SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year ended December 31, 1997

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                          Commission File number 0-3062


                      GUY F. ATKINSON COMPANY OF CALIFORNIA
             (Exact name of registrant as specified in its charter)

STATE OF DELAWARE                                                     94-1649018
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)


                 1001 Bayhill Drive, San Bruno, California 94066
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (415) 876-1000

           Securities Registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $0.01 par value
                                (Title of Class)

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

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

As of January 31, 1998,  the aggregate  market value of the voting stock held by
nonaffiliates  of the registrant was $2,813,077  based on closing sale prices on
the  NASDAQ  National  Market  System.  This  calculation  does  not  reflect  a
determination  that certain  persons are  affiliates of the  registrant  for any
other purpose.

The number of shares of common stock, $0.01 par value, outstanding as of January
31, 1998 was 8,987,467.


                                                                          Page 1

<PAGE>



                     Description of Company's Present Status

         On August  10,  1997,  the  Company,  together  with its two  principal
operating  subsidiaries,  Guy F. Atkinson Company and Guy F. Atkinson  Holdings,
Ltd., filed petitions for  reorganization  under Chapter 11 of the United States
Bankruptcy  Code (the  "Bankruptcy  Code").  These  petitions  were filed in the
United States  Bankruptcy  Court for the Northern  District of  California  (the
"Bankruptcy Court"),  and were assigned case numbers  97-33694-TC,  97-33695-TC,
and 97- 33696-TC (the  "Bankruptcy  Cases").  The filing of the Bankruptcy Cases
was  necessitated by the Company's  deteriorating  cash flow  situation,  by the
maturing  on June 30,  1997,  of the  Company's  bank  lines of credit  totaling
approximately  $55  million,  and  by  the  Company's  unsuccessful  efforts  to
negotiate  renewals of its bank credit lines or  otherwise to secure  additional
financing.

         On  September  8,  1997,  in  order to  finance  its  operations  under
Bankruptcy   Court    protection,    the   Company   secured   a   $60   million
"debtor-in-possession"   loan   facility   from  its  sureties   (the   "Bonding
Companies').  In addition, the Company retained Salomon Brothers, Inc. to advise
on various strategic and financial alternatives,  including a potential business
combination.  Through Salomon  Brothers,  Inc., the Company actively pursued the
possibility of a sale, merger or other business combination for the Company as a
whole or for its assets and business.

         In November 1997,  the Company  entered into an agreement with Morrison
Knudsen Corporation ("MK") pursuant to which MK was to perform a "due diligence"
review of the Company's business,  assets and liabilities and develop a proposal
to the Company for a business  combination  between MK and the Company,  and the
Company would pay MK's fees and expenses  associated with the transaction.  This
agreement  was subject to  Bankruptcy  Court  approval.  In December  1997,  the
Company's  motion  for an order  authorizing  the  agreement  was  denied by the
Bankruptcy Court.

         Ultimately,  although a number of parties initially  expressed interest
in a sale, merger or other business  combination,  no such transaction  occurred
due to the lack of a buyer or merger partner.

         On January 9, 1998, the Bankruptcy Court approved an Interim Procedures
Agreement  (the  "IPA")  with The Clark  Construction  Group,  Inc.,  ("Clark").
Pursuant to the IPA, the Company  engaged Clark as an independent  contractor to
provide  construction  management  services to the Company on an interim  basis.
Clark's  services   consisted  of  management  of  the  Company's  sole  venture
construction  contracts  covered by  outstanding  completion  bonds (the "Bonded
Project").  All phases of  management  were  included,  including  management of
subcontractors,  scheduling, quality control and inspection. In order to perform
these  services,  Clark was permitted to hire the Company's  employees  (who had
been engaged largely in the same activities--managing the Bonded Projects--while
working for the  Company).  This interim  arrangement  remained in place through
January 31, 1998, on which date the Bonding  Companies  exercised their right to
assume control of the Bonded  Projects from the Company.  Clark,  using the same
employees  who formerly  were  employed by the Company,  continued to manage the
Bonded Projects on behalf of the Bonding Companies.

         On  February  4, 1998,  the  Company  and Clark  entered  into an Asset
Purchase  Agreement  under which Clark would  purchase from the Company  certain
equipment  and   contracts,   the  Atkinson  name,  and  all  of  the  Company's
intellectual  property,  goodwill and going concern  value.  The Asset  Purchase
Agreement was approved by the Bankruptcy Court on February 6, 1998.  Pursuant to
the Asset Purchase Agreement, on February 23, 1998, Clark purchased the Atkinson
name and the Company's intellectual  property,  goodwill and going concern value
for a  purchase  price of $1  million.  In  addition,  under the Asset  Purchase
Agreement Clark agreed that the Company's former employees who had been hired by
Clark would be made  available to the Company at a cost  intended to reflect the
cost to Clark of the  employees'  services,  support  services  required for the
employees, and overhead associated with the employees. These

                                                                          Page 2

<PAGE>



employees  would be available on an "as needed" basis to assist the company with
completion of construction  projects  (other than the Bonded  Projects) and with
other activities as well.

         Due to the  Company's  inability  to obtain new surety  bonds since the
filing of the Bankruptcy  Cases,  the Company has been unable to take on any new
projects since that time.

         Given  the   Company's   inability  to  consummate  a  sale  or  merger
transaction  as a going  concern,  and its  inability to obtain new financing or
undertake  new  projects,  the Company is winding up its business by  completing
existing projects, resolving pending disputes, and selling all other assets.

         The Company's assets presently  consist of claims in respect of various
completed  construction  projects,  ongoing construction projects (to the extent
such projects may be completed on a profitable  basis),  joint venture interests
in entities formed for the purpose of carrying out  construction  jobs,  certain
smaller ongoing businesses, real estate, and other miscellaneous assets. The net
amounts to be  realized  by the Company  from the sale or other  realization  on
these assets is unknown at this time.

         Future payments to unsecured  creditors whose claims arose prior to the
commencement of the Company's Chapter 11 case ("pre-petition  creditors") and to
shareholders  (after pre- petition creditors have been paid in full) will depend
on the amount of proceeds,  if any, available after payment in full of expenses,
unsecured  creditors  whose claims  arose after  commencement  of the  Company's
Chapter 11 case ("post-petition  creditors"),  and secured creditors.  There are
currently  outstanding  more than $90  million of  secured  claims  against  the
Company.  The amount of pre-petition claims is difficult to estimate,  but it is
expected to increase as existing projects are completed. Expenses resulting from
the process of winding up the Company's  business and the  Bankruptcy  Cases are
also difficult to estimate. As a result,  although the Company presently expects
that  pre-petition  creditors  will be paid in full and a small  amount  will be
available to distribute to  shareholders,  this result is subject to substantial
uncertainty  and possible wide  variations.  Even  relatively  small  percentage
variances in actual outcomes relative to the Company's estimates could result in
the  Company's  shareholders  losing their entire  investment  and  pre-petition
creditors not receiving  payment in full, or any payment at all. There can be no
assurance that any amounts at all will be paid to  pre-petition  creditors or to
shareholders.

         The process of winding up the  business of the Company will likely take
several years, and in all likelihood the amounts,  if any, paid or to be paid to
pre-petition creditors or shareholders will not be known until virtually the end
of the process.

         On March 27, 1998, the Bankruptcy  Court appointed Mr. E. Lawrence Hill
to act as the Responsible  Officer of the Company.  The concept of a Responsible
Officer arises under the Bankruptcy Code, and the role of a Responsible  Officer
can vary considerably from case to case depending on the circumstances.  In this
instance Mr. Hill will be acting  essentially as the Chief Executive  Officer of
the Company. He will report to a four-person Executive Committee composed of one
representative  from each of the four  major  parties or  constituencies  in the
Bankruptcy Cases (the Banks, the Bonding Companies,  the pre-petition  creditors
and the  Company),  but the Executive  Committee  will not have the authority to
override his decisions.  Important  decisions will be subject to approval of the
Bankruptcy Court, and the parties in the case will have an opportunity to object
to decisions with which they disagree.

         The time within  which the Company  has the  exclusive  right under the
Bankruptcy  Code to file a plan  of  reorganization  has  been  extended  by the
Bankruptcy  Court  until  August 3, 1998.  In  connection  with  obtaining  such
extension, the Company has agreed not to file a plan of

                                                                          Page 3

<PAGE>



reorganization  that  does not  have  the  support  of the  Unsecured  Creditors
Committee  (the  "Committee"),  the  Company's  principal  secured  lenders (the
"Banks"), and the Bonding Companies without first making a reasonable good faith
attempt to meet and confer with such  parties.  If the Company files a plan that
does not have the support of the Committee, the Banks and the Bonding Companies,
any of them may file a competing plan,  even if the  exclusivity  period has not
expired.

         The Company has requested  permission  from the Securities and Exchange
Commission  to  modify  its  public  reporting  obligations  for the term of the
Bankruptcy  Cases. The Company sought approval to file monthly operating reports
prepared  for the  Bankruptcy  Court  under  cover of Form  8-K,  in lieu of the
Company's  Quarterly  Reports  on Form 10-Q and Annual  Report on Form  10-K.  A
response to the modified  reporting  request is expected from the Securities and
Exchange Commission in the near future.

         Statements  in this  report  which  are  prefaced  with  words  such as
"expects,"  "anticipates,"  "believes" and similar words and other statements of
similar sense are forward-looking statements.  These statements are based on the
Company's  current  expectations  and  estimates  as to  prospective  events and
circumstances  which may or may not be within the  Company's  control  and as to
which there can be no firm assurances given. These  forward-looking  statements,
like any other forward-looking statements,  involve risks and uncertainties that
could  cause  actual  results  to differ  materially  from  those  projected  or
anticipated.  Among  the  risks  that  could  cause  actual  results  to  differ
materially  from those  projected or anticipated  are risks  associated with the
outcome of litigation; risks inherent in the construction industry, such as cost
overruns,  accidents and claims;  delays in liquidation of the Company's assets,
such  as  delays  in  completion  of  litigation  or  delays  in  completion  of
construction  projects;  increased  administrative  expenses  as a result of the
Bankruptcy Cases or as a result in delays in winding up the Company's  business;
and changes in market value of assets held for sale.

                                                                          Page 4

<PAGE>



Item 8.  Financial Statements and Supplementary Data

(a)      Financial Statements


Page

6-7      Consolidated Balance Sheets, as of December 31, 1997 and 1996

8        Consolidated Statements of Stockholders' Equity for the years ended 
         December 31, 1997, 1996 and 1995

9        Consolidated Statements of Operations for the years ended December 31,
         1997, 1996 and 1995

10       Consolidated Statements of Cash Flows for the years ended December 31, 
         1997, 1996 and 1995

11-15    Notes to Consolidated Financial Statements





(b)      Financial statement schedules:

         Financial  statement  schedules  are  omitted  because  the  conditions
         requiring   their  filing  do  not  exist,   or  because  the  required
         information is given in the financial  statements,  including the notes
         thereto.

                                                                          Page 5

<PAGE>



<TABLE>
Guy F. Atkinson Company of California
Consolidated Balance Sheets (unaudited)
(in thousands of dollars except share and per share amounts)
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
As of December 31,                                                                                    1997                      1996
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                            <C>                      <C>
ASSETS
Current Assets:
Cash and cash equivalents                                                                      $    25,443              $      7,854
Accounts receivable                                                                                120,616                   118,964
Costs and estimated earnings in excess of billings                                                   2,937                    12,511
Inventories and unamortized costs on contracts in progress                                          49,253                    56,601
Investments in joint ventures                                                                       28,309                    34,076
Deferred income taxes                                                                                    -                       225
Other current assets                                                                                 3,741                     3,986
------------------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                               230,299                   234,217
------------------------------------------------------------------------------------------------------------------------------------

Property, plant and equipment At cost:
     Land                                                                                            2,552                     2,528
     Buildings                                                                                       8,053                    10,232
     Construction equipment                                                                         12,669                    32,928
     Other equipment                                                                                 8,365                     8,314
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    31,639                    54,002
Less accumulated depreciation                                                                       22,023                    25,341
------------------------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment, net                                                             9,616                    28,661
------------------------------------------------------------------------------------------------------------------------------------
Other assets                                                                                         1,243                     2,345
------------------------------------------------------------------------------------------------------------------------------------

Total assets                                                                                   $   241,158                  $265,223
------------------------------------------------------------------------------------------------------------------------------------


The accompanying notes are an integral part of these financial statements


                                                                                                                              Page 6
</TABLE>

<PAGE>



<TABLE>
Guy F. Atkinson Company of California
Consolidated Balance Sheets (unaudited)
(in thousands of dollars except share and per share amounts)

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
As of December 31,                                                                                    1997                      1996
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                           <C>                       <C> 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including current portion of long-term debt                                    $   105,359               $    33,402
Accounts payable                                                                                   66,766                    81,981
Billings in excess of costs and estimated earnings                                                 21,249                    21,422
Accrued federal & foreign income taxes                                                              1,231                     8,096
Other accrued expenses                                                                             35,004                    21,953
Due to joint ventures                                                                               1,595                       588
------------------------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                                         231,204                   167,442
------------------------------------------------------------------------------------------------------------------------------------

Non-current liabilities
Long-term debt, less current portion                                                                  836                     1,210
Deferred income taxes                                                                                   -                       109
Postretirement health care and postemployment benefit obligations                                   7,178                     7,178
------------------------------------------------------------------------------------------------------------------------------------

Total liabilities                                                                                 239,218                   175,939
------------------------------------------------------------------------------------------------------------------------------------

Contingencies (Note 16)

Stockholders' Equity
Preferred stock, par value $0.01; 2,000,000 shares authorized;
     none issued or outstanding
Common stock, par value $0.01;  20,000,000 shares  authorized;  8,987,467 issued
     and outstanding at December 31, 1997 and at December 31, 1996                                  1,896                     1,896
Paid-in capital                                                                                    13,262                    13,262
Accumulated translation adjustment                                                                 (3,709)                   (4,526)
Unearned compensation                                                                                   -                         -
Additional pension liability                                                                          (35)                      (35)
Retained earnings                                                                                  (9,474)                   78,687
------------------------------------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                                          1,940                    89,284
------------------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity                                                       $241,158                  $265,223

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


The accompanying notes are an integral part of these financial statements


                                                                                                                              Page 7
</TABLE>

<PAGE>



<TABLE>
Guy F. Atkinson Company of California
Consolidated Statements of Stockholders' Equity (unaudited)
(in thousands of dollars except share and per share amounts)

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                        Capital Stock            Accumulated     Unearned   Additional
                                               Number               Paid-in      Translation     Compen-       Pension      Retained
                                            of Shares     Amount    Capital      Adjustment       sation     Liability      Earnings
------------------------------------------------------------------------------------------------------------------------------------

<S>                                        <C>           <C>       <C>           <C>              <C>           <C>       <C>     
Balance, December 31, 1994                 8,950,824      1,894     13,185        (5,249)          (736)            -        87,894

Changes for the year - 1995:
Net income                                                                                                                    3,609
Cash dividend - $2.00 per share                                                                                             (17,835)
Restricted shares:
     Forfeited                               (33,600)                 (336)                         336
Stock options exercised                       33,930          1        236
Foreign currency translation                                                         803
Additional minimum pension liability                                                                             (344)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1995                 8,951,154      1,895     13,085        (4,446)          (400)         (344)       73,668

Changes for the year - 1996:
Net income                                                                                                                    5,019
Restricted shares:
     Forfeited                               (40,000)                 (400)                         400
Stock options exercised                       76,313          1        577
Foreign currency translation                                                         (80)
Additional minimum pension liability                                                                              309
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1996                  8,987,467   $ 1,896   $ 13,262       $(4,526)        $    -     $     (35)    $  78,687

Changes for the year - 1997:
Net income                                                                                                                  (88,161)
Foreign currency translation                                                         817
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997                  8,987,467   $ 1,896   $ 13,262       $(3,709)        $    -     $     (35)    $  (9,474)
------------------------------------------------------------------------------------------------------------------------------------


The accompanying notes are an integral part of these financial statements


                                                                                                                              Page 8
</TABLE>

<PAGE>



<TABLE>
Guy F. Atkinson Company of California
Consolidated Statements of Operations (unaudited)
(in thousands of dollars except share and per share amounts)

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Years ended December 31,                                                                    1997              1996              1995
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                   <C>                 <C>            <C>       
Revenue                                                                               $  370,551          $468,467       $  416,995

Cost of revenue                                                                          406,122           424,217          377,823
------------------------------------------------------------------------------------------------------------------------------------

Gross margin                                                                             (35,571)           44,250           39,172
Restructuring charges                                                                      5,906                 -                -
General and administrative expenses                                                       43,427            39,335           38,551
------------------------------------------------------------------------------------------------------------------------------------

Income (loss) from operations                                                            (84,904)            4,915              621
Other income (expense)
     Interest income                                                                         963             1,801            3,784
     Interest expense                                                                     (6,664)           (1,684)            (904)

Miscellaneous, net                                                                        (4,061)            1,781            1,249
------------------------------------------------------------------------------------------------------------------------------------

Total other income (expense)                                                              (9,762)            1,898            4,129
------------------------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes                                                               (94,666)            6,813            4,750
Provision (benefit) for income taxes                                                      (6,505)            1,794            1,141
------------------------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                                     $  (88,161)       $    5,019       $    3,609

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

Net income (loss) per share of common stock                                               $(9.81)           $ 0.54           $ 0.39

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

Average number of shares of common stock and common stock
      equivalents utilized in net income (loss) per share calculation                  8,987,000         9,359,000        9,161,000

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



The accompanying notes are an integral part of these financial statements
                                                                                                                              Page 9

</TABLE>

                  

<PAGE>



<TABLE>
Guy F.  Atkinson  Company of  California  
Consolidated  Statements of Cash Flows (unaudited) 
(in thousands of dollars except share and per share amounts)

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
As of December 31,                                                                          1997              1996           1995
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                    <C>               <C>            <C>    
Operating activities
Net income (loss)                                                                      $ (88,161)        $   5,019      $   3,609

Adjustments to reconcile  net income to net cash provided by (used in) operating
   activities:
     Restructuring charges                                                                 5,906                 -              -
     Depreciation, depletion and amortization                                             10,673             4,693          6,666
     Deferred income taxes                                                                   113              (451)           444
     (Gain) on dispositions of property, plant and equipment                                  76            (3,724)        (3,028)
Changes in operating assets and liabilities:
     Accounts receivable                                                                  (2,548)          (42,832)       (43,080)
     Inventories and unamortized costs on contracts                                        6,331           (35,619)          (963)
     Investments in joint ventures                                                         6,659            (1,957)         8,845
     Other current assets                                                                    237             1,257         (2,089)
     Accounts payable and accrued expenses                                                (5,222)          (10,524)        46,353
     Accrued income taxes                                                                 (6,738)            3,076         (1,877)
     Billings in excess of costs and estimated earnings, net                               9,480            17,377        (21,033)
     Other, net                                                                             (148)             (425)          (259)
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                                      (63,342)          (64,110)        (6,412)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Property, plant and equipment expenditures                                             (924)          (10,016)       (23,022)
     Proceeds from dispositions of property, plant and equipment                           7,269             9,609          7,791
     Increase (decrease) in other assets, net                                              1,102                 8             40
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities                                        7,447              (399)       (15,191)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Short-term borrowings (repayments), net                                              72,309            32,500              -
     Proceeds of long-term borrowings                                                          -                50            812
     Long-term debt repayments                                                              (727)             (700)          (911)
     Common stock issuance related to stock option awards                                      -               577            237
     Cash dividends paid                                                                       -                 -        (17,835)
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities                                       71,582            32,427        (17,697)
------------------------------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash                                                    1,902               132            663
------------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                                   $  17,589          $(31,950)     $ (38,637)

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

Supplementary information:
Cash paid during the period for:
     Interest                                                                          $   3,118         $   3,826      $     553
     Federal, foreign and state income taxes                                                (138)              561          2,563

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

The accompanying notes are an integral part of these financial statements

                                                                                                                             Page 10
</TABLE>


                                                                               

<PAGE>


Guy F. Atkinson Company of California Notes to unaudited  
Consolidated Financial Statements 
(in thousands of dollars except share and per share amounts)

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

1.   Chapter 11 Proceedings and Basis of Financial Statement Presentation

On August 10,  1997,  the  Company  filed a petition  for  reorganization  under
Chapter 11 of the U.S. Bankruptcy Code. Subsequent to that date, the Company has
been   operating  its  business  as  a   debtor-in-possession   subject  to  the
jurisdiction  of  the  U.S.  Bankruptcy  Court  for  the  Northern  District  of
California.  For a description of the Company's present status,  please refer to
the portion of the  Company's  report for the year ended  December 31, 1997,  on
Form 10-K, under the heading "Description of Company's Present Status."

On February 6, 1998,  the U.S.  Bankruptcy  Court  approved  the sale of certain
assets of the  Company to the Clark  Construction  Group,  Inc.,  pursuant to an
asset purchase  agreement.  Under this agreement the Clark  Construction  Group,
Inc., acquired the name, intellectual property, goodwill and going concern value
of the Company.

As a consequence  of the  aforementioned  transaction,  the Company is no longer
bidding on new  construction  projects,  and is seeking to complete its existing
backlog of contracts and conclude the sale of its remaining assets in an orderly
fashion.

The  consolidated  financial  statements  of the Company have been  presented in
accordance with the American Institute of Certified Public Accountants Statement
of Position 90-7 "Financial  Reporting by Entities in  Reorganization  under the
Bankruptcy  Code," and have been prepared in accordance with generally  accepted
accounting  principles  applicable  to  a  going  concern,   which  contemplates
continuity  of  operations,   realization  of  assets  and  the  liquidation  of
liabilities and commitments in the normal course of business.

The bankruptcy filing,  together with the sale of certain assets described above
and the losses from  operations  raise  substantial  doubt  about the  Company's
ability to continue as a going concern.  The  appropriateness of using the going
concern basis is dependent upon, among other things,  the ability of the Company
to generate  sufficient  cash from the  completion of its  remaining  backlog of
construction contracts,  and from the sale of its assets, as well as the ability
to continue to use cash and other collateral.  The Company's ability to continue
to use cash and other collateral depends upon the consent of its banks and other
secured and unsecured creditors.

THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED ON THE BASIS THAT THE COMPANY IS A
"GOING  CONCERN." THE COMPANY IS NOT A "GOING  CONCERN" AND IN FACT IS PRESENTLY
IN THE PROCESS OF WINDING UP ITS BUSINESS.  THE  INFORMATION  CONTAINED IN THESE
FINANCIAL  STATEMENTS IS BASED ON HISTORICAL  INFORMATION  AND HAS BEEN PREPARED
AND IS PRESENTED ON THE SAME BASIS AS THE  COMPANY'S  FINANCIAL  STATEMENTS  FOR
PRIOR PERIODS.  THE ACTUAL  AMOUNTS  REALIZED FROM THE ASSETS OF THE COMPANY MAY
VARY  WIDELY  FROM THE  AMOUNTS  SHOWN ON THESE  FINANCIAL  STATEMENTS,  AND THE
COMPANY  WILL INCUR  SUBSTANTIAL  COSTS IN ORDER TO  REALIZE  SUCH  AMOUNTS.  NO
INFERENCE MAY BE DRAWN FROM THESE FINANCIAL  STATEMENTS  ABOUT AMOUNTS,  IF ANY,
THAT ULTIMATELY  WILL BE AVAILABLE TO DISTRIBUTE TO THE COMPANY'S  CREDITORS AND
SHAREHOLDERS.




                                                                         Page 11

<PAGE>


Guy F. Atkinson Company of California 
Notes to unaudited  Consolidated Financial Statements 
(in thousands of dollars except share and per share amounts)

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

2.   Summary of Significant Accounting Policies

Use of Estimates in the Preparation of Financial Statements

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

Principles of Consolidation

The  consolidated  financial  statements  include  Guy F.  Atkinson  Company  of
California and its  subsidiaries.  Investments in joint ventures are recorded on
the  equity  method.  Significant  transactions  between  the  Company  and  its
subsidiaries are eliminated in consolidation.

Construction Contract Accounting

Construction  revenue  and  gross  margin,  including  the  Company's  share  of
joint-venture  contracts,  are  recognized  using the  percentage  of completion
method.  This method applies the ratio of costs  incurred to Company  engineers'
estimates  of  total  costs on a  contract-by-contract  basis.  These  estimates
include provisions for known and anticipated cost overruns,  if any exist or are
expected  to occur,  and may be subject  to  revision  in the  normal  course of
business.

Revenue  from claims by the  Company for  additional  contract  compensation  is
recorded  when  agreed to by the  owner.  Provision  is made  currently  for any
anticipated future losses on contracts in progress.

The classification of construction  contract-related  current assets and current
liabilities  is based on the Company's  contract  performance  cycle,  which may
exceed one year.

Foreign Exchange

The Company has assets,  liabilities  and  transactions  in foreign  currencies,
principally  the Canadian  dollar,  which  potentially  expose it to the risk of
foreign exchange gains and losses.

Cash and Cash Equivalents

Cash equivalents consists of highly-liquid  securities with an original maturity
of three months or less.

Inventories and Unamortized Costs on Contracts

Inventories are valued at the lower of cost (principally first-in, first-out) or
market  prices.  Unamortized  costs on  contracts  include the cost of plant and
project  facilities to be absorbed over the life of the projects,  the estimated
value of  recoverable  assets,  and costs related to unpriced  change orders and
claims for  additional  contract  compensation  to the extent their  recovery is
probable. The amount of costs relating to unpriced change orders and claims that
is included in inventories and  unamortized  costs on contracts is the lesser of
the actual amount of costs incurred or the estimated  amount that is recoverable
as additional compensation. These

                                                                         Page 12

<PAGE>


Guy F. Atkinson Company of California 
Notes to unaudited  Consolidated Financial Statements 
(in thousands of dollars except share and per share amounts)

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

2.   Summary of Significant Accounting Policies, continued

estimates are based upon management's  expectations regarding the probability of
future recovery and may be subject to revision in the normal course of business.

Property, Plant, and Equipment

Property,  plant,  and  equipment  are stated at cost.  Major  improvements  and
renewals are capitalized,  while  maintenance and repairs are charged to cost as
incurred.

The Company  depreciates  all property,  plant,  and equipment over its expected
useful life on a straight-line  basis. The depreciation expense is determined by
means of management  estimates of expected useful life,  salvage value and asset
usage.  These  estimates  may be subject  to  revision  in the normal  course of
business.

Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of
differences  between the tax bases of assets and liabilities and their financial
reporting  amounts at each year-end  based on enacted tax laws and statutory tax
rates  applicable to the periods in which the differences are expected to affect
taxable income.  Valuation  allowances are established  when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense is
the tax payable for the period and the change  during the period in deferred tax
assets and liabilities.

Earnings Per Share

Earnings per share of common stock and common stock  equivalents  are calculated
using the weighted average number of common shares outstanding, plus (in periods
where they have a dilutive  effect) the net  additional  number of shares  which
would be issuable upon the exercise of stock options and warrants, assuming that
the Company  used the  proceeds  received to  repurchase  outstanding  shares at
market prices.


3.   Cash and Cash Equivalents

--------------------------------------------------------------------------------
Cash and cash equivalents consist of the following:   1997                  1996
--------------------------------------------------------------------------------

Investment-grade commercial paper                    6,814                 1,770
Cash balances                                       18,629                 6,084
--------------------------------------------------------------------------------

Total cash and short-term investments           $   25,443            $    7,854
--------------------------------------------------------------------------------


4.   Accounts Receivable

Accounts  receivable  include  retained  percentages  of $31,174  and $31,044 at
December 31, 1997 and 1996  respectively.  The amount for 1997 is expected to be
collected during 1998 and later years.


                                                                         Page 13

<PAGE>


Guy F. Atkinson Company of California Notes to unaudited  
Consolidated Financial Statements 
(in thousands of dollars except share and per share amounts)


5.   Inventories and Unamortized Costs on Contracts

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

The major classifications of inventory are as follows:   1997               1996
--------------------------------------------------------------------------------


Construction materials, parts and supplies         $    2,724         $    1,728
Unamortized costs on contracts                         46,529             54,873
--------------------------------------------------------------------------------

                                                   $   49,253         $   56,601
--------------------------------------------------------------------------------


Unamortized costs on contracts include $32,472 (1996 - $8,500) of costs relating
to claims,  and $10,882 (1996 - $41,767) of costs relating to unapproved  change
orders.


6.    Miscellaneous Income (Expense)

Miscellaneous  income (expense) includes those items of income and expense which
are not derived from operations.  This category consists of gains or losses from
the disposition of property,  plant,  and equipment,  foreign  exchange gains or
losses, and gains or losses resulting from other non-operating items.

Miscellaneous income (expense) in 1997, includes a loss of $2,659 related to the
write-off  of the  company's  remaining  investment  in a  geothermal  property,
together with $2,009 in foreign exchange losses.

Miscellaneous  income  (expense) in 1996,  includes  gains of $1,761 on property
dispositions.


7.  Litigation and Contingencies

Litigation

The nature of the construction business periodically results in liens, disputes,
suits and claims. Certain claims and suits have been brought against the Company
in connection with contractual disputes,  alleging personal injury,  property or
other  damages.  Disputes are  generally  negotiated to settlement or litigated,
with judgments against the Company being either promptly satisfied or appealed.
Company  policy is to accrue  amounts  for any  liabilities  which it
believes  will result from claims and suits  against the Company.  These amounts
are based upon management's  estimates of the most likely outcome of such claims
and suits,  and may be  materially  different  from the amounts  asserted by the
claimants.

On March 7, 1995, a complaint  asserting breach of contract and other wrongdoing
in connection  with the Company's  sale of its  manufacturing  subsidiary,  Lake
Center Industries, Inc., was filed against the Company and its financial advisor
by an  unsuccessful  bidder for Lake  Center.  The  plaintiffs  allege they have
suffered actual damages of $290 in connection with preparing their bid, and also
seek to  recover  $7,000  on a theory  of  unjust  enrichment  together  with an
additional $10,000 in punitive damages.  The Company believes this suit to be 
without  merit.


                                                                         Page 14

<PAGE>


Guy F. Atkinson Company of California Notes to unaudited  
Consolidated Financial Statements 
(in thousands of dollars except share and per share amounts)

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


7.  Litigation and Contingencies, continued


Environmental Liabilities

The Company has certain  potential  environmental  remediation  obligations with
respect  to  properties  which have been sold.  In  recording  the sale of these
properties,  the Company set aside a portion of the sale proceeds as reserves to
cover the potential  future costs of such  environmental  remediation  which may
become necessary. The portion of the sale proceeds which was set aside was based
upon  management's  best  estimate of  potential  future  costs,  if any.  These
estimates may be subject to revision in the normal course of business.

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

The following is a summary of environmental liabilities:   1997             1996
--------------------------------------------------------------------------------

Reserves for anticipated environmental remediation
 obligations                                          $   2,269        $   2,269
Less expenditures to date                                   875              390
--------------------------------------------------------------------------------

                                                      $   1,394        $   1,879
--------------------------------------------------------------------------------


<TABLE>
8.  Quarterly Financial Data - Unaudited

<CAPTION>
--------------------------------------------------------------------------------------------------------------------

1997                                                             1st Quarter  2nd Quarter   3rd Quarter  4th Quarter
--------------------------------------------------------------------------------------------------------------------

<S>                                                              <C>          <C>           <C>          <C>      
Revenue                                                          $ 120,058    $ 111,357     $ 95,306     $  43,830
--------------------------------------------------------------------------------------------------------------------

Gross margin                                                        11,541      (27,237)       4,627       (24,502)
--------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                $  (1,392)   $ (47,776)    $ (6,597)    $ (32,396)
--------------------------------------------------------------------------------------------------------------------


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

Net income (loss) per share of common stock                      $   (0.15)   $   (5.32)    $  (0.73)    $   (3.61)
--------------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------
1996                                                             1st Quarter  2nd Quarter   3rd Quarter  4th Quarter
--------------------------------------------------------------------------------------------------------------------

Revenue                                                          $  99,185    $ 128,714     $126,011     $ 114,557
--------------------------------------------------------------------------------------------------------------------

Gross margin                                                         8,625       12,927       10,944        11,754

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

Net income (loss)                                                $    (483)   $   1,584     $  1,001     $   2,917
--------------------------------------------------------------------------------------------------------------------


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

Net income (loss) per share of common stock                      $   (0.05)   $    0.17     $   0.11     $    0.31
--------------------------------------------------------------------------------------------------------------------


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

1995                                                             1st Quarter  2nd Quarter   3rd Quarter  4th Quarter
--------------------------------------------------------------------------------------------------------------------

Revenue                                                          $  89,738    $  86,434     $ 91,364     $ 149,459
--------------------------------------------------------------------------------------------------------------------

Gross margin                                                         6,938        7,264       10,818        14,152

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

Net income (loss)                                                $    (987)   $     721     $  1,215     $   2,660
--------------------------------------------------------------------------------------------------------------------


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

Net income (loss) per share of common stock                      $   (0.11)   $    0.08     $   0.13     $    0.29
--------------------------------------------------------------------------------------------------------------------

                                                                                                             Page 15
</TABLE>





                                                                               

<PAGE>


                                   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.

                                   GUY F. ATKINSON COMPANY OF CALIFORNIA



                                   By: /s/ John F. Whitsett
                                       John F. Whitsett
                                       Chief Executive Officer
                                       Chairman of the Board


Date: June 18, 1998

                                                                         Page 16
<PAGE>