<PAGE>

                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (MARK ONE)

[ X ]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Period Ended JUNE 30, 2002

[  ]   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 0-29416
                       -------

                           UNIFAB International, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Louisiana                                             72-1382998
----------------------------------------                    --------------------
 (State or other jurisdiction or                            (I.R.S. Employer
  incorporation or organization)                             Identification No.)


           5007 Port Road
            New Iberia, LA                                            70560
-----------------------------------------                         --------------
(Address of principal executive offices)                            (Zip Code)


                                 (337) 367-8291
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


                                 NOT APPLICABLE
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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 periods 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
                                       ---     ---

Common Stock, $0.01 Par Value ---- 8,189,972 shares outstanding as of
August 12, 2002.

<PAGE>

                           UNIFAB INTERNATIONAL, INC.

                                      INDEX

<TABLE>
<CAPTION>

PART I.     FINANCIAL INFORMATION                                                           PAGE
<S>                                                                                           <C>
     Item 1.   Financial Statements

               Condensed  Consolidated  Balance Sheets-- June 30, 2002 and
                December 31, 2001............................................................ 1

               Condensed Consolidated Statements of Operations -- Three Months
                Ended June 30, 2002 and 2001; Six Months Ended June 30, 2002
                and 2001..................................................................... 2

               Condensed Consolidated  Statements of Cash Flows-- Six Months Ended June 30,
                2002 and 2001................................................................ 3

               Notes to Condensed Consolidated Financial Statements-- June 30,
                2002......................................................................... 4


     Item 2.   Management's  Discussion and Analysis of Financial Condition and
                Results of Operations........................................................ 6

     Item 3.   Quantitative and Qualitative Disclosure of Market Risk........................ 8

PART II.    OTHER INFORMATION


     Item 5.   Other Information............................................................. 9

     Item 6.   Exhibits and Reports on Form 8-K.............................................. 9
</TABLE>

<PAGE>

                           UNIFAB INTERNATIONAL, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>

                                                                                                  JUNE 30        DECEMBER 31
                                                                                                   2002             2001
                                                                                                -----------      -----------
                                                                                                (UNAUDITED)
                                                                                                       (IN THOUSANDS)
<S>                                                                                               <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                                       $    636        $    754
  Accounts receivable, net of allowance for doubtful accounts
      of $896 and  $528, respectively                                                                7,886          15,362
  Costs and estimated earnings in excess of billings on uncompleted contracts                        2,590           5,769
  Income tax receivable                                                                              2,756           4,112
  Prepaid expenses and other assets                                                                  2,804           2,442
                                                                                                  --------        --------
Total current assets                                                                                16,672          28,439

Property, plant and equipment, net                                                                  31,808          34,125
Goodwill, net                                                                                          260             260
Other assets                                                                                           787             383
                                                                                                  --------        --------
Total assets                                                                                      $ 49,527        $ 63,207
                                                                                                  ========        ========

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
  Accounts payable                                                                                $ 10,016        $ 15,123
  Billings in excess of costs and estimated earnings on uncompleted contracts                            5           1,343
  Accrued liabilities                                                                                3,012           4,240
  Notes payable                                                                                     22,958          23,246
                                                                                                  --------        --------
Total current liabilities                                                                           35,991          43,952

Noncurrent notes payable                                                                                --             122

Shareholders' equity:
  Common stock, $0.01 par value, 20,000,000 shares authorized,  8,189,972 and 8,189,972
   shares outstanding                                                                                   82              82
  Additional paid-in capital                                                                        46,830          46,830
  Retained earnings (accumulated deficit)                                                          (33,286)        (27,695)
  Currency translation adjustment                                                                      (90)            (84)
                                                                                                  --------        --------
Total shareholders' equity                                                                          13,536          19,133
                                                                                                  --------        --------
Total liabilities and shareholders' equity                                                        $ 49,527        $ 63,207
                                                                                                  ========        ========
</TABLE>


SEE ACCOMPANYING NOTES

<PAGE>

                           UNIFAB INTERNATIONAL, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED JUNE 30        SIX  MONTHS ENDED JUNE 30
                                                        --------------------------        -------------------------
                                                            2002           2001            2002             2001
                                                        -----------       --------        --------         --------
                                                                       (IN THOUSANDS EXCEPT PER SHARE DATA)

<S>                                                       <C>            <C>              <C>              <C>
Revenue ...........................................       $  8,379       $ 22,861         $ 18,235         $ 44,564
Cost of revenue ...................................          9,409         21,126           19,302           42,701
                                                          --------       --------         --------         --------

Gross profit (loss) ...............................         (1,030)         1,735           (1,067)           1,863
Selling, general and administrative
  Expense .........................................          1,688          1,940              ___            3,246
                                                          --------       --------         --------         --------
Income (loss) from operations .....................         (2,718)          (205)          (4,313)          (2,187)
Other income (expense):
  Net loss on disposal of assets ..................           (351)            --             (351)              --
  Interest expense ................................           (381)          (704)            (930)          (1,273)
  Interest income .................................             --              2                2                9
                                                          --------       --------         --------         --------
Loss before income taxes ..........................       $ (3,450)          (907)          (5,592)          (3,451)
 Income tax benefit ...............................             --           (316)              --           (1,258)
                                                          --------       --------         --------         --------
 Net loss .........................................       $  (3,45)      $   (591)          (5,592)        $ (2,193)
                                                          ========       ========         ========         ========

Basic and diluted loss per share ..................       $  (0.42)      $  (0.07)        $ (0..68)        $  (0.27)
                                                          ========       ========         ========         ========
Basic and diluted weighted average shares
  outstanding .....................................          8,190          8,132            8,190            8,132
                                                          ========       ========         ========         ========
</TABLE>




SEE ACCOMPANYING NOTES.

<PAGE>

                           UNIFAB INTERNATIONAL, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                            SIX MONTHS ENDED
                                                                                 JUNE 30
                                                                       --------------------------
                                                                           2002          2001
                                                                       --------------------------
                                                                             (IN THOUSANDS)
<S>                                                                    <C>           <C>
Net cash provided by (used in) operating activities                    $    267      $  (1,734)

Investing activities:
Proceeds from sale of equipment                                             130             27
Purchases of equipment                                                     (105)        (2,128)
                                                                       --------------------------
                                                                             25         (2,101)
Financing activities:
Net change in revolver                                                   (2,017)         3,035
Payments on notes payable                                                  (407)             -
Loans from Midland                                                        2,014              -
                                                                       --------------------------
                                                                           (410)         3,035
                                                                       --------------------------
Net change in cash and cash equivalents                                    (118)          (800)
Cash and cash equivalents at beginning of period                            754          1,004
                                                                       --------------------------
Cash and cash equivalents at end of period                             $    636      $     204
                                                                       ==========================
</TABLE>


SEE ACCOMPANYING NOTES.

<PAGE>

                           UNIFAB INTERNATIONAL, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 2002

1.    DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

      UNIFAB International, Inc. (the Company) fabricates and assembles jackets,
decks, topside facilities, quarters buildings, drilling rigs and equipment for
installation and use offshore in the production, processing and storage of oil
and gas. Through a wholly-owned subsidiary, Allen Process Systems, LLC, the
Company designs and manufactures specialized process systems such as oil and gas
separation systems, gas dehydration and treatment systems, and oil dehydration
and desalting systems, and other production equipment related to the development
and production of oil and gas reserves. Compression Engineering Services, Inc.
(CESI), a division of Allen Process Systems, LLC, provides compressor project
engineering from inception through commissioning, including project studies and
performance evaluation of new and existing systems, on-site supervision of
package installation, and equipment sourcing and inspection. Through a
wholly-owned subsidiary, Oil Barges, Inc., the Company designs and fabricates
drilling rigs, including first of a kind barges using proprietary designs. The
Company's main fabrication facilities are located at the Port of Iberia in New
Iberia, Louisiana. Through a wholly-owned subsidiary, UNIFAB International West,
LLC, the Company provides repair, refurbishment and conversion services for oil
and gas drilling rigs and industrial maintenance services primarily for the
petrochemical industry. Through a wholly-owned subsidiary, Allen Process
Systems, Ltd., headquartered in London, England, the Company provides
engineering and project management services primarily in Europe and the Middle
East and the Far East.

      The operating cycle of the Company's contracts is typically less than one
year, although some large contracts may exceed one year's duration. Assets and
liabilities have been classified as current and noncurrent under the operating
cycle concept, whereby all contract-related items are regarded as current
regardless of whether cash will be received within a 12-month period. At June
30, 2002, it was anticipated that substantially all contracts in progress, and
receivables associated therewith, would be completed and collected within a
12-month period.

2.    BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are
wholly owned. Significant intercompany accounts and transactions have been
eliminated in consolidation.

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
loss on transfer of assets and termination of operating leases on idle
facilities, write off of inventory, and reserves for disputed contracts
considered necessary for a fair presentation have been included. Operating
results for the six-month period ended June 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002.

      These financial statements should be read in conjunction with the
financial statements and footnotes thereto for the year ended December 31, 2001
included in the Company's Annual Report on Form 10-K.

<PAGE>

3.    SUBSEQUENT EVENT

      On August 13, 2002 the Company and Midland Fabricators and Process
Systems, LLC closed a transaction under which Midland exchanged $22.8 million
outstanding under the Company's Senior Secured Credit Agreement for 738 shares
of preferred stock and a secured subordinated debenture and two secured
subordinated notes in the aggregate amount of $12.8 million. The debenture,
valued at $10.7 million, is convertible into the Company's common stock at a
price of $0.35 per share. Midland's preferred stock will be convertible into a
total of 73,800,000 shares of the Company's common stock. The financial
statements at June 30, 2002 do not reflect this transaction, which will, among
other things reclassify the amounts outstanding under the Senior Secured Credit
Agreement to noncurrent. The Company intends to file shortly a complete
description of the transaction with Midland in a current report on Form 8-K,
which will include pro forma financial statements giving effect to the terms of
the Midland transaction.

4.    GOING CONCERN ASSUMPTION AND WORKING CAPITAL DEFICIT

      Throughout 2001 and during the first six months of 2002, the Company's
results of operations and financial condition deteriorated dramatically. In
significant ways, the Company's declining financial condition impacted its
ability to compete for contracts and labor, two important factors in the
Company's historic profitability. Oil and gas prices have declined recently and
drilling activity has significantly declined in the Company's primary market,
the Gulf of Mexico. The Company does not expect recovery of fabrication prices
or substantial increases in fabrication projects in the near future. As more
fully described in Note 5, at June 30, 2002, the Company was in default of the
financial covenants of the Company's Secured Senior Credit Facility as amended
by the Waiver and Second Amendment to Amended and Restated Credit Agreement (the
"Amended Credit Agreement"). As a result of being in default, the Company has a
working capital deficit of $19,319,000 caused by the reclassification to current
liabilities of $22,667,000 outstanding under the Amended Credit Agreement. The
Amended Credit Agreement also required a $6.1 million principal payment by June
30, 2002 to reduce the outstanding amounts under the Amended Credit Agreement.
The Company was not able to make this payment which resulted in a default under
the terms of the Amended Credit Agreement. At June 30, 2002, the Company was
unable to pay its current obligations to unsecured creditors when due. On that
date, various vendors and other unsecured creditor of the company had either
taken legal action to collect amounts due from the Company, or were threatening
to do so. The Company expects that the closing of the Midland transaction on
August 13, 2002 will cause a marked improvement in the Company's financial
condition.

5.    CREDIT FACILITY

      AMENDED AND RESTATED CREDIT AGREEMENT. On March 5, 2002, the Company
entered into a Waiver and Second Amendment to Amended and Restated Credit
Agreement (the "Amendment"). The Senior Secured Credit Agreement was originally
entered into on November 30, 1999, and was amended and restated October 19, 2000
with the same syndicate of commercial banks led by Bank One, Louisiana, N.A., as
agent (the "Credit Agreement"). The Company's quarterly report on Form 10-Q for
the quarter ended March 31, 2002 explained, in detail, the terms of the
Amendment and the Company's failure, at that time, to be in compliance with the
terms of the Credit Agreement. At June 30, 2002, the Company had $22.7 million
outstanding under the Credit Agreement, of which $1.0 million was for letters of
credit. At June 30, 2002, the Company was not in compliance with numerous
provisions of the Credit Agreement, including the failure to meet important
business ratios required to be maintained under the Credit Agreement and
including the failure to make required financial payments under the Credit
Agreement. On August 13, 2002, the Company closed the Midland transaction and,
in connection therewith, the terms of the Credit Agreement were substantially
modified. As will be explained in greater detail in a current report on Form 8-K
that the Company will file during August 2002, the Credit Agreement has been
modified to extend the payment due dates of all debts due thereunder to begin on
August 13, 2005, and Midland has waived all existing defaults of all covenants
under the Credit Agreement.

<PAGE>

6.    INCOME TAXES

      The Company provides for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards No. 109, ACCOUNTING
FOR INCOME TAXES. As of June 30, 2002, the Company has recorded deferred tax
assets of $14.3 million, including $11.1 million related to net operating loss
carryforwards that expire in years 2020 through 2022. In accordance with FAS
109, the Company considered that since it had a cumulative pre-tax loss for
recent years it is more likely than not that a portion of the deferred tax
assets will not be realized. The ability of the Company to utilize these net
operating loss carryforwards is also limited on an annual basis because the
transaction with Midland described above results in a change in control under
the current tax regulations. The Company has recorded a valuation allowance to
offset the deferred tax asset related to the operating loss carryforwards which
exceeds net deferred tax liabilities. The Company believes that the remaining
deferred tax assets at June 30, 2002, amounting to $4.7 million, are realizable.
Management will continue to assess the adequacy of the valuation allowance on a
quarterly basis.

<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      This discussion and analysis of financial condition and results of
operations should be read in conjunction with the unaudited condensed
consolidated financial statements and the related disclosures included elsewhere
herein and Management's Discussion and Analysis of Financial Condition and
Results of Operations included as part of the Company's Annual Report on Form
10-K.

SUBSEQUENT EVENT

      On August 13, 2002 the Company and Midland Fabricators and Process
Systems, LLC closed a transaction under which Midland exchanged $22.8 million
outstanding under the Company's Senior Secured Credit Agreement for 738 shares
of preferred stock and a secured subordinated debenture and two secured
subordinated notes in the aggregate amount of $12.8 million. The debenture,
valued at $10.7 million, is convertible into the Company's common stock at a
price of $0.35 per share. Midland's preferred stock will be convertible into a
total of 73,800,000 shares of the Company's common stock. The financial
statements at June 30, 2002 do not reflect this transaction, which will, among
other things reclassify the amounts outstanding under the Senior Secured Credit
Agreement to noncurrent. The Company intends to file shortly a complete
description of the transaction with Midland in a current report on Form 8-K,
which will include pro forma financial statements giving effect to the terms of
the Midland transaction.

RESULTS OF OPERATIONS

      Revenue for the three months ended June 30, 2002 decreased 63% to $8.4
million from $22.9 million for the three months ended June 30, 2001. For the
six-month periods ended June 30, 2002 and 2001, revenue was $18.2 million and
$44.6 million, respectively, a decrease in the current period of 59%. This
decrease is primarily due to reduced revenue on barge repair and shipbuilding
activities resulting from the closure of the Company's OBI facilities at the
Port of Iberia, and revenue levels approximately one third of those in the same
period last year for the Company's structural fabrication, process system design
and fabrication and international project management and design services. These
reduced levels were the result of lower activity in these markets in the June
2002 period compared to the June 2001 period. Also, the Company experienced
reduced opportunities to bid on projects and was eliminated from bidding on
various projects as a result of the substantial deterioration of the Company's
financial condition and results of operations experienced during the 2001 fiscal
year. Further, the Company was unable to post sufficient collateral to secure
performance bonds and as a result was unable to qualify to bid on various
contracts. At June 30, 2002, backlog was approximately $7.2 million, which is
approximately one-quarter the backlog at March 31, 2001.

      Total direct labor hours worked decreased 60% from the levels experienced
in the same period last year. Direct labor hours worked by the Company's
structural fabrication and process system design and fabrication facilities
decreased by nearly 56% from the same period last year. Direct labor hours at
the Company's drilling rig fabrication facilities were eliminated with the
closure of that facility.

      Cost of revenue was $9.4 million for the three months ended June 30, 2002
compared to $21.1million for the same period last year. For the six-month
periods ended June 30, 2002 and 2001, cost of sales was $19.3 million and $42.7
million, respectively. Cost of revenue consists of costs associated with the
fabrication process, including direct costs (such as direct labor costs and raw
materials) and indirect costs that can be specifically allocated to projects
(such as supervisory labor, utilities, welding supplies and equipment costs).
This increase in costs as a percentage of revenue reflects an adjustment of
$550,000 recorded in the June 2002 quarter related to disputes on several
contracts. The Company recorded valuation reserves totaling $407,000 mainly on
waste water process equipment manufactured by the Environmental division, steel
inventory used to manufacture drilling rig derricks, and small parts inventory.
The Company has ceased environmental operations and drilling rig derrick
fabrication operations and is proceeding to sell the related equipment and
inventory on hand. The Company also recorded an impairment charge of $252,000 on
assets formerly used at the OBI facility which have no remaining utility to the
Company.

<PAGE>

Additionally, the severe decrease in revenue and activity, which did not allow
the Company to recover fixed costs related to process system design and
fabrication or the costs related to the deep water fabrication facility in Lake
Charles. The Company is actively seeking alternative sources of capital to
sustain the development and operations of the facility in Lake Charles,
including partnering with a financially viable entity, obtaining separate
capital financing for the facility and other capital raising methods. In the
event these methods are unsuccessful, the Company may sell the facility. If the
facility is sold, it is likely the Company would not fully recover the cost of
construction of the facility and would record a loss on the sale that would be
material to the operating results of the Company.

      Gross profit (loss) for the three months ended June 30, 2002 decreased to
a loss of $1.0 million from a profit of $1.7 million for the same period last
year. In the six-month periods ended June 30, 2002 gross profit (loss) decreased
to a loss of $1.1 million from a profit of $1.9 million in the six-month period
ended June 30, 2001. The decrease in gross profit is primarily due costs in
excess of revenue for the Company's process system design and fabrication
services and at the Company's deep water facility in Lake Charles, Louisiana and
adjustments of $550,000 related to disputes on several contracts, $407,000
related to valuation reserves on inventory, and $252,000 related to a charge for
asset impairment. The effects of theseadjustments was offset in part by a $1.1
million contract loss reserve recorded in the March quarter last year.
Additionally, decreased man hour levels in the quarter and six-month periods
ended June 30, 2002 2002 compared to the same periods last year at the Company
facilities caused hourly fixed overhead rates to increase and resulted in
increased costs relative to revenue.

      Selling, general and administrative expense decreased to $1.7 million in
the three months ended June 30, 2002 compared to $1.9 million in the three
months ended June 30, 2001, and decreased to $3.2 million in the six-month
period ended June 30, 2002 compared to $4.1 million in the corresponding
six-month period in 2001. Included the June 2002 period expense of $150,000
related to the termination and settlement of the employment contracts of two
former executive officers of the Company. The Company's selling, general and
administrative expense as a percentage of revenue increased to 20% in the three
months ended June 30, 2002 from 8% in the same period last year, and to 18% in
the six month period ended June 30, 2001 from 9% in the same period last year.

      Included in Other income (expense) is a loss of $477,000 related to the
transfer of ownership of the buildings and other leasehold improvements on the
Company's drilling rig repair facilities at the Port of Iberia in exchange for
termination of the leases and cancellation of all amounts owed under those
leases. During the June 2002 quarter, the Company sold the industrial
maintenance business and related assets and recorded a gain of $126,000 on the
sale.

      Interest expense for the three and six month periods ended June 30, 2002
were lower than the same period in 2001 due to reduced effective interest rates
in the June 2002 quarter.

      No net income tax benefit was recognized in the three and six month
periods ended June 30, 2002 compared to an income tax benefit of $316,000 in the
three months ended June 30, 2001 and $1,258,000 in the six months ended June 30,
2002. The Company has recorded a valuation allowance to offset the deferred tax
asset related to the operating loss generated in the quarter which exceeds net
deferred tax liabilities. In accordance with FAS 109, the Company considered
that it had a cumulative pre-tax loss for recent years and revised its judgment
about the realization of deferred tax assets. The valuation allowance reflects
the Company's judgment that it is more likely than not that a portion of the
deferred tax assets will not be realized. The Company believes that the
remaining deferred tax assets at June 30, 2002 are realizable. Management will
continue to assess the adequacy of the valuation allowance on a quarterly basis.

LIQUIDITY AND CAPITAL RESOURCES

      Historically, the Company has funded its business activities through funds
generated from operations, short-term borrowings on its revolving credit
facilities for working capital needs and individual financing arrangements for
equipment, facilities improvements, insurance premiums, and long-term needs.
During the

<PAGE>

six months ended June 30, 2002, the Company's available funds and cash generated
from operations of $267,000 and investment activities of $25,000 together funded
cash used in financing activities of $410,000.

      On March 5, 2002, the Company entered into a Waiver and Second Amendment
to Amended and Restated Credit Agreement (the "Amendment"). The Senior Secured
Credit Agreement was originally entered into on November 30, 1999, and was
amended and restated October 19, 2000 with the same syndicate of commercial
banks led by Bank One, Louisiana, N.A., as agent (the "Credit Agreement"). The
Company's quarterly report on Form 10-Q for the quarter ended March 31, 2002
explained, in detail, the terms of the Amendment and the Company's failure, at
that time, to be in compliance with the terms of the Credit Agreement. At June
30, 2002, the Company had $22.7 million outstanding under the Credit Agreement,
of which $1.0 million was for letters of credit. At June 30, 2002, the Company
was not in compliance with numerous provisions of the Credit Agreement,
including the failure to meet important business ratios required to be
maintained under the Credit Agreement and including the failure to make required
financial payments under the Credit Agreement. On August 13, 2002, the Company
closed the Midland transaction and, in connection therewith, the terms of the
Credit Agreement were substantially modified. As will be explained in greater
detail in a current report on Form 8-K that the Company will file during August
2002, the Credit Agreement has been modified to extend the payment due dates of
all debts due thereunder to begin on August 13, 2005, and Midland has waived all
existing defaults of all covenants under the Credit Agreement.

<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to revenue recognition
and long-lived assets. The Company bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company believes the following critical
accounting policies affect its more significant judgments and estimates used in
the preparation of its consolidated financial statements.

      Revenue from construction contracts, which are typically of short
duration, are recognized on the percentage-of-completion method, measured by
relating actual labor cost, labor and subcontract cost, or total estimated
contract costs for work performed to date to the estimated total labor cost,
total labor and subcontract cost or total contract cost of the respective
contract. Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, and repairs. Provisions for estimated losses, if any, on uncompleted
contracts are made in the period in which such losses are determined.
Significant changes in cost estimates due to adverse market conditions or poor
contract performance could affect estimated gross profit, possibly resulting in
a contract loss.

      The Company's customers are principally major and large independent oil
and gas companies and drilling companies. This concentration of customers may
impact our overall exposure to credit risk, either positively or negatively, in
that our customers may be similarly affected by changes in economic or other
conditions. Reserves for uncollectible accounts receivable are evaluated
periodically against specific accounts that are known to be uncollectible.
Increases in the reserves for uncollectible accounts are charged to operating
results in the period they are identified. Receivables are generally not
collateralized. Significant adverse changes in the economic environment of the
oil and gas industry could result in materially lower collectibility of recorded
receivables and could require a charge for uncollectible accounts in the future.

      Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The Company assesses the recoverability of
long- lived assets by determining whether the carrying values can be recovered
through projected net cash flows undiscounted and without interest charges,
based on expected operating results over their remaining lives. Future adverse
market conditions or poor operating results could result in the inability to
recover the current carrying value of the long-lived asset, thereby possibly
requiring an impairment charge in the future.

      Income taxes have been provided using the liability method. Deferred
income taxes reflect the net effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. The amount of future income tax assets
recognized is limited to the amount of benefit that is more likely than not to
be realized. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or the entire
deferred tax asset will not be realized. The ultimate realization of the
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers the scheduled reversals of deferred tax liabilities, the
likelihood of future taxable income and tax planning strategies when making this
assessment. Based on this assessment, the Company records a valuation allowance
against deferred tax assets that are more likely than not unrealizable. The
amount of the deferred tax asset considered realizable, however, could be
reduced in the future if taxable income is not available to allow for the
deduction of the deferred tax assets.

<PAGE>

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

Certain statements included in this report and in oral statements made from time
to time by management of the Company that are not statements of historical fact
are forward-looking statements. In this report, forward-looking statements are
included primarily in the sections entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The words "expect,"
"believe," "anticipate," "project," "plan," "estimate," "predict," and similar
expressions often identify forward-looking statements. Such statements may
involve risks and uncertainties and include, among other things, information as
to possible future increases in oil and gas prices and drilling activity and the
effect of current and future levels of prices and drilling activity on demand
for products and services of the Company, on the prices the Company can obtain
for its products and services and on the profitability of the Company. All such
statements are subject to factors that could cause actual results and outcomes
to differ materially from the results and outcomes predicted in the statements,
and investors are cautioned not to place undue reliance upon them. Those factors
include the risks, contingencies and uncertainties described immediately below
and the following risks:

      o     general economic and business conditions and industry trends;
      o     the continued strength of the industries in which we are involved;
      o     decisions about offshore developments to be made by oil and gas
            companies;
      o     the highly competitive nature of our businesses;
      o     our future financial performance, including availability, terms and
            deployment of capital;
      o     the continued availability of qualified personnel;
      o     changes in, or our failure or inability to comply with, government
            regulations and adverse outcomes from legal and regulatory
            proceedings;
      o     changes in existing environmental regulatory matters;
      o     rapid technological changes;
      o     realization of deferred tax assets;
      o     consequences of significant changes in interest rates and currency
            exchange rates;
      o     difficulties we may encounter in obtaining regulatory or other
            necessary approvals of any strategic transactions;
      o     social, political and economic situations in foreign countries where
            we do business, including among others, countries in the Middle
            East;
      o     effects of asserted and unasserted claims;
      o     our ability to obtain surety bonds and letters of credit; and
      o     our ability to maintain builder's risk, liability and property
            insurance in amounts we consider adequate at rates that we consider
            economical, particularly after the impact on the insurance industry
            of the September 11, 2001 terrorist attacks.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      Quantitative and qualitative disclosures about market risk are in Item 7A
of the Company's Form 10-K for the period ended December 31, 2001. Refer to Note
4 to the Condensed Consolidated Financial Statements for a discussion of the
Credit Agreement. No other material changes have occurred since December 31,
2001.

<PAGE>

      PART II

ITEM 5. OTHER INFORMATION

      On June 10, 2002 the Company announced the transfer of its common stock
listing to the NASDAQ SmallCap Market. The press release making this
announcement is attached hereto as Exhibit 99.1.

      On August 2, 2002 the Company announced it had obtained a waiver allowing
it to close the transaction with Midland Fabricators and Process Systems, LLC.
The press release making this announcement is attached hereto as Exhibit 99.2.

     On August 5, 2002 the Company sent the following notice to all
shareholders:

         In June 2002, Midland Fabricators and Process Systems, LLC acquired the
      debt that our company owed to our bank lenders. We announced Midland's
      acquisition of our bank debt in a press release on April 26, 2002, and in
      a filing with the Securities and Exchange Commission on May 13, 2002.
      Since that time, Midland has extended additional credit to our company in
      order to permit us to meet our payroll and other operating expenses.
      Today, our company owes Midland a total of $22.74 million.

         Midland is a company owned by William A. Hines and his family. Mr.
      Hines was a director of UNIFAB from 1998 until March 2001, and he owns
      10,968 shares of our common stock. Mr. Hines has extensive experience in
      the oil field service industry, and currently owns a number of oil field
      service companies.

         During the second week of August, 2002, our company intends to issue
      738 shares of our preferred stock to Midland in exchange for the
      cancellation of $10 million in outstanding debt. Simultaneously, Midland
      will exchange our remaining bank debt for a secured debenture in the
      approximate amount of $12.7 million. Midland's preferred stock will be
      converted into a total of 73,800,000 shares of our common stock when
      additional shares of common stock become authorized, and Midland's
      debenture will be convertible, at Midland's option, into common stock of
      our company at a price of $.35 per share. These transactions were agreed
      to in an agreement that Midland and our company executed on April 26,
      2002. A copy of that agreement is on file with the Securities and Exchange
      Commission as an exhibit to our Current Report on Form 8-K dated May 13,
      2002, and may be accessed through the Commission's EDGAR database on the
      world-wide web.

         After Midland exchanges the bank debt, Midland will hold approximately
      90% of the voting power of our company after issuance of the preferred
      stock but before conversion of the debenture, and will have the right to
      designate the entire board of directors. Midland has agreed that it will
      cause our company's stock to continue to be publicly traded for at least
      two years following Midland's acquisition of control of our company.
      Midland has also agreed to cause the company to offer all shareholders
      (other than Midland) the right to purchase up to 16.5 million additional
      shares of our common stock for $.35 per share. If this rights offering is
      fully subscribed, then Midland's percentage of the voting power of our
      company will decrease from 90% to 75% (before conversion of Midland's
      debenture).

         After Midland acquires voting control of our company, Mr. Charles
      Broussard will resign from the Board of Directors, and our remaining
      directors will remain on the board. In addition, Midland has asked the
      remaining directors to fill the vacancies on the board with Mr. Hines (who
      would serve as Chairman), Mr. Donald Moore, Mr. Allen Porter, Mr. William
      Downey and Mr. Frank Cangelosi. These directors will serve until the 2002
      annual meeting of shareholders.

         Our Board of Directors entered into our agreement with Midland
      following a lengthy and

<PAGE>

      unsuccessful process by which the Board attempted to sell our company. The
      Board believes that the transaction with Midland is in the best interests
      of our company and our shareholders. Among other things, the Board
      considered the fact that our company was unable to pay its current
      obligations, and was being sued by various of its vendors. Indeed, our
      company did not have the financial stability to attract business
      opportunities and was facing a probable bankruptcy. The Board was unable
      to find a purchaser for the company that would have preserved any value
      for our shareholders. While our company's most recent balance sheet shows
      that we have $17 million in shareholders' equity, the value of our assets
      on that balance sheet has been calculated in accordance with generally
      accepted accounting principles (cost, less depreciation). Several times in
      the recent past, we have attempted to sell certain assets to raise working
      capital. In those sale transactions, we have realized approximately 35% of
      the book value of the assets we have sold. Our management believes that
      sales of assets in the context of bankruptcy would yield even lower
      proceeds for our assets, including probably no more than 25% of the value
      of our major asset. Even if we were able to liquidate our assets for an
      amount in excess of the amount owed to our secured creditor, we have
      unsecured creditors to whom we owe approximately $8 million. These
      creditors would be entitled to receive the proceeds of any liquidation
      after our secured creditor had been fully paid. Accordingly, our
      management is firmly convinced that our shareholders would receive no
      value for their shares if our company were forced into bankruptcy.

         In addition to these considerations, the Board has considered the
      opinion of the investment banking firm of Chaffe & Associates, Inc., the
      independent financial advisor to our Board. Based upon the factors
      considered and assumptions made by Chaffe & Associates, and the limits of
      review set forth in its opinion, and the financial position of our company
      on July 21, 2002, that firm was of the opinion that the transaction we
      propose to close with Midland in the second week of August is fair from a
      financial point of view to the holders of Unifab common stock other than
      Midland, Mr. Hines or any affiliates of either. We intend to file a full
      description of the effects of the Midland transaction with the Securities
      and Exchange Commission as soon as practicable after the closing, and we
      will include a copy of the Chaffe & Associates, Inc. opinion with that
      filing.

         Generally, a change in control of a NASDAQ-traded company requires
      shareholder approval under NASDAQ's listing requirements. The shareholder
      approval process normally takes two to three months to complete. The Audit
      Committee of our Board of Directors requested a waiver of that
      requirement, based upon the Audit Committee's finding that our company is
      unable to meet its current obligations and could not afford to undertake
      the lengthy process of holding a shareholders' meeting. Based upon the
      Audit Committee's finding, the NASDAQ Small Cap Market, the stock market
      on which our stock is currently trading, granted a waiver of its
      shareholder approval requirement. This notice is being delivered to all
      shareholders in compliance with the rules of the NASDAQ applicable to
      waivers of the shareholder approval requirements.

         We are required to wait for ten days following the date that this
      notice is mailed to our shareholders to close the proposed transaction
      with Midland. This notice should be mailed on or around July 29, 2002. If
      the mailing occurs on that date, we intend to close the transaction with
      Midland on August 8, 2002. In the meantime, shareholders who have
      questions are welcome to contact Peter J. Roman, our chief financial
      officer, who can be reached at (337) 367-8291.

         The Board of Directors of our company is very appreciative to our
     shareholders for the support that the Board has received during the past
     two years -- years which have been extremely difficult for the company, its
     management and its employees. The Board and management sincerely hope that
     the transaction with Midland will cause our company to be successful in its
     future operations, and will serve to increase significantly shareholder
     value in the long term.

<PAGE>

      On August 14, 2002 the Company announced operating results and related
matters for the second quarter ending June 30, 2002. The press release making
this announcement is attached hereto as Exhibit 99.3.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)   Exhibits

           Exhibit
           NUMBER        DESCRIPTION

             99.1        Press release issued by the Company on June 10, 2002
                         announcing the transfer of its common stock listing to
                         the NASDAQ SmallCap Market.

             99.2        Press release issued by the Company on August 2, 2002
                         announcing the waiver allowing it to close the
                         transaction with Midland Fabricators and Process
                         Systems, LLC.

             99.3        Press release issued by the Company on August 14, 2002
                         announcing its operating results and related matters
                         for the second quarter ending June 30, 2002.

             99.4        Certification pursuant to 18 U.S.C., Section 1350 as
                         adopted pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                UNIFAB International, Inc.
                                           -------------------------------------



Date  August 14, 2001                      /s/   Peter J. Roman
    ----------------------                 -------------------------------------
                                           Peter J. Roman
                                           Vice President and Chief Financial
                                           Officer
                                           (Principal Financial and Accounting
                                           Officer)