SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                -----------------

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

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

For the transition period from ______________ to ______________

                         Commission file number 0-23880

                                  Monroc, Inc.
             (Exact Name of Registrant as Specified in Its Charter)

                   Delaware                                    87-0436697
(State or Other Jurisdiction of Incorporation               (I.R.S. Employer 
               or Organization)                             Identification No.)

  P.O. Box 537, 1730 Beck Street, Salt Lake City, Utah         84110
         (Address of Principal Executive Offices)           (Zip Code)

Registrant's telephone number, including area code            (801) 359-3701
                                                   -------------------------

Securities registered pursuant to Section 12(b) of the Act:

         Title of Each Class          Name of Each Exchange on Which Registered
            Common Stock                      The Nasdaq National Market

Securities registered pursuant to Section 12(g) of the Act:


                                (Title of Class)

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

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

         As of March 19, 1998,  4,514,200  shares of the Company's  Common Stock
was  outstanding  and the  aggregate  market  value of the voting  stock held by
non-affiliates of the Company was approximately $23,973,177.

<PAGE>



                                  MONROC, INC.

                          1997 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS


                                                                           Page

PART I   ....................................................................1
         ITEM 1.   BUSINESS................................................. 1
         ITEM 2.   PROPERTIES...............................................10
         ITEM 3.   LEGAL PROCEEDINGS........................................11
         ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......11

PART II  ...................................................................12
         ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND
                   RELATED STOCKHOLDER MATTERS..............................12
         ITEM 6.   SELECTED FINANCIAL DATA..................................12
         ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS......................13
         ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..............19
         ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                   ACCOUNTING  AND FINANCIAL DISCLOSURE.....................20

PART III ...................................................................20
         ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......20
         ITEM 11.  EXECUTIVE COMPENSATION...................................22
         ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                   MANAGEMENT...............................................27
         ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........28

PART IV  ...................................................................29
         ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                   FORM 8-K.................................................30



<PAGE>



                                     PART I

ITEM 1.   BUSINESS

General

         Monroc,  Inc.,  a Delaware  corporation  ("Monroc"  or the  "Company"),
produces and sells to the construction industry ready mix concrete,  prestressed
and  precast  concrete  building  components,   sand  and  gravel  products  and
accessories  for the concrete  trade.  The Company's  products are sold in Utah,
Idaho, Wyoming and adjoining states, including Colorado, Nevada, Oregon, Montana
and, to a lesser extent,  Washington and California.  The Company owns or leases
38 plants in Utah, Idaho and Wyoming.

         The Company was  incorporated  in Delaware in 1986 and is the successor
to a Utah corporation  which was incorporated in 1920. The Company was organized
in  1986 to  purchase  the  assets  of its  predecessor  corporation  through  a
leveraged employee stock ownership plan. Unless otherwise indicated,  references
to "Monroc" or the "Company" mean Monroc, Inc., including its subsidiaries.

Recent Developments

         Treasure Valley Concrete  Acquisition.  On January 6, 1998, the Company
acquired all of the outstanding  capital stock of privately held Treasure Valley
Concrete,   Inc.,  an  Idaho  corporation  ("Treasure  Valley  Concrete"),   for
approximately  $3.35 million in cash.  Treasure Valley Concrete is a producer of
ready  mix  concrete  in the  Boise,  Idaho  market.  Upon  consummation  of the
acquisition,  Treasure Valley  Concrete became a wholly owned  subsidiary of the
Company.  Treasure Valley Concrete's  operations are included in the description
of properties and markets in this Annual Report on Form 10-K.

         Proposed  Merger.  The Company has entered into an Amended and Restated
Agreement  and Plan of Merger  dated as of  January  29,  1998 and  amended  and
restated  as of March 4, 1998 (the  "Merger  Agreement")  with U.S.  Aggregates,
Inc., a privately-held  Delaware corporation ("USAI"),  and Western Acquisition,
Inc., a Delaware corporation and a subsidiary of USAI ("Sub"), providing for the
merger  of Sub with  and  into the  Company  (the  "Merger"),  with the  Company
continuing as the surviving  corporation  and a subsidiary of USAI.  Pursuant to
the Merger Agreement, each outstanding share of common stock, par value $.01 per
share,  of the Company (the "Common  Stock") will be converted into the right to
receive $10.771 per share in cash. In addition,  the Merger  Agreement  provides
that each option or warrant to purchase shares of Common Stock will be cancelled
in consideration  for the right to receive in cash an amount equal to the number
of shares subject to such option or warrant multiplied by the difference between
(x) $10.771  and (y) the  exercise  price of such  option or  warrant,  less any
applicable tax withholdings. The Merger is conditioned upon, among other things,
the  approval  of  the  stockholders  of the  Company,  certain  regulatory  and
governmental approvals and other customary conditions,  and is expected to close
during the second quarter of 1998.

Products

         The Company's products fall into three principal categories:  (i) ready
mix concrete,  (ii) prestressed and precast concrete products and (iii) sand and
gravel aggregates.  The following table compares the percentage of the Company's
total net sales which were represented by the Company's three product areas over
the last three years:


                                                  Percentage of Net Sales
                                                 1997      1996      1995
                                                 ----      ----      ----
Ready Mix Concrete ..........................     57%       49%       66%
Precast/Prestressed/Construction ............     31        43        25
Sand and Gravel Aggregates ..................     12         8         9


                                        1

<PAGE>



         Ready Mix Concrete.  Ready mix concrete is produced by combining  rock,
sand, cement and water with certain chemical  additives in a "batch plant." This
mixture  is then  put  into a mixer  truck  where  it is  mixed  thoroughly  and
delivered to a  construction  site.  Concrete is one of the most basic  building
materials  and is used to some  degree  in  almost  all  construction  projects,
including new road and bridge construction,  commercial and industrial projects,
residential construction and agricultural construction (such as grain and potato
storage enclosures and dairy farms).

         The  Company's  market areas for its ready mix  products are  typically
limited to within 20 to 40 miles of each of its  plants.  Because of the cost of
delivery and the competitiveness of the concrete industry, the Company's ability
to transport  ready mix concrete over longer  distances is limited  depending on
the location of competitors' plants.

         Prestressed  and Precast  Concrete  Products.  Prestressed  and precast
concrete   products  are  used  primarily  as  parts  of  buildings  or  highway
structures. These products may be used architecturally,  such as in a decorative
wall of a building,  or structurally,  such as building walls,  frames,  floors,
roofs or highway bridge beams. Prestressed concrete products are manufactured by
stressing or  stretching  steel  cables,  incasing  them in  concrete,  and then
releasing  the cable after the concrete has  hardened.  The  contraction  of the
cable  compresses  the  concrete,  adding to its  strength.  In the  prestressed
manufacturing  process, the number of steel cables used, their placement and the
amount of stressing  required varies  depending on the intended use of the final
product.  Manufacturing  a bridge beam  strong  enough to support  traffic,  for
example,  requires  careful  engineering  to  determine  all  of  these  product
specifications.

         Precast concrete products,  which include architectural walls and floor
panels,  are manufactured by a process similar to the manufacturing  process for
prestressed  concrete products;  however,  precast products do not contain steel
cables that have been  stretched  to  strengthen  the  concrete.  Also,  precast
products may or may not contain steel bars for reinforcement, depending upon the
intended use of the precast products and the related specifications.

         Due to the comparatively higher cost of the labor and materials used in
fabricating prestressed and precast products,  freight cost is a relatively less
significant  factor in the overall cost of these  products  than it is for ready
mix concrete. Therefore,  prestressed and precast concrete products can often be
shipped over longer  distances and sold at prices that remain  competitive  with
those of other  manufacturers.  The Company has sold its prestressed and precast
concrete  throughout much of the western United States. One of the major sources
of demand for the  Company's  prestressed  and precast  products has been prison
construction.

         Sand and Gravel Aggregates.  Sand and gravel aggregates are produced by
crushing and screening  material that is either dug from a bank or quarried from
a solid  deposit by blasting or  bulldozing.  The  material is sized and in some
cases washed to remove dirt and other fine materials so it will bond better with
cement in concrete.  Sand and gravel aggregates are used to produce concrete and
asphalt and also as a base or  foundation  material  under  roads and  highways,
airport runways,  concrete slabs or floors and other structures.  Transportation
is a significant factor in the cost of sand and gravel aggregates.  Accordingly,
the market area for sand and gravel aggregates is usually geographically limited
to within 15 to 30 miles of each of the Company's individual plants. The Company
also uses its aggregates as raw materials in its own concrete operations.

The Company's Markets and Industry

         The Company has ready mix batch  plants and sand and gravel pits in the
Salt Lake City and Park City areas of Utah, in all the major  metropolitan areas
across the  southern  half of Idaho and in the Big Horn  basin area of  Wyoming.
Additionally, with precast plants in Salt Lake City, Utah and in Boise and Idaho
Falls,  Idaho,  the  Company  can provide  prestressed  and precast  products to
projects in most of the western  United States.  See  "--Company  Facilities and
Equipment."

         The  Company's  business  is heavily  dependent  upon the  construction
industry and is directly  affected by the level of construction  activity in the
geographic  areas in which it operates.  The level of  construction  activity is
cyclical  and  the  Company's  business  varies  accordingly.   The  demand  for
construction  varies  depending  upon a number  of  factors,  including  weather
conditions,  the  availability of construction  financing at favorable  interest
rates, overall  overbuilding,  labor relations in the construction  industry and
the levels of  material  and energy  supplies.  In  addition,  local,  state and
federal building  projects are dependent upon budgets and, in many cases,  voter
approved bonds.

                                        2

<PAGE>



         Most  of  the  intermountain  west  is  currently  experiencing  strong
construction  growth  rates.  In Utah and  Idaho,  the  number  of  construction
contracts  has  increased  at steady  growth  rates since  1990.  Utah and Idaho
represent two of the top seven fastest growing states in the United States,  and
Salt Lake City,  Utah and Boise,  Idaho are two of the top four fastest  growing
cities in the country.  Significant  amounts of public  construction,  including
highway infrastructure and new prison construction,  as well as private projects
are underway in the  Company's  market areas.  In the Salt Lake Valley,  several
billion  dollars will be spent on  infrastructure  construction  in the next few
years.

         The Company will be involved in several of these construction  projects
in 1998. The Company is supplying  over 40% of the aggregates  being used on the
reconstruction  of I-15  through the Salt Lake Valley over the next three years.
Also,  in 1998 the Company  will supply  ready mix concrete for a new light rail
transportation  system being constructed in the Salt Lake Valley and will supply
aggregates and concrete for new roads as well as expansion  projects at the Salt
Lake  International  Airport.  In Idaho, the Company has a $6 million project to
supply precast cells and prestress  products for an expansion of the Idaho State
Prison south of Boise.

         The Company  generally  sells its products to  contractors.  On certain
projects,  the Company may also act as a subcontractor  and erect or install its
precast or prestressed  concrete products.  Most of the Company's sales are made
pursuant  to  bid  proposals  submitted  to one or  more  contractors.  Concrete
products are typically  purchased  from the supplier  submitting the lowest bid;
however,  projects are occasionally awarded based upon product quality.  Some of
the  Company's  sales  contracts  are  obtained by  negotiation  with owners and
architects.

Company Facilities and Equipment

         The Company  operates 38 plants at 23 sites in Utah, Idaho and Wyoming.
In addition,  the Company operates a fleet of  approximately  160 transit mixing
trucks to deliver ready mixed concrete to its customers, a fleet of tractors and
trailers for hauling prestress/precast products and cement and a few dump trucks
to deliver sand and gravel. Some of the products sold by the Company are shipped
on  temporarily  leased  vehicles,  vehicles  operated by  contract  truckers or
customers'  vehicles  loaded at the  Company's  plants.  Preventive  maintenance
programs and policies are  maintained by the Company for maximum  utilization of
equipment and facilities.

  Utah Operations

         Salt Lake City.  The  Company  currently  operates  two ready mix batch
plants in the Salt Lake  Valley,  including a new  central  mix plant  opened in
mid-1996 on its  property  located at the  southern  end of the Salt Lake Valley
(the "Point of the Mountain  Site").  The Company's other ready mix plant in the
Salt Lake City area is located in  Northern  Salt Lake City on Beck  Street (the
"Beck  Street  Site")  where  the  Company's   headquarters  are  also  located.
Presently,  the Company operates a fleet of 25 ready mix trucks in the Salt Lake
Valley. The largest of the Company's prestress/precast plants is also located on
the Beck Street property.

         The  Company  also owns or leases four sand and gravel pits in the Salt
Lake City.  The two sand and gravel pits located at the Beck Street Site and the
Point of the Mountain Site are owned by the Company. The pit located at the Beck
Street  Site  property  totals  approximately  256 acres and has total  reserves
estimated to be approximately 135,000,000 tons. The estimated reserves increased
in 1997 as a result of final  approval on a reclamation  plan regarding the Beck
Street Site.  The Point of the Mountain pit totals about 150 acres and has total
reserves  estimated to be  approximately  93,000,000  tons.  Aggregates  for the
Company's  ready  mix  operations  are  presently  produced  at the Point of the
Mountain Site pit. The Company believes the Point of the Mountain Site, together
with the Beck Street Site,  should provide adequate  resources for the Company's
Salt Lake Valley operations in the foreseeable future.

         In late 1996,  the Company leased 94 acres of property on the west side
of the Salt Lake Valley containing estimated aggregate reserves of approximately
5,000,000  tons on which it produces  road base.  In May 1997,  the Company also
leased a 108 acre pit on the west side of the Salt Lake Valley  containing  over
10,000,000  tons of aggregate.  The Company is still  applying for the necessary
permits but expects to install an  aggregate  wash plant  capable of producing a
range of products on this site in 1998.

         The Company's  management believes its reserves in the Salt Lake Valley
are adequate for the foreseeable future.  Zoning and environmental  permits have
become more difficult to obtain for new aggregate pits in the Salt Lake Valley

                                        3

<PAGE>



because acceptable sites for such pits are becoming fewer and are located closer
to expanding  residential  areas which  fosters  opposition  from  residents and
increases the  difficulty of obtaining  such permits.  Accordingly,  the Company
believes it has a competitive  advantage over competitors that are attempting to
obtain necessary permits and enter into the aggregate  industry in the Salt Lake
Valley.  Additionally,  the Company believes its four strategically located pits
in  the  Salt  Lake  Valley  increases  its  competitive   advantage  over  such
competitors  because the  Company's  transportation  costs may be less than such
costs for the competitors.

         Park City and  Heber  City.  The  Company  has a two  ready mix  plants
located  on  one  site  in  Park  City,   Utah,  a  resort  community  which  is
approximately  40 miles from Salt Lake City. The Park City area contains several
ski resorts and is scheduled to host several  Olympic events in connection  with
the  2002  Winter  Olympics.  The Park  City  area is  experiencing  significant
population growth and the Company's  management believes the Park City area will
continue to grow.

         In 1994, the Company constructed a ready mix plant in Heber City, Utah,
which is  approximately  18 miles  from Park  City.  Because of the high cost of
housing in Park City, Heber is often selected as a place of residence by persons
who are employed by the Park City resorts.

         The Company  operates 14 ready mix trucks in  connection  with its Park
City and Heber City  operations.  Sand and gravel is trucked from sources in the
Salt Lake Valley to produce the concrete at these sites.

  Idaho Operations

         Boise,  Idaho.  The  Company  has both ready mix and  prestress/precast
operations in Boise,  Idaho. The Company installed a new central mix batch plant
in 1994 at its Eagle site which enhances the Company's  ability to deliver ready
mix  concrete in the Boise area.  In  addition,  the Company  acquired  Treasure
Valley Concrete in January 1998. Treasure Valley Concrete has two concrete batch
plants that will provide the Company  with greater  coverage of the Boise market
area.  The  Company is the  largest  ready mix  concrete  supplier  in Boise and
operates a fleet of 48 ready mix trucks in this market.

         Products  from  the  prestress/precast  operations  in  Boise  are sold
throughout southern Idaho and into the neighboring states of Nevada, Oregon, and
Washington.  The  Company  also  operates a sand and  gravel pit with  estimated
reserves of  approximately  4,000,000 tons. The Company's  Boise  facilities are
located on a 265 acre site located  adjacent to the Boise River.  The Boise area
is currently experiencing significant development.

         In late 1997,  the Company  purchased  270 acres  containing  estimated
aggregate reserves of approximately  14,000,000 tons in Middleton,  Idaho, which
is  approximately  15 miles west of its current Boise  operations.  The purchase
price was approximately  $2.7 million,  of which  approximately  $2.0 million is
payable  over ten  years  between  1997 and  2007.  Residential  and  commercial
development  in the area is  moving  westward  towards  this  site.  With  these
aggregate reserves, the Company believes it is well positioned to take advantage
of future  construction  activity in the Boise area.  The Company also  obtained
mineral rights to  approximately  1,000,000 tons of aggregate  reserves with the
acquisition of Treasure Valley Concrete.

         Magic Valley  Operations.  The Company operates several ready mix batch
plants  in the south  central  part of Idaho in an area  known as Magic  Valley.
These plants are located at Twin Falls, Ketchum,  Bellevue,  Wendell and Burley,
Idaho.  The Company  maintains  25 ready mix trucks to service the Magic  Valley
markets.

         The Company operates a ready mix batch plant in Twin Falls,  Idaho. The
sand and gravel used in this  operation  is mined and  processed at a leased pit
north of Twin Falls.  Upon the condition  that the Company  continues to extract
sand and gravel from the pit,  the terms of the lease  permit the Company to use
the pit until all sand and gravel  resources  have been  depleted.  The  Company
believes the Twin Falls pit has adequate reserves for the foreseeable future.

         In each of Ketchum  and  Bellevue,  Idaho,  the Company has a ready mix
plant.  Both of these plants  service  primarily the Sun Valley resort area. The
Company  supplies  a  majority  of the  concrete  used  in this  area.  Concrete
aggregates  for the Company's  operations at this location are purchased  from a
local sand and gravel supplier.

                                        4

<PAGE>



         The  Company  also  maintains  a ready mix batch  plant in the  farming
community  of  Wendell,  Idaho which  serves as a  satellite  for the Twin Falls
operation.  Aggregates  for the concrete  produced at this  location are trucked
from Twin Falls.

         The  Company  has a ready mix batch  plant in Burley,  Idaho,  which is
approximately 50 miles east of Twin Falls. Concrete aggregates for the Company's
operations at this location are purchased from a local sand and gravel supplier.

         Eastern Idaho Operations. The Company has plants in the cities of Idaho
Falls,  Pocatello  and  Blackfoot,  which are located in the eastern  portion of
Idaho.  The Company  operates  25 ready mix trucks to service the eastern  Idaho
area.

         Idaho Falls is one of the major cities in eastern Idaho. In addition to
a ready mix plant in Idaho Falls, the Company has a prestress plant as well as a
sand and  gravel pit  located  on a 242 acre  site.  The sand and gravel pit has
estimated reserves of approximately 3,000,000 tons.

         The  Company  maintains  ready  mix  concrete  operations  in  each  of
Pocatello and  Blackfoot,  Idaho that are supplied from  Company-owned  sand and
gravel pits located in  Pocatello  and  Blackfoot.  The  Blackfoot  operation is
located on 107 acres of land and the Pocatello  pit is located on  approximately
239 acres.  The Company's  management  believes both pits have adequate sand and
gravel reserves for the foreseeable future.

  Wyoming Operations

         The Company has ready mix plants in Cody, Powell, Greybull and Worland,
Wyoming. In addition, the Company provides construction services,  such as ditch
lining, road grading and excavation through its Wyoming facilities.  The Company
operates 26 ready mix trucks among the Cody, Powell,  Greybull and Worland ready
mix plants.

         Cody.  Through its Cody,  Wyoming  plant,  the Company  sells ready mix
concrete and sand and gravel,  and also provides road  grading,  excavation  and
construction  services in the area.  Although Cody is primarily an  agricultural
area,  tourism is a significant  industry with the east entrance of  Yellowstone
National Park only 50 miles west of the city.  The Company has one competitor in
the Cody area.

         The sand and gravel used in the Company's Cody  operations is presently
mined  from a pit owned by the State of  Wyoming  or from a 20 acre  gravel  pit
owned by the Company.  The Company pays a royalty to the State of Wyoming  based
on the number of tons extracted from the state's pit.

         Powell. The Company's Powell,  Wyoming ready mix batch plant is located
approximately 30 miles northeast of Cody. The Company supplies most of the ready
mix  concrete and sand and gravel in the area with the only  competition  coming
from the  competitor in Cody.  Sand and gravel  aggregates  are trucked from the
pits used in connection with the Company's Cody operations.

         Greybull.  Greybull,  Wyoming is a small  agricultural  town located 54
miles east of Cody.  The  Company is the only  source of  concrete  and sand and
gravel in the  community.  The Company  owns a 20 acre pit north of Greybull and
also obtains sand and gravel from the Company's Worland, Wyoming source.

         Worland.  Worland, Wyoming lies 38 miles south of Greybull. The Company
is the sole  provider  of  concrete  and sand and  gravel in the area.  Sand and
gravel used in the Worland  operations  is mined from a local pit pursuant to an
agreement with the Bureau of Land Management. This agreement expires in 2000 and
is currently subject to a 55,000 ton limit during the term of the agreement.

Future Land Development

         When the  Company's  predecessors  acquired  and opened  the  Company's
current large sand and gravel aggregate  quarries near Salt Lake City and Boise,
the quarries were located  beyond these cities'  outskirts.  The growth of these
two cities in the  intervening  years has now placed  these land  holdings  well
within their respective  metropolitan  areas.  This growth currently  provides a
significant  advantage for the Company as the Company's operations are now close
to important areas of new construction activity.

                                        5

<PAGE>



         In addition,  the location of the  Company's  quarries in growing urban
areas in Salt  Lake  City and  Boise  offers  the  Company  the  possibility  of
eventually  converting  these land  holdings  to  residential,  recreational  or
commercial  use. The Company  believes it is conducting  its operations on these
properties  in a way that  will  optimize  their  potential  development  value,
although no assurance can be given that the Company will be able to successfully
develop these  properties in the future.  In 1996, the Company closed its Kearns
pit on the west side of the Salt Lake Valley and in 1997,  the Company  received
approval  of an  application  to  change  the  zoning  of  the  158.1  acres  to
residential.  The Company  signed a sales  agreement  in 1997 to sell the Kearns
property for  approximately  $6.7  million in three  options over the next three
years.  The Company  also signed a sales  agreement to sell 9.9 acres it owns in
the central part of the Salt Lake Valley for approximately  $1.9 million,  which
sale is expected to close in 1998.  Future land  development  may be possible as
aggregate reserves are depleted on other properties.  See "--Company  Facilities
and Equipment."

         Past  independent  appraisals  of  the  Company's  real  property  have
indicated  that the fair market  value of the  Company's  real  property  may be
significantly  greater than the historical  cost shown on the Company's  balance
sheet at December 31, 1997. However,  the ability of the Company to successfully
develop any of its real  property is dependent on such factors as financing  and
obtaining  necessary zoning and other  governmental  approvals,  as well as real
estate  market  conditions  at the time,  and no assurance can be given that the
Company  will be able to  successfully  develop any of its real  property in the
future.

Competition

         The  industries in which the Company  operates are highly  competitive.
Competitive factors within the industries are primarily based on price and, to a
lesser extent, product quality and customer service. In many of its markets, the
Company has several  competitors,  in part because equipment for producing ready
mix concrete and  aggregates  can be leased from several  sources.  However,  in
these markets,  a new or existing  ready mix concrete or aggregates  supplier is
limited by the  availability of aggregate  sources.  New aggregate  reserves are
becoming more scarce,  and obtaining the necessary  zoning changes and operating
permits has become more  difficult.  See "--Company  Facilities and  Equipment."
Additionally,  such  competitors  may be forced to incur  higher  costs than the
Company because of the increasing difficulty of obtaining aggregates.

         Although the Company tries to distinguish its products based on quality
and customer  service,  the Company's  products are  relatively  generic and the
prices  the  Company  charges  its  customers  are not  likely to be  materially
different  from the  prices  charged  by other  producers  in the same  markets.
Accordingly,  the  Company's  profitability  generally  depends  on the level of
demand for its products and its ability to contain  operating costs.  Prices are
subject to material changes in response to relatively minor  fluctuations in the
supply and demand,  general  economic  conditions  and other market  conditions.
There can be no  assurance  that  prices  will not decline in the future or that
such  declines  will not have a material  adverse  effect on the  results of the
Company's operations.

         In Utah, the Company faces  competition not only from locally owned and
operated  companies but also from larger  regional,  national and  international
companies,  some of which may have  substantially  greater  financial  and other
resources  than the  Company.  A  recent  consolidation  trend in the  Company's
industry has lead to larger,  financially  stronger  competitors  of the Company
that have capital  sources  readily  available to improve  plants and equipment.
However, the Company's  significant aggregate reserve positions in the Salt Lake
Valley will allow it to meet market demand for ready mix concrete and aggregates
and compete  effectively in the market in 1998 and the  foreseeable  future.  In
Idaho and Wyoming,  the Company faces  competition  primarily from locally owned
and operated companies.

         Competition in the precast and prestress  concrete  market comes from a
number of  companies  located in large  metropolitan  areas in the Western  U.S.
since  precast  and  prestress  products  can be  competitively  shipped  longer
distances.  The  ability of the  Company  to be  competitive  on any  individual
construction  project  depends on its production  costs and haul distance to the
job compared to the location and production capability of competitors.

Seasonality and Cyclicality

         Due to its location in the Rocky Mountains,  the Company's  business is
impacted by adverse weather conditions in the winter. Historically, construction
activity  decreases  significantly  in  December,  January,  February  and March
because of snow and cold  weather.  The  Company  generally  experiences  losses
during these months.

                                        6

<PAGE>



         The construction  industry is highly cyclical and is strongly  affected
by changes in economic growth and conditions and changes in interest rates.  The
demand for construction  varies  depending upon a number of factors,  including,
weather  conditions,  the  availability of  construction  financing at favorable
interest  rates,  overall  fluctuations  in  regional  economies,  past under or
overbuilding,  labor  relations in the  construction  industry and the levels of
material and energy  supplies.  In the past, the Company's  revenues and backlog
have varied  significantly  because of changes in economic  conditions on either
the national or regional level.

Raw Materials and Suppliers

         The  Company  obtains  the  bulk  of  its  raw  materials  (other  than
aggregates,  substantially  all of which are produced  internally)  and supplies
from several sources. The raw materials used by the Company are widely available
for local purchases by the Company at all of its plant locations and the Company
is not dependent upon any one supplier.  The Company's  management believes that
for the  foreseeable  future the Company  will have  reserves of sand and gravel
aggregates  sufficient  for  its  operations.   See  "--Company  Facilities  and
Equipment."

Regulation and Environmental Matters

         The Company's  operations  are subject to numerous  federal,  state and
local laws and  regulations.  The plants and quarries are subject to regulations
and  safety  standards  established  by the Mine  Safety  and Health Act and the
Occupation  Safety  and Health  Act,  and the  federal  agencies  which  oversee
compliance  with  such  acts,  as well as the  safety  codes of state  and local
governments.

         The  Company's  management  believes that the Company has all approvals
and permits  from local  governing  bodies  which are required for the mining of
sand and gravel  aggregates and the conduct of the Company's  other  businesses.
State  and  local  authorities,  however,  may  adopt  new laws and  regulations
relating to land use which may, in some  instances,  reduce or restrict  uses of
the Company's properties.

         Because the Company  sometimes acts as a subcontractor  in erecting its
prestressed  and  precast  concrete  products,  it  must  maintain  contractor's
licenses in the states in which it sells these products.  The Company  presently
has current contractor's licenses in all states in which it does business.

         The  Company's  plants  are also  subject to  governmental  regulations
concerning   environmental   pollution.   The  Company   believes   that  it  is
substantially  in  compliance  with  all  applicable  regulations.  The  cost of
maintaining such compliance is not considered to be material.  During the normal
course of its  operations,  the Company uses and disposes of materials,  such as
solvents and lubricants used in equipment  maintenance,  which are classified as
hazardous by government  agencies  which  regulate  environmental  quality.  The
Company  attempts to minimize the  generation of such waste as much as possible,
and to recycle  such  wastes.  Remaining  wastes are  disposed  of in  permitted
off-site disposal sites.

         The  Company  is  currently  the owner of 9.9 acres of land  located in
Murray,  Utah which contains  mining slag  previously  deposited by ASARCO,  the
former  owner.  The slag  contains  certain  heavy  metals,  including  lead and
arsenic,  which may have  leached from the slag into the  environment.  This and
adjoining  properties  formerly  owned  by  ASARCO  have  been  proposed  by the
Environmental  Protection  Agency  (the  "EPA")  for  listing  on  the  National
Priorities  List  for  cleanup  of  the  lead  slag  and  potential  groundwater
contamination  from arsenic  laden soils.  Although the Company did not generate
the slag material, under the Comprehensive Environmental Response,  Compensation
and Liability Act ("CERCLA"),  the current owner of a property may be liable for
cleanup  costs.  In such case, the Company would have a claim against the former
owner, ASARCO, for its respective share of these costs.

         In May 1997, all of the landholders and the City of Murray entered into
an Agreement in Principle in which the  landholders  agreed to donate land for a
roadway  through the properties  which would be used as a depository for some of
the hazardous  wastes on the site. In addition,  the parties agreed to cooperate
in the remediation efforts to be conducted by ASARCO.

         All parties  concerned  including the EPA are currently in negotiations
regarding  a proposed  draft  Remedial  Design/Remedial  Action  Consent  Decree
("Consent Decree"). As proposed, the Consent Decree requires the Company


                                        7

<PAGE>



to  (i)   contribute   a  certain   amount  of  its  property  for  the  roadway
(approximately  1.8 acres with a book  value of  approximately  $19,000)  as its
share of the cleanup costs, (ii) participate in a local improvement district for
the installation of curb, gutter, and sidewalks along the proposed roadway,  (an
approximately  $30,000  assessment  over a ten-year  period) and (iii) implement
certain institutional controls. In return, the Company will receive contribution
protection  and a covenant  not to sue.  Under the current  draft of the Consent
Decree,  the Company's  obligations  terminate  upon sale of the  property.  The
Company's  estimated  cost to  satisfy  these  requirements  under the  proposed
Consent Decree are immaterial.

         On May 5, 1997, the Company entered into an agreement to sell its total
acreage in Murray, Utah to The Boyer Company, L.C. for a total purchase price of
approximately $1.9 million.  The agreement is subject to the purchaser obtaining
necessary  approvals.  Pursuant to the agreement,  the purchaser will assume the
Company's  liabilities  under the Agreement in Principle and the Consent  Decree
described above. Subject to certain conditions,  the Company expects the sale of
the Murray property to close on or before January 1, 1999.

         Prior to  learning of the  potential  presence of lead in the slag from
the  Murray  site,  the  Company  sold some of the slag for use in road base and
railroad fill.  The Company has not sold any material from this site since 1988.
The Company  may be liable for  cleanup costs if it is  determined that the lead
from this slag poses  an environmental  hazard.  The Company  has not determined
that the lead from this slag poses an environmental hazard,  nor has the Company
received  any notice  of  government or  private  action on  this  matter.   The
potential cost  to the Company,  if any,  is not  ascertainable  at the  present
time.  The Company's  management believes that there are economically reasonable
methods of containing the slag should this become necessary.

Backlog

         A  significant  portion of the  Company's  business,  particularly  for
prestressed and precast concrete, is based on orders for delivery at times which
may be many months after the order date. Therefore,  the Company generally has a
significant  amount of  outstanding  work  orders.  The  Company's  backlogs for
prestressed and precast concrete  products as of December 31, 1997 and 1996 were
approximately $14,316,000 and 12,085,000, respectively.

Employees

         As of December 31,  1997,  the Company had 451  employees,  of which 85
were  in   administrative   or  clerical  areas  and  366  were  in  production.
Approximately 283 of the production employees are represented by various unions.
Four  contracts  covering a total of 157 employees in Utah and Idaho will expire
in 1998 and will be  renegotiated  with the applicable  unions  regarding  these
contracts.  The Company  believes its  relations  with its  employees  and their
unions are satisfactory.

Forward-Looking Statements and Risk Factors

         Forward-Looking  Statements.  Certain statements made herein, including
without limitation statements made under the captions  "Business--The  Company's
Markets and Industry,"  "--Company  Facilities and Equipment," and "Management's
Discussion and Analysis of Financial  Condition and Results of Operations,"  are
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995 (the "Reform Act"). In addition, when used in this
Annual Report on Form 10-K the words or phrases "will likely result," "expects,"
"intends,"  "will   continue,"  "is   anticipated,"   "estimates,"   "projects,"
"management  believes,"  "the  Company  believes"  and similar  expressions  are
intended to identify forward-looking statements within the meaning of the Reform
Act.

         Forward-looking  statements  include plans and objectives of management
for future operations,  including plans and objectives  relating to the products
and the future economic  performance and financial  results of the Company.  All
forward-looking  statements  involve  predictions  and are  subject to known and
unknown risks and uncertainties,  including, without limitation, those discussed
below as well as general  economic  and  business  conditions,  that could cause
actual results to differ materially from historical earnings and those presently
anticipated  or projected.  Readers  should not place undue reliance on any such
forward-looking  statements,  which speak only as of the date made.  The factors
listed below and  elsewhere in this Annual  Report on Form 10-K could affect the
Company's financial performance and could cause the Company's actual results for
future  periods to differ  materially  from any  opinions,  views or  statements
expressed  with  respect  to  future  periods.   In  light  of  the  significant
uncertainties inherent in forward-looking  statements, the inclusion of any such
statement should not be regarded as a representation by the Company or any other
person that the objectives

                                        8

<PAGE>



or plans of the Company will be achieved.  The Company  disclaims any obligation
or intent to update any such factors or  forward-looking  statements  to reflect
future events or developments.

         Dependence  on the  Construction  Industry;  Economic  Conditions.  The
Company's  business is heavily  dependent upon the construction  industry and is
directly affected by the level of construction  activity in the geographic areas
in which it operates. The demand for construction varies depending upon a number
of  economic  factors,  including  fluctuations  in  regional  growth  rates and
interest rates, the availability of financing,  the availability of public funds
for  infrastructure  projects  and  levels  of  material  and  energy  supplies.
Accordingly, adverse economic conditions in the Company's markets or a worsening
of general economic  conditions  could adversely affect the Company's  operating
results.  While at the present time  economic  conditions  for the  construction
industry are  favorable in the Company's  areas of  operation,  these areas have
suffered  economic  difficulties  in the past and there can be no assurance that
these  economic  conditions  will not decline again in the future or that demand
for the Company's products will remain at current levels.

         Environmental  Regulation.  The  Company  is subject to a wide range of
federal, state and local laws, regulations and ordinances. In particular, may of
these laws and  regulations  pertain to the  protection of the  environment  and
regulate water  discharges and air emissions,  as well as the handling,  use and
disposal of hazardous  and  non-hazardous  waste  materials.  In  addition,  the
Company's  plants and quarries are subject to regulations  and safety  standards
established  by the Mine  Safety and Health  Act and the  Occupation  Safety and
Health Act, the federal  agencies which oversee  compliance  with those acts and
the safety codes of state and local government. While the Company believes it is
substantially in compliance with all such applicable laws and regulations, there
can be no  assurance  that the  Company  is, or in the future  will be,  able to
comply  with,  or  continue  to  comply  with,   current  or  future  government
regulations  in  every  jurisdiction  in  which  it  may  conduct  its  business
operations.  The Company's  operating costs may be affected by the obligation to
pay for the cost of  complying  with  existing  environmental  and safety  laws,
ordinances and regulations.  In addition, in the event any future legislation is
adopted,  the Company may,  from time to time,  be required to make  significant
capital and operating expenditures in response to such legislation.

         The  Company  is  currently  the owner of 9.9 acres of land  located in
Murray,  Utah which contains  mining slag  previously  deposited by ASARCO,  the
former  owner.  The slag  contains  certain  heavy  metals,  including  lead and
arsenic,  which may have  leached from the slag into the  environment.  This and
adjoining  properties formerly owned by ASARCO have been proposed by the EPA for
listing  on the  National  Priorities  List for  cleanup  of the  lead  slag and
potential  groundwater  contamination  from arsenic  laden  soils.  Although the
Company did not generate the slag material, under CERCLA, the current owner of a
property may be liable for cleanup costs. In such case, the Company would have a
claim against the former owner, ASARCO, for its respective share of these costs.

         In May 1997, all of the landholders and the City of Murray entered into
an Agreement in Principle in which the  landholders  agreed to donate land for a
roadway  through the properties  which would be used as a depository for some of
the hazardous  wastes on the site. In addition,  the parties agreed to cooperate
in the remediation efforts to be conducted by ASARCO.

         All parties  concerned  including the EPA are currently in negotiations
regarding a proposed  draft  Consent  Decree.  As proposed,  the Consent  Decree
requires the Company to (i)  contribute a certain amount of its property for the
roadway  (approximately 1.8 acres with a book value of approximately $19,000) as
its share of the cleanup costs, (ii) participate in a local improvement district
for the installation of curb,  gutter,  and sidewalks along the proposed roadway
(an approximately $30,000 assessment over a ten-year period) and (iii) implement
certain institutional controls. In return, the Company will receive contribution
protection  and a covenant  not to sue.  Under the current  draft of the Consent
Decree,  the Company's  obligations  terminate  upon sale of the  property.  The
Company's  estimated  cost to  satisfy  these  requirements  under the  proposed
Consent  Decree are  immaterial.  However,  no  assurance  can be given that the
Consent  Decree  will  approved  or,  if  approved,  will  contain  the terms as
presently proposed.

         On May 5, 1997, the Company entered into an agreement to sell its total
acreage in Murray, Utah to The Boyer Company, L.C. for a total purchase price of
approximately $1.9 million.  The agreement is subject to the purchaser obtaining
necessary  approvals.  Pursuant to the agreement,  the purchaser will assume the
Company's  liabilities  under the agreement in principle and the Consent  Decree
described above. Subject to certain conditions,  the Company expects the sale of
the Murray property to close on or before January 1, 1999. However, no assurance
can be given that the sale of the Murray property will occur.


                                        9

<PAGE>



         Prior to  learning of the  potential  presence of lead in the slag from
the  Murray  site,  the  Company  sold some of the slag for use in road base and
railroad  fill. The Company has not sold any material from this site since 1988.
The Company may be liable for cleanup  costs if it is  determined  that the lead
from this slag poses an  environmental  hazard.  The Company has not  determined
that the lead from this slag poses an  environmental  hazard nor has the Company
received  any  notice  of  government  or  private  action on this  matter.  The
potential cost to the Company, if any, is not ascertainable at this time.

         Risks Related to the Proposed Merger and Other Potential  Dispositions.
The Company  believes  that the  proposed  Merger will offer  opportunities  for
long-term  efficiencies  in  operations  that should  positively  affect  future
results  of the  combined  operations  of the  Company  and  USAI.  However,  no
assurances  can be given  whether or when such  efficiencies  will be  realized.
Although the parties to the Merger have entered into definitive agreements,  the
closing  of  the  Merger  is  subject  to the  timely  satisfaction  of  certain
conditions  contained in the Merger  Agreement.  Although the Company  currently
expects that such closing  conditions will be satisfied or waived,  there can be
no assurance that the closing of the Merger will occur. Such conditions include,
among  others,  the  receipt  of  all  necessary  consents  and  approvals  from
governmental  officials  and other  third  parties  and the  absence  of certain
material  adverse  changes in the business or  operations  of the  Company.  See
"--Recent  Developments"  and "Item  7--Management's  Discussion and Analysis of
Financial Condition and Results of Operations--Subsequent Events."

         The  Company  is also  pursuing  the  sale  of  certain  assets  of its
prestressed/precast    division   and   its   Wyoming    subsidiary.    See"Item
7--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations--Liquidity and Capital Resources." No assurance can be given that any
of these contemplated transactions will occur.

         Seasonality. The Company services the construction industry principally
in geographic  areas where  construction  activity may be restricted  during the
winter  months.  As a result,  the Company  experiences  reduced  revenues  from
December to March and realizes a  substantial  part of its  revenues  during the
other months of the year. The Company  generally incurs losses during the winter
months and must have  sufficient  working  capital to fund its  operations  at a
reduced level until the spring  construction  season.  No assurance can be given
that the Company will continue to have  sufficient  working  capital to fund its
operations during the winter months.

         Competitive and Price Sensitive  Industry.  The industries in which the
Company  operates  are  highly  competitive.   Competitive  factors  within  the
industries are primarily based on price and, to a lesser extent, product quality
and customer  service.  With respect to the Company's ready mix  operations,  in
Idaho and Wyoming the Company faces competition primarily from locally owned and
operated  companies;  however,  in Utah the Company  additionally  competes with
larger  regional,   national  and  international   companies  that  likely  have
substantially  greater  financial and other  resources than the Company.  In the
precast and prestressed  concrete  market,  the Company faces  competition  from
metropolitan areas throughout the western states because precast and prestressed
concrete products easily can be shipped over long distances.

         The  Company's  products  are  relatively  generic,  and the prices the
Company charges its customers are not likely to be materially different from the
prices  charged  by  other  producers  in the  same  markets.  Accordingly,  the
Company's  profitability  generally  depends  on the  level  of  demand  for its
products  and its  ability to contain  operating  costs.  Prices are  subject to
material changes in response to relatively minor  fluctuations in the supply and
demand, general economic conditions and other market conditions. There can be no
assurance  that prices will not decline in the future or that such declines will
not have a material adverse effect on the results of the Company's operations.

         Labor  Agreements.  As of  December  31,  1997,  the  Company  had  451
employees,  of which  approximately 283 were represented by various unions. Four
union  contracts  covering  a total of 157  employees  will  expire in 1998.  No
assurance  can be given that the  Company  will be able to  negotiate  the union
contracts on the same terms and conditions as those presently in effect or terms
and conditions acceptable to the Company.

ITEM 2.   PROPERTIES

         The Company operates 38  plants at 23 sites in Utah, Idaho and Wyoming.
See  "Item  1--Business--Company   Facilities  and  Equipment"  for  information
relating to the Company's  properties.  All of the Company's  existing  personal
property and real  property are used as  collateral  to secure  certain  Company
borrowings. See "Item 7--Management's

                                       10

<PAGE>



Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations--Liquidity  and  Capital  Resources"  and  Note  6 to  the  Company's
Consolidated Financial Statements.

ITEM 3.   LEGAL PROCEEDINGS

         The Company is subject to various legal proceedings and claims,  either
asserted or unasserted,  which arise in the ordinary  course of business.  While
the outcome of these claims cannot be predicted with certainty,  management does
not believe that the outcome of any of these legal  matters will have a material
effect on the  Company's  consolidated  results of  operations  or  consolidated
financial position.

         The  Company  is  currently  the owner of 9.9 acres of land  located in
Murray,  Utah that  contains  mining slag  previously  deposited by ASARCO,  the
former  owner.  The slag  contains  certain  heavy  metals,  including  lead and
arsenic,  which may have  leaked  from the slag into the  environment.  This and
adjoining  properties formerly owned by ASARCO have been proposed by the EPA for
listing  on the  National  Priorities  List for  cleanup  of the  lead  slag and
potential  groundwater  contamination  from  arsenic  laden  soils.  All parties
concerned, including the EPA, are currently in negotiations regarding a proposed
draft Consent  Decree.  See  "Business--Regulation  and  Environmental  Matters"
and--"Forward-Looking Statements and Risk Factors--Environmental Regulation."

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

None.


                                       11

<PAGE>



                                     PART II

ITEM 5.   MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
          MATTERS

         The  Company's  Common Stock is traded on The Nasdaq Stock Market under
the symbol  "MROC." The following  table sets forth,  for the calendar  quarters
indicated,  the high and low closing  prices for the  Company's  Common Stock as
reported by Nasdaq.  These  quotations  represent  interdealer  prices,  without
retail  mark-ups,  mark-downs  or  commissions,  and  may not  represent  actual
transactions.


                                    High                Low
1997:
First Quarter                    $  6.50              $  5.25
Second Quarter                      9.75                 6.25
Third Quarter                      12.88                 9.25
Fourth Quarter                     12.13                 9.88

1996:
First Quarter                    $  5.63              $  4.13
Second Quarter                      5.38                 4.50
Third Quarter                       6.25                 4.63
Fourth Quarter                      6.38                 4.50

         The closing price of  the Company's Common  Stock on March 19, 1998 was
$10.625.  As of March 19, 1998, the Company had approximately 43 stockholders of
record.

         The Company has never paid a cash dividend on its Common Stock and does
not  contemplate  paying cash  dividends on its Common Stock in the  foreseeable
future.

ITEM 6.           SELECTED HISTORICAL FINANCIAL DATA

         The selected historical financial data presented below has been derived
from the  Company's  audited  consolidated  financial  statements.  The selected
historical   financial   data   should  be  read  in   conjunction   with  "Item
7--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations" and the consolidated  financial statements,  related notes and other
financial information included elsewhere in this report.

<TABLE>
<CAPTION>

                                              1997             1996             1995              1994             1993
                                             ------           ------           ------            ------           ------
<S>                                       <C>              <C>              <C>                <C>              <C> 

CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net Sales...............................     $61,383,362      $70,401,396      $48,302,240       $41,156,276      $34,547,464
ESOP contribution.......................         800,000          800,000          800,000           800,000          937,816
Operating profit (loss).................       1,074,024        (884,993)        2,511,755         1,160,462          937,318
Net earnings (loss).....................         239,119      (1,367,679)        1,355,651           283,582          763,872
Net earnings (loss) per share...........            0.05           (0.31)             0.48              0.11             0.34
Weighted average common shares..........       4,485,376        4,467,000        2,835,063         2,611,521        2,235,730

CONSOLIDATED BALANCE
SHEET DATA:
Total assets                                 $42,515,723      $40,638,252      $35,607,756       $26,578,145      $20,008,378
Long-term obligations (net of current
maturities).............................       6,826,736        5,161,742        6,591,329         9,020,569        6,771,793
Stockholders' equity....................      19,736,731       18,670,583       19,236,262         8,306,366        4,922,549
</TABLE>


                                       12

<PAGE>



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

Overview

         The  Company  produces  and sells sand and gravel  products,  ready mix
concrete,  prestress  and  precast  concrete  products  and  accessories  to the
building  and  construction  industry.  The Company  owns or leases 38 plants in
Utah,  Idaho and Wyoming.  The Company's  products are sold principally in Utah,
Idaho and  Wyoming  and to a lesser  extent in  Colorado,  Montana,  Washington,
Oregon, Arizona, New Mexico and California.

         The Company  entered into an  Agreement  and Plan of Merger dated as of
January  29, 1998 and  amended  and  restated  as of March 4, 1998 (the  "Merger
Agreement") with U.S.  Aggregates,  Inc., a Delaware corporation  ("USAI"),  and
Western  Acquisition,  Inc., a Delaware  corporation  and a  subsidiary  of USAI
("Sub"),  providing  for the  merger  of Sub  with and  into  the  Company  (the
"Merger"),  with the Company  continuing as the surviving  corporation  and as a
subsidiary of USAI. Pursuant to the Merger Agreement,  each outstanding share of
Common  Stock will be converted  into the right to receive  $10.771 per share in
cash. In addition,  the Merger Agreement provides that each option or warrant to
purchase shares of Common Stock will be cancelled in consideration for the right
to  receive  in cash an amount  equal to the  number of shares  subject  to such
option or warrant  multiplied by the difference between $10.771 and the exercise
price of such option or  warrant,  less any  applicable  tax  withholdings.  The
Merger is conditioned upon, among other things, the approval of the stockholders
of  the  Company,  certain  regulatory  and  governmental  approvals  and  other
customary  conditions.  In  connection  with the proposed  Merger,  the Board of
Directors of the Company  received a fairness  opinion (the  "Opinion") from SBC
Warburg Dillon Read Inc. to the effect that, as of the date of the Opinion,  the
Merger consideration is fair to the stockholders of the Company from a financial
point of view. See "--Subsequent Events."

         Net  sales  consist  of  total  sales  less   discounts,   returns  and
allowances.  While net sales  decreased in 1997 compared to 1996,  gross profit,
operating  profit and net  earnings  increased  in 1997  compared  to 1996.  The
decrease in net sales resulted from  completion of the $21.6 million Snake River
Correction  Facility  precast  project in early 1997.  Generally,  the Company's
prestress/precast  concrete products carry smaller gross profit margins than are
associated  with the Company's sand and gravel and ready mix concrete  products.
The increase in profitability in 1997 was primarily  attributable to a change in
the Company's  sales mix in 1997 to reflect more high margin sand and gravel and
ready mix  concrete  products  and  lower  relative  sales of  prestress/precast
concrete products.

         Cost of sales for ready mix  concrete  products  consists  of  material
costs, production costs, freight charges, equipment depreciation and maintenance
expenses, fuel costs and direct labor costs. Cost of sales for prestress/precast
concrete  products  consists  of  material  costs,   freight  costs,   equipment
depreciation and maintenance costs, fuel costs,  direct labor costs and erection
costs.  Cost of sales for sand and gravel  products  consists of depletion cost,
processing  costs,  direct labor cost,  equipment  depreciation  and maintenance
costs, fuel costs and in some cases,  freight costs. The Company's sales of sand
and  gravel  in  connection  with  the  I-15  reconstruction   project  have  no
corresponding  cost of sale other than  depletion  costs.  Depletion cost varies
based on the particular aggregate reserve being depleted. During 1997, depletion
costs recorded by the Company ranged from $0.01 to $ 0.06 per ton of aggregate.

         The  Company's  contributions  to its  Employee  Stock  Ownership  Plan
("ESOP")  are  non-cash   contributions   and  do  not  decrease  the  level  of
stockholder's  equity.  The  contributions  are charged  against  income and are
deductible  for federal and state income tax purposes.  The original  borrowings
that the ESOP used to acquire the Company's Common Stock were loaned to the ESOP
by the Company, which had borrowed these funds from two banks.  Contributions to
the ESOP are non-cash expenses for the Company for purposes of its financial and
tax  accounting.  Although  the  original  borrowings  with  which  the ESOP was
financed  have  now been  retired,  an ESOP  liability  to the  Company  remains
outstanding.  The ESOP repays this  liability to the Company with  contributions
the ESOP  receives  from the  Company.  The Company  intends to continue to make
contributions  to the ESOP as determined by the Company's  management in amounts
which are  deductible  for tax purposes in order to permit the ESOP to repay its
liability to the Company.  Subject to various  regulations and  conditions,  the
Company is generally allowed to deduct ESOP and pension plan contributions in an
amount equal to 25% of its qualified  payroll.  While the  contributions  to the
ESOP are repaid to the Company by the ESOP,  resulting  in no net cash  outflow,
and are a deductible expense for tax purposes, these amounts directly reduce

                                       13

<PAGE>



the  Company's  reported  earnings.  As of December  31, 1997,  the  outstanding
balance of the ESOP's note to the Company was $1.72 million.

         In  addition to its effect on the  Company's  income  statements,  ESOP
accounting also impacts the Company's  balance sheets.  Amounts  received by the
Company representing  principal payments on the loan to the ESOP are recorded as
reductions of the ESOP note receivable. Additionally, since the loan to the ESOP
is carried on the Company's balance sheet as a reduction of stockholders' equity
rather than as an asset,  repayments of principal on the loan to the ESOP result
in increases in  stockholders'  equity,  which offset the  reductions  in equity
caused by the non-cash contributions charged against earnings. Consequently, the
ESOP  contributions  since the  original  acquisition  of the stock  have had no
effect  on  total  stockholders'  equity  and  will  have  no  effect  on  total
stockholders'  equity  as long as  contributions  are  used to  reduce  the note
receivable from the ESOP.

         In the third quarter of 1996, the Company's management restructured the
Company's operations and as a result recorded a one-time restructuring charge of
$1.5  million.  The Company  periodically  engages in sales of property,  plant,
equipment  and land and  recognizes a gain or loss equal to the  purchase  price
received minus the book value of the property, plant, equipment for land sold.

Results of Operations

         The  following  table  sets  forth,  for  the  periods  indicated,  the
percentage of net sales  represented  by certain items included in the Company's
Consolidated Statements of Operations:

<TABLE>
<CAPTION>

                                                                     Year Ended December 31,
                                                       ----------------------------------------------------
                                                           1997               1996                1995
                                                       -------------      -------------      --------------
<S>                                                  <C>                 <C>               <C> 

Net sales ...........................................     100.0%             100.0%             100.0%
Costs and expenses ..................................       98.3             101.3                94.8
Operating profit (loss) .............................        1.7               (1.3)               5.2
Other income (expense) net ..........................       (1.6)              (1.0)              (2.5)
Earnings (loss) before income taxes .................        0.1               (2.3)               2.7
Income taxes (benefit) ..............................       (0.3)              (0.4)              (0.1)
Net earnings (loss) .................................        0.4               (1.9)               2.8
</TABLE>


Comparison of Years Ended December 31, 1997 and 1996

         Net sales  decreased  $9.0 million,  or 15%, from $70.4 million for the
year ended  December 31, 1996 (the "1996  Period") to $61.4 million for the year
ended  December 31, 1997 (the "1997  Period").  Sand and gravel sales  increased
$2.1  million,  or 38%, to $7.6  million  for the 1997  Period  compared to $5.5
million for the 1996 Period  primarily  because of increased sales in connection
with the I-15 freeway  reconstruction  project ongoing in Salt Lake City,  Utah.
However,  net  sales  by  the  Company's   prestress/precast  concrete  division
decreased $11.2 million,  or 37%, to $19.2 million compared to $30.4 million for
the 1996 Period, primarily due to the completion of the Snake River Correctional
Facility in early 1997 and the lack of new or existing precast project contracts
capable of  sustaining  1996 precast net sales  volumes.  Net sales of ready mix
concrete increased to $34.3 million, or 1%, in the 1997 Period compared to $34.0
million  for the 1996  Period.  This  increase  was  primarily  attributable  to
sustained construction activity in the Company's market areas.

         Cost of sales  decreased  $10.4 million,  or 17%, from $63.0 million in
the 1996 Period to $52.6 million in the 1997 Period. This decrease was primarily
due to a lower  volume  of net sales in the 1997  Period  of  pre-stress/precast
concrete  products which carry a higher cost of sales component  relative to the
Company's  sand and  gravel  and  ready  mix  concrete  products.  Gross  profit
increased  from $7.4  million  in the 1996  Period to $8.8  million  in the 1997
Period and increased as a percentage of net sales from 10% in the 1996 period to
14% in the 1997 period. The increase in gross profit was also due primarily to a
lower  volume of net sales of  prestress/precast  concrete  products in the 1997
Period  which  carry  lower  margins  and an  increase in net sales of ready mix
concrete and sand and gravel.  Ready mix operating profit margins increased from
9% in the 1996 Period to 12.3% in the 1997 Period.  The improvement in ready mix
concrete operating profit margins was primarily  attributable to price increases
and improved efficiencies in the Company's


                                       14

<PAGE>



ready mix concrete operations.  Sand and gravel product operating profit margins
increased to approximately  36% for the 1997 Period compared to 15% for the 1996
Period. The higher profitability of sand and gravel sales for the 1997 Period is
primarily  attributable  to an  increase  in sand and gravel sold for use in the
I-15 reconstruction project in Salt Lake City during the 1997 Period and to high
start up costs for the Company's  Point of the Mountain pit and costs of closing
down the Company's  aggregate  operations at the Kearns pit incurred  during the
1996  Period.  Sales  in the 1997  Period  relating  to the I-15  reconstruction
project  are  based  on a  royalty  of  $0.50  per  ton  of  aggregate  with  no
corresponding cost of sales other than depletion of $0.01 per ton sold.

         General and  administrative  expenses  increased $1.0 million,  or 14%,
from $5.9 million in the 1996 Period to $6.9  million in the 1997  Period.  This
increase was primarily  attributable to payment of increased  health care claims
in the 1997 Period as well as an increase in salary  costs  incurred as a result
of the  employment  of several new  managers,  bonuses paid under the  Company's
manager  incentive  program  and  severance   compensation  paid  to  terminated
employees  in the  1997  Period.  As a  percentage  of net  sales,  general  and
administrative  expenses increased from 8% in the 1996 Period to 11% in the 1997
Period.

         Contributions  to the ESOP  remained  constant at $800,000 for the 1997
period  and for the  1996  period.  However,  as a  percent  of net  sales,  the
Company's  contribution to the ESOP Plan increased from 1.1% for the 1996 period
to 1.3% for the 1997 period.  Restructuring  charges of $1,500,000 were incurred
on a one-time basis in the third quarter of the 1996 Period.

         Operating  profit  increased  $2.0 million to $1.1 million for the 1997
Period as  compared to an  operating  loss of $884,993 in the 1996 Period due to
factors set forth above.

         Net other expense  increased  from $700,381 for the 1996 Period to $1.0
million for the 1997 Period.  This increase resulted  primarily from an increase
of $236,711 in interest  expense for the 1997 Period to $1.0 million as compared
to  $810,122  for the 1996 Period  because of  increased  borrowings  and higher
average  balances  outstanding  under the Credit Facility  (defined  below).  In
addition,  the Company recognized a loss on sale of property,  plant,  equipment
and  land of  $16,029  for the  1997  Period  as  compared  to a gain on sale of
property,  plant,  equipment  and land of $35,930 in the 1996  Period.  Interest
income  decreased  $40,224 to $33,587 for the 1997 Period as compared to $73,811
for the 1996 Period.

         Earnings  before income taxes increased $1.6 million to $44,749 for the
1997  Period as  compared to a loss of $1.6  million  for the 1996  Period.  Net
earnings  after taxes  increased $1.6 million to $239,119 for the 1997 Period as
compared to a loss of $1.4  million  for the 1996 Period for the reasons  stated
above.

Comparison of Years ended December 31, 1996 and 1995

         Net sales  increased  22.1 million,  or 46%, from $48.3 million for the
year ended  December 31, 1995 (the "1995  Period") to $70.4 million for the 1996
Period. Sales of prestress/precast products increased 149% from $12.2 million in
the 1995 Period to $30.4 million in the 1996 Period due to production during the
1996 Period on the Snake River Correctional  Facility, a $21.6 million contract.
Ready mix concrete sales  increased  $2.7 million,  or 9%, from $31.3 million in
the 1995 Period to $34.0  million in the 1996 Period due  primarily to sustained
construction  activity in the  Company's  market  areas.  Sand and gravel  sales
increased  31% from $4.2  million in the 1995 Period to $5.5 million in the 1996
Period due to increased volume of processed aggregates.

         Cost of sales increased $22.8 million, or 57%, to $63.0 million for the
1996 Period  compared to $40.2  million for the 1995 Period.  This  increase was
primarily attributable to increased  prestress/precast concrete sales due to the
Snake River  Correctional  Facility  project.  Gross  profit  decreased  to $7.4
million for the 1996 Period as compared to $8.1 million for the 1995 Period, and
gross profit as a percentage of net sales decreased from  approximately  17% for
the  1995  Period  to 10%  for the  1996  Period.  Operating  profit  margin  on
prestress/precast  concrete  products was 12% in the 1996 Period compared to 23%
in the 1995  Period due to  significantly  lower bid  margins on the Snake River
Correctional  Facility contract.  Operating profit margins on ready mix concrete
decreased  from 12% in the 1995 Period to 9% in the 1996 Period because of lower
prices  due to a shift of demand to  commercial  construction.  Sand and  gravel
operating  margins also decreased from 27% in the 1995 Period to 13% in the 1996
Period  primarily  due to high  start  up costs  in the  Company's  Point of the
Mountain pit and costs of closing down its  aggregate  operations  at the Kearns
pit.

                                       15

<PAGE>




         General and administrative  expenses increased $1.1 million, or 24%, to
$5.9  million  for the 1996  Period as  compared  to $4.8  million  for the 1995
Period.  This increase was due primarily to payment  during the 1996 Period of a
$200,000 consulting fee to Building and Construction Capital Partners, L.P., the
general partner of BCCP I, L.P. ("BCCP I") which is a significant stockholder of
the  Company,  increased  personnel,   administrative,  legal  and  professional
expenses  incurred  in  connection  with  the  redirection  of the  Company  and
increased  administrative costs related to the Snake River Correctional Facility
construction.

         Contribution  to the Company's ESOP remained  constant for the 1995 and
1996 Periods at $800,000.  The Company  recorded a restructuring  charge of $1.5
million in the third  quarter of the 1996 Period.  This  one-time  restructuring
charge included a write-off of certain facilities and equipment obsoleted by new
operating   strategies   totaling  $715,000,   the  closure  of  undersized  and
unprofitable  operations in Utah and Wyoming totaling $351,000,  and accruals of
the remaining two years of the employment  agreement  with the Company's  former
president and chief executive  officer  totaling  $333,000 and costs  associated
with the restructuring of management totaling $101,000.

         Operating  loss  reported by the  Company  for the 1996 Period  totaled
$884,993 as compared to operating profit of $2.5 million recorded by the Company
for the 1995 Period.  Other expense decreased to $700,381 for the 1996 Period as
compared to $1.2 million for the 1995 Period. This decrease in other expense net
was primarily  attributable  to lower interest  expense of $810,122 for the 1996
Period as compared to $1.4 million for the 1995 Period resulting from the use of
proceeds  from the sale of Common  Stock to BCCP I to  temporarily  pay down the
Company's debt and an increase in interest income to $73,811 for the 1996 Period
as compared to $34,222 for the 1995  Period,  partially  offset by a decrease in
gain on sale of  property,  plant,  equipment  and land to  $35,930  in the 1996
Period from $129,085 for the 1995 Period.

         Earnings  loss before  income  taxes  totaled $1.6 million for the 1996
Period as compared to earnings  before income taxes of $1.3 million for the 1995
Period for the reasons set forth  above.  The Company  incurred a net loss after
tax of $1.4  million for the 1996  Period as  compared  to net  earnings of $1.4
million for the 1995 Period for the reasons set forth above.

Subsequent Events

         On January 29, 1998, the Company signed a definitive  Merger  Agreement
with USAI  pursuant to which USAI will  acquire for cash all of the  outstanding
shares of Common  Stock for $10.771 per share,  or $57.6  million.  Although the
transaction has been approved by the Board of Directors of both  companies,  the
transaction  is  contingent  upon,  among  other  things,  approval  of Monroc's
stockholders,  certain regulatory approvals and other customary conditions.  The
transaction is currently expected to close in the second quarter of 1998 subject
to  stockholder  and  regulatory   approvals.   BCCP  I,  which  currently  owns
approximately  37 percent of the outstanding  shares of Common Stock, has agreed
to vote in favor of the  transaction.  USAI,  is a portfolio  company of Golder,
Thoma, Cressey, Rauner, Inc., a Chicago based private equity investment group.

         On January 6, 1998,  the Company  acquired all of the capital  stock of
Treasure Valley  Concrete,  Inc. for $3.35 million in cash. The Company financed
the entire  purchase  price with  borrowings  under the term loan portion of the
Credit Facility  (defined  below).  Treasure Valley Concrete  produces and sells
ready mix  concrete  in the  greater  Boise,  Idaho  area,  and had  revenues of
approximately  $7 million in 1997.  The Company  intends to  integrate  Treasure
Valley Concrete's operations into its current Boise, Idaho operations.

Liquidity and Capital Resources

         The Company's  primary sources of liquidity have been comprised of cash
flow from  operating  activities,  borrowings  under its  $15.0  million  credit
facility  provided by the CIT Group (the "Credit  Facility") and the issuance of
Common Stock.  The Company  requires  capital for the  procurement  of property,
plant,  equipment,  aggregate  deposits,  land and inventory,  normal  operating
expenses and for general working capital purposes. The Credit Facility, which is
the  Company's  principal  source of  liquidity,  was renewed in  February  1996
increasing the total credit  available from $11.0 million to $15.0 million.  The
interest  rate accruing  under the Credit  Facility was reduced in February 1996
from the prime rate plus 2.5% to the prime rate plus 0.75%.  The Credit Facility
provides for both revolving and term loans.  Under the revolving  portion of the
Credit Facility, the Company may borrow up to 85% of eligible receivables at any

                                       16

<PAGE>



time.  Borrowings  under the term loan are limited by the value of the Company's
real and personal  property  with a maximum limit of $10.0  million.  The Credit
Facility  requires  that the Company pay a monthly fee on the unused  portion of
the Credit  Facility at the rate of 0.5% per annum.  Between  February  1996 and
February  1997 and between  February  1997 and February  1998,  the terms of the
Credit  Facility  required  the Company to pay  interest on minimum  outstanding
balances of $2.0 million and $4.0 million,  respectively.  During these periods,
the Company's  outstanding  borrowings under the Credit Facility  exceeded these
minimum amounts. As of December 31, 1997,  outstanding  borrowings on the Credit
Facility in the form of revolving  loans  totaled $5.9 million  compared to $5.4
million as of December 31, 1996. As of December 31, 1997, the  outstanding  term
loan balance under the Credit Facility was $2.0 million. Subsequent to year end,
the Company  increased the outstanding  term loan portion of the Credit Facility
to $5.35 million in connection with the acquisition of Treasure Valley Concrete.
See  "--Subsequent  Events." At  December  31,  1997,  the Company had a maximum
credit  availability  under the Credit  Facility of $7.1  million.  Availability
under the Credit  Facility is based upon the level of eligible  receivables  and
the amount of unamortized  availability under the term loan. The Credit Facility
is  secured by a general  lien on all of the  Company's  assets  and  expires in
February, 2002.

         In addition to the Company's  borrowings under the Credit Facility,  at
December 31, 1997 the Company had notes  outstanding  to the previous  owners of
the  Company's  Wyoming  subsidiary  in the amount of $406,822 as compared to an
outstanding  balances  under such notes at December 31, 1996 of $598,142.  These
notes  bear  interest  at the prime  rate plus 2% and are  secured  by the fixed
property and inventory of the subsidiary.

         The Company also had outstanding  notes payable to Colonial  Commercial
Corp. ("Colonial") in the amount of $298,750 at December 31, 1997. Colonial is a
minority  stockholder  of the  Company.  These notes bear  interest at the prime
rate.  Principal  payments  under these notes are due each year in eight monthly
installments of $30,000 each. No principal  payments are required for the months
of January,  February,  March and December.  These notes are subordinated to the
Credit Facility.

         In December 1995, the Company issued  1,650,000  shares of Common Stock
to BCCP I at a price of $5.50 per share for net  proceeds of $8.8  million.  The
Company used $3.4 million of the net proceeds to pay down  outstanding  balances
under the Company's  then existing  credit  facility with CIT Group leaving $5.4
million in cash and cash  equivalents  at December 31, 1995.  Since December 31,
1995,  the Company  has used the  remaining  net  proceeds  for the  purchase of
property, plant and equipment, aggregate deposits and land and for the financing
of working capital and inventory.

         Concurrently  with the  issuance of Common Stock to BCCP I, the Company
issued a warrant to BCCP I to  purchase  up to  1,500,000  additional  shares of
Common Stock at a price of $6.25 per share. This warrant is exercisable  through
December 28, 2000. If this warrant were exercised in full, the gross proceeds to
the Company would be $9.4 million.  No assurances can be given that this warrant
will ever be exercised.

         For the year ended  December 31, 1997,  net cash  provided by operating
activities  equaled  $5.1  million,   consisting   primarily  of  net  earnings,
depreciation and amortization of property, plant and equipment,  contribution to
the Company's ESOP and accounts receivable,  partially offset by inventories and
trade accounts  payable.  For the year ended December 31, 1997, net cash used in
investing activities equaled $7.6 million,  consisting primarily of purchases of
property,  plant and equipment and  purchases of additional  aggregate  deposits
including  270 acres  with  over  14,000,000  tons of  aggregate  reserves  near
Middleton,  Idaho.  For the year ended  December 31, 1997,  net cash provided by
financing  activities  totaled $2.1 million,  consisting  primarily of increased
borrowings  under the Credit  Facility  and the issuance of notes for 75% of the
purchase price of the Middleton land,  partially offset by principal payments on
long-term obligations and the repurchase of certain outstanding warrants.

         The  Company  finances a portion  of its  equipment  through  operating
leases and anticipates  continuing to finance a portion of its equipment in this
manner.  The  Company  anticipates  that it will have the  ability to  refinance
certain equipment as needed thereby generating additional cash for operations.

         In  1996,  the  Snake  River   Correction   Facility  project  required
significant  capital  resources and put heavy demands on the Company's  cash and
liquidity. The project was completed in early 1997 and the Company currently has
no similar prestress/precast  projects ongoing and does not currently anticipate
any similar projects during the next 12 months.

                                       17

<PAGE>



         The  Company  is also  pursuing  the  sale  of  certain  assets  of its
prestress/precast  division.  The  Company  has  been  in  negotiations  with  a
potential  buyer since early 1997.  The  Company is  currently  uncertain  as to
whether  negotiations  with  the  potential  purchaser  will  continue.  If such
negotiations are terminated,  the Company currently intends to continue pursuing
a sale of such  assets.  The Company  anticipates  that such an asset sell would
generate  additional cash for operations.  In addition,  the Company is pursuing
the sale of its Wyoming  subsidiary.  Such a sale would also  generate  cash for
operations. The Company has not entered into a definitive agreement with a buyer
of its prestress/precast assets or its Wyoming subsidiary.  No assurances can be
given that a definitive  agreement will be entered into or that the Company will
be able to successfully consummate the sale of such operations.

         The Company  believes  that its existing cash  balances,  combined with
additional availability under the Credit Facility, cash from operations and cash
from planned asset sales and equipment refinancings,  will enable it to meet its
working capital  requirements for at least 12 months.  However, if the Company's
capital  requirements  increase or if the Company is unable to conserve  cash or
generate  cash through  asset sales,  the Company could be required to limit its
capital expenditures,  aggregate deposit purchases and acquisition activities or
secure additional sources of capital. There can be no assurance the Company will
be  capable  of  securing  additional  capital or that the terms upon which such
capital will be available to the Company will be acceptable.

Inflation

         Inflation in the U.S.  economy has been relatively  moderate during the
last few years.  Price  increases  for labor and  materials  have kept pace with
inflation,  but the  Company  has  generally  been  successful  in passing  cost
increases on to customers.  In 1997,  price  increases  were  introduced in most
markets.  The Company continues to pursue work at higher prices to cover ongoing
cost increases and improve operating margins.

Seasonality

         Because of the location of its  operations  in the  intermountain  west
region of the Western United States, the Company experiences significantly lower
sales during the winter months due to adverse  weather  conditions.  The Company
usually  experiences  losses  during  these  months  because of the lower  sales
volume.

Year 2000 Compliance

         The  Company  has  reviewed  its  software  systems,  all of which  are
provided  by outside  vendors,  and based upon  representations  by the  outside
vendors  regarding the year 2000 issue, no modifications to such systems will be
required.  Based on this  review,  the Company does not  anticipate  the need to
invest any capital resources to address the year 2000 issue.

Outlook

         The  Company  currently  expects to  consummate  the Merger  during the
second quarter of 1998,  subject to  stockholder  and  regulatory  approval.  In
addition,  the  Company  intends to  continue  to pursue the  strategic  sale of
certain assets including  certain assets of its  prestress/precast  division and
its Wyoming subsidiary.

         Without  giving effect to the Merger or any  operational  changes which
may occur following the Merger,  the Company currently expects that net sales of
sand and gravel and ready mix concrete  products  will increase in the aggregate
and as a percentage of total net sales in the near term and that gross profit as
a percentage of net sales will  increase to reflect the  increased  gross profit
associated with the sale of sand and gravel and ready mix concrete products. The
Company also anticipates that general and administrative  expenses will increase
in the near term as a result of costs incurred in connection with the Merger.

         The Company also anticipates procuring additional aggregate reserves as
such  reserves  become  available,  provided  they  can be  purchased  on  terms
acceptable  to  the  Company.  The  Company's  operational   activities  pending
consummation of the Merger are subject to certain  restrictions set forth in the
Merger  Agreement  and the Company is generally  restricted  to  conducting  its
business in the ordinary course consistent with past practice. Certain material

                                       18

<PAGE>



variations  from the  Company's  past  operational  practice  would  require the
consent of the other parties to the Merger Agreement.

Forward-Looking Statements

         Certain  statements  set forth  above  under the  captions  "Overview",
"Liquidity   and   Capital   Resources",   "Seasonality"   and   "Outlook"   are
forward-looking statements including, without limitation,  statements related to
(i) the Merger; (ii) planned asset sales and equipment  refinancings;  (iii) the
expected  increase  in net  sales of sand and  gravel  and  ready  mix  concrete
products  and the  corresponding  expected  increase  in gross  profit and gross
profit as a percent of net sales;  (iv) the  Company's  cash usage trend and the
Company's  potential  need for and access to capital  sources;  (v)  operational
restrictions  applicable to the Company  pending  consummation  of Merger;  (vi)
anticipated  increases  in  general  and  administrative   expenses;  (vii)  the
Company's projected liquidity for the next 12 months;  (viii) integration of the
Treasure Valley Concrete  operations;  (ix) the Company's readiness for the year
2000  computer  issue;  (x)  seasonality   issues:  and  (xi)  other  statements
containing  the  words   "expects",   "intends",   "anticipates",   "estimates",
"projects",  "will continue",  "plans",  or words of similar effect and that are
not statements of historical fact. These forward-looking  statements are subject
to certain risks,  uncertainties  and factors which could cause the  anticipated
results to not be realized.  These  risks,  uncertainties  and factors  include,
without  limitation,  (a)  the  Merger  may  not be  consummated  or may  not be
consummated on the terms currently set forth in the Merger Agreement; (b) in the
event of price  competition  or a decrease in demand for the Company's  sand and
gravel or ready mix concrete  products for reasons of market  proximity,  price,
quality,  general economic  conditions,  or state of federal  budgetary  changes
affecting  freeway  projects  generally  and  the  I-15  reconstruction  project
specifically,  the  Company  may not be able to  increase  sales of its sand and
gravel  or its  ready  mix  concrete  products  or may  not be  able to do so at
anticipated  profit  margins;  (c) weather  conditions  and other  circumstances
beyond the  Company's  control may impact its ability to increase  sales of sand
and  gravel and ready mix  concrete  products;  (d) if the  Company is forced to
conserve  cash or is unable  to access  liquidity  under  its  Credit  Facility,
through the debt or equity capital  markets or through asset sales,  the Company
may be unable to fund operations or purchase additional aggregate properties and
in any event may be unable to purchase such  properties  on terms  acceptable to
the  Company;  (e)  the  Company  may be  unable  to  consummate  a sale  of its
prestress/precast  concrete division or its Wyoming  subsidiary;  and (f) any of
the factors listed under "Item 1--Forward  Looking  Statements and Risk Factors"
may occur causing  outcomes to differ  materially from those  anticipated in the
forward- looking statements.  Although the Company believes that its assumptions
underlying the forward-looking  statements contained herein are reasonable,  any
of  those  assumptions  could  prove  inaccurate  and,  therefore,  there  is no
assurance that the results  contemplated in any such  forward-looking  statement
will be utilized.  Budgeting and other  management  decisions are  subjective in
many respects and thus susceptible to interpretations and periodic revision. The
impact of actual  experience and business  developments may cause the Company to
alter its marketing,  capital  expenditure plans or other budgets,  which may in
turn affect the Company's  results of  operations.  In light of the  significant
uncertainties  inherent in the  forward-looking  statements included herein, the
inclusion of any such statement  should not be regarded as a  representation  by
the Company or any other person that the objectives or plans of the Company will
be achieved.

         Due to factors noted above and elsewhere in this filing,  the Company's
future  earnings  and stock  price may be  subject  to  significant  volatility,
particularly  on a quarterly  basis.  Past financial  performance  should not be
considered a reliable  indicator of future  performance and investors should not
use historical  trends to anticipate  results or trends in future  periods.  Any
shortfall in sales or earnings from the levels anticipated by parties other than
the Company could have an immediate and significant  effect on the trading price
of the Company's Common Stock in any given period. Additionally, the Company may
not learn of such  shortfalls  until late in the  fiscal  quarter,  which  would
result in an even more  immediately  and adverse  effect on the trading price of
the Company's Common Stock.

ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Consolidated  financial  statements and supplementary  data required by
this Item 8 are set forth at the pages indicated in Item 14(a) below.


                                       19

<PAGE>



ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

         On  April  9,  1997,  the  Board  of  Directors  of the  Company,  upon
recommendation  of its  Audit  Committee,  approved  a change  in the  Company's
independent  accountants  from  Grant  Thornton  LLP to  Deloitte  & Touche  LLP
effective  for the year ended  December  31,  1997.  During the two fiscal years
ended  December 31, 1996 and 1995 and  thereafter,  the Company did not have any
disagreements with Grant Thornton LLP on any matter of accounting  principles or
practices,  financial statement  disclosure or auditing scope or procedure,  nor
did any reports  issued by Grant  Thornton  LLP contain an adverse  opinion or a
disclaimer  of  opinion,  nor were such  reports  qualified  or  modified  as to
uncertainty,  audit scope or accounting principles.  The information provided in
the  Company's  Current  Report  on Form  8-K  dated  as of  April  14,  1997 is
incorporated herein by reference.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  directors  and  executive  officers of the Company as of March 19,
1998 were as follows:


    Name                     Age         Position
    Robert L. Miller          57         Chairman of the Board
    Ronald D. Davis           52         President, Chief Executive Officer and
                                           Director
    L. William Rands          53         Chief Financial Officer, Vice President
                                           - Finance, Secretary and Treasurer
    James E. Dahl             62         Director
    Michael A. Kane           36         Director
    William T. Lightcap       60         Director
    Jules Ross                65         Director
    Marc T. Scholvinck        40         Director
    Delbert T. Tanner         46         Director

        Robert L.  Miller has been  Chairman  of the Board and a director of the
Company since  December  1995. In 1994,  Mr. Miller became a limited  partner of
Building  and  Construction  Capital  Partners,  L.P.  ("BCCP").  A family trust
controlled  by Mr.  Miller is a limited  partner of BCCP I, L.P.  ("BCCP  I"), a
principal  stockholder  of the  Company.  From 1991 to 1994,  Mr.  Miller  was a
private  investor,  investing  during that period in,  among other  projects,  a
residential  development and fast food franchise. In 1980, Mr. Miller co-founded
West Venture Development Company, a developer of land, single family housing and
shopping centers in Southern California,  and was responsible for the operations
of that company until it was sold in 1991.

        Ronald D. Davis has served as President,  Chief Executive  Officer and a
director  of the  Company  since  July  1996.  From  1985 to  1996,  he was Vice
President and General  Manager of CalMat Inc.'s Central and Northern  California
operations. Prior to that, he was President of Bakersfield Ready mix.

        L. William Rands has served as Chief Financial Officer, Vice President -
Finance and  Treasurer  of the Company  since June 1985.  Mr.  Rands was elected
Secretary  of the  Company  in  1992.  Prior to  joining  the  Company,  he held
financial  positions  at  the  Carborundum  Company,  Occidental  Petroleum  and
McKinsey & Co.

        James E. Dahl has been a director of the Company  since  December  1995.
Mr. Dahl has served as a consultant to the construction  and materials  industry
since 1992.  From 1989 to 1992, he was Vice President and General Manager of the
Northwest  Division of Beazer West, Inc.  ("Beazer  West"), a company located in
the United Kingdom and engaged in the business of sand and gravel aggregates and
ready  mix  concrete.  From  1968 to 1989,  Mr.  Dahl  held  various  management
positions at Kaiser sand and gravel  Company,  his last  position  being that of
President and General Manager before it was acquired by Beazer West.

        Michael A. Kane has been  a director of the Company since December 1995.
Mr. Kane has served as a Managing  Director of  Libra/Mezzanine  Partners,  L.P.
since September 1997. From 1994 to September 1997, Mr. Kane was a

                                       20

<PAGE>



Managing  Director of Richard C. Blum & Associates,  L.P. ("Blum & Associates").
From 1992 to 1994,  Mr. Kane was a Vice  President of General  Electric  Capital
Corporation,  with nationwide  responsibility for transactions in the cement and
aggregates business,  and from 1987 to 1992 he held various other positions with
that  corporation.  Blum &  Associates  is a  money  management  firm  with  its
headquarters located in San Francisco, California, and it is the general partner
of  BCCP,  a  limited  partnership  which  makes  investments  in  building  and
construction  industries.  BCCP is the general  partner of BCCP I, the principal
stockholder of the Company.

        William T. Lightcap has been a director of the Company  since 1992.  Mr.
Lightcap has been a management  consultant since 1995. From 1993 to 1995, he was
executive  director of Hart,  King & Coldren,  a law firm  located in Santa Ana,
California.  He was self-employed from April 1992 to January 1993 and was a Vice
President and General Manager of Beazer West from 1990 to March 1992.

        Jules Ross has been a director of the Company  since 1987.  Mr. Ross has
been a Vice  President  and director of  Thackeray  Corporation  (NYSE),  a real
estate investment  corporation  located in New York City since 1988. He also has
been a Managing Director of the RDR Group, a private  investment company located
in Pomona,  New York,  since  1996.  Mr.  Ross has been a  principal  of Odyssey
Partners,  L.P., an investment  partnership  located in New York City since 1987
("Odyssey  Partners").  From  1991 to 1993,  Mr.  Ross was  President  and Chief
Executive Officer of CER Corporation,  an engineering consulting firm located in
Las Vegas, Nevada.

        Marc T.  Scholvinck has been a director of the Company since March 1997.
Mr.  Scholvinck has been a Managing Director and Chief Financial Officer of Blum
& Associates  since 1996,  and was Director of Finance and  Controller of Blum &
Associates from 1991 to 1996,  except for a ten-month period in 1993 when he was
a  self-employed  financial  consultant  and Financial  Director of Leopard Rock
Hotel  Company in  Zimbabwe.  Prior to joining Blum &  Associates  in 1991,  Mr.
Scholvinck  worked for Deloitte & Touche LLP in San Francisco,  California,  San
Jose, California and Cape Town, South Africa.

        Delbert H. Tanner has been a director  of the  Company  since July 1996.
Mr.  Tanner  has been the  Chief  Executive  Officer  of  Channel  Partners,  an
outsource  marketing firm located in Gilbert,  Arizona since 1996.  From 1993 to
1995, Mr. Tanner was Executive  Vice  President of CalMat,  Inc., a construction
materials firm located in Los Angeles,  California and from 1987 to 1993, he was
Regional Vice President of APAC, a subsidiary  construction  firm of Ashland Oil
located in Atlanta, Georgia.

        The Company is not aware of any family  relationships among any director
or executive officer of the Company.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

        Section  16(a)  of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's  officers and directors and persons who own  beneficially
more than ten percent of a registered class of the Company's  equity  securities
to file with the Securities and Exchange  Commission and Nasdaq initial  reports
of  ownership  and  reports of  changes in  ownership  of the  Company's  equity
securities.  Officers,  directors and greater than ten percent beneficial owners
are  required to furnish the Company  with copies of all Section  16(a)  reports
they file.

        Based  solely upon a review of the copies of such  reports  furnished to
the Company or written  representations that no other reports were required, the
Company  believes  that  during the  fiscal  year ended  December  31,  1997 the
Company's  officers,  directors and greater than ten percent  beneficial  owners
complied with all applicable Section 16(a) filing requirements.

                                       21

<PAGE>



ITEM 11.  EXECUTIVE COMPENSATION

        The following table sets forth certain information  regarding the annual
and  long-term  compensation  for  services  rendered  to  the  Company  in  all
capacities  for the fiscal years ended  December 31, 1995,  1996 and 1997 of the
Chief Executive  Officer and the other  executive  officers of the Company whose
salary and bonus  exceeded  $100,000  for the fiscal year ended 1997 (the "Named
Executive Officers").


<TABLE>
<CAPTION>
                                            Summary Compensation Table

                                                                                             Long-Term
                                                                                            Compensation
                                                                                            ------------
                                                                                             Restricted
                                                  Annual Compensation                       Stock Awards
                                 -------------------------------------------------------    -----------
                                                                      Other Annual                               All Other
Name and Principal Position       Year        Salary       Bonus     Compensation(5)                           Compensation
---------------------------       ----        ------       -----     ------------                              ------------
<S>                            <C>       <C>          <C>         <C>                      <C>                 <C>
Ronald D. Davis................   1997     $152,083(1)  $40,012(3)         --                   --               $9,409(7)
   President and Chief            1996       75,000(2)   50,000(4)         --                200,000(6)           4,305(7)
   Executive Officer              1995         --           --             --                   --                  --
L. William Rands...............   1997        90,000     14,040(3)         --                 12,000(6)           1,140(7)
   Vice President--Finance,       1996        82,333        -0-            --                   --                1,032(7)
     Chief Financial Officer,     1995        82,000     16,400(3)         --                   --                 815(7)
     Treasurer and Secretary
</TABLE>

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

(1)  Includes  an  annualized  salary of  $150,000  from  January  1, 1997 until
     October 31, 1997 and an increase in  annualized  salary to $165,000 for the
     remaining two months in 1997.

(2)  Mr.  Davis was  employed by the  Company on July 1, 1996,  at which time he
     became the Company's  President and Chief Executive  Officer.  Accordingly,
     Mr.  Davis'  salary and bonus for 1996 are for the period from July 1, 1996
     to December 31, 1996.

(3)  Cash bonus pursuant to the Senior Management Bonus Program.

(4)  Cash signing bonus paid to Mr. Davis upon commencement of his employment.

(5)  The total  value of certain  benefits  provided by the Company to the Named
     Executive  Officers is less than either  $50,000 or 10% of the total annual
     salary and bonus of the Named Executive Officers.

(6)  Stock options granted to the respective  Named Executive  Officer under the
     Company's 1996 Stock Option Plan.

(7)  Annual life insurance premiums paid by the Company.


                                       22

<PAGE>



       The following table sets forth certain information with respect to grants
of stock options  pursuant to the Company's 1996 Stock Option Plan during fiscal
year 1997 to the Named Executive Officers.

                                         Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                                                                                      Potential
                                                  Percentage                                     Realizable Value at
                                                   of Total                                         Assumed Annual 
                                                   Options       Exercise                        Rates of Stock Price
                                                  Granted to      or Base                            Appreciation    
                                    Options       Employees        Price                          for Option Term(1)
                                    Granted       in Fiscal         per        Expiration        --------------------
Name                               (Shares)          Year          Share          Date              5%         10%   
-----                              --------          ----          -----          ----            -------     ------
<S>                               <C>           <C>             <C>         <C>               <C>            <C>

Ronald D. Davis ...............           0           --             --             --              --          --
L. William Rands ..............      12,000         12.50%         $5.25       03/20/02           $39,620     $100,406

</TABLE>

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

(1)  Potential gains are net of the exercise price,  but before taxes associated
     with the  exercise.  Amounts  represent  hypothetical  gains  that could be
     achieved for the  respective  options if exercised at the end of the option
     term. The assumed 5% and 10% rates of stock price appreciation are provided
     in accordance with the rules of the Securities and Exchange Commission, and
     do not represent the Company's  estimate or projection of the future Common
     Stock price.  Actual gains, if any, on stock option exercises are dependent
     upon the  future  financial  performance  of the  Company,  overall  market
     conditions and the option holder's continued employment through the vesting
     period.  This table does not take into account any actual  appreciation  in
     the price of the Common Stock from the date of grant.

       The following  table sets forth certain  information  with respect to the
unexercised  options to purchase shares of Common Stock under the Company's 1996
Stock Option Plan held by the Named Executive  Officers at December 31, 1997. No
options were exercised by the Named Executive Officers during 1997.

             Aggregated Option/SAR Exercises in Last Fiscal Year and
                        Fiscal Year-End Option/SAR Values

<TABLE>
<CAPTION>

                                          Number of Unexercised                  Value of Unexercised
                                                 Options                         In-the-Money Options
                                          at December 31, 1997                  at December 31, 1997(1)
                                         ----------------------                 -----------------------
Name                                  Exercisable       Unexercisable       Exercisable       Unexercisable
----                                  -----------       -------------       -----------       -------------
<S>                                 <C>               <C>                  <C>             <C>  

 Ronald D. Davis...................     80,000             120,000           $375,000           $297,000
 L. William Rands..................     29,000               --               145,625              --

---------------------------
</TABLE>

(1)  Based on the closing  sales  price of $10.125 on  December  31, 1997 of the
     Company's Common Stock listed on The Nasdaq National Market.

Employment Agreements

         On June 2, 1996, the Company entered into an Employment  Agreement with
Ronald D. Davis  pursuant to which Mr. Davis is employed as President  and Chief
Executive  Officer of the  Company  until June 2, 1999.  Mr.  Davis'  Employment
Agreement  provides for an initial annualized base salary of $150,000 per annum,
which may be  increased  at the  discretion  of the Board of  Directors,  and an
annual  incentive  bonus in such  amount  as may be  determined  by the Board of
Directors.  Effective November 1997, the Board of Directors approved an increase
in Mr. Davis' annualized base salary to $165,000.

         Pursuant to his  Employment  Agreement,  in 1996 the  Company  paid Mr.
Davis a  signing  bonus  of  $50,000,  and  reimbursed  him for his  moving  and
temporary housing expenses. The Company also granted Mr. Davis options under the
Company's  1996 Stock Option Plan to purchase  200,000 shares of Common Stock at
prices ranging from $5.125 to $8.75 per share. The options vest over a period of
four years ending July 1, 2000. In March 1998, the Company agreed to pay $50,000
to Mr.  Davis  upon  the  sale  of all or  part  of the  Company  as  additional
compensation for Mr. Davis'

                                       23

<PAGE>



services  provided in connection with such transaction.  Accordingly,  Mr. Davis
will receive such $50,000 payment upon consummation of the Merger.

         On July 25, 1995, the Company entered into an Employment Agreement with
L. William  Rands  pursuant to which Mr. Rands is employed as Vice  President of
Finance,  Secretary and Treasurer of the Company until July 31, 1998. Mr. Rands'
Employment  Agreement  provides for an initial annualized base salary of $82,000
per annum,  which may be increased at the  discretion of the Board of Directors,
and an annual  incentive  bonus in such amount as may be determined by the Board
of  Directors.  Effective  December  1996,  the Board of  Directors  approved an
increase in Mr. Rands' annualized base salary to $90,000.

         Pursuant to an agreement  dated as of June 23, 1997 between the Company
and Mr. Rands,  the Company has agreed to pay $50,000 to Mr. Rands upon the sale
of all or part of the Company as additional compensation for Mr. Rands' services
provided  in  connection  with such  transaction.  Accordingly,  Mr.  Rands will
receive such $50,000 payment upon consummation of the Merger.

Pension Plan

         The Company  provides  certain  retirement  benefits  to its  employees
pursuant  to an  Employee  Pension  Plan and Trust  Agreement,  as  amended  and
restated (the "Pension  Plan").  Employees  are eligible to  participate  in the
Pension Plan after they have completed one year of service with the Company.

         Pursuant  to the Pension  Plan,  the  Company  contributes  a specified
percentage of each participating  employee's compensation to the Pension Plan in
each  year.  For 1997,  the  specified  percentage  was 7%,  subject  to certain
limitations and  exceptions.  The Company's  contributions  are allocated to the
account of each participating employee, subject to a maximum permissible amount.
Employees may also make voluntary  contributions to the Pension Plan, subject to
certain limitations.  A participating employee's account at his or her selection
is invested among a limited number of mutual funds.

         Upon  retirement,  an employee may elect the distribution of his or her
accrued benefit in the form of a lump sum payment, various forms of annuities or
installment  payments.  Accordingly,  the annual benefits payable to an employee
under the Pension Plan would depend upon the form of payment  elected.  Assuming
Mr.  Davis  and Mr.  Rands  elected  to  receive  distributions  in the  form of
installment  payments over 20 years,  and assuming a yield of 10% with no salary
increases, the estimated annual payments payable to Mr. Davis and Mr. Rands upon
retirement at the normal retirement age (65) would be approximately  $35,000 and
$45,000, respectively.

The Employee Stock Ownership Plan

         The Company's ESOP owns approximately 1,163,719 shares or approximately
26% of the Company's  Common Stock. The ESOP is an employee stock ownership plan
qualified under Section 401(a) of the Internal Revenue Code (the "Code").

         The ESOP is  currently  administered  by the  Company  as the ESOP Plan
Administrator  and the Company's Chief Executive Officer is authorized to act on
behalf of the  Company.  The ESOP also allows the Board of  Directors to appoint
other individuals or an Advisory Committee to administer the plan. The assets of
the ESOP are held in trust by First Security Bank of Utah, N.A. (the "Trustee").
The Trustee  holds legal title to all assets of the ESOP and as a result has the
power to buy and sell the Common  Stock held by the ESOP,  but only  pursuant to
written directions of the Company.

         Each  employee  of the  Company  with at least one year of  service  is
eligible to participate in the ESOP. The ESOP Plan Administrator establishes and
maintains  an account  for each  participant  that  reflects  the  participant's
allocable share of the ESOP's assets.  Each participant's share of the Company's
contribution  for a plan year is  determined  by  multiplying  the total  amount
contributed by a fraction equal to the proportion that the participant's  salary
bears to the  total  salary  of all  participant's  for  such  year  subject  to
individual  allocation  limits under the Code. A  participant's  account becomes
fully vested and nonforfeitable  after six years of employment with the Company,
or earlier if the participant  attains age 62, becomes totally disabled or dies.
The  participant's  account  otherwise  vests  at a rate  of  20%  per  year  of
employment  beginning with the second year of  employment.  The Company pays all
administrative costs of the ESOP.

                                       24

<PAGE>



         Mr. Davis does not participate in the ESOP. Mr. Rand's is a participant
in the ESOP and his  allocable  share of the ESOP's  assets for the years  1995,
1996 and 1997 were valued at $4,564, $5,192 and $5,919, respectively.

Compensation of Directors

         Each  non-employee  director  receives  $1,000  per Board of  Directors
meeting attended,  plus expenses,  and $500 for each standing Board of Directors
Committee meeting which he attends (Audit Committee,  Compensation Committee and
Strategic  Planning  Committee).  The Company also has entered into a consulting
agreement  with BCCP  pursuant to which the Company pays BCCP $200,000 per year.
Marc T.  Scholvinck  is a Managing  Director of Blum &  Associates,  the general
partner of BCCP, and Robert L. Miller is a limited  partner of BCCP. BCCP is the
general  partner of BCCP I, a  significant  stockholder  of the  Company,  and a
family trust  controlled by Mr. Miller is a limited partner of BCCP I. See "Item
13--Certain Relationships and Related  Transactions--Consulting  Agreement." The
Company has also granted stock options to certain directors pursuant to its 1994
Stock  Option  Plan  and its 1996  Stock  Option  Plan.  See  "Item  13--Certain
Relationships and Related Transactions."

                          COMPENSATION COMMITTEE REPORT

         Notwithstanding  anything  to  the  contrary  set  forth  in any of the
previous  filings  made by the  Company  under the  Securities  Act of 1933,  as
amended,  or the  Securities  Act of 1934,  as amended,  that might  incorporate
future filings,  including, but not limited to, this Annual Report on Form 10-K,
in  whole  or in part,  the  following  Compensation  Committee  Report  and the
performance  graph  appearing  herein shall not be deemed to be  incorporated by
reference into any such future filings.

         The Company's  executive  compensation  program is  administered by the
Compensation  Committee of the Board of Directors.  The role of the Compensation
Committee, which is comprised entirely of outside, non-employee directors, is to
review and approve salaries and other  compensation of the executive officers of
the Company.  The  Committee  also reviews and approves  various  other  Company
compensation policies and administers the Company's 1994 Stock Option Plan, 1996
Stock Option Plan,  including  the review and approval of stock option grants to
the  executive  officers of the  Company.  This  Compensation  Committee  Report
discusses the Company's  executive  compensation  policies and the basis for the
compensation  paid to the  Company's  executive  officers,  including  its Chief
Executive  Officer,  Ronald D. Davis,  during the fiscal year ended December 31,
1997.

Executive Compensation Philosophy

         In designing its compensation  programs, the Company follows its belief
that  compensation  should  reflect  the value  created for  stockholders  while
supporting the Company's  business  strategies and short-terms  operating goals.
Accordingly,  the Company's  policy with respect to executive  compensation  has
been  designed to align the  interests of  management  with the interests of the
Company's  stockholders  adequately and fairly compensate  executive officers in
relation  to  their  responsibilities,  capabilities  and  contributions  to the
Company in a manner that is comparable  with  compensation  paid by companies of
comparable size or within the Company's industry.

         Total cash  compensation  for the  executive  officers  consists of the
following  components:  (a) base  salary,  (b) annual  bonus  compensation,  (c)
incentive compensation in the form of stock options granted pursuant to the 1994
Stock Option Plan and the 1996 Stock Option Plan and (d) certain other  benefits
provided to the Company's executive officers.

         Base  Salary.  Base  salaries in 1997 for the  executive  officers  are
established at levels considered  appropriate in respect to the duties and scope
of  responsibilities  of each executive  officer's  position.  Each executive is
reviewed  individually on an annual basis.  Salary  adjustments are based on the
individual's  experience and background,  performance during the prior year, the
general  movement of  salaries  in the  marketplace,  and the  Company's  fiscal
position.

         Annual  Bonus  Compensation.  Pursuant to the Senior  Management  Bonus
Program Fiscal 1997, the Compensation Committee may grant annual bonus awards to
individual  executive officers based on the executive  officer's  performance in
assisting the Company in meeting  expected  stockholder  returns and  management
goals.  The  Compensation  Committee  has the  authority to select the executive
officers and employees who will be granted bonuses and to determine

                                       25

<PAGE>



the timing,  pricing and amount of any such bonus.  In determining the amount of
bonus to be paid to the Company's Chief Executive Officer and the salary,  bonus
and  other  compensation  to be  paid to the  other  executive  officers  of the
Company,  the Compensation  Committee considered a number of factors relating to
corporate  performance,  including,  among others,  whether the Company had been
successful in meeting management's earnings projections, whether the Company had
met its goals for expanding its business  operations and whether  management had
met its goals for  strengthening  the Company's  management  team. The Committee
also  considered  whether  the  compensation  paid  to  executive  officers  was
sufficient to attract and retain qualified executive officers.

         Incentive Compensation. The Compensation Committee is also responsible,
within  the terms of the  respective  plans,  for  administering  the 1994 Stock
Option Plan and the 1996 Stock Option Plan. The Compensation  Committee provides
intermediate  and  long-term  incentives  through  grants  of stock  options  to
executive  officers.  Stock options are designed to provide incentive for future
performance.

         Other  Benefits.  Other elements of  compensation  include medical life
insurance  benefits  available to employees  generally.  Executive officers also
receive  supplemental  life insurance  benefits  which,  in addition to the life
insurance benefits received by all employees.

         Compensation  of the  Chief  Executive  Officer.  The  Chief  Executive
Officer,  Mr.  Ronald  D.  Davis,  participates  in the  executive  compensation
programs  described in this report. Mr. Davis became the Chief Executive Officer
on July 1, 1996 with an initial  annualized  base salary of $150,000.  Effective
November 1997, Mr. Davis's salary was increased to $165,000 based on the factors
discussed above in "Base Salary,"  including a review of market pay trends.  For
services rendered during fiscal 1997, the Committee awarded Mr. Davis a bonus of
approximately  $40,012  pursuant to the Senior  Management  Bonus Program Fiscal
1997 based on  achieving  certain  financial  objectives  during the fiscal year
1997. The Company  typically grants options to is executive  officers in January
of each year. However,  pending consummation of the proposed Merger, the Company
has not granted any stock  options to executive  officers  during 1998. In March
1998, the Company has agreed to pay $50,000 to Mr. Davis upon the sale of all or
part of the Company as additional  compensation for Mr. Davis' services provided
in connection with such transaction. Accordingly, Mr. Davis will receive $50,000
upon consummation of the Merger.

                                    Robert L. Miller, Chair
                                    James E. Dahl
                                    William T. Lightcap
                                    Delbert H. Tanner

           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The  Compensation  Committee  of  the  Board  of  Directors,  which  is
responsible  for the  compensation  policies of the Company  with respect to its
executive officers,  is comprised of Robert L. Miller, James E. Dahl, William T.
Lightcap and Delbert H. Tanner.  Mr.  Miller is a limited  partner of BCCP and a
family trust  controlled by Mr. Miller is a limited partner of BCCP I. BCCP I is
a significant  stockholder  of the Company,  and BCCP is the general  partner of
BCCP I. BCCP has entered into a consulting  agreement with the Company  pursuant
to which the  Company  pays  BCCP  $200,000  annually  for  consulting  services
rendered to the Company by BCCP. See "Item 13--Certain Relationships and Related
Transactions--Consulting Agreement."

                             STOCK PERFORMANCE GRAPH

         Set  forth  below  is a  line  graph  comparing  the  cumulative  total
stockholder  return (stock price  appreciation  plus dividends) of the Company's
Common Stock with the  cumulative  total return of the Nasdaq Market Index and a
market  weighted index of publicly  traded peers for the period from May 5, 1994
(the date of the Company's  initial public offering)  through December 31, 1997.
The graph assumes that $100 is invested in each of the Common Stock,  the Nasdaq
Market Index and the index of publicly  traded peers on May 5, 1994 and that all
dividends are reinvested.  The publicly  traded  companies in the peer group are
CalMat Co.,  Centex  Construction  Products,  Inc.,  Dravo  Corp.,  Florida Rock
Industries,  Inc.,  LaFarge Corp.,  Lone Star  Industries,  Inc.,  Medusa Corp.,
Southdown, Inc., Texas Industries,  Inc., United States Lime & Mineral, Inc. and
Vulcan Materials Corp.

                                       26

<PAGE>



                COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
                               AMONG MONROC, INC.;
                           PEER GROUP AND BROAD MARKET


<TABLE>
<CAPTION>

      Measurement Period               Company           Nasdaq Market Index          Peer Group Index
      ------------------               -------           -------------------          ----------------
<S>                                 <C>                 <C>                           <C> 

      May 5, 1994                      $100.00                 $100.00                     $100.00
      December 31, 1994                  70.00                  101.44                       94.57
      December 31, 1995                 107.50                  131.58                      110.88
      December 31, 1996                 127.50                  163.51                      127.61
      December 31, 1997                 202.50                  200.01                      201.66
</TABLE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding beneficial
ownership  of the Common  Stock as of March 20, 1998 by (i) each person known to
the Company to beneficially own more than 5% of the outstanding shares of Common
Stock,  (ii) each director of the Company,  (iii) each executive  officer of the
Company and (iv) all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>

                                                             Number of Shares
                                                               Beneficially             Percent
Name and Address of Beneficial Owner                             Owned(1)               of Class
------------------------------------                            ----------              --------
<S>                                                        <C>                        <C> 

Richard C. Blum (2) ....................................            3,721,577             61.9%
         909 Montgomery Street, Suite 400
         San Francisco, CA 94133
Colonial Commercial Corp................................              328,071              7.3
         3601 Hemstead Turnpike
         Suite 121-1
         Levittown, NY  11756
Monroc, Inc. Employee Stock Ownership Plan(3)...........            1,163,719             25.8
James E. Dahl(4)........................................               13,000              *
Ronald D. Davis(5)......................................               80,000              1.7
Michael A. Kane.........................................                   --              *
William Lightcap(7).....................................               15,000              *
Robert L. Miller(6).....................................            3,721,577             61.9
L. William Rands(8).....................................               43,658              1.0
Jules Ross(9)...........................................               21,566              *
Marc T. Scholvinck(6)...................................            3,721,577             61.9
Delbert H. Tanner(10)...................................               13,100              *
All directors and executive officers as a group
 (14 persons)...........................................            3,907,901             63.4
</TABLE>

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

*    Represents ownership of less than 1.0%.

(1)  Except as indicated  below,  each of the  beneficial  owners  listed in the
     above  table  has,  to  the  knowledge  of the  Company,  sole  voting  and
     investment power with respect to the indicated shares of Common Stock.


                                       27

<PAGE>



(2)  Mr.  Blum is a  controlling  person  and  Chairman  of  Richard  C.  Blum &
     Associates Inc.  ("RCBA Inc."),  which is the general partner of Richard C.
     Blum &  Associates  LP  ("Blum &  Associates").  Blum &  Associates  is the
     general partner of Building and Construction Partners, L.P. ("BCCP"), which
     is the general  partner of BCCP I, L.P.  ("BCCP I"). These shares of Common
     Stock include (i) 1,650,000  shares held directly by BCCP I, (ii) 1,500,000
     shares subject to an unexercised  warrant held by BCCP I that entitles BCCP
     I to purchase up to 1,500,000 shares of Common Stock for $6.25 per share at
     any time prior to December 28, 2000,  (iii) 328,071 shares held by Colonial
     Commercial  Corp.  ("Colonial")  that are  subject  to  certain  agreements
     pursuant  to which  Colonial  has  agreed  to vote its  shares  in favor of
     persons originally  nominated as directors by BCCP, so long as such persons
     are  nominated for  re-election,  until the end of the year 2000 (see "Item
     13--Certain  Relationships and Related  Transactions--Certain  Purchase and
     Consulting  Agreements)  and (iv) 243,506  unallocated  shares owned by the
     ESOP,  under the terms of which  unallocated  shares  owned by the ESOP are
     voted by management in accordance  with the  determination  of the Board of
     Directors  of the  Company,  50% of the  directors  of which  have has been
     nominated  by  or  are   affiliated   with  BCCP  (see  "Item   13--Certain
     Relationships  and Related  Transactions--Certain  Purchase and  Consulting
     Agreements).  Mr. Blum disclaims  beneficial  ownership of these securities
     except to the extent of his pecuniary interest thereof.

(3)  ESOP participants vote the shares allocated to their individual accounts on
     matters  submitted to a vote of stockholders.  Under the terms of the ESOP,
     the  243,506  unallocated  shares  owned  by the  ESOP  are to be  voted in
     accordance with the determination of the Board of Directors of the Company.

(4)  Includes  options to purchase  13,000 shares  granted to Mr. Dahl which are
     exercisable within 60 days.

(5)  Includes  options to purchase  80,000 shares granted to Mr. Davis which are
     exercisable within 60 days.

(6)  Includes 3,721,577 shares beneficially owned by BCCP I. Mr. Scholvinck is a
     Managing Director and the Chief Financial Officer of Blum & Associates, the
     general  partner of BCCP. BCCP is the general partner of BCCP I. Mr. Miller
     is a limited partner of BCCP and a family trust controlled by Mr. Miller is
     a limited partner of BCCP I.

(7)  Includes  10,000  shares  owned  directly  by Mr.  Lightcap  and options to
     purchase 5,000 shares granted to Mr. Lightcap which are exercisable  within
     60 days.

(8)  Includes 14,658 shares  allocated to Mr. Rands held in the ESOP and options
     to purchase 29,000 shares granted to Mr. Rands which are exercisable within
     60 days.

(9)  Includes  11,566 shares owned directly by Mr. Ross, and options to purchase
     10,000 shares granted to Mr. Ross which are exercisable within 60 days.

(10) Includes  100  shares  beneficially  owned by Mr.  Tanner  and  options  to
     purchase 13,000 shares granted to him which are exercisable within 60 days.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Purchase and Consulting Agreements

         BCCP I acquired  an  interest  in the  Company  on  December  28,  1995
pursuant to a Stock Purchase  Agreement between the Company and BCCP (the "Stock
Purchase  Agreement").  Prior to the closing of the stock purchase  transaction,
BCCP  assigned  to its  affiliate,  BCCP I, all of its  rights  under  the Stock
Purchase Agreement (other than its right to designate directors and rights under
a  consulting  agreement  between  BCCP and the  Company).  BCCP is the  general
partner of BCCP I. Robert L.  Miller,  a director of the  Company,  is a limited
partner of BCCP and a family trust controlled by Mr. Miller is a limited partner
of BCCP I. Marc T. Scholvinck, a director of the Company, is a Managing Director
and the Chief  Financial  Officer of Blum & Associates,  the general  partner of
BCCP.

         Pursuant  to the  Stock  Purchase  Agreement,  BCCP  had the  right  to
nominate four directors to be appointed  immediately  following the consummation
of the stock purchase transaction.  Of the four directors originally nominated


                                       28

<PAGE>



by BCCP pursuant to the Stock Purchase  Agreement and thereafter  elected to the
Board of Directors,  three were  re-elected at the Company's 1997 annual meeting
of stockholders  (Messrs.  Miller,  Kane and Dahl). Mr.  Scholvinck,  a Managing
Director and the Chief Financial Officer of Blum & Associates,  was appointed to
the  Board of  Directors  in March  1997 to fill a  vacancy  resulting  from the
resignation  of a director and was  re-elected  to the Board of Directors at the
Company's 1997 annual meeting of stockholders.

         Pursuant to the Stock Purchase Agreement,  the Company and BCCP entered
into a consulting  agreement  which  provides  that, so long as BCCP's  nominees
constitute a majority of the Board of  Directors,  BCCP will offer  consultation
and  advice  with  respect  to  the  Company's  business,   including  strategic
acquisitions,  financing  and  business  strategy.  As  compensation  for  these
services, the Company agreed to pay BCCP $200,000 per year and to reimburse BCCP
for its out of pocket expenses. In 1997, the Company paid BCCP $200,000 for such
services and reimbursed BCCP approximately $5,700 for expenses.

Promissory Notes to Stockholders

         The Company has issued to Wel-Com Financial Services,  Inc. ("Wel-Com")
a promissory  note in the principal  amount of $718,750.  The terms of this note
require the Company to pay  $120,000  per year,  together  with  interest at the
prime rate,  through the year 2001.  As of December  31, 1997,  the  outstanding
balance of this note was  $298,750.  Wel- Com is a  wholly-owned  subsidiary  of
Colonial,  which owns 328,071 shares or  approximately  7.3% of the  outstanding
Common  Stock of the Company.  The  President of  Colonial,  Bernard  Korn,  was
formerly a director of the Company,  and  pursuant to an  agreement  between the
Company and Colonial,  he has been  designated as an observer to attend meetings
of the Board of Directors of the Company. See "--Consulting Agreement."

         The Company  issued a  promissory  note to a group of seven  investors,
including  Odyssey Partners,  in the principal amount of $718,750.  The terms of
the note  required the Company to pay $120,000 per year,  together with interest
at the prime rate, through the year 2001. On June 26, 1997, the Company paid the
remaining  outstanding  principal  balance  of  $373,750,  less  a  ten  percent
prepayment  discount.  Jules Ross, a director of the Company,  is a principal of
Odyssey.

Indebtedness of Management

         On October 18, 1996,  the Company  loaned  $140,000 to Ronald D. Davis,
President and Chief  Executive  Officer of the Company,  in connection  with his
purchase of a residence.  The promissory note evidencing this loan is secured by
a deed of trust on Mr. Davis' residence and bears interest at the rate of 7% per
annum. The promissory note required  payments of interest only until October 23,
1997,  when the entire  principal  balance  became due. On January 1, 1998,  Mr.
Davis tendered a replacement  one-year promissory note due on January 1, 1999 on
the same terms as the original note. Mr. Davis  continued to pay interest at the
rate of 7% per annum through December 31, 1997. During 1997, Mr.
Davis paid a total of $9,800 pursuant to this loan.

Employment Agreements

         The Company  has entered into employment  with certain of its executive
officers. See "Item 11--Executive Compensation--Employment Agreements."



                                       29

<PAGE>



                                     PART IV

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

         (a) (1)  Index to Consolidated Financial Statements

                  Report of Deloitte & Touche LLP, Independent Certified
                  Public Accountants........................................F-1

                  Report of Grant Thornton LLP, Independent Certified
                  Public Accountants........................................F-2

                  Consolidated Balance Sheets at December 31, 1997
                  and 1996..................................................F-3

                  Consolidated Statements of Operations for the Years
                  ended December 31, 1997, 1996 and 1995....................F-5

                  Consolidated Statements of Stockholders' Equity
                  for the Years ended December 31, 1997, 1996 and 1995......F-6

                  Consolidated Statements of Cash Flows for the Years
                  ended December 31, 1997, 1996 and 1995....................F-7

                  Notes to Financial Statements.............................F-9

         (a) (2)  Financial Statement Schedules

                  Report of Deloitte & Touche LLP, Certified Public
                  Accountants..............................................F-25

                  Report of Grant Thornton LLP, Certified Public
                  Accountants..............................................F-25

                  Schedule II - Valuation and Qualifying Accounts..........F-25

         (b)  Reports on Form 8-K

                  None

         (c)  Exhibits

                2.1    Stock Purchase Agreement dated January 6, 1998
                       between the Company and Treasure Valley Concrete, Inc.(7)

                2.2    Agreement and Plan of Merger dated January 29, 1998 among
                       the  Company,  U.S.  Aggregates,  Inc.  and  Western 
                       Acquisition, Inc.(8)

                3.1    Certificate of Incorporation(1)

                3.2    By Laws(1)

                10.1   Monroc, Inc. Employee Stock Ownership Plan, amended and
                       restated as of April 1, 1987(1)

                10.2   Monroc, Inc. 1994 Stock Option Plan, amended as of April
                       18, 1997(3)

                10.3   Form of indemnity agreements with directors(1)

                10.4   Amendment  dated  February  27,  1996  to  the  Loan  and
                       Security  Agreement  dated  July  26,  1993  between  the
                       Company and CIT Group/Credit Finance, Inc. (4)

                                       30

<PAGE>



                10.5   Loan and Security Agreement  dated July 26,  1993 between
                       the Company and CIT Group/Credit Finance, Inc. (1)

                10.6   Stock  Purchase  Agreement  dated July  26, 1995  by  and
                       between Building  and Capital Construction Partners, L.P.
                       and Monroc, Inc.(2)

                10.7   Consulting  Agreement  dated  December  28, 1995  by  and
                       between  Building and Capital Construction Partners, L.P.
                       and Monroc, Inc.(2)

                10.8   Voting Agreement  dated December 28,  1995 by and between
                       Building  and  Capital  Construction  Partners,  L.P. and
                       Colonial Commercial Corp.(2)

                10.9   Voting  Agreement dated  December 28, 1995 by and between
                       Building  and  Capital Construction  Partners,  L.P.  and
                       Odyssey Partners (1)

                10.10  Employment Agreement dated July 25, 1995  with L. William
                       Rands(5)

                10.11  Monroc, Inc.  1996 Stock Option  Plan,  amended April 18,
                       1997(3)

                10.12  Employment Agreement  dated June  2, 1996  with Ronald D.
                       Davis(5)

                10.13  Real  Estate  Purchase Agreement  dated December  27,1996
                       between the Company and Whitney Family Trust(5)

                10.14  Snake   River   Correctional   Institution   Subcontract
                       Agreement dated September 12, 1995 by and between Monroc,
                       Inc. and Hoffman Construction Co.*

                10.15  Snake   River   Correctional   Institution   Subcontract
                       Agreement dated December 14, 1995 by and  between Monroc,
                       Inc. and Hoffman Construction Co.*

                10.16  Sand  and Gravel  Lease dated  May 1, 1996 by and between
                       Monroc, Inc.  and the  State of  Wyoming,  Board of  Land
                       Commissioners*

                10.17  Sand  and Gravel  Lease dated  October 25,  1996  by  and
                       between Monroc, Inc. and LLK, Inc.*

                10.18  Sand  and Gravel  Lease dated  April May 29,  1997 by and
                       between Monroc, Inc. and Alma L. Rushton*

                10.19  Memorandum of Agreement  dated September  17, 1997 by and
                       between Monroc, Inc. and Kenneth Dunn*

                16     Letter from Grant Thornton LLP dated April 10, 1997(6)

                21     Subsidiaries of Monroc, Inc.*

                23.1   Consent of Deloitte & Touche LLP*

                23.2   Consent of Grant Thornton LLP*

                27     Financial Data Schedule*

                99.1   Voting Agreement dated January 29, 1995 between U.S.
                       Aggregates, Inc., and BCCP I, L.P.(8)

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

(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 (File No. 33-75172).


                                       31

<PAGE>



(2)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     December 28, 1995.

(3)  Incorporated  by reference to the Company's Proxy Statement dated April 18,
     1997.

(4)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1995.

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

(6)  Incorporation  by reference  of the  Company's  Current  Report on Form 8-K
     filed April 14, 1997.

(7)  Incorporation  by reference  to the  Company's  Current  Report on Form 8-K
     filed January 15, 1998.

(8)  Incorporation  by reference  to the  Company's  Current  Report on Form 8-K
     filed February 3, 1998.

     *        Filed herewith

                                       32

<PAGE>

MONROC, INC. AND SUBSIDIARY

Consolidated Financial Statements for the Years Ended December 31, 1997 and 1996
and for the Three Years in the Period Ended  December  31, 1997 and  Independent
Auditors' Report



<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and
  Stockholders of Monroc, Inc.:

We have audited the accompanying  consolidated balance sheet of Monroc, Inc. and
Subsidiary  (the  Company) as of December 31, 1997 and the related  consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended.  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 audit. The consolidated financial
statements of the Company for each of the two years in the period ended December
31, 1996 were audited by other auditors  whose report,  dated February 11, 1997,
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  such 1997 consolidated  financial statements present fairly, in
all material respects,  the financial position of Monroc, Inc. and Subsidiary as
of December 31, 1997, and the results of their operations and cash flows for the
year then ended in conformity with generally accepted accounting principles.



DELOITTE & TOUCHE LLP

Salt Lake City, Utah
March 31, 1998


                                      F-1

<PAGE>


                              REPORT OF INDEPENDENT

                          CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors

Monroc, Inc.

We have audited the accompanying  consolidated balance sheet of Monroc, Inc. and
Subsidiary,  as of December 31, 1996, and the related consolidated statements of
operations,  stockholders'  equity,  and cash flows for each of the two years in
the  period  ended  December  31,  1996.  These  financial  statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Monroc, Inc. and
Subsidiary,  as of December  31,  1996,  and the  consolidated  results of their
operations  and their  consolidated  cash flows for each of the two years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.



                                                        /s/ Grant Thornton LLP

                                                        GRANT THORNTON LLP

Salt Lake City, Utah

February 11, 1997

                                      F-2

<PAGE>

<TABLE>
<CAPTION>

MONROC, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
__________________________________________________________________________________________________

ASSETS                                                                1997               1996
<S>                                                           <C>                  <C> 

CURRENT ASSETS:
  Cash and cash equivalents                                     $   752,280          $ 1,189,631
  Accounts receivable, net of allowance for discounts and
   doubtful accounts of $263,165 in 1997 and $301,624 in 1996     9,022,922           13,201,601
  Other receivables                                                 157,236
  Note receivable from officer                                      140,000
  Costs and estimated earnings in excess of billings
   on uncompleted contracts                                         215,045              181,634
  Inventories                                                     4,684,107            3,977,274
  Prepaid expenses                                                1,165,697            1,305,491
                                                                -----------          -----------
          Total current assets                                   16,137,287           19,855,631
                                                                -----------          -----------

PROPERTY, PLANT, AND EQUIPMENT - At cost                         30,021,473           27,310,062
Less accumlated depreciation and amortization                    12,363,433           11,802,432
                                                                -----------          -----------
          Total property, plant, and equipment                   17,658,040           15,507,630
                                                                -----------          -----------

AGGREGATE DEPOSITS                                                5,394,458            2,477,154
Less accumulated depletion                                          444,496              337,595
                                                                -----------          -----------
          Total aggregate deposits                                4,949,962            2,139,559
                                                                -----------          -----------
LAND                                                              1,377,190            1,436,204

LAND HELD FOR SALE                                                1,667,329              915,951

OTHER ASSETS, At cost, less accumulated amorization of
  $359,307 in 1997 and $301,545 in 1996                             725,915              783,277
                                                                -----------          -----------
TOTAL                                                           $42,515,723          $40,638,252
                                                                ===========          ===========
</TABLE>

See notes to consolidated financial statements.                     (Continued)


                                       F-3
<PAGE>

<TABLE>
<CAPTION>

MONROC, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
_________________________________________________________________________________________________

LIABILITIES AND STOCKHOLDERS' EQUITY                                  1997               1996
<S>                                                          <C>                   <C> 

CURRENT LIABILITIES:
  Line of credit                                                $ 5,898,872          $ 5,354,688
  Current maturities of long-term obligations:
   Related parties                                                  120,000              240,000
   Other                                                          1,244,444              891,289
  Trade accounts payable                                          4,581,624            6,328,925
  Accrued liabilities                                             2,419,969            1,549,652
  Billings in excess of costs and estimated earnings
   on uncompleted contracts                                         161,221              690,254
                                                                -----------          -----------
          Total current liabilities                              14,426,130           15,054,808

LONG-TERM OBLIGATIONS, Less current maturities:
  Related parties                                                   178,750              597,500
  Other                                                           6,647,986            4,564,243

DEFERRED COMPENSATION                                               748,641              779,263

DEFERRED INCOME TAXES                                               777,485              971,855

COMMITMENTS AND CONTINGENCIES (Notes 6 and 11)

STOCKHOLDERS' EQUITY:
  Preferred stock, $0.01 par value; 1,000,000
   shares authorized; none issued 
  Common stock, $0.01 par value; 20,000,000 shares
   authorized; issued and outstanding 4,514,200 and
   4,467,000 as of December 31, 1997 and 1996 respectively           45,142               44,670
  Capital in excess of par value                                 24,717,191           24,481,864
  Accumulated deficit                                            (3,301,556)          (3,331,905)
                                                                -----------          -----------
          Total                                                  21,460,777           21,194,629

Less unpaid principal of Employee Stock Ownership
  Plan note receivable                                           (1,724,046)          (2,524,046)

          Total stockholders' equity                             19,736,731           18,670,583
                                                                -----------          -----------
TOTAL                                                           $42,515,723          $40,638,252
                                                                ===========          ===========
</TABLE>

See notes to consolidated financial statements.                      (Concluded)


                                       F-4

<PAGE>

<TABLE>
<CAPTION>

MONROC, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
________________________________________________________________________________________________________________

                                                                 1997            1996                1995
<S>                                                          <C>             <C>               <C>

NET SALES                                                    $61,383,362       $70,401,396       $48,302,248

COSTS AND EXPENSES:
  Cost of sales                                               52,584,214        63,045,372        40,206,797
  General and administrative expenses                          6,925,124         5,941,017         4,783,696
  Contribution to ESOP                                           800,000           800,000           800,000
  Restructuring charges                                                          1,500,000
                                                             -----------       -----------       -----------
          Total costs and expenses                            60,309,338        71,286,389        45,790,493
                                                             -----------       -----------       -----------

OPERATING PROFIT (LOSS)                                        1,074,024          (884,993)        2,511,755
                                                             -----------       -----------       -----------

OTHER INCOME (EXPENSE):
  Gain (loss) on sale of property, plant,
   equipment, and land                                           (16,029)           35,930           129,085
  Interest income                                                 33,587            73,811            34,222
  Interest expense                                            (1,046,833)         (810,122)       (1,385,434)
                                                             -----------       -----------       -----------

          Total other expense                                 (1,029,275)         (700,381)       (1,222,127)
                                                             -----------       -----------       -----------

EARNINGS (LOSS) BEFORE INCOME TAXES                               44,749        (1,585,374)        1,289,628

INCOME TAX BENEFIT                                              (194,370)         (217,695)          (66,023)
                                                             -----------       -----------       ----------- 
NET EARNINGS (LOSS)                                          $   239,119       $(1,367,679)      $ 1,355,651
                                                             ===========       ===========       ===========
BASIC EARNINGS PER COMMON SHARE                              $      0.05       $     (0.31)      $      0.48
                                                             ===========       ===========       ===========
DILUTED EARNINGS PER COMMON SHARE                            $      0.05       $     (0.31)      $      0.48
                                                             ===========       ===========       ===========
</TABLE>

See notes to consolidated financial statements.


                                       F-5

<PAGE>

<TABLE>
<CAPTION>

MONROC, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
________________________________________________________________________________________________________________
                                                                                                      Employee
                                                                                                        Stock 
                                                                  Capital in                          Ownership
                                                                   Excess of      Accumulated         Plan Note
                                             Common Stock          Par Value        Deficit           Receivable
                                       -----------------------
                                        Shares         Amount
<S>                                   <C>            <C>         <C>            <C>               <C> 

BALANCE AT JANUARY 1, 1995              2,817,000      $28,170     $15,722,119    $(3,319,877)       $(4,124,046)

Common stock issued                     1,650,000       16,500       8,759,745

Net earnings for the year                                                           1,355,651

Reduction of ESOP not receivable                                                                         800,000
                                        ---------      -------     -----------    -----------        -----------
BALANCE AT DECEMBER 31, 1995            4,467,000       44,670      24,481,864     (1,964,226)        (3,324,046)

Net loss for the year                                                              (1,367,679)

Reduction of ESOP note receivable                                                                        800,000
                                        ---------      -------     -----------    -----------        -----------
BALANCE AT DECEMBER 31, 1996            4,467,000       44,670      24,481,864     (3,331,905)        (2,524,046)

Common stock issued                        47,200          472         235,327

Purchase of stock warrants                                                           (208,770)

Net earnings for the year                                                             239,119

Reduction of ESOP note receivable                                                                        800,000
                                        ---------      -------     -----------    -----------        -----------
BALANCE AT DECEMBER 31, 1997            4,514,200      $45,142     $24,717,191    $(3,301,556)       $(1,724,046)
                                        ==========     =======     ===========    ===========        ===========

</TABLE>

See notes to consolidated financial statements.


                                       F-6

<PAGE>

<TABLE>
<CAPTION>

MONROC, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
________________________________________________________________________________________________________________

                                                                 1997            1996                1995
<S>                                                       <C>               <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings (loss)                                        $   239,119       $(1,367,679)      $ 1,355,651
  Adjustments to reconcile net earnings (loss) to net
   cash provided by (used in) operating activities:
   Depreciation and amortization of property, plant,
    and equipment                                              2,302,722         2,376,609         2,384,383
  Deferred income tax expense                                   (194,370)         (217,695)         (106,887)
  Restructuring charges                                                          1,500,000
  Provision for contribution to ESOP and repayment
   of ESOP note receivable                                       800,000           800,000           800,000
  Amortization of other assets                                    57,362            81,886            82,153
  Provision for discounts and doubtful accounts                  397,402           536,863           532,764
  Depletion of aggregate deposits                                106,902           107,210            60,776
  (Gain) loss on sale of property, plant and
    equipment, and land                                           16,029           (35,197)         (129,085)
  Changes in assets and liabilities:
    Accounts receivable                                        3,624,041        (7,098,586)       (2,597,383)
    Note receivable from officer                                (140,000)
    Costs and estimated earnings in excess
     of billings on uncompleted contracts                        (33,411)          (28,691)            5,943
    Inventories                                                 (761,485)       (1,161,494)         (846,865)
    Prepaid expenses                                             139,794          (215,599)         (693,941)
    Other assets                                                                   518,213          (158,710)
    Trade accounts payable                                    (1,747,301)        1,021,622         2,280,071
    Accrued liabilities                                          870,317            26,864           365,864
    Billings in excess of costs and estimated
     earnings on uncompleted contracts                          (529,033)          447,724            84,325
    Deferred compensation                                        (30,622)           18,779            92,441
                                                             -----------       -----------       ----------- 
      Net cash provided by (used in) operating activities      5,117,466        (2,689,171)        3,511,500
                                                             -----------       -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant, and equipment                 (4,357,454)       (4,502,562)       (1,996,270)
  Proceeds from sale of property, plant, 
   equipment, and land                                           306,293           329,323           390,572
  Additions to aggregate deposits                             (2,917,305)          (22,500)
  Addition to land                                              (637,712)         (842,083)          (40,278)
                                                             -----------       -----------       -----------
      Net cash used in investing activities                   (7,606,178)       (5,037,822)       (1,645,976)
                                                             -----------       -----------       -----------


                                                                     (Continued)
</TABLE>


                                      F-7

<PAGE>

<TABLE>
<CAPTION>

MONROC, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
________________________________________________________________________________________________________________

                                                                 1997            1996                1995
<S>                                                        <C>               <C>               <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in line of credit                  $   544,184       $ 5,268,170       $  (787,846)
  Principal payments on long-term obligations                 (1,656,388)       (3,626,970)       (4,287,363)
  Issuance of long-term obligations                            3,136,536           768,673           457,110
  Purchase of stock warrants                                    (208,770)
  Issuance of common stock                                       235,799                           8,776,245
                                                             -----------       -----------       ----------- 
      Net cash provided by financing activities                2,051,361         2,409,873         4,158,146
                                                             -----------       -----------       -----------
NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                                           (437,351)       (5,317,120)        6,023,670

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                                             1,189,631         6,506,751           483,081
                                                             -----------       -----------       -----------
CASH AND CASH EQUIVALENTS AT
 END OF YEAR                                                 $   752,280       $ 1,189,631       $ 6,506,751
                                                             ===========       ===========       ===========

SUPPLEMENTAL DISCLOSURES OF
 CASH FLOW INFORMATION:
 Cash paid during the year for:
  Interest                                                   $   981,672       $   907,054       $ 1,468,677
  Income taxes                                                    None              32,410               960

</TABLE>


NONCASH  INVESTING AND  FINANCING  ACTIVITIES - The Company  acquired  equipment
under capital lease obligations  totaling $418,000,  $1,424,000,  and $19,060 in
1997, 1996, and 1995, respectively.  Additionally, inventory valued at a cost of
$54,652 was transferred to the cost of land due to land  reclamation  activities
during 1997.

See notes to consolidated financial statements.


                                       F-8


<PAGE>


MONROC, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
_______________________________________________________________________________


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Business  Activity - Monroc,  Inc. and subsidiary (the Company)  operate in
     one industry segment,  the production and sale of sand and gravel products,
     ready-mix concrete,  prestress/precast  concrete products,  and accessories
     for the building and construction industry, principally in Utah, Idaho, and
     Wyoming.

     Principles of Consolidation - The consolidated financial statements include
     the  accounts  of the  Company and its  wholly-owned  subsidiary,  Big Horn
     Redi-Mix,  Inc.  (Big Horn).  All  significant  intercompany  accounts  and
     transactions have been eliminated in consolidation.

     Inventories - Inventories  are stated at the lower of cost or market.  Cost
     is determined using the first-in,  first-out (FIFO) method, except for sand
     and gravel which uses the lower of average cost or market.

     Property,  Plant, and Equipment and Aggregate  Deposits - Property,  plant,
     and equipment are stated at cost and are  depreciated  over their estimated
     useful lives.  Leased  property  under capital leases is amortized over the
     lives of the respective  leases or over the service lives of the assets for
     those leases which  substantially  transfer  ownership.  The  straight-line
     method of  depreciation  is  followed  for  financial  reporting  purposes;
     however,  straight-line and accelerated  methods are used for tax purposes.
     Depletion  on aggregate  deposits is  calculated  on a  units-of-production
     basis.   The  estimated   lives  used  in  determining   depreciation   and
     amortization are:

                                                                  Years

            Mobile equipment                                      5-12
            Plant equipment                                       5-12
            Administrative equipment and buildings                5-50

     Other  Assets  - Other  assets  include  miscellaneous  amortizable  assets
     including financing  commitment fees, which fees are being amortized on the
     interest  method over the term of the notes payable to banks.  Other assets
     also includes goodwill which is being amortized on the straight-line method
     over 20 years.  Impairment of long-lived assets is determined by evaluating
     long-lived  assets on a periodic  basis in  accordance  with SFAS No.  121,
     "Accounting  for the  Impairment  of  Long-Lived  Assets and of  Long-Lived
     Assets to be  Disposed  Of," which was  adopted on January 1, 1996.  Assets
     determined to be impaired are written down to their fair value.  There were
     no significant impairments during 1997 or 1996.

     Revenue  Recognition  -  Revenues  on  contracts  which are  primarily  for
     prestress/precast    concrete    products    are    recognized    on    the
     percentage-of-completion method. The percentage-of-completion is determined
     on the units-of-production  basis. Under this method, revenues,  costs, and
     estimated  profits are recognized as individual  units are  completed.  The
     amounts included in the accompanying balance sheets as "costs and estimated
     earnings in excess of billings on uncompleted contracts" represent revenues
     recognized  in excess of amounts  billed  (underbillings)  and "billings in
     excess of costs and estimated earnings on uncompleted  contracts" represent
     billings in excess of revenues recognized (overbillings).



                                      F-9


<PAGE>


     During  1997 and 1996,  the  Company  recognized  revenue of  approximately
     $6,349,000 and $15,600,000,  respectively,  on a significant  project which
     was completed  during 1997. No single  project with revenues  recognized in
     excess of 10% of total consolidated revenues existed during 1995.

     Contract costs include all direct labor and benefits,  materials, unique to
     or installed  in the project,  and  indirect  cost  allocations,  including
     employee  benefits  and  construction   equipment  expense.   As  long-term
     contracts  extend  over one or more years,  revision  in cost and  earnings
     estimates  during the course of the work are  reflected  in the  accounting
     period in which the facts which require the revision  become known.  At the
     time a loss on a contract becomes known, the entire amount of the estimated
     ultimate loss is recognized in the financial statements.

     Costs  attributable  to  contract  claims or disputes  are  recorded in the
     accompanying balance sheets only when realization is probable.  The amounts
     are recorded at the lesser of actual costs incurred or the amount  expected
     to be realized.

     Revenues on other product sales are recognized when the product is shipped.

     Income  Taxes - The Company  utilizes an asset and  liability  approach for
     financial  accounting  and reporting  for income taxes.  Under this method,
     deferred tax assets and liabilities are determined  based on the difference
     between the financial statement and tax bases of assets and liabilities and
     are measured  using  enacted tax rates and laws that will be in effect when
     the differences are expected to reverse.  An allowance against deferred tax
     assets is recorded  when it is more likely than not that such tax  benefits
     will not be realized.

     ESOP Accounting - The Company  established an Employee Stock Ownership Plan
     (ESOP) in 1986 to facilitate  the  acquisition of assets from a predecessor
     company.  In conjunction with the acquisition,  the Company loaned the ESOP
     $10 million, which the ESOP used to finance the acquisition of its interest
     in the Company.  Generally accepted accounting  principles require that the
     note  receivable  from  the  ESOP be  included  in the  balance  sheet as a
     reduction of stockholders' equity.

     The  ESOP  allocates  the  shares  issued  to  the  ESOP  in  1986  to  the
     participants   of  the  ESOP  as  described   below.   The  Company   makes
     contributions  to the ESOP which  allow the ESOP to make the debt  payments
     back  to  the  Company  on  the  note   receivable   from  the  ESOP.  ESOP
     contributions  by the Company are expensed and charged  against  income for
     accounting  purposes and are  deductible  for income tax  purposes.  Shares
     allocable  to  participants  for a given year are  determined  based on the
     ratio of the  current  year's ESOP debt  service  payments  (principal  and
     interest)  on the  original  note from the Company as compared to the total
     remaining  required debt service on that loan. The contribution to the ESOP
     is a noncash expense of the Company because the contributions are paid back
     to the Company and reduce the note receivable from the ESOP.  Consequently,
     no cash is consumed as a result of the  contributions.  Furthermore,  since
     the note  receivable  from  the ESOP is  reduced  by  contributions,  total
     stockholders' equity is not affected by the contributions to the ESOP.

     Cash Equivalents - For financial statement purposes,  the Company considers
     all highly liquid debt instruments  purchased with an original  maturity of
     three months or less to be cash equivalents.

     Concentration of Credit Risk - A significant portion of the Company's sales
     are  to  customers  whose  activities  are  related  to  the  building  and
     construction  industry.  These  customers  are  located  primarily  in  the
     intermountain west. The Company generally extends credit to these customers
     and, therefore,


                                      F-10


<PAGE>

     collection  of  receivables  is affected by the economy of the building and
     construction industry.  However, the Company closely monitors extensions of
     credit.

     The Company  maintains cash and money market balances at several  financial
     institutions in the  intermountain  west.  Accounts at each institution are
     insured  up to  $100,000  by the  Federal  Deposit  Insurance  Corporation.
     Uninsured  balances  aggregate  to  approximately  $615,000 and $860,000 at
     December 31, 1997 and 1996, respectively.

     Estimates and  Assumptions  - 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.

     Related  Parties - The Company  made  consulting  fee  payments of $200,000
     during  the  years  ended  December  31,  1997 and 1996 to an  entity  with
     controlling  ownership  of the Company  (see Note 12).  These  payments are
     included  in  general  and  administrative  expenses  in  the  consolidated
     statements  of  operations.  There  were no such  payments  in 1995.  As of
     December  31,  1997,  the  Company had a note  receivable  in the amount of
     $140,000 from the Company's  president  which bears interest at the rate of
     7% per annum with  interest  only  payments  until January 1, 1999 when the
     entire  principal  balance becomes due. See description of notes payable to
     related parties at Note 6.

     Reclassifications - Certain amounts in 1996 and 1995 have been reclassified
     to conform to classifications adopted in 1997.

2.   CONTRACTS IN PROCESS

     Costs  incurred  to date,  estimated  earnings,  and the  related  progress
     billings are as follows:

                                                        1997           1996

      Costs incurred to date                         $ 1,631,558    $20,418,275
      Estimated earnings                                 103,131      1,303,930
                                                     -----------    -----------
      Revenue recognized                               1,734,689     21,722,205
      Less billings to date                           (1,680,865)   (22,230,825)
                                                     -----------    -----------
      Total                                          $    53,824    $  (508,620)
                                                     ===========    ===========

     The  above  are  included  in the  accompanying  balance  sheets  under the
     following captions:

                                                        1997           1996
      Costs and estimated earnings in excess of
       billings on uncompleted contracts             $   215,045    $   181,634
      Billings in excess of costs and estimated 
       earnings on uncompleted contracts                (161,221)      (690,254)
                                                     -----------    -----------
      Total                                          $    53,824    $  (508,620)
                                                     ===========    ===========


                                      F-11


<PAGE>


     Retainage on  uncompleted  contracts  amounts to $1,234,140 and $869,884 at
     December  31,  1997  and  1996,  respectively.   All  accounts  receivable,
     including  retainage,  under  contracts  in  process  are  expected  to  be
     collected within one year.

     A  significant  portion  of  the  Company's   business,   particularly  for
     prestressed and precast concrete,  is based on orders for delivery at times
     which may be many  months  after the order  date.  Therefore,  the  Company
     generally  has  a  significant  amount  of  outstanding  work  orders.  The
     Company's  backlogs for  prestressed  and precast  concrete  products as of
     December 31, 1997 and 1996 were approximately  $14,316,000 and $12,085,000,
     respectively.

3.   INVENTORIES

     Inventories are summarized as follows:

                                                        1997           1996

      Raw materials                                  $1,507,715    $  605,182
      Resale and admixture products                     411,714       409,836
      Supplies                                          208,411       142,710
      Sand and gravel                                 2,556,267     2,819,546 
                                                     ----------    ----------
      Total                                          $4,684,107    $3,977,274
                                                     ==========    ==========


4.   PROPERTY, PLANT, AND EQUIPMENT

     Property, plant, and equipment are summarized as follows:

                                                        1997           1996

      Mobile equipment                               $15,424,667    $14,639,448
      Plant equipment                                 12,124,843     10,555,358
      Administrative equipment buildings               1,045,015        870,391
      Construction in progress                         1,426,948      1,244,865 
                                                     -----------    -----------
      Total                                          $30,021,473    $27,310,062
                                                     ===========    ===========

     Included above is $2,795,389 and $2,293,287 in 1997 and 1996, respectively,
     of equipment under capital leases. The related accumulated  amortization is
     $500,179 and $239,756 at 1997 and 1996, respectively.

5.   LINE OF CREDIT

     At  December  31,  1997 and 1996,  the  Company  has a $15  million  credit
     facility with a financing  company which includes a line of credit and term
     loans.  The line of credit bears  interest at prime plus .75% (9.25% and 9%
     at December 31, 1997 and 1996, respectively),  payable monthly. Advances on
     the line of credit are limited to 85% of qualified  accounts  receivable up
     to a maximum of  $15,000,000  minus the balances on the other notes payable
     to this financing company. The line of credit is cross-collateralized  with
     the  $2,000,000  notes  payable  through  a  security  interest  on all the
     Company's  personal and real  property.  The  agreement  also  requires the
     Company  pay a fee  of  0.5%  per  annum  of  the  unused  credit  line  of
     $15,000,000. The line of credit agreement expires in February 2002.


                                      F-12


<PAGE>


     The  Company  borrows  on the  line to pay for all  operating  costs,  debt
     service,  and other costs.  The Company deposits all daily cash collections
     from accounts  receivable  and other  sources  against the line to minimize
     amounts outstanding on the line.

6.   LONG-TERM OBLIGATIONS

     Long-term obligations consist of the following:

<TABLE>
<S>                                                                               <C>                <C> 
                                                                                          1997               1996
           Variable  interest  rate notes  payable to the  financing  company at
             prime plus .75% (9.25% at December 31, 1997); to be paid in full no
             later than February 27, 2002; cross-collateralized with the line of
             credit  through a security  interest on all the Company's  personal
             and real property. The agreements require, among other things, that
             the  Company  maintain  minimum  levels of working  capital and net
             worth and prohibits the payment of dividends                            $  2,000,000       $   2,000,000

           Variable  interest rate notes payable to entities owned or controlled
             by stockholders at prime (8.5% at December 31, 1997); principal due
             in eight installments per year;  interest payments are due monthly;
             not  collateralized;  subordinated  to the line of credit and notes
             payable to a financing company.                                              298,750             837,500

           Variable  interest rate notes payable to individuals at prime plus 2%
             (10.5% at  December  31,  1997);  principal  payments  due in equal
             monthly   installments   of   $20,409   through   September   1999;
             collateralized by land, buildings, and inventory.                            406,822             598,142

           Two fixed  rate  notes  payable  to  individuals  at 9.0%;  principal
             payments due in equal monthly  installments  totaling $20,519 until
             December 15, 2007 and January 2, 2008 when all remaining  principal
             and interest is due; collateralized by land.                               2,051,024

           6.0% to 16.6% notes and capital leases payable in monthly
             installments of principal plus interest, collateralized by
             equipment and land.                                                        3,434,584           2,857,390
                                                                                     ------------       -------------

           Total                                                                        8,191,180           6,293,032
           Less current maturities                                                      1,364,444           1,131,289
                                                                                     ------------      --------------

           Total                                                                     $  6,826,736      $    5,161,743
                                                                                     ============      ==============
</TABLE>


                                      F-13


<PAGE>


     The following is a schedule of maturities of long-term debt  obligations at
     December 31, 1997:

       Year ending December 31:
        1998                                      $1,364,444
        1999                                       1,287,696
        2000                                         993,949
        2001                                         700,323
        2002                                       3,496,991
        Thereafter                                   347,777
                                                  ----------
       Total                                      $8,191,180
                                                  ==========


     The following is a schedule of capital lease obligations  included above at
     December 31, 1997:

       Year ending December 31:
        1998                                      $  552,748
        1999                                         489,657
        2000                                         448,589
        2001                                         356,722
                                                  ----------
       Total minimum lease payments                1,847,716
       Less amount representing interest             274,744
                                                  ----------

       Present value of minimum lease payments     1,572,972
       Less current maturities                       430,630
                                                  ----------

       Long-term maturities                       $1,142,342
                                                  ==========


     The Company has entered into several  operating leases on certain equipment
     expiring through 2003. Lease expense for the years ended December 31, 1997,
     1996, and 1995 was $2,626,518,  $1,492,798, and $687,462, respectively. The
     following is a schedule of future  minimum lease  payments on the Company's
     operating leases at December 31, 1997:

       Year ending December 31:
        1998                                      $2,649,899
        1999                                       2,145,671
        2000                                       1,830,574
        2001                                       1,359,949
        2002                                         539,176
        Thereafter                                    97,360
                                                  ----------
       Total                                      $8,622,629
                                                  ==========


     Not  included in the above  schedule  are  production  royalties  which the
     Company has agreed to pay on aggregate  deposits  mined on lease  property.
     The payments are based on a progressive scale ranging from $0.25 per ton in
     1997 to $0.48 per ton in 2000. The annual expense for these  royalties were
     $116,776, $67,334, and $93,134 for 1997, 1996, and 1995, respectively.


                                      F-14


<PAGE>


7.   ACCRUED LIABILITIES

     Accrued liabilities consist of the following:

                                                      1997              1996

       Deferred restructuring costs               $   97,665        $  192,127
       Vacation payable                              408,598           389,215
       Accrued payroll taxes                          59,193           241,660
       Workers compensation payable                  442,669           115,043
       Property taxes payable                        155,265            91,569
       Sales and use tax payable                     231,656           198,893
       Interest payable                               79,533            14,372
       Other accrued liabilities                     945,390           306,773
                                                  ----------        ----------
       Total                                      $2,419,969        $1,549,652
                                                  ==========        ==========


8.   INCOME TAXES

     Income tax benefit consists of the following:

                                            1997           1996          1995

       Current - Federal                                              $  40,864
       Deferred - Federal                $(194,370)     $(217,695)     (106,887)
                                         ---------      ---------     ---------
       Total                             $(194,370)     $(217,695)    $ (66,023)
                                         =========      =========     =========


      The components of the Company's deferred tax assets and liabilities are as
follows:

                                                           1997          1996

      Deferred tax assets (liabilities):
       Net operating loss carryforward                 $1,798,843    $1,914,893
       Deferred compensation                              262,024       243,356
       Allowance for doubtful accounts                     92,108       102,790
       Accrued expenses                                   357,509       258,536
       Inventory cost capitalization                      119,679        74,266
       Other                                               16,572        10,955
       Excess of tax depreciation and amorization      (1,220,679)   (1,096,580)
       Difference in assigned values and tax basis
        in purchase of subsidiaries                      (777,485)     (971,855)
       Valuation allowance                             (1,426,056)   (1,508,216)
                                                       ----------    ----------
       Net deferred tax liability                      $ (777,485)   $ (971,855)
                                                       ==========    ==========


     There were no deferred  tax assets or income tax  benefits  recorded in the
     financial  statements  for  net  deductible  temporary  differences  or net
     operating  loss  carryforwards  due to the  fact  that  the  likelihood  of
     realization of the related tax benefits cannot be  established.  A deferred
     tax liability was recognized upon



                                      F-15


<PAGE>


     the purchase of three  subsidiary  corporations  during  1994.  The initial
     deferred  liability was calculated on the differences  between the assigned
     values  and  tax  bases  of the  assets  and  liabilities  acquired  in the
     purchase.

     At December 31, 1997, the Company had net operating loss  carryforwards for
     tax reporting  purposes of approximately  $5,100,000,  which expire through
     the  year  2012.  The net  operating  loss  carryforwards  are  subject  to
     limitation  in any  given  year  upon the  occurrence  of  certain  events,
     including significant changes in ownership.

     The net change in the  Company's  valuation  allowance for the deferred tax
     assets was $(82,160) and $249,650 for 1997 and 1996, respectively.

     Reconciliation  of income taxes computed at the federal  statutory rate and
     income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>

                                                    1997           1996          1995

<S>                                            <C>           <C>            <C> 
       Income tax (benefit) computed at the
        Federal statutory rate                    $  15,662      $(554,881)    $ 451,370
       Net operating loss (utilized) generated      (82,159)       402,108      (524,941)
       Percentage depletion                        (144,646)       (89,693)      (51,098)
       Alternative minimum tax                                                    40,864
       Nondeductible expenses                        16,773         32,804        21,417
       All other, net                                               (8,033)       (3,635)
                                                  ---------      ---------     ---------
       Income tax benefit                         $(194,370)     $(217,695)    $ (66,023)
                                                  =========      =========     =========
</TABLE>


9.   EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

     The Company has an ESOP covering  substantially all full-time employees who
     have at least one year of service. Under the terms of the ESOP, the Company
     contributes  amounts as  determined  by the Board of  Directors.  Shares of
     stock  allocated  for a given  year are  further  allocated  to  individual
     participants based on the ratio of the participants' annual compensation to
     total  compensation for all participants.  Shares allocated to participants
     vest over six years.

     In 1986, the ESOP purchased  1,606,796 shares of the Company's common stock
     representing a 68% interest, in exchange for a $10,000,000 promissory note.
     The balance on the note  receivable from ESOP was $1,724,046 and $2,524,046
     at December 31, 1997 and 1996, respectively. As of December 31, 1997, there
     were 1,164,075  shares of the Company's  common stock remaining in the ESOP
     with 920,569 shares allocated to participants'  accounts and 243,506 shares
     remaining to be allocated based on future contributions by the Company. All
     shares in the ESOP are considered  issued and  outstanding  for purposes of
     calculating  earnings  per  share.  Participants  vote the  shares in their
     accounts on any stockholder vote while the unallocated  shares are voted by
     the ESOP trustee under instructions from the Company's Board of Directors.

     As of December 31, 1997,  the fair value of the 243,506  shares still to be
     allocated  to   participants'   accounts  was  $2,465,508.   The  principal
     reductions on the ESOP note were $800,000 for each of the three years ended
     December 31, 1997,  1996, and 1995, and were shown as  contributions to the
     ESOP.


                                      F-16


<PAGE>


     The  accumulated  deficit at  December  31,  1997  includes  $8,275,954  of
     contributions  since  1986 to the  ESOP,  which  have  been  used to reduce
     principal on the ESOP note.

10.  RETIREMENT PLANS

     The Company makes  payments to a defined  contribution  pension plan (Plan)
     covering most full-time nonbargaining employees who have completed at least
     one full year of service  with the  Company  based on a  percentage  of the
     employee's  salary.  Payments  are  made to the  Plan as they  accrue.  The
     contributions  for the years ended  December 31, 1997,  1996, and 1995 were
     $523,128,  $480,757,  and  $344,968,  respectively.  There are also certain
     bargaining  employees who are covered  under this Plan.  The Company has no
     liability under the Plan beyond the amounts  contributed.  The Company also
     makes payments to various bargaining union trust funds, as negotiated under
     union contracts.  The  contributions for the years ended December 31, 1997,
     1996, and 1995 were $286,504, $334,364, and $220,791, respectively.

11.  COMMITMENTS AND CONTINGENCIES

     Deferred  Compensation and Employment Agreements - In May 1996, the Company
     amended  the  employment  agreement  with its  former  president  and chief
     executive officer  (president).  The amended agreement  stipulates that the
     Company  will no longer  accrue  amounts  towards  the  former  president's
     deferred  compensation  effective  May 22, 1996.  In  addition,  the amount
     accrued in the former president's  unfunded deferred  compensation  account
     will continue to earn interest at 1% below the prime interest rate (7.5% at
     December 31,  1997).  The total  accrued  amount will be paid over a period
     equal to one and  one-fourth  times the  length of  Company  service of the
     president as follows:


       Year ending December 31:
        1998                                      $111,955
        1999                                        30,220
        2000                                        32,544
        2001                                        35,047  
        2002                                        37,744  
        Thereafter                                 598,796
                                                  --------
       Total                                      $846,306
                                                  ========


     Deferred  compensation of $748,641 and $779,263 was accrued in this account
     and a payable under the former president's  employment agreement of $97,665
     and  $192,127  was  included  in  accrued  liabilities  (see  Note 7) as of
     December 31, 1997 and 1996, respectively.

     The Company has entered into employment  agreements with certain  officers.
     These  agreements  provide  for annual  compensation  through  July 1998 as
     determined by the Board of  Directors.  The Board of Directors has approved
     annual compensation of $255,000 for these officers as of December 31, 1997.

     Environmental  Matters - The Company is currently the owner of 9.9 acres of
     land located in Murray, Utah that contains mining slag previously deposited
     by the former owner.  The slag contains certain heavy metals including lead
     and arsenic that may have leached from the slag into the environment.  This
     and adjoining properties have been proposed by the Environmental Protection
     Agency (EPA) for listing on the National Priorities List for cleanup of the
     lead slag and potential groundwater contamination. Although the Company did
     not  generate  the slag  material,  under the  Comprehensive  Environmental
     Response,


                                      F-17


<PAGE>


     Compensation and Liability Act ("CERCLA"),  the current owner of a property
     may be liable for cleanup  costs.  In such case,  the Company  would have a
     claim against the former owner for its respective share of these costs. All
     the  landholders  and the City of  Murray  entered,  in May  1997,  into an
     Agreement  in Principle  in which  landholders  agreed to donate land for a
     roadway through the properties which would be used as a depository for some
     of the  hazardous  wastes on the site. In addition,  the parties  agreed to
     cooperate in the  remediation  efforts to be conducted by the former owner.
     The parties  are  currently  in  negotiations  regarding a proposed  draft,
     Remedial  Design/Remedial Action Consent Decree ("CD"). As proposed, the CD
     requires the Company to (i) contribute a certain amount of its property for
     the  roadway  (approximately  1.8 acres with a book value of  approximately
     $19,000) as its share of the cleanup  costs,  (ii)  participate  in a local
     improvement  district for the installation of a curb, gutter, and sidewalks
     along the  proposed  roadway  (approximately  a $30,000  assessment  over a
     ten-year period), and (iii) implement certain  institutional  controls.  In
     return, the Company will receive contribution protection and a covenant not
     to sue.  Under  the  current  draft of the CD,  the  Company's  obligations
     terminate  upon  sale of the  property.  The  Company's  estimated  cost to
     satisfy these requirements of the CD as outlined above are immaterial.

     On May 5, 1997,  the Company  entered  into an  agreement to sell its total
     acreage in Murray,  Utah to The Boyer  Company,  L.C. for a total  purchase
     price of  approximately  $1.9  million.  The  agreement  is  subject to the
     purchaser obtaining  necessary  approvals.  Pursuant to the agreement,  the
     purchaser  will assume the  Company's  liabilities  under the  agreement in
     principle and the proposed EPA consent agreement  described above including
     the  dedication  of the land for the roadway and the  participation  in the
     improvement  district.  If the sale to the Boyer Group does not occur, then
     the  Company  would be  responsible  for those  costs.  Subject  to certain
     conditions, the Company expects the sale of the Murray property to close on
     or before January 1, 1999.

     Prior to  learning of the  potential  presence of lead in the slag from the
     Murray  site,  the  Company  sold some of the slag for use in road base and
     railroad  fill.  The Company has not sold any slag  material from this site
     since 1988. The Company may be liable for cleanup costs if it is determined
     that the lead from this slag poses an environmental hazard. The Company has
     not received any notice of government or private action on this matter. The
     potential cost to the Company,  if any, is not ascertainable at the present
     time because no action  currently is pending by any party and it is unknown
     whether any action will be taken in the future.  The  Company's  management
     believes that there are economically  reasonable  methods of containing the
     slag should this become necessary.

     Other - The  Company  is  engaged  in  various  lawsuits  as  plaintiff  or
     defendant  arising  in the normal  course of  business.  In the  opinion of
     management,  based upon advice of counsel,  the  ultimate  outcome of these
     lawsuits  will  not  have a  material  impact  on the  Company's  financial
     statements.

12.  CAPITAL STOCK

     On December 28, 1995, the Company issued  1,650,000  shares of common stock
     in a  private  placement  to a single  purchaser  at $5.50 per  share.  Net
     proceeds of $8,776,245 after issuance costs of $298,755 were received.  The
     Company  also  entered into an  agreement  with the  purchaser  wherein the
     purchaser   will   receive   $200,000   per  year,   payable  in  quarterly
     installments,  for consulting services so long as the purchaser's  nominees
     constitute a majority of the members of the board of directors.


                                      F-18


<PAGE>


     Earnings  (Loss) Per Share -  Effective  December  31,  1997,  the  Company
     adopted SFAS No. 128, "Earnings Per Share", and retroactively  restated its
     earnings per share (EPS) for 1997,  1996, and 1995 to conform with SFAS No.
     128.

     Basic and diluted earnings per share are calculated as follows for the year
     ended December 31, 1997:



<TABLE>
<CAPTION>
                                                                                                Per
                                                                                 Average       Share
                                                                  Income          Shares       Amount

<S>                                                        <C>                <C>            <C> 

       Income                                                    $239,119 
                                                                 --------

       EPS basic:
        Income available to common stockholders                   239,119        4,485,376      $0.05
                                                                 --------                       =====
 
       Effect of dilutive securities - options and warrants                        546,524
                                                                                   -------
       EPS diluted:
        Income available to common stockholders
         with assumed conversions                                $239,119        5,031,900      $0.05
                                                                 ========        =========      =====

</TABLE>


     Earnings per common share  diluted are  computed  using the treasury  stock
     method.  Average shares  outstanding  were 4,467,000 and 2,835,063 for 1996
     and 1995,  respectively.  During  1996 and 1995,  no  options  or  warrants
     outstanding were "in the money" and as such there was no dilutive effect.

13.  STOCK OPTIONS AND WARRANTS

     Effective  January 20, 1994, the Company  adopted a stock option plan which
     provides for the granting of stock options to purchase up to 200,000 shares
     of common stock,  subject to adjustment  under  certain  circumstances.  In
     1997,  the Company  amended this plan and  increased  the shares  available
     under the 1994 option plan to 260,000. As of December 31, 1997, the Company
     had  granted  stock  options  under the 1994 stock  option  plan to various
     officers,  directors,  and employees of the Company  covering the aggregate
     amount of 119,600 shares of common stock.

     On May 22, 1996, the stockholders  approved the Company's 1996 stock option
     plan which  provides  for the  granting of stock  options to purchase up to
     300,000 shares of common stock.  In 1997, the Company amended this plan and
     increased the shares available under the 1996 option plan to 600,000. As of
     December 31, 1997,  the Company had granted  stock  options  under the 1996
     stock  option  plan  covering  296,000  shares of common  stock.  Of these,
     136,000  options had vested as of December 31, 1997. The remaining  160,000
     options  vest  annually  through  July 2000 with 60,000 to vest in 1998 and
     1999 with the remaining 40,000 to vest in 2000.

     In conjunction with its initial public offering in 1994, the Company issued
     60,000 warrants at $5.50 per share to various entities  involved in helping
     the  Company  go  public.  During  1997,  58,750  of  these  warrants  were
     repurchased  at a cost of $208,770.  As of December  31, 1997,  none of the
     remaining 1,250 warrants had been exercised.

     On December 28, 1995, in connection  with the issuance of 1,650,000  shares
     of common  stock  (Note  12),  the  Company  issued a  warrant  to a single
     purchaser to purchase 1,500,000 shares of common stock at an


                                      F-19


<PAGE>


     exercise  price of $6.25 per share.  The  warrant  was  exercisable  at the
     issuance date and expires in December  2000.  As of December 31, 1997,  the
     warrant has not been exercised.

     The Company accounts for stock based compensation under APB Opinion No. 25,
     "Accounting  for Stock Issued to  Employees",  and related  Interpretations
     under which no compensation cost has been recognized.  The Company accounts
     for  stock-based  compensation  under APB Opinion No. 25,  "Accounting  for
     Stock  Issued to  Employees",  and related  interpretations  under which no
     compensation cost has been recognized. During 1996, the Company adopted the
     disclosure  provision of Financial Accounting Standard No. 123, "Accounting
     for  Stock-Based  Compensation"  (FAS 123).  If the  Company had elected to
     recognize  compensation expense based upon the fair value at the grant date
     for awards under these plans consistent with the methodology  prescribed by
     FAS 123, the  Company's net earnings  (loss) and earnings  (loss) per share
     would be reduced to the pro forma amounts indicated below:

                                                    1997                1996
      Net earnings (loss):
       As reported                                $239,119         $(1,367,679)
       Pro forma                                   160,599          (1,565,723)

     Earnings (loss) per common share:
       As reported - basic                        $   0.05         $     (0.31)
       Pro forma - basic                              0.04               (0.35)

       As reported - diluted                          0.05               (0.31)
       Pro forma - diluted                            0.03               (0.35)


     These pro forma  amounts may not be  representative  of future  disclosures
     because they do not take into effect pro forma  compensation  costs related
     to grants made before 1995.  The fair value of the  applicable  options was
     estimated  at the date of grant using the modified  Black-Scholes  American
     option-pricing  model with the following  weighted-average  assumptions for
     1997 and 1996:  expected volatility of 57% and 61%, risk-free interest rate
     of 5.18% and 6%, and expected life of .25 and 3.6 years, respectively.  The
     weighted  average  fair value of options  granted  during 1997 and 1996 was
     $.70 and $3.07, respectively.

     Option pricing models  require the input of highly  subjective  assumptions
     including the expected stock price volatility. Also, the Company's employee
     stock options have  characteristics  significantly  different from those of
     traded  options  and  changes  in  the  subjective  input  assumptions  can
     materially  affect the fair value  estimate.  Management  believes the best
     input  assumptions  available  were  used  to  value  the  options  and the
     resulting option values are reasonable.


                                      F-20


<PAGE>


     Information  with respect to the  Company's  stock option plans at December
     31, 1997 and changes for the three years then ended is as follows:

                                                                        Weighted
                                                                         Average
                                             Stock          Exercise    Exercise
                                             Options         Price        Price

      Outstanding at January 1, 1995         136,500        $5.00          $5.00
       Granted                                20,100         5.00           5.00
                                             -------
      Outstanding at December 31, 1995       156,600
       Granted                               217,700       5.00-8.75        6.61
       Canceled                                6,700       5.00-8.75        5.00

      Outstanding at December 31, 1996       367,600       5.00-8.75        5.95
       Granted                               112,000       5.25-7.50        5.94
       Canceled                               16,800         5.00           5.00
       Exercise                               47,200         5.00           5.00
                                             -------
      Outstanding at December 31, 1997       415,600      $5.00-8.75       $6.11
                                             =======      ==========       =====
      Exercisable at December 31, 1997       255,600      $5.00-7.50       $5.35
                                             =======      ==========       =====


     Additional  information about stock options  outstanding and exercisable at
     December 31, 1997 is summarized as follows:

          Options Outstanding
                                                        Weighted-
                                                         Average       Weighted-
               Range of                                 Remaining       Average
               Exercise              Number            Contractual     Exercise
                Prices             Outstanding         Life (Years)      Price

              $5.00-$5.75            259,600                2.69          $5.25
                  6.60                40,000                5.00           6.60
                  6.80                20,000                5.00           6.80
                  7.50                16,000                4.50           7.50
                  7.60                40,000                5.00           7.60
                  8.75                40,000                5.00           8.75
                                     -------                              -----
                                     415,600                              $6.11
                                     =======                              =====


                                      F-21


<PAGE>


         Options Exercisable
                                                        
                                                         Weighted-
               Range of                                   Average
               Exercise              Number              Exercise
                Prices             Exercisable            Price

              $5.00-$5.75            239,600               $5.21
                  7.50                16,000                7.50
                                     -------               -----
                                     255,600               $5.35
                                     =======               =====



14.  QUARTERLY FINANCIAL RESULTS (UNAUDITED)

     Quarterly financial results for the year ended December 31, 1997, 1996, and
     1995 are as follows:
<TABLE>
<CAPTION>

                                                                       Basic      Diluted
                                          Operating         Net       Earnings    Earnings
                             Net           Profit         Earnings      (Loss)     (Loss)
                            Sales          (Loss)          (Loss)     Per Share   Per Share
<S>                    <C>            <C>            <C>            <C>         <C> 

     1997
      First quarter      $14,913,135    $   234,371     $     7,328       N/A       N/A
      Second quarter      16,352,296        803,956         763,914     $ 0.17     $ 0.15
      Third quarter       16,192,520      1,198,274       1,050,878       0.23       0.19
      Fourth quarter      13,925,411     (1,162,577)     (1,583,001)     (0.35)     (0.29) 
                         -----------    -----------     -----------     ------     ------
     Total               $61,383,362    $ 1,074,024     $   239,119     $ 0.05     $ 0.05
                         ===========    ===========     ===========     ======     ======

     1996
      First quarter      $ 9,204,260    $  (916,431)    $(1,040,688)    $(0.23)    $(0.23)
      Second quarter      19,416,157        888,028         771,339       0.17       0.17
      Third quarter       22,245,881       (458,711)       (656,845)     (0.15)     (0.15)
      Fourth quarter      19,535,098       (397,879)       (441,485)     (0.10)     (0.10) 
                         -----------    -----------     -----------     ------     ------
     Total               $70,401,396    $  (884,993)    $(1,367,679)    $(0.31)    $(0.31)
                         ===========    ===========     ===========     ======     ======

     1995
      First quarter      $ 7,132,047    $  (341,526)    $  (665,505)    $(0.24)    $(0.24)
      Second quarter      12,500,024      1,269,853         911,321       0.32       0.32
      Third quarter       14,876,696      1,493,652       1,199,899       0.43       0.43
      Fourth quarter      13,793,481         89,776         (90,064)     (0.03)     (0.03)
                         -----------    -----------     -----------     ------     ------
     Total               $48,302,248    $ 2,511,755     $ 1,355,651     $ 0.48     $ 0.48
                         ===========    ===========     ===========     ======     ======

</TABLE>


     Year end adjustments to accrued liabilities, accounts receivable, property,
     and contract estimates made in the fourth quarter of 1997 had the effect of
     decreasing net income by approximately  $925,000 or $.25 per common share -
     basic/  $.18  per  common  share  -  diluted.   Additionally,  the  Company
     experienced operating losses during the fourth quarter of 1997.


                                      F-22


<PAGE>


15.  RESTRUCTURING CHARGES AND PLANT CLOSING

     A change in control of the Company  occurred  in 1995.  The  Company's  new
     management  restructured  the  operations  so that the  Company can be more
     responsive  to  the  needs  of  the  marketplace   and  improve   operating
     efficiencies.   Due  to  these  changes,   the  Company   incurred  certain
     restructuring  charges totaling  $1,500,000  ($0.34 per share) during 1996.
     These one time restructuring charges included: (i) the write-off of certain
     facilities and equipment obsolete by new operating  strategies  ($715,000);
     (ii) the closure of  undersized  and  unprofitable  operations  in Utah and
     Wyoming  ($351,000);  (iii) the payout remaining on the Company's  two-year
     employment  agreement with its former president and chief executive officer
     ($333,000);   and  (iv)  costs  associated  with  restructuring  management
     ($101,000).

     Also during 1996,  the Company  closed a plant and has spent  approximately
     $638,000 and $842,000 in 1997 and 1996,  respectively,  to prepare the land
     for commercial or residential development. The Company does not believe the
     closure of the plant will have a significant impact on future operations.

     The  following  table  presents a summary of activity  with  respect to the
     restructuring reserve for the year ended December 31, 1997:

          Balance at December 31, 1996                      $192,127
          Cash outlays                                        94,462
                                                            --------
          Balance at December 31, 1997                      $ 97,665
                                                            ========


16.  SUBSEQUENT EVENTS

     On January 6, 1998, the Company  acquired all the outstanding  common stock
     of Treasure Valley Concrete, Inc., an Idaho corporation,  for $3,350,000 in
     cash and the  assumption  of  $1,141,000 of  liabilities.  Treasure  Valley
     Concrete,  Inc., with annual  revenues of  approximately  $7 million,  is a
     producer of ready mix  concrete,  serving the Boise,  Idaho area.  With the
     close of the  transaction,  Treasure Valley Concrete becomes a wholly owned
     subsidiary of Monroc, Inc.

     The Company has entered into an Amended and Restated  Agreement and Plan of
     Merger dated as of January 29, 1998 and amended and restated as of March 4,
     1998  (the  Merger  Agreement)  with  U.S.  Aggregates,  Inc.,  a  Delaware
     corporation (USAI), and Western  Acquisition,  Inc., a Delaware corporation
     and a subsidiary  of USAI (Sub),  providing  for the merger of Sub with and
     into the Company (the Merger), with the Company continuing as the surviving
     corporation  and a subsidiary  of USAI.  Pursuant to the Merger  Agreement,
     each  outstanding  share of common stock,  par value $.01 per share, of the
     Company  (the  Common  Stock) will be  converted  into the right to receive
     $10.771 per share in cash. In addition,  the Merger Agreement provides that
     each option or warrant to purchase  shares of Common Stock will be canceled
     in  consideration  for the right to receive in cash an amount  equal to the
     number of  shares  subject  to such  option or  warrant  multiplied  by the
     difference  between  $10.771  and the  exercise  price  of such  option  or
     warrant, less any applicable tax withholdings.

     The Merger is  conditioned  upon,  among other things,  the approval of the
     stockholders of the Company,  certain regulatory and governmental approvals
     and other customary conditions. In connection with the proposed Merger, the
     Board of  Directors  of the Company  received a fairness  opinion  from SBC
     Warburg  Dillion  Read  Inc.  to the  effect  that,  as of the  date of the
     opinion,  the  merger  consideration  is  fair to the  stockholders  of the
     Company from a financial point of view.


                                      F-23


<PAGE>


17.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The amounts  presented  in the  consolidated  financial  statements  of the
     Company's  financial  instruments,  consisting of notes payable,  long-term
     debt,  and  capital  lease  obligations,  when  stated at fair value  using
     current interest rates, would not be significantly different.

18.  RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

     In June  1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
     Income".  SFAS No. 130  establishes  standards for reporting and display of
     comprehensive  income and its components  (revenues,  expenses,  gains, and
     losses)  in a full  set  of  general  purpose  financial  statements.  This
     Statement   requires  that  an  enterprise  (a)  classify  items  of  other
     comprehensive  income by their  nature  in a  financial  statement  and (b)
     display the accumulated  balance of other  comprehensive  income separately
     from retained earnings and additional paid-in capital in the equity section
     of a statement of financial position.  SFAS No. 130 is effective for fiscal
     years  beginning  after  December 15, 1997.  Reclassification  of financial
     statements  for  earlier  periods  provided  for  comparative  purposes  is
     required.  The  adoption  of SFAS No. 130 will  require  the Company to add
     disclosure to the financial statements about comprehensive income.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures About Segments of
     an Enterprise and Related Information", which redefines how public business
     enterprises report information about operating segments in annual financial
     statements.  It also establishes  standards for related  disclosures  about
     products and services,  geographical  areas, and major customers.  SFAS No.
     131 is effective  for  financial  statements  for periods  beginning  after
     December  15,  1997.  In  the  initial  year  of  application,  comparative
     information  for earlier years is to be restated.  The adoption of SFAS No.
     131 will result in additional disclosures regarding the Company's segments.

                                     ******


                                      F-24

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and
 Stockholders of Monroc, Inc.:

We have audited the  consolidated  financial  statements  of Monroc,  Inc.,  and
Subsidiary  (the Company) as of December 31, 1997,  and for the year then ended,
and have issued our report thereon dated March 31, 1998; such report is included
elsewhere in this Form 10-K. Our audit also included the consolidated  financial
statement  schedule  of the  Company,  listed  in  Item  14.  This  consolidated
financial statement schedule is the responsibility of the Company's  management.
Our responsibility is to express an opinion based on our audit. The consolidated
financial  statements  of the Company for the years ended  December 31, 1996 and
1995 were  audited by other  auditors  whose  report,  dated  February 11, 1997,
expressed  an  unqualified  opinion  on those  consolidated  statements.  In our
opinion,  such consolidated  financial  statement  schedule,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
present fairly in all material respects the information set forth therein.


/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

Salt Lake City, Utah
March 31, 1998


                              REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS
                                   ON SCHEDULE

Board of Directors
Monroc, Inc.

In connection with our audit of the consolidated financial statements of Monroc,
Inc. and  Subsidiary,  referred to in our report dated February 11, 1997,  which
included  in the  annual  report to  stockholders  and Form  10-K,  we have also
audited  Schedule II for each of the two years in the period ended  December 31,
1996. In our opinion,  this schedule presents fairly, in all material  respects,
the information required to be set forth therein.


                                                   /s/ Grant Thornton LLP
                                                   GRANT THORNTON LLP

Salt Lake City, Utah
February 11, 1997


<TABLE>
<CAPTION>
MONROC, INC. AND SUBSIDIARY

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-------------------------------------------------------------------------------------------------



                                                     (1)             (2)
                                                                   Charged
                               Balance at         Charged to       to Other                          Balance at
                               Beginning          Costs and        Accounts        Deductions           End
                               of Period           Expenses        Describe        Write-Offs        of Period

<C>                            <C>                <C>              <C>           <C>                <C>       
ALLOWANCE FOR DISCOUNTS
 AND DOUBTFUL ACCOUNTS

Year ended December 31:
1997                           $  301,624         $ 397,402        $ 999,999     $ (435,861)        $  263,165
1996                              296,647           536,863                        (531,886)           301,624
1995                              209,495           532,764                        (445,612)           296,647

DEFERRED TAXES
 VALUATION ALLOWANCE

Year ended December 31:
1997                           $1,508,216                                         $ (82,160)        $1,426,056
1996                            1,258,566         $ 249,650                                          1,508,216
1995                            1,783,302                                          (524,736)         1,258,566
</TABLE>



                                      F-25

<PAGE>

                                   SIGNATURES

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

                                      Monroc, Inc.


Date: April 10, 1998                  By:  /s/ Ronald D. Davis
                                          --------------------
                                          Ronald D. Davis
                                          President and Chief Executive Officer

         Pursuant to 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 indicated, on the date set forth above.

         Signature                              Title


/s/ Robert L. Miller                       Chairman of the Board
Robert L. Miller

/s/ Ronald D. Davis                        President and Chief Executive Officer
Ronald D. Davis

/s/ L. William Rands                       Vice President - Finance, Treasury
L. William Rands                             and Secretary (Principal Financial
                                             and Accounting Officer)

/s/ William T. Lightcap                    Director
William T. Lightcap

/s/ Jules Ross                             Director
Jules Ross

/s/ Marc T. Scholvinck                     Director
Marc T. Scholvinck

/s/ Delbert H. Tanner                      Director
Delbert H. Tanner

/s/ Michael A. Kane                        Director
Michael A. Kane

/s/ James E. Dahl                          Director
James E. Dahl


<PAGE>



                                INDEX TO EXHIBITS


2.1  Stock  Purchase  Agreement  dated  January 6, 1998  between the Company and
     Treasure Valley Concrete, Inc.(7)

2.2  Agreement and Plan of Merger dated January 29, 1998 among the Company, U.S.
     Aggregates, Inc. and Western Acquisition

3.1  Certificate of Incorporation(1)7

3.2  By Laws(1)

10.1 Monroc,  Inc. Employee Stock Ownership Plan, amended and restated effective
     as of April 1, 1987(1)

10.2 Monroc,  Inc.  1994 Stock Option Plan,  amended and restated as of April 1,
     1987(1)

10.3 Form of indemnity agreements with directors(1)

10.4 Amendment dated February 27, 1996 to the Loan and Security  Agreement dated
     July 26, 1993 between the Company and CIT Group/Credit Finance, Inc.(4)

10.5 Loan and Security Agreement dated July 26, 1993 between the Company and CIT
     Group/Credit Finance, Inc.(1)

10.6 Stock Purchase  Agreement  dated July 26, 1995 by and between  Building and
     Capital Construction Partners, L.P. and Monroc, Inc.(2)

10.7 Consulting  Agreement  dated December 28, 1995 by and between  Building and
     Capital Construction Partners, L.P. and Monroc, Inc.(2)

10.8 Voting  Agreement  dated  December  28,  1995 by and between  Building  and
     Capital Construction Partners, L.P. and Colonial Commercial Corp.(2)

10.9 Voting  Agreement  dated  December  28,  1995 by and between  Building  and
     Capital Construction Partners, L.P. and Odyssey Partners(1)

10.10 Employment Agreement dated July 25, 1995 with L. William Rands.(5)

10.11 Monroc, Inc. 1996 Stock Option Plan, amended April 18, 1997(3)

10.12 Employment Agreement dated July 2, 1996 with Ronald D. Davis(5)

10.13 Real Estate Purchase Agreement dated December 27, 1996 between the Company
      and Whitney Family Trust(5)

10.14 Snake River Correctional Institution Subcontract Agreement dated September
      12, 1995 by and between Monroc, Inc. and Hoffman Construction Co.*

10.15 Snake River Correctional Institution Subcontract Agreement dated December
      14, 1995 by and between Monroc, Inc. and Hoffman Construction Co.*

10.16 Sand and Gravel Lease  dated May 1, 1996  by and between Monroc,  Inc. and
      the State of Wyoming, Board of Land Commissioners*


<PAGE>



10.17 Sand and Gravel Lease dated October 25, 1996 by and between  Monroc,  Inc.
      and LLK, Inc.*

10.18 Sand and  Gravel Lease dated  May 29, 1997 by and between Monroc, Inc. and
      Alma L. Rushton*

10.19 Memorandum of  Agreement dated  September 17,  1997 by and between Monroc,
      Inc. and Kenneth Dunn*

16   Letter from Grant Thornton LLP dated April 10, 1997(6)

21   Subsidiaries of Monroc, Inc.*

23.1 Consent of Deloitte & Touche LLP*

23.2 Consent of Grant Thornton LLP*

27   Financial Data Schedule*

99.1 Voting Agreement dated January 29, 1995 between U.S. Aggregates,  Inc., and
     BCCP I, L.L.P.(8)

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

(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 (File No. 33-75172).

(2)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     December 28, 1995.

(3)  Incorporated  by reference to the Company's Proxy Statement dated April 29,
     1996.

(4)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1995.

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

(6)  Incorporation  by reference  of the  Company's  Current  Report on Form 8-K
     filed April 14, 1997.

(7)  Incorporation  by reference  to the  Company's  Current  Report on Form 8-K
     filed January 15, 1998.

(8)  Incorporation  by reference  to the  Company's  Current  Report on Form 8-K
     filed February 3, 1998.

*    Filed herewith