<PAGE>   1

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                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A

                               (AMENDMENT NO. 2)


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

(MARK ONE)

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                    FOR THE FISCAL YEAR ENDED MARCH 27, 1999

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 0-22989

                           WHITE CAP INDUSTRIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                          <C>
                 DELAWARE                                84-1380403
      (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NO.)
3120 AIRWAY AVENUE, COSTA MESA, CALIFORNIA                  92626
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (714) 850-0900
        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                          COMMON STOCK, PAR VALUE $.01
                                (TITLE OF CLASS)

     Indicate by checkmark 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 the 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.  [ ]

     Common Stock, $.01 par value, outstanding as of May 28, 1999: 10,725,188
shares.

     Aggregate market value of voting stock held by non-affiliates of the
registrant computed at the NASDAQ closing price of $13.50 as of May 28, 1999,
was $108,344,236.

                      DOCUMENTS INCORPORATED BY REFERENCE

     None.


     This Amendment No. 2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 27, 1999 is filed to modify the Consolidated Financial
Statements included in Item 8 of Part II in its entirety and to include
disclosure of certain information concerning Section 16(a) beneficial ownership
compliance in Items 10 and 13 of Part III.

--------------------------------------------------------------------------------
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<PAGE>   2


                                    PART II


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                           WHITE CAP INDUSTRIES, INC.
                                AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
         YEARS ENDED MARCH 27, 1999, MARCH 31, 1998, AND MARCH 31, 1997


<TABLE>
<CAPTION>
                                                              PAGE NUMBER
                                                              -----------
<S>                                                           <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS....................       3
CONSOLIDATED BALANCE SHEETS.................................       4
CONSOLIDATED STATEMENTS OF OPERATIONS.......................       5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY.............       6
CONSOLIDATED STATEMENTS OF CASH FLOWS.......................       7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................       8
SCHEDULE II.................................................      22
</TABLE>


                                        2
<PAGE>   3

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
White Cap Industries, Inc.

     We have audited the accompanying consolidated balance sheets of WHITE CAP
INDUSTRIES, INC. (a Delaware corporation) and subsidiary as of March 31, 1998
and March 27, 1999, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended March 27, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of White Cap
Industries, Inc. and subsidiary as of March 31, 1998 and March 27, 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended March 27, 1999 in conformity with generally accepted accounting
principles.


                                          /s/  ARTHUR ANDERSEN LLP

                                          --------------------------------------
                                               ARTHUR ANDERSEN LLP

Orange County, California
May 17, 1999

                                        3
<PAGE>   4

                           WHITE CAP INDUSTRIES, INC.

                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                              MARCH 31,    MARCH 27,
                                                                1998         1999
                                                              ---------    ---------
                                                                  (IN THOUSANDS)
<S>                                                           <C>          <C>
CURRENT ASSETS:
  Cash and cash equivalents.................................  $  1,720     $  1,994
  Accounts receivable, net of allowance for doubtful
     accounts of $1,330
     and $1,346, respectively...............................    30,631       42,434
  Inventories...............................................    33,729       48,940
  Prepaid expenses and other................................       390        1,200
  Deferred income taxes.....................................     3,122        2,553
                                                              --------     --------
                                                                69,592       97,121
                                                              --------     --------
PROPERTY AND EQUIPMENT, net.................................     9,260       12,806
RENTAL EQUIPMENT, net.......................................     4,546        6,071
INTANGIBLE ASSETS, net......................................    34,667       56,868
OTHER ASSETS................................................       215          326
                                                              --------     --------
                                                              $118,280     $173,192
                                                              ========     ========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt.........................  $    526     $    707
  Accounts payable..........................................    27,783       31,117
  Accrued liabilities.......................................     6,657        7,328
                                                              --------     --------
                                                                34,966       39,152
                                                              --------     --------
LONG-TERM DEBT, net of current portion......................    17,080       52,965
                                                              --------     --------
DEFERRED INCOME TAXES.......................................       180        2,329
                                                              --------     --------
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS' EQUITY:
  Series B Convertible Preferred Stock, $.10 par value:
     Designated -- 1,000 shares; issued and
      outstanding -- 60.....................................         6            6
  Common Stock, $.01 par value:
     Authorized -- 20,000 shares; issued and outstanding --
     10,383 at March 31, 1998 and 10,720 at March 27,
      1999..................................................       100          104
  Additional paid-in capital................................    74,763       77,298
  Retained earnings (accumulated deficit)...................    (8,815)       1,338
                                                              --------     --------
                                                                66,054       78,746
                                                              --------     --------
                                                              $118,280     $173,192
                                                              ========     ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        4
<PAGE>   5

                           WHITE CAP INDUSTRIES, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                         YEARS ENDED
                                                             -----------------------------------
                                                             MARCH 31,    MARCH 31,    MARCH 27,
                                                               1997         1998         1999
                                                             ---------    ---------    ---------
                                                               (IN THOUSANDS, EXCEPT PER SHARE
                                                                        INFORMATION)
<S>                                                          <C>          <C>          <C>
NET SALES..................................................  $101,770     $186,727     $292,313
COST OF GOODS SOLD.........................................    69,740      126,760      196,411
                                                             --------     --------     --------
  Gross Profit.............................................    32,030       59,967       95,902
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE................    27,375       49,262       75,270
NON-RECURRING CHARGE.......................................        --        1,426           --
                                                             --------     --------     --------
  Income from operations...................................     4,655        9,279       20,632
INTEREST EXPENSE, NET......................................     2,273        4,507        3,835
                                                             --------     --------     --------
  Income before income taxes and extraordinary item........     2,382        4,772       16,797
PROVISION (BENEFIT) FOR INCOME TAXES.......................      (414)       1,938        6,644
                                                             --------     --------     --------
  Net income before extraordinary item.....................     2,796        2,834       10,153
EXTRAORDINARY ITEM NET OF TAX BENEFIT
  OF $3,769................................................        --        5,999           --
                                                             --------     --------     --------
  Net income (loss)........................................  $  2,796     $ (3,165)    $ 10,153
                                                             ========     ========     ========
Basic income (loss) per share:
  Income before extraordinary charges......................  $   2.63     $   0.48     $   0.95
  Extraordinary charges....................................        --        (1.16)          --
                                                             --------     --------     --------
  Basic income (loss) per share............................  $   2.63     $  (0.68)    $   0.95
                                                             ========     ========     ========
  Basic weighted average shares outstanding................     1,044        5,170       10,656
                                                             ========     ========     ========
Diluted income (loss) per share:
  Income before extraordinary charges......................  $   1.88     $   0.28     $   0.91
  Extraordinary charges....................................        --        (0.67)          --
                                                             --------     --------     --------
  Diluted income (loss) per share..........................  $   1.88     $  (0.39)    $   0.91
                                                             ========     ========     ========
  Diluted weighted average shares outstanding..............     1,458        8,949       11,106
                                                             ========     ========     ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        5
<PAGE>   6

                           WHITE CAP INDUSTRIES, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                          SERIES A AND B
                                           CONVERTIBLE                                       RETAINED
                                         PREFERRED STOCK     COMMON STOCK     ADDITIONAL     EARNINGS
                                         ----------------   ---------------    PAID-IN     (ACCUMULATED
                                         SHARES   AMOUNT    SHARES   AMOUNT    CAPITAL       DEFICIT)      TOTAL
                                         ------   -------   ------   ------   ----------   ------------   -------
                                                                      (IN THOUSANDS)
<S>                                      <C>      <C>       <C>      <C>      <C>          <C>            <C>
BALANCE, March 31, 1996................      --   $    --        7    $ --     $     4       $ 3,941      $ 3,945
  Recapitalization:
    Stockholder distributions..........      --        --       --      --          --        (6,252)      (6,252)
    Purchase and retirement of
      WCI common stock.................      --        --       (7)     --          (4)       (5,716)      (5,720)
    Common stock issued................      --        --    1,044       6          --            --            6
    Series A-1 convertible preferred
      stock issued.....................   1,497     2,250       --      --          --            --        2,250
    Series A-2 convertible preferred
      stock issued.....................     683        --       --      --          --            --           --
  Preferred dividend accretion.........      --        --       --      --          --           (55)         (55)
  Net income...........................      --        --       --      --          --         2,796        2,796
                                         ------   -------   ------    ----     -------       -------      -------
BALANCE, March 31, 1997................   2,180     2,250    1,044       6          --        (5,286)      (3,030)
  Sale of common stock in initial
    public offering....................      --        --    4,345      43      71,372            --       71,415
  Conversion of Series A preferred
    stock to common stock..............  (2,180)   (2,250)   3,652      38       2,212            --           --
  Sale of Series B convertible
    preferred stock....................      60         6       --      --          --            --            6
  Exercise of warrants and conversion
    of notes payable...................      --        --    1,230      12       1,000            --        1,012
  Preferred dividend accretion.........      --        --       --      --          --          (364)        (364)
  Exercise of stock options............      --        --       20      --         175            --          175
  Private sales of common stock........      --        --       92       1           4            --            5
  Net loss.............................      --        --       --      --          --        (3,165)      (3,165)
                                         ------   -------   ------    ----     -------       -------      -------
BALANCE, March 31, 1998................      60         6   10,383     100      74,763        (8,815)      66,054
  Common stock adjustment..............      --        --      136      --          --            --           --
  Common stock issued for
    acquisitions.......................      --        --      106       2       2,328            --        2,330
  Exercise of stock options............      --        --       95       2         207            --          209
  Net income...........................      --        --       --      --          --        10,153       10,153
                                         ======   =======   ======    ====     =======       =======      =======
BALANCE, March 27, 1999................      60   $     6   10,720    $104     $77,298       $ 1,338      $78,746
                                         ======   =======   ======    ====     =======       =======      =======
</TABLE>

    The accompany notes are an integral part of these consolidated financial
                                  statements.
                                        6
<PAGE>   7

                           WHITE CAP INDUSTRIES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          YEARS ENDED
                                                              -----------------------------------
                                                              MARCH 31,    MARCH 31,    MARCH 27,
                                                                1997         1998         1999
                                                              ---------    ---------    ---------
                                                                        (IN THOUSANDS)
<S>                                                           <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).........................................  $  2,796     $ (3,165)    $ 10,153
  Adjustments to reconcile net income (loss) to net cash
    provided by (used in)
    operating activities:
    Depreciation............................................     1,460        2,005        2,815
    Amortization............................................        64          889        1,772
    Gain on disposition of property and equipment...........       (28)        (111)          (8)
    Imputed interest on the conversion of debts and exercise
      of warrants...........................................        --          250           --
    Other non-cash charges..................................        --        1,707          161
  Changes in assets and liabilities, net of effects from
    acquisitions:
    Increase in accounts receivable.........................    (4,861)      (1,761)      (5,707)
    Increase in inventories.................................    (1,698)      (7,271)     (10,096)
    (Increase) decrease in prepaid expenses and other.......       955           17         (826)
    Decrease (increase) in deferred tax asset...............      (738)      (1,930)         569
    Increase in accounts payable............................     5,079        4,537          463
    Increase (decrease) in accrued expenses.................       405         (309)        (801)
    Increase (decrease) in deferred tax liability...........       200          (20)       2,149
                                                              --------     --------     --------
Net cash provided by (used in) operating activities.........     3,634       (5,162)         644
                                                              --------     --------     --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures......................................    (2,120)      (3,640)      (5,386)
  Proceeds from sale of property and equipment..............       139          436           16
  Acquisitions of businesses, net of $1,323, $301 and $875
    in cash acquired, respectively..........................   (16,502)     (33,169)     (30,669)
                                                              --------     --------     --------
  Net cash used in investing activities.....................   (18,483)     (36,373)     (36,039)
                                                              --------     --------     --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) under line of senior loan and
    security agreement......................................       467      (11,833)      36,100
  Principal payments on notes payable.......................        --      (21,997)        (640)
  Proceeds received from notes payable......................    22,235        9,392           --
  Proceeds from the exercise of stock options and
    warrants................................................        --          299          209
  Decrease in receivable from stockholder...................       481           --           --
  Stockholder distributions paid............................    (6,241)          --           --
  Preferred dividends paid..................................       (55)        (364)          --
  Preferred stock sold and repurchased......................     4,906       (2,650)          --
  Common stock repurchased and retired......................    (5,720)          --           --
  Net proceeds from initial public offering.................        --       71,415           --
  Increase in deferred finance costs........................    (1,215)      (1,221)          --
                                                              --------     --------     --------
  Net cash provided by financing activities.................    14,858       43,041       35,669
                                                              --------     --------     --------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................         9        1,506          274
CASH AND CASH EQUIVALENTS, beginning of period..............       205          214        1,720
                                                              --------     --------     --------
CASH AND CASH EQUIVALENTS, end of period....................  $    214     $  1,720     $  1,994
                                                              ========     ========     ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for --
  Interest..................................................  $  2,451     $  4,322     $  3,259
                                                              ========     ========     ========
  Income taxes..............................................  $     10     $    251     $  5,292
                                                              ========     ========     ========
DETAILS OF ACQUISITIONS:
  Fair value of assets......................................  $ 20,216     $ 43,227     $ 38,314
  Liabilities assumed.......................................    (2,391)      (9,757)      (4,440)
                                                              --------     --------     --------
  Acquisitions price........................................    17,825       33,470       38,874
  Less cash acquired........................................    (1,323)        (301)        (875)
  Less common stock issued for acquisition..................        --           --       (2,330)
                                                              --------     --------     --------
  Net cash paid for acquisitions............................  $ 16,502     $ 33,169     $ 30,669
                                                              ========     ========     ========
NON CASH FINANCING ACTIVITIES:
  Conversion of Note Payable to Common Stock................  $     --     $    500     $     --
                                                              ========     ========     ========
  Conversion of Preferred Stock to Common Stock.............  $     --     $  2,250     $     --
                                                              ========     ========     ========
  Common stock issued for acquisition.......................  $     --     $     --     $  2,330
                                                              ========     ========     ========
  Equipment acquired under capital lease obligations........  $     --     $     --     $    606
                                                              ========     ========     ========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                        7
<PAGE>   8

                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 27, 1999

1. BUSINESS ORGANIZATION

     White Cap Industries, Inc. (formerly White Cap Holdings, Inc.) ("WCI"), was
formed in November 1996 as a Delaware corporation and had no prior operating
history. White Cap Industries Corp. ("WCIC") was formed in February 1976 as a
California corporation.


     In February 1997, WCI and WCIC completed a transaction whereby the sole
shareholder of WCIC exchanged all of the outstanding stock of WCIC for preferred
stock of WCI, cash and dividends. This transaction was accounted for as a
recapitalization whereby WCIC became a wholly owned subsidiary of WCI. The
operating results for all periods prior to the recapitalization transaction
consist entirely of the historical results of WCIC. In December 1998, White Cap
Industries II, Inc. (WCI II) was formed as a Delaware Corporation and had no
prior operating history. Both WCI II and WCIC were wholly-owned subsidiaries of
WCI. Also in December 1998, WCI II and WCIC completed a merger whereby WCI II
was the surviving company and sole subsidiary of WCI. The operating results for
all periods prior to the merger consist entirely of the historical results of
WCIC. Hereinafter WCI and WCI II are collectively referred to as the "Company."


     The Company is a business-to-business retailer of specialty tools and
materials to professional contractors throughout the Western United States. At
March 27, 1999, the Company's operations consisted of a central distribution
center located in Costa Mesa, California and 40 retail branches located in
California, Nevada, Arizona, Colorado, Oregon, Washington, Texas, New Mexico,
and Utah.

     The Company acquired five contractor suppliers during the fiscal year ended
March 27, 1999 (see Note 4).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation


     The accompanying consolidated financial statements and related notes
include the accounts of White Cap Industries, Inc. and its wholly owned
subsidiary White Cap Industries II, Inc. All significant intercompany accounts
and transactions have been eliminated in consolidation.


  Fiscal Year

     Beginning with the year ended March 27, 1999, the Company changed its
fiscal year to a 52- or 53-week period ending on the Saturday nearest to March
31.

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.

  Concentration of Credit Risk

     The majority of sales are on a credit basis to professional concrete,
framing, waterproofing, landscaping, grading, electrical, mechanical and general
contractors located throughout the Western United States. Many customers are
under-capitalized and generally represent a higher than normal credit risk. In
many cases this risk is somewhat mitigated by filing a preliminary notice on
materials for specific jobs sites. The Company records an estimated allowance
for doubtful accounts and adjusts this estimate periodically based upon
historical experience and specific knowledge of a customer's financial
condition. No single customer represents

                                        8
<PAGE>   9
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

more than two percent of the accounts receivable balance shown in the
accompanying consolidated balance sheets.

  Cash and Cash Equivalents

     The Company considers all highly liquid investment instruments purchased
with an original maturity of three months or less to be cash equivalents.

  Inventories

     Inventories are stated at the lower of cost (weighted average, which
approximates FIFO) or market and consist primarily of purchased products held
for sale.

  Property and Equipment

     Property and equipment are recorded at cost and depreciated based on the
estimated useful lives of depreciable assets using primarily the straight-line
method for financial reporting purposes and accelerated methods for tax
purposes. Estimated useful lives are as follows:

<TABLE>
<S>                                    <C>
Building.............................  30 years
Transportation equipment.............  3 to 10 years
Machinery and equipment..............  2 to 10 years
Office equipment.....................  3 to 5 years
                                       Lesser of useful life or term of
Leasehold improvements...............  lease
</TABLE>

     Upon retirement of property and equipment, the asset and accumulated
depreciation and amortization accounts are relieved and any gain or loss is
reflected in operations. Maintenance costs and repairs are expensed as incurred.


  Intangible Assets


     Intangible assets consist of goodwill, covenant not to compete and deferred
financing costs. Goodwill represents the excess of cost over the fair value of
net assets acquired in business combinations accounted for under the purchase
method. Management has evaluated its accounting for goodwill, considering such
factors as historical profitability and future undiscounted operating cash
flows, and believes that the asset is realizable and that the amortization
period is appropriate.

     Intangible assets are amortized on a straight-line basis over the following
estimated useful lives:

<TABLE>
<S>                                    <C>
Goodwill.............................  40 years
Covenant not to compete..............  Term of the agreement (5 years)
Deferred financing costs.............  Term of the agreements (5 years)
</TABLE>

  Revenue Recognition

     Revenue from product sales is recognized as orders are picked up by
customers or upon delivery to customers. The Company also rents equipment to
customers under short-term agreements and such revenue is recognized over the
rental period as earned. The Company establishes reserves for estimated customer
returns, allowances and discounts at the time the related revenue is recognized.

                                        9
<PAGE>   10
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

  Cost of Goods Sold

     Cost of goods sold consists primarily of the purchase cost of the product
plus transportation to the Company's facilities. Vendor rebates are recognized
on an accrual basis in the period earned as a reduction to cost of goods sold.

  Advertising Expenses


     Advertising costs, which consists primarily of radio advertisements,
catalog expenses and store promotions are charged to expense in the period in
which the advertisement or promotion occurs. Advertising expenses in the fiscal
years ended March 27, 1999, March 31, 1998 and 1997, were approximately
$1,445,000, $1,338,000, and $379,000, respectively.


  Income Taxes

     The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109. The statement
requires an asset and liability approach for financial accounting and reporting
of income taxes. Deferred taxes are determined based on the estimated future tax
effects of differences between the financial and tax basis of assets and
liabilities given the provisions of the enacted tax laws. Prior to the
recapitalization transaction completed in February 1997, WCIC was taxed as an S
Corporation (see Note 7).

  Fair Value of Financial Instruments

     The carrying value of cash and cash equivalents, accounts receivable and
accounts payable approximates the fair value. In addition, the carrying value of
all borrowings approximate fair value based on interest rates currently
available to the Company.

  Cash Management

     The Company has a cash management program that processes cash receipts and
provides for centralized cash disbursements using certain zero-balance accounts.
This cash management program may result in negative book cash balances in
various zero-balance disbursement accounts. At March 31, 1998 and March 27,
1999, such negative cash balances total approximately $7.2 million and $7.3
million, respectively, and are included in accounts payable.

  Stock Split

     Effective October 1997, the Company effected a 1.74 for 1 stock split of
the common stock. The financial statements have been retroactively adjusted to
reflect the stock split.

  Stock-Based Compensation

     As permitted under SFAS No. 123, the Company accounts for employee
stock-based compensation under APB Opinion No. 25 and therefore presents the
necessary pro forma disclosures (see Note 11).

  Per Share Amounts

     The Company has adopted the provisions of SFAS No. 128, "Earnings Per
Share", and applied this pronouncement to all periods presented. This statement
requires the presentation of both basic and diluted net income (loss) per share
for financial statement purposes. Basic net income (loss) per share is computed
by dividing income (loss) available to common stockholders by the weighted
average number of common shares

                                       10
<PAGE>   11
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

outstanding. Diluted net income (loss) per share includes the effect of the
potential shares outstanding, including dilutive stock options and warrants
using the treasury stock method.

  Recent Accounting Pronouncements

     The Company adopted the Financial Accounting Standards Board Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income"
during the year ended March 27, 1999. This statement requires that all items
that meet the definition of components of comprehensive income be reported in a
financial statement for the period in which they are recognized. Components of
comprehensive income include revenues, expenses, gains and losses that under
generally accepted accounting principles are included in comprehensive income
(loss) but are excluded from net income (loss). There are no differences between
the Company's net income (loss), as reported, and comprehensive income (loss) as
defined, for each of the three years in the period ended March 27, 1999.

     The Company has also adopted SFAS no. 131, "Disclosures About Segments Of
An Enterprise and Related Information" during the year ended March 27, 1999. The
Company believes it operates in a single business segment.

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. SFAS 133 requires all derivatives to be
carried on the balance sheet at fair value. Changes in the fair value of
derivatives must be recognized in the Company's Consolidated Statements of
Operations when they occur; however, there is an exception for derivatives that
qualify as hedges as defined by SFAS 133. If a derivative qualifies as a hedge,
a company can elect to use "hedge accounting" to eliminate or reduce the income
statement volatility that would arise from reporting changes in a derivative's
fair value. Adoption of SFAS 133 is not expected to materially impact the
Company's reported financial results.

     In March 1998, the American Institute of Certified Public Accounts
("AICPA") issued Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed For or Obtained for Internal Use ("SOP" No. 98-1").
SOP No. 98-1 is effective for fiscal years beginning on January 1, 1999. SOP No.
98-1 will require the capitalization of certain costs and the expensing of
certain costs incurred after the date of adoption in connection with developing
or obtaining software. Management does not believe the adoption of this
statement will have a material effect on the Company's future earnings and
financial position.

     In April 1998, AICPA issued Statement of Position 98-5, Reporting on the
Costs of Start-Up Activities ("SOP" No. 98-5"). SOP No. 98-5 is effective for
fiscal years beginning after December 15, 1998. SOP No. 98-5 will require costs
of start-up activities and organization costs to be expenses as incurred.
Non-capital expenditures incurred in connection with opening new branches are
expensed as incurred under the Company's current policy which conforms with SOP
No. 98-5.

  Reclassifications

     Certain amounts for prior periods have been reclassified to conform to the
current year presentation.

                                       11
<PAGE>   12
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

3. EARNINGS (LOSS) PER SHARE

     The following is a reconciliation of the Company's weighted average shares
outstanding for the purpose of calculating basic and diluted earnings (loss) per
share for all periods presented (in thousands):

<TABLE>
<CAPTION>
                                                                  YEARS ENDED
                                                      -----------------------------------
                                                      MARCH 31,    MARCH 31,    MARCH 27,
                                                        1997         1998         1999
                                                      ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>
Basic weighted average shares.......................    1,044        5,170       10,656
Effect of dilutive securities:
  Warrants..........................................       98        1,172           --
  Options...........................................       --          556          450
  Convertible preferred stock.......................      316        2,051           --
                                                        -----        -----       ------
Diluted weighted average shares.....................    1,458        8,949       11,106
                                                        =====        =====       ======
</TABLE>

     The Company did not have any stock options outstanding prior to March 31,
1997 (see Note 11).

     Net income available for common shareholders used to compute basic earnings
per share reflects an adjustment for preferred dividends of $55,000 and $364,000
in the fiscal years ended March 31, 1997 and March 31, 1998, respectively. No
preferred dividends were paid in the fiscal year ended March 27, 1999.

4. RECENT ACQUISITIONS

     During the years ended March 31, 1997, March 31, 1998 and March 27, 1999,
the Company acquired the following businesses:

<TABLE>
<CAPTION>
         BUSINESS ACQUIRED                   DATE ACQUIRED
         -----------------                   -------------
<S>                                        <C>
A-Y Supply                                 January 1, 1997
Stop Supply                                May 9, 1997
Viking Distributing                        June 25, 1997
Burke Concrete Associates L.P.             November 1, 1997
JEF Supply                                 February 1, 1998
Sierra Supply                              April 1, 1998
CCS                                        April 1, 1998
Charles R. Watts Co.                       May 1, 1998
Nyco                                       May 1, 1998
Sun City                                   December 14, 1998
</TABLE>

     The acquisitions described above were accounted for as purchases and were
valued based on management's estimate of the fair value of the assets acquired
and liabilities assumed with respect to each acquisition at the dates of
acquisition. The Company has made preliminary purchase price allocations pending
additional market information related to the closure of certain acquired
locations and the related facility's future lease obligations which aggregated
approximately $0.7 million and $1.3 million for acquisitions made during the
fiscal years ended March 27, 1999 and March 31, 1998, respectively. Costs in
excess of net assets acquired of $32.9 million and $56.9 million were allocated
to goodwill as of March 31, 1998 and March 27, 1999, respectively.

     Had the acquisitions occurred at the beginning of the fiscal year of
acquisition and prior fiscal year, the unaudited pro forma net sales, net income
before extraordinary item, net income, diluted net income per share

                                       12
<PAGE>   13
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

and diluted weighted average number of common shares outstanding would be as
follows (in thousands, except net income per share data):

<TABLE>
<CAPTION>
                                                          YEARS ENDED PROFORMA
                                                              (UNAUDITED)
                                                         ----------------------
                                                         MARCH 31,    MARCH 27,
                                                           1998         1999
                                                         ---------    ---------
<S>                                                      <C>          <C>
Net sales..............................................  $264,247     $298,722
Net income before extraordinary item...................     6,843        9,744
Net income.............................................     5,982        9,744
Diluted net income per share...........................      0.48         0.88
Diluted weighted average shares outstanding............     8,949       11,114
</TABLE>

5. DETAIL OF SELECTED BALANCE SHEET ACCOUNTS

  Property and Equipment

     Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                         MARCH 31,    MARCH 27,
                                                           1998         1999
                                                         ---------    ---------
<S>                                                      <C>          <C>
Land and building......................................   $   471      $   471
Transportation equipment...............................     5,313        5,677
Machinery and equipment................................     3,098        5,015
Office equipment.......................................     5,581        8,031
Leasehold improvements.................................     2,505        3,333
                                                          -------      -------
                                                           16,968       22,527
Less -- accumulated depreciation.......................    (7,708)      (9,721)
                                                          -------      -------
                                                          $ 9,260      $12,806
                                                          =======      =======
</TABLE>

  Rental Equipment

     Rental equipment consists primarily of construction equipment acquired in
connection with various business acquisitions and is net of accumulated
depreciation of approximately $1,375,000 and $1,784,000 at March 31, 1998 and
March 27, 1999, respectively. Rental equipment is recorded at cost and
depreciated based on the estimated useful lives of the assets using primarily
the straight-line method for financial reporting purposes and accelerated
methods for tax purposes. The estimated useful lives of rental assets range from
5 to 10 years.

                                       13
<PAGE>   14
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

  Intangible Assets

     Intangible assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                         MARCH 31,    MARCH 27,
                                                           1998         1999
                                                         ---------    ---------
<S>                                                      <C>          <C>
Goodwill...............................................   $32,906      $56,864
Covenant not to compete................................     1,500        1,815
Deferred financing costs and other.....................     1,338        1,286
                                                          -------      -------
                                                           35,744       59,965
Less -- accumulated amortization.......................    (1,077)      (3,097)
                                                          -------      -------
                                                          $34,667      $56,868
                                                          =======      =======
</TABLE>

  Accrued Liabilities

     Accrued liabilities consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                         MARCH 31,    MARCH 27,
                                                           1998         1999
                                                         ---------    ---------
<S>                                                      <C>          <C>
Payroll and payroll related............................   $2,342       $ 2,590
Accrued taxes..........................................    1,692            --
Other..................................................    2,623         4,738
                                                          ------       -------
                                                          $6,657       $ 7,328
                                                          ======       =======
</TABLE>

6. LONG-TERM DEBT

     Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                         MARCH 31,    MARCH 27,
                                                           1998         1999
                                                         ---------    ---------
<S>                                                      <C>          <C>
Senior Loan and Security Agreement --
  Revolving line of credit.............................   $ 7,000      $13,000
  Term Loan............................................     7,300       37,400
Note payable secured by transportation equipment,
  interest at 8.25 percent, maturing August 2005.......     2,853        2,562
Other..................................................       453          710
                                                          -------      -------
                                                           17,606       53,672
     Less -- Current portion...........................      (526)        (707)
                                                          -------      -------
                                                          $17,080      $52,965
                                                          =======      =======
</TABLE>

  Senior Loan and Security Agreement

     On October 29, 1997 the Company entered into a new Credit Agreement with
available borrowings of up to $100 million on an unsecured basis (including a
$75 million delayed draw term facility for acquisitions and a $25 million
revolving credit facility). Interest on the amounts borrowed may be paid at the
option of the Company at a rate per annum equal to the lead bank's prime or
reference rate (as defined), or alternatively at bankers' acceptance rate (as
defined) or LIBOR rate plus margins (as defined), in each case, based upon the
Company's ratio of total debt to operating cash flow. As of March 27, 1999, the
interest rates ranged from 5.9 to 8.5 percent on both the delayed term and the
revolving credit facility. The term facility and the revolving

                                       14
<PAGE>   15
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

credit facility mature on October 29, 2001 at which time the Company may request
a one year extension. The Credit Agreement contains certain restrictive
covenants limiting mergers, use of proceeds, indebtedness, liens, investments,
sale of assets and acquisitions. The Credit Agreement also contains financial
covenants which requires the Company to maintain a minimum net worth, leverage
ratio, fixed charge coverage ratio and asset coverage ratio, among others.

     Annual maturities of long-term debt as of March 27, 1999 are as follows (in
thousands):

<TABLE>
<CAPTION>
                    YEAR ENDING MARCH:
<S>                                                          <C>
  2000.....................................................  $   707
  2001.....................................................      612
  2002.....................................................      388
  2003.....................................................   50,806
  2004.....................................................      439
  Thereafter...............................................      720
                                                             -------
                                                             $53,672
                                                             =======
</TABLE>

     In connection with the initial public offering during the fiscal year ended
March 31, 1998, the Company paid off most of its outstanding debt. The payoffs
of debt resulted in prepayment penalties of approximately $7.9 million, the
write-off of deferred loan fees of approximately $1.6 million and the incurrence
of imputed interest charges of approximately $0.3 million, net of a tax benefit
of approximately $3.8 million.

7. INCOME TAXES

     Significant components of the Company's provision (benefit) for income
taxes attributable to continuing operations are as follows (in thousands):

<TABLE>
<CAPTION>
                                                          YEARS ENDED
                                              -----------------------------------
                                              MARCH 31,    MARCH 31,    MARCH 27,
                                                1997         1998         1999
                                              ---------    ---------    ---------
<S>                                           <C>          <C>          <C>
Current:
  Federal...................................    $ 105       $ 3,016      $3,515
  State.....................................       19           532         921
                                                -----       -------      ------
                                                  124         3,548       4,436
                                                -----       -------      ------
Deferred:
  Federal...................................     (457)       (1,368)      2,272
  State.....................................      (81)         (242)        (64)
                                                -----       -------      ------
                                                 (538)       (1,610)      2,208
                                                -----       -------      ------
          Total provision (benefit).........    $(414)      $ 1,938      $6,644
                                                =====       =======      ======
</TABLE>

                                       15
<PAGE>   16
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

     The significant components of the Company's deferred income tax asset
(liability) are as follows (in thousands):

<TABLE>
<CAPTION>
                                                         MARCH 31,    MARCH 27,
                                                           1998         1999
                                                         ---------    ---------
<S>                                                      <C>          <C>
Current deferred tax asset:
  Inventory reserves...................................   $1,457       $ 1,567
  Allowance for bad debt...............................      544           523
  Net operating loss carry forward.....................      786            --
  Accrued liabilities and other........................      335           463
                                                          ------       -------
                                                          $3,122       $ 2,553
                                                          ======       =======
Non-current deferred tax liability:
  Depreciation.........................................   $ (180)      $(1,155)
  Goodwill amortization and other......................       --        (1,174)
                                                          ------       -------
                                                          $ (180)      $(2,329)
                                                          ======       =======
</TABLE>

     Although realization of the above net deferred tax assets is not assured,
management believes that realization of the recorded net deferred tax assets is
more likely than not through future taxable earnings.

     Reconciliation of the statutory Federal income tax rate to the Company's
effective tax rate before extraordinary charge is as follows:

<TABLE>
<CAPTION>
                                                          YEARS ENDED
                                              -----------------------------------
                                              MARCH 31,    MARCH 31,    MARCH 27,
                                                1997         1998         1999
                                              ---------    ---------    ---------
<S>                                           <C>          <C>          <C>
U.S. Federal statutory rate.................     34.0%       34.0%        34.0%
State income taxes, net of Federal
  benefit...................................       --         4.0          4.8
Income from "S" Corporation period..........    (32.6)         --           --
Subchapter "C" impact of reinstating net
  deferred tax asset........................    (21.0)         --           --
Other.......................................      2.2         2.6          0.8
                                                -----        ----         ----
Effective income tax rate...................    (17.4)%      40.6%        39.6%
                                                =====        ====         ====
</TABLE>

8. NON-RECURRING CHARGES

     During the fiscal year ended March 31, 1998 the Company recognized $1.4
million of non-recurring charges including a $1.0 million one-time guaranteed
bonus and approximately $0.4 million of severance and contract termination
payments.

9. STOCKHOLDERS' EQUITY

     At March 27, 1999, the authorized capital stock of WCI consists of
20,000,000 shares of common stock and 1,000,000 shares of preferred stock, of
which 60,000 shares of preferred stock are issued and outstanding.

  Senior Redeemable Preferred Stock

     In connection with the recapitalization transaction, WCI issued 675,969 of
senior redeemable preferred stock (Senior Preferred Stock) in a private
placement for an aggregate price of $2,650,000. The Senior Preferred Stock
accrued cumulative dividends of eight percent per annum and, upon completion of
the initial

                                       16
<PAGE>   17
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

public offering (IPO) became a mandatory redeemable. The Senior Preferred Stock
was redeemed in October 1997 for the stated amount plus accrued dividends and is
no longer outstanding.

  Convertible Preferred Stock

     In connection with the recapitalization transaction, WCI issued 2,604,507
shares of Series A-1 Preferred Stock ("A-1 Preferred") in a private placement
for an aggregate purchase price of $2,250,000. In addition, WCI issued 1,189,527
shares of Series A-2 Preferred Stock ("A-2 Preferred") to WCIC's former
shareholder, together with other consideration, in exchange for all outstanding
common shares of WCIC.

     The A-1 Preferred and the A-2 Preferred accrued cumulative dividends of
approximately $393,000 per year. At the option of the holder, each share of the
A-1 and A-2 Preferred was convertible into one share of common stock. Such
conversion was automatic in the event of an IPO or upon merger or sale of the
Company.

     In October 1997 the shares were converted to common stock at the completion
of the IPO and are no longer outstanding.

  Common Stock Warrants

     In connection with the issuance of the Senior Redeemable Preferred Stock,
the Company issued warrants to purchase 1,176,186 shares of common stock at an
exercise price of $0.006 per share (estimated fair value). The warrants were
exercised at the completion of the IPO in October 1997 and are no longer
outstanding.

10. PUBLIC OFFERING

     On October 27, 1997 the Company completed its initial public offering of
4.3 million shares of common stock with net proceeds of approximately $71.4
million. The net proceeds were used to retire all outstanding bank and
subordinated interest bearing indebtedness and associated prepayment penalties,
redeem Redeemable Preferred Stock and pay preferred stock dividends.

11. EMPLOYEE BENEFIT PLANS

  Employee Stock Option Plan

     On March 19, 1997, the Company adopted the 1997 Long Term Incentive and
Stock Option Plan ("the Plan"). The Plan reserves for issuance to employees,
members of the board of directors, consultants and independent contractors a
maximum of 660,849 shares of the Company's A-1 Preferred, which converted into
660,849 shares of Common Stock upon exercise of stock options, stock
appreciation rights, and restricted or performance stock awards. Stock options
may be granted as "Incentive Stock Options" (as defined by the Internal Revenue
Code of 1986) or as nonqualified options. The exercise price is determined by
the Compensation Committee and may not be less than 100 percent of the fair
market value at the date of grant. For Incentive Stock Options the exercise
price for options granted to individuals who own more than ten percent of the
total combined voting power of all classes of the stock of the Company shall be
110 percent of the fair value at the date of grant. Each option and award shall
expire on the date determined by the Compensation Committee but may not extend
beyond ten years for incentive stock options and fifteen years for nonqualified
options.

     Options to acquire an aggregate of 645,841 shares of Common Stock at an
exercise price of $2.48 per share were granted to employees on March 31, 1997.
The options vest over five years, beginning September 30, 1997 and expire March
31, 2007. At March 27, 1999, there were no shares available for future grant
under the Plan.

                                       17
<PAGE>   18
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

     In connection with its initial public offering in October 1997, the Company
adopted the 1997 Long-Term Equity Incentive Plan (the "Incentive Plan"), which
replaced the Company's previous incentive plan. The Incentive Plan provides for
the granting to directors, employees and other key individuals who perform
services for the Company and its subsidiaries of the following types of
incentive awards: stock options, stock appreciation rights, restricted stock,
performance units, performance grants and other types of awards that the
Compensation Committee of the Board of Directors deems to be consistent with the
Incentive Plan. An aggregate of 1,301,699 shares of Common Stock have been
reserved for issuance under the Incentive Plan. As of March 27, 1999, options to
purchase an aggregate of 660,500 shares of Common Stock at an exercise price
ranging between $2.48 and $18.00 per share were outstanding.

     A summary of the status of the Company's stock option plan at March 31,
1997 and 1998, and March 27, 1999 and changes during the years then ended is
presented below:

<TABLE>
<CAPTION>
                                                                   YEARS ENDED
                               -----------------------------------------------------------------------------------
                                       MARCH 31,                   MARCH 31,                    MARCH 27,
                                         1997                        1998                         1999
                               -------------------------   -------------------------   ---------------------------
                                             WEIGHTED                    WEIGHTED                      WEIGHTED
                                             AVERAGE                     AVERAGE                       AVERAGE
                                SHARES    EXERCISE PRICE    SHARES    EXERCISE PRICE     SHARES     EXERCISE PRICE
                               --------   --------------   --------   --------------   ----------   --------------
<S>                            <C>        <C>              <C>        <C>              <C>          <C>
Outstanding -- beginning of
  year.......................        --          --         645,841       $ 2.48          624,613       $2.65
  Granted....................   645,841       $2.48           7,000       $18.00          134,400       $7.92
  Exercised..................        --          --         (19,781)      $ 2.48          (79,460)      $2.48
  Cancelled..................        --          --          (8,447)      $ 2.48          (19,053)      $2.48
                               --------       -----        --------       ------       ----------       -----
Outstanding -- end of year...   645,841       $2.48         624,613       $ 2.65          660,500       $3.75
                               ========       =====        ========       ======       ==========       =====
Exercisable -- end of year...        --          --         123,523       $ 2.48          154,176       $3.55
                               ========       =====        ========       ======       ==========       =====
Options Available for
  grant......................    15,008                     493,000                     1,160,299
                               ========                    ========                    ==========
  Weighted average fair value
     of options granted......  $   0.68                    $  10.44                    $     4.91
                               ========                    ========                    ==========
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                         1997    1998    1999
                                                         ----    ----    ----
<S>                                                      <C>     <C>     <C>
Expected Life ( years).................................     5       5       5
Risk-free interest rate................................  6.38%   6.73%   4.30%
Volatility.............................................   0.0%   60.0%   71.5%
Dividend yield.........................................   0.0%    0.0%    0.0%
</TABLE>

     The following table summarizes information about stock options outstanding
at March 27, 1999:

<TABLE>
<CAPTION>
                          NUMBER OF OPTIONS   WEIGHTED AVERAGE      WEIGHTED
                           OUTSTANDING AT        REMAINING          AVERAGE
         EXERCISE PRICE    MARCH 27, 1999     CONTRACTUAL LIFE   EXERCISE PRICE
         --------------   -----------------   ----------------   --------------
<S>      <C>              <C>                 <C>                <C>
             $ 2.48            519,600              8.00             $ 2.48
             $ 7.88            133,100              9.50             $ 7.88
             $14.69                800              9.75             $14.69
             $18.00              7,000              8.83             $18.00
                               -------              ----             ------
                               660,500              8.31             $ 3.75
                               =======              ====             ======
</TABLE>

     The Company has adopted the pro forma disclosure provisions of SFAS No.
123. Accordingly, no compensation cost has been recognized for the stock option
plans. Had compensation cost for the Company's

                                       18
<PAGE>   19
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

stock option plans been determined under SFAS No. 123, the Company's net income
and basic net income per common share would approximate the following pro forma
amounts (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                          YEARS ENDED
                                              -----------------------------------
                                              MARCH 31,    MARCH 31,    MARCH 27,
                                                1997         1998         1999
                                              ---------    ---------    ---------
<S>                                           <C>          <C>          <C>
Net income (loss):
  As reported...............................   $2,796       $(3,165)     $10,153
  Pro forma.................................    2,796        (3,353)       9,901
Basic net income (loss) per common share
  As reported...............................   $ 2.63       $ (0.68)     $  0.95
  Pro forma.................................   $ 2.63       $ (0.71)     $  0.93
</TABLE>

  401(k) Plan

     The Company maintains a defined contribution benefit plan (the "401(k)
Plan") covering substantially all of its employees. Company contributions to the
401(k) Plan are defined by the plan. The Company's expense related to the 401(k)
Plan totaled $99,000, $170,000, and $242,000 for the years ended March 31, 1997
and 1998, and March 27, 1999 respectively.

12. COMMITMENTS AND CONTINGENCIES

  Operating Leases


     The Company has entered into operating leases that expire at various dates
through 2007. Total rental expense under these operating leases was
approximately $1,868,000, $3,252,000, and $4,864,000 for the years ended March
31, 1997 and 1998, and March 27, 1999. Future minimum rentals on these operating
leases are as follows (in thousands):



<TABLE>
<S>                                                           <C>
YEAR ENDING MARCH:
  2000......................................................  $ 5,187
  2001......................................................    4,110
  2002......................................................    3,254
  2003......................................................    2,151
  2004......................................................    1,458
  Thereafter................................................    2,077
                                                              -------
                                                              $18,237
                                                              =======
</TABLE>


  Employment Agreements/Bonus Plans

     The Company entered into employment agreements with certain key management
employees with a minimum term of 5 years. These agreements specify annual base
salary levels, incentive bonuses which are payable if the Company attains
certain earnings goals, as defined, and severance provisions that range from
zero to three years of base compensation. The Company accrues for these bonuses
based on management's estimates of achieving such performance goals and has
included these amounts in accrued liabilities at March 27, 1999.

                                       19
<PAGE>   20
                   WHITE CAP INDUSTRIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 27, 1999

13. QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following is a summary of the unaudited quarterly results of operations
for the fiscal years ended March 31, 1998 and March 27, 1999 (in thousands,
except per share data):

<TABLE>
<CAPTION>
                                                              QUARTER
                                              ----------------------------------------
                                               FIRST     SECOND      THIRD     FOURTH
                                              -------    -------    -------    -------
<S>                                           <C>        <C>        <C>        <C>
FISCAL YEAR ENDED MARCH 27, 1999:
  Net sales.................................  $68,637    $79,401    $73,813    $70,462
  Gross profit..............................   22,074     25,926     24,810     23,092
  Net income before extraordinary item......    2,604      3,401      2,509      1,639
  Net income................................    2,604      3,401      2,509      1,639
  Diluted income per share..................  $  0.23    $  0.31    $  0.23    $  0.14
  Diluted weighted average shares
     outstanding............................   11,112     11,140     11,147     11,175
FISCAL YEAR ENDED MARCH 31, 1998:
  Net sales.................................  $37,311    $48,695    $50,303    $50,418
  Gross profit..............................   11,463     15,536     16,624     16,344
  Net income before extraordinary item......      403      1,152        538        741
  Net income (loss).........................      403      1,152     (5,461)       741
  Diluted income (loss) per share...........  $  0.04    $  0.17    $ (0.56)   $  0.07
  Diluted weighted average shares
     outstanding............................    6,781      6,678      9,832     11,147
</TABLE>

                                       20
<PAGE>   21

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
White Cap Industries, Inc.

     We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of White Cap Industries, Inc. (a Delaware
corporation) and subsidiary included in this Form 10-K and have issued our
report thereon dated May 17, 1999. Our audit was made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The schedule
listed in the index above is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

                                          /s/ ARTHUR ANDERSEN LLP

Orange County, California
May 17, 1999

                                       21
<PAGE>   22

                           WHITE CAP INDUSTRIES, INC.

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                           ADDITIONS
                                                    ------------------------
                                      BALANCE AT    CHARGED TO    CHARGED TO                  BALANCE AT
                                      BEGINNING     COSTS AND       OTHER                       END OF
                                      OF PERIOD      EXPENSES      ACCOUNTS     DEDUCTIONS      PERIOD
                                      ----------    ----------    ----------    ----------    ----------
                                                                (IN THOUSANDS)
<S>                                   <C>           <C>           <C>           <C>           <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
  Year ended March 27, 1999.........    $1,330        $  470         $200          $654         $1,346
  Year ended March 31, 1998.........       646         1,249          307           872          1,330
  Year ended March 31, 1997.........       675           241          146           416            646
</TABLE>

                                       22
<PAGE>   23


                                    PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



COMPOSITION OF BOARD



     The Company's Board of Directors consists of such number of Directors as
may be determined by the Board of Directors from time to time. All Directors are
elected annually by the stockholders, each to hold office until his successor is
elected and qualified or until his earlier resignation, death or removal.



INFORMATION CONCERNING DIRECTORS



     The following sets forth certain information with respect to the Directors
of the Company.



<TABLE>
<CAPTION>
       NAME         AGE                            POSITION
       ----         ---                            --------
<S>                 <C>   <C>
Greg Grosch         52    Chairman of the Board of Directors, Chief Executive
                          Officer and President
Dan Tsujioka        50    Executive Vice President -- Merchandising, Secretary and
                          Director
Chris Lane          38    Chief Financial Officer and Director
Mark King           39    Director
James Johnson       61    Director
Charles Hamilton    50    Director
Doug Jacobs         58    Director
Don Koll            66    Director
</TABLE>



     GREG GROSCH, 52, is Chairman, Chief Executive Officer and President of the
Company and has 25 years experience in retailing. In 1976, Mr. Grosch formed
White Cap Industries, Inc. and since then has directed and been directly
involved in all aspects of the business and implementation of the Company's
growth strategy. Prior to joining the Company, Mr. Grosch held sales and
marketing positions with a major regional grocery chain and a national oil
company. Mr. Grosch holds a Bachelor's Degree in Marketing from California State
University, Northridge. Mr. Grosch has served on the Board of Directors since
the Company's inception.



     DAN TSUJIOKA, 50, joined the Company in November 1996 as Executive Vice
President and was elected Director in February 1997. In July 1997, Mr. Tsujioka
was appointed Executive Vice President -- Merchandising, with responsibility for
Company-wide merchandising. Mr. Tsujioka was a member of the original founding
group and the first general manager of Home Depot, Inc., where he started the
first prototype warehouse for Home Improvement Supplies (the predecessor to Home
Depot). Mr. Tsujioka was with Home Depot and its predecessors from 1980 to 1989.
From 1994 to 1995, Mr. Tsujioka served as Vice President of Special Projects for
Home Depot training store managers and district managers in a "back to basics"
training program. From 1995 to 1996, Mr. Tsujioka was Vice President of
Merchandising for Home Depot. From 1989 to 1993, Mr. Tsujioka was retired.



     CHRIS LANE, 38, has been a Director of the Company since February 1997 and
has been a consultant to the Company since 1995. Mr. Lane was appointed Chief
Financial Officer of the Company in April 1997. From 1992 to 1997, Mr. Lane
performed merger and acquisition and litigation support services as a partner
with the Orange County, California accounting firm of Kieckhafer, Lane &
Schiffer LLP. From 1986 to 1992, Mr. Lane was with Arthur Andersen LLP. He was
an Audit Manager when he left the firm in 1992. In June 1997, Mr. Lane entered
into an agreement with KRG Capital agreeing to act as a Director of KRG Capital.
Mr. Lane holds a Bachelor's Degree in Economics and an MBA in Management from
the University of California, Irvine.



     MARK M. KING, 39, has been a Director of the Company since February 1997.
Mr. King is the founder and a Managing Director of KRG Capital. Mr. King has 14
years experience as a senior executive, an investment banker, and the lead
principal in the completion of 29 strategic acquisitions involving middle market
companies. From September 1994 to January 1996, Mr. King served as Vice
President of LM Capital Corporation, a registered investment advisor
specializing in private and public equity investments and strategic


                                       23
<PAGE>   24


acquisitions. From 1988 to 1992, Mr. King was the Co-Founder, President, and
Vice Chairman of Industrial Services Technologies, Inc. ("IST"), a provider of
maintenance services to the refinery, fertilizer and chemical industries and
from 1992 to the present, he has served as Vice Chairman of IST. Mr. King serves
as a director of various private companies.



     JAMES A. JOHNSON, 61, has been a Director of the Company since February
1997. Mr. Johnson is the co-founder of and has been a Managing General Partner
of Apex Investment Partners, a Chicago based manager of investment funds, since
1988. Prior to founding Apex, from 1986 to 1988, Mr. Johnson was the co-founder
and general partner of Knightsbridge Partners, an investment banking firm. From
1974 to 1986, Mr. Johnson served in various positions, including Senior Vice
President, with Beatrice Companies. From 1965 to 1974, Mr. Johnson held various
positions, including Senior Manager, with KPMG Peat Marwick. Mr. Johnson serves
as a director of various private companies.



     CHARLES A. HAMILTON, 50, has been a Director of the Company since February
1997. Mr. Hamilton has over 27 years of investment experience in the fields of
security analysis, corporate finance and venture capital. He is currently a
principal in the private equity group at Robertson, Stephens Funds, which has
been a wholly-owned subsidiary of BancAmerica since October 1997. He had
previously served as managing director of Robertson, Stephens & Company since
1981. Mr. Hamilton has served as a director of numerous venture-financed
companies in recent years and he is presently on the board of ten private
companies.



     DOUGLAS C. JACOBS, 58, has been a Director of the Company since September
1998. Mr. Jacobs currently serves as Chief Financial Officer of the Cleveland
Browns. Mr. Jacobs served as Executive Vice President of Gucci Timepieces
(America), Inc. from 1997 to 1998. Mr. Jacobs served as President of The Severin
Group (exclusive manufacturer and distributor of Gucci timepieces) from 1996 to
1997. Mr. Jacobs was with Arthur Andersen & Company from 1963 to 1996 and was a
partner from 1972 to 1996. He served as a Regional Managing Partner from 1990 to
1996 and an Office Managing Partner from 1977 to 1996. From 1961 to 1963 Mr.
Jacobs served as a Lieutenant in the U.S. Navy. Mr. Jacobs also serves on the
Board of Directors of Standard Pacific Corporation. He earned a B.S. in Business
and an MBA from Case Western University.



     DONALD M. KOLL, 66, has been a Director of the Company since September
1998. Mr. Koll is the Chairman and Chief Executive Officer of the Koll
Companies, he directs the full scope of development and acquisition services
delivered by the organization he founded in 1962. Koll Development is one of the
nations leading real estate development companies involved in joint-venture
partnerships with major financial institutions, REIT's, endowment funds, pension
fund advisors, high net-worth individuals and real estate opportunity funds.
Under Mr. Kolls direction, the company has developed more than 60 million square
feet of office, industrial and retail space throughout the United States, Mexico
and the Pacific Rim. Mr. Koll is also a Partner in Koll Bren Realty Advisors,
which serves as asset manager for $2.5 billion in pension funds to invest in
real estate. Mr. Koll currently serves on the Board of Directors of The Irvine
Company, CB Richard Ellis, and Fidelity National Title. He previously served on
the board of Grubb & Ellis and Wells Fargo Bank. Mr. Koll is also a presidential
appointee to the Aerospace Museum in Washington D.C. and the board of trustees
of the John F. Kennedy Center for the Performing Arts. Mr. Koll earned his
bachelor's degree in Economics from Stanford University and served as a pilot in
the U.S. Air Force.



INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES



     The Committees of the Board of Directors consist of an Audit Committee and
a Compensation Committee. The Board of Directors held 5 meetings during the
fiscal year ended March 27, 1999. During the fiscal year, all Directors attended
100% of the total meetings of the Board of Directors and Committees of the Board
of Directors on which they served. Members of the Company's Board of Directors
serve without cash compensation.



     Audit Committee. The members of the Audit Committee are Messrs. Jacobs,
Johnson and King. The Audit Committee oversees actions taken by the Company's
independent auditors, recommends the engage-


                                       24
<PAGE>   25


ment of auditors and reviews the Company's internal accounting policies and
practices. Mr. Johnson chairs the Audit Committee.



     Compensation Committee. The members of the Compensation Committee are
Messrs. King, Johnson and Hamilton. The Compensation Committee approves the
compensation of executives of the Company, makes recommendations to the Board of
Directors with respect to standards for setting compensation levels and
administers the Company's incentive plans. Mr. King chairs the Compensation
Committee.



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



     Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) of the Exchange Act of 1934,
as amended, during its most recent fiscal year and Form 5s and amendments
thereto furnished to the Company with respect to its most recent fiscal year,
and any written representation furnished to the Company, each of Greg Grosch,
Dan Tsujioka, Chris Lane, Mark King, Charles Hamilton, Jack Karg, Richard
Gagnon, Doug Jacobs and Donald Koll has not filed on a timely basis a Form 5
relating to a stock option grant. Additionally, each of Doug Jacobs and Donald
Koll has not filed on a timely basis a Form 3. KRG Capital Partners, LLC has not
filed on a timely basis a Form 5 relating to a release of certain persons from a
voting agreement.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



TRANSACTION ADVISORY AGREEMENT



     KRG Capital and the Company are parties to a transaction advisory agreement
pursuant to which the Company pays to KRG Capital transaction advisory fees
based on the completion of additional acquisitions by the Company. The
transaction advisory fee is $200,000 payable on the first acquisition closing
each year, and (i) $50,000 for any transactions where the aggregate transaction
value is $20 million or less, unless the Board of Directors determines the
transaction presents unusual complexities in which case the fee may be adjusted
upward upon approval of the Board of Directors, and (ii) an amount to be agreed
upon and approved by the Board of Directors, but in no event less than $50,000,
for any transaction where the aggregate transaction value exceeds $20 million.
If the transaction advisory agreement is terminated by the Company prior to the
end of the term of the agreement, at the time of such termination, KRG Capital
shall be entitled to receive its annual transaction fees for the period that is
the lesser of (i) three years or (ii) the remainder of the term of the
transaction advisory agreement (including any extensions thereto).



STOCKHOLDER AGREEMENT



     The Company, KRG Capital, Mr. Grosch and certain affiliates of KRG Capital
are parties to an Amended and Restated Stockholders Agreement (the "Stockholders
Agreement"). The Stockholders Agreement has a term of ten years. The
Stockholders Agreement provides that so long as Mr. Grosch or parties related to
KRG Capital hold at least 5% of the issued and outstanding Common Stock, (i) Mr.
Grosch and KRG Capital each are entitled to designate one director, (ii) the
stockholder parties will vote all of their shares for such designees and (iii)
KRG Capital is entitled to have one additional KRG Capital principal attend all
board meetings as a non-voting observer. Each of Mr. Grosch and Mr. King are the
designated directors of Mr. Grosch and KRG Capital, respectively.



LEASES



     The Company leases a property located in Las Vegas, Nevada, from Greg
Grosch and his wife. The lease was entered into in May 1994 and is a six year
lease renewable for 4 successive five year terms at the Company's option.
Monthly rent under the lease is $5,761 for the Las Vegas property. The terms of
the lease are to be renegotiated upon renewal. Payments under the Las Vegas
lease totaled $69,469 in the fiscal year ended March 27, 1999.



     The Company also leases a property in Riverside, California from Black
Marlin Investment Company and the Nuttal Trust (the "Landlord"). Black Marlin
Investment Company is wholly owned by Mr. and Mrs. Grosch. The Riverside lease
has a term of six years expiring in 2002. Monthly rent under the Riverside


                                       25
<PAGE>   26


lease is $7,403. Payments under the Riverside lease to the Landlord totaled
$88,843 in the fiscal year ended March 27, 1999.



     The Company is a guarantor of certain indebtedness of Greg Grosch, his wife
and the Landlord secured by mortgages on the two properties described above. The
Company believes that the terms of the leases described above are no less
favorable to the Company than terms that could be obtained with unaffiliated
third parties in arms-length transactions.



CERTAIN STOCKHOLDERS



     Apex Investment Fund III, L.P., Apex Strategic Partners LLC and Argentum
Capital Partners, L.P. combined own more than 10% of the common equity of the
Company.



CREDIT AGREEMENT



     An affiliate of BancBoston Robertson Stephens is a lender under the
Company's existing credit agreement. Mr. Hamilton, a Director of the Company,
was a Managing Director of BancBoston Robertson Stephens.




                                       26
<PAGE>   27

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          WHITE CAP INDUSTRIES, INC.

Date: October 25, 1999                              /s/ GREG GROSCH
                                          --------------------------------------
                                                       Greg Grosch
                                            President/Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on October 25, 1999, by the following persons on behalf
of the registrant and in the capacities indicated.


<TABLE>
<CAPTION>
                  SIGNATURE                                      CAPACITY
                  ---------                                      --------
<S>                                            <C>

               /s/ GREG GROSCH                 Chairman, Chief Executive Officer, President
---------------------------------------------   and Director (principal executive officer)
                 Greg Grosch

              /s/ CHRIS J. LANE                    Chief Financial Officer and Director
---------------------------------------------  (principal accounting and financial officer)
                Chris J. Lane

              /s/ DAN TSUJIOKA                            Secretary and Director
---------------------------------------------
                Dan Tsujioka

              /s/ MARK M. KING                                   Director
---------------------------------------------
                Mark M. King

            /s/ JAMES A. JOHNSON                                 Director
---------------------------------------------
              James A. Johnson

           /s/ CHARLES A. HAMILTON                               Director
---------------------------------------------
             Charles A. Hamilton

            /s/ DOUGLAS C. JACOBS                                Director
---------------------------------------------
              Douglas C. Jacobs

             /s/ DONALD M. KOLL                                  Director
---------------------------------------------
               Donald M. Koll
</TABLE>

                                       27