<PAGE>
 
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM 10-K
(Mark One)
X    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
--   EXCHANGE ACT OF 1934 (FEE REQUIRED) 

For the fiscal year ended December 31, 1997
                                 OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
--  EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


Commission file number 0-25428
                       -------
 
                           MEADOW VALLEY CORPORATION
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

          Nevada                                        88-0328443
-------------------------------------------------------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
 incorporation or organization)


4411 South 40th Street, Suite D-11, Phoenix, AZ         85040
-------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)

                                (602) 437-5400
-------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

       SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
                              

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

     Title of each class:                  Name of exchange on which registered:
Common stock, $.001 par value                 Nasdaq National Market
Common stock purchase warrants                Nasdaq National Market

 
   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes   x     No ___
                                                ---          

   Indicated by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K   x
           ---

   On February 27, 1998, the aggregate market value of the registrant's voting
stock held by non-affiliates was $14,654,878
 
   On February 27, 1998, there were 3,601,250 shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     The registrant incorporates by reference into Part III of this Report,
information contained in its definitive proxy statement disseminated in
connection with its Annual Meeting of Shareholders for the year ended December
31, 1997.

                                       1
<PAGE>
 
                                    PART I

ITEM 1.  BUSINESS

GENERAL

     The following is a summary of certain information contained in this Report
and is qualified in its entirety by the detailed information and financial
statements that appear elsewhere herein. Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout the Report and
will be further discussed from time to time in the Company's periodic reports
filed with the Commission. The forward-looking statements included in the Report
speak only as of the date hereof.

     Meadow Valley Corporation (the "Company") was incorporated in Nevada on
September 15, 1994. On October 1, 1994, the Company purchased all of the
outstanding Common Stock of Meadow Valley Contractors, Inc. ("MVC"), for $11.5
million comprised of a $10 million promissory note and $1.5 million paid by the
issuance of 500,000 restricted shares of the Company's Common Stock valued at
$3.00 per share. MVC was founded in 1980 as a heavy construction contractor and
has been engaged in that activity since inception. References to the Company's
history include the history of MVC.

     Operating through MVC, the Company is a heavy construction contractor
specializing in structural concrete construction of highway bridges and
overpasses and the paving of highways and airport runways. The Company generally
serves as the prime contractor for public sector customers (such as federal,
state and local governmental authorities) in the states of Nevada, Arizona, Utah
and New Mexico. The Company believes that specializing in structural concrete
construction has contributed significantly to its revenue growth and provides it
with an advantage in the competitive bidding process. However, such
specialization limits the types and sizes of projects upon which the Company
bids and may be a competitive disadvantage for projects in which the amount of
work proposed to be completed by the prime contractor (as compared to the amount
of work which will be subcontracted by the prime contractor) is a consideration
in the bidding process. The Company primarily seeks public sector customers
because public sector projects are less cyclical than private sector projects,
payment is more reliable, work required by the project is generally standardized
and little marketing expense is incurred in obtaining projects.

     The Company had a project backlog of approximately $214 million at December
31, 1997, which included a $91.8 million reconstruction of the core of the
interchange at I-15 and US 95 in Las Vegas, NV, portions of a $39 million
sitework for a new terminal at McCarran International Airport in Las Vegas, NV,
portions of the $36 million Squaw Peak Pkwy Shea-Thunderbird Freeway
Continuation in Phoenix, AZ, and portions of a $55 million Pima Freeway
Continuation, in Phoenix, AZ. The Company's backlog includes approximately $124
million of work that is scheduled for completion during 1998. The Company has
acted as the prime contractor on projects funded by a number of governmental
authorities, including the Federal Highway Administration, the Arizona
Department of Transportation, the Nevada Department of Transportation, the Utah
Department of Transportation, the Clark County (Nevada) Department of Public
Works, the Salt Lake City (Utah) Airport Authority, the New Mexico Department of
Transportation and the City of Phoenix.

     On October 16, 1995, the Company sold 1,675,000 Units of its securities to
the public at $6.00 per Unit (the "Public Offering"). Each Unit consisted of one
share of $.001 par value common stock and one common stock purchase warrant. In
November 1995, the Company sold an additional 251,250 Units pursuant to its
underwriters' overallotment option.

     In 1996, the Company acquired certain assets of AKR Contracting ("AKR"), an
unaffiliated Company in Phoenix, Arizona. AKR specializes in earthwork, grading
and paving of residential subdivisions, commercial centers and has become
increasingly involved in small publicly funded projects in Arizona and New
Mexico. Through AKR, the Company entered into operating leases for a portable
hot mix asphalt plant and related paving equipment and a rubberized asphalt
plant. The asphalt paving capabilities provide the Company the opportunity to
expand its existing geographic market. The Company believes increased
competitiveness and revenues will be generated on projects that call for large
quantities of asphaltic concrete, recycled asphalt or rubberized asphalt.

                                       2
<PAGE>
 
     In 1996, the Company formed Ready Mix, Inc. ("RMI") as a wholly-owned
subsidiary.  RMI manufactures and distributes ready mix concrete in Las Vegas,
NV, and targets markets such as concrete subcontractors, prime contractors, home
builders, commercial and industrial property developers, pool builders and
homeowners.  RMI began operations from its first location in March 1997.
Financed with internal funds, a $2 million line of credit, notes payable and
operating leases, the Company intends for RMI to operate from two sites using at
least 40 mixer trucks.

     In 1996, the Company formed Prestressed Products Incorporated ("PPI") as a
wholly-owned subsidiary.  PPI designs, manufactures and erects precast
prestressed concrete building components for use on commercial, institutional
and public construction projects throughout the Southwest.  Product lines
include architectural and structural building components and prestressed bridge
girders for highway construction.  During 1997, PPI began operations with a
precast yard and concrete batch plant located on leased property adjacent to the
Company's office in Moapa, Nevada.

     During 1997, financed through internal funds and operating leases, the
Company obtained equipment and experienced personnel to enter the concrete or
"white" paving market.  By performing white paving work, the Company may be able
to increase its project revenue and earnings, reduce reliance on white paving
subcontractors and improve the likelihood of being awarded projects in which the
amount of work proposed to be completed on a project by the prime contractor is
a consideration in the competitive bidding process.

BUSINESS STRATEGY

  The Company seeks to generate revenue growth and profitability by pursuing the
following business strategy:

  (i) Expand Construction-related Niche Markets.  The Company will continue to
explore  niche markets which may increase the Company's competitiveness,
diversify its revenue base, increase project revenue and improve profitability.

  (ii) Solidify Market Position. The Company intends to continue to expand its
operations in Nevada, Arizona, Utah and New Mexico and consider expansion into
other western states.

  (iii) Seek to Acquire Other Businesses. The Company will seek to acquire other
businesses that  provide subcontracting services used by the Company in its
projects, complement the Company's existing construction expertise or offer
construction services similar to the Company in other geographic markets.  In
certain circumstances, the Company may join with one or more companies
combining expertise, financial strength, and/or  bonding capacity.  Through a
joint  venture, the Company may be able to pursue projects which might otherwise
exceed its staffing or bonding resources, including design-build type projects
currently contemplated by governmental entities within the Company's existing
market area.

  (iv) Increase Bonding Capacity. The Company retained  a portion of the
proceeds of its Public Offering to  increase its bonding capacity in order to
bid upon more and larger projects.  The Company intends to retain a portion of
future earnings to further increase its bonding capacity.  See "Insurance and
Bonding."

MARKET OVERVIEW

  The Company believes that infrastructure construction (primarily highways,
bridges, overpasses, tunnels and other transportation projects) in the western
United States is substantial and will generate continued federal, state and
local government expenditures.  In 1997 the U.S. Congress began debate for
renewal of the Intermodal Surface Transportation Efficiency Act of 1991
("ISTEA").  Unable to reach a final agreement before the close of the
legislative session, Congress simply extended the existing law through April 30,
1998.  Absent action from Congress, states would be prohibited from obligating
federal funds after May 1, 1998.  However, the U.S. Senate has now begun debate
on S. 1173 - the Intermodal Surface Transportation Efficiency Act of 1997 or
("ISTEA II").  There is support for an increase in the amounts to be authorized
under this new act which is expected to provide the bulk of infrastructure
funding through 2003.  The Company believes that Congress will pass ISTEA II, or
some form thereof, with an increase over previous obligations in order to meet
the growing infrastructure needs of the nation's transportation system. In 
March, 1998, the U.S. Senate adopted an agreement that will boost federal
highway spending by $25.8 billion from $145 billion to approximately $171
billion. Most of the funding increase will be spread over the final years

                                       3
<PAGE>
 
of ISTEA II, providing for a federal highway program funded at an annual average
of approximately $29 billion during the years 1999-2003. The collection of
federal gas taxes and other user fees has historically exceeded the amounts
reinvested into transportation by the government, thereby allowing the "surplus"
in the Highway Trust Fund to minimize the overall budget deficit. The actual
projected income to the Highway Trust Fund is closer to $31 billion per year as
opposed to the expenditure of approximately $21 billion per year, therefore,
there is room to increase spending and still remain within the income stream of
the trust fund.

        The growth of the Company's market has been exceptional. The states of
Arizona, Nevada and Utah continue to lead the nation in key growth statistics.
In particular, the three metropolitan areas of Phoenix, Salt Lake City and Las
Vegas are leading growth markets. Nevada led the nation in population growth,
with Arizona in second place and Utah was third (tied with Georgia). Nevada, on
a percentage basis, was also the leader in employment growth. Maricopa County,
Arizona and Clark County, Nevada were #3 and #6, respectively, in actual number
of jobs created in 1997. This growth has led to high levels of residential and
commercial construction and to increased infrastructure work. It is expected
that highway and street spending in the Company's market will increase
approximately 7% over 1997.

        The State Departments of Transportation, counties and municipalities,
along with metropolitan planning organizations, are primarily responsible for
programming capital improvements in streets, highways, freeways and airports.
Most of these organizations are expecting increased spending over 1997 levels.
The precise amounts will be greatly affected by the final outcome of ISTEA II.
In addition to federal funds administered through the states, there are other
funding mechanisms in place to increase infrastructure investment. Maricopa
County, Arizona and Clark County, Nevada continue to collect a half-cent sales
tax for the specific purpose of constructing multi-billion dollar freeway
transportation facilities. Both programs will continue to receive funds through
2015. The airports in Phoenix, Las Vegas and Salt Lake City also have
significant capital improvement programs, in excess of $1 billion each. In Salt
Lake City, another design-build contract is being discussed to build the new
Legacy Freeway valued at approximately $400 million. Depending upon resolution
of alignment and environmental issues, this project could go out for proposal
during 1998 or 1999.

        The Company's two newest subsidiaries, RMI and PPI, are affected most by
the amount of new residential and commercial construction in the Las Vegas area.
Forecasts for 1998 predict that the residential and commercial construction in
the Las Vegas area will be somewhat less than 1997's record levels. Large hotel
and casino projects built during 1996 and 1997 will not likely repeat in 1998
and will account for the largest drop-off. RMI's primary customers have been
residential builders and that market segment is expected to remain strong;
however, we expect stiffer competition from those companies previously supplying
the major projects. PPI's market appears to have sufficient activity to fill
production capacity.

        The Company believes that the overall health of its existing markets
will present many opportunities for improved performance.

OPERATIONS
 
        In addition to the construction of highways, bridges, overpasses and
airport runways, the Company constructs other heavy civil projects. From its
Phoenix, Arizona corporate office and area offices in Moapa, Nevada, Salt Lake
City, Utah and New Mexico, the Company markets (primarily by responding to
solicitations for competitive bids) and manages all of its projects. Project
management is also located on-site to provide direct supervision to the
operations.

        In addition to profitability, the Company considers a number of factors
when determining whether to bid on a project, including the location of the
project, likely competitors and the Company's current and projected workloads.
The Company uses a computer-based project estimating system which reflects its
bidding and construction experience and which the Company believes best
identifies a project's risks and opportunities. The Company develops
comprehensive estimates with each project divided into phases and line items for
which separate labor, equipment, material, subcontractor and overhead cost
estimates are compiled. Once a project begins, the estimate provides the Company
with a budget against which ongoing project costs are measured. There can be no
assurance that every project will attain its budgeted costs. A number of factors
can affect a project's profitability including weather, availability of a
quality workforce and actual productivity rates. Each month the project manager
updates the job's projected performance at completion by using actual costs-to-
date and re-forecasted costs-to-complete for the

                                       4
<PAGE>
 
balance of the work remaining. Regular review of the estimated costs to complete
permit project, area and corporate management to be as responsive as possible to
cost overruns or other problems that may affect profitability.

        The Company owns some of the equipment used in its business lines,
including cranes, backhoes, scrapers, graders, loaders, trucks, trailers,
pavers, rollers and batch plants and related equipment. The net book value of
the Company's equipment at December 31, 1997 was approximately $9.1 million. The
increase is due primarily to the additional equipment needed for the added
construction workload and for the subsidiaries, RMI and PPI, which commenced
operations during the year. The Company leases a significant portion of its
equipment and attempts to keep the equipment as fully utilized as possible and
may rent equipment on a short-term basis to other contractors.

        The Company's corporate management oversees operational and strategic
issues and, through the corporate accounting staff, provides administrative
support services to area managers, subsidiary presidents and individual project
management at the project site. The latter are responsible for planning,
scheduling and budgeting operations, equipment maintenance and utilization and
customer satisfaction. Subsidiary presidents, area managers and project managers
monitor project costs on a daily and weekly basis while corporate management
monitors such costs monthly.

        Raw materials (primarily concrete, aggregate and steel) used in the
Company's operations are available from a number of sources. There are a
sufficient number of materials suppliers within the Company's market areas to
assure the Company of adequate competitive bids for supplying such raw
materials. Generally, the Company will obtain several bids from competing
concrete, asphalt or aggregate suppliers whose reserves of such materials will
normally extend beyond the expected completion date of the project. Costs for
raw materials vary depending upon project duration, construction season, or
other factors; but, generally, prices quoted to the Company for raw materials
are fixed for the project's duration. Increased construction activity in the
western United States has created temporary scarcity of key construction
materials, primarily cement powder. It is foreseeable that shortages of cement
supply might reoccur which could result in unexpected and uncontrollable
reductions in sales of ready mix concrete from RMI, the Company's ready mix
concrete subsidiary. The Company strives to obtain supply commitments from a
number of suppliers, but their supply capacity is occasionally exceeded by spot
demands. The Company has not yet been impacted by any cement shortages on its
construction projects, as it normally obtains guaranteed commitments for supply
of cement powder for the duration of the contracts and any damages incurred by
lack of supply could be assessed back to the supplier.

PROJECTS AND CUSTOMERS

        The Company specializes in public sector construction projects and its
principal customers are the state departments of transportation in Nevada,
Arizona, Utah and New Mexico and bureaus and departments of municipal and county
governments in those states. For the year ended December 31, 1997, revenue
generated from six projects in Nevada, Arizona and Utah represented 56% of the
Company's revenue. The discontinuance of any projects, a general economic
downturn or a reduction in the number of projects let out for bid in any of the
states in which the Company operates, could have an adverse effect on the
Company's results of operations. In each of the three years ended December 31,
1995,1996 and 1997 Clark County General Services and the Arizona Department of
Transportation each accounted for over 10% of the Company's consolidated
revenue. Additionally, the Utah Department of Transportation accounted for over
10% of the Company's consolidated revenue during the year ended December 31,
1997.

  The following table describes all projects substantially completed by the
Company in each of the three years ended December 31, 1995, 1996 and 1997.
Contract amounts include agreed upon change orders, if any, and represent the
total dollar value of the contract to the Company.
<TABLE>
<CAPTION>
                                                                               CONTRACT       COMPLETION
CUSTOMER                     PROJECT DESIGNATION            LOCATION            AMOUNT           DATE
---------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C>
City of Phoenix             Grand Canal                     Phoenix, AZ          $    43,845  January 1995
</TABLE> 
                                       5
<PAGE>
 
<TABLE> 
<CAPTION>  
                                                                                CONTRACT      COMPLETION
CUSTOMER                     PROJECT DESIGNATION            LOCATION             AMOUNT          DATE
---------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C>  
Arizona Department
    of Transportation        Squaw Peak Parkway             Phoenix, AZ         $ 25,733,328           May 1995

Arizona Department
    of Transportation        Casa Grande Highway            Phoenix, AZ           27,052,138           May 1995

Clark County Nevada
    General Services         Flamingo Winnick               Las Vegas, NV          2,687,309           May 1995

Clark County Nevada
    General Services         Airport North Portal           Las Vegas, NV         15,068,853           May 1995

Arizona Department
    of Transportation        Red Mountain Freeway           Phoenix, AZ           12,684,836           May 1995

Salt Lake City, Utah
    Airport Authority        40/th/ Street Relocation       Salt Lake City, UT     2,293,088           May 1995

Clark County Nevada
    General Services         Van Buskirk                    Las Vegas, NV          3,175,206           May 1995

Continental Insurance        Gila River                     Phoenix, AZ            3,594,017           May 1995

City of Mesquite, Nevada     Mesquite                       Mesquite, NV             316,244           October 1995

Lincoln County, Nevada       Panaca, NV                     Panaca, NV               243,903           October 1995

Colorado River
    Commission               River Mountain                 Las Vegas, NV          1,300,901           November 1995

City of Mesquite, Nevada     Summer Ridge                   Mesquite, NV              63,323           December 1995

City of Mesquite, Nevada     Hillside Storm Drain           Mesquite, NV             162,103           December 1995

City of Henderson,
   Nevada                    C-1 Channel                    Henderson, NV          1,086,497           October 1995

Arizona Department
    of Transportation        Highway at Heber               Heber, AZ              5,535,662           April 1996

Arizona Department
    of Transportation        I-17 Widening                  Phoenix, AZ            8,832,295           October 1996

DG Fenn                      Baptist Retirement             Phoenix, AZ               78,468           October 1996

Salt Lake City Airport
    Authority                South Cargo                    Salt Lake City, UT     1,517,428           October 1996

Intermountain
    Roadbuilders             Davis Monthan - Streets        Tucson, AZ               344,418           April 1996

Town of Youngtown            Youngtown Streets              Youngtown, AZ             77,423           February 1996

</TABLE> 
                                       6
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                CONTRACT      COMPLETION
CUSTOMER                     PROJECT DESIGNATION            LOCATION              AMOUNT        DATE
---------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C> 
Arizona Department
    of Transportation        Pima Freeway                   Phoenix, AZ         $   7,546,838          May 1996

Salt Lake City                                              Salt Lake
    Airport Authority        Salt Lake City Airport         City, UT               27,364,636          January 1996

Clark County Nevada
    General Services         South Beltway                  Las Vegas, NV          16,175,964          January 1996

Arizona Department
    of Transportation        Dunlap                         Phoenix, AZ             8,198,181          January 1996

VFL Technology
    Corporation              Chevron Cell Construction      Salt Lake City, UT      1,362,974          June 1996

Arizona Department
    of Transportation        Chandler Boulevard             Phoenix, AZ             2,209,435          May 1996

Utah Department of
    Transportation           Snow Canyon                    Southern, UT            4,138,290          January 1996

Arizona Department
    of Transportation        Navajo Papermill Road          Phoenix, AZ               641,061          January 1996

Intermountain
    Roadbuilders             Intermountain Roadbuilders     Phoenix, AZ               264,845          January 1996

Arizona Department
    of Transportation        Goodyear Urban                 Goodyear, AZ              463,665          August 1996

Crescent Run LLP             Crescent Run                   Mesa, AZ                  262,261          April 1996

Wespac                       Lost Canyon II                 Scottsdale, AZ            152,778          October 1996

City of Winslow              City of Winslow                Winslow, AZ             1,402,868          September 1996
Clark County Dept.
    of Aviation              Searchlight                    Searchlight, NV           707,977          January 1996

Arizona Department
    of Transportation        Nogales Connection             Nogales, AZ            11,327,515          October 1996

Clark County Dept.
    of Aviation              Jean Airport                   Jean, NV                3,897,065          March 1997

Clark County Dept.
    of Aviation              McCarran Garage Infrastructure Las Vegas, NV           6,203,284          November 1997

Intermountain
    Roadbuilders             Davis Monthan  - Taxiway       Tucson, AZ                162,677          March 1997

City of Henderson            Equestrian Detention           Henderson, NV           5,436,067          March 1997
</TABLE> 
         
                                       7
<PAGE>
 
<TABLE> 
<CAPTION>  
                                                                                CONTRACT      COMPLETION
CUSTOMER                     PROJECT DESIGNATION            LOCATION              AMOUNT         DATE
---------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C> 
Homes by Dave
    Brown                   Country Estates                 Gilbert, AZ           $   215,770           July 1997

Chanen                      Midwestern University II        Glendale, AZ             230,579           January 1997

Moapa Water District        Moapa Water District            Moapa, NV                903,919           January 1997

City of Phoenix             Collector Street Overlay        Phoenix, AZ            1,820,288           January 1997

Triton Builders             AT&T Expansion                  Mesa, AZ                 246,080           January 1997

City of Phoenix             Skunk Creek Landfill            Phoenix, AZ            2,845,955           January 1997

City of Las Vegas           Detention Facility              Las Vegas, NV            430,700           February 1997

Robert Ewing                Lone Butte 3 & 4                Maricopa County          201,979           February 1997

Frehner Construction        Precast                         Las Vegas, NV             89,924           January 1997

City of Gilbert             Municipal Parking Expansion     Gilbert, AZ              154,492           January 1997

Kay Rogers/ADA
    Construction            Legacy II                       Phoenix, AZ              194,023           August 1997

United States Dept.
    of Agriculture           Tonto Forest                   Arizona                   99,515           July 1997

Mayo Clinic/Ryan
    Cos.                     Mayo Arrowhead                 Glendale, AZ             155,165           October 1997

Robert Ewing                 Lone Butte Industrial          Maricopa County          225,000           February 1997

Nevada Department
    of Transportation        Eastern State Highway System   Las Vegas, NV          2,260,492           October 1997

City of Bisbee               Bisbee Municipal Airport       Bisbee, AZ               295,712           January 1997

Clark County General
     Services                CCPW Bridge Repair             Las Vegas, NV             42,214           December 1997
</TABLE>

  The following table describes all projects of the Company in progress as of
December 31, 1997.  Current contract amounts include agreed upon change orders,
if any, and represent the dollar value of the contract to the Company.
<TABLE>
<CAPTION>
                                                                                  CURRENT       AWARD DATE/
                                                                                 CONTRACT       ESTIMATED
CUSTOMER                     PROJECT DESIGNATION            LOCATION              AMOUNT      COMPLETION DATE
--------------------------------------------------------------------------------------------------------------
<S>                           <C>                            <C>                <C>           <C>
Clark County, Nevada          McCarran Airport Parking                                                 January 1995/
   General Services           Garage                         Las Vegas, NV      $ 60,290,797           March 1998
 
Clark County Department                                                                                August 1995/
    of Public Works           LV Beltway                     Las Vegas, NV        29,169,402           March 1998

</TABLE> 
                                       8
<PAGE>
 
<TABLE> 
<CAPTION>  
                                                                                 CURRENT       AWARD DATE/
                                                                                CONTRACT        ESTIMATED
CUSTOMER                     PROJECT DESIGNATION            LOCATION             AMOUNT       COMPLETION DATE
--------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C> 
Arizona Department of        Phoenix - Casa Grande (Joint                                              November 1995/
    Transportation             Venture)                     Phoenix, AZ         $  20,930,123          March 1998

Clark County Department                                                                                March 1996/
    of Aviation              Runway Extension               Las Vegas, NV          11,142,129          March 1998

Clark County Department                                                                                June 1996/
    of Aviation              Ticketing Facility             Las Vegas, NV           8,282,903          March 1998

Clark County Department                                                                                June 1996/
    of Aviation              Union Pacific R.R.Relocation   Las Vegas, NV           2,019,620          March 1998

Clark County Department                                                                                August 1996/
    of Aviation              Terminal D Sitework            Las Vegas, NV          39,444,911          April 1998

Dept. of United States                                                                                 June 1996/
    Army                     White Sands Missile Range      New Mexico              1,956,670          July 1999

Dept. of Transportation                                                                                July 1996/
    Hwy. Administration      Wiggins Crossing               Arizona                   794,611          March 1998

Clark County Department                                                                                October 1996/
    of Aviation              McCarran Air Cargo Expansion   Las Vegas, NV           2,543,872          March 1998

New Mexico Department                                                                                  August 1996/
    of Transportation        I-25/Socorro                   New Mexico              3,319,865          June 1998

Arizona Department of        Squaw Peak Shea-TBird                                                     October 1996/
    Transportation           Continuation                   Phoenix, AZ            36,494,376          February 1999

United States Forest                                        Roosevelt Lake,                            October 1996/
    Service                  School House Campground         AZ                     4,774,604          April 1998
                                                                                                       October 1996/
Jackson Properties            Country Meadows                Maricopa County          929,815          February 1998

Utah Department of                                                                                     October 1996/
    Transportation            I-15/Woods Crossing            Salt Lake, UT         17,205,605          June 1998

United States Marine                                                                                   October 1996/
    Corp.                     Yuma Taxiway Repair            Yuma, AZ                 705,793          March 1998

Arizona Department of                                                                                  November 1996/
    Transportation            Douglas Rodeo Highway          Douglas, AZ            1,435,326          March 1998

                                                                                                       December 1996/
City of Mesa                  City of Mesa Sealcoat          Mesa, AZ                  84,013          March 1998

Arizona Department of                                                                                  February 1997/
     Transportation           Payson Show-Low                Payson, AZ             3,764,594          March 1998
</TABLE> 

                                       9
<PAGE>
<TABLE> 
<CAPTION>  
                                                                                 CURRENT       AWARD DATE/
                                                                                CONTRACT        ESTIMATED
CUSTOMER                     PROJECT DESIGNATION            LOCATION              AMOUNT      COMPLETION DATE
--------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C> 
Clark County General                                                                                   March 1997/
     Services                Sloan Channel                  Las Vegas, NV       $ 1,296,493            March 1998

Nevada Department of                                                                                   April 1997/
     Transportation          NDOT Bike Path                 Las Vegas, NV         1,654,113            March 1998

Clark County General                                                                                   May 1997/
     Services                Channel Repair                 Las Vegas, NV           198,882            May 1998

Clark County General                                                                                   August 1997/
     Services                Russell Road                   Las Vegas, NV         4,742,339            March 1998

Arizona Department of                                                                                  April 1997/
     Transportation          White River                    Arizona                 673,213            March 1998

                                                                                                       October 1997/
City of Phoenix              City of Phoenix Overlay II     Phoenix, AZ            2,207,621           February 1998

Arizona Department of                                       Coconino County,                           June 1997/
     Transportation          Blueridge-Forest                 AZ                   2,247,621           March 1998

Fann                                                        Coconino County,                           September 1997/
     Construction            Clint's Well                     AZ                     685,266           March 1998

Clark County General                                                                                   September 1997/
     Services                McCarran Mobil Home Park       Las Vegas, NV          7,680,542           April 1998

Arizona Department of                                                                                  June 1997/
    Transportation           Pima Freeway                   Phoenix, AZ           55,104,378           September 1999

Utah Department of                                          Salt Lake City,                            August 1997/
     Transportation          Bangerter Highway                UT                  17,887,071           January 1999

Dept. of United States                                                                                 August 1997/
    Army                     White Sands MissileRange       New Mexico             2,000,000           August 1999

Salt Lake City Airport                                      Salt Lake City,                            August 1997/
     Authority               Utah Taxiway                     UT                   9,000,204           June 1998

Arizona Department of                                                                                  August 1997/
     Transportation          Ashfork Devildog               Williams, AZ           3,612,303           August 1998

Maricopa County Dept.                                       Maricopa County,                           September 1997/
     of Parks & Recreation   Lake Pleasant                    AZ                   1,628,582           March 1998

                                                                                                       September 1997/
Victory Valley Land          Lake Mead                      Henderson, NV          2,767,886           February 1998

                                                                                                       September 1997/
City of Showlow              City of Showlow                Showlow, AZ            2,389,478           October 1998
</TABLE> 

                                      10

<PAGE>
 
<TABLE> 
<CAPTION>  
                                                                                  CURRENT       AWARD DATE/
                                                                                  CONTRACT       ESTIMATED
CUSTOMER                     PROJECT DESIGNATION            LOCATION              AMOUNT      COMPLETION DATE
--------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                 <C>           <C> 
New Mexico Department                                       Donna Ana County,                          December 1997/
     of Transportation       I-15/Hatch                       NM                $  3,914,175           August 1998

New Mexico Department                                                                                  December 1997/
     of Transportation       NM Ruidoso                     Ruidoso, NM            8,399,870           November 1998

Arizona Department of                                       Coconino County,                           December 1997/
     Transportation          SR87-Blueridge                   AZ                   2,249,619           July 1998

Nevada Department of                                                                                   December 1997/
     Transportation          Spaghetti Bowl                 Las Vegas, NV         91,813,884           November 2000
</TABLE>
                                        
BACKLOG

     The Company's backlog (anticipated revenue from the uncompleted portions of
awarded projects) was approximately $214 million at December 31, 1997, compared
to approximately $130 million at December 31, 1996. At December 31, 1997, the
Company's backlog included approximately $124 million of work that is scheduled
for completion during 1998. The Company includes a construction project in its
backlog at such time as a contract is awarded or a firm letter of commitment is
obtained. The Company believes that its backlog figures are firm, subject to
provisions contained in its contracts which allow customers to modify or cancel
the contracts at any time upon payment of a relatively small cancellation fee.
The Company has not been materially adversely affected by contract cancellations
or modifications in the past. A portion of the Company's anticipated revenue in
any year is not reflected in its backlog at the start of the year because some
projects are initiated and completed in the same year.

COMPETITION

     The Company believes that the primary competitive factors as a prime
contractor in the construction industry are price, reputation for quality work,
financial strength, knowledge of local market conditions and estimating
abilities. The Company believes that it competes favorably with respect to each
of the foregoing factors. Most of the Company's projects involve public sector
work for which contractors are first pre-qualified to bid and then are chosen by
a competitive bidding process, primarily on the basis of price. Because the
Company's bids are often determined by the cost to it of subcontractor services
and materials, the Company believes it is often able to lower its overall
construction bids due to its prompt payments to, consistent workloads for, and
good relationships with its subcontractors and suppliers. The Company competes
with a large number of small owner/operator contractors that tend to dominate
smaller (under $4 million) projects. When bidding on larger infrastructure
projects, the Company also competes with larger, well capitalized regional and
national contractors (including Granite Construction Incorporated, Peter Kiewit
Sons', Inc. and Sundt Corp., Inc.), many of whom have larger net worths, bonding
capacities and construction personnel than the Company. Due to currently
favorable market conditions in Nevada, Arizona, Utah and New Mexico, which have
resulted in an increase in heavy construction projects in these states,
additional competition for projects may be expected. Such additional competition
could reduce the Company's profit margins on certain projects.

     The Company has received single project bond approval up to $100 million
and aggregate program bonds totaling up to $240 million. Larger competitors have
unlimited bonding capacity and, therefore, may be able to bid on more work than
the Company. Except for bonding capacity, the Company does not believe it is at
a competitive disadvantage in relation to its larger competitors. With respect
to its smaller competitors, the Company believes that its larger bonding
capacity, longer relationships with subcontractors and suppliers and the
perceived stability of having been in business since 1980 may be competitive
advantages.

     The Company does not believe that the competitive environment is materially
different in other western states in which

                                       11
<PAGE>
 
the Company may expand. Initially, the Company will be at a competitive
disadvantage in new markets until it obtains information on those markets and
develops relationships with local subcontractors.

THE CONTRACT PROCESS

     The Company's projects are obtained primarily through competitive bidding
and negotiations in response to advertisements by federal, state and local
government agencies and solicitations by private parties. The Company submits
bids after a detailed review of the project specifications, an internal review
of the Company's capabilities and equipment availability and an assessment of
whether the project is likely to attain targeted profit margins. The Company
owns, leases, or is readily able to rent, any equipment necessary to complete
the projects upon which it bids. After computing estimated costs of the project
to be bid, the Company adds its desired profit margin before submitting its bid.
The Company believes that success in the competitive bidding process involves
(i) being selective on projects bid upon in order to conserve resources, (ii)
identifying projects which require the Company's specific expertise, (iii)
becoming familiar with all aspects of the project to avoid costly bidding errors
and (iv) analyzing the local market to determine the availability and cost of
labor and the degree of competition. Since 1987, the Company has been awarded
contracts for approximately 18% of the projects upon which it has bid. A
substantial portion of the Company's revenue is derived from projects that
involve ''fixed unit price'' contracts under which the Company is committed to
provide materials or services at fixed unit prices (such as dollars per cubic
yard of earth or concrete, or linear feet of pipe). The unit price is determined
by a number of factors including haul distance between the construction site and
the warehouses or supply facilities of local material suppliers and to or from
disposal sites, site characteristics and the type of equipment to be used. While
the fixed unit price contract generally shifts the risk of estimating the
quantity of units for a particular project to the customer, any increase in the
Company's unit cost over its unit bid price, whether due to inefficiency, faulty
estimates, weather, inflation or other factors, must be borne by the Company.

     Most government contracts provide for termination of the contract at the
election of the customer. In such event the Company is generally entitled to
receive a small cancellation fee in addition to reimbursement for all costs it
incurred on the project. Many of the Company's contracts are subject to
completion requirements with liquidated damages assessed against the Company if
schedules are not met. The Company has not been materially adversely affected by
these provisions in the past.

     Contracts often involve work periods in excess of one year. Revenue on
uncompleted fixed price contracts is recorded under the percentage of completion
method of accounting. The Company begins to recognize revenue on its contracts
when it first accrues direct costs. Pursuant to construction industry practice,
a portion of billings, generally not exceeding 10%, may be retained by the
customer until the project is completed and all obligations of the contractor
are paid. The Company has not been subject to a loss in connection with any such
retention.

     The Company acts as prime contractor on most of its construction projects
and subcontracts certain jobs such as electrical, mechanical and some white
paving work to others. As prime contractor, the Company bills the customer for
work performed and pays the subcontractors from funds received from the
customer. Occasionally the Company provides its services as a subcontractor to
another prime contractor. As a subcontractor, the Company will generally receive
the same or similar profit margin as it would as a prime contractor, although
revenue to the Company will be smaller because the Company only contracts a part
of the project. As prime contractor, the Company is responsible for the
performance of the entire contract, including work assigned to subcontractors.
Accordingly, the Company is subject to liability associated with the failure of
subcontractors to perform as required under the contract. The Company
occasionally requires its subcontractors to furnish bonds guaranteeing their
performance, although affirmative action regulations require the Company to use
its best efforts to hire minority subcontractors for a portion of the project
and some of these subcontractors may not be able to obtain surety bonds. On
average, the Company has required performance bonds for less than 10% of the
dollar amount of its subcontracted work. However, the Company is generally aware
of the skill levels and financial condition of its subcontractors through its
direct inquiry of the subcontractors and contract partners of the
subcontractors, as well as its review of financial information provided by the
subcontractors and third party reporting services including credit reporting
agencies and bonding companies. The Company has experienced subcontractor
related losses of less than .5 of 1% of total revenue over the last five fiscal
years including a loss of .8 of 1% of total revenue for the year ended December
31, 1993. As the Company expands into new geographic areas, it expects to obtain
references and examine the financial condition of prospective subcontractors
before entering into contracts
                                       12
<PAGE>
 
with them, requiring bonding as deemed appropriate.
 
     In connection with public sector contracts, the Company is required to
provide various types of surety bonds guaranteeing its own performance. The
Company's ability to obtain surety bonds depends upon its net worth, working
capital, past performance, management expertise and other factors. Surety
companies consider such factors in light of the amount of the Company's surety
bonds then outstanding and the surety companies' current underwriting standards,
which may change from time to time. See ''Insurance and Bonding''.

INSURANCE AND BONDING

     The Company maintains general liability and excess liability insurance
covering its owned and leased construction equipment and workers' compensation
insurance in amounts it believes are consistent with its risks of loss and in
compliance with specific insurance coverages required by its customers as a part
of the bidding process. The Company carries liability insurance of $17 million
per occurrence, which management believes is adequate for its current operations
and consistent with the requirements of projects currently under construction by
the Company.

     The Company is required to provide a surety bond on most of its projects.
The Company's ability to obtain bonding, and the amount of bonding required, is
primarily determined by the Company's management experience, net worth, liquid
working capital (consisting of cash and accounts receivable in excess of
accounts payable and accrued liabilities), the Company's performance history and
the number and size of projects under construction. The larger the project
and/or the more projects in which the Company is engaged, the greater the
Company's bonding, net worth and liquid working capital requirements. Bonding
requirements vary depending upon the nature of the project to be performed. The
Company generally pays a fee to bonding companies of 1/2% to 1% of the amount of
the contract to be performed. Because these fees are generally payable at the
beginning of a project, the Company must maintain sufficient working capital to
satisfy the fee prior to receiving revenue from the project. The Company has 
received single project bonding approval up to $100 million and aggregate
program bonds totaling up to $250 million.

MARKETING

     The Company obtains its projects primarily through the process of
competitive bidding. Accordingly, the Company's marketing efforts are limited to
subscribing to bid reporting services and monitoring trade journals and other
industry sources for bid solicitations by various government authorities. In
response to a bid request, the Company submits a proposal detailing its
qualifications, the services to be provided and the cost of the services to the
soliciting entity which then, based on its evaluation of the proposals
submitted, awards the contract to the successful bidder. Generally, the contract
for a project is awarded to the lowest bidder, although other factors may be
taken into consideration such as the bidder's track record for compliance with
bid specifications and procedures and its construction experience.

     In the precast and ready mix market, which the Company pursues through its
PPI and RMI subsidiaries, a more focused effort is required. Certification of
plants and facilities must be obtained and maintained in order to comply with
certain project requirements. Membership and participation in selected industry
associations help to increase the Company's exposure to potential clients and
are two means by which the Company stays informed as to industry developments
and future prospects within the marketplace. Customer care and service are
important marketing tools for PPI and RMI which focus much more on private
owners than public works. Building and maintaining customer relations and
reputation for quality work are essential elements to the marketing efforts of
these businesses.

GOVERNMENT REGULATION

     The Company's operations are subject to compliance with regulatory
requirements of federal, state and municipal authorities, including regulations
covering labor relations, safety standards, affirmative action and the
protection of the environment including requirements in connection with water
discharge, air emissions and hazardous and toxic substance discharge. Under the
Federal Clean Air Act and Clean Water Act, the Company must apply water or
chemicals to reduce dust

                                      13
<PAGE>
 
on road construction projects and to contain water contaminants in run-off water
at construction sites. The Company may also be required to hire subcontractors
to dispose of hazardous wastes encountered on a project. The Company believes
that it is in substantial compliance with all applicable laws and regulations.
However, amendments to current laws or regulations imposing more stringent
requirements could have a material adverse effect on the Company.

EMPLOYEES

     On December 31, 1997, the Company employed approximately 97 salaried
employees (including its management personnel and executive officers) and
approximately 443 hourly employees. The number of hourly employees varies
depending upon the amount of construction in progress. For the year ended
December 31, 1997, the number of hourly employees ranged from approximately 173
to approximately 443 and averaged approximately 322. At December 31, 1997, the
Company's employees did not belong to a labor union and the Company believes its
relations with its employees are satisfactory.

ITEM 2.  PROPERTIES

     The following properties were leased by the Company at December 31, 1997:
          (1)  6,200 square feet of executive office space at 4411 South 40th
               Street, Suites D-10 and D-11, Phoenix, Arizona, 85040, expires in
               December 2000, at a monthly rental rate of $5,219 per month.
          (2)  1,800 square feet of office space at 1598 North 400 West, Suite
               C, Layton, Utah 84041, which expires in February 1998, at a
               monthly rental rate of $1,050 per month.
          (3)  2,000 square feet of office space for the Company's ready mix
               operations, at 3430 E. Flamingo , Suite 100, Las Vegas, Nevada,
               on a month-to-month basis, at a rental rate of $2,400 .
          (4)  2,000 square feet of office space at 1501 Highway 168, Moapa,
               Nevada 89025, on a month-to-month basis, at a rental rate of $800
               per month, from a Company controlled by a principal stockholder.
               The Company believes that its rental rates are fair, reasonable
               and consistent with rates charged by unaffiliated third parties
               in the same market area.
          (5)  17,500 square feet of property at 1501 Highway 168, Moapa, Nevada
               89025, on a month-to-month basis, at a rental rate of $2,500 per
               month, from a Company controlled by a principal stockholder. The
               Company uses the property for its manufacturing of prestressed
               concrete products. The Company believes that its rental rates are
               fair, reasonable and consistent with rates charged by
               unaffiliated third parties in the same market area.

     The Company owns approximately five acres of land at 109 W. Delhi, North
Las Vegas, NV 89030, which is used for the manufacturing of ready mix concrete.

     The Company owns approximately 24.5 acres of property in Moapa, Nevada,
which is currently being readied for its intended use.

     The Company has determined that the above properties are suitable and 
adequate for their intended use.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is a party to legal proceedings in the ordinary course of its
business. The Company believes that the nature of these proceedings (which
generally relate to disputes between the Company and its subcontractors,
material suppliers or customers regarding payment for work performed or
materials supplied) are typical for a construction firm of its size and scope,
and that none of these proceedings are material to its financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1997.

                                      14
<PAGE>
 
                                 PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's Common Stock has been listed on the Nasdaq National Market
since October 1995 and is traded under the symbol "MVCO". The following table
represents the high and low closing prices for the Company's common stock on the
Nasdaq National Market.

<TABLE>
<CAPTION>
                      1995           1996             1997
-----------------------------------------------------------------
                  HIGH   LOW    HIGH    LOW      HIGH     LOW
                -------------------------------------------------
<S>               <C>   <C>     <C>     <C>     <C>      <C>
First Quarter...                6 5/8       5   5  5/8   3 9/16
Second Quarter..                6 5/8       5   5  7/8   3 1/2
Third Quarter...                7 3/8   4 7/8   6  1/4   5 5/16
Fourth Quarter..     7  5 1/8   5 1/2   3 5/8   6 9/16   5 1/2
</TABLE>


HOLDERS OF RECORD

  As of February 27, 1998 there were more than 900 record and beneficial owners
of the Company's Common Stock.

 
ITEM 6.     SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>                                     
                                                                                                                 
YEARS ENDED DECEMBER 31,                                     PROFORMA                                           
------------------------------------------                 COMBINED (1)                                         
                                                1993           1994           1995           1996           1997 
                                          ---------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>           <C>             <C>
Income Statement Data:
Revenues..................................  $ 60,474,750   $ 80,220,521   $ 90,048,523  $ 133,723,645   $ 149,979,395
Gross Profit..............................     3,461,503      5,472,878      4,354,455      2,810,585       7,434,944
Income (loss) from Operations.............      (230,934)     4,704,425      2,364,676       (331,525)      1,867,958
Interest Expense..........................         3,727        500,000      1,116,464        611,828         624,048
Income (loss) before income taxes (2).....        60,501      4,565,398      1,608,997       (106,863)      1,930,986
Net income (loss).........................        37,511      2,824,776      1,059,347        (85,228)      1,211,615
Basic net income (loss) per common share..         $0.02          $0.84          $0.65         $(0.02)          $0.34
Diluted net income (loss) per common
 share....................................         $0.02          $0.84          $0.65          $(.02)          $0.33
 
Basic weighted average shares 
 outstanding (3)..........................     1,675,000      3,350,000      1,641,663      3,601,250       3,601,250
Diluted weighted average shares 
 outstanding..............................     1,675,000      3,350,000      1,641,663      3,601,250       3,651,360
 
Financial Position Data:                            1993           1994           1995           1996            1997
                                          ---------------------------------------------------------------------------
Working capital (deficiency)..............   $ 5,617,286   $ (3,348,451)  $ 11,319,107  $   8,738,820   $   6,847,137
Total assets..............................    19,664,666     22,375,168     28,909,786     42,121,334      49,063,197
Long-term debt............................             -              -      3,689,055      4,631,377       5,847,659
Stockholders' equity (deficit)............     6,809,481       (232,770)    11,761,997     11,676,769      12,888,384
</TABLE>

                                       15
<PAGE>
 
(1)  Effective October 1, 1994, the Company acquired all the outstanding shares
     of Meadow Valley Contractors, Inc. ("MVC") in a transaction accounted for
     by the purchase method of accounting whereby the basis of certain assets
     was revalued for accounting purposes. To arrive at this proforma
     presentation, the MVC financial statements for the 1994 period prior to
     October 1, 1994 have been combined with the Company's financial statements
     for the period ending December 31, 1994. See Note 2 to the Company's
     Consolidated Financial Statements.

(2)  Includes the effect of proforma income tax adjustments reflecting
     additional income taxes that would have been reported had MVC been subject
     to federal and state income taxes for the periods presented through
     September 30, 1994.   Prior to October 1, 1994, MVC was a S Corporation
     and, therefore, did not pay income taxes.

(3)  The average shares outstanding and net income (loss) per share are computed
     upon the number of shares of the Company's Common Stock outstanding as of
     December 31, 1994, including the assumed issuance of 500,000 shares of
     restricted Common Stock in the MVC acquisition, which were issued during
     October 1995.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

     The following is a summary of certain information contained in this Report
and is qualified in its entirety by the detailed information and financial
statements that appear elsewhere herein. Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout the Report and
will be further discussed from time to time in the Company's periodic reports
filed with the Commission. The forward-looking statements included in the Report
speak only as of the date hereof.

     The Company was incorporated in Nevada on September 15, 1994. On October 1,
1994, the Company purchased all of the outstanding Common Stock of Meadow Valley
Contractors, Inc. ("MVC"), for $11.5 million comprised of a $10 million
promissory note and $1.5 million paid by the issuance of 500,000 restricted
shares of the Company's Common Stock valued at $3.00 per share. MVC was founded
in 1980 as a heavy construction contractor and has been engaged in that activity
since inception. References to the Company's history include the history of MVC.

     The Company is a heavy construction contractor specializing since 1980 in
structural concrete construction of highway bridges and overpasses and the
paving of highways and airport runways. The Company generally serves as the
prime contractor for public sector customers (such as federal, state and local
governmental authorities) in the states of Nevada, Arizona, Utah and New Mexico.
The Company believes that specializing in structural concrete construction has
contributed significantly to its revenue growth and provides it with an
advantage in the competitive bidding process. However, such specialization
limits the types and sizes of projects upon which the Company bids and may be a
competitive disadvantage for projects in which the amount of work proposed to be
completed by the prime contractor (as compared to the amount of work which will
be subcontracted by the prime contractor) is a consideration in the bidding
process. The Company primarily seeks public sector customers because public
sector projects are less cyclical than private sector projects, payment is more
reliable, work required by the project is generally standardized and little
marketing expense is incurred in obtaining projects.

     In 1996, the Company acquired certain assets of AKR Contracting ("AKR"), an
unaffiliated Company in Phoenix, Arizona. AKR specializes in earthwork, grading
and paving of residential subdivisions, commercial centers and has become
increasingly involved in small publicly funded projects in Arizona and New
Mexico. Through AKR, the Company entered into operating leases for a portable
hot mix asphalt plant and related paving equipment and a rubberized asphalt
plant. The asphalt paving capabilities provide the Company the opportunity to
expand its existing geographic market. The Company believes increased
competitiveness and revenues will be generated on projects that call for large
quantities of asphaltic concrete, recycled asphalt or rubberized asphalt.

                                       16
<PAGE>
 
     In 1996, the Company formed Ready Mix, Inc. ("RMI") as a wholly-owned
subsidiary. RMI manufactures and distributes ready-mix concrete in Las Vegas,
NV, and targets markets such as concrete subcontractors, prime contractors, home
builders, commercial and industrial property developers, pool builders and
homeowners. RMI began operations from its first location in March 1997. Financed
with internal funds, a $2 million line of credit, notes payable and operating
leases, the Company intends for RMI to operate from two sites using at least 40
mixer trucks.

     In 1996, the Company formed Prestressed Products Incorporated ("PPI") as a
wholly-owned subsidiary. PPI designs, manufactures and erects precast
prestressed concrete building components for use on commercial, institutional
and public construction projects throughout the Southwest. Product lines include
architectural and structural building components and prestressed bridge girders
for highway construction. During 1997, PPI began operations with a precast yard
and concrete batch plant located on leased property adjacent to the Company's
office in Moapa, Nevada.

     During 1997, financed through internal funds and operating leases, the
Company obtained equipment and experienced personnel to enter the concrete or
"white" paving market. By performing white paving work, the Company may be able
to increase its project revenue and earnings, reduce reliance on white paving
subcontractors and improve the likelihood of being awarded projects in which the
amount of work proposed to be completed on a project by the prime contractor is
a consideration in the competitive bidding process.

     The Company has historically relied upon a small number of projects to
generate a significant portion of its revenue. For instance, revenue generated
from six projects represented 56% of the Company's revenue for the year ended
December 31, 1997. Results for any one calender quarter may fluctuate widely
depending upon the stage of completion of the Company's active projects.

RESULTS OF OPERATIONS

     The following table sets forth statement of operations data expressed as a
percentage of revenues for the periods indicated:

<TABLE>
<CAPTION>
                                        YEARS ENDED DECEMBER 31,
                                      --------------------------- 
                                         1995     1996     1997
                                         ----     ----     ----
<S>                                     <C>      <C>      <C>
Revenues..............................  100.00%  100.00%  100.00%
Cost of contract revenues.............   95.16    97.90    95.04
Gross profit..........................    4.84     2.10     4.96
General and administrative expenses...    2.21     2.35     3.71
Income (loss) from operations.........    2.63     (.25)    1.25
Interest income.......................     .52      .56      .44
Interest expense......................   (1.24)    (.46)    (.42)
Other income..........................     .07      .07      .01
Prior offering costs..................    (.19)       -        -
Income (loss) before income taxes.....    1.79     (.08)    1.29
Net income (loss) after income taxes..    1.18     (.06)     .81
</TABLE>


YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31,  1996

     Revenue and Backlog. Revenue increased 12% to $150.0 million for the year
ended December 31, 1997, from $133.7 million for the year ended December 31,
1996. The increase results primarily from a $12.0 million increase in revenue
generated from construction materials production and manufacturing sold to non-
affiliates.

                                      17
<PAGE>
 
     Gross Profit. As a percentage of revenue, gross profit increased from 2.10%
in 1996 to 4.96% in 1997. The increase results primarily from an increase in
MVCI and RMI combined gross profit margins from 2.10% in 1996 to 5.38% in 1997
or an increase of 156%, offset by a gross loss of 11.5% related to the precast
operations of PPI. The gross loss related to the precast operations of PPI were
he result of (i) sales, marketing, estimating, administrative and organizational
costs preliminary to revenue generation (ii) staffing and training production 
crews and related loss of productivity (iii) non-compensable differences between
preliminary (pre-bid) and final designs of PPI (iv) a compressed completion 
schedule creating extraordinary increases in the number of personnel, compounded
by poor productivity of inexperienced crews requiring an inordinate amount of 
overtime. Gross profit margins can be affected by construction delays and
difficulties due to weather conditions, availability of materials, the timing of
work performed by other subcontractors and the physical and geological condition
of the construction site.

     General and Administrative Expenses. General and administrative expenses
increased from $3,142,110 for 1996 to $5,566,986 for 1997. The increase results,
in part, from the costs associated with the Company's wholly-owned ready-mix
concrete and precast/prestressed products subsidiaries, the Company's continued
expansion in the Utah market and expansion into the white paving market. The
additional costs associated with the Company's wholly-owned ready-mix concrete
and precast/prestressed products subsidiaries and the continued expansion in the
Utah market and expansion into the white paving market amounted to approximately
$1,684,000. The remainder of the increase was $365,948 in corporate labor and a 
variety of costs including costs in excess of $79,000 related to enhancements in
the safety plan, $75,000 related to non-recurring consulting studies and $53,000
related to corporate travel.

     Interest Income and Expense. Interest income decreased in 1997 to $666,397
from $741,270 due to a decrease in cash reserves resulting primarily from the
expansion into the production and manufacturing of construction materials and
the purchase of equipment. Interest expense increased slightly in 1997 to
$624,048 from $611,828, due primarily to financing certain of the property and
equipment additions.

     Net Income (Loss) After Income Taxes. Net income after taxes for 1997 was
$1,211,615 compared to a net loss after income taxes for 1996 of $(85,228). The
increase primarily resulted from the increase in revenue and gross profit margin
offset, in part, by higher general and administrative expenses as discussed
above.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

     Revenue and Backlog. Revenue increased 48.5% to $133.7 million for the year
ended December 31, 1996, from $90.0 million for the year December 31, 1995. The
increase results primarily from a $30.0 million increase in backlog at December
31, 1995 over the prior year and the award of approximately $100 million of
projects during the first nine months of 1996, compared to approximately $58
million during the same period in 1995. In addition, the Company's expansion
into earthwork, grading and paving of residential subdivisions, commercial
centers and in small public works, through the acquisition of certain assets of
AKR, contributed approximately $11.2 million to the Company's overall revenue
growth. Revenue is impacted in any one period by the backlog at that beginning
of that period.

     Gross Profit. As a percentage of revenue, gross profit decreased from 4.84%
in 1995 to 2.10% in 1996. The decrease results primarily from cost overruns
attributable to (i) omission of costs from bid estimates (ii) difficulty in
assembling an adequate skilled labor force due to physical location of a
construction site (iii) erroneous assumptions at bid time regarding the
Company's construction productivity (iv) cost related plan or specification
errors and (v) inadequate field and corporate supervision, offset by a 2.2%
increase in gross profit margins due to the settlement of a claim which is
related to a project completed during 1995. Gross profit margins can be affected
by construction delays and difficulties due to weather conditions, availability
of materials, the timing of work performed by other subcontractors and the
physical and geological condition of the construction site.

     General and Administrative Expenses. General and administrative expenses
increased from $1,989,779 for 1995 to $3,142,110 for 1996. The increase results,
in part, from the start-up costs associated with the Company's development stage
subsidiaries, the Company's expansion in the Utah market and, through AKR,
expansion into earthwork, grading and paving of residential subdivisions,
commercial centers and small publicly funded projects. The additional costs
associated with the development stage companies, expansion in the Utah market
and AKR amounted to $719,572, consisting primarily of salaries and office set up
costs. In addition to the start-up costs, the Company sustained increased
general and administrative expenses due to the 48.5% growth in revenue.Interest
Income and Expense. Interest income increased in 1996 to $741,270 from $470,150

                                       18
<PAGE>
 
due to invested proceeds from the Public Offering and increased funds held in
retention. Interest expense decreased in 1996 to $611,828 due to the November
1995 repayment of $6.5 million of loans issued in connection with the
acquisition of Meadow Valley Contractors, Inc.

     Net Income (Loss) After Income Taxes. Net loss after income taxes for 1996
was $(85,228) compared to net income of $1,059,347 for 1995. The decrease
resulted primarily from the lower gross profit and higher general and
administrative expenses discussed above.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary need for capital has been to finance growth in its
core business as a heavy construction contractor and its expansion into the
other construction and construction related businesses heretofore discussed.
Annual revenue has grown from approximately $90.0 million in 1995 to $150.0
million in 1997. Growth has resulted in the need for additional capital to
finance increased receivables, retentions and capital expenditures, and to
address fluctuations in the work-in-process billing cycle.

     The following table sets forth, for the periods presented, certain items
from the Statements of Cash Flows of the Company. 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                         -----------------------------------------
                                                             1995           1996          1997
                                                             ----           ----          ---- 
<S>                                                      <C>            <C>            <C>
Cash Provided By (Used in) Operating Activities........   $(1,789,928)   $(3,085,632)   5,967,880
Cash Used in Investing Activities......................      (527,120)      (584,470)  (2,816,474)
Cash Provided By (Used in) Financing Activities........     2,935,528       (247,283)  (1,738,860)
</TABLE>

     Although the Company may experience increased profitability as operations
increase, cash may be reduced to finance receivables and for customer cash
retention required under contracts subject to completion. Management continually
monitors the Company's cash requirements to maintain adequate cash reserves, and
the Company believes that its cash balances were and, together with the
operating lines of credit described below, are sufficient.

     Cash used in operating activities during 1995amounted to $1.8 million,
primarily the result of an increase in accounts receivable and net costs in
excess of billings of $5.5 million, offset by net income of $1.0 million, 
depreciation and amortization of $.4 million and an increase in accounts
payable $2.2 million.

     Cash used in operating activities during 1996 amounted to $3.1 million,
primarily the result of an increase in accounts receivable and prepaid expenses
of $14.1 million, offset by an increase in accounts payable of $8.6 million
along with an increase in net billings in excess of costs of $1.6 million and 
depreciation and amortization of $.8 million.

     Cash provided by operating activities during 1997 amounted to $6.0 million,
primarily the result of net income of $1.2 million, depreciation and
amortization of $1.4 million, a decrease in accounts receivable of $.7 million,
an increase in net billings in excess of costs $2.3 million and a $.4 million
decrease in deferred income tax payable.

     Cash used in investing activities during 1995 included the purchase of
property and equipment of $1.4 million offset by a decrease in restricted cash
of $.3 million and repayment of $.6 million of loans to related parties.

     Cash used in investing activities during 1996 amounted to $.6 million,
primarily the result of the purchase of property and equipment of $1.9 million
offset by a decrease in restricted cash of $1.2 million and proceeds from the
sale of property and equipment of $.1 million. The decrease in restricted cash
during 1995 and 1996 is a result of the partial release of funds held in escrow
accounts pending the completion of three large volume projects.

     Cash used in investing activities during 1997 amounted to $2.8 million
related primarily to equipment purchases.

                                      19
<PAGE>
 
     Cash provided by financing activities during 1995 amounted to approximately
$3.0 million and included proceeds from the initial public offering of the
Company's securities in the amount of $9.5 million, net of offering costs,
offset by repayment of $6.5 million of loans from a related party issued in
connection with the MVC acquisition. Cash used in financing activities during
1996 included lease payments of $.1 million and equipment loan payments of $.1
million, a total of approximately $.2 million. Cash used in financing activities
during 1997 amounted to $1.7 million including $.5 million repayment of a loan
from a related party and $.5 million prepayment of a loan from a related party
and repayments of notes payable and capital lease obligations in the amount of
$.7 million.

     The Company currently has available from a commercial bank a $2,000,000
operating line of credit at an interest rate of the commercial bank's prime plus
 .50%, and a $2,000,000 operating line of credit at an interest rate of the
commercial bank's prime plus .25% ("lines of credit"). At December 31, 1997, and
as of the filing date of this report, nothing had been drawn on either of the
lines of credit. Under the lines of credit, the Company is required to maintain
certain levels of working capital, to promptly pay all its obligations and is
precluded from conveying, selling or leasing all or substantially all of its
assets. At December 31, 1997, the Company was in full compliance with all such
covenants and there are no material covenants or restrictions in the lines of
credit which the Company believes would impair its operations. The lines of
credit expire September 15, 1998.

     The Company anticipates that a substantial portion of the costs associated
with a planned second ready-mix plant and related equipment will be financed
through bank financing and operating leases. In addition, the Company is
currently leasing approximately 40 ready-mix trucks with estimated annual lease
payments of $800,000.

     Management believes that the Company's cash reserves, together with its
lines of credit and its capacity to enter into other financing arrangements are
sufficient to fund its cash requirements for the next 12 months and that the
Company's working capital will be adequate to fund its short term and long term
requirements.

NEW ACCOUNTING PRONOUNCEMENTS

  Accounting for Stock-Based Compensation:
     Statements of Financial Accounting Standards No. 123, "Accounting for 
Stock-Based Compensation" ("SFAS No. 123") establishes a fair value method of
accounting for stock-based compensation plans and for transactions in which an
entity acquires goods or services from nonemployees in exchange for equity
instruments. The Company adopted this accounting standard January 1, 1996. SFAS
123 also encourages, but does not require companies to record compensation cost
for stock-based employee compensation. The Company has chosen to continue to
account for stock-based compensation utilizing the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair market price of the Company's stock
at the date of grant over the amount an employee must pay to acquire the stock.

  Earnings per Share:
     Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
("SFAS 128") issued by the FASB is effective for financial statements with
fiscal years and interim periods beginning after December 15, 1997. Early
adoption is not permitted. SFAS 128 provides for the calculation of Basic and
Diluted earnings per share. Basic earnings per share includes no dilution and is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that could share in the
earnings of an entity, similar to fully diluted earning per share. The Company
adopted this accounting standard on December 15, 1997.

  Disclosure of Information about Capital Structure:
     Statement of Financial Accounting Standard No. 129, "Disclosure of
Information about Capital Structure," ("SFAS 129") issued by the FASB is
effective for financial statements ended December 15, 1997. The new standard
reinstates various securities disclosure requirements previously in effect under
Accounting Principles Board Opinion No. 15, which has been superseded by SFAS
No. 128. The Company does not expect adoption of SFAS No. 129 to have a material
effect, if any, on its financial position or results of operations.

                                      20
<PAGE>
 
  Reporting Comprehensive Income:
     Statement of Financial Accounting Standard No. 130, "Reporting
Comprehensive Income," ("SFAS 130") issued by the FASB is effective for
financial statements with fiscal years beginning after December 15, 1997.
Earlier application is permitted. SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of general-
purpose financial statements. The Company does not expect adoption of SFAS 130
to have a material effect, if any, on its financial position or results of
operations.

  Disclosures about Segments of an Enterprise and Related Information:
     Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," ("SFAS 131") issued by the
FASB is effective for financial statements with fiscal years beginning after
December 15, 1997. Earlier application is permitted. SFAS 131 requires that
public companies report certain information about operating segments, products,
services and geographical areas in which they operate and their major customers.
The Company does not expect adoption of SFAS 131 to have a material effect, if
any, on its financial position or results of operations.

IMPACT OF INFLATION

     The Company believes that inflation has not had a material impact on its
operations. However, substantial increases in labor costs, worker compensation
rates and employee benefits, equipment costs, material or subcontractor costs
could adversely affect the operations of the Company for future periods.

YEAR 2000

     The Company's accounting software currently does not utilize a four digit
year field; however, the Company has been assured by the software manufacturer
that all necessary modifications for the year 2000 have been or will be made and
tested timely.

KNOWN AND ANTICIPATED FUTURE TRENDS AND CONTINGENCIES

     Subject to the Company's profitability and increases in retained earnings,
it is anticipated that the bonding limits will increase proportionately, thereby
allowing the Company to bid on and perform more and larger projects.

     The Company believes that government of all levels will continue to be the
primary source of funding for infrastructure work. The reauthorization of the
ISTEA bill is essential to the well-being of the industry and the Company. "See 
Market Overview".

     The competitive bidding process will continue to be the dominant method for
determining contract award. However, other innovative bidding methods will be
tried and may gain favor, namely "A Plus B" contracts, where the bidders'
proposals are selected on both price and scheduling criteria. Design-build
projects are becoming more common and are likely to increase in frequency.
Design-build projects also tend to be of more worth to the owner when the
contract size is substantial, usually $50 million or more.

     In light of the rising needs for infrastructure work throughout the nation
and the tendency of the current needs to out-pace the supply of funds, it is
anticipated that alternative funding sources will continue to be sought. Funding
for infrastructure development in the United States is coming from a growing
variety of innovative sources. An increase of funding measures is being
undertaken by various levels of government to help solve traffic congestion and
related air quality problems. Sales taxes, fuel taxes, user fees in a variety of
forms, vehicle license taxes, private toll roads and quasi-public toll roads are
examples of how transportation funding is evolving. Transportation norms are
being challenged by federally mandated air quality standards. Improving traffic
movement, eliminating congestion, increasing public transit, adding or
designating high occupancy vehicle (HOV) lanes to encourage car pooling and
other solutions are being considered in order to help meet EPA-imposed air
quality standards.

                                      21
<PAGE>
 
SEASONALITY
     The construction industry is seasonal, generally due to inclement weather
occurring in the winter months. Accordingly, the Company may experience a
seasonal pattern in its operating results with lower revenue in the first and
fourth quarters of each calendar year than other quarters. Quarterly results may
also be affected by the timing of bid solicitations by governmental authorities,
the stage of completion of major projects and revenue recognition policies.
Results for any one quarter, therefore, may not be indicative of results for
other quarters or for the year.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's Consolidated Financial Statements are indexed on page F-1.
    
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     Not Applicable

 


                                 PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information on directors and executive officers of the Company will be
included under the caption "Directors and Executive Officers" of the Company's
definitive Proxy Statement relating to the Annual Meeting of Shareholders for
the year ended December 31, 1997, which is hereby incorporated by reference.

ITEM 11.  EXECUTIVE COMPENSATION
 
     Information on executive compensation will be included under the caption
"Compensation of Executive Officers" of the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders for the year ended December 31,
1997, which is hereby incorporated by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information on beneficial ownership of the Company's voting securities by
each director and all officers and directors as a group, and by any person known
to beneficially own more than 5% of any class of voting security of the Company
will be included under the caption "Beneficial Ownership of the Company's
Securities" of the Company's definitive Proxy Statement relating to the Annual
Meeting of the Shareholders for the year ended December 31, 1997, which is
hereby incorporated by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information on certain relationships and related transactions including
information with respect to management indebtedness will be included under the
caption "Information Regarding Indebtedness of Management to the Company" of the
Company's definitive Proxy Statement relating to the Annual Meeting of
Shareholders for the year ended December 31, 1997, which is hereby incorporated
by reference.

                                      22
<PAGE>
 
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

  (a)(1)  Financial Statements
              See Item 8 of Part II hereof.

 
  (a)(2)  Financial Statement Schedules
              The schedules specified under Regulation S-X are either not
              applicable or immaterial to the Company's consolidated financial
              statements for the years ended December 31, 1995, 1996 and 1997.

  (b)     Reports on Form 8-K
              There were no reports on Form 8-K filed during the fourth quarter
              ended December 31, 1997.

  (c)     Exhibits

<TABLE>
<CAPTION>
  EXHIBIT
   NO.                                                  TITLE
 
-----------      ---------------------------------------------------------------------------------
<S>    <C>       <C>  
 
       1.01      Form of Underwriting Agreement with Spelman & Co., Inc. (1)

       1.02      Form of Selected Dealer Agreement (1)

       1.03      Form of Representatives' Warrant (1)

       1.04      Consulting Agreement with the Representative (1)

       1.05      Form of Amended Underwriting Agreement (Spelman & Co., Inc.) (1)

       1.06      Form of Amended Representatives' Warrant (Spelman & Co., Inc.)(1)

       1.07      Form of Underwriting Agreement (H D Brous & Co., Inc.)(1)

       1.08      Form of Selected Dealer Agreement (H D Brous & Co., Inc.)(1)

       1.09      Form of Representatives' Unit Warrant (H D Brous & Co., Inc.)(1)

       1.10      Warrant Agreement (1)

       1.11      Agreement Among Underwriters (1)

       1.12      Form of Underwriting Agreement (H D Brous & Co., Inc. and Neidiger/Tucker/Bruner,
                 Inc.)(1)

       1.13      Form of Agreement Among Underwriters (H D Brous & Co., Inc. and
                 Neidiger/Tucker/Bruner, Inc.)(1)

       1.14      Form of Selected Dealer Agreement (H D Brous & Co., Inc. and
                 Neidiger/Tucker/Bruner, Inc.)(1)

       1.15      Form of Representatives'  Warrant Agreement, including Form of
                 Representatives'Warrant (H D Brous & Co., Inc. and Neidiger/Tucker/Bruner, Inc.)(1)

       3.01      Articles of Incorporation and Amendments thereto of the Registrant (1)

       3.02      Bylaws of the Registrant (1)

       3.03      Bylaws of the Registrant Effective October 20, 1995

       5.01      Opinion of Gary A. Agron, regarding legality of the Common Stock (includes
                 Consent)(1)

       5.02      Opinion of Gary A. Agron, regarding legality of the Units, Common Stock and
                 Warrants (1)

      10.01      Incentive Stock Option Plan (1)

</TABLE> 
                                       23
<PAGE>
 
<TABLE> 
<CAPTION> 
 
  EXHIBIT
   NO.                                                  TITLE
<S>   <C>        <C> 
-----------      ------------------------------------------------------------------------------------
      10.02      Office lease of the Registrant (1)

      10.03      Office lease of the Registrant (1)

      10.04      Contract between the State of Arizona and the Registrant dated October 22, 1993 (1)

      10.05      Surety Bond between the Registrant and St. Paul Fire & Marine Insurance Company (1)

      10.06      Surety Bond between the Registrant and United States Fidelity and Guaranty
                 Company (1)

      10.07      Contract between Clark County, Nevada and the Registrant dated October 6, 1992 (1)

      10.08      Surety Bond between the Registrant and St. Paul Fire and Marine Insurance
                 Company (1)

      10.09      Agreement between Salt Lake City Corporation and the Registrant dated
                 May 5, 1993 (1)

      10.10      Contract between Clark County, Nevada and the Registrant dated July 21, 1993 (1)

      10.11      Contract between Clark County, Nevada and the Registrant dated August 17, 1993 (1)

      10.12      Promissory Note executed by Robert C. Lewis and Richard C. Lewis (1)

      10.13      Promissory Note executed by Moapa Developers, Inc. (1)

      10.14      Promissory Note executed by Paul R. Lewis (1)

      10.15      Contract between Clark County, Nevada and the Registrant dated September 7, 1993 (1)

      10.16      Agreement between Salt Lake City Corporation and the Registrant dated February 11,
                 1994 (1)

      10.17      Contract between Northwest/Cheyenne Joint Venture and the Registrant dated March
                 16, 1994 (1)

      10.18      Contract between Clark County, Nevada and the Registrant dated April 5, 1994 (1)

      10.19      Statutory Payment Bond dated September 8, 1994 (1)

      10.20      Employment Agreement with Mr. Lewis (1)

      10.21      Employment Agreement with Mr. Black (1)

      10.22      Employment Agreement with Mr. Terril (1)

      10.23      Employment Agreement with Mr. Nelson (1)

      10.24      Employment Agreement with Ms. Danley (1)

      10.25      Employment Agreement with Mr. Jessop (1)

      10.26      Employment Agreement with Mr. Larson (1)

      10.27      Stock Purchase Agreement (1)

      10.28      Form of Lockup Letter (1)

      10.29      Revolving Credit Loan Agreement (1)

      10.30      Contract Award Notification - Arizona Department of Transportation (1)

      10.31      Contract Award Notification - McCarran International Airport (1)

      10.32      Contract Award Notification - City of Henderson (1)

      10.33      Contract between Registrant and Arizona Department of Transportation (1)

      10.34      Contract between Registrant and Arizona Department of Transportation (1)

      10.35      Office Lease of the Registrant (1)
</TABLE> 

                                       24
<PAGE>
<TABLE> 
<CAPTION> 
 
  EXHIBIT
    NO.                                                 TITLE
<S>   <C>        <C>  
-----------      ------------------------------------------------------------------------------------
      10.36      Contract between Registrant and Arizona Department of Transportation (2)

      10.37      Contract Award Notification - Clark County (2)

      10.38      Joint Venture Agreement (2)

      10.39      Employment Agreement with Mr. Grasmick (2)

      10.40      Contract between Registrant and Clark County, Nevada (2)

      10.41      Contract between Registrant and Clark County, Nevada (2)

      10.42      Contract between Registrant and Utah Department of Transportation (2)

      10.43      Contract between Registrant and Arizona Department of Transportation (2)

      10.44      Promissory Note executed by Nevada State Bank (2)

      10.45      Escrow Settlement Documents and related Promissory Note (2)

      10.46      Conveyor Sales Contract and Security Agreement (2)

      10.47      CAT Financial Installment Sale Contract (2)

      10.48      Second and Third Amendments to Office Lease of the Registrant (2)

      10.49      Lease Agreement with US Bancorp (2)

      10.50      Lease Agreement with CIT Group (2)

      10.51      CAT Financial Installment Sale Contract

      10.52      CAT Financial Installment Sale Contract

      10.53      CAT Financial Installment Sale Contract

      10.54      CAT Financial Installment Sale Contract

      10.55      CAT Financial Installment Sale Contract

      10.56      Escrow Settlement Documents

      10.57      Promissory Note executed by General Electric Capital Corporation

      10.58      Promissory Note executed by General Electric Capital Corporation

      10.59      Promissory Note executed by General Electric Capital Corporation

      10.60      Promissory Note executed by General Electric Capital Corporation

      10.61      Promissory Note executed by Nevada State Bank

      10.62      KDC Sales Contract

      10.63      Lease Agreement with CIT

      10.64      Lease Agreement with CIT

      10.65      Contract between Registrant and Utah Department of Transportation

      10.66      Contract between Registrant and Clark County, Nevada

      10.67      Contract between Registrant and New Mexico State Highway and Transportation
                 Department

      10.68      Contract between Registrant and Salt Lake City Corporation

      10.69      Contract between Registrant and Utah Department of Transportation

      10.70      Contract between Registrant and Arizona Department of Transportation

      10.71      Contract between Registrant and Nevada Department of Transportation

      10.72      Employment and Indemnification Agreements with Mr. Nelson

</TABLE> 
                                       25
<PAGE>
 
<TABLE> 
<CAPTION> 
 
  EXHIBIT
   NO.                                                  TITLE
-----------      ------------------------------------------------------------------------------------
<S>   <C>        <C>  
      10.73      Employment and Indemnification Agreements with Mr. Terril

      10.74      Employment and Indemnification Agreements with Mr. Lewis

      10.75      Employment and Indemnification Agreements with Mr. Larson

      10.76      Employment and Indemnification Agreements with Mr. Burnell

      16.01      Letter re: Change in Certifying Accountant (1)

      21.01      Subsidiaries of the Registrant (1)

      23.01      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.02      Consent of Semple & Cooper (Meadow Valley Corporation)(1)

      23.03      Consent of Gary A. Agron, Esq. (See 5.01, above.)(1)

      23.04      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.05      Consent of BDO Seidman LLP (Meadow Valley Corporation)(1)

      23.06      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.07      Consent of BDO Seidman LLP (Meadow Valley Corporation) (1)

      23.08      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.09      Consent of BDO Seidman LLP (Meadow Valley Corporation and Meadow Valley
                 Contractors, Inc.)(1)

      23.10      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.11      Consent of BDO Seidman LLP (Meadow Valley Corporation and Meadow Valley
                 Contractors, Inc.)(1)

      23.12      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.13      Consent of BDO Seidman LLP (Meadow Valley Corporation and Meadow Valley
                 Contractors, Inc.)(1)

      23.14      Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)(1)

      23.15      Consent of DO Seidman LLP (Meadow Valley Corporation and Meadow Valley
                 Contractors, Inc.)(1)

      27         Financial Data Schedule
</TABLE>
-----------------
(1)  Incorporated by reference to the Company's Registration Statement on Form
     S-1, File Number 33-87750 declared effective on October 16, 1995.

(2)  Incorporated by reference to the Company's December 31, 1996 Annual Report 
     on Form 10-K.

                                      26
<PAGE>
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized
<TABLE> 
<CAPTION> 
<S>                                                <C>

                                                   MEADOW VALLEY CORPORATION
                                                 
                                                   /s/ Bradley E. Larson
                                                   -------------------------------------
                                                   Bradley E. Larson
                                                   President and Chief Executive Officer
                                                   Date: March 13, 1998
</TABLE> 
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                                <C> 
/s/ Bradley E. Larson                              /s/ Gary W. Burnell
-----------------------------------------------    -------------------------------------
Bradley E. Larson,                                 Gary W. Burnell,
Director, President and Chief Executive Officer    Vice President, Treasurer and Chief Financial Officer
Date: March 13, 1998                               Date: March 13, 1998

 
/s/ Kenneth D. Nelson                              /s/ Paul R. Lewis 
-----------------------------------------------    -------------------------------------
Kenneth D. Nelson,                                 Paul R. Lewis,
Director, Chief Administrative Officer and         Director and Chief Operating Officer
Vice President                                     Date: March 13, 1998
Date: March 13, 1998
 
/s/ Alan A. Terril                                 /s/ Gary A. Agron
-----------------------------------------------    -------------------------------------
Alan A. Terril,                                    Gary A. Agron,
Director and Vice President - Nevada Operations    Director
Date: March 13, 1998                               Date: March 13, 1998
 
/s/ Charles E. Cowan                               /s/ Scott E. Miller
-----------------------------------------------    -------------------------------------
Charles E. Cowan,                                  Scott E. Miller,
Director                                           Director
Date: March 13, 1998                               Date: March 13, 1998
 
/s/ Julie L. Bergo
-----------------------------------------------
Julie L. Bergo,
Secretary and Principal Accounting Officer
Date: March 13, 1998
</TABLE>

                                       27
<PAGE>
 
                         INDEX TO FINANCIAL STATEMENTS


MEADOW VALLEY CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>
<S>                                                                                                <C>
Independent Certified Public Accountants' Report.................................................  F-2
Consolidated Balance Sheets at December 31, 1996 and 1997........................................  F-3
Consolidated Statements of Operations for the years ended December 31, 1995, 1996, and 1997......  F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31,
 1995, 1996 and 1997.............................................................................  F-5
 
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and  1997......  F-6
Notes to Consolidated Financial Statements.......................................................  F-8
</TABLE>
 

                                      F-1
<PAGE>
 
                INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT



To the Stockholders and Board of Directors of
Meadow Valley Corporation

We have audited the accompanying consolidated balance sheets of Meadow Valley
Corporation and Subsidiaries as of December 31, 1996 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years ended December 31, 1995, 1996 and 1997. These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted audit standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation.  We believe our audits of the consolidated
financial statements 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 Meadow
Valley Corporation and Subsidiaries as of December 31, 1996 and 1997, and the
consolidated results of their operations, and cash flows for each of the three
years ended December 31, 1995,  1996 and 1997, in conformity with generally
accepted accounting principles.



                                                                BDO Seidman, LLP



Los Angeles, California
February 19, 1998

                                      F-2

<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
 
                                                                                    DECEMBER 31,   DECEMBER 31,
Assets:                                                                                 1996           1997
                                                                                  -----------------------------
<S>                                                                                 <C>            <C>
Current Assets:
     Cash and cash equivalents (Notes 1 and 3)....................................   $ 1,440,519    $ 2,853,065
     Restricted cash (Notes 1 and 3)..............................................     1,415,577      1,719,768
     Accounts receivable, net (Notes 1, 4 and 18).................................    26,861,458     26,244,473
     Prepaid expenses and other...................................................       836,086        925,923
     Note receivable - related party (Notes 12 and 22)............................       257,575        257,575
     Note receivable - other (Note 11)............................................         1,855          2,009
     Costs and estimated earnings in excess of billings on uncompleted
        contracts (Note 5)........................................................     3,726,328      4,758,917
                                                                                  -----------------------------
               Total Current Assets...............................................    34,539,398     36,761,730
Property and equipment, net (Notes 1, 6, 9 and 12)................................     5,278,390     10,211,468
Refundable deposits...............................................................       247,740        127,737
Note receivable - other (Note 11).................................................       210,602        209,264
Goodwill, net (Note 1)............................................................     1,820,850      1,740,821
Tradename, net (Note 1)...........................................................        24,354         12,177
                                                                                  -----------------------------
                Total Assets......................................................   $42,121,334    $49,063,197
                                                                                  =============================
Liabilities and Stockholders' Equity:
Current Liabilities:
     Notes payable - related party (Notes 2 and 12)...............................   $   500,000    $   500,000
     Notes payable - other (Note 9)...............................................       266,220        818,846
     Obligations under capital leases (Note 14)...................................       254,364        405,204
     Accounts payable (Notes 7 and 12)............................................    19,629,807     19,536,421
     Accrued liabilities (Notes 8 and 12).........................................     1,777,334      1,993,182
     Billings in excess of costs and estimated earnings on uncompleted
       contracts (Note 5).........................................................     3,372,853      6,660,940
                                                                                  -----------------------------
                Total Current Liabilities.........................................    25,800,578     29,914,593
Deferred income taxes (Notes 1 and 13)............................................        12,610        412,561
Obligations under capital leases (Note 14)........................................       643,910        973,847
Note payable - related party (Notes 2 and 12).....................................     3,000,000      2,000,000
Notes payable - other (Note 9)....................................................       987,467      2,873,812
                                                                                  -----------------------------
               Total Liabilities..................................................    30,444,565     36,174,813
                                                                                  -----------------------------
Commitments and contingencies (Notes 12, 14 and 16)
Stockholders' Equity:
     Preferred stock - $.001 par value; 1,000,000 shares authorized, none issued
       and outstanding (Note 15)..................................................
     Common stock - $.001 par value; 15,000,000 shares authorized, 3,601,250
       Issued and outstanding (Notes 15 and 19)...................................         3,601          3,601
     Additional paid-in capital...................................................    10,943,569     10,943,569
     Capital adjustments (Note 2).................................................      (799,147)      (799,147)
     Retained earnings............................................................     1,528,746      2,740,361
                                                                                  -----------------------------
               Total Stockholders' Equity.........................................    11,676,769     12,888,384
                                                                                  -----------------------------
               Total Liabilities and Stockholders' Equity.........................   $42,121,334    $49,063,197
                                                                                  =============================
</TABLE>


   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                  Statements

                                      F-3
<PAGE>
 
                  MEADOW VALLEY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,      
                                                         1995            1996            1997    
                                                   ----------------------------------------------
<S>                                                  <C>            <C>             <C>          
Contract Revenues (Note 18).......................    $90,048,523    $133,723,645    $149,979,395
Cost of Contract Revenues (Note 12)...............      85,694,068     130,913,060     142,544,451
                                                   ----------------------------------------------
Gross Profit (Note 21)............................       4,354,455       2,810,585       7,434,944
General and Administrative Expenses...............      1,989,779       3,142,110       5,566,986
                                                   ----------------------------------------------
Income (loss) from Operations (Note 21)...........       2,364,676        (331,525)      1,867,958
                                                   ----------------------------------------------
Other Income (Expense):                                                                          
Interest income...................................        470,150         741,270         666,397
Interest expense (Note 12)........................     (1,116,464)       (611,828)       (624,048)
Other income......................................         63,635          95,220          20,679
Offering costs written off........................       (173,000)              -               -
                                                   ----------------------------------------------
                                                         (755,679)        224,662          63,028
                                                   ----------------------------------------------
Income (loss) before income taxes.................      1,608,997        (106,863)      1,930,986
Income tax (expense) benefit (Note 13)............       (549,650)         21,635        (719,371)
                                                   ----------------------------------------------
Net Income (loss).................................    $ 1,059,347    $   (85,228)    $  1,211,615
                                                   ==============================================
Basic Net Income (loss) per common share..........           $.65          $(.02)            $.34
                                                   ==============================================
Diluted Net income (loss) per common share........           $.65          $(.02)            $.33
                                                   ==============================================
Basic Weighted Average Common Shares Outstanding 
 (Note 20)........................................      1,641,663      3,601,250        3,601,250
                                                   ==============================================
Diluted Weighted Average Common Shares Outstanding                                                       
  (Note 20).......................................      1,641,663       3,601,250       3,651,360
                                                   ============================================== 
</TABLE>



   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements

                                      F-4
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997



<TABLE>
<CAPTION>
                                             COMMON STOCK
                                        ----------------------
                                          NUMBER OF
                                           SHARES                 PAID-IN       CAPITAL      RETAINED
                                         OUTSTANDING    VALUE     CAPITAL     ADJUSTMENT     EARNINGS
                                         -------------------------------------------------------------
<S>                                      <C>           <C>      <C>           <C>          <C>
Balance at December 31, 1994...........     1,175,000   $1,175   $    10,575   $(799,147)   $  554,627
Sale of Units to the public (Note 15)..     1,926,250    1,926     9,433,494
Issuance of common stock (Note 2)......       500,000      500     1,499,500
Net income for the year................                                                      1,059,347
                                       ---------------------------------------------------------------
Balance at December 31, 1995...........     3,601,250    3,601    10,943,569    (799,147)    1,613,974
Net loss for the year..................                                                        (85,228)
                                       ---------------------------------------------------------------
Balance at December 31, 1996...........     3,601,250    3,601    10,943,569    (799,147)    1,528,746
Net income for the year................                                                      1,211,615
                                       ---------------------------------------------------------------
Balance at December 31, 1997...........     3,601,250   $3,601   $10,943,569   $(799,147)   $2,740,361
                                       ===============================================================
</TABLE>


   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements

                                      F-5
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                               ----------------------------------------------
                                                                     1995            1996            1997
                                                               ----------------------------------------------
<S>                                                              <C>            <C>             <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
     Cash received from customers..............................  $ 84,602,809   $ 122,322,752   $ 152,899,056
     Cash paid to suppliers and employees......................   (85,317,317)   (124,394,729)   (146,785,012)
     Interest received.........................................       459,997         685,738         615,008
     Interest paid.............................................    (1,195,119)       (642,344)       (658,622)
     Income taxes paid.........................................      (340,298)     (1,057,049)       (102,550)
          Net cash provided by (used in) operating activities..    (1,789,928)     (3,085,632)      5,967,880
                                                               ----------------------------------------------
Cash flows from investing activities:
     Purchase of AKR Contracting tradename.....................             -         (36,531)              -
     Decrease (increase) in restricted cash....................       316,996       1,213,972        (304,191)
     Collection of notes receivable - related party............       600,000               -               -
     Collection of note receivable - other.....................             -             876           1,184
     Additional cost of acquisition............................      (136,058)              -               -
     Proceeds from sale of property and equipment..............        86,202         126,431         322,960
     Proceeds from sale of rental real estate..................             -          16,866               -
     Purchase of property and equipment........................    (1,175,377)     (1,906,084)     (2,836,427)
     Purchase of real estate...................................      (218,883)              -               -
          Net cash used in investing activities................      (527,120)       (584,470)     (2,816,474)
                                                               ----------------------------------------------
Cash flows from financing activities:
     Deferred offering costs...................................    (1,166,498)              -               -
     Proceeds from sale of units to public.....................    10,633,000               -               -
     Repayment of capital lease obligations....................       (30,974)       (124,333)       (319,428)
     Repayment of notes payable - other........................             -        (122,950)       (419,432)
     Repayment of note payable - related party.................    (6,500,000)              -      (1,000,000)
          Net cash provided by (used in) financing activities..     2,935,528        (247,283)     (1,738,860)
                                                               ----------------------------------------------
Net increase (decrease) in cash and cash equivalents...........       618,480      (3,917,385)      1,412,546
Cash and cash equivalents at beginning of period...............     4,739,424       5,357,904       1,440,519
Cash and cash equivalents at end of period.....................  $  5,357,904   $   1,440,519   $   2,853,065
                                                               ==============================================
</TABLE>



   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements

                                      F-6
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


 
<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED DECEMBER 31,
                                                             -------------------------------------------
                                                                   1995           1996           1997
                                                             -------------------------------------------
<S>                                                            <C>            <C>            <C>
Increase (Decrease) in Cash and Cash Equivalents
 (Continued):

Reconciliation of Net Income (Loss) to Net Cash Provided by
(used in) Operating Activities:
Net Income (loss)............................................   $ 1,059,347   $   (85,228)   $ 1,211,615
Adjustments to reconcile net income to net cash provided by
 (used in) operating activities:
     Depreciation and amortization...........................       367,015        769,173     1,356,504
     Gain on sale of property and equipment..................       (17,913)       (38,170)      (24,890)
     Gain on sale of rental real estate......................             -        (11,316)            -
     Offering costs written off..............................       173,000              -             -

Changes in Assets and Liabilities, net of acquisition of
subsidiary:
     Accounts receivable.....................................    (4,026,929)   (13,095,536)      668,374
     Prepaid expenses and other..............................        17,037       (968,247)     (187,115)
     Costs and estimated earnings in excess of billings on
       uncompleted contracts.................................    (1,647,081)    (1,005,150)   (1,032,589)
     Interest payable........................................       (78,655)       (30,516)      (34,574)
     Accounts payable........................................     2,155,191      8,644,352       (93,386)
     Accrued liabilities.....................................      (188,168)       767,429       250,422
     Billings in excess of costs and estimated earnings on
       uncompleted contracts.................................       182,574      2,654,059     3,288,087
     Interest receivable.....................................         5,302        (55,532)      (51,389)
     Income tax receivable...................................             -              -       216,870
     Income tax payable......................................       269,017       (609,315)            -
     Deferred income tax payable.............................       (59,665)       (21,635)      399,951
                                                             --------------   ------------   -----------
Net cash provided by (used in) operating activities..........   $(1,789,928)  $ (3,085,632)  $ 5,967,880
                                                             -------------------------------------------
</TABLE>

   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements

                                      F-7
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  Nature of the Corporation:
   Meadow Valley Corporation (the "Company") was organized under the laws of the
State of Nevada on September 15, 1994. The principal business purpose of the
Company is to operate as the holding Company of Meadow Valley Contractors, Inc.
(MVC), Ready Mix, Inc. (RMI) and Prestressed Products Incorporated (PPI).   MVC
is a general contractor, primarily engaged in the construction of structural
concrete highway bridges and overpasses, and the paving of highways and airport
runways in the states of Nevada, Arizona, Utah and New Mexico.  MVC was acquired
by the Company as of October 1, 1994. ( See Note 2)  RMI is a producer and
retailer of ready-mix concrete operating in the Las Vegas metropolitan area.
PPI manufactures and erects prestressed products, primarily in the Southern
Nevada area.

 Principles of Consolidation:
  The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries MVC, RMI and PPI. Intercompany
transactions and balances have been eliminated in consolidation.

 Accounting Estimates:
  The preparation of 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 assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

 Revenue and Cost Recognition:
  Revenues and costs from fixed-price and modified fixed-price construction
contracts are recognized for each contract on the percentage-of-completion
method, measured by the percentage of costs incurred to date to the estimated
total of direct costs. Direct costs include, among other things, direct labor,
field labor, equipment rent, subcontracting, direct materials, and direct
overhead.  General and administrative expenses are accounted for as period costs
and are, therefore, not included in the calculation of the estimates to complete
construction contracts in progress.  Project losses are provided in the period
in which such losses are determined, without reference to the percentage-of-
completion.  As contracts can extend over one or more accounting periods,
revisions in costs and earnings estimated during the course of the work are
reflected during the accounting period in which the facts that required such
revisions become known.

  The asset "costs and estimated earnings in excess of billings on uncompleted
contracts" represents revenue recognized in excess of amounts billed.  The
liability "billings in excess of costs and estimated earnings on uncompleted
contracts" represents billings in excess of revenues recognized.

 Restricted Cash:
  At December 31, 1996 and December 31, 1997 funds in the amount of  $1,415,577
and $1,719,768 were held in trust, in lieu of retention, on some of the
Company's construction contracts and will be released to the Company after the
contracts are completed.

 Accounts Receivable:
  Included in accounts receivable are trade receivables that represent amounts
billed but uncollected on completed construction contracts and construction
contracts  in progress.

  The Company follows the allowance method of recognizing uncollectible accounts
receivable.  The allowance method recognizes bad debt expense based on a review
of the individual accounts outstanding, and the Company's prior history of
uncollectible accounts receivable.  As of December 31, 1996,  no allowance was
established for potentially uncollectible accounts receivable because, in the
opinion of management, all accounts were considered fully collectible.  As of
December 31, 1997, $35,441 has been established for potentially uncollectible
accounts receivable.

                                      F-8
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

 Property and Equipment:
  Property and equipment are recorded at cost.  Depreciation is provided for on
the straight-line method, over the following estimated useful lives.

        Plant                              15 years
        Computer equipment                 5-7 years
        Equipment                          3-10 years
        Vehicles                           5 years
        Office furniture and equipment     5-7 years
        Leasehold Improvements             5 years

 Goodwill:
  Goodwill represents the excess of the costs of acquiring Meadow Valley
Contractors, Inc. over the fair value of its net assets and is being amortized
on the straight-line method over twenty-five (25) years.  Amortization expense
charged to operations for the years ended December 31, 1995, 1996 and 1997
amounted to $81,390, $80,029 and $80,029.  The carrying value of goodwill will
be periodically reviewed by the Company and impairments, if any, will be
recognized when expected future operating cash flows derived from goodwill is
less than its carrying value.

 Tradename:
  On January 2, 1996, the Company acquired the tradename of AKR Contracting in
the amount of $36,531.  The tradename amortization is provided for on a straight
line basis over three years.  Amortization expense charged to operations  in
each of the years ended December 31, 1996 and 1997 was $12,177.

 Income Taxes:
  The Company accounts for income taxes in accordance with the Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).  SFAS
109 requires the Company to recognize deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in a
Company's financial statements or tax returns.  Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement carrying amounts and tax basis of assets and liabilities
using enacted tax rates in effect in the years in which the differences are
expected to reverse.  The Company files consolidated tax returns with MVC, RMI
and PPI  for federal and state tax reporting purposes.

 Cash Flow Recognition:
  For purposes of the statement of cash flows, the Company considers all highly
liquid instruments purchased with an initial maturity of three (3) months or
less to be cash equivalents.

 Fair Value of Financial Instruments:
  The Financial Accounting Standards Board issued SFAS No. 107, Disclosures
about Fair Value of Financial Statements, which was effective December 31, 1995.
This statement requires the disclosure of estimated fair values for all
financial instruments for which it is practicable to estimate fair value.

  The carrying amounts of financial instruments including cash, restricted cash,
accounts receivable, costs and estimated earnings in excess of billings on
uncompleted contracts, prepaid expenses and other, current portion of notes
receivable, current maturities of long-term debt, accounts payable, billings in
excess of costs and estimated earnings on uncomplete contracts and accrued
liabilities approximate fair value because of their short maturity.

                                      F-9
<PAGE>
 
                  MEADOW VALLEY CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

 Fair Value of Financial Instruments (Continued):
  The carrying amount of long-term debt approximates fair value because the
interest rates on these instruments approximate the rates at which the Company
could borrow at December 31, 1996 and 1997.

 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of:
  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 121) establishes new guidelines regarding when impairment losses on 
Long-Lived assets, which include plant and equipment, and certain identifiable 
intangible assets, should be recognized and how impairment losses should be 
measured. The Company has adopted this accounting standard and its effects on 
the financial position and results of operations were immaterial.

 Stock-Based Compensation:
  Statements of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS No. 123) establishes a fair value method of accounting
for stock-based compensation plans and for transactions in which an entity
acquires goods or services from nonemployees in exchange for equity instruments.
The Company adopted this accounting standard on January 1, 1996.  SFAS 123 also
encourages, but does not require companies to record compensation cost for
stock-based employee compensation.  The Company has chosen to continue to
account for stock-based compensation utilizing the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair market price of the Company's stock
at the date of grant over the amount an employee must pay to acquire the stock.

 Earnings per Share:
  Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
("SFAS 128") issued by the FASB is effective for financial statements with
fiscal years and interim periods beginning after December 15, 1997.  Early
adoption is not permitted.  SFAS 128 provides for the calculation of Basic and
Diluted earnings per share.  Basic earnings per share includes no dilution and
is computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period.  Diluted earnings
per share reflects the potential dilution of securities that could share in the
earnings of an entity, similar to fully diluted earnings per share.  The Company
adopted this accounting standard on December 15, 1997. The effect of adopting 
this standard was that diluted earnings per share decreased by $.01 over the 
calculations under APB opinion No.15. There was no effect on prior years.

 Disclosure of Information about Capital Structure:
  Statement of Financial Accounting Standard No. 129, "Disclosure of Information
about Capital Structure," ("SFAS 129") issued by the FASB is effective for
financial statements ended December 15, 1997.  The new standard reinstates
various securities disclosure requirements previously in effect under Accounting
Principles Board Opinion No. 15, which has been superseded by SFAS No. 128.  The
Company does not expect adoption of SFAS No. 129 to have a material effect, if
any, on its financial position or results of operations.

 Reporting Comprehensive Income:
  Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income," ("SFAS 130") issued by the FASB is effective for financial statements
with fiscal years beginning after December 15, 1997.  Earlier application is
permitted. SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements.  The Company does not expect adoption of SFAS 130 to have
a material effect, if any, on its financial position or results of operations.

 Disclosures about Segments of an Enterprise and Related Information:
  Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," ("SFAS 131") issued by the
FASB is effective for financial statements with fiscal years beginning after
December 15, 1997.  Earlier application is permitted.  SFAS 131 requires that
public companies report certain information about operating segments, products,
services and geographical areas in which they operate and their major customers.
The Company does not expect adoption of SFAS 131 to have a material effect, if
any, on its financial position or results of operations.

                                      F-10
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION:

  On October 24, 1994, the Company signed a Stock Purchase Agreement to purchase
all of the outstanding common stock of MVC. The acquisition was effective as of
October 1, 1994.  The purchase price included a $10,000,000 promissory note,
bearing interest at ten percent (10%) per annum, and due ten days after the
closing of the Initial Public Offering.  Also included in the aforementioned
Stock Purchase Agreement was a $1,500,000 stock note payable, bearing interest
at six percent (6%) per annum, and due ten days after the closing of the Initial
Public Offering.  Payment of the stock note payable was made by the issuance of
500,000 shares of restricted common stock.  Prior to the initial public offering
the promissory notes were secured by all of the outstanding common stock of MVC.
(See Note 12)

  The acquisition of MVC was accounted for using the purchase method of
accounting under APB Opinion 16 "Business Combinations". Accordingly, the assets
and liabilities were valued at their fair values for the portion of the
acquisition relating to new stockholders of the Company's interest which
resulted in increasing the basis of the historical book value of the net assets
acquired (all goodwill) in the amount of $1,864,676.  In addition, as of October
1, 1994, $799,147 was charged to stockholders' equity, representing the
proportionate amount of the net purchase price in excess of the cost of the
interest of certain stockholders of the Company who were also stockholders of
MVC prior to the acquisition. During the year ended December 31, 1995 the
Company incurred additional costs relating to the acquisition in the amount of
$136,058.

3.  CONCENTRATION OF CREDIT RISK:
 
  The Company maintains cash balances at various financial institutions.
Deposits not to exceed $100,000 for each institution are insured by the Federal
Deposit Insurance Corporation.  At December 31, 1996 and December 31, 1997, the
Company has uninsured cash, cash equivalents, and restricted cash in the amount
of $5,434,509 and $8,465,267.

4.  ACCOUNTS RECEIVABLE:

  Following is a summary of receivables at December 31, 1996 and December 31,
1997.

<TABLE> 
<CAPTION> 
                                         DECEMBER 31,  DECEMBER 31,
                                             1996          1997
                                       ----------------------------
<S>                                      <C>           <C>
Contracts in progress..................   $17,079,502   $18,169,773
Contracts in progress - retention......     7,590,488     5,605,988
Completed contracts....................       927,230        29,361
Completed contracts - retention........       436,832       138,163
Other receivables......................       827,406     2,336,629
                                       ----------------------------
                                           26,861,458    26,279,914
Less: Allowance for doubtful accounts..             -       (35,441)
                                       ----------------------------
                                          $26,861,458   $26,244,473
                                       ============================
</TABLE>

                                      F-11
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  CONTRACTS IN PROGRESS:

  Costs and estimated earnings in excess of billings and billings in excess of
costs and estimated earnings on uncompleted contracts consist of the following:

<TABLE>
<CAPTION>
                                                   DECEMBER 31,    DECEMBER 31,
                                                        1996            1997
                                                -------------------------------
       <S>                                        <C>             <C>
       Costs incurred on uncompleted contracts..  $ 164,191,228   $ 248,840,680
       Estimated earnings to date...............      7,179,053      12,345,608
                                                -------------------------------
                                                    171,370,281     261,186,288
       Less: billings to date...................   (171,016,806)   (263,088,311)
                                                -------------------------------
                                                  $     353,475    $ (1,902,023)
                                                ===============================

  Included in the accompanying balance sheet under the following captions:

       Costs and estimated earnings in excess 
        of billings on uncompleted contracts....  $   3,726,328    $  4,758,917
       Billings in excess of costs and 
        estimated earnings on uncompleted 
        contracts...............................     (3,372,853)     (6,660,940)
                                                -------------------------------
                                                  $     353,475    $ (1,902,023)
                                                ===============================

6.  PROPERTY AND EQUIPMENT:

  Property and equipment consists of the following:

                                                  DECEMBER 31,   DECEMBER 31,
                                                      1996           1997
                                                -------------------------------
       <S>                                      <C>            <C>
       Land.....................................  $     562,901    $    788,379
       Plant....................................             -        2,106,476
       Computer equipment.......................        173,905         292,538
       Equipment................................      3,542,594       6,518,913
       Vehicles (Note 14).......................      1,824,078       2,433,510
       Office furniture and equipment...........         42,897          45,816
       Leasehold improvements...................         42,028          60,689
                                                -------------------------------
                                                      6,188,403      12,246,321
       Accumulated depreciation.................       (972,413)     (2,034,853)
                                                -------------------------------
                                                      5,215,990      10,211,468
       Construction in progress.................         62,400              -
                                                -------------------------------
                                                  $   5,278,390    $ 10,211,468
                                                ===============================
</TABLE>

                                      F-12
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  ACCOUNTS PAYABLE:

  Accounts payable consist of the following:
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,  DECEMBER 31, 
                                                                             1996          1997    
                                                                       ----------------------------
            <S>                                                          <C>           <C>         
            Trade......................................................   $13,456,213   $14,245,993
            Retentions.................................................     6,173,594     5,290,428
                                                                       ----------------------------
                                                                          $19,629,807   $19,536,421
                                                                       ============================ 

8.  ACCRUED LIABILITIES:

  Accrued liabilities consist of the following:

                                                                        DECEMBER 31,  DECEMBER 31,
                                                                            1996          1997
                                                                       ----------------------------
            Salaries and wages.........................................    $  772,265    $1,002,738
            Interest...................................................       113,717        79,143
            Taxes......................................................       225,149       315,156
            Insurance..................................................       276,525       358,948
            Legal fees.................................................       180,000            -
            Other......................................................       209,678       237,197
                                                                       ----------------------------
                                                                           $1,777,334    $1,993,182
                                                                       ============================

9.  NOTES PAYABLE - OTHER:

  Notes payable - other consist of the following
                                                                         DECEMBER 31,   DECEMBER 31,
                                                                             1996           1997
                                                                       -----------------------------
<S>                                                                      <C>            <C>
Notes payable, interest rates ranging from 6.382% to 10% with monthly
 payments of $79,110, due dates ranging from 12/18/99 to 1/1/03,
 collateralized by equipment...........................................    $  833,687     $3,144,590
 
Notes payable, interest rates ranging from 9.0% to 9.33% with monthly
 payments of $9,958, due dates ranging from 8/15/03 to 12/31/04,
 collateralized by land................................................       420,000        548,068
                                                                       -----------------------------
                                                                            1,253,687      3,692,658
Less: current portion..................................................      (266,220)      (818,846)
                                                                           $  987,467     $2,873,812
                                                                       =============================
</TABLE>
                                                                               
  Following are maturities of long-term debt for each of the next 5 years:

                1998................   $  818,846
                1999................      880,027
                2000................      769,229
                2001................      650,770
                2002................      454,401
                Subsequent to 2002..      119,385
                                       $3,692,658
                                    =============

                                      F-13
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  LINES OF CREDIT:

     At December 31, 1997, the Company had available from a commercial bank a
$2,000,000 operating line of credit at an interest rate of the commercial bank's
prime plus .50%, and a $2,000,000 operating line of credit at an interest rate
of the commercial bank's prime plus .25% ("lines of credit"). At December 31,
1997, nothing had been drawn on either of the lines of credit. Under the lines
of credit, the Company is required to maintain certain levels of working
capital, to promptly pay all its obligations and is precluded from conveying,
selling or leasing all or substantially all of its assets. At December 31, 1997,
the Company was in compliance with all such covenants. The lines of credit
expires September 15, 1998.

11.  NOTE RECEIVABLE - OTHER:

     Note receivable - other consist of the following:
<TABLE>
<CAPTION>
                                                                       DECEMBER 31,   DECEMBER 31,
                                                                           1996           1997
                                                                     -----------------------------
<S>                                                                    <C>            <C>
8% note receivable, 84 monthly payments in the amount of $1,565
commencing July 19, 1996, balloon payment in the amount of $197,282
due June 19, 2003, collateralized by deed of trust...................      $212,457       $211,273
Less: current portion................................................        (1,855)        (2,009)
                                                                     -----------------------------
                                                                           $210,602       $209,264
                                                                     =============================
</TABLE>

12. RELATED PARTY TRANSACTIONS:

 Note receivable - related party:
     Note receivable - related party consists of a 6% note receivable from a
corporate officer, dated December 15, 1994, due June 15, 1997, collateralized by
100,000 share of the Company's common stock.  During June 1997, the Company
extended the due date to June 15, 1998.   Note receivable - related party was
$257,575 at December 31, 1996 and 1997. (See Note 21)
 
 Equipment:
     During the year ended December 31, 1996 the Company purchased equipment
used in the construction business from a related party in the amount of
$299,800.

 Professional Services:
     During the year ended December 31, 1996 and 1997, a related party rendered
professional services to the Company in the amounts of $26,654 and $17,528.

 Subcontractor/Supplier:
     Various related parties performed construction work for the Company as a
subcontractor or provided materials and equipment used in the construction
business during the years ended December 31, 1995, 1996 and 1997, in the amounts
of $119,614, $81,581 and $19,352.  Included in accounts payable at December 31,
1996 and 1997 are amounts due to related parties, in the amount of $5,808 and
$5,495.

 Accrued Interest:
     During the years ended December 31, 1995, 1996 and 1997, the Company
incurred interest expense in the amounts of $1,063,716, $438,699 and $412,842
related to notes payable to a principal stockholder.  Included in accrued
liabilities at December 31, 1996 and December 31, 1997 are amounts due to
related parties, in the amount of $86,301 and $61,644.  Included in accounts
receivable at December 31, 1996 and 1997 are amounted due from a related party,
in the amount of $15,455 and $15,455.

                                      F-14
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. RELATED PARTY TRANSACTIONS (CONTINUED):

    Note payable - related party:
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,   DECEMBER 31,
                                                                             1996           1997
                                                                       -----------------------------
<S>                                                                      <C>            <C>
12.5% note payable from a related party, due October 16, 2000, due in
equal installments of $1,000,000 plus accrued interest.................    $3,500,000     $2,500,000
Less: current portion..................................................      (500,000)      (500,000)
                                                                       -----------------------------
                                                                           $3,000,000     $2,000,000
                                                                       =============================
</TABLE>
                                                                               
 Commitments:
     The Company leases office space in Moapa, Nevada on a month-to-month basis
from a Company controlled by a principal stockholder with monthly payments of
$800.  The lease terms also require the Company to pay common area maintenance,
taxes, insurance and other costs.  Rent expense under the lease for the year
ended December 31, 1995, 1996 and 1997 amounted to $14,400, $9,600 and $9,600,
respectively.

     The Company leases additional space for its prestressed concrete operations
on a month-to-month basis from a Company controlled by a principal stockholder
with monthly payments of $2,500.  Rent expense under the lease for the years
ended December 31, 1996 and 1997 amounted to $15,000 and $30,000.

13.  INCOME TAXES:

     The provisions for income taxes (benefit) consist of the following:
<TABLE>
<CAPTION>
                                  FOR THE YEARS ENDED DECEMBER 31,
                                    1995        1996        1997
                               ------------------------------------
<S>                              <C>         <C>          <C>
Current:      
     Federal...................   $541,272    $       -     280,327
     State.....................     68,043            -      39,093
                               ------------------------------------
                                   609,315            -     319,420
Deferred.......................    (59,665)     (21,635)    399,951
                               ------------------------------------
                                  $549,650    $(21,635)    $719,371
                               ====================================
</TABLE>

        The Company's deferred tax liability consists of the following, all 
of which is long-term in nature:

<TABLE>
<CAPTION>
                                              DECEMBER 31,
                                           1996          1997
                                      --------------------------
<S>                                     <C>          <C>
Deferred tax asset:
     Net operating loss carryforward..   $ 153,167             -
     Other............................           -        13,822
Deferred tax liability:
     Depreciation.....................    (165,777)     (426,383)
                                      --------------------------
Net deferred tax liability............   $(12,610)    $(412,561)
                                      ==========================
</TABLE>
 
          For the years ended December 31, 1995, 1996 and 1997, the effective
tax rate differs from the federal statutory rate primarily due to state income
taxes.

                                      F-15
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14.  COMMITMENTS:

     The Company is currently leasing office space in Phoenix, Arizona under a
separate non-cancelable operating lease agreement expiring in December 2000.
During August 1997, the Company amended the original lease.  The amended lease
agreement provides for monthly payments of $5,219 through December 31, 1999 and
$5,547 from January 1, 2000 through December 31, 2000.  The lease also requires
the Company to pay common area maintenance, taxes, insurance and other costs.
Rent under the aforementioned operating lease was $14,622, $44,481 and $56,576
for the years ended December 31, 1995, 1996 and 1997.   The Company also is
currently leasing office space in Layton, Utah under a separate non-cancelable
operating lease agreement providing for monthly payments of $1,050 expiring
February 1998.  Rent under the aforementioned operating lease was $12,600 for
the year ended December 31, 1997.

     The Company has entered into employment contracts with each of its
executive officers that provide for an annual salary, issuance of the Company's
common stock and various other benefits and incentives.  At December 31, 1996
and 1997, the total commitments, excluding benefits and incentives amount to
$735,416 and $1,582,500.

     The Company is the lessee of vehicles and equipment under capital leases
expiring in various years through 2002.  The assets and liabilities under a
capital lease are initially recorded at the lower of the present value of the
minimum lease payments or the fair value of the asset.  Each asset is
depreciated over its expected useful life.  Depreciation on the assets under
capital leases charged to expense in 1996 and 1997 was $114,175 and $298,283.
At December 31, 1996 and 1997, property and equipment included $897,749 and
$1,401,948, net of accumulated depreciation, of vehicles and equipment under
capital leases.

14.  COMMITMENTS:

     Minimum future lease payments under capital leases as of December 31, 1997
for each of the next five years and in aggregate are:
<TABLE>
<CAPTION>
        YEAR ENDED DECEMBER 31,                          AMOUNT
        ---------------------------------------------------------
        <S>                                           <C>
        1998........................................   $  523,108
        1999........................................      478,752
        2000........................................      390,667
        2001........................................      202,963
        2002........................................       44,560
                                                    -------------
        Total minimum payments......................    1,640,050
        Less: executory costs.......................      (42,229)
                                                    -------------
        Net minimum lease payments..................    1,597,821
        Less: amount representing interest..........     (218,770)
                                                    -------------
        Present value of net minimum lease payment..   $1,379,051
                                                    =============
</TABLE>

15. STOCKHOLDERS' EQUITY:

 Preferred Stock:
     The Company has authorized 1,000,000 shares of $.001 par value preferred
stock to be issued, with such rights, preferences, privileges, and restrictions
as determined by the Board of Directors.
 

                                      F-16
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. STOCKHOLDERS' EQUITY (CONTINUED):

 Initial Public Offering:
     During October 1995, the Company completed an initial public offering
("Offering") of Units of the Company's securities.  Each unit consisted of one
share of $.001 par value common stock and one redeemable common stock purchase
warrant ("Warrant").  Each Warrant is exercisable to purchase one share of
common stock at $7.20 per share for a period of 5 years from the date of the
Offering.  The Offering included the sale of 1,926,250 Units at $6.00 per Unit.
Net proceeds of the Offering, after deducting underwriting commissions and
offering expenses of $2,122,080, amounted to $9,435,420.  In connection with the
Offering, the Company granted the underwriters warrants to purchase 167,500
shares of common stock at $7.20 per share for a period of 4 years from the date
of the Offering.

16. LITIGATION MATTERS:

     The Company is defending a claimed preference in connection with a payment
made to it by an insurance Company in the approximate amount of $100,000.  The
Company believes that the payment is not a preference, and is vigorously
defending the action.

17. STATEMENT OF CASH FLOWS:

 Non-Cash Investing and Financing Activities:
      The Company recognized investing and financing activities that
affected assets, liabilities, and equity, but did not result in cash receipts or
payments.  These non-cash activities are as follows:
 
     During the year ended December 31, 1995, the Company issued 500,000 share
of restricted common stock in satisfaction of a $1,500,000 discounted stock note
payable.  The Company acquired the stock of MVC for a $10 million note payable
and a 500,000 share stock note payable valued at $1,500,000 effective October 1,
1994. (See Note 2)

     During the year ended December 31, 1995, the Company exchanged certain
machinery and equipment with a book value of $20,000, plus cash of $74,160, for
similar equipment with a cost of $94,160, which represents the book value of
equipment given up plus the cash price.

     During the years ended December 31, 1995 and 1996,  the Company financed
the purchase of construction vehicles and equipment in the amount of $290,533
and $1,719,685.

     During the year ended December 31, 1996, the Company financed the purchase
of land in the amount of $420,000.

     During the year ended December 31, 1996, the Company financed the sale of
real estate in the amount of $213,333.

     During the year ended December 31, 1997, the Company financed the purchase
of property, plant and equipment in the amount of $3,658,608.

                                      F-17
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18. SIGNIFICANT CUSTOMERS:

     For the years ended December 31, 1995, 1996 and 1997, the Company
recognized a significant portion of its revenue from three Customers (shown as
an approximate percentage of total revenue):

<TABLE>
<CAPTION>
                      FOR THE YEARS ENDED DECEMBER 31,
                        1995       1996       1997
                      --------------------------------
        <S>           <C>        <C>        <C>
        A............ 33.2%      23.7%      27.2%
        B............ 39.1%      41.3%      32.2%
        C............    -          -       14.4%
</TABLE>
                                                                               
          At December 31, 1996 and December 31 ,1997, amounts due from the
aforementioned Customers included in restricted cash and accounts receivables,
are as follows:

<TABLE>
<CAPTION>
                              DECEMBER 31,
                           1996         1997
                      --------------------------
        <S>           <C>          <C>
        A............ $ 3,835,166  $ 4,276,679
        B............  14,280,369   13,735,567
        C............           -    2,936,029
</TABLE>

19.  STOCK OPTION PLAN:

     In November, 1994, the Company adopted a Stock Option Plan providing for
the granting of both qualified incentive stock options and non-qualified stock
options.   The Company reserved 700,000 shares of its common stock for issuance
under the Plan.  Granting of the options is at the discretion of the Board of
Directors and may be awarded to employees and consultants.  Consultants may
receive only  non-qualified stock options. The maximum term of the stock options
are 10 years and may be exercised as follows: 33.3% after one year of continuous
service, 66.6% after two years of continuous service and 100.0% after three
years of continuous service.  The exercise price of each option is equal to the
market price of the Company's common stock on the date of grant.

     The following summarizes the stock option transactions:
<TABLE>
<CAPTION>
                                               WEIGHTED
                                  SHARES       AVERAGE
                                           PRICE PER SHARE
 
                               ----------------------------
<S>                              <C>       <C>
Outstanding December 31, 1995..  239,700              $6.25
     Granted...................  241,025               5.36
     Forfeited.................   (1,800)              5.36
                               ---------
Outstanding December 31, 1996..  478,925               5.87
     Granted...................   80,000               5.87
     Forfeited.................  (34,900)              5.87
                               ---------
Outstanding December 31, 1997..  524,025               5.28
                               =========
</TABLE>

                                      F-18
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19.  STOCK OPTION PLAN (CONTINUED):

     Information relating to stock options at December 31, 1997 summarized by
exercise price are as follows:

<TABLE>
<CAPTION>
                                            OUTSTANDING                           EXERCISABLE
                              ------------------------------------------- -------------------------
                                                     WEIGHTED AVERAGE              WEIGHTED AVERAGE
                                               --------------------------          ----------------
                                                                 EXERCISE
 EXERCISE PRICE PER SHARE        SHARES          LIFE (YEAR)      PRICE    SHARES   EXERCISE PRICE
---------------------------------------------------------------------------------------------------
<S>                         <C>               <C>                <C>       <C>      <C>
$6.25                           217,200            10              $6.25  144,800            $6.25
$4.375 to $5.41                 226,825            10              $5.36   75,608            $5.36
$5.31                            80,000            10              $5.31        -                -
---------------------------------------------------------------------------------------------------
$4.375 to $6.25                 524,025            10              $5.28  220,408            $5.26
===================================================================================================
</TABLE>
                                                                               
     All stock options issued to employees have an exercise price not less than
the fair market value of the Company's Common Stock on the date of grant.  In
accordance with accounting for such options utilizing the intrinsic value
method, there is no related compensation expense recorded in the Company's
financial statements for the year ended December 31, 1995, 1996 and 1997.  Had
compensation cost for stock-based compensation been determined based on the fair
value of the options at the grant dates consistent with the method of SFAS 123,
the Company's net income and earnings per share for the years ended December 31,
1995, 1996 and 1997 would have been reduced to the proforma amounts presented
below:
 
<TABLE>
<CAPTION>
                                  1995         1996         1997
                             ---------------------------------------
<S>                            <C>          <C>          <C>
Net income (loss)
     As reported.............   $1,059,347   $ (85,228)   $1,211,615
     Proforma................   $1.059,347   $(179,877)   $  989,003
Net income (loss) per share
     As reported.............   $      .65   $    (.02)   $      .34
     Proforma................   $      .65   $    (.05)   $      .26
</TABLE>

     The fair value of option grants is estimated as of the date of grant
utilizing the Black-Scholes option-pricing model with the following weighted
average assumptions for grants in 1995, 1996 and 1997: expected life of options
of 5 years, expected volatility of 23.94%, risk-free interest rates of 8.0%, and
a 0% dividend yield.  The weighted average fair value at date of grant for
options granted during 1995, 1996 and 1997 approximated $1.31, $1.23 and $1.01.

20.  BASIC EARNINGS (LOSS) PER SHARE:

     The Company's basic net income (loss) per share at December 31, 1996 and 
1997 was computed by dividing net income for the period by 3,601,250, the basic 
weighted average number of common shares outstanding during the period.

     Options to purchase 444,025 at a range of $4,375 to $6.25 per share were 
outstanding during 1996, but were not included in the computation of diluted net
loss per common share because the options' exercise price was greater than the 
average market price of the common share.

     The Company's diluted net income per common share at December 31, 1997 
includes 50,110 common shares that would be issued exercise of outstanding stock
options. Options to purchase 217,200 at $6.25 per share were outstanding during 
1997, but were not included in the computation of diluted net income per common 
share because the options' exercise price was greater than the average market 
price of the common share.

21.  OTHER INFORMATIVE DISCLOSURES:

     During the years ended December 31, 1996 and 1997, the Company incurred
substantial costs related to its prestressed products subsidiary, which was
formed November 12, 1996.  The following is a summary of that subsidiary's 1996
and 1997 results of operations:

<TABLE>
<CAPTION>
                          1996         1997
                      ------------------------
<S>                     <C>        <C>
Gross loss............  $      -   $ (427,028)
Loss from operations..   (76,453)   (1,304,472)
</TABLE>

                                      F-19
<PAGE>
 
                   MEADOW VALLEY CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


22.  SUBSEQUENT EVENTS:

     During January 1998, the Company purchased equipment used in the
construction business from a related party in the amount of $295,000.

     During January 1998, the note receivable-related party and related interest
receivable was repaid to the Company in the amount of $273,368. (See Note 12)



 


 

                                      F-20