company leases its fabrication and office facilities from a partnership
in which the present beneficial stockholders of the Company and their family
members are the general and limited partners. Under the lease for the Company's
principal fabrication and office facilities, the Company's annual rental
payments were $414,000 in 1998, increasing to $556,000 for 1999, $601,000 in
2000, and $605,000 in each year thereafter during the 20 year term of the lease
subject to increase every five years commencing in 2002 pursuant to a Consumer
Price Index formula. The lease agreement for the property and equipment acquired
in the 1997 acquisition of B&K Steel provides for rental payments in the amount
of $340,000 per year over the 20-year term of the lease subject to increase
every five years commencing in 2002 pursuant to a Consumer Price Index formula.
The Company also leases additional office facilities adjacent to the Company's
existing principal office and shop facilities. This office lease provides for
rental payments of $135,000 per year over the 20-year term of the lease, subject
to increase pursuant to a Consumer Price Index Formula. See Item 2.
"Properties."
 
     The Company estimates that its capital expenditures for 1999 will be
approximately $3.5 million. The Company is considering the expansion of certain
of its facilities and production capacities, which would increase the 1999
estimated capital expenditures. The Company believes that its available funds,
cash generated by operating activities and funds available under its bank credit
facilities 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
 
     As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"). SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this Statement
had no impact on the Company's net income or stockholders' equity. SFAS No. 130
requires changes in unfunded pension losses, which prior to adoption were
reported separately in stockholders' equity,
 
                                       24
<PAGE>   25
 
to be included in the computation of other comprehensive income. Prior year
consolidated financial statements have been reclassified to conform to the
requirements of SFAS No. 130.
 
     In March 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1, which has been
adopted prospectively as of January 1, 1999, requires the capitalization of
certain costs incurred in connection with developing or obtaining internal use
software. Prior to the adoption of SOP 98-1, the Company expensed the majority
of internal use software related costs as incurred. The Company has not yet
determined the impact of adopting SOP 98-1.
 
FACTORS THAT MAY AFFECT FUTURE 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, including in Item 5. "Market for Registrant's Common Equity
and Related Stockholder Matters," could affect the Company's future operating
results, financial condition, and the market price of its Common Stock.
 
  Substantial Leverage and Ability to Service Debt
 
     With the Company's 10 1/2% Senior Notes, existing line of credit facility
and other positionings, the Company is highly leveraged with substantial debt
service in addition to operating expenses and planned capital expenditures. The
Company's 10 1/2% Senior Notes permit the Company to incur additional
indebtedness, subject to certain limitations, including additional secured
indebtedness under existing credit facilities. The Company's level of
indebtedness will have several important effects on its future operations,
including, without limitation, (i) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest and principal
on its indebtedness, reducing the funds available for operations and for capital
expenditures, including acquisitions, (ii) covenants contained in the Senior
Notes or the credit facility or other credit facilities will require the Company
to meet certain financial tests, and other restrictions will limit its ability
to borrow additional funds or to dispose of assets, and may affect the Company's
flexibility in planning for, and reacting to, changes in its business, including
possible acquisition activities, (iii) the Company's leveraged position will
substantially increase its vulnerability to adverse changes in general economic,
industry and competitive conditions, (iv) the Company's ability to obtain
additional financing for working capital, capital expenditures, acquisitions,
general corporate and other purposes may be limited and (v) the Company's
leveraged position and the various covenants contained in the Senior Notes and
the credit facility may place the Company at a relative competitive disadvantage
as compared to certain of its competitors. The Company's ability to meet its
debt service obligations and to reduce its total indebtedness will be dependent
upon the Company's future performance, which will be subject to general
economic, industry and competitive conditions and to financial, business and
other factors affecting the operations of the Company, many of which are beyond
its control. There can be no assurance that the Company's business will continue
to generate cash flow at or above current levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its debt,
it may be required, among other things, to seek additional financing in the debt
or equity markets, to refinance or restructure all or a portion of its
indebtedness, including the Senior Notes, to sell selected assets, or to reduce
or delay planned capital expenditures and growth or business strategies. There
can be no assurance that any such measures would be sufficient to enable the
Company to service its debt, or that any of these measures could be effected on
satisfactory terms, if at all.
 
  Fluctuating Quarterly Results of Operations
 
     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, or the Company's failure to timely
replace projects that have been completed or are nearing completion. Any of
these factors could result
                                       25
<PAGE>   26
 
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.
 
  No Assurance of Successful Acquisitions
 
     In addition to the acquisitions of Addison, Six and Bannister, 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
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.
 
     The acquisitions of Addison, Six, and Bannister have consumed and will
continue to consume substantial management attention and resources of the
Company and will require substantial efforts and entail certain risks in the
integration of their operations. There can be no assurance that anticipated cost
savings or synergies will be achieved. The Company will be dependent on the
retention and future performance of key officers and employees of Addison, Six,
and Bannister for day-to-day management and future operating results.
 
  Fixed Price Contracts
 
     Of the Company's $132.9 million backlog at December 31, 1998, most
consisted 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.
 
  Variations in Backlog; Dependence on Large Contracts
 
     The Company's backlog can be significantly affected by the receipt, or
loss, of individual contracts. For example, approximately $30.2 million,
representing 22.7% of the Company's backlog at December 31, 1998, was
attributable to two contracts. In the event one or more large contracts were
terminated or their scope reduced, the Company's backlog could 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.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Backlog."
 
  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.
 
                                       26
<PAGE>   27
 
  Capacity Constraints; Dependence on Subcontractors
 
     The Company routinely relies on subcontractors to perform a significant
portion of its fabrication, erection 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.
 
  Union Contracts
 
     The Company currently is a party to a number of collective bargaining
agreements with various unions representing some of 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.
 
  Revenue Recognition Estimates
 
     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, Nevada, Florida, Georgia, California and Texas, 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 these states and in the southwestern and
southeastern 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, retail shopping
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.
 
  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. 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
 
                                       27
<PAGE>   28
 
adequate or that the Company will be able to maintain adequate insurance in the
future at rates that it considers reasonable.
 
  Risks of International Operations
 
     The Company currently operates in selected international markets and is
seeking to further expand its presence in these markets. Approximately 4.8% of
the Company's revenues in 1998 were related to projects outside the United
States. 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 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.
 
  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. 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
 
                                       28
<PAGE>   29
 
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 ("CERCLA") 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.
 
  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.
 
  Year 2000
 
     The Company is preparing for the impact of the arrival of the Year 2000 on
its business, as well as on the businesses of its customers, suppliers and
business partners. The "Year 2000 Issue" refers to the risk that systems,
products, and equipment having date-sensitive components will not recognize
dates after December 31, 1999. These risks are derived predominantly from the
fact that many software programs have historically categorized the "year" in a
two-digit format. The Year 2000 Issue creates potential risks for the Company in
its information technology and non-information technology systems used in its
business operations. The Company may also be exposed to risks from third parties
with whom the Company interacts who fail to adequately address their own Year
2000 Issues.
 
                            THE COMPANY'S READINESS
 
     The Company started to formulate a plan to address the Year 2000 Issue in
1997. To date, the Company's primary focus has been on its own internal
information technology systems, including all types of systems in use by the
Company in its operations, finance and human resources departments, and to deal
with the most critical systems first. The Company is continually developing a
Year 2000 plan to address all of its Year 2000 Issues. The Company's Year 2000
plan involves the following phases: awareness, assessment, remediation, testing
and implementation.
 
     Although the Company's assessment of the Year 2000 Issue is incomplete, the
Company has completed an assessment of approximately 60% of its internal
information technology systems. The Company estimates that it will complete the
assessment of its remaining internal information technology systems by June 30,
1999 and will establish a timetable for its remediation phase of the remaining
technology systems. The Company has already completed the remediation of
approximately 20% of its information technology systems, including modifying and
upgrading existing software and developing and purchasing new software, and
continues to renovate the portions of such systems for which assessment is
complete. The Company has not begun or established a timetable for the testing
and implementation phases. The Company's goal is to complete such
 
                                       29
<PAGE>   30
 
phases by August 31, 1999, although complications arising from potential or
unanticipated acquisitions might cause some delay.
 
     Some of the Company's fabrication equipment has computer systems and
applications, and in some cases embedded microprocessors, that could be affected
by Year 2000 Issues. The Company has begun to assess the impact on its
fabrication equipment by contacting the vendors of such equipment. A majority of
vendors have informed the Company that (i) certain fabrication equipment is Year
2000 compliant, (ii) it has developed software for functional workarounds to
ensure Year 2000 compliance with respect to the balance of its noncompliant
fabrication equipment and (iii) remediation will be made during future regular
maintenance visits. The Company is in the process of contacting the remaining
vendors of its fabrication equipment and expects to receive information from
such other vendors by May 31, 1999, with respect to their assessment of the
impact on the fabrication equipment that they provided to the Company and the
nature and timetable of the remediation that such vendors may propose. The
Company expects to complete its assessment by August 31, 1999 and that any
required remediation will be completed by December 31, 1999. The Company expects
that its equipment vendors will propose timely remediation and will bear the
cost of modifying or otherwise renovating the Company's fabrication equipment.
 
     The Company has recently begun an assessment of the potential for Year 2000
Issues arising from embedded microprocessors in its other equipment, facilities
and corporate and other offices, including telecommunications systems,
utilities, security systems and expects to complete the assessment by June 1,
1999.
 
                             EXTERNAL RELATIONSHIPS
 
     The Company also faces the risk that one or more of its critical suppliers
or customers ("external relationships") will not be able to interact with the
Company due to the third party's inability to resolve its own Year 2000 Issues,
including those associated with its own external relationships. The Company is
completing its inventory of external relationships and is risk rating each
external relationship based upon the potential business impact, available
alternatives and cost of substitution. The Company is attempting to determine
the overall Year 2000 readiness of its external relationships. In the case of
mission critical suppliers such as banks, financial intermediaries (such as
stock exchanges), telecommunications providers and other utilities, information
technology vendors, financial market data providers, steel and related product
suppliers, and equipment providers (including maintenance), the Company is
engaged in discussions with the third parties and is attempting to obtain
detailed information as to those parties' Year 2000 plans and states of
readiness. The Company has received some preliminary information concerning the
Year 2000 readiness of some of its customers, suppliers and other third parties
with which the Company has a material relationship and expects to engage in
discussions with most of such parties through 1999 in an attempt to determine
the extent to which the Company is vulnerable to those parties' possible failure
to become Year 2000 compliant. The Company, however, does not have sufficient
information at the current time to predict whether its external relationships
will be Year 2000 ready.
 
                        COSTS TO ADDRESS YEAR 2000 ISSUE
 
     The Company's preliminary estimates for the expected total aggregate costs
for assessment, remediation, testing and implementation of its internal
information technology systems will range from approximately $1.0 million to
$1.5 million, of which $300,000 has been incurred. These costs include only
those that are necessary to replace non-compliant systems on an accelerated
basis due to Year 2000 Issues. Many other costs incurred or to be incurred were
part of a planned system conversion, which was not accelerated. The major
components of these costs are: consultants, additional personnel costs,
programming, new software and hardware, software upgrades and travel expenses.
The Company expects that such costs will be funded through operating cash flows.
This estimate, based on currently available information, will be updated as the
Company continues its assessment and proceeds with renovation, testing and
implementation and may be adjusted upon receipt of more information from the
Company's suppliers, customers and other third parties and upon the design and
implementation of the Company's contingency plan. In addition, the availability
and cost of consultants and
                                       30
<PAGE>   31
 
other personnel trained in this area and potential or unanticipated acquisitions
might materially affect the estimated costs.
 
                              RISKS TO THE COMPANY
 
     The Company's Year 2000 Issue involves significant risks. The Company has
and will continue to devote substantial resources to address its Year 2000
Issue, however, there can be no assurance that the Company will succeed in
implementing its evolving Year 2000 plan on a timely basis. The following
describes the Company's "most reasonably likely worst-case scenarios", given
current uncertainties. If the Company's renovated or replaced internal
information technology systems fail the testing phase, or any software
application or embedded microprocessors central to the Company's operations are
overlooked in the assessment or implementation phases, significant problems
including delays may be incurred in purchasing and fabricating product, and
billing the Company's customers for services performed. Furthermore, if its
major customers' systems do not become Year 2000 compliant on a timely basis,
the Company will have problems and incur delays in receiving payment.
 
     If the Company's vendors or suppliers of the Company's necessary steel,
power, telecommunications, transportation, and erection and subcontract services
fail to provide the Company with equipment, raw material and services, the
Company may be unable to provide services to its customers.
 
     If any of these uncertainties were to occur, the Company's business,
financial condition and results of operations would be adversely affected. The
Company is unable to assess the likelihood of such events occurring or the
extent of the effect on the Company.
 
                               CONTINGENCY PLANS
 
     The Company has not yet established contingency plans to address the
Company's worst case scenarios and other unavoided or unavoidable Year 2000
Issues with internal information and non-information technology systems and with
customers, vendors and other third parties, but it expects to create such plans
by October 31, 1999.
 
                      YEAR 2000 FORWARD-LOOKING STATEMENTS
 
     The foregoing Year 2000 discussion contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements, including without limitation, anticipated costs and the dates by
which the Company expects to complete certain actions, are based on management's
best current estimates, which were derived utilizing numerous assumptions about
future events, including the continued availability of certain resources,
representations received from third parties and other factors. However, there
can be no guarantee that these estimates will be achieved, and actual results
could differ materially from those anticipated. Specific factors that might
cause such material differences include, but are not limited to, the ability to
identify and remediate all relevant information technology and non-information
technology systems, results of Year 2000 testing, adequate resolution of Year
2000 Issues by businesses and other third parties who are service providers,
suppliers or customers of the Company, unanticipated system costs, potential or
unanticipated acquisitions, the adequacy of and ability to develop and implement
contingency plans and similar uncertainties. The "forward-looking statements"
made in the foregoing Year 2000 discussion speak only as of the date on which
such statements are made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events.
 
  Forward-Looking Statements
 
     This Annual Report on Form 10-K, including Item 1. "Business," Item 3.
"Legal Proceedings," the Notes to the 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
 
                                       31
<PAGE>   32
 
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 consummation of acquisitions and the integration
and benefits expected to be derived from the acquired companies, 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
and Section 21E of the Securities Exchange Act of 1934.
 
     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 Annual Report on Form 10-K, including Item 1. "Business," Item 3. "Legal
Proceedings," the Notes to the 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. 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 Company undertakes no obligation to
publicly update or review any forward looking statements, whether as a result of
new information, future events, or otherwise.
 
     ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
  Derivative Financial Instruments, Other Financial Instruments, and Derivative
Commodity Instruments
 
     At December 31, 1998, the Company did not participate in any derivative
financial instruments, or other financial and commodity instruments for which
fair value disclosure would be required under SFAS No. 107. The Company holds no
investment securities which would require disclosure of market risk.
 
  Primary Market Risk Exposure
 
     The Company is potentially exposed to market risk associated with changes
in interest rates primarily as a result of its $100.0 million 10 1/2% fixed rate
Senior Notes, which were issued on June 4, 1998. Specifically, the Company is
exposed to changes in the fair value of its $100.0 million Senior Notes. At
December 31, 1998, the fair value of the Senior Notes was approximately 86.9% of
par or $86.9 million. From June 4, 1998 to December 31, 1998, the Senior Notes
had a fair value that was as low as 84.0% of par and as high as 100.0% of par.
The variation in fair value is a function of market interest rate changes and
the investor perception of the investment quality of the Senior Notes.
 
             ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The Independent Auditors' Report and Consolidated Financial Statements of
the Company, including the Notes to such statements, are set forth on pages F-1
through F-23.
 
   ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                              FINANCIAL DISCLOSURE
 
     The Company has had no disagreements with its independent accountants in
regard to accounting and financial disclosure and has not changed its
independent accountants during the two most recent fiscal years.
 
                                       32
<PAGE>   33
 
                                    PART III
 
         ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information regarding (i) directors and executive officers of the Company
is set forth under the caption "Information Concerning Directors and Executive
Officers" and (ii) compliance with Section 16(a) is set forth under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance," in the Company's
Proxy Statement relating to its 1999 Annual Meeting of Stockholders (the "1999
Proxy Statement") and is incorporated by reference into this Form 10-K Report,
which will be filed with the Commission in accordance with Rule 14a-6
promulgated under the Exchange Act. With the exception of the foregoing
information and other information specifically incorporated by reference into
this report, the Company's 1999 Proxy Statement is not being filed as a part
hereof.
 
                       ITEM 11 -- EXECUTIVE COMPENSATION
 
     Information regarding executive compensation is set forth under the caption
"Executive Compensation" in the 1999 Proxy Statement, which information is
incorporated herein by reference; provided, however, that the "Report of the
Compensation Committee on Executive Compensation" and the "Stock Price
Performance Graph" contained in the 1999 Proxy Statement are not incorporated by
reference herein.
 
           ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT
 
     Information regarding security ownership of certain beneficial owners and
management is set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the 1999 Proxy Statement, which information
is incorporated herein by reference.
 
           ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information regarding certain relationships and related transactions of
management is set forth under the caption "Certain Transactions and
Relationships" in the 1999 Proxy Statement, which information is incorporated
herein by reference.
 
                                    PART IV
 
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
(a) (1) Consolidated Financial Statements
 
The following documents are filed as part of this Annual Report on Form 10-K:
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Ernst & Young LLP, Independent Auditors...........  F-1
Consolidated Financial Statements and Notes thereto of
  Schuff Steel Company:
  Consolidated Balance Sheets at December 31, 1998 and
     1997...................................................  F-2
  Consolidated Statements of Income for the years ended
     December 31, 1998, 1997,
     and 1996...............................................  F-3
  Consolidated Statements of Stockholders' Equity for the
     years ended December 31, 1998, 1997, and 1996..........  F-4
  Consolidated Statements of Cash Flows for the years ended
     December 31, 1998, 1997, and 1996......................  F-5
  Notes to Consolidated Financial Statements................  F-6
</TABLE>
 
(a)(2) Financial Statement Schedules
 
     The financial statement schedules have been omitted since they are not
applicable or the information required to be set forth therein is contained
elsewhere herein.
                                       33
<PAGE>   34
 
(a)  (3) Exhibits
 
     The following exhibits are filed as part of this Annual Report on Form
10-K.
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
 2.1(a)   Stock Purchase Agreement dated as of May 12, 1998, by and
          among the Company, E. C. Addison and The Addison Structural
          Services, Inc. Leveraged Employee Stock Ownership Plan, and
          Addison Structural Services, Inc.(5)
 2.1(b)   Amendment to Stock Purchase Agreement dated June 1, 1998, by
          and among the Company, E. C. Addison and The Addison
          Structural Services, Inc. Leveraged Employee Stock Ownership
          Plan, and Addison Structural Services, Inc.(5)
 2.1(c)   Amendment No. 2 to Stock Purchase Agreement dated June 4,
          1998, by and among the Company, E. C. Addison and the
          Addison Structural Services, Inc. Leveraged Employee Stock
          Ownership Plan, and Addison Structural Services, Inc.(5)
 2.2      Stock Purchase Agreement dated as of August 12, 1998 by and
          among Schuff Steel Company, Wayne Harris, and Six
          Industries, Inc.(6)
 2.3      Stock Purchase Agreement dated as of September 30, 1998 by
          and among Schuff Steel Company, Ted F. Rossin and Connie A.
          Rossin, John N. Achuff, II and Mary P. Achuff, Arnold
          Baumgartner, Ronald Bowers and Tonie L. Bowers, Jeffrey
          Clinkscales and Kimberly Clinkscales, Guadalupe Nunez and
          Graciela Nunez and Bannister Steel, Inc.(7)
 3.1(a)   Certificate of Incorporation of the Registrant(1)
 3.1(b)   Certificate of Amendment of Certificate of Incorporation of
          the Registrant(1)
 3.2      Bylaws of the Registrant(1)
 3.3(a)   Articles of Incorporation of B & K Steel Fabrications, Inc.
          ("B & K")(9)
 3.3(b)   Articles of Amendment of B & K(9)
 3.4      Bylaws of B & K(9)
 3.5(a)   Articles of Incorporation of Addison Structural Services,
          Inc. ("Addison")(9)
 3.5(b)   Articles of Amendment to the Articles of Incorporation of
          Addison(9)
 3.6      Bylaws of Addison(9)
 3.7(a)   Articles of Incorporation of Addison Steel, Inc. ("Addison
          Steel")(9)
 3.7(b)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated May 26, 1960(9)
 3.7(c)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated September 22, 1961(9)
 3.7(d)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated November 19, 1962(9)
 3.7(e)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated December 20, 1966(9)
 3.7(f)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated September 11, 1968(9)
 3.7(g)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated February 28, 1981(9)
 3.8      Bylaws of Addison Steel(9)
 3.9(a)   Articles of Incorporation of Quincy Joist Company
          ("Quincy")(9)
 3.9(b)   Articles of Amendment to the Articles of Incorporation of
          Quincy(9)
 3.10     Bylaws of Quincy(9)
</TABLE>
 
                                       34
<PAGE>   35
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
 4.1      Certificate of Incorporation of the Registrant (filed as
          Exhibit 3.1)(1)
 4.2      Form of Certificate representing Common Stock(1)
 4.3      Indenture dated June 4, 1998, by and between the Company and
          Harris Trust Company of California, as Trustee(5)
 4.4      Registration Rights Agreement dated June 4, 1998, by and
          among the Company, the Guarantors (as defined therein),
          Donaldson, Lufkin & Jenrette Securities Corporation,
          Jefferies & Company, Inc., and Friedman, Billings, Ramsey &
          Co., Inc.(5)
 4.5      Form of 10  1/2% Senior Note due June 1, 2008(9)
10.1(a)   Loan Agreement dated June 30, 1996 between the Registrant
          and Bank One, Arizona, NA(1)
10.1(b)   Variable Rate Revolving Line of Credit Note dated June 30,
          1996(1)
10.2(a)   Revolving Line of Credit Loan Agreement and Addendum dated
          June 30, 1995 between the Registrant and Bank One, Arizona,
          NA(1)
10.2(b)   Variable Rate Revolving Line of Credit Note and Addendum
          dated June 30,1995(1)
10.2(c)   Modification Agreement dated June 30, 1996 between the
          Registrant and Bank One, Arizona, NA(1)
10.2(d)   Continuing Guaranty dated June 30, 1995 between David A.
          Schuff, Nancy A. Schuff and Bank One, Arizona, NA(1)
10.2(e)   Continuing Guaranty dated June 30, 1995 between Scott A.
          Schuff and Bank One, Arizona, NA(1)
10.2(f)   Modification Agreement dated March 31, 1997 between the
          Registrant and Bank One, Arizona, NA(1)
10.2(g)   Modification Letter Agreement dated May 7, 1997 between the
          Registrant and Bank One, Arizona, NA(1)
10.2(h)   Modification Agreement dated June 30, 1997 between the
          Registrant and Bank One, Arizona, NA(2)
10.2(i)   Continuing Guaranty dated June 30, 1997 between B & K Steel
          Fabrications, Inc. and Bank One, Arizona, NA(2)
10.2(j)   Subordination of Lien Rights between 19th Avenue/Buchanan
          Limited Partnership and Bank One, Arizona, NA Relating to
          Real Property Located at 420 South 19th Avenue, Phoenix,
          Arizona(2)
10.2(k)   Subordination of Lien Rights between 19th Avenue/Buchanan
          Limited Partnership and Bank One, Arizona, NA Relating to
          Real Property located at 1833-1841 West Buchanan Street,
          Phoenix, Arizona(2)
10.2(l)   Subordination of Lien Rights between 19th Avenue/Buchanan
          Limited Partnership and Bank One, Arizona, NA Relating to
          Real Property Located at 619 North Cooper Road, Gilbert,
          Arizona(2)
10.2(m)   Subordination Agreement dated June 30, 1997 between 19th
          Avenue/Buchanan Limited Partnership, the Registrant and Bank
          One, Arizona, NA(2)
10.3(a)   Loan Agreement and Addendum dated June 30, 1995 between the
          Registrant and Bank One, Arizona, NA(1)
10.3(b)   Variable Rate Line of Credit Note and Addendum dated June
          30,1995(1)
10.3(c)   Modification Agreement dated June 30, 1996 between the
          Registrant and Bank One, Arizona, NA(1)
</TABLE>
 
                                       35
<PAGE>   36
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
10.4      Continuing Guaranty dated April 22, 1996 between the
          Registrant and Bank One, Arizona, NA(1)
10.5      Guaranty of Payment dated April 22, 1997 between the
          registrant and Bank One, Arizona, NA(1)
10.6      Guaranty of Payment dated January 31, 1997 between the
          Registrant and Bank One, Arizona, NA(1)
10.7      Promissory Note dated December 31, 1989 between the
          Registrant and 19th Avenue/Buchanan Limited Partnership(1)
10.7.1    Modification and Extension Agreement dated as of September
          30, 1997 between the Registrant and 19th Avenue/Buchanan
          Limited Partnership(3)
10.8      Lease dated March 1, 1997 for 420 S. 19th Avenue in Phoenix,
          Arizona between 19th Avenue/ Buchanan Limited Partnership
          and the Registrant(1)
10.9      Lease dated March 1, 1997 for 619 N. Cooper Road in Gilbert,
          Arizona between 19th Avenue/ Buchanan Limited Partnership
          and the Registrant(1)
10.10     Lease dated May 1, 1997 for 1841 W. Buchanan Street in
          Phoenix, Arizona between 19th Avenue/Buchanan Limited
          Partnership and the Registrant(1)
10.11     Schuff Steel Company Supplemental Retirement and Deferred
          Compensation Plan(1)*
10.12(a)  Schuff Steel Company 1997 Stock Option Plan(1)*
10.12(b)  Schuff Steel Company 1997 Stock Option Plan (Amended and
          Restated as of April 24, 1998)(8)*
10.12(c)  Form of Incentive Stock Option Agreement for 1997 Stock
          Option Plan(1)*
10.12(d)  Form of Non-Qualified Stock Option Agreement for 1997 Stock
          Option Plan(1)*
10.13     Form of Indemnity Agreement between the Registrant and its
          directors(1)
10.14(a)  Modification and Extension Agreement dated as of September
          30, 1997 between the Registrant and 19th Avenue/Buchanan
          Limited Partnership(2)
10.15(a)  Credit Agreement dated December 10, 1997 between the
          Registrant and Bank One, Arizona, NA(4)
10.15(b)  Promissory Note dated December 10, 1997 between the
          Registrant and Bank One, Arizona, NA(4)
10.19     Schuff Steel Company 1998 Director Compensation Plan(8)*
10.20(a)  Credit Agreement dated June 30, 1998 between the Registrant
          and Wells Fargo Bank, NA(6)
10.20(b)  Modification Agreement dated March 10, 1999 between the
          Registrant and Wells Fargo Bank, NA
10.21     Purchase Agreement, dated June 1, 1998, by and among the
          Registrant, Donaldson, Lufkin & Jenrette Securities
          Corporation, Jefferies & Company, Inc., and Friedman,
          Billings, Ramsey & Co., Inc.(5)
10.22     Employment Agreement by and among Addison Steel, Inc.,
          Schuff Steel Company, and Glen S. Davis, dated May 12, 1998*
10.23     Employment Agreement by and among Quincy Joist Company,
          Schuff Steel Company, and Sam Mahdavi, dated May 12, 1998*
21.1      Subsidiaries of the Registrant
23.1      Consent of Ernst & Young LLP, independent auditors
24.1      Power of Attorney of David A. Schuff
24.2      Power of Attorney of Dennis DeConcini
24.3      Power of Attorney of Edward M. Carson
</TABLE>
 
                                       36
<PAGE>   37
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
27        Financial Data Schedule
</TABLE>
 
---------------
 *  Indicates a management contract or compensation plan.
 
(1) Incorporated by reference to the Company's Registration Statement on Form
    S-1 (Registration No. 333-26711), effective June 26, 1997.
 
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended June 30, 1997.
 
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended September 30, 1997.
 
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the fiscal year ended December 31, 1997.
 
(5) Incorporated by reference to the Company's Current Report on Form 8-K/A,
    filed June 19, 1998.
 
(6) Incorporated by reference to the Company's Current Report on Form 8-K, filed
    August 27, 1998.
 
(7) Incorporated by reference to the Company's Current Report on Form 8-K, filed
    September 4, 1998.
 
(8) Incorporated by reference to the Company's Proxy Statement for its 1998
    Annual Meeting of Stockholders, filed May 28, 1998 (File No 0-22715).
 
(9) Incorporated by reference to the Company's Registration Statement on Form
    S-4 (Registration No. 333-58123), effective July 21, 1998.
 
(b) Reports on Form 8-K
 
     During the quarter ended December 31, 1998, the Company filed Current
Report on Form 8-K dated October 15, 1998, pursuant to Items 5 and 7, to
disclose the completion of the Company's acquisition of Bannister Steel, Inc.
and to file copies of the Stock Purchase Agreement among the Company; Ted F.
Rossin and Connie A. Rossin, John N. Achuff, II and Mary P. Achuff, Arnold
Baumgartner, Ronald Bowers and Tonie L. Bowers, Jeffrey Clinkscales and Kimberly
Clinkscales, Guadalupe Nunez and Graciela Nunez (collectively the "Sellers");
and Bannister Steel, Inc.; and the Company's press release relating to the
foregoing.
 
(c) See Item 14(a)(3) above.
 
(d) See "Financial Statements and Supplementary Data" included under Item 8 to
    this Annual Report on Form 10-K.
 
                                       37
<PAGE>   38
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) 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,
                                          a Delaware corporation
 
                                          By:     /s/ SCOTT A. SCHUFF
                                          --------------------------------------
                                                     Scott A. Schuff
                                          President and Chief Executive Officer
Date: March 18, 1999
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                NAME AND SIGNATURE                                 TITLE                     DATE
                ------------------                                 -----                     ----
<C>                                                    <S>                              <C>
 
                /s/ SCOTT A. SCHUFF                    President, Chief Executive       March 18, 1999
---------------------------------------------------      Officer and Director
                  Scott A. Schuff                        (Principal Executive
                                                         Officer)
 
              /s/ KENNETH F. ZYLSTRA                   Vice President and Chief         March 18, 1999
---------------------------------------------------      Financial Officer,
                Kenneth F. Zylstra                       Secretary, Treasurer and
                                                         Director (Principal
                                                         financial and accounting
                                                         officer)
 
                         *                             Chairman of the Board of         March 18, 1999
---------------------------------------------------      Directors
                  David A. Schuff
 
                         *                             Director                         March 18, 1999
---------------------------------------------------
                 Dennis DeConcini
 
                         *                             Director                         March 18, 1999
---------------------------------------------------
                 Edward M. Carson
 
           * By: /s/ KENNETH F. ZYLSTRA
   ---------------------------------------------
                Kenneth F. Zylstra
                 Attorney-in-Fact
</TABLE>
 
                                       38
<PAGE>   39
 
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
Board of Directors
Schuff Steel Company
 
     We have audited the accompanying consolidated balance sheets of Schuff
Steel Company as of December 31, 1998 and 1997, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Schuff Steel Company at December 31, 1998 and 1997, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
 
                                          /s/ ERNST & YOUNG LLP
 
Phoenix, Arizona
February 8, 1999
 
                                       F-1
<PAGE>   40
 
                              SCHUFF STEEL COMPANY
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31
                                                              -------------------
                                                                1998       1997
                                                              --------    -------
                                                                (IN THOUSANDS)
<S>                                                           <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 15,431    $   197
  Restricted funds on deposit...............................     2,574      2,096
  Receivables...............................................    47,310     24,717
  Costs and recognized earnings in excess of billings on
     uncompleted contracts..................................    11,861      3,982
  Inventories...............................................     6,825      2,364
  Prepaid expenses and other current assets.................     1,936      1,167
                                                              --------    -------
          Total current assets..............................    85,937     34,523
Property, plant and equipment, net..........................    20,850      7,415
Goodwill, net...............................................    52,956         --
Other assets................................................     5,845        100
                                                              --------    -------
                                                              $165,588    $42,038
                                                              ========    =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 11,368    $ 5,749
  Accrued payroll and employee benefits.....................     3,952      1,023
  Insurance payable.........................................       987        721
  Accrued interest..........................................     1,081         46
  Other accrued liabilities.................................     2,304        374
  Billings in excess of costs and recognized earnings on
     uncompleted contracts..................................     7,025      3,758
  Current portion of long-term debt.........................     3,838        304
                                                              --------    -------
          Total current liabilities.........................    30,555     11,975
Long-term debt, less current portion........................   103,870      4,927
Deferred income taxes.......................................     1,625        226
Other liabilities...........................................       403        237
 
Stockholders' equity:
  Preferred stock, $.001 par value -- authorized 1,000,000
     shares, none issued....................................        --         --
  Common stock, $.001 par value -- authorized 20,000,000
     shares, 7,023,420 and 7,000,000 shares issued and
     outstanding in 1998 and 1997, respectively.............         7          7
  Additional paid-in capital................................    14,154     14,013
  Retained earnings.........................................    14,974     10,653
                                                              --------    -------
          Total stockholders' equity........................    29,135     24,673
                                                              --------    -------
                                                              $165,588    $42,038
                                                              ========    =======
</TABLE>
 
                            See accompanying notes.
 
                                       F-2
<PAGE>   41
 
                              SCHUFF STEEL COMPANY
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31
                                                             --------------------------------------
                                                                1998          1997          1996
                                                             ----------    ----------    ----------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                          <C>           <C>           <C>
Revenues...................................................   $189,940      $138,218      $103,912
Cost of revenues...........................................    160,647       117,955        86,998
                                                              --------      --------      --------
     Gross profit..........................................     29,293        20,263        16,914
General and administrative expenses........................     15,509         8,880         6,715
Goodwill amortization......................................        931            --            --
                                                              --------      --------      --------
     Operating income......................................     12,853        11,383        10,199
Interest expense...........................................     (6,812)         (348)         (452)
Other income...............................................      1,733           520           303
                                                              --------      --------      --------
          Income before taxes..............................      7,774        11,555        10,050
Provision for income taxes.................................      3,453         2,823            --
                                                              --------      --------      --------
          Net income.......................................   $  4,321      $  8,732      $ 10,050
                                                              ========      ========      ========
Pro forma net income data (unaudited)
Net income as reported.....................................   $  4,321      $  8,732      $ 10,050
Pro forma additional tax provision.........................         --         1,513         4,020
                                                              --------      --------      --------
Pro forma net income.......................................   $  4,321      $  7,219      $  6,030
                                                              ========      ========      ========
Pro forma net income per share:
  Basic....................................................   $   0.62      $   1.12      $   1.02
                                                              ========      ========      ========
  Diluted..................................................   $   0.60      $   1.10      $   1.02
                                                              ========      ========      ========
Weighted average shares used in computation:
  Basic....................................................      7,014         6,457         5,941
                                                              ========      ========      ========
  Diluted..................................................      7,169         6,556         5,941
                                                              ========      ========      ========
</TABLE>
 
                            See accompanying notes.
 
                                       F-3
<PAGE>   42
 
                              SCHUFF STEEL COMPANY
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                               ACCUMULATED
                                     COMMON STOCK     ADDITIONAL                  OTHER
                                    ---------------    PAID-IN     RETAINED   COMPREHENSIVE
                                    SHARES   AMOUNT    CAPITAL     EARNINGS      INCOME        TOTAL
                                    ------   ------   ----------   --------   -------------   -------
                                                             (IN THOUSANDS)
<S>                                 <C>      <C>      <C>          <C>        <C>             <C>
Balance at December 31, 1995......  5,000      $5      $    15     $ 7,174        $(426)      $ 6,768
  Net income......................     --      --           --      10,050           --        10,050
  Changes in unfunded pension
     losses.......................     --      --           --          --          (93)          (93)
                                                                                              -------
     Comprehensive income.........                                                              9,957
  Distributions to stockholders...     --      --           --      (6,043)          --        (6,043)
                                    -----      --      -------     -------        -----       -------
Balance at December 31, 1996......  5,000       5           15      11,181         (519)       10,682
  Net income......................     --      --           --       8,732           --         8,732
  Changes in unfunded pension
     losses.......................     --      --           --          --          519           519
                                                                                              -------
     Comprehensive income.........                                                              9,251
  Issuance of common stock, net of
     offering expenses............  2,000       2       13,998          --           --        14,000
  Distributions to stockholders...     --      --           --      (9,260)          --        (9,260)
                                    -----      --      -------     -------        -----       -------
Balance at December 31, 1997......  7,000       7       14,013      10,653           --        24,673
  Net income......................     --      --           --       4,321           --         4,321
                                                                                              -------
     Comprehensive income.........                                                              4,321
  Issuance of stock awards........      1      --            5          --           --             5
  Exercise of stock options.......     22      --          112          --           --           112
  Amortization of unearned
     compensation for options
     issued below market..........     --      --           24          --           --            24
                                    -----      --      -------     -------        -----       -------
Balance at December 31, 1998......  7,023      $7      $14,154     $14,974        $  --       $29,135
                                    =====      ==      =======     =======        =====       =======
</TABLE>
 
                             See accompanying notes.
 
                                       F-4
<PAGE>   43
 
                              SCHUFF STEEL COMPANY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31
                                                              -------------------------------
                                                                1998        1997       1996
                                                              --------    --------    -------
                                                                      (IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
OPERATING ACTIVITIES
Net income..................................................  $  4,321    $  8,732    $10,050
Adjustment to reconcile net income to net cash provided by
  (used in) operating activities:
  Depreciation and amortization.............................     3,618       1,520      1,267
  Gain on disposals of property, plant and equipment........      (143)        (21)       (13)
  Deferred income taxes.....................................       (46)       (191)        --
  Unearned compensation.....................................        24          --         --
  Stock awards..............................................         5          --         --
  Loss on pension plan termination..........................        --         251         --
  Changes in operating assets and liabilities:
     Restricted funds on deposit............................      (478)        153     (2,029)
     Receivables............................................    (2,412)     (6,585)    (5,598)
     Costs and recognized earnings in excess of billings on
       uncompleted contracts................................    (2,315)        (53)    (2,255)
     Inventories............................................      (302)       (989)     6,491
     Prepaid expenses and other current assets..............       (85)       (479)        40
     Accounts payable.......................................    (1,477)        917         58
     Accrued payroll and employee benefits..................      (337)       (541)       606
     Insurance payable......................................       266         540        253
     Accrued interest.......................................     1,035          46         --
     Other accrued liabilities..............................    (1,676)        159       (448)
     Billings in excess of costs and recognized earnings on
       uncompleted contracts................................        68      (8,293)     6,111
     Other liabilities......................................       166         237         --
     Accrued pension cost...................................        --         111       (142)
                                                              --------    --------    -------
          Net cash provided by (used in) operating
            activities......................................       232      (4,486)    14,391
INVESTING ACTIVITIES
Acquisitions of property, plant and equipment...............    (2,307)     (3,188)    (2,337)
Proceeds from disposals of property, plant and equipment....     3,789          79        189
Increase in other assets....................................      (672)       (100)      (167)
Purchase of businesses, net of cash acquired................   (78,683)       (427)        --
                                                              --------    --------    -------
          Net cash used in investing activities.............   (77,873)     (3,636)    (2,315)
FINANCING ACTIVITIES
Proceeds from revolving line of credit and long-term debt...    64,534      23,874     33,500
Principal payments on revolving line of credit and long-term
  debt......................................................   (67,771)    (22,993)   (36,278)
Proceeds from issuance of senior notes, net of issuance
  costs.....................................................    96,000          --         --
Proceeds from exercise of stock options.....................       112          --         --
Proceeds from issuance of common stock, net of offering
  expenses..................................................        --      14,000         --
Cash distributions to stockholders..........................        --     (13,815)    (2,334)
                                                              --------    --------    -------
          Net cash provided by (used in) financing
            activities......................................    92,875       1,066     (5,112)
                                                              --------    --------    -------
     Increase (decrease) in cash and cash equivalents.......    15,234      (7,056)     6,964
Cash and cash equivalents at beginning of year..............       197       7,253        289
                                                              --------    --------    -------
          Cash and cash equivalents at end of year..........  $ 15,431    $    197    $ 7,253
                                                              ========    ========    =======
</TABLE>
 
                            See accompanying notes.
 
                                       F-5
<PAGE>   44
 
                              SCHUFF STEEL COMPANY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Description of Business
 
     Schuff Steel Company and its wholly owned subsidiaries ("Schuff or the
Company") are primarily steel fabrication and erection contractors with
headquarters in Phoenix, Arizona and operations in Arizona, Florida, Georgia,
Texas and California. The Company's construction projects are primarily in
Arizona, Nevada, California, Florida, Georgia, Texas, and to a lesser extent, in
Mexico and South America.
 
  Principles of Consolidation
 
     The accompanying consolidated financial statements include the accounts of
the parent Company and all wholly owned subsidiaries. All intercompany
transactions have been eliminated for the year ended December 31, 1998 and 1997.
Financial statements for the year ended December 31, 1996 are not consolidated
since there were no subsidiaries during that period.
 
  Operating Cycle
 
     Balance sheet items expected to be paid or received within one year are
classified as current. Assets and liabilities relating to long-term construction
contracts are included in current assets and current liabilities in the
accompanying consolidated balance sheet, since they will be realized or
liquidated in the normal course of contract completion, although completion may
require more than one year.
 
  Cash and cash equivalents
 
     Cash consists of cash in non-interest bearing checking accounts. Cash
equivalents consist of investments in a money market mutual fund which is
invested in commercial paper and financial instruments and securities issued and
guaranteed by the U.S. Treasury, the U.S. government or its agencies or
instrumentalities. All such investments are highly liquid and are made through
the Company's bank or other investment companies.
 
  Restricted Funds on Deposit
 
     Restricted funds on deposit represent funds on deposit in interest bearing
escrow accounts, which are maintained in lieu of retention for specific
contracts.
 
  Inventories
 
     Inventories, primarily steel components, are stated at the lower of cost or
market under the first-in, first-out method.
 
  Property, Plant and Equipment
 
     Property, plant and equipment is stated at cost and is depreciated over the
estimated useful lives, which generally range from five to 30 years, of the
related assets using the straight line method. Leasehold improvements are
amortized over the shorter of the lease term or the estimated useful life.
Amortization of leasehold improvements is included in depreciation and
amortization.
 
  Goodwill
 
     Goodwill represents the excess of cost over the fair value of net assets
acquired in purchase business combinations and is amortized over 25 years on a
straight-line basis. The Company assesses the recoverability
 
                                       F-6
<PAGE>   45
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
of goodwill based upon expected future undiscounted cash flows resulting from
the acquired businesses. Cumulative amortization of goodwill at December 31,
1998 was approximately $931,000.
 
  Revenue and Cost Recognition
 
     The Company performs its services primarily under fixed-price contracts and
recognizes revenues and costs from construction projects using the percentage of
completion method. Under this method, revenue is recognized based upon the ratio
of the costs incurred to date to the total estimated costs to complete the
project. Revenue recognition begins when progress is sufficient to estimate
final results with reasonable accuracy. Costs include all direct material and
labor costs related to contract performance, subcontractor costs, indirect
labor, and fabrication plant overhead costs, which are charged to contract costs
as incurred. Revenues relating to changes in the scope of a contract are
recognized when the customer has authorized the change, the work is commenced
and the Company has made an estimate of the amount that is probable of being
paid for the change. Revisions in estimates during the course of contract work
are reflected in the accounting period in which the facts requiring the revision
become known. Provisions for estimated losses on uncompleted contracts are made
in the period a loss on a contract becomes determinable.
 
     Construction contracts with customers generally provide that billings are
to be made monthly in amounts which are commensurate with the extent of
performance under the contracts. Contract receivables arise principally from the
balance of amounts due on progress billings on jobs under construction.
Retentions on contract receivables are amounts due on progress billings, which
are withheld until the completed project has been accepted by the customer.
 
     Costs and recognized earnings in excess of billings on uncompleted
contracts primarily represent revenue earned under the percentage of completion
method which has not been billed, and also include costs incurred in excess of
the billings on contracts for which sufficient work has not been performed to
allow for the recognition of revenue. Billings in excess of related costs and
recognized earnings on uncompleted contracts represent amounts billed on
contracts in excess of the revenue allowed to be recognized under the percentage
of completion method on those contracts.
 
  Stock Based Compensation
 
     The Company generally grants stock options for a fixed number of shares to
employees and directors with an exercise price equal to the fair market value of
the shares at the date of grant. The Company accounts for stock option grants to
employees and directors in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," ("APB 25") and accordingly,
recognizes no compensation expense for these stock option grants.
 
  Income Taxes
 
     The Company accounts for income taxes under the liability method in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes."
 
     On June 26, 1997, the Company's stockholders elected to terminate the
Company's status to be treated as an S corporation. As an S corporation, the
Company was not subject to federal and state income taxes. Pro forma net income
information presented in the consolidated statements of income reflects the
provision for income taxes that would have been recorded had the Company been
taxed on its income through the S corporation termination date. As an S
corporation, the Company would from time to time make S corporation
distributions to its stockholders in amounts sufficient for the stockholders to
pay their income tax liability related to the earnings of the Company. The
actual provisions reported for the periods subsequent to the S corporation
termination date reflect the Company's C corporation status.
 
                                       F-7
<PAGE>   46
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Fair Value of Financial Instruments
 
     SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires that the Company disclose estimated fair values of financial
instruments. Cash and cash equivalents, restricted funds on deposit,
receivables, accounts payable, other accrued liabilities, and debt, excluding
the Senior Notes, are carried at amounts that reasonably approximate their fair
values at December 31, 1998. The fair value of the Company's Senior Notes at
December 31, 1998 was approximately $86,875,000 based upon the open market
price.
 
  Concentrations of Credit Risk
 
     Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
receivables. The Company maintains cash and cash equivalents, restricted funds
on deposit and certain other financial instruments with large financial
institutions. The Company performs periodic evaluations of the relative credit
standing of those financial institutions that are considered in the Company's
investment strategy. Concentrations of credit risk with respect to receivables
are limited as the Company's customers tend to be larger general contractors on
adequately funded projects and the Company has certain lien rights.
 
  Use of Estimates
 
     The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the balance sheet date and the reported amounts of revenues and expenses during
the reporting period for long-term contracts.
 
     The Company has a substantial history of making reasonably dependable
estimates of the extent of progress towards completion, contract revenues, and
contract costs on its long-term contracts. The estimates inherent in such
provisions are periodically evaluated and revisions are made as required to
reflect the most up-to-date information. However, due to uncertainties inherent
in the estimation process, actual results could differ materially from those
estimates.
 
  Pro Forma Net Income Data
 
     Basic pro forma net income per share is computed using the weighted average
common shares outstanding, and diluted pro forma net income per share is
computed using the weighted average common shares and common stock equivalents,
if dilutive. Pro forma tax provision is based on the effective tax rate that the
Company believes would have been incurred had the Company not been an S
corporation for income tax purposes. That rate of 40 percent is comprised of a
34 percent federal statutory rate plus an effective state tax rate net of
federal benefit of six percent.
 
  Impact of Recently Issued Accounting Standards
 
     As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes new rules for
the reporting and display of comprehensive income and its components; however,
the adoption of this Statement had no impact on the Company's net income or
stockholders' equity. SFAS No. 130 requires changes in unfunded pension losses,
which prior to adoption were reported separately in stockholders' equity, to be
included in the computation of other comprehensive income. Prior year
consolidated financial statements have been reclassified to conform to the
requirements of SFAS No. 130.
 
     In March 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use"
 
                                       F-8
<PAGE>   47
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
("SOP 98-1"). SOP 98-1, which has been adopted prospectively as of January 1,
1999, requires the capitalization of certain costs incurred in connection with
developing or obtaining internal use software. Prior to the adoption of SOP
98-1, the Company expensed all internal use software related costs as incurred.
The Company has not yet determined the impact of adopting SOP 98-1.
 
  Reclassifications
 
     Certain amounts in the 1997 and 1996 consolidated financial statements have
been reclassified to conform with the 1998 presentation.
 
2.  PURCHASES OF SUBSIDIARIES
 
     On June 4, 1998, the Company acquired all of the issued and outstanding
capital stock of Addison Structural Services, Inc. ("Addison"). As a result of
such purchase, the Company acquired indirect ownership of the assets of
Addison's wholly owned operating subsidiaries, Addison Steel, Inc. and Quincy
Joist Company. The aggregate purchase price was approximately $59,503,000,
consisting of approximately $56,289,000 in cash and $3,214,000 in a promissory
note.
 
     On August 31, 1998, the Company acquired all of the issued and outstanding
capital stock of Six Industries, Inc. ("Six"). The aggregate purchase price was
approximately $18,190,000, consisting of approximately $16,690,000 in cash and
$1,500,000 in a promissory note.
 
     On October 15, 1998, the Company acquired all of the issued and outstanding
capital stock of Bannister Steel, Inc. ("Bannister"). The aggregate purchase
price was approximately $16,750,000 consisting of $15,750,000 in cash and a
$1,000,000 in a promissory note.
 
     The acquisitions have been accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to the assets
and liabilities acquired based on the fair value at the date of the acquisition.
The purchase price allocation based on net assets acquired is as follows:
 
<TABLE>
<CAPTION>
                                              ADDISON      SIX      BANNISTER     TOTAL
                                              -------    -------    ---------    -------
                                                            (IN THOUSANDS)
<S>                                           <C>        <C>        <C>          <C>
Cash consideration..........................  $56,289    $16,690     $15,750     $88,729
Notes payable...............................    3,214      1,500       1,000       5,714
Acquisition costs...........................    1,269        183         431       1,883
                                              -------    -------     -------     -------
Total purchase price........................   60,772     18,373      17,181      96,326
Fair value of net assets acquired...........   33,150      4,996       4,293      42,439
                                              -------    -------     -------     -------
Goodwill....................................  $27,622    $13,377     $12,888     $53,887
                                              =======    =======     =======     =======
</TABLE>
 
     The operating results of the acquirees have been included in the Company's
consolidated financial statements from the dates of acquisitions. The following
unaudited pro forma information presents a summary of consolidated results of
operations as if the acquisitions had occurred on January 1, 1997:
 
<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31
                                                         ----------------------
                                                           1998         1997
                                                         ---------    ---------
                                                             (IN THOUSANDS,
                                                         EXCEPT PER SHARE DATA)
<S>                                                      <C>          <C>
Revenues...............................................  $254,677     $243,506
Net income.............................................     5,488        7,523
Diluted pro forma net income per share.................      0.77         1.15
</TABLE>
 
     The pro forma amounts include a charge for all of the debt costs related to
the issuance of $100 million of the Company's 10 1/2% senior notes, although the
entire amount of the debt was not used to finance the
 
                                       F-9
<PAGE>   48
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
acquisitions. The pro forma amounts do not reflect interest income that would
have been earned on the portion of the debt proceeds that were not used to fund
the cash portion of the purchase price of the acquirees, although such funds
would have been available to the Company for investment purposes.
 
3.  RECEIVABLES AND CONTRACTS IN PROGRESS
 
     Receivables consist of the following:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                           ------------------
                                                            1998       1997
                                                           -------    -------
                                                             (IN THOUSANDS)
<S>                                                        <C>        <C>
Contract receivables:
  Contracts in progress..................................  $36,717    $18,094
  Unbilled retentions....................................   10,011      6,520
                                                           -------    -------
                                                            46,728     24,614
Other receivables........................................      582        103
                                                           -------    -------
                                                           $47,310    $24,717
                                                           =======    =======
</TABLE>
 
     Substantially all of the Company's receivables are due from general
contractors operating in Arizona, California, Florida, Georgia, Nevada, Texas,
Mexico and South America.
 
     Costs and estimated earnings on completed and uncompleted contracts consist
of the following:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31
                                                              --------------------
                                                                1998        1997
                                                              --------    --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
Costs incurred on contracts completed and in progress.......  $365,983    $222,669
Estimated earnings..........................................    57,139      32,274
                                                              --------    --------
                                                               423,122     254,943
Less progress billings......................................   418,286     254,719
                                                              --------    --------
                                                              $  4,836    $    224
                                                              ========    ========
Included in the accompanying consolidated balances sheets
  under the following captions:
  Costs and recognized earnings in excess of billings on
     uncompleted contracts..................................  $ 11,861    $  3,982
  Billings in excess of costs and recognized earnings on
     uncompleted contracts..................................    (7,025)     (3,758)
                                                              --------    --------
                                                              $  4,836    $    224
                                                              ========    ========
</TABLE>
 
4.  INVENTORIES
 
     Inventories consist of the following:
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                             ----------------
                                                              1998      1997
                                                             ------    ------
                                                              (IN THOUSANDS)
<S>                                                          <C>       <C>
Raw materials..............................................  $6,307    $1,846
Finished goods.............................................     518       518
                                                             ------    ------
                                                             $6,825    $2,364
                                                             ======    ======
</TABLE>
 
                                      F-10
<PAGE>   49
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5.  PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment consists of the following:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31
                                                              ------------------
                                                               1998       1997
                                                              -------    -------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Land........................................................  $ 3,908    $    --
Buildings...................................................    5,379         --
Machinery and equipment.....................................   14,325     10,274
Leasehold improvements......................................    3,048      2,647
Furniture and fixtures......................................      353        309
Transportation equipment....................................    1,607      1,547
Cranes......................................................      577        644
Office equipment............................................      634        322
Detailing equipment.........................................      393        316
EDP equipment...............................................    1,804      1,835
Construction in progress....................................      443         --
                                                              -------    -------
                                                               32,471     17,894
Less accumulated depreciation and amortization..............   11,621     10,479
                                                              -------    -------
                                                              $20,850    $ 7,415
                                                              =======    =======
</TABLE>
 
6.  LONG-TERM DEBT
 
     Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31
                                                              ------------------
                                                                1998       1997
                                                              --------    ------
                                                                (IN THOUSANDS)
<S>                                                           <C>         <C>
Senior notes with interest payable semi-annually at 10.50
  percent on June 1 and December 1, maturing in 2008........  $100,000    $   --
Note payable to a bank under a revolving line of credit
  agreement, with interest payable monthly at the bank's
  base rate plus 0.50 percent or LIBOR plus 2.50 percent,
  maturing in 2001..........................................     1,357        --
Note payable under a stock purchase agreement, payable in
  annual installments of $1,071,000 each June plus interest
  at prime less 1.00 percent, maturing in 2001, secured by a
  $1,071,000 letter of credit...............................     3,214        --
Unsecured note payable to related party under a stock
  purchase agreement, payable in annual installments of
  $750,000 each August plus interest at prime, maturing in
  2000......................................................     1,500        --
Note payable to related parties under a stock purchase
  agreement, payable in annual installments of $500,000 each
  October plus interest at prime less 1.00 percent, maturing
  in 2000, secured by a $1,000,000 letter of credit.........     1,000        --
Notes payable to related parties under a stock purchase
  agreement, payable in annual installments of $159,250 plus
  interest at 5.73 percent, maturing in 2002................       637       796
</TABLE>
 
                                      F-11
<PAGE>   50
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31
                                                              ------------------
                                                                1998       1997
                                                              --------    ------
                                                                (IN THOUSANDS)
<S>                                                           <C>         <C>
Note payable to a bank under a revolving line of credit,
  paid in full
  in 1998...................................................        --     2,640
Note payable to a related party, paid in full in 1998.......        --     1,795
                                                              --------    ------
                                                               107,708     5,231
Less current portion........................................     3,838       304
                                                              --------    ------
                                                              $103,870    $4,927
                                                              ========    ======
</TABLE>
 
     On June 4, 1998, the Company completed a private placement pursuant to Rule
144A of the Securities Act of 1933 of $100.0 million in principal amount of its
10.50 percent senior notes due 2008 ("Senior Notes"). Net proceeds of the Senior
Notes were used to repay certain indebtedness of the Company and to pay the cash
portions of the purchase price for the Company's acquisitions of Addison, Six
and Bannister. The Senior Notes are redeemable at the option of the Company in
whole or in part, beginning in 2003 at a premium declining ratably to par by
2006. By 2001, the Company may redeem up to 35.0 percent of the Senior Notes at
a premium with the proceeds of an equity offering, provided that at least 65.0
percent of the aggregate amount of the Senior Notes originally outstanding
remain outstanding. The Senior Notes contain covenants that, among other things,
provide limitations on additional indebtedness, sale of assets, change of
control and dividend payments, as defined. The Senior Notes are fully and
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis by the Company's current and future, direct and indirect subsidiaries. See
Note 15.
 
     The Company maintains a $25.0 million credit facility with a bank that
matures on June 30, 2001. The credit facility is secured by a first priority,
perfected security interest in all assets of the Company and its present and
future subsidiaries. The Company will be eligible for reductions in the interest
rates on the credit facility if the Company achieves certain performance targets
based upon certain financial ratios, as defined. At December 31, 1998, there was
approximately $21.6 million of credit available under the credit facility for
borrowings, which has been reduced by approximately $2.1 million of outstanding
letters of credits under which the Company is committed. The weighted average
interest rate on the revolving line of credit was approximately 8.50 percent at
December 31, 1998 and 1997.
 
     The credit facility also requires that the Company maintain specified
leverage ratios, interest coverage ratios, fixed charge coverage ratios and a
specified minimum EBITDA. The credit facility also contains other covenants
that, among other things, limit the Company's ability to pay cash dividends or
make other distributions, change its business, merge, consolidate or dispose of
material portions of its assets. 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 bank.
 
     Annual principal amounts of long-term debt maturing subsequent to December
31, 1998 are: 1999 -- $3,838,000, 2000 -- $2,481,000, 2001 -- $1,230,000,
2002 -- $159,000, 2003 -- $0, and thereafter -- $100,000,000. The Company made
interest payments of approximately $5,543,000, $325,000 and $420,000 for the
years ended December 31, 1998, 1997 and 1996, respectively, on its long-term
debt.
 
7.  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 retroactively restated in the
consolidated 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
financial statements reflect the authorized shares after having given effect to
the reincorporation.
 
                                      F-12
<PAGE>   51
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On July 7, 1997, the Company sold 2,000,000 common shares pursuant to the
Company's Registration Statement on Form S-1 filed with the Securities and
Exchange Commission. The Company received net proceeds of approximately
$14,000,000 from the sale of the shares 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.
 
     Prior to June 26, 1997, the Company's principal stockholders were the sole
parties to a share repurchase agreement that was funded by life insurance
proceeds and personal promissory notes in the event of the death of either
stockholder. Under the terms of the Company's bank loan agreement, the Company
was permitted to make distributions to enable the shareholders to pay the
premiums on their life insurance policies. Effective June 26, 1997, with the
termination of the Company's "S" election, this agreement was canceled.
 
     Due to the Company's status as a qualified S corporation through June 26,
1997, there was no income tax expense to the Company for the period from January
1, 1997 through June 26, 1997 or the year ended December 31, 1996. However, it
was the policy of the Company to also make distributions to stockholders in such
amounts as were required to enable them to pay income taxes attributable to
their allocable share of taxable S corporation income from the Company through
June 26, 1997. A final accounting was made by the Company in December 1997 for
the period ended June 26, 1997 prior to the preparation and filing of the
Company's final S corporation income tax return. Pursuant to provisions in the
Company's bank loan agreement, the Company was also permitted at its discretion
to declare an annual dividend to the stockholders providing the Company
maintained certain financial criteria.
 
     Following is an analysis of stockholder distributions:
 
<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                                 DECEMBER 31
                                                              -----------------
                                                               1997       1996
                                                              -------    ------
                                                               (IN THOUSANDS)
<S>                                                           <C>        <C>
Stockholder distributions payable at beginning of year......  $ 4,555    $1,071
Additions (deductions):
  Life insurance premiums...................................      173       346
  Current year income taxes.................................    2,087     5,105
  Prior year income taxes...................................       --       (73)
  Less: Prior year refunds applied to current year taxes....       --       (35)
  Current year dividend.....................................    7,000       700
                                                              -------    ------
                                                                9,260     6,043
                                                              -------    ------
Cash distributions:
  Life insurance premiums...................................      173       226
  Current year income taxes.................................    2,087       925
  Prior year income taxes...................................    4,140       798
  Current year dividend.....................................    7,000       285
  Prior year dividend.......................................      415       100
                                                              -------    ------
                                                               13,815     2,334
                                                              -------    ------
Noncash distributions applied to receivables from
  stockholders..............................................       --       225
                                                              -------    ------
Stockholder distributions payable at end of year............  $    --    $4,555
                                                              =======    ======
</TABLE>
 
                                      F-13
<PAGE>   52
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8.  INCOME TAXES
 
     As discussed in Note 1, 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 for the effect of cumulative temporary differences as of
the date of the termination. Prior to its termination as an S corporation, the
Company declared an additional distribution of $7,000,000 to its then current
stockholders. The Company's retained earnings include 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.
 
     Deferred tax assets and liabilities are composed of the following:
 
<TABLE>
<CAPTION>
                                                  DECEMBER 31, 1998     DECEMBER 31, 1997
                                                 -------------------   -------------------
                                                 CURRENT   LONG-TERM   CURRENT   LONG-TERM
                                                 -------   ---------   -------   ---------
                                                              (IN THOUSANDS)
<S>                                              <C>       <C>         <C>       <C>
Deferred tax assets:
Vacation accrual...............................   $317      $    --     $190       $  --
Accrued liabilities............................    254           --       53          --
Deferred rents payable.........................     --          161       --          95
Deferred recognition on contracts in
  progress.....................................     98           --      174          --
Other..........................................     --          193       --          35
                                                  ----      -------     ----       -----
                                                   669          354      417         130
Deferred tax liabilities:
  Property, plant and equipment basis
     difference................................     --          758       --          --
  Accelerated depreciation.....................     --          993       --         158
  Pension accrual..............................     --           --       --          48
  Other........................................     37          228       --         150
                                                  ----      -------     ----       -----
                                                    37        1,979       --         356
                                                  ----      -------     ----       -----
     Net deferred tax assets (liabilities).....   $632      $(1,625)    $417       $(226)
                                                  ====      =======     ====       =====
</TABLE>
 
     In connection with the Company's acquisitions during 1998, the Company
assumed approximately $1,230,000 in net deferred tax liabilities.
 
     Significant components of the income tax expense (benefit) follows:
 
<TABLE>
<CAPTION>
                                                YEAR ENDED
                                               DECEMBER 31
                                             ----------------
                                              1998      1997
                                             ------    ------
                                              (IN THOUSANDS)
<S>                                          <C>       <C>
Current:
  Federal..................................  $2,974    $2,562
  State....................................     525       452
                                             ------    ------
                                              3,499     3,014
Deferred:
  Federal..................................     (39)     (163)
  State....................................      (7)      (28)
                                             ------    ------
                                                (46)     (191)
                                             ------    ------
                                             $3,453    $2,823
                                             ======    ======
</TABLE>
 
                                      F-14
<PAGE>   53
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The reconciliation of income tax computed at the U.S. federal statutory
rates to provision for income taxes follows:
 
<TABLE>
<CAPTION>
                                                       YEAR ENDED         YEAR ENDED
                                                       DECEMBER 31    DECEMBER 31, 1997
                                                          1998       --------------------
                                                         ACTUAL      ACTUAL     PRO FORMA
                                                       -----------   -------    ---------
                                                                 (IN THOUSANDS)
<S>                                                    <C>           <C>        <C>
Tax at U.S. federal statutory rates..................    $2,643      $ 3,929     $3,929
State income taxes, net of federal tax benefit.......       342          280        693
Amortization of goodwill.............................       374           --         --
S Corporation termination............................        --         (300)      (300)
Tax attributable to S corporation portion of
  earnings...........................................        --       (1,213)        --
Other................................................        94          127         14
                                                         ------      -------     ------
                                                         $3,453      $ 2,823     $4,336
                                                         ======      =======     ======
</TABLE>
 
     Total income tax payments for the year ended December 31, 1998 were
approximately $4,907,000 and for the period from June 27, 1997 (date of C
corporation commencement) to December 31, 1997 were approximately $3,012,000.
 
9.  EMPLOYEE RETIREMENT PLANS
 
     The Company maintains a 401(k) retirement savings plan which covers
eligible employees and which permits participants to contribute to the plan,
subject to Internal Revenue Code restrictions. The plan also permits the Company
to make discretionary matching contributions, which amounted to approximately
$78,000, $70,000 and $35,000 for the years ended December 31, 1998, 1997 and
1996, respectively.
 
     In 1996, the Company adopted the "Supplemental Retirement and Deferred
Compensation Plan" for certain management employees. The Plan is an unfunded
deferred compensation plan whereby the Company contributes an amount equal to 10
percent of annual net profits after deducting taxes to be paid by the
stockholders, as defined in the Plan. During the year ended December 31, 1996,
total expense recognized by the Company was $529,000, which was distributed to
eligible employees in 1997 pursuant to termination of this Plan in January 1997.
 
     Certain of the Company's fabrication and erection workforce is subject to
collective bargaining agreements. The Company made contributions to union
sponsored pension plans of $1,479,000, $1,836,000 and $1,122,000 during the
years ended December 31, 1998, 1997 and 1996, respectively. Information from the
administrators of the plans is not available to permit the Company to determine
its share of accumulated benefits and related assets.
 
     The Company has a 401(k) defined contribution retirement savings plan for
union steelworkers. Currently, only participants contribute to this plan on a
voluntary basis, subject to Internal Revenue Code restrictions. All account
balances are 100 percent vested.
 
     On August 15, 1994, the Company and local representatives of the United
Steelworkers of America reached an agreement whereby the Company became a
participating employer in a multi-employer defined benefit retirement plan.
Effective January 1, 1998, the Company is required to contribute 45 cents to the
plan (compared to 40 cents in 1997 and 35 cents in 1996) for each hour worked in
the preceding month by each plan participant. The Company has also agreed to
increase its hourly contribution by five cents per participant annually through
the year 2002. The Company's funding policy is to make monthly contributions to
the plan. Total cost recognized as expense was approximately $232,000, $147,000
and $124,000 during the years ended December 31, 1998, 1997 and 1996,
respectively. At December 31, 1998 and 1997, respectively, there were no
significant due and unpaid amounts related to the employee pension plan.
 
                                      F-15
<PAGE>   54
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     In December 1997, the Company terminated a second, contributory defined
benefit plan that had been maintained to provide pension and disability benefits
to union steelworkers. The plan had previously been curtailed in 1989 when all
pension credits were frozen. At the time of plan termination, all undistributed
benefits were fully vested. Annuities were purchased to settle pension
obligations under the terminated plans and excess pension assets were
distributed to the participants. As a result of the settlement, the Company
recorded a loss of approximately $251,000 in 1997.
 
     Prior to its termination in 1997, the Company accounted for pension expense
under its noncontributory defined benefit pension plan under the provisions of
SFAS No. 87, "Employers' Accounting for Pensions." The weighted average discount
rate used in determining the actuarial present value of accumulated and
projected benefit obligations was 6.5 percent in 1996. The expected long-term
rate of return on plan assets was 8.5 percent in 1996. The weighted average rate
of compensation increase was not applicable because the benefit was not pay
related.
 
     The following table sets forth the funded status of the plan as provided by
consulting actuaries at December 31, 1996:
 
<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
<S>                                                           <C>
Actuarial present value of accumulated and projected benefit
  obligations, all of which are fully vested................      $2,003
Plan assets at fair value...................................       1,740
                                                                  ------
Funded status, projected benefit obligation in excess of
  plan assets...............................................      $  263
                                                                  ======
Comprised of:
  Prepaid pension cost before adjustment to recognize
     additional minimum liability...........................      $  362
  Unrecognized net loss.....................................        (519)
  Unrecognized net obligation...............................        (106)
                                                                  ------
Adjustment to recognize minimum liability...................      $ (263)
                                                                  ======
Net pension cost includes the following components:
  Service costs.............................................      $   50
  Interest cost on projected benefit obligation.............         122
  Actual return on plan assets..............................        (231)
  Net amortization and deferral.............................         128
                                                                  ------
  Net period pension cost...................................      $   69
                                                                  ======
</TABLE>
 
                                      F-16
<PAGE>   55
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
10.  NET INCOME PER SHARE
 
     The following table sets forth the computation of basic and diluted pro
forma net income per share:
 
<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31
                                                              -------------------------------------
                                                                1998          1997          1996
                                                              ---------     ---------     ---------
                                                              (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                                           <C>           <C>           <C>
Numerator:
  Pro forma net income......................................   $4,321        $7,219        $6,030
                                                               ======        ======        ======
Denominator:
  Weighted average shares...................................    7,014         5,975         5,000
  Net effect of shares issued that are attributed to
     stockholder distributions made from initial public
     offering proceeds......................................       --           482           941
                                                               ------        ------        ------
Denominator for basic pro forma net income per share........    7,014         6,457         5,941
Effect of dilutive securities:
  Employee and director stock options.......................      155            99            --
                                                               ------        ------        ------
  Denominator for diluted pro forma net income per
     share -- adjusted weighted average shares and assumed
     conversions............................................    7,169         6,556         5,941
                                                               ======        ======        ======
Pro forma net income per share:
  Basic.....................................................   $ 0.62        $ 1.12        $ 1.02
                                                               ======        ======        ======
  Diluted...................................................   $ 0.60        $ 1.10        $ 1.02
                                                               ======        ======        ======
</TABLE>
 
     Options to purchase 334,000 shares of common stock at prices ranging from
$13.75 to $14.50 were outstanding during 1998 but were not included in the
computation of pro forma diluted net income per share because the options'
exercise prices were greater than the average market price of the common shares
and, therefore, the effect would be anti-dilutive.
 
                                      F-17
<PAGE>   56
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
11.  STOCK OPTIONS
 
     The Company established a qualified stock option plan ("Plan") effective
February 5, 1997. The exercise price of the options, as well as the vesting
period, are established by the Company's Board of Directors. A summary of
activity under the Plan is as follows:
 
<TABLE>
<CAPTION>
                                                                           OUTSTANDING OPTIONS
                                                           SHARES      ---------------------------
                                                          AVAILABLE                   WEIGHTED
                                                            UNDER                 AVERAGE EXERCISE
                                                            GRANT      NUMBER          PRICE
                                                          ---------    -------    ----------------
<S>                                                       <C>          <C>        <C>
Balance at February 5, 1997 (inception of Plan).........         --         --         $   --
  Authorized............................................    600,000         --             --
  Granted...............................................   (360,500)   360,500           5.12
  Exercised.............................................         --         --             --
  Canceled..............................................     48,500    (48,500)          5.00
                                                          ---------    -------         ------
Balance at December 31, 1997............................    288,000    312,000           5.14
  Authorized............................................  1,000,000         --             --
  Granted...............................................   (491,000)   491,000          12.47
  Exercised.............................................         --    (22,420)          5.00
  Canceled..............................................     27,000    (27,000)          9.73
                                                          ---------    -------         ------
Balance at December 31, 1998............................    824,000    753,580         $ 9.51
                                                          =========    =======         ======
Exercisable at December 31, 1998........................                52,980
                                                                       =======
</TABLE>
 
     The following table summarizes information about stock options outstanding
at December 31, 1998:
 
<TABLE>
<CAPTION>
                                      OPTIONS OUTSTANDING
                            ----------------------------------------      OPTIONS EXERCISABLE
                                        WEIGHTED                        ------------------------
                                         AVERAGE         WEIGHTED                    WEIGHTED
                                       CONTRACTUAL       AVERAGE                     AVERAGE
 RANGE OF EXERCISE PRICE    NUMBER        LIFE        EXERCISE PRICE    NUMBER    EXERCISE PRICE
 -----------------------    -------    -----------    --------------    ------    --------------
<S>                         <C>        <C>            <C>               <C>       <C>
$5.00-$7.00...............  353,580       8.52            $ 5.39        36,980        $ 5.00
$8.00-$10.25..............   66,000       9.10            $ 9.55        16,000        $ 8.13
$13.75-$14.50.............  334,000       9.29            $13.86            --            --
</TABLE>
 
     The Company's 1997 Stock Option Plan has authorized the grant of options up
to 1,600,000 shares to officers, directors or key employees of the Company. All
options have ten-year terms and generally vest ratably over five years from the
date of grant. The weighted average fair value of options granted at fair market
value during the year ended December 31, 1998 and 1997 was $9.21 and $3.21,
respectively. During 1998, the weighted average exercise price and fair value of
options granted below the fair market value at date of grant was $10.00 and
$10.83 per option, respectively. Such below market grant was for 50,000 shares
at $10.00 per share and is being expensed over the related five-year vesting
period in the amount of approximately $37,500 per year.
 
     The Company has elected to follow APB 25 and related Interpretations in
accounting for its stock options issued to employees because, as discussed
below, the alternative fair value accounting provided for under SFAS No. 123,
"Accounting for Stock-Based Compensation," ("SFAS No. 123") requires use of
option valuation models that were developed for use in valuing stock options.
Under APB 25, because the exercise price of the Company's employee stock options
generally equals the market price of the underlying stock on the date of grant,
no compensation expense is generally recognized.
 
                                      F-18
<PAGE>   57
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Pro forma information regarding net income and pro forma earnings per share
is required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS No.
123. The fair value for these options was estimated at the date of grant using a
Black Scholes Option pricing model with the following weighted average
assumptions:
 
<TABLE>
<CAPTION>
                                                     YEAR ENDED
                                                    DECEMBER 31
                                              ------------------------
                                                 1998          1997
                                              -----------    ---------
<S>                                           <C>            <C>
Expected life of award......................      5 years      5 years
Volatility..................................         .961         .699
Risk-free interest rate.....................  4.5 percent    6 percent
Expected dividends yield....................    0 percent    0 percent
</TABLE>
 
     Had compensation cost for the Company's stock option plans been determined
based on the fair value at the grant date for awards in 1998 and 1997 consistent
with the provisions of SFAS No. 123, the estimated fair value of the options
would be amortized to expense over the option's vesting period and the Company's
pro forma net income and pro forma net income per share would have been
decreased to the pro forma amounts indicated below:
 
<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                                       DECEMBER 31
                                                     ----------------
                                                      1998      1997
                                                     ------    ------
                                                      (IN THOUSANDS)
<S>                                                  <C>       <C>
Pro forma net income as reported...................  $4,321    $7,219
Pro forma net income including SFAS
  No. 123 expense..................................  $3,808    $7,114
Pro forma earnings per share including SFAS
  No. 123 expense
  Basic............................................  $ 0.54    $ 1.10
  Diluted..........................................  $ 0.53    $ 1.09
</TABLE>
 
     Pro forma results disclosed are based on the provisions of SFAS 123 using
the Black-Scholes option valuation model and are not likely to be representative
of the effects on the net income for future years. In addition, the
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the estimating models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
 
12.  RELATED PARTY TRANSACTIONS AND LEASES
 
     The Company leases certain properties from a partnership owned by related
parties which includes the Company's principal stockholders. The leases expire
in 2017 and require stipulated rent increases every five years based on the
Consumer Price Index. The Company is also obligated to pay the partnership any
taxes related to the lease payments.
 
     Rent expense under the related party leases totaled approximately $980,000,
$900,000 and $274,000 for the year ended December 31, 1998, 1997 and 1996,
respectively.
 
                                      F-19
<PAGE>   58
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company also leases certain property, vehicles, and equipment from
nonrelated parties for which it incurred rent expense of approximately $328,000,
$259,000 and $233,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.
 
     Future minimum rentals (excluding taxes), by year, and in the aggregate
under these noncancelable operating leases at December 31, 1998, are as follows:
 
<TABLE>
<CAPTION>
                                                         (IN THOUSANDS)
<S>                                                      <C>
1999...................................................     $ 1,034
2000...................................................       1,079
2001...................................................       1,083
2002...................................................       1,083
2003...................................................       1,083
Thereafter.............................................      14,247
                                                            -------
                                                            $19,609
                                                            =======
</TABLE>
 
13.  CONTINGENCIES
 
     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 under the employ of the Company. The
Company does not believe there are any such contingencies at December 31, 1998
for which the eventual outcome would have a material adverse impact on the
results of operations or liquidity of 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. The Company believes that the reasons for the delay were such that the
Company should not be liable and accordingly no reserves have been created for
this claim.
 
     During 1998, the Company filed a claim for approximately $8,600,000 for
additional reimbursement for work the Company believes is billable under the
terms of the related contract with respect to changes made in completing certain
aspects of a project. The Company has already incurred and expensed all of the
costs related to this claim. While management believes it has a right to collect
the full amount of the claim, no revenue has been recognized given the
uncertainty of the related negotiations, arbitration, and/or litigation that
will be required to resolve the ultimate payment due the Company.
 
                                      F-20
<PAGE>   59
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
14.  SEGMENT REPORTING AND SIGNIFICANT CUSTOMERS
 
     In accordance with the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131"), the Company
makes key financial decisions based on certain operating results of its
subsidiaries. Segment information as reviewed by the Company is as follows:
 
<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 1998
                                          ------------------------------------------------------
                                           SCHUFF     ADDISON     SIX      BANNISTER     TOTAL
                                          --------    -------    ------    ---------    --------
                                                              (IN THOUSANDS)
<S>                                       <C>         <C>        <C>       <C>          <C>
Revenues from external customers........  $131,185    $47,626    $5,415     $ 5,714     $189,940
Revenues from other segments............        35      3,924     1,755          --        5,714
Segment gross profit....................    14,057     12,531     1,692       1,013       29,293
Interest expense........................     2,704      3,124       614         370        6,812
Depreciation and amortization...........     1,873      1,410       213         122        3,618
Segment income before taxes.............     2,536      4,788       298         152        7,774
Segment net income......................     1,521      2,634       118          48        4,321
Segment total assets....................   151,218     45,996     6,611      11,789      215,614
</TABLE>
 
<TABLE>
<CAPTION>
RECONCILIATION OF REVENUES                                         1998
--------------------------                                    --------------
                                                              (IN THOUSANDS)
<S>                                                           <C>
Total external revenues for reportable segments.............     $189,940
Intersegment revenues for reportable segments...............        5,714
Elimination of intersegment revenues........................       (5,714)
                                                                 --------
          Total consolidated revenues.......................     $189,940
                                                                 ========
</TABLE>
 
<TABLE>
<CAPTION>
RECONCILIATION OF ASSETS
------------------------
<S>                                                           <C>
Total assets for reportable segments........................     $215,614
Elimination of intercompany receivables.....................       (9,807)
Elimination of investment in subsidiaries...................      (40,351)
Other adjustments...........................................          132
                                                                 --------
          Total consolidated assets.........................     $165,588
                                                                 ========
</TABLE>
 
     All Company segments derive revenues from steel fabrication and erection
activities. During 1998, the Addison, Six and Bannister segments' net income
includes interest expense and goodwill amortization, net of tax benefits,
allocated from the Schuff segment to reflect the amount of long-term debt used
and goodwill generated in the acquisitions. All intersegment revenues and
expenses are eliminated during consolidation. There were no reportable segments
during 1997.
 
     The Company had revenues to certain customers that were in excess of 10
percent of the respective year's revenues as follows:
 
<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31
                                                              -----------------------
                                                              1998     1997     1996
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
Customer A..................................................    14%      32%      20%
Customer B..................................................    12%     n/a      n/a
Customer C..................................................   n/a       20%      13%
Customer D..................................................   n/a      n/a       14%
Customer E..................................................   n/a      n/a       12%
</TABLE>
 
                                      F-21
<PAGE>   60
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     During the years ended December 31, 1998, 1997 and 1996, the Company's
revenues included approximately, $9,028,000, $12,435,000, and $14,280,000,
respectively, relating to projects carried out internationally for which
approximately $2,029,000 and $1,541,000 was in accounts receivable at December
31, 1998 and 1997, respectively.
 
15.  SUBSIDIARY GUARANTORS
 
     The Company's 10.50 percent Senior Notes are fully and unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by the
Company's current and future, direct and indirect subsidiaries (collectively the
"Subsidiary Guarantors"), all wholly owned. The following table sets forth the
"summarized combined financial information" of the Subsidiary Guarantors. There
are currently no restrictions on the ability of the Subsidiary Guarantors to
transfer funds to the Company in the form of cash dividends, loans or advances.
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                                   1998
                                                              --------------
                                                              (IN THOUSANDS)
<S>                                                           <C>
Balance sheet data:
  Current assets............................................     $49,363
  Noncurrent assets.........................................      15,033
  Total assets..............................................      64,396
  Current liabilities.......................................      17,038
  Noncurrent liabilities....................................         636
  Total stockholders' equity................................      46,722
</TABLE>
 
<TABLE>
<CAPTION>
                                                                YEAR ENDED
                                                               DECEMBER 31
                                                                   1998
                                                              --------------
                                                              (IN THOUSANDS)
<S>                                                           <C>
Operating data:
  Revenues..................................................     $58,755
  Gross profit..............................................      15,236
  Net income................................................       2,800
</TABLE>
 
     The Company has no other subsidiaries other than the Subsidiary Guarantors.
The summarized combined financial information of the Subsidiary Guarantors
includes information only for the periods from the Subsidiary Guarantors' dates
of acquisitions, since prior to such acquisition dates, the Subsidiary
Guarantors were not subsidiaries of the Company. The Subsidiary Guarantors' net
income also includes goodwill amortization and interest expense, net of tax
benefits, allocated from the Company to reflect the amount of long-term debt
used and goodwill generated in the acquisitions.
 
                                      F-22
<PAGE>   61
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
 
     A summary of the quarterly results of operations for the years ended
December 31, 1998 and 1997 follows (in thousands, except for per share amounts):
 
<TABLE>
<CAPTION>
                                                                   FISCAL YEAR 1998
                                               --------------------------------------------------------
                                               1ST QUARTER    2ND QUARTER    3RD QUARTER    4TH QUARTER
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
Revenues.....................................    $27,426        $35,733        $55,960        $70,821
Gross profit.................................      4,992          3,287          9,012         12,002
Pro forma net income (loss)..................      1,595           (264)         1,084          1,906
Pro forma net income (loss) per share:
  Basic......................................    $  0.23        $ (0.04)       $  0.15        $  0.27
  Diluted....................................    $  0.22        $ (0.04)       $  0.15        $  0.27
Weighted average number of shares
  outstanding:
  Basic......................................      7,000          7,012          7,022          7,023
  Diluted....................................      7,159          7,012          7,161          7,070
</TABLE>
 
<TABLE>
<CAPTION>
                                                                   FISCAL YEAR 1997
                                               --------------------------------------------------------
                                               1ST QUARTER    2ND QUARTER    3RD QUARTER    4TH QUARTER
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
Revenues.....................................    $25,507        $37,177        $35,439        $40,095
Gross profit.................................      3,852          4,438          5,865          6,108
Pro forma net income.........................      1,034          1,752          2,162          2,271
Pro forma net income per share:
  Basic......................................    $  0.17        $  0.29        $  0.31        $  0.32
  Diluted....................................    $  0.17        $  0.29        $  0.31        $  0.32
Weighted average number of shares
  outstanding:
  Basic......................................      5,941          5,941          6,931          7,000
  Diluted....................................      5,941          5,941          7,077          7,148
</TABLE>
 
     The 1998 and 1997 quarterly results for basic and diluted pro forma net
income (loss) per share, when totaled, may not equal the basic and diluted net
income per share for the years ended December 31, 1998 and 1997. These variances
are due to rounding and certain options being antidilutive for certain quarters
but not for the year.
 
                                      F-23
<PAGE>   62
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
 2.1(a)   Stock Purchase Agreement dated as of May 12, 1998, by and
          among the Company, E. C. Addison and The Addison Structural
          Services, Inc. Leveraged Employee Stock Ownership Plan, and
          Addison Structural Services, Inc.(5)
 2.1(b)   Amendment to Stock Purchase Agreement dated June 1, 1998, by
          and among the Company, E. C. Addison and The Addison
          Structural Services, Inc. Leveraged Employee Stock Ownership
          Plan, and Addison Structural Services, Inc.(5)
 2.1(c)   Amendment No. 2 to Stock Purchase Agreement dated June 4,
          1998, by and among the Company, E. C. Addison and the
          Addison Structural Services, Inc. Leveraged Employee Stock
          Ownership Plan, and Addison Structural Services, Inc.(5)
 2.2      Stock Purchase Agreement dated as of August 12, 1998 by and
          among Schuff Steel Company, Wayne Harris, and Six
          Industries, Inc.(6)
 2.3      Stock Purchase Agreement dated as of September 30, 1998 by
          and among Schuff Steel Company, Ted F. Rossin and Connie A.
          Rossin, John N. Achuff, II and Mary P. Achuff, Arnold
          Baumgartner, Ronald Bowers and Tonie L. Bowers, Jeffrey
          Clinkscales and Kimberly Clinkscales, Guadalupe Nunez and
          Graciela Nunez and Bannister Steel, Inc.(7)
 3.1(a)   Certificate of Incorporation of the Registrant(1)
 3.1(b)   Certificate of Amendment of Certificate of Incorporation of
          the Registrant(1)
 3.2      Bylaws of the Registrant(1)
 3.3(a)   Articles of Incorporation of B & K Steel Fabrications, Inc.
          ("B & K")(a)
 3.3(b)   Articles of Amendment of B & K(9)
 3.4      Bylaws of B & K(9)
 3.5(a)   Articles of Incorporation of Addison Structural Services,
          Inc. ("Addison")(9)
 3.5(b)   Articles of Amendment to the Articles of Incorporation of
          Addison(9)
 3.6      Bylaws of Addison(9)
 3.7(a)   Articles of Incorporation of Addison Steel, Inc. ("Addison
          Steel")(9)
 3.7(b)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated May 26, 1960(9)
 3.7(c)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated September 22, 1961(9)
 3.7(d)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated November 19, 1962(9)
 3.7(e)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated December 20, 1966(9)
 3.7(f)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated September 11, 1968(9)
 3.7(g)   Certificate of Amendment of Articles of Incorporation of
          Addison Steel, dated February 28, 1981(9)
 3.8      Bylaws of Addison Steel(9)
 3.9(a)   Articles of Incorporation of Quincy Joist Company
          ("Quincy")(9)
 3.9(b)   Articles of Amendment to the Articles of Incorporation of
          Quincy(9)
 3.10     Bylaws of Quincy(9)
 4.1      Certificate of Incorporation of the Registrant (filed as
          Exhibit 3.1)(1)
 4.2      Form of Certificate representing Common Stock(1)
</TABLE>
<PAGE>   63
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
 4.3      Indenture dated June 4, 1998, by and between the Company and
          Harris Trust Company of California, as Trustee(5)
 4.4      Registration Rights Agreement dated June 4, 1998, by and
          among the Company, the Guarantors (as defined therein),
          Donaldson, Lufkin & Jenrette Securities Corporation,
          Jefferies & Company, Inc., and Friedman, Billings, Ramsey &
          Co., Inc.(5)
 4.5      Form of 10 1/2% Senior Note due June 1, 2008(9)
10.1(a)   Loan Agreement dated June 30, 1996 between the Registrant
          and Bank One, Arizona, NA(1)
10.1(b)   Variable Rate Revolving Line of Credit Note dated June 30,
          1996(1)
10.2(a)   Revolving Line of Credit Loan Agreement and Addendum dated
          June 30, 1995 between the Registrant and Bank One, Arizona,
          NA(1)
10.2(b)   Variable Rate Revolving Line of Credit Note and Addendum
          dated June 30,1995(1)
10.2(c)   Modification Agreement dated June 30, 1996 between the
          Registrant and Bank One, Arizona, NA(1)
10.2(d)   Continuing Guaranty dated June 30, 1995 between David A.
          Schuff, Nancy A. Schuff and Bank One, Arizona, NA(1)
10.2(e)   Continuing Guaranty dated June 30, 1995 between Scott A.
          Schuff and Bank One, Arizona, NA(1)
10.2(f)   Modification Agreement dated March 31, 1997 between the
          Registrant and Bank One, Arizona, NA(1)
10.2(g)   Modification Letter Agreement dated May 7, 1997 between the
          Registrant and Bank One, Arizona, NA(1)
10.2(h)   Modification Agreement dated June 30, 1997 between the
          Registrant and Bank One, Arizona, NA(2)
10.2(i)   Continuing Guaranty dated June 30, 1997 between B & K Steel
          Fabrications, Inc. and Bank One, Arizona, NA(2)
10.2(j)   Subordination of Lien Rights between 19th Avenue/Buchanan
          Limited Partnership and Bank One, Arizona, NA Relating to
          Real Property Located at 420 South 19th Avenue, Phoenix,
          Arizona(2)
10.2(k)   Subordination of Lien Rights between 19th Avenue/Buchanan
          Limited Partnership and Bank One, Arizona, NA Relating to
          Real Property located at 1833-1841 West Buchanan Street,
          Phoenix, Arizona(2)
10.2(l)   Subordination of Lien Rights between 19th Avenue/Buchanan
          Limited Partnership and Bank One, Arizona, NA Relating to
          Real Property Located at 619 North Cooper Road, Gilbert,
          Arizona(2)
10.2(m)   Subordination Agreement dated June 30, 1997 between 19th
          Avenue/Buchanan Limited Partnership, the Registrant and Bank
          One, Arizona, NA(2)
10.3(a)   Loan Agreement and Addendum dated June 30, 1995 between the
          Registrant and Bank One, Arizona, NA(1)
10.3(b)   Variable Rate Line of Credit Note and Addendum dated June
          30,1995(1)
10.3(c)   Modification Agreement dated June 30, 1996 between the
          Registrant and Bank One, Arizona, NA(1)
10.4      Continuing Guaranty dated April 22, 1996 between the
          Registrant and Bank One, Arizona, NA(1)
10.5      Guaranty of Payment dated April 22, 1997 between the
          registrant and Bank One, Arizona, NA(1)
</TABLE>
<PAGE>   64
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
10.6      Guaranty of Payment dated January 31, 1997 between the
          Registrant and Bank One, Arizona, NA(1)
10.7      Promissory Note dated December 31, 1989 between the
          Registrant and 19th Avenue/Buchanan Limited Partnership(1)
10.7.1    Modification and Extension Agreement dated as of September
          30, 1997 between the Registrant and 19th Avenue/Buchanan
          Limited Partnership(3)
10.8      Lease dated March 1, 1997 for 420 S. 19th Avenue in Phoenix,
          Arizona between 19th Avenue/ Buchanan Limited Partnership
          and the Registrant(1)
10.9      Lease dated March 1, 1997 for 619 N. Cooper Road in Gilbert,
          Arizona between 19th Avenue/ Buchanan Limited Partnership
          and the Registrant(1)
10.10     Lease dated May 1, 1997 for 1841 W. Buchanan Street in
          Phoenix, Arizona between 19th Avenue/Buchanan Limited
          Partnership and the Registrant(1)
10.11     Schuff Steel Company Supplemental Retirement and Deferred
          Compensation Plan(1)*
10.12(a)  Schuff Steel Company 1997 Stock Option Plan(1)*
10.12(b)  Schuff Steel Company 1997 Stock Option Plan (Amended and
          Restated as of April 24, 1998)(8)*
10.12(c)  Form of Incentive Stock Option Agreement for 1997 Stock
          Option Plan(1)*
10.12(d)  Form of Non-Qualified Stock Option Agreement for 1997 Stock
          Option Plan(1)*
10.13     Form of Indemnity Agreement between the Registrant and its
          directors(1)
10.14(a)  Modification and Extension Agreement dated as of September
          30, 1997 between the Registrant and 19th Avenue/Buchanan
          Limited Partnership(2)
10.15(a)  Credit Agreement dated December 10, 1997 between the
          Registrant and Bank One, Arizona, NA(4)
10.15(b)  Promissory Note dated December 10, 1997 between the
          Registrant and Bank One, Arizona, NA(4)
10.19     Schuff Steel Company 1998 Director Compensation Plan(8)*
10.20(a)  Credit Agreement dated June 30, 1998 between the Registrant
          and Wells Fargo Bank, NA(6)
10.20(b)  Modification Agreement dated March 10, 1999 between the
          Registrant and Wells Fargo Bank, NA
10.21     Purchase Agreement, dated June 1, 1998, by and among the
          Registrant, Donaldson, Lufkin & Jenrette Securities
          Corporation, Jefferies & Company, Inc., and Friedman,
          Billings, Ramsey & Co., Inc.(5)
10.22     Employment Agreement by and among Addison Steel, Inc.,
          Schuff Steel Company, and Glen S. Davis, dated May 12, 1998*
10.23     Employment Agreement by and among Quincy Joist Company,
          Schuff Steel Company, and Sam Mahdavi, dated May 12, 1998*
21.1      Subsidiaries of the Registrant
23.1      Consent of Ernst & Young LLP, independent auditors
24.1      Power of Attorney of David A. Schuff
24.2      Power of Attorney of Dennis DeConcini
24.3      Power of Attorney of Edward M. Carson
</TABLE>
<PAGE>   65
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
--------                          -----------
<S>       <C>
27        Financial Data Schedule
</TABLE>
 
---------------
 *  Indicates a management contract or compensation plan.
 
(1) Incorporated by reference to the Company's Registration Statement on Form
    S-1 (Registration No. 333-26711), effective June 26, 1997.
 
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended June 30, 1997.
 
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended September 30, 1997.
 
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the fiscal year ended December 31, 1997.
 
(5) Incorporated by reference to the Company's Current Report on Form 8-K/A,
    filed June 19, 1998.
 
(6) Incorporated by reference to the Company's Current Report on Form 8-K, filed
    August 27, 1998.
 
(7) Incorporated by reference to the Company's Current Report on Form 8-K, filed
    September 4, 1998.
 
(8) Incorporated by reference to the Company's Proxy Statement for its 1998
    Annual Meeting of Stockholders, filed May 28, 1998 (File No 0-22715)
 
(9) Incorporated by reference to the Company's Registration Statement on Form
    S-4 (Registration No. 333-58123), effective July 21, 1998.