<PAGE>
                                  EXHIBIT 13
              Portions of the 1996 Annual Report to Stockholders
                             Pitt-Des Moines, Inc.
 
FIVE YEAR SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                                           Years ended December 31,
                                                         --------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)                                      1996      1995      1994       1993       1992

------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                               <C>       <C>       <C>         <C>       <C>
OPERATING PERFORMANCE
Earned revenue                                                                    $468,274  $461,274  $408,061   $323,707   $355,043

Income (loss) from operations                                                       20,588    22,077    15,508     (2,689)     4,681

Net Income:
  Continuing operations                                                             12,551    13,019    11,980        567      4,080

  Discontinued operations                                                                -         -        80        471        820

------------------------------------------------------------------------------------------------------------------------------------

Net Income                                                                        $ 12,551  $ 13,019  $ 12,060   $  1,038   $  4,900

------------------------------------------------------------------------------------------------------------------------------------

Income per common share:
  Continuing operations                                                           $   3.56  $   3.72  $   3.44   $   0.16   $   1.12

  Discontinued operations                                                                -         -      0.02       0.14       0.23

------------------------------------------------------------------------------------------------------------------------------------

Net income per common share                                                       $   3.56  $   3.72  $   3.46   $   0.30   $   1.35

------------------------------------------------------------------------------------------------------------------------------------

FINANCIAL POSITION
Total assets                                                                      $199,885  $201,136  $214,201   $177,803   $166,074

Long-term debt                                                                           -    13,000    22,000          -          -

Stockholders' equity                                                               118,619   108,942    98,549     88,473     89,678


OTHER INFORMATION
For the year:
  Cash provided (utilized) by operations                                          $ 24,749  $ 14,630  $ (2,784)  $ (3,767)  $ 21,414

  Depreciation expense                                                               5,681     5,554     5,037      4,145      4,314

  Capital expenditures                                                               4,153     5,304     7,919      3,942      4,491

  Dividends per common share                                                          0.86      0.66      0.60       0.60       0.60

At year end:
  Book value per common share                                                     $  34.06  $  31.31  $  28.30   $  25.38   $  25.75

  Employees                                                                          2,006     2,082     2,257      1,987      2,066

------------------------------------------------------------------------------------------------------------------------------------

Per share amounts have been restated to account for the three for two stock
 split for all periods presented.
</TABLE>

<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the consolidated financial statements
and accompanying notes and the Review of Operations section of this document.

      All per share amounts included in this discussion have been restated to
account for the three for two stock split for holders of the Company's Common
Stock as of March 14, 1997 as approved by the Board of Directors on February 13,
1997.

RESULTS OF OPERATIONS
The Company realized net income of $12.6 million in 1996 compared with $13.0
million in 1995 and $12.0 million in 1994. The related earnings per share were
$3.56 in 1996 compared with $3.72 in 1995 and $3.46 in 1994. Earned revenue
increased $7.0 million in 1996 compared with 1995 and increased $53.2 million in
1995 when compared with 1994. Income from operations of $20.6 million in 1996
decreased $1.5 million from $22.1 million in 1995 and increased $6.6 million in
1995 when compared with $15.5 million in 1994. In 1996, the increase in earned
revenue can be primarily attributed to an increase in Steel Service Centers
earned revenue while the decrease in income from operations was primarily the
result of the decrease in Steel Construction caused by a combination of lower
volumes and a reduction to the estimated profitability of certain contracts. In
1995, the increase in earned revenue was the result of improvements realized in
all three segments while the increase in income from operations was the result
of increases in Steel Construction and Steel Service Centers. For additional
discussion on the results of operations refer to the individual business segment
narratives below.

ENGINEERED CONSTRUCTION DIVISION
Earned revenue for the Engineered Construction Division (ECD) was $193.1 million
in 1996 compared with $190.8 million and $177.3 million in 1995 and 1994,
respectively. This segment operates as three market focused project groups each
concentrating on specific customers. Economic conditions and competitive
environments, in which ECD competes, vary independently from market to market
and year to year. These external factors, outside of management's control,
contribute to the financial results. The increase in earned revenue of $2.3
million in 1996 was primarily the result of improvements realized in the
industrial market where a higher volume of contract revenue was recognized. The
increase in earned revenue of $13.4 million in 1995 was attributable to
improvements realized in the water storage and international and technology
markets.

     Income from operations of $8.2 million in 1996 decreased $900,000 from $9.1
million reported for 1995. The most significant impact on income from operations
was the increase in selling, general and administrative (S,G&A) expenses
associated with the relocation of ECD headquarters to Houston, Texas that
occurred during the third quarter of 1996. This move was made to promote future
growth opportunities in a geographic market area where many existing and
potential customers are located.  Absent the costs associated with the Houston
move, S,G&A expenses remained relatively constant as a percent of earned revenue
from 1994 through 1996, at 7%, 8% and 8%, respectively. In 1995, income from
operations decreased $2.1 million from $11.2 million in 1994. A downturn in
activity in terms of volume and contract margins in the industrial markets, when
compared with 1994, contributed significantly to this decrease. During 1994, ECD
took advantage of the recovering economy by expanding volume and realizing
higher margins on contracts.

     New awards were $201.8 million, $174.9 million and $199.0 million in 1996,
1995 and 1994, respectively. This resulted in backlog levels of $101.7 million,
$93.1 million and $108.9 million in 1996, 1995 and 1994, respectively. Markets,
in which ECD competes, improved in 1994 and new awards were affected
accordingly. During 1995, new awards were down particularly in the international
markets as a result of the devaluation of the Mexican peso which affected
opportunities in Latin America and the Caribbean. New awards improved, primarily
in the industrial and international and technology markets, to $201.8 million in
1996. This resulted in a strong backlog level of $101.7 million entering 1997.

     Capital expenditures of $2.5 million and $2.3 million in 1996 and 1995,
respectively were primarily for construction and computer equipment. During
1994, expenditures of $3.9 million were for a new office building, computer and
construction equipment.

STEEL CONSTRUCTION
Earned revenue for this segment was $114.3 million, $119.7 million and $101.9
million for 1996, 1995 and 1994, respectively.  During 1994, building
construction activity, particularly in Chicago Steel Construction, dominated
earned revenue for this segment.  Also in September 1994, the bridge fabricating
assets of Phoenix Steel, Inc. were acquired and combined with existing bridge
fabricating assets in Wisconsin to form PDM Bridge. The full benefit of this
acquisition was realized in 1995 by enhancing capabilities to fabricate larger,
more complex bridge structures which in turn enabled this segment to compete in
a larger market area. This resulted in the improvement realized in earned
revenue during 1995. In 1996, the decrease in earned revenue was primarily the
result of the decline in availability of large bridge contracts which is
directly related to federal and state infrastructure spending.


<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
 
     On February 17, 1997, the Company announced plans to close its structural
steel fabricating facility in Melrose Park, Illinois as a result of a shrinking
market for large-scale construction projects in the Chicago area. During 1996,
this facility accounted for 30 percent of Steel Construction's earned revenue.
The costs associated with this shutdown will be reflected in the 1997 first
quarter financial statements and are not expected to be material.

     In February 1997, the Company also announced plans to begin construction
of a new structural steel fabricating facility in the southwestern part of the
United States. This will expand the Company's capabilities to fabricate and
erect structural steel buildings in the west coast and southwest markets, where
the demand for such products is currently strong. This new facility is expected
to be operational in the third quarter of 1997 and is not expected to
significantly impact 1997 operating results for this segment. Certain employees
and equipment from the Melrose Park facility are expected to be redeployed to
both the new facility as well as existing bridge fabricating plants in
Wisconsin.

     Additionally, on March 10, 1997, the Company announced the acquisition of
Candraft Detailing, Inc., an engineering drafting company, located in Vancouver,
British Columbia. While this acquisition is expected to enhance the drafting
capabilities of the Steel Construction business segment, it is not expected to
have a significant impact on earned revenue.

     Over the three year period ended in 1996, income from operations for Steel
Construction responded in much the same way as earned revenue.  In 1994,
building construction activity, particularly in the Chicago area, was the
primary contributor to the $2.8 million reported. During 1995, the increase in
income from operations to $7.6 million was driven primarily by the above-
mentioned enhanced bridge fabrication capabilities along with the increased
availability of large bridge contracts. In 1996, the decrease in profitability
in building construction contracts contributed to the decreased levels of income
from operations when compared with 1995. S,G&A expenses as a percent of earned
revenue for the Steel Construction business segment were 5%, 6% and 6% for the
years ended 1994, 1995 and 1996, respectively.

      As indicated in "Costs and Estimated Profits on Uncompleted Contracts"
in the Notes to Consolidated Financial Statements, Steel Construction's costs
and estimated profits in excess of billings on uncompleted contracts for 1996
and 1995 includes approximately $6.5 million and $6.0 million, respectively,
relating to an unapproved change order arising from a dispute over design and
specification changes on a project currently under construction. On May 14, 1996
the Company filed an action in the United States District Court for the Northern
District of Illinois (Eastern Division) captioned PITT-DES MOINES, INC. V.
METROPOLITAN PIER & EXPOSITION AUTHORITY ET AL. seeking reimbursement in excess
of $15.0 million for additional work and making other claims in connection with
this matter. On June 4, 1996, certain of the defendants in said action made
counterclaims against the Company in amounts approximating $3.5 million. While
counsel believes that the Company has a basis for the claim, neither management
nor counsel is able to predict with certainty the ultimate resolution of this
matter. As additional information becomes available, the Company may revise its
estimate of potential recovery, which could result in a material adjustment to
the results of operations in future periods.

     Steel Construction reported new awards of $95.6 million, $126.6 million and
$92.7 million for the years ended 1996, 1995 and 1994, respectively.  Backlog of
$70.4 million, $89.0 million and $82.1 million were reported for the years ended
1996, 1995 and 1994, respectively.  The decrease in 1996 in new awards and
backlog was primarily the result of the lack of building construction awards in
the Chicago area along with the decline in bridge awards, each as discussed
above.

     Capital expenditures, exclusive of business acquisitions, were $484,000
in 1996 compared with $919,000 and $661,000 in 1995 and 1994, respectively.
During the last three years, capital expenditures were for plant and
construction equipment.

STEEL SERVICE CENTERS
Steel Service Centers earned revenue was $160.9 million in 1996 compared with
$150.8 million and $128.9 million in 1995 and 1994, respectively.  Income from
operations was $13.1 million in 1996 compared with $11.9 million and $7.5
million in 1995 and 1994, respectively. Additionally, S,G&A expenses as a
percent of earned revenue held steady at 8%, 7% and 7% for the years ended 1994,
1995 and 1996, respectively. The increases experienced over the past three
years, in terms of earned revenue and income from operations, have been
primarily the result of a combination of increased demand as a result of the
ongoing economic recovery across the western United States and the benefit of
strategic capital expansion programs initiated in 1994.  These capital expansion
programs have facilitated growth by providing capacity to capture additional
market share. On January 31, 1997, the Company acquired 90% of the stock of
General Steel Corporation located in Vancouver, Washington. The acquisition of
this steel service center will expand the Company's Steel Service Center
Division into the Pacific Northwest. Management expects this expansion to
contribute to this segment's continued improvement in performance into 1997.


<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS

     The Company's Sparks, Nevada service center was flooded on January 1,
1997, and as a result, it operated on a limited basis until the restoration of
the facility was completed in mid-February. Although costs associated with the
flood were covered by insurance, earned revenue of the Steel Service Centers for
the first quarter may be lower than that of the previous year quarter.

     Capital expenditures in 1996 of $1.0 million and $2.1 million in 1995 were
for plant equipment. During 1994, capital expenditures of $3.4 million were
primarily used for expansions of physical plants, processing and warehouse
equipment and upgrading the delivery fleet.

OTHER
Corporate unallocated expenses, consisting primarily of salaries, benefits,
outside professional services, taxes and insurance, were $6.8 million in 1996
compared with $6.5 million and $6.0 million in 1995 and 1994, respectively.

     In 1996, the Company's interest income was $1.3 million compared with $1.2
million in 1995 and $627,000 in 1994. Interest income increased in 1996 and 1995
as a result of increased levels of short-term interest-bearing funds and
interest on long-term notes receivable.

     Interest expense of $1.3 million in 1996 compares with $1.9 million in
1995 and $898,000 in 1994. Interest expense is directly related to the level of
net borrowings the Company maintains throughout each year. On December 31, 1996
the Company had no outstanding debt obligations under the revolving credit
facility compared with $13 million and $22 million of debt obligations at
December 31, 1995 and 1994, respectively.

     The gains on sale of assets were $560,000, $95,000 and $3.6 million in
1996, 1995 and 1994, respectively. In all three years, gains on the sale of idle
properties were recognized. In addition to the sale of idle properties, in 1996
the Company realized a gain on the sale of a foreign investment and in 1994
realized a gain on the sale of PDM Saudi Arabia Ltd., a joint venture.

     The effective tax rate was 39 percent in 1996 and 1995 compared with 36
percent in 1994. In 1994, the effective tax rate was favorably impacted by the
realization of a tax benefit related to the previously mentioned sale of a joint
venture.

     Inflation and changing prices did not significantly impact the Company
during the last three years.

LIQUIDITY AND CAPITAL RESOURCES
The increase in cash flows from operating activities in 1996 when compared with
1995, is due primarily to decreases in net operating assets and liabilities. The
changes in operating assets and liabilities from year to year are affected by
the mix, stage of completion and commercial terms of contracts. In 1996,
decreases in receivables and increases in advance billings on contracts had a
positive effect on cash flow from operations.

     The decrease in cash utilized by investing activities in 1996 and 1995
compared with 1994 is primarily attributable to the acquisition of the bridge
fabricating assets of Phoenix Steel Inc., a steel bridge fabricator, on
September 1, 1994. The total cost of this acquisition was $13.5 million. Capital
expenditures, exclusive of business acquisitions, in 1996 were $4.2 million
compared with $5.3 million and $2.9 million in 1995 and 1994, respectively.

     In January 1997, the Company acquired General Steel Corporation located in
Vancouver, Washington, a steel service center delivering a general line of
carbon steel products in Oregon and Washington. On March 10, 1997, the Company
acquired Candraft Detailing, Inc., an engineering drafting company serving the
steel building and bridge fabrication industry located in Vancouver, British
Columbia. The total costs of these acquisitions were $8.3 million. The Company
intends to continue to evaluate and selectively pursue opportunities for growth
or expansion of its business through investment in or acquisition of
complementary businesses. Acquisition and investment candidates are evaluated
based on various criteria in a process which includes due diligence reviews.
Management anticipates that investment and/or acquisition opportunities will be
available to the Company and intends to investigate those opportunities which
are consistent with the Company's core business and expertise. The Company
expects that any such acquisitions will be financed from cash on hand or
available under the Company's revolving credit facility. In certain cases,
acquisitions may be funded using stock or pursuant to stand-alone credit
facilities.

     Cash utilized by financing activities consisted primarily of dividend
payments and payment of debt obligations. The Company paid cash dividends of
$3.0 million ($.86 per share) in 1996 compared with $2.3 million ($.66 per
share) in 1995 and $2.1 million ($.60 per share) in 1994.

     On February 13, 1997, the Board of Directors declared a 50% increase in its
quarterly dividend to $.275 per share on its post-split shares. The payment of
future dividends will be evaluated based on business conditions.

     The Company has on hand and access to sufficient sources of funds to meet
its anticipated operating, expansion and capital needs, including the
construction of the new structural steel fabricating facility in the
southwestern part of the United States. These sources include the unused portion
of a $40.0 million unsecured revolving credit facility which contains an annual
option to renew for an additional one-year period, subject to lender approval.
On December 31, 1996, $10.6 million of stand-by letters of credit were
outstanding under this agreement. The Company expects to borrow under the credit
facility for working capital requirements in 1997.
<PAGE>
 
BUSINESS SEGMENT INFORMATION

<TABLE>   
<CAPTION>  
                                                          Years ended December 31, 
----------------------------------------------------------------------------------
                                               1996           1995           1994
----------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>
EARNED REVENUE
Engineered Construction Division        $193,098,579   $190,778,590   $177,337,825
Steel Construction                       114,282,912    119,690,135    101,871,144
Steel Service Centers                    160,892,019    150,805,331    128,851,654
----------------------------------------------------------------------------------
                                        $468,273,510   $461,274,056   $408,060,623
----------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Engineered Construction Division        $  8,154,976   $  9,088,399   $ 11,180,896
Steel Construction                         6,177,390      7,607,683      2,767,438
Steel Service Centers                     13,078,895     11,927,971      7,528,151
Corporate and other                       (6,823,541)    (6,547,366)    (5,968,768)
----------------------------------------------------------------------------------
                                        $ 20,587,720   $ 22,076,687   $ 15,507,717
----------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Engineered Construction Division        $ 58,313,226   $ 59,919,222   $ 61,826,921
Steel Construction                        61,626,687     69,129,166     75,024,678
Steel Service Centers                     42,993,504     40,809,816     41,421,278
Corporate and other                       36,951,967     31,278,073     35,928,602
----------------------------------------------------------------------------------
                                        $199,885,384   $201,136,277   $214,201,479
----------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Engineered Construction Division        $  2,483,940   $  2,296,679   $  3,868,223
Steel Construction                           483,777        919,330        660,540
Steel Service Centers                      1,014,284      2,065,521      3,375,412
Corporate and other                          170,930         22,124         38,832
----------------------------------------------------------------------------------
                                        $  4,152,931   $  5,303,654   $  7,943,007
----------------------------------------------------------------------------------
DEPRECIATION
Engineered Construction Division        $  2,007,767   $  1,875,229   $  1,906,768
Steel Construction                         2,110,631      2,196,098      1,902,787
Steel Service Centers                      1,519,868      1,442,272      1,192,176
Corporate and other                           42,711        148,588        628,278
----------------------------------------------------------------------------------
                                        $  5,680,977   $  5,662,187   $  5,630,009
----------------------------------------------------------------------------------
</TABLE>

For the years ended 1996 and 1995, neither any single customer, nor any customer
outside the United States, accounted for 10 percent or more of total earned
revenue. In 1994, Steel Construction's earned revenue includes $48.3 million
related to the fabrication and construction of the McCormick Place Exhibition
Center.


<PAGE>
 
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                     Years ended December 31, 
                                             ---------------------------------------------------
                                                              1996           1995           1994
-------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>
Earned revenue                                         $468,273,510   $461,274,056   $408,060,623
Cost of earned revenue                                  403,799,573    398,731,887    357,639,136
-------------------------------------------------------------------------------------------------
  Gross profit from operations                           64,473,937     62,542,169     50,421,487
Selling, general and administrative expenses             43,886,217     40,465,482     34,913,770
-------------------------------------------------------------------------------------------------
  Income from operations                                 20,587,720     22,076,687     15,507,717
Other income (expense):
  Interest income                                         1,320,422      1,234,367        626,841
  Interest expense                                       (1,269,500)    (1,927,010)      (897,993)
  Gain on sale of assets                                    559,581         95,044      3,576,760
  Miscellaneous, net                                       (569,197)      (223,620)      (157,233)
-------------------------------------------------------------------------------------------------
                                                             41,306       (821,219)     3,148,375
-------------------------------------------------------------------------------------------------
  Income from continuing operations before taxes         20,629,026     21,255,468     18,656,092
Income tax expense                                        8,077,805      8,236,008      6,676,271
-------------------------------------------------------------------------------------------------
  Income from continuing operations                      12,551,221     13,019,460     11,979,821
  Income from discontinued operations, net of taxes               -              -         80,362
-------------------------------------------------------------------------------------------------
Net income                                             $ 12,551,221   $ 13,019,460   $ 12,060,183
-------------------------------------------------------------------------------------------------
 
 
Income per common share:
  Continuing operations                                $       3.56   $       3.72   $       3.44
  Discontinued operations                                         -              -           0.02
-------------------------------------------------------------------------------------------------
Net income per common share                            $       3.56   $       3.72   $       3.46
-------------------------------------------------------------------------------------------------
Shares used to calculate income per share                 3,526,104      3,499,392      3,488,025
-------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>


<PAGE>
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>                                                                                       December 31, 
                                         ------------------------------------------------------------------- 
ASSETS                                                                                  1996           1995
------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>
CURRENT ASSETS                                                   
Cash and cash equivalents                                                        $ 16,814,884   $  9,507,815
Accounts and notes receivable                                                      72,423,871     77,517,346
Inventories                                                                        18,192,154     16,417,820
Costs and estimated profits in excess of billings                                  36,830,613     38,166,308
Deferred income taxes                                                               4,475,749      4,871,911
Prepaid expenses                                                                      822,020        913,589
------------------------------------------------------------------------------------------------------------
Total current assets                                                              149,559,291    147,394,789
                                                                 
                                                                 
OTHER ASSETS                                                                        8,300,139      9,509,912
                                                                 
                                                                 
                                                                 
PROPERTY, PLANT AND EQUIPMENT                                    
Land                                                                                7,273,815      7,391,811
Buildings                                                                          35,212,608     35,383,724
Machinery and equipment                                                            65,457,202     62,300,639
------------------------------------------------------------------------------------------------------------
                                                                                  107,943,625    105,076,174
Allowances for depreciation                                                       (65,917,671)   (60,844,598)
------------------------------------------------------------------------------------------------------------
Net property, plant and equipment                                                  42,025,954     44,231,576
------------------------------------------------------------------------------------------------------------
                                                                                 $199,885,384   $201,136,277
------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                             
<TABLE>
<CAPTION>                                                                                          December 31, 
                                                  --------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY                                                        1996           1995
----------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>            <C>
CURRENT LIABILITIES                                                     
Accounts payable                                                                     $ 41,593,198   $ 41,610,979
Accrued compensation, related taxes and benefits                                       12,005,337     11,739,433
Other accrued expenses                                                                  2,063,670      2,378,643
Billings in excess of costs and estimated profits                                      10,732,270      6,435,634
Income taxes                                                                              493,568      1,344,994
Casualty and liability insurance                                                        7,132,397      8,816,939
----------------------------------------------------------------------------------------------------------------
Total current liabilities                                                              74,020,440     72,326,622
                                                                        
REVOLVING CREDIT FACILITY                                                                       -     13,000,000
                                                                        
DEFERRED INCOME TAXES                                                                   5,698,945      5,601,219
                                                                        
MINORITY INTEREST                                                                       1,546,645      1,266,930
                                                                        
CONTINGENCIES AND COMMITMENTS                                           
                                                                        
STOCKHOLDERS' EQUITY                                                    
Preferred stock -- par value $.01 per share; authorized 3,000,000 shares;                                       
 issued -- none                                                      
Common stock -- no par value; authorized 15,000,000 shares;                                      
 issued 4,473,234 shares                                                               33,549,255     33,549,255
Retained earnings                                                                      99,343,523     89,677,480
----------------------------------------------------------------------------------------------------------------
                                                                                      132,892,778    123,226,735
Treasury stock at cost (1996 -- 990,233 shares; 1995 -- 993,785 shares)               (14,273,424)   (14,285,229)
----------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                            118,619,354    108,941,506
----------------------------------------------------------------------------------------------------------------
                                                                                     $199,885,384   $201,136,277
----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.


<PAGE>
 
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>  
<CAPTION> 
                                                                                              Years ended December 31, 
                                                       ---------------------------------------------------------------
                                                                                    1996           1995           1994
----------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES                              
Net income                                                                  $ 12,551,221   $ 13,019,460   $ 12,060,183
Adjustments to reconcile net income to net cash                   
provided by operating activities:                                 
  Depreciation                                                                 5,680,977      5,553,960      5,036,755
  Discontinued operations                                                              -       (341,873)    (1,397,613)
  Gain on sale of assets                                                        (559,581)       (95,044)    (3,576,760)
  Deferred income taxes                                                          493,889        523,991      2,141,057
  Minority interest in earnings, net of dividends paid                           279,715        139,175        219,675
  Other non-cash credits, net                                                   (547,440)       141,077       (301,288)
Change in operating assets and liabilities providing (using) cash:                                      
  Accounts and notes receivable                                                5,798,778     14,991,156    (31,132,161)
  Inventories                                                                 (1,774,334)     3,449,246     (3,396,234)
  Prepaid expenses                                                                91,569         18,385        663,337
  Costs, estimated profits and billings, net                                   5,632,331    (15,846,823)    10,937,843
  Accounts payable                                                               (17,781)    (5,717,336)     6,720,222
  Accrued liabilities                                                         (2,028,861)      (431,779)    (1,727,972)
  Income taxes                                                                  (851,427)      (773,280)       969,217
----------------------------------------------------------------------------------------------------------------------
  Net cash provided (utilized) by operating activities                        24,749,056     14,630,315     (2,783,739)
----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES                              
  Capital expenditures                                                        (4,152,931)    (5,303,654)    (7,919,020)
  Proceeds from sale of assets                                                 1,459,907        508,286      3,838,022
  Costs incurred related to flood damage                                               -              -     (3,589,298)
  Acquisitions, net of cash acquired                                                   -              -    (13,499,394)
  Change in other assets                                                       1,124,410       (368,499)      (340,468)
----------------------------------------------------------------------------------------------------------------------
  Net cash utilized by investing activities                                   (1,568,614)    (5,163,867)   (21,510,158)
----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES                              
  Proceeds from revolving credit facility                                      8,000,000      4,000,000     28,000,000
  Payments of revolving credit facility                                      (21,000,000)   (13,000,000)    (6,000,000)
  Dividends paid                                                              (3,020,275)    (2,321,336)    (2,091,114)
  Other                                                                          146,902       (305,638)       107,031
----------------------------------------------------------------------------------------------------------------------
  Net cash (utilized) provided by financing activities                       (15,873,373)   (11,626,974)    20,015,917
----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                               7,307,069     (2,160,526)    (4,277,980)
Cash and cash equivalents at beginning of year                                 9,507,815     11,668,341     15,946,321
----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                    $ 16,814,884   $  9,507,815   $ 11,668,341
----------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                                        Treasury stock
                                                                                    -----------------------------------
                                      Common stock     Retained earnings                   Cost        Number of shares
-----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                   <C>                    <C>                  <C>
Balance on December 31, 1993           $33,549,255           $69,055,440            $(14,131,775)             (987,267)
Net income                                                    12,060,183                               
Cash dividends ($.60 per share)                               (2,091,114)                              
Other                                                            177,063                 (70,032)               (3,113)
-----------------------------------------------------------------------------------------------------------------------
Balance on December 31, 1994            33,549,255            79,201,572             (14,201,807)             (990,380)
Net income                                                    13,019,460                               
Cash dividends ($0.66 per share)                              (2,321,336)                              
Other                                                           (222,216)                (83,422)               (3,405)
-----------------------------------------------------------------------------------------------------------------------
Balance on December 31, 1995            33,549,255            89,677,480             (14,285,229)             (993,785)
Net income                                                    12,551,221                               
Cash dividends ($0.86 per share)                              (3,020,275)                              
Other                                                            135,097                  11,805                 3,552
-----------------------------------------------------------------------------------------------------------------------
Balance on December 31, 1996           $33,549,255           $99,343,523            $(14,273,424)             (990,233)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 


SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS SEGMENTS
PDM is a diversified engineering and construction company that is comprised of
three business segments.

     The Engineered Construction Division designs, fabricates and constructs
water storage tanks, anaerobic wastewater systems, processing, refining and
storage facilities, and specially engineered products such as low-temperature
and cryogenic systems, high vacuum and thermal test facilities and supercritical
fluid extraction facilities.

     Steel Construction is engaged in fabricating and erecting structural steel
for commercial, institutional and public sector buildings, bridge rehabilitation
and fabricating structural steel for new bridges.

     Steel Service Centers provide warehousing, first-stage processing and
distribution of carbon steel products including plates, sheets, bars, tubes,
shapes, pipe and other miscellaneous metal products. The culvert facilities
manufacture and market corrugated metal culvert pipe and accessories.

BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Pitt-Des Moines,
Inc. and its subsidiaries (Company). Intercompany accounts and transactions
have been eliminated in consolidation.

     The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the balance sheet dates
and the reported amounts of revenue and expenses during the reporting periods
for long-term contracts.

RECLASSIFICATIONS
Certain amounts in the 1994 and 1995 consolidated financial statements and notes
to consolidated financial statements have been reclassified to conform with the
1996 presentation.

CLASSIFICATIONS OF CURRENT ASSETS AND LIABILITIES
The Company includes in current assets and current liabilities amounts
realizable and payable under contracts which extend beyond one year. Other
assets and liabilities are classified as current or non-current on the basis of
expected realization or payment within or beyond one year, respectively.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents are defined as cash and short-term investments with
maturities of three months or less at the time of acquisition.

INVENTORIES
Inventories of raw materials and fabricated parts are principally valued at the
lower of last-in, first-out (LIFO) cost or market except for certain inventories
which are valued at the lower of first-in, first-out (FIFO) cost or market.

     Contract material inventories included in accumulated contract costs are
valued using the specific identification method.

PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment are carried at cost. Buildings,
machinery and equipment, including capitalized leases, are depreciated by
accelerated methods.

     In January 1996, the Company adopted the Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" (SFAS No. 121). The effect of adoption was
not material. At December 31, 1996, $5.4 million of long-lived assets to be
disposed of, including $2.5 million of long-lived assets from discontinued
operations, were included in Property, Plant and Equipment.

REVENUE RECOGNITION
The Company follows the percentage of completion method of reporting income from
contracts. This method takes into account the cost, estimated profit and earned
revenue to date on contracts not yet completed. Revenue recognized is the
portion of the total contract price that the man-hours expended to date bears to
the estimated final total man-hours, based on current estimates of man-hours to
complete. Revenue recognition is not related to progress billings to customers.

     As long-term contracts extend over one or more years, revisions in
estimates of costs and estimated profits during the course of work are reflected
in the accounting period in which the facts which require the revision become
known. At the time a loss on a contract becomes known, the entire amount of the
estimated ultimate loss is recognized in the financial statements.


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The Company has a history of making reasonably dependable estimates of
the extent of progress towards completion, contract revenues, and contract costs
on its long-term contracts. However, due to uncertainties inherent in the
estimation process, actual results could differ materially from those estimates.

     Revenue from change orders and claims is recognized when the settlement is
probable and the amount can be reasonably estimated. Contract costs include all
direct material, labor, subcontract costs and those indirect costs related to
contract performance. Costs and estimated profits in excess of billings are
classified as a current asset. Amounts billed in excess of costs and estimated
profits are classified as a current liability.

INCOME TAXES
Deferred tax assets and liabilities are recognized for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns.

NET INCOME PER SHARE OF COMMON STOCK
Earnings per share is based on the weighted average number of shares outstanding
during the year and include the dilutive effect of the assumed exercise of
outstanding stock options, as computed under the treasury stock method.

ACQUISITION
On September 1, 1994, the Company acquired the bridge fabricating assets of
Phoenix Steel, Inc., a steel bridge fabricator. The total cost of this
acquisition was $13.5 million.

     The acquisition was accounted for as a purchase and, accordingly, the
acquired assets and liabilities were recorded at their estimated fair value at
the date of acquisition. Operating results have been included since the
acquisition date, but pro forma information has not been presented because it is
immaterial.

ACCOUNTS AND NOTES RECEIVABLE
On December 31, 1996 and 1995, accounts receivable include approximately $17.1
million and $19.6 million, respectively, which have been billed under retainage
provisions in contracts and will become due upon completion of the contracts.
Accounts receivable on December 31, 1996 include approximately $1.8 million
which is expected to be collected after December 31, 1997. The allowance for
doubtful accounts was approximately $900,000 on December 31, 1996 and 1995,
respectively.

     The majority of accounts receivable are from customers in various
locations and industries throughout the United States. The Company maintains
adequate reserves for potential credit losses and such losses have been minimal
and within management's estimates.

INVENTORIES
Inventories aggregating approximately $16.8 million and $14.9 million on
December 31, 1996 and 1995, respectively, are valued at the lower of LIFO cost
or market. If these amounts had been valued on the FIFO method, which
approximates replacement cost, these amounts would have been approximately $15.5
million and $15.7 million higher than reported on December 31, 1996 and 1995,
respectively.

     Inventories carried on a FIFO basis were $1.4 million and $1.5 million on
December 31, 1996 and 1995, respectively.

DISCONTINUED OPERATION
On October 31, 1994, the Company sold substantially all of  the operating assets
of CVI Incorporated, a wholly owned subsidiary, to Process Systems
International, Inc., a subsidiary of Chart Industries, Inc., for consideration
of $5.7 million.

     Discontinued operations, net of taxes in the accompanying consolidated
statements of income is composed of the following:

<TABLE>
<CAPTION>
 
                                     Years ended December 31, 
                                  ---------------------------
(Dollars in thousands)                    1996   1995    1994
-------------------------------------------------------------
<S>                                       <C>    <C>    <C>
Income (loss) from operations,      
 net of income tax expense          
 (benefit) of $27 in 1996,          
 $94 in 1995 and $(214) in 1994.          $   -  $   -  $(493)
Gain from disposal, net             
 of income tax expense              
 of $383 in 1994.                             -      -    573
-------------------------------------------------------------
                                          $   -  $   -  $  80
-------------------------------------------------------------
</TABLE>


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS

Costs and estimated profits on uncompleted contracts are summarized as follows:

<TABLE>
<CAPTION> 
                                                            December 31, 
                                           -----------------------------
                                                    1996            1995
------------------------------------------------------------------------
<S>                                        <C>             <C>
Costs incurred on
 uncompleted contracts                     $ 646,533,535   $ 542,631,132
Estimated profits                             88,728,735      69,861,448
------------------------------------------------------------------------
                                             735,262,270     612,492,580
Billings to date                            (709,163,927)   (580,761,906)
------------------------------------------------------------------------
                                           $  26,098,343   $  31,730,674
------------------------------------------------------------------------
</TABLE>

     Costs, estimated profits and billings on uncompleted contracts are
included in the accompanying Consolidated Statements of Financial Condition
under the following captions:

<TABLE>
<CAPTION>

                                                            December 31, 
                                              ---------------------------
                                                       1996         1995
-------------------------------------------------------------------------
<S>                                            <C>            <C>
Costs and estimated                   
 profits in excess of billings                 $ 36,830,613   $38,166,308
                                      
Billings in excess of costs           
 and estimated profits                          (10,732,270)   (6,435,634)
-------------------------------------------------------------------------
                                               $ 26,098,343   $31,730,674
-------------------------------------------------------------------------
</TABLE>

Included in costs and estimated profits in excess of billings on uncompleted
contracts was approximately $6.5 million and $6.0 million at December 31, 1996
and 1995, respectively, relating to an unapproved change order arising from a
dispute over design and specification changes on a project currently under
construction.

     On May 14, 1996 the Company filed an action in the United States District
Court for the Northern District of Illinois (Eastern Division) captioned PITT-
DES MOINES, INC. V. METROPOLITAN PIER & EXPOSITION AUTHORITY ET AL. seeking
reimbursement in excess of $15.0 million for additional work and making other
claims in connection with an unapproved change order arising from a dispute over
design and specification changes to a project under construction. On June 4,
1996 certain of the defendants in said action made counterclaims against the
Company in amounts approximating $3.5 million. While counsel believes that the
Company has a basis for the claim, neither management nor counsel is able to
predict with certainty the ultimate resolution of this matter. As additional
information becomes available, the Company may revise its estimate of potential
recovery, which could result in a material adjustment to the results of
operations in future periods.

OTHER ASSETS
Other assets include prepaid pension costs and notes receivable.


PENSIONS
The Company has a number of noncontributory defined benefit pension plans
covering most employees. Plans covering salaried employees provide monthly
benefits at retirement age based on the participant's monthly salary and years
of employment. Plans covering hourly employees generally provide benefits of
stated amounts for each year of service although certain of such plans provide
benefits based on the participant's hourly wage rate and years of service. The
plans permit the Company, at any time, to amend or terminate the plans subject
to union approval, if applicable.

     The Company's policy is to fund the legal minimum required contributions.
Plan assets on December 31, 1996 consisted primarily of listed stocks, bonds,
investments in pooled funds and group annuity contracts of insurance carriers.

     The Company also makes contributions to certain multi-employer defined
benefit pension plans primarily for field union employees. These contributions
are determined in accordance with the provisions of negotiated labor contracts
and generally are based on the number of man-hours worked. Company contributions
and cost recognized for these plans were approximately $664,000, $738,000 and
$675,000 for the years ended December 31, 1996, 1995 and 1994, respectively. The
estimated accumulated plan benefits and plan assets for these plans are not
available.

     The Company sponsored or contributed to union sponsored defined
contribution plans which cover nearly all salaried employees, certain hourly
groups in accordance with their union labor contracts and nearly all non-union
field employees. Based upon the plan, the Company contributions represent either
a stated matching percentage of the participant's basic contribution or a stated
rate per hour worked. Company contributions and cost recognized for these plans
were $1.6 million, $1.6 million and $1.3 million for the years ended December
31, 1996, 1995 and 1994, respectively.


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Net periodic pension expense (income)  for the Company's continuing
operations defined benefit pension plans included the following components:

<TABLE>
<CAPTION>
                                                                                                   Years ended December 31, 
                                                                             ----------------------------------------------
                                                                                           1996           1995         1994
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>            <C>            <C>
Service cost-benefits earned during the period                                     $  1,475,183   $  1,169,634   $ 1,287,601
Interest cost on projected benefit obligation                                         4,311,399      4,258,907     3,727,962
Actual (return) loss on plan assets                                                 (10,163,666)   (14,100,076)      677,553
Net amortization, deferral and other                                                  3,842,415      8,812,612    (6,038,666)
----------------------------------------------------------------------------------------------------------------------------
Net periodic pension (income) expense                                              $   (534,669)  $    141,077   $  (345,550)
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

The following assumptions were used in the determination of net periodic cost: 
                                                                               
                                                                                                  Years ended December 31, 
                                                                             -----------------------------------------------
                                                                                           1996           1995         1994
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>            <C>           <C>
Discount rate                                                                              7.5%           8.5%          7.5%
Rates of increase in compensation levels                                                   5.5%           6.5%          6.0%
Expected long-term rates of return on assets                                               9.0%           9.0%          9.0%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

The interest rate used to discount actuarial liabilities to present value at
December 31, 1996 and 1995 was 7.5%.


 
The following table sets forth the status of the Company's defined
benefit pension plans:

<TABLE>
<CAPTION>
                                                                      December 31, 1996                       December 31, 1995
                                                    -----------------------------------     -----------------------------------
                                                            Plans whose     Plans whose             Plans whose     Plans whose
                                                          assets exceed     accumulated           assets exceed     accumulated
                                                            accumulated        benefits             accumulated        benefits
                                                               benefits   exceed assets                benefits   exceed assets
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>                     <C>             <C>
Actuarial present value of benefit obligations:                                                                     
  Vested benefit obligation                                $ 48,440,023     $ 3,440,538            $ 44,780,865     $ 5,311,910
-------------------------------------------------------------------------------------------------------------------------------

  Accumulated benefit obligation                           $ 49,873,918     $ 3,626,261            $ 45,937,231     $ 5,595,363
-------------------------------------------------------------------------------------------------------------------------------
                                                                                              
Plan assets at fair value                                  $ 70,953,591     $ 2,290,079            $ 62,285,463     $ 3,922,870
Projected benefit obligation                                (57,835,463)     (3,626,261)            (53,190,866)     (5,595,363)
-------------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected                                                                    
     benefit obligation                                      13,118,128      (1,336,182)              9,094,597      (1,672,493)
Unrecognized net (gain) loss                                 (5,527,306)        251,355              (1,910,489)        334,527
Unrecognized net (asset) obligation                          (2,871,426)         34,777              (3,489,410)        (59,064)
Unrecognized prior service cost                               1,776,666         485,219               1,578,444         701,390
Adjustment to recognize minimum liability                             -        (771,351)                      -        (976,853)
-------------------------------------------------------------------------------------------------------------------------------
Pension asset (liability) recognized in                                        
     Consolidated Statements of Financial Condition        $  6,496,062     $(1,336,182)           $  5,273,142     $(1,672,493)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


EMPLOYEE STOCK OWNERSHIP PLAN
The Company has a noncontributory Employee Stock Ownership Plan (ESOP) which
provides salaried employees, who have at least one year of continuous service,
an opportunity to own Company Common Stock and to accumulate additional
retirement benefits. The Company's contributions, whether in cash or in stock,
are determined annually by the Board of Directors in an amount not to exceed the
maximum allowable as an income tax deduction. Company contributions are 100
percent vested after five years of continuous service. The ESOP contribution is
allocated to the participant's account based upon the actual salary paid to the
participant during that year. The following table sets forth the status of the
Company's ESOP:

<TABLE>
<CAPTION>
                                                 Years ended December 31, 
                                 ----------------------------------------
                                          1996          1995         1994
-------------------------------------------------------------------------
<S>                                 <C>           <C>          <C>
Contributions                       $  663,000    $  639,000   $  507,000
Dividends paid on ESOP shares       $   83,000    $   55,000   $   42,000
Number of shares held by ESOP           94,860        76,644       66,435
Plan assets at market value         $2,600,000    $2,000,000   $1,400,000
-------------------------------------------------------------------------
</TABLE>

REVOLVING CREDIT FACILITY
The Company has an unsecured revolving credit agreement with several banks from
which it may borrow up to $40 million. This agreement matures on December 31,
1998, at which time all borrowings must be repaid in full. This Agreement
contains an annual option to renew for an additional one-year period, subject to
lender approval. Borrowings under the revolving credit agreement bear interest
at the prime rate or at rates based on the London Interbank Offered Rate
(LIBOR), or other rates which are mutually acceptable to the banks and the
Company. A commitment fee of one-fourth of one percent per annum is charged on
any unused amount of this revolving credit commitment. This agreement contains
restrictive financial covenants that require minimum levels of net worth and
maintenance of specific financial ratios. On December 31, 1996, $10.6 million of
stand-by letters of credit were outstanding under this agreement.

     The Company made cash payments of interest totaling $1.2 million for the
year ended December 31, 1996 and $2.7 million and $613,000 for the years ended
December 31, 1995 and 1994, respectively.

COMMON STOCK SPLIT
On February 13, 1997, the Company declared a 3 for 2 stock split effective in
the form of a stock dividend payable March 28, 1997 to stockholders of record at
the close of business on March 14, 1997. Per share amounts, market prices,
number of shares and stock option amounts have been adjusted for the stock split
for all periods presented.

STOCK PLAN
The Stock Option Plan of 1990 (Plan) provides for grants of incentive stock
options to officers and key employees. The Plan is administered by a committee
consisting of at least three directors of the Company, none of whom are eligible
to participate in the Plan. A total of 300,000 shares of the Company's Common
Stock may be issued pursuant to the Plan. Grant prices are determined by the
committee and are established at the fair market value of the Company's Common
Stock at the date of grant. Options vest over a four-year period in equal annual
amounts, or over such other period as the committee shall determine, and may be
accelerated in the event of certain other circumstances such as death or
disability of the optionee. These options generally expire within ten years
after the date of grant. The following table summarizes option activity for the
two years ended December 31, 1996:

<TABLE>
<CAPTION>
 
                                                       Option price range
                                                Shares          per share
-------------------------------------------------------------------------
<S>                                            <C>       <C>
Outstanding on December 31, 1994                98,250   $20.50 -- $24.83
-------------------------------------------------------------------------
Granted                                        108,750             $23.17
Surrendered                                    (10,500)  $24.67 -- $24.83
-------------------------------------------------------------------------
Outstanding on December 31, 1995               196,500   $20.50 -- $24.83
-------------------------------------------------------------------------
Granted                                         60,000   $27.33 -- $28.50
Exercised                                       (6,000)            $20.50
-------------------------------------------------------------------------
Outstanding on December 31, 1996               250,500   $20.50 -- $28.50
-------------------------------------------------------------------------
Exercisable:
December 31, 1995                              113,437   $20.50 -- $24.83
December 31, 1996                              140,625   $20.50 -- $24.83
-------------------------------------------------------------------------
Available for future grant:
December 31, 1995                               96,750
December 31, 1996                               36,750
-------------------------------------------------------------------------
</TABLE>

     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). SFAS No. 123 establishes financial accounting and
reporting standards for stock-based compensation plans and to transactions in
which an entity issues its equity instruments to acquire goods and services from
non-employees. The new accounting standards prescribed by SFAS No. 123 are
optional, and the Company has elected to continue to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" Pro
forma disclosures relating to net income and earnings per share, as required
under SFAS No. 123, have not been provided as they do not materially differ from
amounts reported.


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



INCOME TAXES

The income tax expense (benefit) included in the Consolidated Statements of
Income is as follows:

<TABLE>
<CAPTION>
                                                                                         Years ended December 31, 
                                                            ----------------------------------------------------
                                                                                  1996         1995         1994
----------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>          <C>          <C>
Current:                                                                 
  Federal                                                                    $5,698,508   $5,618,289   $3,415,816
  State                                                                       1,250,000    1,300,000      800,000
  Foreign                                                                       446,011      263,705      408,048
-----------------------------------------------------------------------------------------------------------------
  Total current                                                               7,394,519    7,181,994    4,623,864
Deferred:                                                                
  Federal                                                                       548,900      886,742    1,716,378
  State                                                                         161,442      260,805      504,752
-----------------------------------------------------------------------------------------------------------------
  Total deferred                                                                710,342    1,147,547    2,221,130
-----------------------------------------------------------------------------------------------------------------
Total income tax expense                                                     $8,104,861   $8,329,541   $6,844,994
-----------------------------------------------------------------------------------------------------------------
</TABLE>
 
The income tax expense (benefit) applicable to continuing and discontinued
 operations is as follows:

<TABLE>
<CAPTION>
                                                                                         Years ended December 31, 
                                                             ----------------------------------------------------
                                                                                  1996         1995         1994
-----------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>          <C>          <C>
Provision for continuing operations:                                     
  Current                                                                    $7,583,916   $7,712,017   $4,535,213
  Deferred                                                                      493,889      523,991    2,141,058
-----------------------------------------------------------------------------------------------------------------
  Total provision for continuing operations                                   8,077,805    8,236,008    6,676,271
Provisions for discontinued operations:                                  
  Current                                                                      (189,397)    (530,023)      88,651
  Deferred                                                                      216,453      623,556       80,072
-----------------------------------------------------------------------------------------------------------------
  Total provisions for discontinued operations                                   27,056       93,533      168,723
-----------------------------------------------------------------------------------------------------------------
Total income tax expense                                                     $8,104,861   $8,329,541   $6,844,994
-----------------------------------------------------------------------------------------------------------------
</TABLE>

A reconciliation of statutory federal income tax to the income tax expense on
the income from continuing operations is as follows:

<TABLE>
<CAPTION>
                                                                                         Years ended December 31, 
                                                            ----------------------------------------------------
                                                                                  1996         1995         1994
----------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>          <C>          <C>
Statutory federal income tax expense                                        $7,220,159   $7,226,859   $6,343,072
Increase (decrease) in taxes resulting from:                   
  Tax benefit from sale of a foreign investment                                      -            -     (525,936)
  State taxes less federal benefit                                             812,500      858,000      521,482
  Other, net                                                                    45,146      151,149      337,653
----------------------------------------------------------------------------------------------------------------
Income tax expense -- continuing operations                                 $8,077,805   $8,236,008   $6,676,271
----------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Deferred taxes reflected the tax effects of differences between the
amounts recorded as assets and liabilities for financial reporting purposes and
the amounts recorded for income tax purposes. The tax effects of significant
temporary differences giving rise to deferred tax assets and liabilities are as
follows:

<TABLE>
<CAPTION>
                                                                     December 31,   
---------------------------------------------------------------------------------
                                                          1996               1995
--------------------------------------------------------------------------------- 
<S>                                                 <C>             <C>
Deferred tax assets:                       
  Casualty and liability insurance                  $1,997,372         $2,595,613
  Contract related amounts                             127,900            131,980
  Inventory                                            185,513            102,931
  Employee benefits                                  1,817,764          1,694,187
  Accounts receivable allowance                        347,200            347,200
--------------------------------------------------------------------------------- 
  Total deferred tax assets                         $4,475,749         $4,871,911
--------------------------------------------------------------------------------- 
Deferred tax liabilities:                                            
  Accelerated depreciation                          $3,058,632         $3,263,232
  Pension                                            2,727,323          2,333,870
  Other                                                (87,010)             4,117
--------------------------------------------------------------------------------- 
  Total deferred tax liabilities                    $5,698,945         $5,601,219
--------------------------------------------------------------------------------- 
</TABLE>                                                             

Income taxes paid for the years ended December 31, 1996, 1995 and 1994 were
approximately $8.2 million, $7.1 million and $3.7 million, respectively.


CONTINGENCIES
There are various claims and legal proceedings against the Company arising from
the normal course of business. Although counsel is unable to predict with
certainty the ultimate outcome, management and counsel believe the Company has
significant and meritorious defenses to any claims, and intend to pursue them
vigorously.

     The Company's operations, including idle facilities and other property, are
subject to and affected by federal, state and local laws and regulations
regarding the protection of the environment. The Company accrues for
environmental costs where such obligations are either known or considered
probable and can be reasonably estimated.

     The Company is participating as a potentially responsible party (PRP) at
three different sites pursuant to proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA). Other parties
have also been identified as PRP's at the sites. Investigative and/or remedial
activities are ongoing. The Company believes, based upon information presently
available to it, that such future costs will not have a material effect on the
Company's financial position, results of operations or liquidity. Additionally,
amounts reflected in results of operations and in the statements of financial
condition during the three years ended December 31, 1996, have also not been
material. However, the imposition of more stringent requirements under
environmental laws or regulations, new developments or changes regarding site
cleanup costs or the allocation of such costs among PRP's or a determination
that the Company is potentially responsible for the release of hazardous
substances at sites other than those currently identified, could result in
additional costs.

     As previously reported, on November 3, 1993, an accident occurred at the
construction site of a new United States Post Office in Chicago where the
Company's Steel Construction business segment was in the process of erecting the
steel structure of the building. Two men were killed and five seriously injured
when a portion of the erected steel collapsed. Various personal injury claims
had been asserted against the Company, and others, as a result of the accident
(the "Personal Injury Cases"). As of December 31, 1996, the Company's insurance
carriers have settled all of the claims against the Company in the Personal
Injury Cases in which the Company was a defendant without the Company incurring
any additional cost.

     An investigation of the November 3, 1993 accident was conducted by the
Federal Occupational Safety and Health Administration (OSHA) and the Justice
Department as required by OSHA law. OSHA has cited the Company for safety
violations and has assessed $147,000 in civil penalties. In an order dated April
28, 1995, an administrative law judge dismissed OSHA's case assessing civil
penalties. OSHA's appeal of this decision is pending before the Occupational
Safety and Health Review Commission.


<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     As a result of the OSHA/Justice Department investigation, on August 23,
1996, the Company was served with an indictment issued by a grand jury for the
United States District Court for the Northern District of Illinois. The
indictment alleges that the Company is guilty of two misdemeanors for violations
of the Occupational Safety Health Act (and regulations promulgated thereunder)
concerning the erection of structural steel members around the time of the
November 3, 1993 accident and that such violations caused the deaths of the two
men killed in the accident. The Department of Justice has reported that the
maximum criminal fines and penalties which can be assessed, if the Company is
convicted of both misdemeanors, is $1.0 million.

     On September 17, 1996 the Company entered a plea of not guilty to the
alleged misdemeanors and demanded a jury trial at which it intends to vigorously
defend itself against the allegations. The Company believes that it has
significant and meritorious defenses to the alleged misdemeanors.

     If the Company is convicted of the alleged misdemeanors, management
believes that the resulting fines, penalties and costs of defense, which would
be uninsured, would not be material to the Company's financial condition,
although they could be material to the Company's reported results of operations
for the period in which such payments are incurred. As a result of the Justice
Department's actions, other claims, or proceedings may be instituted against the
Company. While the Company has no reason to believe that any such claim, action
or proceeding will be instituted against it, the Company cannot predict the
likelihood of such a claim, action or proceeding being instituted against it,
and cannot assess the availability of any insurance coverage or the possibility
or materiality of an adverse result in the event of any such claim, action or
proceeding in advance of a claim, action or proceeding being instituted.

     On June 20, 1996 the Company was served with a subpoena to appear and
produce documents before a grand jury of the United States District Court for
the Western District of Wisconsin in connection with the United States
Department of Justice Antitrust Division's investigation of bid rigging and
other criminal violations in the steel bridge fabrication industry. The Company
has been informed that it is not the target of the investigation at present but
that it and other companies in the steel bridge fabrication industry are the
subjects of the investigation.

     The Company has no reason to believe that it will become a target of the
investigation or that a criminal action will be instituted against it in these
matters. If the Company became a target or a criminal investigation were
instituted, the Company believes that it would have significant and meritorious
defenses to any such charges and would vigorously defend against them.

     Management believes that the ultimate outcome of any matter currently
pending against the Company will not materially affect the financial position of
the Company although they could be material to the reported results of
operations for the period in which they occur.

SUBSEQUENT EVENTS
On January 31, 1997, the Company acquired General Steel Corporation, a steel
service center located in Vancouver, Washington. This acquisition will expand
the Company's Steel Service Center Division, headquartered in Stockton,
California, into the Pacific Northwest.

     On February 17, 1997, the Company announced plans for its wholly-owned
subsidiary, PDM Strocal, Inc. to begin construction of a new structural steel
fabricating facility in the southwestern part of the United States. The new
facility will expand the capabilities of PDM Strocal (located in Stockton,
California), and is expected to be operational in the third quarter of 1997. At
the same time, the Company also announced the decision to close its structural
steel fabricating facility in Melrose Park, Illinois, redeploying some employees
and equipment to the new plant as well as to existing bridge fabricating plants
in Wisconsin. The cost associated with this shutdown will be reflected in the
1997 first quarter financial statements.

     On March 10, 1997, the Company acquired Candraft Detailing, Inc., an
engineering drafting company serving the steel building and bridge fabrication
industry, located in Vancouver, British Columbia. This acquisition is expected
to enhance the drafting capabilities of the Steel Construction business segment.

BUSINESS SEGMENT INFORMATION
For business segment information for years ended December 31, 1996, 1995 and
1994, see Business Segment Information in Consolidated Financial Statements 
section in the 1996 Annual Report to Stockholders.


<PAGE>
 
REPORT OF INDEPENDENT AUDITORS AND MANAGEMENT



REPORT OF INDEPENDENT AUDITORS
STOCKHOLDERS AND BOARD OF DIRECTORS
PITT-DES MOINES
We have audited the accompanying consolidated statements of financial condition
of Pitt-Des Moines, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. 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
Pitt-Des Moines, Inc. and subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.


/s/ Ernst & Young LLP


Pittsburgh, Pennsylvania
March 4, 1997



REPORT OF MANAGEMENT
The management of Pitt-Des Moines, Inc. and its subsidiaries is responsible for
preparing the financial statements and for ensuring that other information
included in this annual report is consistent therewith. Estimates and judgments
are necessary ingredients in the preparation of the financial statements.
Management is considerate of these estimates and judgments and believes that the
financial statements and other financial information included herein have been
prepared, in all material respects, in conformity with accounting principles
that are generally accepted, appropriate in the circumstances and consistently
applied. The financial statements have been audited by Ernst & Young LLP,
independent auditors.

     In order to prepare the financial statements, Pitt-Des Moines, Inc.
maintains and relies upon a system of internal accounting control. This system
is designed to provide reasonable assurance that assets are safeguarded,
transactions are executed in accordance with management's authorization and
transactions are recorded properly. This system is tested and evaluated by Pitt-
Des Moines, Inc.'s internal auditors. Ernst & Young LLP evaluates the system of
internal accounting control to determine the extent and timing of the procedures
they deem necessary to express an opinion on the financial statements, taken as
a whole.

     Oversight of the audit process is provided by the Audit Committee of the
Board of Directors. The Audit Committee meets with the internal auditors and the
independent auditors to discuss and review audit scope and audit findings. The
internal and independent auditors have free access to the Audit Committee;
management is not present during these discussions unless requested by the Audit
Committee. The Audit Committee also recommends to the Board of Directors the
appointment of the independent auditors.

     Management recognizes its responsibility for fostering a strong ethical
climate so that the business of Pitt-Des Moines, Inc. is conducted according to
the highest standard of corporate conduct.



/s/ Wm. W. McKee

Wm. W. McKee
President and Chief Executive Officer




/s/ R. A. Byers

R. A. Byers
Vice President Finance and Treasurer


<PAGE>
 
TWO YEAR QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)



The following is a summary of the quarterly results of operations:

<TABLE>
<CAPTION>
                                                                                                           Quarters ended 
                                                       ------------------------------------------------------------------
(Dollars in thousands, except per share amounts)                  March 31,      June 30,   September 30,     December 31,
--------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>        <C>               <C>
1996                                                                                                                    (1)
Earned revenue                                                     $115,966      $121,649        $120,795         $109,864
Gross profit from operations                                         14,931        15,678          16,686           17,179
Income before income taxes                                            5,210         5,606           5,137            4,676
Net income                                                            3,174         3,426           3,103            2,848
Net income per share                                               $   0.90      $   0.97        $   0.88         $   0.81
--------------------------------------------------------------------------------------------------------------------------
                                                                                                            
1995                                                                                                        
Earned revenue                                                     $119,242      $113,468        $123,186         $105,378
Gross profit from operations                                         13,295        14,798          17,151           17,298
Income before income taxes                                            3,699         4,330           6,857            6,369
Net income                                                            2,279         2,627           4,158            3,955
Net income per share                                               $   0.65      $   0.75        $   1.19         $   1.13
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

A separate computation of earnings per share is made for each quarter presented.
The dilutive effect on earnings per share resulting from the assumed exercise of
stock options is included in each quarter in which dilution occurs. The earnings
per share computation for the year is a separate annual calculation.
Accordingly, the sum of the quarterly earnings per share amounts will not
necessarily equal the earnings per share for the year.

(1) During the fourth quarter of 1996, adjustments were recorded to increase
    contract costs which reduced net income by $0.31 per share.


<PAGE>
 
STOCKHOLDERS' REFERENCE



COMMON STOCK INFORMATION
The following table sets forth, for the periods indicated, the high and low
stock prices of the Common Stock and the dividends paid per share of Common
Stock.

<TABLE>
<CAPTION>
                                                  
                               Price range      Quarterly 
                  ------------------------      dividends
                           High        Low      per share
---------------------------------------------------------
<S>                     <C>        <C>          <C>
1996                
First Quarter           $31 1/8    $26           $.32
Second Quarter           30 1/8     27 1/4        .18
Third Quarter            29 5/8     28 1/8        .18
Fourth Quarter           28 3/8     26 7/8        .18
---------------------------------------------------------
                                                 $.86
---------------------------------------------------------
1995                              
First Quarter            24 5/8    $21            .16 1/2
Second Quarter           24 1/4     21 5/8        .16 1/2
Third Quarter            25 1/8     21 1/2        .16 1/2
Fourth Quarter           26 1/8     24            .16 1/2
---------------------------------------------------------
                                                 $.66
---------------------------------------------------------
</TABLE>

On February 28, 1997, there were 3,483,001 shares outstanding and approximately
435 stockholders of record of the Company's Common Stock.

STOCK TRADING
The Company's Common Stock is traded on the American Stock Exchange (symbol
PDM).