SCHUFF STEEL CO
S-1/A, 1997-06-10
CONSTRUCTION - SPECIAL TRADE CONTRACTORS
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<PAGE>   1
 
   
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1997
    
 
   
                                                     REGISTRATION NO. 333-26711.
    
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
   
                                AMENDMENT NO. 1
    
   
                                       TO
    
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
 
                              SCHUFF STEEL COMPANY
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                  <C>                                  <C>
              DELAWARE                               1791                              86-0318760
      (STATE OF INCORPORATION)           (PRIMARY STANDARD INDUSTRIAL               (I.R.S. EMPLOYER
                                         CLASSIFICATION CODE NUMBER)              IDENTIFICATION NO.)
</TABLE>
 
                             420 SOUTH 19TH AVENUE
                             PHOENIX, ARIZONA 85009
                                 (602) 252-7787
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                            ------------------------
 
                                SCOTT A. SCHUFF
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                              SCHUFF STEEL COMPANY
                             420 SOUTH 19TH AVENUE
                             PHOENIX, ARIZONA 85009
                                 (602) 252-7787
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                            ------------------------
                                   COPIES TO:
 
   
<TABLE>
<S>                                                   <C>
               STEVEN D. PIDGEON, ESQ.                                GARY D. GILSON, ESQ.
                SNELL & WILMER L.L.P.                            BLACKWELL SANDERS MATHENY WEARY
                 ONE ARIZONA CENTER                                      & LOMBARDI LLP
             PHOENIX, ARIZONA 85004-0001                          2300 MAIN STREET, SUITE 1100
                   (602) 382-6000                                  KANSAS CITY, MISSOURI 64108
                                                                         (816) 983-8000
</TABLE>
    
 
                            ------------------------
 
        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
 
                            ------------------------
 
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]
 
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]
 
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
 
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
 
                            ------------------------
 
   
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
    
================================================================================
<PAGE>   2
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
   
                   SUBJECT TO COMPLETION, DATED JUNE 10, 1997
    
 
                                2,200,000 SHARES
 
               SCHUFF LOGO    SCHUFF STEEL COMPANY    SCHUFF LOGO
 
                                  COMMON STOCK
 
                            ------------------------
   
     All of the 2,200,000 shares of common stock, $.001 par value per share (the
"Common Stock"), offered hereby are being sold by Schuff Steel Company (the
"Company"). Prior to this offering, there has been no public market for the
Common Stock of the Company. Application has been made for inclusion of the
Common Stock on the Nasdaq National Market under the symbol "SHUF." It is
currently estimated that the initial public offering price will be between $9.00
and $11.00 per share. See "Underwriting" for factors to be considered in
determining the initial public offering price.
    
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
 
                            ------------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
         EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
               UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
           ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
=================================================================================================
                                                          UNDERWRITING
                                      PRICE TO              DISCOUNTS            PROCEEDS TO
                                       PUBLIC          AND COMMISSIONS(1)        COMPANY(2)
- -------------------------------------------------------------------------------------------------
<S>                             <C>                   <C>                   <C>
Per Share......................           $                     $                     $
- -------------------------------------------------------------------------------------------------
Total(3).......................           $                     $                     $
=================================================================================================
</TABLE>
 
(1) The Company has agreed to indemnify the Underwriters against certain
    liabilities under the Securities Act of 1933, as amended, in connection with
    this offering. See "Underwriting."
 
(2) Before deducting expenses of this offering payable by the Company estimated
    at $675,000, including a fee payable to the Company's financial consultant.
    See "Underwriting."
 
(3) The Company has granted the Underwriters a 30-day option to purchase up to
    330,000 additional shares of Common Stock on the same terms and conditions
    as the securities offered hereby solely to cover over-allotments, if any. If
    such option is exercised in full, the total Price to Public, Underwriting
    Discounts and Commissions, and Proceeds to Company will be $          ,
    $          , and $          , respectively. See "Underwriting."
 
     The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them and subject to
certain other conditions including the right of the Underwriters to withdraw,
cancel, modify or reject any order in whole or in part. It is expected that
delivery of the shares will be made against payment therefor on or about
            , 1997.
 
                            ------------------------
 
   
PRINCIPAL FINANCIAL SECURITIES, INC.                             CRUTTENDEN ROTH
    
   
                                                          INCORPORATED
    
 
               The date of this Prospectus is             , 1997
<PAGE>   3
 
     CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT AND OTHER STABILIZING TRANSACTIONS. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, THE OVER-THE-COUNTER MARKET OR
OTHERWISE. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
                                        2
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
   
     The following summary is qualified in its entirety by the detailed
information and Consolidated Financial Statements, including the Notes thereto,
appearing elsewhere in this Prospectus. Except as otherwise specified, all
information in this Prospectus: (i) gives effect to the redomestication merger
of the Company's predecessor Arizona corporation with and into the Company and
the exchange of 50,000 shares of Common Stock for each then issued and
outstanding share of common stock of the predecessor corporation pursuant to
such merger; (ii) gives effect to the revocation of the Company's subchapter S
election immediately prior to the closing of this offering; and (iii) assumes no
exercise of either the over-allotment option granted to the Underwriters or
currently outstanding stock options granted by the Company. Except as otherwise
specified, all references herein to the "Company" or "Schuff" include Schuff
Steel Company, a Delaware corporation, its subsidiary, and its predecessor
Arizona corporation.
    
 
                                  THE COMPANY
 
     Schuff Steel Company is a rapidly growing steel fabrication and erection
firm that provides a fully integrated range of steel construction services.
Schuff operates primarily in the southwestern United States with a concentration
in Arizona, Nevada and southern California, and has recently expanded its
operations into South America and Mexico. The Company is the largest steel
fabrication and erection firm serving the Arizona industrial and commercial
markets, a position it recently enhanced with the 1997 acquisition of B&K Steel
Fabrications, Inc. ("B&K Steel"). The Company also believes that it is the
leading steel fabricator and erector for the hotel and casino industry in
Nevada. Engineering News Record ranked the Company as the second largest steel
erection subcontractor in the United States based upon 1995 revenues and as the
largest steel erection subcontractor in the United States based upon 1994
revenues.
 
   
     Schuff has achieved significant growth in revenues and pre-tax income over
the past five years. Revenues have more than doubled from $47.0 million in 1992
to $103.9 million ($113.3 million giving pro forma effect to the 1997 B&K Steel
acquisition) in 1996. During that same period, pre-tax income has grown at a
compound annual growth rate of 101.5%, from $610,000 in 1992 to $10.1 million in
1996.
    
 
   
     The Company seeks to differentiate itself from its competitors by providing
a fully integrated range of steel construction services, including engineering,
detailing, fabrication and erection, and by providing a level of service and
expertise necessary to accommodate large, fast track projects. The Company
believes that there is an increasing trend in the industry to design and build
projects according to accelerated time schedules. With many projects, only a
portion of the detail design drawings are completed when construction begins.
The remaining drawings are completed, with numerous design changes being
implemented, throughout the construction process. The fast track,
"design-as-you-go" nature of these projects creates a demand for integrated
contractors that can (i) reduce the logistical and coordination problems
inherent in using multiple subcontractors and (ii) more efficiently respond to
rapid and multiple design changes while minimizing the project delays and cost
overruns commonly associated with such changes. The complexity and size of these
projects is particularly suited to contractors with extended financial and
operational capabilities. The Company believes that it has gained a reputation
in the industry as a reliable, fully integrated provider of engineering,
detailing, fabrication and erection services with the ability to complete large,
complex projects on a timely, cost efficient basis.
    
 
     The Company has provided its integrated fabrication and erection services
to a wide variety of projects, including hotels and casinos, office complexes,
hospitals, mining facilities, manufacturing plants, shopping malls, sports
stadiums, large diameter water pipes, and other public works projects. Examples
of major projects include: Bank One Ballpark, a baseball stadium featuring a
fully retractable steel roof being constructed for Major League Baseball's
Arizona Diamondbacks franchise; Agua Fria Siphon Project, an aqueduct system
with over two miles of specially fabricated 21 foot diameter pipe; MGM Grand
Hotel & Casino in Las Vegas, the world's largest hotel and casino; Intel Corp.'s
Fab 12 Plant, one of the largest semiconductor manufacturing plants in the
United States; and Bajo de la Alumbrera in Argentina, one of the largest copper
mines in the world.
 
                                        3
<PAGE>   5
 
     The Company believes that the steel fabrication and erection industry is
highly fragmented and that many of its competitors are small businesses that
offer limited services or confine operations to local or regional markets. Given
the trend toward the use of fully integrated contractors, the Company believes
the industry may experience consolidation and that it is well positioned to take
advantage of potential acquisition opportunities.
 
BUSINESS STRATEGY
 
     The Company's objective is to achieve and maintain a leading market
position in each of its geographic and specific product markets. The Company
seeks to achieve this objective by pursuing the following business strategies:
(i) promoting its ability to provide a fully integrated range of engineering,
detailing, fabrication and erection services, which enables the Company to
compete more effectively on large, complex, fast track, "design-as-you-go"
projects; (ii) focusing its engineering, detailing, fabrication and erection
expertise on distinct product segments requiring unique or innovative
techniques, where the Company typically experiences less competition; (iii)
diversifying its construction projects across a wide range of commercial,
industrial and specialty projects; and (iv) offering in-house project management
and engineering expertise not typically provided by steel fabricators or
erectors, which facilitates the Company's ability to procure contracts for
large, more complicated projects.
 
GROWTH STRATEGY
 
     The Company seeks to achieve continued growth and diminish the impact of
business and economic cycles by pursuing the following strategies: (i) promoting
growth internally by adding sales and marketing personnel dedicated to fast
growing markets, further developing its engineering and design capabilities and
fabrication capacity, and continually updating its fabrication and detailing
equipment and technologies; (ii) capitalizing on the highly fragmented nature of
the steel fabrication and erection industry by pursuing selective acquisitions
of companies that offer the Company increased plant facilities, opportunities to
increase market share in selected geographic markets, penetration of new product
market segments and access to domestic and international markets targeted by the
Company for geographic expansion; (iii) pursuing additional project
opportunities by continuing to diversify into new geographic and product
markets, leveraging its existing relationships with key national and
multi-national general contractors and other customers, and establishing new
strategic alliances; and (iv) expanding its international operations by pursuing
opportunities in South America, Mexico and Southeast Asia.
 
     The Company was incorporated in Arizona in 1976 and reincorporated under
the laws of Delaware in 1997. The Company's principal executive offices are
located at 420 South 19th Avenue, Phoenix, Arizona 85009, and its telephone
number is (602) 252-7787.
 
                                        4
<PAGE>   6
 
                                  THE OFFERING
 
<TABLE>
<S>                                             <C>
Common Stock offered........................    2,200,000 shares(1)
Common Stock to be outstanding immediately
  after this offering.......................    7,200,000 shares(1)
Use of proceeds.............................    Purchase of specialized equipment, funding
                                                of the subchapter S distribution to the
                                                Company's present stockholders, and general
                                                corporate and working capital purposes. See
                                                "Use of Proceeds" and "S Corporation
                                                Distribution."
Proposed Nasdaq National Market symbol......    "SHUF"
</TABLE>
 
- ---------------
(1) Excludes 330,000 shares of Common Stock that may be sold by the Company upon
    exercise of the Underwriters' over-allotment option. Also excludes 345,500
    shares of Common Stock issuable upon exercise of stock options outstanding
    under the Company's 1997 Stock Option Plan with an exercise price of $5.00
    per share, and 22,500 shares of Common Stock issuable upon exercise of stock
    options to be granted to the Company's non-employee directors upon their
    appointment to the Board of Directors at the closing of this offering at an
    exercise price equal to the initial public offering price. See "Management,"
    "Description of Capital Stock" and "Underwriting."
 
   
                                    RISK FACTORS
    
 
   
     Prospective purchasers of Common Stock should carefully consider all of the
information contained in this Prospectus, particularly the factors set forth
herein under "Risk Factors" beginning on page 8. Among other matters, the
Company has experienced, and is expected to continue to experience, variations
in quarterly and annual results of operations. Factors that may affect these
results include, among other things, the timing and terms of major contract
awards and the starting and completion dates of projects. Based upon its current
backlog and project schedules, the Company anticipates that pre-tax income for
the second and third quarters of 1997 will be lower than recorded for the same
periods of 1996, and revenues for the third quarter of 1997 may be lower than
the same period of 1996. In this regard, the Company received a number of large
contract awards in late 1995 that positively impacted 1996 results, particularly
the third quarter of 1996.
    
 
                                        5
<PAGE>   7
 
                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
   
     The following table sets forth selected summary financial data as of the
dates and for the periods indicated. The historical financial data for each year
in the five-year period ended December 31, 1996 are derived from the audited
financial statements of the Company. The quarterly periods reflect unaudited
results of the Company, which, in the opinion of management, reflect all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the Company's financial position and results of operations for
the periods presented. The results for any interim period are not necessarily
indicative of results to be expected for a full fiscal year. See "Risk
Factors -- Fluctuating Quarterly Results of Operations." The following table
also sets forth unaudited pro forma financial information for each period that
gives effect to the revocation of the Company's S corporation status. The
following data should be read in conjunction with, and are qualified by
reference to, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial Statements and
Notes thereto included elsewhere in this Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED
                                            YEAR ENDED DECEMBER 31,                    MARCH 31,
                                ------------------------------------------------   ------------------
                                 1992      1993      1994      1995     1996(1)      1996      1997
                                -------   -------   -------   -------   --------   --------   -------
<S>                             <C>       <C>       <C>       <C>       <C>        <C>        <C>
SELECTED INCOME STATEMENT
  DATA:
Revenues......................  $46,991   $58,640   $68,199   $62,090   $103,912   $ 10,410   $25,507
Cost of revenues..............   41,752    50,376    58,874    54,222     86,998      8,418    21,655
                                -------   -------   -------   -------    -------   --------   -------
  Gross profit................    5,239     8,264     9,325     7,868     16,914      1,992     3,852
General and administrative
  expenses....................    4,102     4,367     4,915     5,284      6,715      1,357     2,081
                                -------   -------   -------   -------    -------   --------   -------
  Operating income............    1,137     3,897     4,410     2,584     10,199        635     1,771
Interest expense..............     (583)     (627)     (718)     (752)      (452)      (147)      (95)
Other income..................       56        60        67       618        303         52        96
                                -------   -------   -------   -------    -------   --------   -------
  Income before income tax....      610     3,330     3,759     2,450     10,050        540     1,772
Pro forma income taxes(2).....      245     1,330     1,500       980      4,020        215       710
                                -------   -------   -------   -------    -------   --------   -------
  Pro forma net income(2).....  $   365   $ 2,000   $ 2,259   $ 1,470   $  6,030   $    325   $ 1,062
                                =======   =======   =======   =======    =======   ========   =======
Pro forma net income per
  share(2)....................                                          $   1.02              $  0.18
Shares used in
  computation(3)..............                                             5,926                5,926
 
OTHER DATA:
Backlog(4)....................  $34,466   $18,387   $22,544   $80,834   $ 67,335   $126,061   $65,550
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                                                                                    AS OF MARCH 31,
                                                                                 ----------------------
                                                                                             1997 PRO
                                                                                   1997      FORMA AS
SELECTED BALANCE SHEET DATA:                                                      ACTUAL    ADJUSTED(5)
                                                                                 --------   -----------
<S>                           <C>       <C>       <C>       <C>       <C>        <C>        <C>
Working capital, including
  current portion of long
  term debt.................  $ 5,700   $ 4,804   $ 8,498   $ 7,965   $  8,476   $  8,598     $21,683
Total assets................   22,681    25,387    26,244    25,260     43,969     48,160      61,245
Long term debt, excluding
  current portion...........    3,720     3,806     7,057     5,271      2,753      2,777       2,777
Stockholders' equity........    4,256     5,320     6,032     6,768     10,682     11,436      24,521
</TABLE>
    
 
                                        6
<PAGE>   8
 
- ---------------
   
(1) Does not give effect to the Company's acquisition of B&K Steel on January
    31, 1997, which was accounted for under the purchase method of accounting.
    Accordingly, financial information relating to B&K Steel has not been
    included in periods prior to the acquisition. Giving effect to the
    acquisition of B&K Steel, as if it had occurred on January 1, 1996, the
    Company's pro forma and unaudited revenues, gross profit, income before
    income taxes, pro forma net income (after pro forma income taxes), and pro
    forma net income per share would have been $113,291,000, $18,097,000,
    $10,165,000, $6,099,000, and $1.03, respectively.
    
 
(2) Prior to this offering, the Company elected to be treated as an S
    corporation under the Internal Revenue Code of 1986, as amended (the
    "Code"). As an S corporation, the Company is not subject to income taxes.
    Pro forma net income reflects the provision for income taxes that would have
    been recorded had the Company been subject to income taxes as a C
    corporation for all periods, assuming an effective tax rate of 40%. Pro
    forma net income does not include credits of $300,000 to income to be
    recorded upon revocation of the Company's subchapter S election. See "S
    Corporation Distribution" and "Management's Discussion and Analysis of
    Financial Condition and Results of Operations."
 
   
(3) Shares used in the computation of pro forma net income per share are based
    upon a weighted average number of common shares and common stock equivalents
    outstanding during each year. In accordance with Securities and Exchange
    Commission Staff Accounting Bulletin (SAB) Number 83, all issuances of the
    Company's common stock options at prices below the expected initial public
    offering price during the twelve-month period preceding the proposed
    offering have been treated as common stock equivalents as if they had been
    issued at the Company's inception using the treasury stock method. In
    addition, in accordance with SAB Number 55, common stock equivalents include
    the number of shares expected to be issued in the proposed offering for
    which the net offering proceeds will be used to make stockholder
    distributions.
    
 
(4) Backlog is the amount of potential future revenues to be recognized upon
    performance of contracts awarded to the Company. Backlog increases as new
    contract commitments are received, decreases as revenues are recognized, and
    increases or decreases to reflect modifications in the work to be performed
    under a contract. Of the Company's $67.3 million backlog as of December 31,
    1996, approximately $13.1 million was attributable to three projects for a
    single customer in Las Vegas, Nevada, and approximately $34.3 million was
    attributable to the Bank One Ballpark project in Phoenix, Arizona. Of the
    Company's $65.6 million backlog at March 31, 1997, approximately $15.9
    million was attributable to two projects for a single customer in Las Vegas,
    and approximately $26.8 million was attributable to the Bank One Ballpark
    project. See "Management's Discussion and Analysis of Financial Condition
    and Results of Operations" and "Business -- Backlog."
 
   
(5) Gives effect to (i) the sale of the 2,200,000 shares of Common Stock by the
    Company offered hereby at an assumed initial public offering price of $10.00
    per share and the application of the estimated net proceeds therefrom,
    including payment of the $7.0 million S Corporation Distribution and (ii) an
    increase to stockholders' equity to reflect the recognition of a deferred
    tax asset, and corresponding credit to income, in the amount of $300,000
    upon revocation of the Company's S corporation election. See "Use of
    Proceeds," "S Corporation Distribution," "Capitalization" and Note 1 to
    Consolidated Financial Statements.
    
 
                                        7
<PAGE>   9
 
                                  RISK FACTORS
 
     Investment in the Common Stock offered hereby involves certain risks. In
addition to the other information included elsewhere in this Prospectus,
prospective investors should give careful consideration to the following factors
before purchasing shares of the Common Stock offered hereby.
 
   
FLUCTUATING QUARTERLY RESULTS OF OPERATIONS
    
 
   
     The Company has experienced, and in the future is expected to continue to
experience, substantial variations in its results of operations as a result of a
number of factors, many of which are outside the Company's control. In
particular, the Company's operating results may vary because of downturns in one
or more segments of the building construction industry, changes in economic
conditions, the Company's failure to obtain, or delays in awards of, major
projects, the cancellation of major projects, the Company's failure to timely
replace projects that have been completed or are nearing completion, or declines
in the amount of the Company's billings in excess of costs and recognized
earnings on uncompleted projects. Any of these factors could result in the
periodic inefficient or underutilization of the Company's resources and could
cause the Company's operating results to fluctuate significantly from period to
period, including on a quarterly basis. Based upon its current backlog and
project schedules, the Company anticipates that pre-tax income for the second
and third quarters of 1997 will be lower than recorded for the same periods of
1996, and revenues for the third quarter of 1997 may be lower than the same
period of 1996. In this regard, the Company received a number of large contract
awards in late 1995 that positively impacted 1996 results, particularly the
third quarter of 1996.
    
 
   
LARGE FIXED PRICE CONTRACTS
    
 
   
     Of the Company's $65.5 million backlog at March 31, 1997, approximately
$62.1 million (95%) consisted of projects being performed on a fixed price
basis. In bidding on projects, the Company estimates its costs, including
projected increases in costs of labor, material and services. Despite these
estimates, costs and gross profit realized on a fixed price contract may vary
from estimated amounts because of unforeseen conditions or changes in job
conditions, variations in labor and equipment productivity over the terms of
contracts, higher than expected increases in labor or material costs and other
factors. These variations could have a material adverse effect on the Company's
business, financial condition and results of operations for any period. See
"Business -- Contracting Methods and Performance Bonding."
    
 
   
DEPENDENCE ON CONSTRUCTION INDUSTRY
    
 
   
     The Company earns virtually all of its revenues in the building
construction industry, which is subject to local, regional and national economic
cycles. The Company's revenues and cash flows depend to a significant degree on
major construction projects in various industries, including the hotel and
casino, retail shopping, health care, mining, computer chip manufacturing,
public works and other industries, each of which industries may be adversely
affected by general or specific economic conditions. If construction activity
declines significantly in the Company's principal markets, the Company's
business, financial condition and results of operations would be adversely
affected.
    
 
DEPENDENCE ON SUBCONTRACTORS
 
     The Company routinely relies on subcontractors to perform a significant
portion of its fabrication and project detailing to fulfill projects that the
Company cannot fulfill in-house due to capacity constraints or that are in
markets in which the Company has not established a strong local presence. With
respect to these projects, the Company's success depends on its ability to
retain and successfully manage these subcontractors. Any difficulty in
attracting and retaining qualified subcontractors on terms and conditions
favorable to the Company could have an adverse effect on the Company's ability
to complete these projects in a timely and cost effective manner.
 
UNION CONTRACTS
 
     The Company currently is a party to a number of collective bargaining
agreements with various unions representing the Company's fabrication and
erection employees. These contracts expire or are subject to
 
                                        8
<PAGE>   10
 
expiration at various times in the future. The inability of the Company to renew
such contracts could result in work stoppages and other labor disturbances,
which could disrupt the Company's business and adversely affect the Company's
results of operations. See "Business -- Employees."
 
PERCENTAGE OF COMPLETION ACCOUNTING
 
     The Company recognizes revenues using the percentage of completion
accounting method. Under this method, revenues are recognized based on the ratio
that costs incurred to date bear to the total estimated costs to complete the
project. Estimated losses on contracts are recognized in full when the Company
determines that a loss will be incurred. The Company frequently reviews and
revises revenues and total cost estimates as work progresses on a contract and
as contracts are modified. Accordingly, revenue adjustments based upon the
revised completion percentage are reflected in the period that estimates are
revised. Although revenue estimates are based upon management assumptions
supported by historical experience, these estimates could vary materially from
actual results. To the extent percentage of completion adjustments reduce
previously reported revenues, the Company would recognize a charge against
operating results, which could have a material adverse effect on the Company's
results of operations for the applicable period. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Introduction."
 
GEOGRAPHIC CONCENTRATION
 
   
     The Company's fabrication and erection operations currently are conducted
primarily in Arizona and Nevada, states in which the construction industry has
experienced substantial growth during recent years. Of the $103.9 million in
revenues earned by the Company in 1996, the Company estimates that approximately
$66.5 million, or 64.0%, of those revenues were related to projects in Arizona
and Nevada. Because of this concentration, future construction activity and the
Company's business may be adversely affected in the event of a downturn in
economic conditions existing in Arizona and Nevada and in the southwestern
United States generally. Factors that may affect economic conditions include
increases in interest rates or limitations in the availability of financing for
construction projects, decreases in the amount of funds budgeted for
governmental projects, decreases in capital expenditures devoted to the
construction of plants, distribution centers, industrial facilities, hotels and
casinos, convention centers and other facilities, the prevailing market prices
of copper, gold and other metals that impact related mining activity, and
downturns in occupancy rates, office space demand, tourism and convention
related activity and population growth. See "Business -- Primary Markets and
Products."
    
 
   
VARIATIONS IN BACKLOG
    
 
     The Company's backlog can be significantly affected by the receipt, or
loss, of individual contracts. For example, approximately 40.9% of the Company's
$65.5 million backlog at March 31, 1997 was attributable to the Bank One
Ballpark project in Phoenix, Arizona. In the event one or more large contracts
were terminated or their scope reduced, the Company's backlog would decrease
substantially. The Company's future business and results of operations may be
adversely affected if it is unable to replace significant contracts when lost or
completed, or if it otherwise fails to maintain a sufficient level of backlog.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Backlog."
 
   
OPERATING RISKS; LITIGATION
    
 
   
     Construction and heavy steel plate weldments involve a high degree of
operational risk. Natural disasters, adverse weather conditions, design,
fabrication and erection errors and work environment accidents can cause death
or personal injury, property damage and suspension of operations. The occurrence
of any of these events could result in loss of revenues, increased costs, and
liability to third parties. The Company is subject to litigation claims in the
ordinary course of business, including lawsuits asserting substantial claims.
Currently, the Company does not maintain any reserves for its ongoing
litigation, and expenses litigation costs as incurred. The Company periodically
reviews the need to maintain a litigation reserve. The Company maintains risk
management, insurance, and safety programs intended to prevent or mitigate
losses. There can be no assurance that any of these programs will be adequate or
that the Company will be able to maintain adequate insurance in the future at
rates that it considers reasonable. See "Business -- Legal Proceedings and
Insurance."
    
 
                                        9
<PAGE>   11
 
RISKS OF INTERNATIONAL OPERATIONS
 
     The Company is expanding into international markets, with approximately
13.7% of its revenues in 1996 relating to projects outside the United States.
The Company's international operations are subject to certain political,
economic and other uncertainties, including risks of war, nationalization of
assets, renegotiation or nullification of existing contracts, changing political
conditions, changing laws and policies affecting trade and investment, and
overlap of different tax structures. Although the Company currently attempts to
limit its exposure to currency fluctuations by dealing solely in United States
dollars, there can be no assurance that the Company's international operations
will escape the risks of fluctuating currency values, hard currency shortages,
or controls on currency exchange.
 
COMPETITION
 
     Many small and various large companies offer fabrication, erection and
related services that compete with those provided by the Company. Local and
regional companies offer competition in one or more of the Company's geographic
markets or product segments. Out of state or international companies may provide
competition in any market. The Company competes for every project it obtains.
Although the Company believes customers consider, among other things, the
availability and technical capabilities of equipment and personnel, efficiency,
safety record and reputation, price competition usually is the primary factor in
determining which qualified contractor with available equipment is awarded a
contract. Competition has resulted in pressure on pricing and operating margins,
and the effects of competitive pressure in the industry may continue. Some of
the Company's competitors have greater capital and other resources than the
Company and are well established in their respective markets. There can be no
assurance that the Company's competitors will not substantially increase their
commitment of resources devoted to competing aggressively with the Company or
that the Company will be able to compete profitably with its competitors.
 
SUBSTANTIAL LIQUIDITY REQUIREMENTS
 
   
     The Company's operations require significant amounts of working capital to
procure materials for contracts to be performed over relatively long periods,
and for purchases and modifications of heavy-duty and specialized fabrication
equipment. In addition, the Company's contract arrangements with customers
sometimes require the Company to provide payment and performance bonds and, in
selected cases, letters of credit, to partially secure the Company's obligations
under its contracts, which may require the Company to incur significant
expenditures prior to receipt of payments. Furthermore, the Company's customers
often will retain a portion of amounts otherwise payable to the Company during
the course of a project as a guarantee of completion of that project. To the
extent the Company is unable to receive project payments in the early stages of
a project, the Company's cash flow would be reduced, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis and Results of
Operations -- Liquidity and Capital Resources."
    
 
NO ASSURANCE OF SUCCESSFUL ACQUISITIONS
 
     The Company intends to consider acquisitions of and alliances with other
companies in its industry that could complement the Company's business,
including the acquisition of entities in diverse geographic regions and entities
offering greater access to industries and markets not currently served by the
Company. There can be no assurance that suitable acquisition or alliance
candidates can be identified or, if identified, that the Company will be able to
consummate such transactions. Further, there can be no assurance that the
Company will be able to integrate successfully any acquired companies into its
existing operations, which could increase the Company's operating expenses.
Moreover, any acquisition by the Company may result in potentially dilutive
issuances of equity securities, incurrence of additional debt and amortization
of expenses related to goodwill and intangible assets, all of which could
adversely affect the Company's profitability. Acquisitions involve numerous
risks, such as diverting attention of the Company's management from other
business concerns, the entrance of the Company into markets in which it has had
no or only limited experience and the potential loss of key employees of the
acquired company, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Growth Strategy."
 
                                       10
<PAGE>   12
 
DEPENDENCE UPON KEY PERSONNEL
 
   
     The Company's success depends on the continued services of the Company's
senior management and key employees as well as the Company's ability to attract
additional members to its management team with experience in the steel
fabrication and erection industry. Although the Company has implemented a stock
option plan designed to retain key management and other employees, and believes
that it offers competitive compensation to such personnel, the Company is not a
party to any employment agreements with its management personnel or other key
employees. The unexpected loss of the services of any of the Company's
management or other key personnel, or its inability to attract new management
when necessary, could have a material adverse effect upon the Company. See
"Management."
    
 
POTENTIAL ENVIRONMENTAL LIABILITY
 
   
     The Company's operations and properties are affected by numerous federal,
state and local environmental protection laws and regulations, such as those
governing discharges to air and water and the handling and disposal of solid and
hazardous wastes. Compliance with these laws and regulations has become
increasingly stringent, complex and costly. There can be no assurance that such
laws and regulations or their interpretation will not change in a manner that
could materially and adversely affect the Company. Certain environmental laws,
such as the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") and its state law counterparts, provide for strict and joint and
several liability for investigation and remediation of spills and other releases
of toxic and hazardous substances. These laws may apply to conditions at
properties currently or formerly owned or operated by an entity or its
predecessors, as well as to conditions at properties at which wastes or other
contamination attributable to an entity or its predecessors come to be located.
Although the Company has not incurred any material environmental related
liability in the past and believes that it is in material compliance with
environmental laws, there can be no assurance that the Company, or entities for
which it may be responsible, will not incur such liability in connection with
the investigation and remediation of facilities it currently operates (or
formerly owned or operated) or other locations in a manner that could materially
and adversely affect the Company. See "Business -- Environmental Regulation."
    
 
GOVERNMENTAL REGULATION
 
     Many aspects of the Company's operations are subject to governmental
regulations in the United States and in other countries in which the Company
operates, including regulations relating to occupational health and workplace
safety, principally the Occupational Safety and Health Act and regulations
thereunder. Although the Company believes that it is in material compliance with
such laws, there can be no assurance that it will be able to maintain this
status. Further, the Company cannot determine to what extent future operations
and earnings of the Company may be affected by new legislation, new regulations
or changes in or new interpretations of existing regulations. See
"Business -- Governmental Regulation."
 
CONTROL BY MAJORITY STOCKHOLDERS; ABILITY TO ISSUE PREFERRED STOCK
 
     Upon completion of this offering, Mr. David A. Schuff, the Company's
Chairman and co-founder, and Mr. Scott A. Schuff, the Company's President, Chief
Executive Officer, co-founder and a member of its Board of Directors,
collectively will control the voting of approximately 69.4% of the outstanding
Common Stock. As a result, these individuals will control the vote on all
matters requiring approval of the stockholders, including causing or restricting
the sale or merger of the Company. In addition, the Company's Certificate of
Incorporation authorizes the Company to issue shares of "blank check" preferred
stock, the designation, number, voting powers, preferences, and rights of which
may be fixed or altered from time to time by the Board of Directors.
Accordingly, the Board of Directors has the authority, without stockholder
approval, to issue preferred stock with rights that could adversely affect the
voting power or other rights of the holders of the Common Stock. See
"Management," "Principal Stockholders" and "Description of Capital Stock --
Preferred Stock."
 
                                       11
<PAGE>   13
 
ABSENCE OF PRIOR MARKET FOR COMMON STOCK; DETERMINATION OF OFFERING PRICE
 
   
     Prior to this offering, there has been no public trading market for the
Common Stock. Consequently, the price of the Common Stock offered hereby will be
determined through negotiations between the Company and the Representatives. In
addition, there can be no assurance that a regular trading market for the Common
Stock will develop after this offering or that, if developed, any such market
will be sustained. See "Underwriting."
    
 
POSSIBLE VOLATILITY OF STOCK PRICE
 
     The stock market has experienced price and volume fluctuations that have
affected the market for many companies and have often been unrelated to the
operating performance of such companies. The market price of the Common Stock
could also be subject to significant fluctuations in response to variations in
the Company's quarterly operating results, analyst reports, announcements
concerning the Company, legislative or regulatory changes in the interpretation
of existing statutes or regulations affecting the Company's business,
litigation, general trends in the industry and other events or factors.
 
SHARES ELIGIBLE FOR FUTURE SALE
 
   
     There will be 7,200,000 shares of Common Stock outstanding upon
consummation of this offering (assuming no exercise of the over-allotment option
granted to the Underwriters). Of these shares, 2,200,000 shares of Common Stock
will be freely tradeable. The 5,000,000 remaining shares of Common Stock are
beneficially held by Messrs. David A. Schuff and Scott A. Schuff who, together
with the Company, have agreed not to sell, contract to sell or otherwise dispose
of any shares of Common Stock without the consent of the Representatives for a
period of 180 days after the date of this Prospectus. Upon expiration of these
agreements, these shares will be eligible for sale in the public markets subject
to the notice, manner of sale, volume limitations, and current public reporting
requirements imposed by Rule 144 ("Rule 144") promulgated under the Securities
Act of 1933, as amended (the "Securities Act"). Sales of substantial amounts of
Common Stock in the open market, or the availability of such shares for sale
following this offering, could adversely affect the prevailing market price of
the Common Stock and may make it more difficult for the Company to sell its
equity securities in the future on terms it deems appropriate. See "Shares
Eligible for Future Sale," "Principal Stockholders" and "Underwriting."
    
 
IMMEDIATE AND SUBSTANTIAL DILUTION
 
   
     Purchasers of Common Stock offered hereby will suffer immediate dilution of
$6.61 in the net tangible book value per share of the Common Stock from the
initial public offering price. See "Dilution."
    
 
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
 
     This Prospectus contains forward-looking statements including statements
regarding, among other items, the Company's business strategy, growth strategy,
and anticipated trends in the Company's business. Additional written or oral
forward-looking statements may be made by the Company from time to time in
filings with the Securities and Exchange Commission or otherwise. The words
"believe," "expect," "anticipate," and "project" and similar expressions
identify forward-looking statements, which speak only as of the date the
statement is made. These forward-looking statements are based largely on the
Company's expectations and are subject to a number of risks and uncertainties,
some of which cannot be predicted or quantified and are beyond the Company's
control. Future events and actual results could differ materially from those set
forth in, contemplated by, or underlying the forward-looking statements.
Statements in this Prospectus, including those set forth in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" describe factors, among others, that could contribute
to or cause such differences. In light of these risks and uncertainties, there
can be no assurance that the forward-looking information contained in this
Prospectus will in fact transpire or prove to be accurate. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by this
section.
 
                                       12
<PAGE>   14
 
                                  THE COMPANY
 
     Founded in 1976, the Company initially operated primarily as a steel
erector on commercial and industrial building projects and subcontracted steel
fabrication services to others. Due to a sharp increase in commercial and
industrial construction activity in the 1980's, many of the Company's
fabrication subcontractors could not meet the increased demand for steel
fabrication services and raised prices to the Company. In August 1985, the
Company acquired the assets of Marathon Steel Company, a Phoenix, Arizona-based
steel fabrication contractor. The acquisition of Marathon Steel Company enabled
the Company to become less dependent on steel fabrication subcontractors and to
continue its pursuit of large, more complicated construction projects.
 
     The Company is a fully integrated fabricator and erector of structural
steel and heavy steel plate. The Company fabricates and erects structural steel
for commercial and industrial construction projects such as high and low rise
buildings and office complexes, hotels and casinos, convention centers, sports
arenas, shopping malls, hospitals, dams, bridges, mines and power plants. The
Company also specializes in the fabrication and erection of heavy steel plate,
including large diameter water pipe, water storage tanks, pollution control
scrubbers, tunnel liners, pressure vessels, and a variety of customized
projects. The Company seeks to differentiate its operations by offering
complete, turnkey steel construction services featuring engineering, detailing,
shop fabrication and field erection. By offering an integrated package of steel
construction services from a single source, the Company is able to respond more
efficiently to the design and construction challenges associated with large,
complex, "fast track" construction projects.
 
     The Company was incorporated in Arizona in 1976 and was reincorporated in
Delaware in 1997. The Company's principal executive offices are located at 420
South 19th Avenue, Phoenix, Arizona 85009, and its telephone number is (602)
252-7787.
 
                                       13
<PAGE>   15
 
                           S CORPORATION DISTRIBUTION
 
     Since 1987, the Company has been subject to taxation under subchapter S of
the Code. As a result, the taxable income of the Company has been attributed and
taxed directly to the Company's stockholders, rather than to the Company.
Historically, the Company has not distributed all of its taxable income. Amounts
in excess of estimated stockholder tax liabilities and certain other
distributions have been retained as working capital and used to support business
operations.
 
     The following table sets forth the Company's taxable income and accrued
distributions from the date of its S corporation election in 1987 through March
31, 1997:
 
<TABLE>
        <S>                                                              <C>
        Taxable income.................................................   $26.1 million
        Less: Distributions accrued and paid through March 31, 1997....    10.6 million
        Less: Distributions accrued but unpaid at March 31, 1997.......     4.8 million
                                                                          -------------
        Undistributed taxable income at March 31, 1997.................   $10.7 million
                                                                          =============
</TABLE>
 
   
     Of the Company's undistributed taxable income, $7.0 million will be paid to
the Company's current stockholders from the proceeds of this offering (the "S
Corporation Distribution"), and the remainder will be retained by the Company as
equity. Purchasers of shares in this offering will not receive any of this
distribution. See "Use of Proceeds" and "Capitalization."
    
 
     The Company intends to revoke its S corporation election prior to the
closing of this offering. Upon revocation of its S corporation election, the
Company will become subject to income taxation and, in connection therewith, the
Company will record a deferred tax asset of $300,000 in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 1 to Consolidated Financial Statements.
 
                                       14
<PAGE>   16
 
                                USE OF PROCEEDS
 
   
     The net proceeds to the Company from the sale of the 2,200,000 shares of
Common Stock offered hereby, after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company (including
amounts payable to the Company's financial consultant), are estimated to be
approximately $19.8 million ($22.9 million if the Underwriters' over-allotment
option is exercised in full) based upon an assumed initial public offering price
of $10.00 per share. The Company anticipates that such net proceeds will be used
as follows: (i) $7.0 million to fund the S Corporation Distribution; (ii)
approximately $2.5 million to purchase specialized fabrication equipment; and
(iii) the balance for general corporate purposes, including, when and if
available, the acquisition of businesses complementary to the Company's business
and growth strategy. The Company has no pending commitments for and is not
engaged in negotiations in connection with any acquisitions. See "S Corporation
Distribution."
    
 
     Until applied as set forth above, all proceeds will be invested in
short-term, interest bearing, investment grade or equivalent securities or bank
certificates of deposit. Investment of the net proceeds in short-term
investments rather than operations could adversely affect the Company's overall
return on its capital.
 
                                DIVIDEND POLICY
 
     Except for the distributions described in "Use of Proceeds" and "S
Corporation Distribution" above, the Company intends to retain earnings to
finance the operations and expansion of the Company's business and does not
anticipate paying cash dividends on its Common Stock in the foreseeable future.
See "Description of Capital Stock."
 
                                       15
<PAGE>   17
 
                                 CAPITALIZATION
 
   
     The following table sets forth the actual capitalization of the Company as
of March 31, 1997, and the pro forma as adjusted amounts, which reflect (i) the
sale of the 2,200,000 shares of Common Stock offered hereby at an assumed
initial public offering price of $10.00 per share, after deducting the
underwriting discount and estimated offering expenses, (ii) the application of
the estimated net proceeds therefrom, including payment of the S Corporation
Distribution and (iii) an increase in retained earnings to reflect recognition
of a deferred tax asset and corresponding credit to income in the amount of
$300,000 upon revocation of the Company's S corporation election. See "Use of
Proceeds," "S Corporation Distribution," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Note 1 to Consolidated
Financial Statements. The table should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included elsewhere in this
Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                      AS OF MARCH 31, 1997,
                                                                     -----------------------
                                                                                  PRO FORMA
                                                                     ACTUAL      AS ADJUSTED
                                                                     -------     -----------
                                                                           (UNAUDITED)
                                                                         (IN THOUSANDS)
    <S>                                                              <C>         <C>
    Long term debt, including current portion......................  $ 3,094       $ 3,094
    Stockholders' equity:
      Preferred Stock, $.001 par value; 1,000,000 shares
         authorized; no shares outstanding.........................       --            --
      Common Stock, $.001 par value; 20,000,000 shares authorized;
         5,000,000 shares issued and outstanding, actual; 7,200,000
         shares issued and outstanding, as adjusted(1).............        5             7
      Unfunded pension losses(2)...................................     (541)         (541)
      Additional paid in capital...................................       15        19,798
      Retained earnings............................................   11,957         5,257
                                                                     -------       -------
              Total stockholders' equity...........................   11,436        24,521
                                                                     -------       -------
    Total capitalization...........................................  $14,530       $27,615
                                                                     =======       =======
</TABLE>
    
 
- ---------------
(1) Excludes up to 330,000 shares of Common Stock that may be sold by the
    Company upon the exercise of the Underwriters' over-allotment option. Also
    excludes up to 345,500 shares of Common Stock issuable upon exercise of
    stock options outstanding at March 31, 1997 under the Company's 1997 Stock
    Option Plan, and 22,500 shares of Common Stock issuable upon exercise of
    stock options to be granted to the Company's non-employee directors upon
    their appointment to the Board of Directors at the closing of this offering.
    See "Management," "Description of Capital Stock" and "Underwriting."
 
   
(2) See Note 6 to Consolidated Financial Statements.
    
 
                                       16
<PAGE>   18
 
                                    DILUTION
 
   
     The net tangible book value of the Company's Common Stock at March 31, 1997
was $11.3 million, or $2.27 per share of Common Stock. Net tangible book value
per common share represents the book value of the Company's tangible assets less
total liabilities divided by the number of shares of Common Stock outstanding.
At March 31, 1997, the Company had $10.7 million of undistributed taxable
income. If the $7.0 million S Corporation Distribution anticipated in this
offering had been previously distributed on that date, the Company's pro forma
tangible net book value would have been $4.3 million, or $0.87 per share.
    
 
   
     Without taking into account any changes in such net tangible book value
subsequent to March 31, 1997, other than to give effect to (i) the sale by the
Company of 2,200,000 shares of Common Stock offered hereby (after deducting the
underwriting discount and estimated offering expenses) and the application of
the estimated proceeds thereof, including payment of the S Corporation
Distribution, and (ii) an increase in retained earnings to reflect the
recognition of a deferred tax asset, and corresponding credit to income, in the
amount of $300,000 upon revocation of the Company's S corporation election, the
pro forma net tangible book value of the Company as of March 31, 1997 would have
been $24.4 million, or $3.39 per share. This represents an immediate increase in
net tangible book value of $2.52 per share to current stockholders and immediate
dilution of $6.61 per share to new investors purchasing Common Stock pursuant to
this offering. Dilution per share to new investors represents the difference
between the amount per share paid by purchasers of Common Stock of the Company
pursuant to this offering and the pro forma net tangible book value per share of
Common Stock immediately after completion of this offering. The following table
illustrates the per share effect of this dilution on an investor's purchase of
shares:
    
 
   
<TABLE>
    <S>                                                                   <C>       <C>
    Initial public offering price per common share....................              $10.00
      Pro forma net tangible book value per common share before this
         offering.....................................................    $0.87
      Increase in pro forma net tangible book value per common share
         attributable to new investors................................     2.52
    As adjusted pro forma net tangible book value per common share
      after this offering.............................................                3.39
                                                                                    ------
    Dilution per common share to new investors........................              $ 6.61
                                                                                    ======
</TABLE>
    
 
   
     The foregoing table excludes up to 330,000 shares of Common Stock that may
be sold by the Company upon the exercise of the Underwriters' over-allotment
option. The table also excludes 345,500 shares of Common Stock issuable upon
exercise of stock options granted under the Company's 1997 Stock Option Plan at
an exercise price of $5.00 per share and 22,500 shares of Common Stock issuable
upon exercise of stock options to be granted to the Company's non-employee
directors upon their appointment to the Board of Directors at the closing of
this offering with an exercise price equal to the initial public offering price.
Assuming the exercise of all such options, other than the over-allotment option,
the pro forma net tangible book value per share before this offering would be
$1.17, the pro forma net tangible book value per share after this offering would
be $3.48, and the dilution per share to new investors would be $6.52. See
"Description of Capital Stock," "Underwriting" and "Management."
    
 
                                       17
<PAGE>   19
 
               SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
   
     The following sets forth selected historical consolidated financial data of
the Company for each of the years in the five-year period ended December 31,
1996 and for the three month periods ended March 31, 1996 and 1997. The selected
annual historical consolidated financial data are derived from the Company's
Consolidated Financial Statements audited by Ernst & Young LLP, independent
auditors. The selected annual historical consolidated financial data for the
three month periods ended March 31, 1996 and 1997 have been derived from the
Company's unaudited Consolidated Financial Statements for such periods. In the
opinion of management, the following unaudited data reflects all adjustments,
consisting only of normal recurring adjustments, necessary to fairly present the
Company's financial position and results of operations for the periods
presented. The results for any interim period are not necessarily indicative of
results to be expected for a full fiscal year. See "Risk Factors -- Fluctuating
Quarterly Results of Operations." For additional information, see the
Consolidated Financial Statements of the Company and Notes thereto included
elsewhere in this Prospectus. The following table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and is qualified by reference thereto and to the Company's
Consolidated Financial Statements and Notes thereto.
    
 
   
<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED
                                                      YEAR ENDED DECEMBER 31,                    MARCH 31,
                                         -------------------------------------------------   ------------------
                                          1992      1993      1994       1995     1996(1)      1996      1997
                                         -------   -------   -------   --------   --------   --------   -------
<S>                                      <C>       <C>       <C>       <C>        <C>        <C>        <C>
STATEMENT OF INCOME DATA:
Revenues...............................  $46,991   $58,640   $68,199   $ 62,090   $103,912   $ 10,410   $25,507
Cost of revenues.......................   41,752    50,376    58,874     54,222     86,998      8,418    21,655
                                         -------   -------   -------   --------   --------   --------   -------
  Gross profit.........................    5,239     8,264     9,325      7,868     16,914      1,992     3,852
General and administrative expenses....    4,102     4,367     4,915      5,284      6,715      1,357     2,081
                                         -------   -------   -------   --------   --------   --------   -------
  Operating income.....................    1,137     3,897     4,410      2,584     10,199        635     1,771
Interest expense.......................     (583)     (627)     (718)      (752)      (452)      (147)      (95)
Other income...........................       56        60        67        618        303         52        96
                                         -------   -------   -------   --------   --------   --------   -------
  Income before income taxes...........      610     3,330     3,759      2,450     10,050        540     1,772
Pro forma income taxes(2)..............      245     1,330     1,500        980      4,020        215       710
                                         -------   -------   -------   --------   --------   --------   -------
  Pro forma net income(2)..............  $   365   $ 2,000   $ 2,259   $  1,470   $  6,030   $    325   $ 1,062
                                         =======   =======   =======   ========   ========   ========   =======
Pro forma net income per share(2)......                                           $   1.02              $  0.18
Shares used in computation(3)..........                                              5,926                5,926
OPERATING DATA:
Backlog(4).............................  $34,466   $18,387   $22,544   $ 80,834   $ 67,335   $126,061   $65,550
 
BALANCE SHEET DATA:
Cash and cash equivalents..............  $    90   $   113   $    63   $    289   $  7,253   $  1,554   $ 4,750
Restricted funds on deposit(5).........       --        --        --        220      2,249        220     2,896
Costs and recognized earnings in excess
  of billings on uncompleted
  contracts(6).........................      681       714       777      1,076        871         62     1,332
Billings in excess of costs and
  recognized earnings on uncompleted
  contracts(6).........................    5,846     4,215     6,506      5,940     19,623     13,207    22,407
Property and equipment, net............    1,887     4,310     4,666      4,222      5,116      4,214     5,758
Total assets...........................   22,681    25,387    26,244     25,260     43,969     31,487    48,160
Long term debt, excluding current
  portion..............................    3,720     3,806     7,057      5,271      2,753      3,511     2,777
Stockholders' equity...................  $ 4,256   $ 5,320   $ 6,032   $  6,768   $ 10,682   $  6,961   $11,436
</TABLE>
    
 
                                       18
<PAGE>   20
 
- ---------------
   
(1) Does not give effect to the Company's acquisition of B&K Steel on January
    31, 1997, which was accounted for under the purchase method of accounting.
    Accordingly, financial information relating to B&K Steel has not been
    included in periods prior to the acquisition. Giving effect to the
    acquisition of B&K Steel as if it had occurred on January 1, 1996, the
    Company's pro forma and unaudited revenues, gross profit, income before
    income taxes, pro forma net income (after pro forma income taxes), and pro
    forma net income per share would have been $113,291,000, $18,097,000,
    $10,165,000, $6,099,000, and $1.03, respectively.
    
 
(2) Prior to this offering, the Company elected to be treated as an S
    corporation under the Code. As an S corporation, the Company is not subject
    to income taxes. Pro forma net income reflects the provision for income
    taxes that would have been recorded had the Company been subject to income
    taxes as a C corporation for all periods, assuming an effective tax rate of
    40%. Pro forma net income does not include projected credits of $300,000 to
    income to be recorded upon revocation of the Company's S corporation
    election. See "S Corporation Distribution" and "Management's Discussion and
    Analysis of Financial Condition and Results of Operations."
 
   
(3) Shares used in the computation of pro forma net income per share are based
    upon the weighted average number of common shares and common stock
    equivalents outstanding during each year. In accordance with SAB Number 83,
    all issuances of the Company's common stock options at prices below the
    expected initial public offering price during the twelve-month period
    preceding the proposed offering have been treated as common stock
    equivalents as if they had been issued at the Company's inception using the
    treasury stock method. In addition, in accordance with SAB Number 55, common
    stock equivalents include the number of shares expected to be issued in the
    proposed offering for which the net offering proceeds will be used to make
    stockholder distributions.
    
 
(4) Backlog is the amount of potential future revenues to be recognized upon
    performance of contracts awarded to the Company. Backlog increases as new
    contract commitments are received, decreases as revenues are recognized, and
    increases or decreases to reflect modifications in the work to be performed
    under a contract. Of the Company's $67.3 million backlog as of December 31,
    1996, approximately $13.1 million was attributable to three projects for a
    single customer in Las Vegas, Nevada, and approximately $34.3 million was
    attributable to the Bank One Ballpark project in Phoenix, Arizona. Of the
    Company's $65.6 million backlog at March 31, 1997, approximately $15.9
    million was attributable to two projects for a single customer in Las Vegas,
    and approximately $26.8 million was attributable to the Bank One Ballpark
    project. See "Management's Discussion and Analysis of Financial Condition
    and Results of Operations" and "Business -- Backlog."
 
(5) Restricted funds on deposit represent funds on deposit in an interest
    bearing escrow account which are maintained in lieu of retention for a
    specific contract. Retentions on contract receivables are amounts due which
    are withheld until the completed project has been accepted by the customer
    in accordance with the contract. See Note 1 to Consolidated Financial
    Statements.
 
(6) The Company recognizes revenues and costs from construction projects using
    the percentage of completion accounting method. Under this method, revenues
    are recognized based upon the ratio of the costs incurred to date to the
    total estimated costs to complete the project, commencing when progress is
    sufficient to estimate final results with reasonable accuracy, which
    typically occurs when fabricated product is shipped to the project site or
    when erection of the project commences. Construction contracts with
    customers generally provide that billings are to be made monthly in amounts
    which are commensurate with the extent of performance under the contracts.
    Costs and recognized earnings in excess of billings on uncompleted contracts
    primarily represent revenues earned under the percentage of completion
    method which have not been billed, and also include costs incurred in excess
    of billings on contracts for which sufficient work has not been performed to
    allow for recognition of revenues. Billings in excess of costs and
    recognized earnings on uncompleted contracts represent amounts billed on
    contracts in excess of the revenues allowed to be recognized under the
    percentage of completion method on those contracts.
 
                                       19
<PAGE>   21
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     The following discussion and analysis provides information regarding the
Company's financial position as of December 31, 1995 and 1996 and March 31, 1996
and 1997, and its results of operations for the years ended December 31, 1994,
1995, and 1996 and the three months ended March 31, 1996 and 1997. This
discussion should be read in conjunction with the preceding "Selected
Consolidated Financial and Operating Data" and the Company's Consolidated
Financial Statements and related Notes thereto and other financial data
appearing elsewhere in this Prospectus. Results of operations for interim
periods are not necessarily indicative of results to be expected for the full
fiscal year. For information relating to factors that could affect future
operating results, see "Risk Factors." Any forward-looking statements included
in this section or elsewhere in the Prospectus should be considered in light of
such risk factors, as well as the information set forth below and in other
portions of the Prospectus, any of which could cause the Company's actual
results to differ materially from those discussed herein.
 
INTRODUCTION
 
   
     The Company's results of operations are affected primarily by (i) the level
of commercial and industrial construction in its principal markets, (ii) the
Company's ability to win project contracts, (iii) the amount and complexity of
project changes requested by customers or general contractors, (iv) the
Company's success in utilizing its resources at or near full capacity, and (v)
the Company's ability to complete contracts on a timely and cost effective
basis. The level of commercial and industrial construction activity is related
to several factors, including local, regional and national economic conditions,
interest rates, availability of financing, and the supply of existing facilities
relative to demand.
    
 
   
     The Company believes that there is an increasing trend in the steel
fabrication and erection industry to design and build large, complex projects
according to accelerated time schedules. With many projects, only a portion of
the detail design drawings are completed when construction begins. The remaining
drawings are completed, with numerous design changes being implemented,
throughout the construction process. These fast track, "design-as-you-go"
projects are well-suited to integrated contractors that can (i) reduce the
logistical and coordination problems inherent in the use of multiple
subcontractors to complete a large, complex project and (ii) more efficiently
respond to rapid and multiple design changes while minimizing project delays and
cost overruns commonly associated with such changes. The complexity and size of
these projects requires subcontractors possessing extended financial and
operational capabilities. Typically, these projects offer greater potential
profit than small, less complex projects because project management and overhead
requirements for large projects usually are proportionately less. Individual
large projects can have a substantial impact upon the Company's results of
operations and cause significant fluctuations from quarter to quarter.
    
 
   
     The Company obtains contracts through competitive bidding or negotiation,
which generally are either fixed price or cost-plus arrangements. During 1995
and 1996, approximately $57.0 million (92.0%) and $94.0 million (91%),
respectively, of the Company's revenues were derived from projects performed
pursuant to fixed price contracts. In bidding or negotiating contracts, the
Company must estimate its costs, including projected increases in labor,
material, and services costs. Project duration typically lasts from three to
twelve months.
    
 
     The Company recognizes revenues using the percentage of completion
accounting method. Under this method, revenues are recognized based upon the
ratio of costs incurred to date to the estimated total cost to complete the
project. Revenue recognition begins when progress is sufficient to estimate
final results with reasonable accuracy, which typically occurs when fabricated
product is shipped to the project site or when erection of the project
commences. Revenues relating to changes in the scope of a contract are
recognized when the customer has authorized the change, the work is commenced
and the Company has made an estimate of the amount that will be paid for the
change. The cumulative impact of revisions in total cost estimates during the
progress of work is reflected in the period in which these revisions become
known. Estimated losses on contracts are recognized in full when it is
determined that a loss will be incurred on a contract.
 
     Cost of revenues consists of the costs of materials, equipment, direct
labor, fringe benefits, and indirect costs associated with detailing,
fabrication and erection, including rent, depreciation and supervisory labor.
Other costs not associated with specific projects are included in general and
administrative expenses.
 
                                       20
<PAGE>   22
 
   
     Gross profit margins can be positively affected by large, more complex
projects, the percentage of negotiated contracts relative to competitively bid
contracts, the number and scope of contract modifications and improvements in
operating efficiencies. Gross profit margins can be adversely affected by
construction delays, inefficient or underutilization of the Company's resources,
availability and cost of materials and labor, the timing and performance of work
by other contractors, weather conditions and construction site conditions.
    
 
     Backlog increases as contract commitments are obtained, decreases as
revenues are recognized, and increases or decreases to reflect modifications in
the work to be performed under the contract. The timing of contract commitments,
the size of projects and other factors beyond the Company's control can cause
significant fluctuation in backlog outstanding at any given date.
 
     The Company presently is taxed as an S corporation for income tax purposes.
Accordingly, its income is taxed directly to its stockholders. Prior to the
completion of this offering, the Company's S corporation election will be
revoked and thereafter the Company will be subject to income tax as a C
corporation. For purposes of the financial information contained in this
section, pro forma income tax expense has been included assuming an income tax
rate of 40%, and pro forma net income reflects this provision.
 
RESULTS OF OPERATIONS
 
     The following table sets forth for the periods indicated certain financial
data as a percentage of revenues:
 
<TABLE>
<CAPTION>
                                                                                THREE MONTHS
                                                 YEARS ENDED DECEMBER 31,      ENDED MARCH 31,
                                                 -------------------------     ---------------
                                                 1994      1995      1996      1996      1997
                                                 -----     -----     -----     -----     -----
    <S>                                          <C>       <C>       <C>       <C>       <C>
    Revenues.................................    100.0%    100.0%    100.0%    100.0%    100.0%
    Cost of revenues.........................     86.3      87.3      83.7      80.9      84.9
                                                 -----     -----     -----     -----     -----
      Gross profit...........................     13.7      12.7      16.3      19.1      15.1
    General and administrative expenses......      7.2       8.5       6.5      13.0       8.2
                                                 -----     -----     -----     -----     -----
      Operating income.......................      6.5       4.2       9.8       6.1       6.9
    Interest expense.........................     (1.1)     (1.2)     (0.4)     (1.4)     (0.4)
    Other income.............................      0.1       1.0       0.3       0.5       0.4
                                                 -----     -----     -----     -----     -----
      Income before income taxes.............      5.5       4.0       9.7       5.2       6.9
    Pro forma income taxes...................      2.2       1.6       3.9       2.1       2.7
                                                 -----     -----     -----     -----     -----
      Pro forma net income...................      3.3%      2.4%      5.8%      3.1%      4.2%
                                                 =====     =====     =====     =====     =====
</TABLE>
 
     THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
 
   
     Revenues.  Revenues increased by 145.0% to $25.5 million for the three
months ended March 31, 1997 from $10.4 million for the three months ended March
31, 1996. The increase was attributable primarily to a greater number of large
individual contracts in 1997 as compared to 1996 and to an unusually low revenue
quarter for 1996 due to the Company being in the early stages of large contracts
for which revenue recognition had not begun. The revenues in the period ended
March 31, 1997 also included $1.6 million of revenues of B&K Steel following its
acquisition by the Company on January 31, 1997. The average revenues for the
Company's ten largest revenue generating projects in the three month period
ended March 31, 1997 was $2.0 million versus $850,000 in the three month period
ended March 31, 1996. One contract, relating to Bank One Ballpark, produced
revenues of $9.0 million for the first quarter of 1997. The largest contract in
progress during the three month period ended March 31, 1996 contributed only
$2.7 million to revenues earned in that quarter.
    
 
   
     Gross profit.  Gross profit increased by 93.4% to $3.9 million for the
three months ended March 31, 1997 from $2.0 million for the three months ended
March 31, 1996. The increase was attributable primarily to a 145.0% increase in
revenues. As a percentage of revenues, gross profit declined to 15.1% in 1997
from 19.1% in 1996 due to above-average 1996 margins resulting from higher than
anticipated revenues from requested contract modifications. The above-average
1996 margins were largely attributable to an increase in anticipated revenues
and lower than anticipated costs on a single contract. These changes, based on
the stage of completion of that contract, accounted for approximately 5.5% of
the margin impact on the quarter.
    
 
     General and administrative expenses.  General and administrative expenses
increased by 53.4% to $2.1 million for the three months ended March 31, 1997
from $1.4 million for the three months ended March 31,
 
                                       21
<PAGE>   23
 
   
1996. General and administrative expenses as a percentage of revenues decreased
to 8.2% in 1997 from 13.0% in 1996 due to the 145.0% increase in revenues and a
less than proportionate increase in general and administrative expenses required
to support the increase in revenues. General and administrative expenses include
those for contract bids, estimating, sales and marketing, facilities, project
management, and support services, none of which increased in proportion to the
145.0% increase in revenues, primarily because the Company's higher average
contracts during the period do not require proportionately higher general and
administrative expenses. The Company believes that it currently has sufficient
management and administrative resources to support continued growth in revenues
without a proportionate increase in general and administrative expenses.
    
 
     Interest expense.  Interest expense decreased by 35.4% to $95,000 for the
three months ended March 31, 1997 from $147,000 for the three months ended March
31, 1996. The decrease was attributable to the lower average line of credit
borrowings, which was made possible by the Company's ability to increase its
billings in excess of costs and recognized earnings on uncompleted contracts.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
 
     Pro forma net income.  Pro forma net income increased by 226.8% to $1.1
million for the three months ended March 31, 1997 from $325,000 for the three
months ended March 31, 1996.
 
   
     Backlog.  Backlog at March 31, 1997 was $60.5 million less than at March
31, 1996. Backlog at March 31, 1996 was unusually high due to the receipt of
five contracts, each in excess of $10.0 million, during the fourth quarter of
1995 and the first quarter of 1996. These contracts produced backlog totalling
$86.5 million at March 31, 1996, $50.0 million of which was attributable to the
first and second phases of the Bank One Ballpark project. Backlog at March 31,
1997 included $26.8 million relating to the second and third phases of the Bank
One Ballpark project. The Company's backlog at March 31, 1997 also reflected
approximately $15.9 million attributable to two projects for a single customer
in Las Vegas, Nevada.
    
 
     YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
 
     Revenues.  Revenues increased by 67.4% to $103.9 million in 1996 from $62.1
million in 1995. The increase was attributable primarily to larger individual
contracts in 1996 compared to 1995, including the Bank One Ballpark, which
contributed $19.8 million. The Bank One Ballpark project is expected to generate
total revenues approaching $55.0 million when completed in 1998. The average
revenues for the Company's ten largest revenue generating projects was $7.8
million in 1996 versus $3.3 million in 1995. Excluding Bank One Ballpark, the
ten largest revenue generating projects averaged $6.4 million in 1996, which
represented a 93.9% increase over the 1995 average of $3.3 million.
 
   
     Gross profit.  Gross profit increased by 115.0% to $16.9 million in 1996
from $7.9 million in 1995 primarily due to the 67.4% increase in revenues. As a
percentage of revenues, gross profit increased to 16.3% in 1996 from 12.7% in
1995. The increase as a percentage of revenues was attributable primarily to
greater overhead absorption, better pricing associated with larger projects,
improved operating efficiencies, and modifications to specific contracts. By
obtaining larger average value and more complex contracts, the Company has been
able to realize higher gross margins on such projects, a trend that was
reflected in the Company's gross profit in 1996. In addition, many of the
Company's fixed costs, such as depreciation, increased proportionately less than
the 67.4% increase in revenues, which further served to improve gross margins.
    
 
     General and administrative expenses.  General and administrative expenses
increased by 27.1% to $6.7 million in 1996 from $5.3 million in 1995. Of the
$1.4 million increase in 1996, $590,000 was attributable to bonus payments to
employees and $529,000 was attributable to a deferred compensation plan
implemented in 1996. The Company's deferred compensation plan was terminated in
1997. General and administrative expenses as a percentage of revenues decreased
to 6.5% in 1996 from 8.5% in 1995 due to the benefits of having larger average
contracts in 1996. In 1995, the Company experienced a 9.0% decrease in revenues
from 1994 and elected not to reduce general and administrative costs
proportionately in anticipation of future contract awards, thereby causing
higher general and administrative expenses as a percentage of revenues.
 
     Interest expense.  Interest expense decreased by 39.9% to $452,000 in 1996
from $752,000 in 1995. The decrease was attributable to the lower average line
of credit borrowings, which reflected in large part the
 
                                       22
<PAGE>   24
 
Company's ability to increase its billings in excess of costs and recognized
earnings on uncompleted contracts. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
 
     Pro forma net income.  Pro forma net income increased by 310.2% to $6.0
million in 1996 from $1.5 million in 1995.
 
     Backlog.  Backlog at December 31, 1996 was $13.5 million less than at
December 31, 1995 due to the receipt of four contract awards that collectively
represented backlog of $47.2 million at December 31, 1995. Additionally, the
high level of backlog at the end of the first quarter of 1996 caused the Company
to become more selective in the pursuit of new contract awards during the
remainder of the year. Of the backlog at December 31, 1996, approximately $13.1
million was attributable to three projects for a single customer in Las Vegas,
Nevada, and approximately $34.3 million was attributable to the Bank One
Ballpark project in Phoenix, Arizona.
 
     YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
 
     Revenues.  Revenues decreased by 9.0% to $62.1 million in 1995 from $68.2
million in 1994. The decrease was attributable primarily to the completion of
two large construction projects during 1994, delays in commencing work on
certain new projects, and a focus on certain targeted projects that did not
materialize. The average revenues for the Company's ten largest revenue
generating projects was $3.3 million in each of 1995 and 1994.
 
   
     Gross profit.  Gross profit decreased by 15.6% to $7.9 million in 1995 from
$9.3 million in 1994. As a percentage of revenues, gross profit decreased to
12.7% in 1995 from 13.7% in 1994 due primarily to the decrease in revenues
coupled with the relatively fixed nature of certain expenses. During 1995, the
Company's margins were adversely impacted by a single large project for which
the Company projected a small loss based upon difficulties in the fabrication
and erection of this unique project. Given that the majority of revenues from
this contract were recognized in 1995, margins were relatively lower than in
1994.
    
 
     General and administrative expenses.  General and administrative expenses
increased by 7.5% to $5.3 million in 1995 from $4.9 million in 1994. General and
administrative expenses as a percentage of revenues increased to 8.5% in 1995
from 7.2% in 1994. In 1995, the Company experienced a 9.0% decrease in revenues
from 1994 and elected not to reduce general and administrative costs
proportionately in anticipation of future contract awards, thereby causing
higher general and administrative expenses as a percentage of revenues.
 
     Interest expense.  Interest expense increased by 4.7% to $752,000 in 1995
from $718,000 in 1994. The increase was attributable to slightly higher average
amounts outstanding on the Company's revolving line of credit.
 
     Pro forma net income.  Pro forma net income decreased by 34.9% to $1.5
million in 1995 from $2.3 million in 1994.
 
     Backlog.  Backlog at December 31, 1995 was $58.3 million greater than at
December 31, 1994 due to the receipt of four contract awards totalling $47.2
million in the fourth quarter of 1995.
 
                                       23
<PAGE>   25
 
QUARTERLY DATA
 
     The following table sets forth certain quarterly consolidated financial
data for each of the Company's last nine quarters and such data as a percentage
of the Company's revenues for the respective quarters. The information has been
derived from unaudited consolidated financial statements prepared by management
that, in the opinion of management, reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of such
quarterly information. The operating results for any quarter are not necessarily
indicative of the results to be expected for any future period.
 
<TABLE>
<CAPTION>
                                                                         QUARTER ENDED
                               --------------------------------------------------------------------------------------------------
                                                                     (DOLLARS IN THOUSANDS)
                                                                                                                      FISCAL YEAR
                                          FISCAL YEAR 1995                            FISCAL YEAR 1996                   1997
                               ---------------------------------------     ---------------------------------------    -----------
                               MARCH 31   JUNE 30   SEPT. 30   DEC. 31     MARCH 31   JUNE 30   SEPT. 30   DEC. 31     MARCH 31
                               --------   -------   --------   -------     --------   -------   --------   -------    -----------
<S>                            <C>        <C>       <C>        <C>         <C>        <C>       <C>        <C>        <C>
Revenues.....................  $17,994   $11,909    $12,481   $19,706      $10,410   $29,691    $38,861   $24,950       $25,507
Cost of revenues.............   15,897    10,256     10,695    17,374        8,418    25,600     32,976    20,004        21,655
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Gross profit.................    2,097     1,653      1,786     2,332        1,992     4,091      5,885     4,946         3,852
General and administrative
  expenses...................    1,283     1,306      1,255     1,440        1,357     1,500      1,748     2,110         2,081
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Operating income.............      814       347        531       892          635     2,591      4,137     2,836         1,771
Interest expense.............     (182)     (217)      (189)     (164)        (147)      (90)      (100)     (115)          (95)
Other income.................       25        13         17       563           52        80         75        96            96
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Income before income taxes...      657       143        359     1,291          540     2,581      4,112     2,817         1,772
Pro forma income taxes.......      263        57        144       516          215     1,034      1,645     1,126           710
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Pro forma net income.........  $   394    $   86    $   215    $  775      $   325    $1,547    $ 2,467    $1,691       $ 1,062
                               =======    =======   =======    =======     =======    =======   =======    =======      =======
 
                                                                  AS A PERCENTAGE OF REVENUES
                               --------------------------------------------------------------------------------------------------
Revenues.....................    100.0 %   100.0 %    100.0 %   100.0 %      100.0 %   100.0 %    100.0 %   100.0 %       100.0%
Cost of revenues.............     88.3      86.1       85.7      88.2         80.9      86.2       84.9      80.2          84.9
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Gross profit.................     11.7      13.9       14.3      11.8         19.1      13.8       15.1      19.8          15.1
General and administrative
  expenses...................      7.1      11.0       10.0       7.3         13.0       5.1        4.5       8.4           8.2
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Operating income.............      4.6       2.9        4.3       4.5          6.1       8.7       10.6      11.4           6.9
Interest expense.............     (1.0)     (1.8)      (1.5)     (0.8)        (1.4)     (0.3)      (0.3)     (0.5)         (0.4)
Other income.................      0.1       0.1        0.1       2.9          0.5       0.3        0.2       0.4           0.4
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Income before income taxes...      3.7       1.2        2.9       6.6          5.2       8.7       10.5      11.3           6.9
Pro forma income taxes.......      1.5       0.5        1.2       2.6          2.1       3.5        4.2       4.5           2.7
                               -------    -------   -------    -------     -------    -------   -------    -------      -------
Pro forma net income.........      2.2 %     0.7 %      1.7 %     4.0 %        3.1 %     5.2 %      6.3 %     6.8 %         4.2%
                               =======    =======   =======    =======     =======    =======   =======    =======      =======
</TABLE>
 
   
     The Company has experienced, and is expected to continue to experience,
variations in quarterly and annual results of operations. Factors that may
affect these results include, among other things, the timing and terms of major
contract awards and the starting and completion dates of projects. Based upon
its current backlog and project schedules, the Company anticipates that pre-tax
income for the second and third quarters of 1997 will be lower than recorded for
the same periods of 1996, and revenues for the third quarter of 1997 may be
lower than the same period of 1996. In this regard, the Company received a
number of large contract awards in late 1995 which positively impacted 1996
results, particularly the third quarter of 1996.
    
 
                                       24
<PAGE>   26
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company attempts to structure the payment arrangements under its
contracts to match costs incurred under the project. To the extent the Company
is able to bill in advance of costs incurred, it generates working capital
through billings in excess of costs and recognized earnings on uncompleted
contracts. To the extent the Company is not able to bill in advance of costs, it
relies on its credit facilities to meet its working capital needs. At March 31,
1997, the Company had no borrowings under its line of credit due in large part
to its billings in excess of costs and recognized earnings on uncompleted
contracts of $22.4 million. At March 31, 1997, the Company had working capital
of approximately $8.6 million. The Company believes that it has sufficient
liquidity through its present resources and the existence of its bank credit
facility to meet its near term financial needs.
 
     The Company's short term cash needs are primarily for working capital to
support operations including receivables, inventories, and other costs incurred
in performing its contracts. Operating activities provided cash flows of
$251,000 for the three months ended March 31, 1997 and $14.4 million for the
year ended December 31, 1996. For the first quarter of 1997, operating cash
flows were less than net income due to increased working capital requirements.
For the year ended December 31, 1996, operating cash flows were greater than net
income (excluding pro forma income taxes) due to favorable billings relating to
contracts in process. Investing activities required $705,000 for the three
months ended March 31, 1997 and $2.3 million during the year ended December 31,
1996, substantially all of which were related to purchases of property and
equipment and the cash portion of the acquisition of B&K Steel. Financing
activities consumed $2.0 million for the three months ended March 31, 1997 and
$5.1 million for the year ended December 31, 1996, which were related primarily
to repayments of long-term debt and line of credit balances. Also included in
financing activities were distributions to stockholders for income taxes related
to the operations of the business and other stockholder distributions. These
distributions totaled $776,000 for the three months ended March 31, 1997 and
$2.3 million for the year ended December 31, 1996. Other than the S Corporation
Distribution, the Company does not anticipate paying any future dividends. See
"Dividend Policy."
 
   
     The Company maintains a $6.5 million credit facility with a commercial bank
that is subject to renewal on June 30, 1998 and is collateralized by contract
receivables, equipment and inventory. The Company's credit facility requires
that the Company maintain minimum tangible net worth of $6.1 million, minimum
owners equity (the sum of capital, capital surplus and retained earnings divided
by total assets on a six-month average) of 21%, working capital of $4.9 million,
and a current ratio of at least 1.25 to 1.0. The security agreements pursuant to
which the Company's assets are pledged prohibit any further pledge of such
assets without the written consent of the Company's lender. Under this facility,
the Company may borrow up to an amount equal to 75% of qualifying contracts
receivable, but in no event less than $2.5 million. The Company's ability to
borrow is subject to, among other restrictions, billings in excess of costs and
recognized earnings on uncompleted contracts. At March 31, 1997, other than the
minimum borrowing amount, there was no additional credit available under the
line for future borrowings due to the high level of billings in excess of costs
and recognized earnings on uncompleted contracts. The Company also maintains an
equipment financing line of credit pursuant to which it may borrow up to
$500,000. This line of credit is subject to financial covenants similar to its
primary line of credit. The Company is seeking to modify its credit facility to
increase the amounts available, including the minimum borrowing amount.
    
 
   
     The Company has two other long-term debt commitments that are related to
its property and equipment. One is a subordinated note payable to a limited
partnership comprised of the Company's present stockholders and certain of their
family members, which requires monthly payments of $12,037 plus interest and
matures in 1999. The balance on this loan was approximately $2.3 million at
March 31, 1997. The other long-term debt of the Company consists of two notes in
the aggregate principal amount of $796,250 incurred as part of the consideration
paid to the sellers in the B&K Steel acquisition. Such notes are payable in five
equal annual installments ending in 2002. The acquisition of B&K Steel, which
had 1996 revenues of approximately $9.4 million, was accounted for under the
purchase method of accounting. The fair value of the tangible net assets
acquired approximated the purchase price so no goodwill was recorded with
respect to the transaction.
    
 
     The Company leases its fabrication and office facilities from a partnership
in which the present beneficial stockholders of the Company and their family
members are the general and limited partners. Under the lease
 
                                       25
<PAGE>   27
 
for the Company's principal fabrication and office facilities, the Company's
annual rental payments were $264,000 in 1996, increasing to $292,000 for 1997,
$414,000 for 1998, $556,000 for 1999, $601,000 in 2000, and $605,000 in each
year thereafter during the 20 year term of the lease. The lease agreement for
the B&K Steel property and equipment provides for rental payments in the amount
of $340,000 per year over the 20 year term of the lease. The Company also leases
additional office facilities adjacent to the Company's existing principal office
and shop facilities. This office lease provides for rental payments of $135,000
per year over the 20 year term of the lease. See "Business -- Properties" and
"Certain Relationships and Related Transactions."
 
   
     The Company estimates that its capital expenditures for 1997 will be
approximately $2.5 million. The Company believes that its available funds, cash
generated by operating activities and funds available under its bank credit
facility will be sufficient to fund these capital expenditures and its working
capital needs. However, the Company may expand its operations through future
acquisitions and may require additional equity or debt financing. See "Risk
Factors -- Substantial Liquidity Requirements."
    
 
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
     Statements of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" (FAS 123), establishes a fair value method of accounting for
stock based compensation plans and for transactions in which an entity acquires
goods or services from non-employees in exchange for equity instruments. The
Company adopted this standard effective January 1, 1996. FAS 123 encourages, but
does not require, companies to record compensation costs for stock based
employee compensation. The Company has chosen to account for stock based
compensation to employees utilizing the intrinsic value method of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, compensation costs for stock options is measured as the excess, if
any, of the fair market value of the Company's stock at the date of grant over
the amount an employee must pay to acquire the stock. The Company's first stock
option grants were made in February 1997, thereby making the standards
applicable to the quarter ended March 31, 1997. The grants were made at amounts
that management believes equal the fair value of its Common Stock at the date of
grant and, accordingly, no compensation expense was required.
 
   
     Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(FAS 128), issued by the Financial Accounting Standards Board in February 1997,
is effective for periods ending after December 15, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact is expected to result in an increase in pro forma
primary earnings per share for the year ended December 31, 1996 of $0.19 and for
the quarter ended March 31, 1997 of $0.03. The impact of FAS 128 on the
calculation of fully diluted pro forma earnings per share for these periods is
not expected to be material.
    
 
                                       26
<PAGE>   28
 
                                    BUSINESS
 
GENERAL
 
     The Company is a rapidly growing steel fabrication and erection company
that provides a fully integrated range of steel construction services.
Engineering News Record, a professional trade publication, ranked the Company
the second largest steel erection subcontractor in the United States based on
1995 revenues and the largest steel erection subcontractor in the United States
based on 1994 revenues. The Company seeks to differentiate its operations by
offering complete, turnkey steel construction services featuring engineering,
detailing, shop fabrication and field erection. By offering a single source of
steel construction services, the Company is able to respond more efficiently to
the design and construction challenges associated with large, fast track,
"design-as-you-go" construction projects.
 
     The Company's services are employed in the construction of a variety of
commercial and industrial structures, such as hotels and casinos, office
buildings, hospitals, manufacturing plants, mining facilities, shopping malls,
sports stadiums, power plants, bridges, large diameter water pipes and other
public works projects. Its customers include general contractors, project
owners, engineering firms, mine operators and various governmental entities. The
Company operates primarily in the southwestern United States with a
concentration in Arizona, Nevada, and southern California, and is expanding its
operations in South America and Mexico.
 
     The Company has experienced significant growth in revenues and pre-tax
income over the past five years. Revenues have more than doubled from $47.0
million in 1992 to $103.9 million ($113.3 million giving pro forma effect to the
1997 B&K Steel acquisition) in 1996. During that same period, pre-tax income has
grown at a compound annual growth rate of 101.5%, from $610,000 in 1992 to $10.1
million in 1996.
 
OVERVIEW OF INDUSTRY
 
   
     Companies engaged in the steel fabrication and erection industry prepare
detailed shop drawings, fabricate and erect structural steel and steel plate
weldments, and perform related engineering services for the construction of
various facilities. The primary customers for these services include private
developers, general contractors, engineering firms and governmental agencies
involved in a variety of large scale construction projects. Historically, these
customers have relied on multiple subcontractors to perform various services to
complete a single project, primarily because few companies in this industry
offer fully integrated engineering, detailing, fabrication and erection
services.
    
 
   
     The Company believes that there is an increasing trend in the construction
industry toward complex, fast track, "design-as-you-go" projects. This trend is
largely driven by the desire of project owners to more quickly secure the
benefits of revenue producing projects, such as casinos, mines and computer chip
plants. These projects require that all phases of construction be accomplished
in accordance with compressed time schedules. Further, because many construction
activities are dependent on the progress of steel erection, timely completion of
this phase is critical. These projects also are characterized by numerous design
changes requiring that all construction participants coordinate their efforts in
order to respond quickly and efficiently in implementing these changes. These
trends have created a demand for fully integrated fabrication and erection
contractors that can (i) avoid the coordination difficulties inherent in the use
of multiple subcontractors and (ii) implement rapid and multiple design changes
in a coordinated and timely manner, preventing project delays and reducing costs
to the general contractor or owner. The Company believes that it has gained a
reputation in the industry as a reliable, fully integrated provider of
engineering, detailing, fabrication and erection services with the ability to
complete large, complex projects on a timely, cost efficient basis.
    
 
     The Company also believes that the steel fabrication and erection industry
is highly fragmented and that many of its competitors are small businesses
operating in local or regional markets. Given the trend toward the use of fully
integrated contractors and the large number of smaller companies engaged in this
industry, the Company believes the industry may experience consolidation.
 
                                       27
<PAGE>   29
 
BUSINESS STRATEGY
 
     The Company's objective is to achieve and maintain a leading market
position in each of its geographic and specific product markets. The Company
believes that its track record of providing quality services on a timely basis
has enabled it to garner a dominant share of the primary geographic markets
served by it and to increase its market share of large, fast track projects in
markets in which it maintains a significant presence. The Company will continue
to pursue its objective by implementing a strategy comprised of the following
components:
 
   
          Promote Coordinated Service Capabilities.  The Company promotes its
     ability to provide a fully integrated range of engineering, detailing,
     fabrication and erection services, which enables the Company to compete
     more effectively on large, "design-as-you-go" projects that typically offer
     more favorable contract terms. The Company believes it is positioned to
     capitalize on industry trends toward construction of large, fast track
     projects incorporating numerous design changes, and the increasing demand
     for fully integrated fabrication and erection contractors capable of both
     implementing those design changes in a timely and cost efficient manner and
     providing overall project management capabilities.
    
 
          Emphasize Innovative Services.  The Company focuses its engineering,
     detailing, fabrication and erection expertise on distinct product segments
     requiring unique or innovative techniques, where the Company typically
     experiences less competition and more advantageous negotiated contract
     opportunities. The Company has extensive experience in providing services
     requiring complex fabrication and erection techniques and other unusual
     project needs, such as specialized transportation, steel treatment or
     specialty coating applications. These service capabilities have enabled the
     Company to address such design sensitive projects as computer chip
     manufacturing facilities, large diameter underground water pipes, and
     uniquely designed hotels and casinos.
 
          Diversify Customer and Product Base.  Although the Company seeks to
     garner a leading share of the geographic and product markets in which it
     competes, it also seeks to diversify its construction projects across a
     wide range of commercial, industrial, and specialty projects. The following
     chart sets forth the percentage of revenues attributable to the Company's
     various geographic and project markets for 1996:
 
<TABLE>
<CAPTION>
                                                 INDUSTRIAL     COMMERCIAL     OTHER
                                                 ----------     ----------     -----
                <S>                              <C>            <C>            <C>
                Arizona........................      12%            30%          1%
                California.....................       2%            19%         --
                Nevada.........................       4%            18%         --
                International..................      14%            --          --
</TABLE>
 
          In recent periods, the Company has focused efforts on diversifying
     into international markets. Accordingly, the Company believes that its
     combined diversification into new geographic, specific product and
     international markets will better enable it to expand its revenue base and
     to reduce the impact of periodic market or economic conditions adversely
     impacting one or more of its market segments.
 
          Employ Unique Technical Expertise.  The Company offers in-house
     project management and design expertise not typically provided by steel
     fabricators and erectors. The Company employs two registered structural
     engineers and approximately 30 design and detailing personnel, which
     permits the Company to occupy a more influential role in critical design
     decisions on many projects. The Company believes that its ability to offer
     these services allows it to negotiate rather than bid on a greater
     percentage of its contracts, which enables the Company to obtain terms more
     favorable to it than the terms of competitively bid projects, while at the
     same time providing overall cost savings and project efficiencies to its
     customers. The Company's technical expertise also permits it to compete
     more effectively for projects offering unique structural or design
     challenges, such as the fully retractable roof on the Bank One Ballpark,
     the Salt River Siphon Replacement Project, and specialty coating of large
     diameter water pipe. See "Business -- Primary Markets and Products."
 
                                       28
<PAGE>   30
 
GROWTH STRATEGY
 
     The Company believes that the steel fabrication and erection industry will
continue to be characterized by large, complex, fast track projects. The
complexity and size of these projects requires companies with extended financial
and operational capabilities. With its integrated service capabilities and
financial and management strength, the Company intends to take advantage of this
trend. Additionally, the fragmented nature of the industry provides the Company
opportunities for growth. The Company seeks to achieve continued growth and
diminish the impact of business and economic cycles by pursuing a growth
strategy consisting of the following components:
 
   
          Promote Internal Growth.  The Company intends to pursue continued
     internal growth by adding sales and marketing personnel to dedicated, fast
     growing markets in which the Company is actively pursuing new projects, by
     further developing its engineering and design capabilities and fabrication
     capacity, and by continually updating its fabrication and detailing
     equipment and technologies. The Company believes that these efforts will
     enhance its market share, revenues, and operating income in its existing
     and targeted principal markets and improve its operating capacity.
     Recently, the Company dedicated one sales manager to the rapidly expanding
     Nevada commercial and industrial market and appointed one full-time
     marketing representative to pursue new project opportunities in South
     America. In addition, the Company recently secured additional office and
     administrative facilities, which will permit the expansion of its existing
     detailing, estimating and other project operations. The Company also
     intends to invest approximately $2.5 million in new fabrication equipment
     and technologies in 1997.
    
 
   
          Acquire Synergistic Businesses.  The Company will pursue selective
     acquisitions of steel fabrication and erection companies that offer the
     Company increased plant facilities, opportunities to increase market share
     in selected geographic markets, penetration of new product market segments
     and access to domestic and international markets targeted by the Company
     for geographic expansion. Such acquisitions may also provide the additional
     benefits of increased purchasing efficiencies with respect to steel and
     other raw materials, payment and performance bonding and insurance
     premiums, and more efficient allocation and utilization of labor resources
     among projects within its geographic markets. The Company believes that
     many of its competitors operate primarily on a local or limited geographic
     basis and, while having established relationships in those markets, lack
     the resources to compete for large or more complex projects. In addition,
     the industry is highly fragmented with many of the Company's competitors
     being closely or family held entities.
    
 
   
          In January 1997, the Company completed the acquisition of all of the
     outstanding capital stock of B&K Steel, a competitor of the Company located
     in the Phoenix metropolitan area. B&K Steel is primarily a fabrication
     contractor and had revenues of approximately $9.4 million in 1996. The
     Company believes that the acquisition of B&K Steel will enable the Company
     to capture a larger share of the Arizona industrial and commercial market
     and will provide the Company with increased access to the mining industry
     throughout the southwestern United States. The acquisition of B&K Steel
     also provides the Company with additional fabrication facilities located
     near the Company's existing facilities.
    
 
          Create Additional Project Opportunities.  The Company believes that
     its ability to efficiently coordinate and implement numerous design and
     logistical changes on large or more complex fast track projects, combined
     with its established long term relationships with key national and
     multi-national general contractors and other customers, will provide the
     Company with opportunities to market its services in a number of markets in
     which the Company has not yet achieved a leading position or conducted
     significant operations. Domestically, the Company plans to expand into
     markets in which it believes it can leverage its existing expertise to
     achieve a significant share of such markets. Among the regions targeted by
     the Company for domestic expansion are the Pacific Northwest, which
     presents several opportunities in the expanding computer chip manufacturing
     industry, and Texas, which offers the Company convenient and cost effective
     access to its developing international markets.
 
          The Company also will seek to capture significant market share in
     selected product markets. Among other markets, the Company is seeking to
     increase its participation in the construction of sports stadiums and
     airports and, through its acquisition of B&K Steel, the mining and smaller
     commercial construction
 
                                       29
<PAGE>   31
 
     markets. The Company plans to participate in these markets through the
     acquisition of existing participants, expansion of strategic customer
     relationships into new markets, and through increased sales and marketing
     efforts generally.
 
          Expand Internationally and Develop Strategic Alliances.  The Company
     recently has developed its presence in selected international markets,
     including Chile and Argentina, and is pursuing opportunities in Mexico and
     Southeast Asia. Each of these international markets is expected to have a
     growing demand for services offered by the Company. In Argentina, the
     Company recently completed fabrication and erection coordination services
     for mill facilities at one of the largest copper mines in the world. The
     Company also completed a large mining project in Chile. In addition, the
     Company will seek to expand internationally by partnering with existing
     multi-national customers such as Fluor Daniel, Inc. and Bechtel Group,
     Inc., as well as other international structural and design engineering
     firms, and by entering into strategic alliances with leading foreign
     fabricators and erectors in the Company's targeted international markets.
     The Company believes that its international alliances also will help to
     reduce its risk of entry into foreign markets by partnering with entities
     having an established presence and experience in such markets.
 
   
          The Company has developed a strategic alliance with Corey, S.A. de
     C.V., Mexico's leading steel fabrication and erection contractor. Pursuant
     to this alliance, the parties intend to form a corporate joint venture that
     intends to provide detailing services to the Company's domestic operations.
     The Mexico joint venture intends to use state of the art Stru-Cad and
     Autocad design systems, and is expected to significantly expand the
     Company's internal detailing capacity. The Company believes its investment
     in this joint venture will reduce its reliance on detailing subcontractors
     and improve the Company's cost profile. The Company expects the alliance to
     provide it access to several large projects in Mexico through Corey's
     marketing, importation and fabrication support.
    
 
PRIMARY MARKETS AND PRODUCTS
 
     The Company's current principal geographic markets include Arizona and
Nevada. The Company also has a substantial presence in southern California and
currently is expanding into selected international markets. Set forth below is a
description of the Company's primary markets and products.
 
     Arizona Market.  The Company is the leading steel fabrication and erection
firm in Arizona. The Company has been a prominent participant in many of
Arizona's largest and most visible public and private projects, including the
expansion of Sky Harbor Airport in Phoenix, which involved the night time
erection of pedestrian walkways linking the airport's main concourses; the
erection of 10,000 tons of bridge plate girders for the interchange of
Interstates 10 and 17 in Phoenix; and the fabrication of the Roosevelt Dam
penstock near Phoenix. In addition, the Company believes that it is the dominant
fabricator and erector for Arizona's rapidly growing semiconductor and computer
chip industry. The Company's major projects in this industry have included the
fabrication and erection of structural steel for Intel Corp.'s "Fab 12"
facility, which was one of the largest construction projects of its kind in the
United States in 1994 and 1995; the fabrication and erection of Motorola Inc.'s
Chandler, Arizona computer chip manufacturing facility in 1995; and the
1995-1996 fabrication and erection of portions of the Sumitomo Energy Center, a
new wafer manufacturing plant constructed by Sumitomo Sitix in Scottsdale,
Arizona. Recent large Arizona-based projects include:
 
   
          - BANK ONE BALLPARK.  In 1995, the Company was awarded a contract to
     provide steel fabrication and erection services for the Bank One Ballpark
     in Phoenix, a new state of the art baseball stadium for Major League
     Baseball's Arizona Diamondbacks franchise that will feature, among other
     things, a fully retractable roof consisting of steel components detailed,
     fabricated and erected by the Company. The stadium contract is divided into
     three phases representing a total of approximately $55 million in revenues
     to the Company, of which approximately $29 million had been earned as of
     March 31, 1997. The stadium will require over 20,000 tons of structural
     steel and the employment of approximately 160 iron workers at the peak of
     construction.
    
 
          - BARROWS NEUROLOGICAL INSTITUTE.  The Company was the fabricator and
     erector for the Barrows Neurological Center in Phoenix, Arizona. Due to the
     unique nature of this facility, the project required
 
                                       30
<PAGE>   32
 
     highly specialized vibration control which resulted in a structural frame
     that weighs five times normal tonnage for a building of this size.
 
          - MAYO HOSPITAL.  The Company is the fabricator and erector for the
     Mayo Clinic's newest hospital facility currently being constructed in
     Phoenix, Arizona.
 
     Nevada Market.  The Company believes that it is the dominant fabricator and
erector in the Nevada hotel and casino construction industry, which has
experienced rapid expansion over the past several years and is expected to
continue its expansion for the foreseeable future. The Company maintains a sales
manager dedicated to pursue Nevada-based projects. In recent years, the Company
has completed several large fast track projects in the Nevada hotel and casino
industry, including the 500,000 square foot Sands Expo and Convention Center,
which was completed in nine months; the Mirage Hotel and Casino; the Holiday
Riverboat remodeling project, which involved the fabrication and erection of two
120 foot high river boat "stacks" constructed by the Company during the active
operation of the resort; the launch tower of the "SkyScreamer SkyCoaster" thrill
ride at the MGM Grand Theme Park, a 220 foot high structure that was erected by
the Company in only three days; and the Orleans Hotel and Casino, which involved
the fabrication and erection of over 7,900 tons of structural steel for the
casino, entertainment, and retail areas. Among the Company's recent hotel and
casino projects in Nevada are the following:
 
          - BELLAGIO HOTEL AND CASINO.  The Company is the fabricator and
     erector for the casino and retail areas of the Bellagio Hotel and Casino, a
     new $1.2 billion Spanish-themed resort consisting of over one million
     square feet of retail and casino space and a 37 story hotel tower with
     approximately 3,800 rooms.
 
          - MGM GRAND HOTEL AND CASINO RENOVATION.  This structure is presently
     the world's largest hotel and casino with 5,005 hotel rooms and one million
     square feet of retail and casino space. The Company's participation
     includes the completion of a facade renovation and the provision of
     fabrication and erection services for the new MGM Convention Center, which
     will consist of over 250,000 square feet of convention area.
 
          - NEW YORK, NEW YORK HOTEL AND CASINO.  The Company was the fabricator
     and erector for the New York, New York hotel and casino, which required
     approximately 6,500 tons of structural steel and represented a contract
     price to the Company of over $15 million. The hotel was constructed to
     resemble the New York City skyline, including replicas of the Statute of
     Liberty, the Brooklyn Bridge, and other New York City landmarks.
 
          - LUXOR HOTEL AND CASINO SHOWROOM THEATER.  The Company has been
     involved in the construction of the Luxor Hotel and Casino Showroom Theater
     and renovation of the hotel ballroom.
 
     California Market.  The Company has maintained a strong presence in the
California market and intends to achieve a greater share of this geographic
market as it experiences an increase in new construction activity. The Company
provided fabrication and erection services for several new hospital facilities
in California, including the new Children's Hospital and Health Center in San
Diego, the expansion of the Sharp Women's Center in San Diego, which required
construction around existing and operating hospital wings, and the Valley
Medical Center in San Jose. The Company also was selected as the fabricator and
erector for the Fashion Valley Mall in San Diego, which involved the fabrication
and erection of over 7,000 tons of steel for a new second level of retail
shopping space, which was erected at night over the existing shopping facility
without disturbing the ordinary operations of the mall.
 
     Specialty Markets.  In addition to seeking to achieve a leading market
share in the principal geographic markets that it serves, the Company focuses
its fabrication and erection expertise on distinct product segments,
particularly product segments requiring unique or specialized expertise where
the Company has the potential to achieve a dominant market share. A recent
example of such a product segment is large diameter water pipe used in
governmental aqueduct systems. These projects require the complex formation and
welding of steel plate into large diameter pipe sections that are used to
transport water from major supply sources to various population centers,
primarily in the arid southwestern United States. The Company has developed
in-house specialized fabrication equipment used to construct and weld these pipe
sections, a unique coal tar and fiberglass enamel application system used to
coat the pipe, and customized transportation equipment
 
                                       31
<PAGE>   33
 
necessary to deliver the system to its ultimate destination. The Company's
expertise and specialized equipment development has made it a dominant
fabricator and erector of these large aqueduct projects in Arizona, Nevada, and
California. The Company's recently completed large diameter pipe projects
include the following:
 
          - SALT RIVER SIPHON REPLACEMENT PROJECT.  The Company served as the
     fabricator and erector for the Salt River Siphon Replacement project, a
     project requiring the fabrication of over 8,500 feet of 21 foot diameter
     pipe for the U. S. Bureau of Reclamation. The system will transport water
     from the Salt River near Phoenix, Arizona to the major population centers
     of Arizona.
 
          - AGUA FRIA SIPHON PROJECT.  This project was similar in scope to and
     followed the Company's successful completion of the Salt River Siphon
     project, and entailed the specialized fabrication and erection of over two
     miles of 21 foot diameter pipe from the Central Arizona Project canal
     system under the Agua Fria River to Phoenix, Arizona.
 
          - MOHAVE UNDERGROUND AQUEDUCT.  The Company was the contractor for the
     Mohave Underground Aqueduct project, a massive underground siphon system
     for the California Department of Water that will transport water to San
     Bernardino, California. The aqueduct system utilized over seven miles of 12
     foot diameter pipe.
 
          - RIVER MOUNTAIN TUNNEL.  The Company recently completed fabrication
     of the River Mountain Tunnel water system in Nevada, which consists of
     several uniquely constructed pieces of 12 foot diameter pipe, which will be
     used to transport water to Las Vegas, Nevada.
 
     Other recent specialty projects completed by the Company include the
fabrication and erection of a missile launch complex at Vandenberg Air Force
Base, a thermal blast simulator for the U. S. Corps of Engineers designed to
test military and other equipment against the simulated forces of an atomic
blast, and numerous large capacity water storage tanks holding up to five
million gallons of water that have been fabricated by the Company for a variety
of governmental agencies, private utilities, and other industrial customers.
 
     International Markets.  The Company recently has focused its expansion into
selected international markets such as South America and Mexico, and is
exploring opportunities in Southeast Asia. In South America, the Company
provided the design consultation, fabrication, and delivery of approximately
7,200 tons of structural steel for the Bajo de la Alumbrera mining project in
Argentina, which is anticipated to be one of the largest copper mines in the
world when completed. In Chile, the Company recently completed the Verde Gold
mine project for Fluor Daniel, Inc. In Mexico, the Company is currently
providing the fabrication of an ore facility and conveyor system.
 
                                       32
<PAGE>   34
 
   
     Following is a list of selected projects in the Company's principal
geographic and product market segments which the Company has completed within
the last ten years, each of which represents a contract price in excess of
$1,000,000:
    
 
   
<TABLE>
<S>                                           <C>
COMPUTER CHIP PLANTS                          LOCATION
- ---------------------                         --------
Intel C-12                                    Phoenix, AZ
Motorola Bldg 99                              Phoenix, AZ
Western Digital                               Irvine, CA
NEC Megaline Project                          Sacramento, CA
Intel NADC and C-5 Bldgs                      Chandler, AZ
HOSPITALS
- ---------
Valley Medical Center                         Santa Clara
                                              County, CA
Mayo Hospital                                 Phoenix, AZ
Children's Hospital                           San Diego, CA
Sharps Hospital Womens' Center                San Diego, CA
Riverside In-Patient Hospital                 Riverside, CA
Barrows Neurological Center                   Phoenix, AZ
Kaiser Clinic                                 Los Angeles, CA
Veterans Administration Hospital              San Diego, CA
DISTRIBUTION CENTERS
- -------------------
Smiths Distribution Center                    Tolleson, AZ
Smiths Distribution Center                    Riverside, CA
Toyota Distribution Center                    Ontario CA
Anheuser Busch                                Ontario, CA
Ralphs Grocery Distribution                   Los Angeles, CA
LARGE DIAMETER WATER PIPE
- ---------------------------
Mojave Siphon Pipe                            Adelanto, CA
Agua Fria Siphon                              Maricopa County,
                                              AZ
Salt River Siphon                             Maricopa County,
                                              AZ
Control Gorge Penstock                        Bishop, CA
Waddell Dam Siphon Pipe                       Maricopa County,
                                              AZ
SPORTS ARENAS
- -------------
America West Arena                            Phoenix, AZ
INDUSTRIAL FACILITIES AND MINES               LOCATION
- -----------------------------
Bajo de la Alumbrera                          Argentina, South
                                              America
Verde Gold                                    Santiago, Chili
Newmont Gold Mill #2, #4, #5                  Carlin, NV
Phelps Dodge Mining Facility                  Morenci, AZ
U.S. Corps of Engineers Desalinization Plant  Yuma, AZ
Titanium Metals Plant                         Henderson, NV
Preheater Tower                               Rillito, AZ
General Mills Process Plant                   Albuquerque, NM
AIRPORTS
- -------
Phoenix Sky Harbor (Terminal 4)               Phoenix, AZ
McCarren Airport                              Las Vegas, NV
Skywest Terminal                              Salt Lake City, UT
HOTEL, CASINOS AND CONVENTION CENTERS
- ---------------------
MGM Hotel & Casino                            Las Vegas, NV
New York, New York Casino                     Las Vegas, NV
Sands Convention Center                       Las Vegas, NV
The Orleans Hotel & Casino                    Las Vegas, NV
Boulder Station Hotel & Casino                Las Vegas, NV
The Mirage Hotel & Casino                     Las Vegas, NV
Flamingo Hilton                               Las Vegas, NV
Desert Inn Hotel & Casino                     Las Vegas, NV
Hard Rock Hotel & Casino                      Las Vegas, NV
SHOPPING MALLS
- ---------------
Scottsdale Fashion Square                     Scottsdale, AZ
Galleria at Sunset                            Las Vegas, NV
Boulevard Mall Expansion                      Las Vegas, NV
Nordstrom Department Store                    Santa Ana, CA
Fashion Valley Mall                           San Diego, CA
Barney's of New York                          Beverly Hills, CA
The Shops at Arizona Center                   Phoenix, AZ
</TABLE>
    
 
                                       33
<PAGE>   35
 
BUSINESS OPERATIONS
 
     The primary services provided by the Company are engineering and
preparation of detail drawings, shop fabrication, and field erection. Following
is a description of the Company's principal services.
 
          - Engineering and Detailing.  The Company maintains significant
     in-house structural engineering and detailing capabilities which enable it
     to implement and coordinate with its shop and field personnel changes to
     building and structural designs sought by project owners or general
     contractors, and to help influence critical determinations as to the most
     cost effective systems, designs, connections, and erection procedures for a
     particular project. The Company's detailers prepare detail shop drawings of
     the dimensions, positions, locations, and connections, and the fabrication
     and erection sequences of, each piece of steel utilized in a project, and
     continually update these drawings to accommodate design and other changes.
     The Company utilizes a Stru-CAD automated detailing system that interacts
     electronically with the Company's numerically controlled fabrication
     equipment and produces updated detail drawings electronically, which are
     delivered to each of the Company's domestic and foreign field locations.
     The Company's detailing division initially prepares advance materials bills
     by size and length of each steel piece within pre-defined areas or
     sequences of erection for each project. Detailers coordinate directly with
     customers and the Company's fabrication and erection teams to determine and
     plan the order of fabrication and erection of a project and associated
     personnel and equipment requirements.
 
   
          - Shop Fabrication.  The Company's fabrication services consist of the
     procurement from steel producers of raw steel shapes in different sizes and
     lengths. These shapes vary in cross-section from I-beams to angle, channel,
     tube, pipe, and plate. Upon delivery of these steel shapes, and prior to
     fabrication, the Company prepares load lists that identify the sequence and
     date that each individual piece of steel is required on a project, a
     procedure that reduces the handling of and the need to store materials in
     the field. Upon completion of detail shop drawings, the Company's
     fabrication shop cuts the raw steel pieces to length, drills and punches
     holes through the use of numerically controlled beam lines, and completes
     coping and beveling with its numerically controlled machinery and automated
     burning equipment. The Company then fabricates fittings and completes
     welding and inspection of each finished structural piece. The Company
     utilizes advanced technologies to inspect weld seams, which significantly
     reduces costs, fabrication hours, and the likelihood of structural defects.
     After the completion of processing to customer specifications, finished
     pieces are loaded for shipment to the construction site, often pursuant to
     just-in-time delivery schedules.
    
 
          - Field Erection.  The erection process typically consists of
     pre-assembly of steel component parts at the project site, the lifting of
     components by crane to the appropriate location at the site and the final
     assembly of major components to form the steel backbone of the project. The
     Company's field erection crews erect fabricated steel components in
     accordance with erection drawings prepared and updated by the Company's
     detailers. The erection process for each project is managed by experienced
     field supervisors and the Company employs local union erection personnel on
     an as needed basis in areas near the project sites.
 
PROJECT MANAGEMENT
 
     All contract awards to the Company are assigned a project number which is
used to track each steel component and man-hour associated with the project
through the entire construction process. All project drawings, specifications,
and completion schedules on a project are reviewed by the Company's General
Manager and all projects are assigned one or more Project Managers who assume
primary responsibility for all aspects of the project, subject to oversight by
the General Manager. Often a Project Manager assigned to a given project will
have significant experience in similar projects. A Project Manager generally
will be responsible for one to five projects in various stages of completion at
any given time, depending on the scope, complexity, and geographic location of
such projects. Each project is divided into critical sequences of steel groups
that follow the anticipated erection or fabrication path. Each sequence follows
a timeline and the status is continually monitored. The General Manager and
Project Manager for each project coordinate and manage design changes or other
changes in scheduled completion deadlines in an effort to minimize overall
project
 
                                       34
<PAGE>   36
 
delays. The Company provides production bonuses to its Project Managers based
on, among other factors, the achievement of lower costs on a project than the
estimated costs used to formulate the initial bid or price or prices of
subsequent change orders, and the ability to minimize costs or cost overruns on
particularly complex projects or on projects that exceed initial cost estimates.
 
     The Company believes that a key factor in its success has been its ability
to provide through its in-house personnel valuable input and assistance to
general contractors, engineering firms, and other customers with respect to
overall project design of fabrication and erection sequences and other critical
project decisions, which often results in overall project cost savings and
efficiencies and helps to solidify key customer relationships. In addition to
its centralized project management, the Company also uses a high percentage of
skilled erection employees local to projects and utilizes advanced scheduling
systems to enhance its ability to provide project management services to
customers complementary to its core engineering, detail drawing, shop
fabrication, and field erection services.
 
SAFETY AND QUALITY ASSURANCE
 
     The Company has adopted and maintains important safety policies that are
administered and enforced by the Company's top management. The Company considers
workplace accident prevention to be of primary importance in all phases of its
operations and provides continual training on safety procedures and techniques
to all of its shop and field personnel.
 
     The Company uses advanced welding and fabrication technologies and all of
the Company's products are fabricated in accordance with applicable industry and
specific customer standards and specifications. The Company has achieved and
maintains a level three certification by the American Institute of Steel
Construction (AISC) with respect to its fabrication operations, the highest
level of certification available from AISC. In addition, the Company's welding
employees are certified in accordance with the American Society of Mechanical
Engineers (ASME) Section IX, Non-Destructive Examination Inspector Certification
to Society Non-Destructive Testing TC-IA Standards. The Company has developed
project-specific and Company-wide quality assurance and quality control
programs, and utilizes sophisticated x-ray and ultra-sonic systems to inspect
weld seams.
 
SALES AND ESTIMATING
 
   
     The Company's domestic sales and marketing efforts are led by five sales
managers. Each sales manager is responsible primarily for the Company's sales
and marketing efforts in defined geographic areas. The Company also employs one
full-time international marketing representative responsible primarily for the
development of the emerging South American and Mexican markets. In addition, the
Company employs ten full-time project estimators and one chief estimator. The
Company's sales representatives maintain relationships with and make personal
and other sales calls on general contractors, architects, engineers, and other
potential sources of business to determine potential new projects under
consideration, which provides the Company with valuable market information and
new project opportunities. The Company maintains future projects reports in
order to track the weekly progress of new opportunities. The Company's sales
efforts are further supported by most of its executive officers and by its
engineering personnel, who have substantial experience in the design,
fabrication, and erection of structural steel and heavy steel plate.
    
 
   
     The Company competes for new project opportunities through its
relationships and interaction with its active and prospective customer base,
which provides the Company with valuable current market information and sales
opportunities. In addition, the Company frequently is contacted by governmental
agencies in connection with public construction projects, and by large private
sector project owners and by general contractors and engineering firms in
connection with new building projects such as plants, warehouse and distribution
centers, and other industrial and commercial facilities.
    
 
     Upon selection of projects to bid or price, the Company's estimating
division reviews and prepares projected costs of shop, field, detail drawing
preparation and crane hours, steel and other raw materials, and
 
                                       35
<PAGE>   37
 
other costs. On bid projects, a formal bid is prepared detailing the specific
services and materials to be provided by the Company, payment terms and project
completion timelines. Upon acceptance, the Company's bid proposal is finalized
in a definitive contract.
 
CONTRACTING METHODS AND PERFORMANCE BONDING
 
     The Company's projects are awarded through a competitive bid process or are
obtained through negotiation, in either case generally using one of two types of
contract pricing approaches: fixed price or cost-plus pricing. Under the fixed
price approach, the Company receives the price fixed in the contract, subject to
adjustment only for change orders placed by the customer. As a result, the
Company retains all cost savings but is also responsible for cost overruns.
Under the cost-plus arrangement, the Company receives a specified fee in excess
of its direct labor and material cost, up to a maximum amount, and thus seeks to
gain protection against cost overruns and sometimes benefits directly from cost
savings. Historically, a substantial majority of the Company's contracts have
been fixed price arrangements.
 
     While customers may consider a number of factors, including availability,
capability, reputation, and safety record, price and the ability to meet
customer imposed project schedules are the principal factors on which the
Company obtains contracts. Generally, the Company's contracts and projects vary
in length from three to twelve months depending on the size and complexity of
the project, project owner demands, and other factors.
 
     The Company's contract arrangements with customers sometimes require the
Company to provide payment and performance bonds and, in selected cases
typically associated with international projects, letters of credit, to
partially secure the Company's obligations under its contracts. Bonding
requirements typically arise in connection with public works projects and
sometimes with respect to certain private contracts. The Company's payment and
performance bonds are obtained through surety companies and typically cover the
entire contract price on a project. The Company believes that its bonding
capacity provides a competitive advantage in some cases due to the Company's
ability to obtain large bonds and to negotiate more favorable pricing of bonds.
 
BACKLOG
 
     The Company considers backlog an important indicator of its operating
condition because its engineering, detailing, fabrication, and erection services
are characterized by long lead times for projects and orders. The Company
defines its backlog of contract commitments as the potential future revenues to
be recognized upon performance of contracts awarded to the Company. Backlog
increases as new contract commitments are obtained, decreases as work is
performed and the related revenues are recognized, and increases or decreases as
modifications in work are performed under a contract. As of December 31, 1996,
the Company's backlog was $67.3 million. As of March 31, 1996 and 1997, the
Company's backlog was $126.1 million and $65.6 million, respectively. Of the
Company's $67.3 million backlog as of December 31, 1996, approximately $13.1
million was attributable to three projects for a single customer in Las Vegas,
Nevada, and approximately $34.3 million was attributable to the Bank One
Ballpark project in Phoenix, Arizona. Of the Company's $65.6 million backlog as
of March 31, 1997, approximately $15.9 million was attributable to two projects
for a single customer in Las Vegas, and approximately $26.8 million was
attributable to the Bank One Ballpark project. The Company expects approximately
97% of its backlog as of December 31, 1996, and approximately 97% of its backlog
as of March 31, 1997, to be recognized as revenues in 1997.
 
COMPETITION
 
     The principal geographic and product markets served by the Company are
highly competitive. The Company competes with other contractors on a local,
regional, or national basis, and, in certain cases, on an international basis.
The Company has different competitors for each of its services and product
segments and within each geographic market served by the Company. The Company
believes that it can compete effectively for new projects both nationally and
internationally and that it is among the largest competitors in its industry.
Among the principal competitive factors within the industry are price,
timeliness of completion of projects,
 
                                       36
<PAGE>   38
 
quality, reputation, and the desire of customers to utilize specific contractors
with whom they have favorable relationships and prior experience. Certain of the
Company's competitors have financial and operating resources greater than those
of the Company.
 
GOVERNMENTAL REGULATION
 
     The Company's operations are governed by and subject to government
regulations in the United States and in foreign countries in which the Company
operates, including laws and regulations relating to workplace safety and worker
health, principally the Occupational Safety and Health Act and regulations
thereunder in the United States. With respect to its international operations,
the Company is subject to a number of laws and regulations, including those
relating to taxation of its earnings and earnings of its personnel and its use
of local personnel and suppliers. The Company's operations are subject to the
risk of changes in federal, state, and local laws and policies which may impose
restrictions on the Company, including trade restrictions, expropriation or
nationalization decrees, confiscatory tax systems, primary or secondary boycotts
or embargos directed at specific countries, import restrictions or other trade
barriers, and mandatory sourcing rules, any of which could, if adopted or
implemented, materially and adversely affect the Company. The Company believes
that it is in material compliance with the laws and regulations under which it
and its operations are currently governed and does not believe that future
compliance with such laws and regulations will have a material and adverse
effect on it. The Company cannot determine, however, to what extent future
operations and earnings of the Company may be affected by new legislation, new
regulations, or changes in or new interpretations of existing regulations.
 
     The Company is subject to licensure and holds licenses in each of the
states in the United States in which it operates and in certain local
jurisdictions within such states. The Company believes that it is in material
compliance with all contractor licensing requirements in the various states in
which it operates. The loss or revocation of any license or the limitation on
any of the Company's primary services thereunder in any state in which the
Company conducts substantial operations could prevent the Company from
conducting further operations in such jurisdiction and would have a material
adverse effect on the Company.
 
ENVIRONMENTAL REGULATION
 
     The Company's operations and properties are affected by numerous federal,
state, and local environmental protection laws and regulations, such as those
governing discharges into air and water, and the handling and disposal of solid
and hazardous waste. The requirements of these laws and regulations have become
increasingly stringent, complex, and costly to comply with. In addition, the
Company may be subject to claims alleging personal injury or property damage as
a result of alleged exposure to hazardous substances. The Company is not aware
of any non-compliance with environmental laws that could have a material adverse
effect on the Company's business or operations. There can be no assurance,
however, that such laws, regulations, or their interpretation will not change in
the future in a manner that could materially and adversely affect the Company.
 
     Certain environmental laws, such as CERCLA, provide for strict and joint
and several liability for investigation and/or remediation of spills and other
releases of hazardous substances. Such laws may apply to conditions at
properties presently owned or operated by the Company or its predecessors, as
well as to conditions at properties at which waste or other contamination
attributable to an entity or its predecessors come to be located. The Company's
facilities have been operated for many years, and substances that are or might
be considered hazardous were used at such locations. The Company does not
anticipate incurring material capital expenditures for environmental controls or
for investigation or remediation of environmental conditions during the current
or succeeding fiscal year. Nevertheless, the Company can give no assurance that
it, or entities for which it may be responsible, will not incur liability in
connection with the investigation and remediation of facilities it currently
owns or operates or other locations in a manner that could materially and
adversely affect the Company.
 
                                       37
<PAGE>   39
 
EMPLOYEES
 
     As of March 31, 1997, the Company employed approximately 765 people. The
number of persons employed by the Company on an hourly basis fluctuates directly
in relation to the amount of business performed by the Company. Certain of the
fabrication and erection personnel employed by the Company are represented by
the United Steelworkers of America, the International Association of Bridge,
Structural and Ornamental Iron Workers Union, the International Union of
Operating Engineers, and the International Brotherhood of Boilermakers, Iron
Shipbuilders, Blacksmiths, Forgers and Helpers Union. The Company is a party to
several separate collective bargaining agreements with such unions in certain of
the Company's current operating regions, which expire (if not renewed) at
various times in the future. Most of the Company's collective bargaining
agreements are subject to automatic annual or other renewal unless either party
elects to terminate the agreement on the scheduled expiration date. The Company
considers its relationship with its employees to be good and, other than
sporadic and unauthorized work stoppages of an immaterial nature, none of which
have been related to the Company's own labor relations, the Company has not
experienced a work stoppage or other labor disturbance. See "Risk
Factors -- Union Contracts."
 
     The Company utilizes third-party fabrication subcontractors on many of its
projects and also subcontracts detailing services from time to time when it
lacks available in-house capacity for such services. The Company's inability to
engage fabrication and detailing subcontractors on terms favorable to the
Company could limit the Company's ability to complete projects in a timely
manner or compete for new projects and could have a material adverse effect on
the Company. See "Risk Factors -- Dependence on Subcontractors."
 
PROPERTIES
 
     The Company's primary fabrication facilities consist of over 400,000 square
feet of shop space under roof on approximately 26 acres in Phoenix, Arizona.
These facilities also house the Company's executive and administrative offices
and engineering and detailing division and are leased by the Company from a
partnership owned by certain affiliates of the Company. This lease was recently
amended as of March 1, 1997 and expires on February 28, 2017. Annual rent under
the lease totaled $252,000 and $264,000 for 1995 and 1996, respectively, and
will be $292,000 in 1997, $414,000 in 1998, $556,000 in 1999, $601,000 in 2000,
and $605,000 in each year thereafter during the remaining term of the lease,
subject to increase every five years commencing in 2002 pursuant to a Consumer
Price Index formula. See "Certain Relationships and Related Transactions."
 
     With the acquisition of B&K Steel, the Company added approximately 145,000
square feet of covered fabrication, office, engineering and detailing facilities
on approximately 23 acres in Gilbert, Arizona. The property on which B&K Steel's
facilities are located was acquired by a partnership owned by certain affiliates
of the Company and is leased to the Company by that partnership. This lease
commenced on March 1, 1997 and expires on February 28, 2017. Annual rent under
the lease is estimated to be $283,000 in 1997 and $340,000 in each year
thereafter, subject to increase every five years commencing in 2002 based on a
Consumer Price Index formula. See "Certain Relationships and Related
Transactions."
 
     A partnership owned by certain affiliates of the Company has acquired and
is leasing to the Company additional facilities consisting of approximately
22,000 square feet of office space adjacent to its existing principal
fabrication and office facilities. This lease commenced on May 1, 1997 and
expires April 30, 2017. Annual rent under the lease will be $90,000 in 1997 and
$135,000 in each year thereafter, subject to increase every five years based on
a Consumer Price Index formula. The Company anticipates that a portion of the
premises will be subleased. See "Certain Relationships and Related
Transactions."
 
     Under each of the foregoing leases, the Company also is obligated to pay
all taxes, insurance and maintenance costs.
 
                                       38
<PAGE>   40
 
SUPPLIERS
 
     The Company currently purchases a majority of its steel and steel
components from several domestic and foreign steel producers and suppliers.
However, steel is readily available from numerous foreign and domestic steel
producers. The Company is not dependent on any one supplier. The Company
believes that its relationships with its suppliers are good and has no long term
commitments with any of its suppliers.
 
LEGAL PROCEEDINGS AND INSURANCE
 
     Construction in general and the fabrication and erection of structural
steel and heavy steel plate in particular involve a high degree of operational
risk. Adverse weather conditions, operator and other error, and other unforeseen
factors can cause personal injury or loss of life, severe damage to or
destruction of property and equipment, and suspension of operations. Litigation
arising from such occurrences may result in the Company being named as a party
to lawsuits asserting substantial claims or to administrative or criminal
actions that may involve substantial monetary penalties or the restriction of
the Company's operations in one or more jurisdictions.
 
   
     The Company is a defendant in lawsuits from time to time, including
lawsuits arising in the normal course of its business. While it is impossible at
this time to determine with certainty the ultimate outcome of these lawsuits,
the Company's management believes that the ultimate outcome will not have a
material adverse effect on the Company.
    
 
     The Company maintains workers compensation insurance that provides full
coverage of statutory workers compensation benefits. The Company also maintains
employer liability insurance in its principal geographic markets in amounts of
$1,000,000 per accident for bodily injury by accident and $1,000,000 per
employee (and as a policy limit) for bodily injury by disease and contractors
commercial general liability insurance in the amount of $1,000,000. In addition,
the Company maintains umbrella coverage limits of $14,000,000. The Company also
maintains insurance against property damage caused by fire, flood, explosion and
similar catastrophic events that may result in physical damage or destruction of
the Company's facilities and property. All policies are subject to various
deductibles and coverage limitations. Although management of the Company
believes that the Company's insurance is adequate for its present needs, there
can be no assurance that the Company will be able to maintain adequate insurance
at premium rates that management considers commercially reasonable, nor can
there be any assurance that such coverage will be adequate to cover all claims
that may arise.
 
   
     Currently, the Company does not maintain any reserves for its ongoing
litigation, and expenses litigation costs as incurred. The Company periodically
reviews the need to maintain a litigation reserve. The Company seeks to mitigate
the effects of loss or damage through the maintenance of risk management,
insurance, and safety programs. There can be no assurance, however, that the
Company's efforts to mitigate losses will be successful or that any losses
incurred will not exceed the Company's insurance or estimated reserves therefor.
See "Risk Factors -- Operating Risks."
    
 
                                       39
<PAGE>   41
 
                                   MANAGEMENT
 
   
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
    
 
   
     In connection with the closing of this offering, the Company intends to
expand the size of its Board of Directors and has nominated five additional
directors to fill the resulting newly created directorships, including three
non-employee director-nominees. The Company's directors and executive officers
are elected annually. Information concerning the Company's current directors and
executive officers, and persons nominated to become directors upon the closing
of this offering, is set forth below:
    
 
<TABLE>
<CAPTION>
              NAME                 AGE              POSITION WITH THE COMPANY
- ---------------------------------  ---     --------------------------------------------
<S>                                <C>     <C>
David A. Schuff..................  65      Chairman of the Board of Directors
Scott A. Schuff..................  38      President and Chief Executive Officer,
                                           Director
Dennis F. Randall................  52      Vice President and General Manager,
                                           Director -- Nominee
Kenneth F. Zylstra...............  55      Vice President and Chief Financial Officer,
                                           Director -- Nominee
Edward M. Carson.................  67      Director -- Nominee
H. Wilson Sundt..................  64      Director -- Nominee
Dennis DeConcini.................  60      Director -- Nominee
</TABLE>
 
     David A. Schuff has served as the Chairman of the Board of Directors since
its inception and is a co-founder of the Company. Mr. Schuff served as President
and Chief Executive Officer of the Company from its founding in 1976 to 1995.
Mr. Schuff has been involved in the steel fabrication and erection business in a
number of capacities since 1958. David A. Schuff is the father of Scott A.
Schuff.
 
     Scott A. Schuff is the President and Chief Executive Officer of the
Company, a co-founder of the Company, and a member of its Board of Directors.
Mr. Schuff has served in numerous capacities with the Company since its founding
in 1976, and has been a member of the Board of Directors since 1976 and has been
the President and Chief Executive Officer since 1995.
 
     Dennis F. Randall has served as Vice President and the General Manager of
the Company since 1993. Prior to 1993, Mr. Randall was President, Chief
Executive Officer and a director of Havens Steel Company. Mr. Randall holds a
B.E.S. degree in Civil Engineering from Brigham Young University and completed
the Advanced Management Program at Harvard University. Mr. Randall has been
nominated and has agreed to serve as a director of the Company upon the closing
of this offering.
 
     Kenneth F. Zylstra has served as Vice President and Chief Financial Officer
of the Company since 1983, and has been an officer of Schuff since 1979. Prior
to 1979, Mr. Zylstra was associated with Ernst & Young (then Ernst & Ernst). Mr.
Zylstra received a B.B.A. Degree in Public Accounting from Loyola University --
Chicago, and is a member of the American Institute of Certified Public
Accountants, the Illinois CPA Society, and the Construction Financial Management
Association. Mr. Zylstra has been nominated and has agreed to serve as a
director of the Company upon the closing of this offering.
 
   
     Edward M. Carson has been nominated and has agreed to serve as a director
of the Company upon the closing of this offering. Mr. Carson was the Chairman of
the Board of Directors of First Interstate Bancorp, a bank holding company, from
1990 through April 1995, and was its Chief Executive Officer from 1990 through
1994. Mr. Carson currently is a director of Wells Fargo & Co., one of the
largest bank holding companies in the western United States. Mr. Carson also
serves as a director of Aztar Corporation, Castle & Cooke, Inc., and Terra
Industries, Inc.
    
 
                                       40
<PAGE>   42
 
     H. Wilson Sundt has been nominated and has agreed to serve as a director of
the Company upon the closing of this offering. Mr. Sundt has served as the
Chairman of the Board of Directors and Chief Executive Officer of Sundt Corp., a
privately held general construction contracting firm, since 1976, and served as
its President from 1979 through 1983. Mr. Sundt also serves as a director of
Tucson Electric Power Company, an electric utility based in Tucson, Arizona. Mr.
Sundt has been active in the construction industry since 1957.
 
   
     Dennis DeConcini has been nominated and has agreed to serve as a director
of the Company upon the closing of this offering. Mr. DeConcini is a former
United States Senator for Arizona and currently is a partner of Parry and Romani
Associates, Inc., a consulting firm based in Washington, D.C., and is a partner
of DeConcini McDonald Yetwin & Lacy, P.C., a law firm with offices in Tucson and
Phoenix, Arizona, and in Washington, D.C. Mr. DeConcini also serves by
appointment of the President of the United States on the Board of Directors of
the Federal Home Loan Mortgage Corporation (Freddie Mac), a federally chartered
mortgage finance corporation.
    
 
   
     Donald T. Engler has served as Vice President -- Marketing of the Company
since 1994, and in that capacity is primarily responsible for the Company's
industrial and foreign sales. From 1991 to 1994, Mr. Engler served as Vice
President -- Plate Division of the Company. Mr. Engler is a registered engineer.
    
 
     Randy J. Eskelson has served as Vice President -- Estimating and Sales of
the Company since 1988. Mr. Eskelson is primarily responsible for sales in
Arizona, California, New Mexico, Hawaii, Washington, Oregon and Utah.
 
     Leslie R. Dias has served as Vice President -- Industrial Sales for the
Company since 1985. Mr. Dias joined the Company in 1985 after the Company's
acquisition of Marathon Steel Company.
 
     Michael T. Wittig has served as Vice President -- Manufacturing and
Engineering since 1993, and in that capacity, is primarily responsible for
implementation of new technologies in the Company's detailing and manufacturing
operations. Prior to 1993, Mr. Wittig was a systems coordinator with the
Company.
 
     Donald T. Pekau has served as Vice President -- Project Coordination since
1991, and in that capacity supervises a number of the Company's Project
Managers.
 
     Forrest Paysnoe has served as Vice President -- Field Operations since
1992, and in that capacity is responsible for all aspects of field operations
and is the safety coordinator on each of the Company's job sites.
 
   
     Scott Esmeier has served as Plant Superintendant of the Company's principal
fabrication facilities since 1995. Prior to that time, Mr. Esmeier was a Plant
Superintendant of Able Steel Fabricators, Inc., a privately held steel
fabrication company located in Mesa, Arizona.
    
 
   
     Richard M. Hampton has served as Purchasing Manager since 1992. Prior to
that time, Mr. Hampton was employed by Able Steel Fabricators, Inc. in Mesa,
Arizona.
    
 
   
     Daniel T. Kneifl has served as Vice President and General Manager of B&K
Steel since its acquisition by the Company in January 1997. Prior to that time,
Mr. Kneifl, a co-founder of B&K Steel, was a director and the President of B&K
Steel since 1994, and a director and Vice President since 1984.
    
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
     Effective upon the closing of this offering, the Company will establish a
Compensation Committee and an Audit Committee. The Compensation Committee, all
of the members of which will be non-employee directors, will review executive
salaries and administer any bonus, incentive compensation, and stock option
plans of the Company. In addition, the Compensation Committee will consult with
management of the Company regarding compensation policies and practices of the
Company. The Audit Committee, all of the members of which also will be
non-employee directors, will review the professional services provided by the
Company's independent auditors, the annual consolidated financial statements of
the Company and the Company's system of internal controls.
 
                                       41
<PAGE>   43
 
DIRECTOR FEES
 
     The Company's non-employee directors will be compensated for attendance at
meetings of the Board of Directors and at meetings of committees of the Board of
Directors of which they are members, and will be reimbursed for reasonable
travel expenses incurred in connection with attendance at each Board and
committee meeting pursuant to policies to be established by the Board of
Directors. Each non-employee director will receive options to purchase 7,500
shares of Common Stock upon the closing of this offering with an exercise price
equal to the initial public offering price of the Common Stock. All of the stock
options will vest one year after the date of grant. Directors who are also
officers of the Company will not be compensated for their services as directors.
 
SUMMARY OF EXECUTIVE COMPENSATION
 
     The table below sets forth information concerning the annual and long term
compensation for services rendered in all capacities to the Company during the
fiscal year ended December 31, 1996, of those persons who were, at December 31,
1996: (i) the chief executive officer of the Company and (ii) each of the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 (the "Named Executive Officers"):
 
<TABLE>
<CAPTION>
                                                                                 LONG TERM
                                                                               COMPENSATION
                               ANNUAL COMPENSATION          ---------------------------------------------------
                        ---------------------------------   RESTRICTED
                                             OTHER ANNUAL     STOCK      SECURITIES    LTIP        ALL OTHER
       NAME AND          SALARY     BONUS    COMPENSATION     AWARDS     UNDERLYING   PAYOUTS   COMPENSATION(1)
  PRINCIPAL POSITION       ($)       ($)         ($)           ($)       OPTIONS(#)     ($)           ($)
- ----------------------  ---------  --------  ------------   ----------   ----------   -------   ---------------
<S>                     <C>        <C>       <C>            <C>          <C>          <C>       <C>
Scott A. Schuff.......    260,008    22,000      5,069          --           --          --              --
President and Chief
Executive Officer
David A. Schuff.......    296,411    22,825      4,890          --           --          --              --
Chairman of the Board
of Directors
Dennis Randall(2).....    118,088    33,225      3,955          --           --          --             739
Vice President and
General Manager
Kenneth F.
  Zylstra(2)..........    111,155    51,025      4,615          --           --          --           1,218
Vice President and
Chief Financial
Officer
</TABLE>
 
- ---------------
(1) The amounts shown in this column represent the dollar value of 401(k) plan
    contributions made by the Company for the benefit of the Named Executive
    Officers. See "Management -- 401(k) Plan."
 
(2) The amounts shown exclude $62,445 set aside for each of Messrs. Randall and
    Zylstra pursuant to the Company's Supplemental Retirement and Deferred
    Compensation Plan more fully described below, which will be paid in 1997.
    This plan has since been terminated. See "Management -- Deferred
    Compensation Plan."
 
1997 STOCK OPTION PLAN
 
     In February 1997, the Company's Board of Directors and stockholders
approved the Schuff Steel Company 1997 Stock Option Plan (the "Option Plan").
Under the Option Plan, the Company may grant incentive stock options or
non-qualified stock options to directors, employees, consultants, and advisors
of the Company. The Company believes that the Option Plan promotes the success
and enhances the value of the Company by linking the personal interests of
participants to those of the Company's stockholders and providing participants
with an incentive for outstanding performance. The total number of shares of
Common Stock available for awards under the Option Plan is 600,000, subject to a
proportionate increase or decrease in the event of a stock split, reverse stock
split, stock dividend, or other adjustment to the Company's total number of
issued and outstanding shares of Common Stock.
 
                                       42
<PAGE>   44
 
     Following this offering, the Option Plan will be administered by the Board
of Directors or a committee that is appointed by, and serves at the discretion
of, the Board of Directors consisting solely of non-employee directors. The
Board of Directors or the committee, as the case may be, will have the exclusive
authority to administer the Option Plan, including the power to determine
eligibility, the type and number of awards to be granted, and the terms and
conditions of any award granted, including the price and timing of awards. As of
the date of this Prospectus, the Company has granted options to purchase 345,500
shares of Common Stock to various of its employees. Generally, such options are
subject to vesting over a five-year period, with 20% of the options becoming
exercisable by the holder thereof on each successive anniversary date of the
grant. The exercise price of the options granted to date is $5.00 per share.
 
401(k) PLAN
 
     Under the Company's 401(k) retirement savings plan, eligible employees may
direct that a portion of their compensation, up to a maximum of $9,500 per year,
be withheld by the Company and contributed to their account. All 401(k) plan
contributions are placed in a trust fund to be invested by the 401(k) plan's
trustee, except that the 401(k) plan may permit participants to direct the
investment of their account balances among mutual or investment funds available
under the plan. The 401(k) plan permits the Company to provide discretionary
matching contributions not to exceed 25% of the amount deferred up to 5% of a
participant's compensation. Amounts contributed to participant accounts under
the 401(k) plan and any earnings or interest accrued on the participant accounts
are generally not subject to federal income tax until distributed to the
participant and may not be withdrawn until death, retirement, or termination of
employment.
 
DEFERRED COMPENSATION PLAN
 
     In 1996, the Company maintained a Supplemental Retirement and Deferred
Compensation Plan, pursuant to which it contributed on a discretionary basis to
certain key employees 10% of annual net profits, which amount was allocated
among participants in accordance with individual agreements between the Company
and such participants. In 1996, the Company recorded expenses of $528,900 in
accordance with this Plan. This Plan was terminated in 1997 and the Company is
considering alternative bonus arrangements for certain key employees.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     For the year ended December 31, 1996, the Company's Board of Directors
established levels of compensation for certain of the Company's executive
officers without the involvement of the Compensation Committee, which had not
yet been formed. David A. Schuff and Scott A. Schuff, the Company's Chairman and
President/Chief Executive Officer, respectively, participated in the
deliberations regarding executive compensation that occurred during 1996. The
Board of Directors will select members of the Compensation Committee following
the closing of this offering, each of which will be a non-employee member of the
Company's Board of Directors.
 
                                       43
<PAGE>   45
 
                             PRINCIPAL STOCKHOLDERS
 
     As of April 30, 1997, the outstanding shares of the Company's Common Stock
were beneficially owned by the persons listed below. To the knowledge of the
Company, all persons listed below have sole voting and investment power with
respect to their shares, except to the extent that authority is shared by their
respective spouses under applicable law.
 
<TABLE>
<CAPTION>
                                                      SHARES BENEFICIALLY       SHARES BENEFICIALLY
                                                             OWNED                     OWNED
                                                     PRIOR TO OFFERING(1)        AFTER OFFERING(1)
                                                     ---------------------     ---------------------
            NAME OF BENEFICIAL OWNER(2)                NUMBER      PERCENT       NUMBER      PERCENT
- ---------------------------------------------------  ----------    -------     ----------    -------
<S>                                                  <C>           <C>         <C>           <C>
David A. Schuff and Nancy A. Schuff(3).............   2,550,000      51.0%      2,550,000      35.4%
Scott A. Schuff(4).................................   2,450,000      49.0%      2,450,000      34.0%
All directors, director-nominees and executive
  officers as a group (7 persons)..................   5,000,000       100%      5,000,000      69.4%
</TABLE>
 
- ---------------
 
(1) A person is deemed to be the beneficial owner of securities that can be
    acquired within 60 days from the date set forth above through the exercise
    of any option, warrant, or right. Shares of Common Stock subject to options,
    warrants, or rights that are currently exercisable or exercisable within 60
    days are deemed outstanding for the purpose of computing the percentage of
    the person holding such options, warrants, or rights, but are not deemed
    outstanding for computing the percentage of any other person. The amounts
    and percentages are based upon 5,000,000 shares of Common Stock outstanding
    as of April 30, 1997, and 7,200,000 shares of Common Stock outstanding as of
    the closing of this offering, respectively.
 
(2) The address of each of the listed stockholders is 420 South 19th Avenue,
    Phoenix, Arizona 85009.
 
(3) 2,050,000 of these shares are owned by the Schuff Family Trust Under Trust
    Agreement dated June 28, 1983, as amended, and 500,000 of these shares are
    owned by the Schuff Irrevocable Trust Under Trust Agreement Dated December
    31, 1996. David A. Schuff and Nancy A. Schuff are co-trustees of each of the
    trusts and exercise voting and investment power over such shares.
 
(4) 2,250,000 of these shares are owned by the Scott A. Schuff Family Trust
    Under Trust Agreement dated March 12, 1992, as amended, and 200,000 of these
    shares are owned by the Scott A. Schuff Irrevocable Trust Under Trust
    Agreement dated December 31, 1996, as amended. Scott A. Schuff is the
    trustee of each of these trusts and exercises voting and investment power
    over such shares.
 
                                       44
<PAGE>   46
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Since its inception, the Company has maintained business relationships and
engaged in certain transactions with the affiliated companies and parties
described below. In the future, any transactions between the Company and its
affiliated entities, executive officers, directors, or significant stockholders
will require the approval of a majority of the non-employee directors of the
Company and will be on terms that will be no less favorable to the Company than
the Company could obtain from non-affiliated parties.
 
     The Company and B&K Steel lease their respective fabrication and office
facilities from 19th Avenue/ Buchanan Limited Partnership, an Arizona limited
partnership (the "Schuff Partnership"). The general and limited partners of the
Schuff Partnership are David A. Schuff, Scott A. Schuff, and certain of their
family members. David A. Schuff is a co-founder and the Chairman of the Board of
Directors of the Company, and Scott A. Schuff is a Director and the President
and Chief Executive Officer of the Company. David A. Schuff and Scott A. Schuff
presently are the beneficial owners of 100% of the outstanding Common Stock of
the Company and it is estimated that after this offering they will own
beneficially approximately 69.4% of the issued and outstanding Common Stock of
the Company (or approximately 66.4% if the Underwriters' over-allotment option
is exercised). See "Management" and "Principal Stockholders."
 
     In March 1997, the Company entered into a new lease agreement with the
Schuff Partnership with respect to its primary fabrication facilities. These
facilities include approximately 400,000 square feet of shop space under roof
situated on approximately 26 acres. This new lease agreement was based upon a
third party appraisal of the property and an assumed annual rate of return of
10%, which took into account the location and use of the property, potential
tenants, comparable returns on similar properties, and other relevant factors.
The new lease increased the Company's annual rent payments from $264,000 in 1996
to $292,000 for 1997, $414,000 for 1998, $556,000 for 1999, $601,000 for 2000,
and $605,000 for each year thereafter, subject to increase in 2002 and every
five years thereafter based on a Consumer Price Index formula, which represents
an annual rent per square foot of improved space of $0.66, $0.73, $1.04, $1.39,
$1.50 and $1.51, respectively. The agreement also enabled the Company to extend
the lease term to 20 years. The Company also is obligated under the lease to
reimburse the Schuff Partnership an additional amount equal to any taxes
incurred by it in connection with the lease payments, and is obligated to pay
insurance and maintenance expenses. The term of this lease expires on February
28, 2017.
 
     In March 1997, the Company also entered into a lease agreement with the
Schuff Partnership with respect to the recently acquired B&K Steel property,
consisting of approximately 145,000 square feet of covered fabrication, office,
engineering and detailing facilities on approximately 23 acres. Based upon the
same methodology described above, the Company entered into a lease with
substantially similar terms for the property and equipment with annual rent
payments of approximately $340,000 over 20 years, subject to increase every five
years based on a Consumer Price Index formula, representing an annual rent per
square foot of improved space of approximately $2.34. The rent was based upon a
recent appraisal of the underlying property. The Company also is obligated to
reimburse the Schuff Partnership for taxes incurred by it in connection with the
lease payments. The term of the lease expires on February 28, 2017.
 
     Effective May 1, 1997, the Schuff Partnership leased to the Company
approximately 22,000 square feet of additional office facilities adjacent to the
Company's existing principal office and shop facilities. Based upon the same
methodology described above, the Company entered into a lease with substantially
similar terms for the property with annual rent payments of $135,000 over 20
years, subject to increase every five years based on a Consumer Price Index
formula, representing an annual rent per square foot of improved space of
approximately $6.14. The rent was based upon the purchase price of the property,
which was determined by arm's-length negotiation with the seller. The Company is
also obligated to reimburse the Schuff Partnership for taxes incurred by it in
connection with the lease and is obligated to pay insurance and maintenance
costs. This lease expires on April 30, 2017. See "Business -- Properties."
 
     In 1989, the Schuff Partnership borrowed $5,000,000 from a commercial bank
in connection with its refinancing of the property on which the Company's
principal facilities are located (the "Partnership Loan"). The Schuff
Partnership in turn loaned $4,249,062 to the Company and the Company delivered
to the Schuff Partnership a subordinated promissory note in that amount (the
"Subordinated Loan"). As of March 31,
 
                                       45
<PAGE>   47
 
1997, the principal balance of the Subordinated Loan was $2,265,016. In April
1996, in connection with the refinancing of the Partnership Loan, the Company
guaranteed repayment of the Schuff Partnership's indebtedness under that loan,
which guarantee is anticipated to be released following the closing of this
offering.
 
     Mr. David A. Schuff, Mrs. Nancy A. Schuff, his wife, and Mr. Scott A.
Schuff have personally guaranteed the Company's indebtedness under its revolving
credit and equipment purchase facilities.
 
     The Company historically has made cash advances to its principal
stockholders. Such advances have been evidenced by recourse promissory notes
that are payable on demand after one year. As of March 31, 1997, there were no
amounts owed by David A. Schuff and Scott A. Schuff under such notes. The
Company does not intend to continue the practice of advancing funds to its
stockholders after this offering.
 
     The Company currently purchases a portion of its steel inventory from
Arizona Steel, Inc., an Arizona corporation ("Arizona Steel"), in which Scott A.
Schuff owns a 75% interest. Arizona Steel is a steel distribution center formed
in January 1997 that sells steel pieces to a number of fabrication contractors,
one of approximately twenty from which the Company purchases steel from time to
time. The Company purchases most of its steel inventory directly from various
steel mills but from time to time purchases small quantities of steel from local
steel distribution centers as a result of special needs that do not permit the
lead time or volumes normally associated with mill purchases. The Company
currently includes Arizona Steel among its list of suppliers, all of which bid
for purchase orders by the Company on the basis of cost, availability and
delivery. It is the Company's policy not to make purchases from Arizona Steel
unless it offers the most competitive terms based on the factors listed above.
In the first four months of 1997, the Company purchased approximately $47,000 of
steel from Arizona Steel, representing less than 0.5% of the steel purchased
from all suppliers during that period.
 
                                       46
<PAGE>   48
 
                          DESCRIPTION OF CAPITAL STOCK
 
     The following description of the Company's capital stock does not purport
to be complete and is subject in all respects to applicable Delaware law and to
the provisions of the Company's Certificate of Incorporation and Bylaws, copies
of which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
 
     The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.001 per share, and 1,000,000 shares of Preferred
Stock, par value $.001 per share. Immediately following the completion of this
offering, 7,200,000 shares of Common Stock will be issued and outstanding and no
shares of Preferred Stock will be issued and outstanding.
 
COMMON STOCK
 
     Holders of Common Stock are entitled to one vote for each share held of
record on all matters on which stockholders are entitled to vote. Holders of
Common Stock do not have cumulative voting rights, and therefore holders of a
majority of the shares voting for the election of directors can elect all of the
directors. Holders of Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor. The Company does not anticipate declaring cash dividends in
the foreseeable future. See "Dividend Policy." In the event of liquidation,
dissolution, or winding up of the Company, the holders of Common Stock are
entitled to share ratably in any corporate assets remaining after payment of all
debts, subject to any preferential rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, conversion, or redemption rights and
are not subject to further calls or assessments by the Company. All of the
outstanding shares of Common Stock are, and the shares offered by the Company
hereby will be, if issued, validly issued, fully paid, and nonassessable. As of
the date of this Prospectus, there are four record holders of Common Stock.
 
PREFERRED STOCK
 
     The Board of Directors of the Company has the authority, without further
action by the Company's stockholders, to issue from time to time up to 1,000,000
shares of Preferred Stock in one or more series and to fix the number of shares,
designations, voting powers, preferences, optional and other special rights, and
the restrictions or qualifications thereof. The rights, preferences, privileges,
and restrictions or qualifications of different series of Preferred Stock may
differ with respect to dividend rates, amounts payable on liquidation, voting
rights, conversion rights, redemption provisions, sinking fund provisions, and
other matters. The issuance of Preferred Stock could: (i) decrease the amount of
earnings and assets available for distribution to holders of Common Stock; (ii)
adversely affect the rights and powers, including voting rights, of holders of
Common Stock; and (iii) have the effect of delaying, deferring, or preventing a
change in control of the Company. The Company has no present plans to issue any
shares of Preferred Stock.
 
ANTI-TAKEOVER LAW
 
     The Company is subject to Section 203 of the General Corporation Law of the
State of Delaware ("Section 203"), which restricts certain transactions and
business combinations between a corporation and an "Interested Stockholder"
owning 15% or more of the corporation's outstanding voting stock for a period of
three years from the date the stockholder becomes an Interested Stockholder.
Subject to certain exceptions, unless the transaction is approved by the board
of directors or the holders of at least two-thirds of the outstanding voting
stock of the corporation (excluding shares held by the Interested Stockholder),
Section 203 prohibits significant business transactions such as a merger with,
disposition of assets to, or receipt of disproportionate financial benefits by
the Interested Stockholder, or any other transaction that would increase the
Interested Stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an Interested Stockholder, the
Interested Stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain employee stock plans).
 
                                       47
<PAGE>   49
 
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Company's Certificate of Incorporation provides that to the fullest
extent permitted by Delaware law, a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of such director's fiduciary duty, except for liability: (i) for any
breach of the director's duty of loyalty to the Company or its stockholders;
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (iii) in respect of certain unlawful
dividend payments or stock redemptions or repurchases; and (iv) for any
transaction from which the director derives an improper benefit. The effect of
the provision of the Company's Certificate of Incorporation is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior), except in the
situations described in clauses (i) through (iv) above. This provision does not
limit or eliminate the rights of the Company or any stockholder to seek
nonmonetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. In addition, the Company's Certificate of
Incorporation provides that the Company shall indemnify any person who is or was
a director, officer, employee, or agent of the Company, or who is or was serving
at the request of the Company as a director, officer, employee, or agent of
another corporation or entity, against expenses, liabilities, and losses
incurred by any such person by reason of the fact that such person is or was
acting in such capacity. The Company's Certificate of Incorporation also permits
it to secure insurance on behalf of any director, officer, employee, or agent of
the Company for any liability arising out of such person's actions in such
capacity.
 
   
     The Company contemplates entering into agreements to indemnify its
directors. These agreements would, among other things, indemnify the Company's
directors for certain expenses (including attorneys' fees), judgments, fines,
and settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of the Company, arising out of such
person's services as a director of the Company, any subsidiary of the Company,
or any other company or enterprise to which such person provides services at the
request of the Company. To the extent that the Board of Directors or the
stockholders of the Company may in the future wish to limit or repeal the
ability of the Company to provide indemnification as set forth in the Company's
Certificate of Incorporation, such repeal or limitation may not be effective as
to directors or others who are parties to the indemnification agreements because
their rights to full protection would be contractually assured by such
agreements. It is anticipated that similar contracts may be entered into, from
time to time, with future directors of the Company. The Company believes that
the indemnification provisions in its Certificate of Incorporation and in the
indemnification agreements are necessary to attract and retain qualified persons
as directors.
    
 
CERTAIN BYLAW PROVISIONS
 
     The Company's Bylaws contain several provisions that regulate the
nomination of directors and the submission of proposals in connection with
stockholder meetings. The Company's Bylaws require that any stockholder desiring
to propose business or nominate a person to the Board of Directors at an annual
stockholders meeting must give notice of any proposals not less than 90 days
prior to the anniversary date of the immediately preceding annual meeting,
subject to certain exceptions. Such notice is required to contain certain
information as set forth in the Bylaws. No business matter shall be transacted
nor shall any person be eligible for election as a director of the Company
unless proposed or nominated, as the case may be, in strict accordance with this
procedure set forth in the Company's Bylaws.
 
     Although the Bylaws do not give the Board of Directors any power to approve
or disapprove of stockholder nominations for the election of directors or of any
other business desired by stockholders to be conducted at an annual or any other
meeting, the Bylaws may have the effect of precluding a nomination for the
election of directors or the conduct of business at a particular annual meeting
if the proper procedures are not followed or may discourage or deter a third
party from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of the Company, even if the
conduct of such solicitation or such attempt might be beneficial to the Company
and its stockholders. The Company's procedures with respect to all stockholder
proposals and the nomination of directors will be conducted in
 
                                       48
<PAGE>   50
 
accordance with Section 14 of the Securities Exchange Act of 1934, as amended,
and the rules promulgated thereunder.
 
TRANSFER AGENT AND REGISTRAR
 
     The Transfer Agent and Registrar for the Common Stock of the Company is
Harris Trust Company of California, 601 S. Figueroa, Los Angeles, California
95517.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of this offering, the Company will have outstanding
7,200,000 shares of Common Stock. Of these shares, the 2,200,000 shares of
Common Stock sold in this offering, plus any additional shares sold upon
exercise of the Underwriters' over-allotment option, will be freely tradeable
without restriction under the Securities Act. Commencing 180 days following the
date of this Prospectus, 5,000,000 shares of Common Stock held by existing
stockholders will become eligible for sale under Rule 144, subject to compliance
with the volume limitations and other requirements of Rule 144.
 
     In general, under Rule 144 persons (or persons whose shares are aggregated)
who have beneficially owned "restricted" shares for at least one year, including
persons who are "affiliates" of the Company, as that term is defined under Rule
144, are entitled to sell (in accordance with the provisions specified in the
rule) within any three-month period a number of shares that does not exceed the
greater of one percent of the then outstanding shares of the Company's Common
Stock (72,000 shares immediately following this offering assuming no exercise of
the Underwriters' over-allotment option) or the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the date on which
notice of the sale is filed with the Commission. All of the 5,000,000 shares
presently outstanding are "restricted" shares and have been beneficially owned
by persons who are "affiliates" of the Company for more than one year.
 
   
     The Company, its existing stockholders, directors, director-nominees and
officers have agreed with the Underwriters that, except in certain
circumstances, they will not issue, offer to sell, sell, contract to sell, or
otherwise dispose of any shares of Common Stock or any shares convertible or
exchangeable into any shares of Common Stock for a period of 180 days after the
date of this Prospectus without the prior written consent of the
Representatives.
    
 
     Prior to this offering, there has been no public market for the Company's
Common Stock and no prediction can be made of the effect, if any, that market
sales of shares or the availability of such shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of substantial
amounts of the Common Stock in the public market could adversely affect
prevailing market conditions and could impair the Company's future ability to
raise capital through the sale of its equity securities. See "Risk Factors --
Shares Eligible for Future Sale."
 
                                       49
<PAGE>   51
 
                                  UNDERWRITING
 
   
     Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters") for whom Principal Financial
Securities, Inc. and Cruttenden Roth Incorporated are acting as representatives
(the "Representatives"), have severally agreed to purchase from the Company, and
the Company has agreed to sell to the Underwriters, the respective number of
shares of Common Stock set forth opposite each Underwriter's name below:
    
 
   
<TABLE>
<CAPTION>
                                                                            NUMBER OF
                                   UNDERWRITERS                              SHARES
        ------------------------------------------------------------------  ---------
        <S>                                                                 <C>
        Principal Financial Securities, Inc. .............................
        Cruttenden Roth Incorporated......................................
 
                                                                            ---------
                  Total...................................................
                                                                            =========
</TABLE>
    
 
     The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to certain conditions precedent, including
the absence of any material adverse change in the Company's business and the
receipt of certain certificates, opinions, and letters from the Company and its
respective counsel and the Company's independent certified public accountants.
The nature of the Underwriters' obligation is such that they are committed to
purchase and pay for all the shares of Common Stock if any are purchased. In the
event of a failure by any Underwriter to purchase its portion of the Common
Stock, the Underwriting Agreement provides, depending upon the total number of
shares of Common Stock involved in the default, that the purchase commitments of
the other Underwriters may be increased or that the Underwriting Agreement may
be terminated, without prejudice to the right of any party as against any
defaulting Underwriter.
 
   
     The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock directly to the public at the
initial public offering price set forth on the cover page of this Prospectus and
to certain securities dealers at such price less a concession not in excess of
$          per share. The Underwriters may allow, and such selected dealers may
reallow, a discount not in excess of $          per share to certain brokers and
dealers. After the initial public offering of the shares, the public offering
price and other selling terms may be changed by the Representatives. No change
in such terms shall change the amount of proceeds to be received by the Company
as set forth on the cover page of this Prospectus.
    
 
   
     The Representatives are permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions consist of bids or
purchases for the purpose of fixing or maintaining the price of the Common
Stock. If the Underwriters create a short position in the Common Stock in
connection with this offering, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing Common Stock in the open market. The
Representatives may also elect to reduce any short position by exercising all or
part of the over-allotment option described below. The Representatives may also
impose a penalty bid on certain Underwriters. This means that if the
Representatives purchase shares of Common Stock in the open market to reduce the
Underwriters' short position or to stabilize the price of the Common Stock, they
may reclaim the amount of the selling concession from the Underwriters who sold
those shares as part of this offering. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of such purchases.
The imposition of a penalty bid might also have an effect on the price of a
security to the extent that it discourages resales of the security. Neither the
Company nor any of the Underwriters makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the Common Stock. In addition, neither the Company nor
any of the Underwriters makes any representation that the Representatives will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
    
 
                                       50
<PAGE>   52
 
     The Company has granted an option to the Underwriters, exercisable for a
period of 30 days after the date of this Prospectus, to purchase up to an
additional 330,000 shares of Common Stock at the public offering price set forth
on the cover page of this Prospectus, less the underwriting discounts and
commissions. The Underwriters may exercise this option only to cover
over-allotments, if any. To the extent that the Underwriters exercise this
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase such additional shares of Common Stock in approximately
the same proportion as set forth in the above table.
 
   
     Prior to this offering, there has been no established trading market for
the Common Stock. Consequently, the initial public offering price for the Common
Stock offered hereby has been determined by negotiation among the Company and
the Representatives. Among the factors considered in such negotiations were the
preliminary demand for the Common Stock, the prevailing market and economic
conditions, the Company's results of operations, estimates of the business
potential and prospects of the Company, the present state of the Company's
business operations, an assessment of the Company's management, the
consideration of these factors in relation to the market valuation of comparable
companies in related businesses, the current condition of the markets in which
the Company operates, and other factors deemed relevant. There can be no
assurance that an active trading market will develop for the Common Stock or
that the Common Stock will trade in the public market subsequent to this
offering at or above the initial public offering price.
    
 
     The Underwriting Agreement provides that the Company will indemnify the
Underwriters and their controlling persons against certain liabilities under the
Securities Act or will contribute to payments the Underwriters and their
controlling persons may be required to make in respect thereof. The Company has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
 
     The foregoing is a brief summary of certain provisions of the Underwriting
Agreement and does not purport to be a complete statement of its terms and
conditions. A copy of the Underwriting Agreement is on file with the Commission
as an exhibit to the Registration Statement of which this Prospectus forms a
part. See "Additional Information."
 
CONSULTING AGREEMENT
 
   
     The Company has executed a consulting agreement with Mr. D. Ronald Yagoda
dated as of January 15, 1997. Pursuant to this agreement, Mr. Yagoda agreed to
assist the Company in developing its business plan and corporate structure,
interviewing and selecting investment bankers, meeting with investment bankers,
security analysts, portfolio managers, stockbrokers, and others and, based upon
such review and services, to provide consultation services for purposes of
assisting the Company in connection with an initial public offering. Under the
agreement, as of April 27, 1997, the Company has paid Mr. Yagoda $15,000 in fees
for services rendered by Mr. Yagoda, and has agreed to pay Mr. Yagoda a fee
equal to 0.5% of the proceeds of this offering. The agreement terminates on
January 15, 1998. Mr. Yagoda is not affiliated or associated with the
Representatives or the Underwriters.
    
 
                                 LEGAL MATTERS
 
   
     The validity of the shares offered hereby is being passed upon for the
Company by Snell & Wilmer L.L.P., Phoenix, Arizona. Certain legal matters will
be passed upon for the Underwriters by Blackwell Sanders Matheny Weary &
Lombardi LLP, Kansas City, Missouri.
    
 
                                    EXPERTS
 
     The financial statements of Schuff Steel Company at December 31, 1996 and
1995, and for each of the three years in the period ended December 31, 1996,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
 
                                       51
<PAGE>   53
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act of 1933 with respect to the Common Stock offered
hereby. This Prospectus constitutes a part of the Registration Statement and
does not contain all of the information set forth therein and in the exhibits
thereto, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is hereby made to such
Registration Statement and exhibits. Statements contained in this Prospectus as
to the contents of any document are not necessarily complete and in each
instance are qualified in their entirety by reference to the copy of the
appropriate document filed with the Commission. The Registration Statement,
including the exhibits thereto, may be examined without charge at the
Commission's public reference facility at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, copies of all or any part of
the Registration Statement, including such exhibits thereto, may be obtained
from the Commission at its principal office in Washington, D.C., upon payment of
the fees prescribed by the Commission. The Commission maintains a World Wide Web
site (http://www.sec.gov) that contains reports, proxy statements, and other
information regarding registrants, such as the Company, that file electronically
with the Commission.
 
     The Registration Statement and the reports and other information to be
filed by the Company following this offering in accordance with the Securities
Exchange Act of 1934, as amended, can be inspected and copied at the principal
office of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549, and at the following regional offices of the Commission:
7 World Trade Center, New York, NY 10048, and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, IL 60601. Copies of such material may
be obtained from the Public Reference Section of the Commission at its principal
office at 450 Fifth Street, N.W., Washington D.C. 20549, upon payment of the
fees prescribed by the Commission.
 
   
     The Company intends to provide its stockholders with annual reports
containing consolidated financial statements audited by independent auditors and
quarterly reports for the first three fiscal quarters of each year containing
unaudited summary consolidated financial information.
    
 
                                       52
<PAGE>   54
 
                              SCHUFF STEEL COMPANY
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
Report of Independent Auditors......................................................     F-2
Consolidated Financial Statements
  Consolidated Balance Sheets as of December 31, 1995 and 1996, and March 31, 1997
     (unaudited)....................................................................     F-3
  Consolidated Statements of Income for the years ended December 31, 1994, 1995, and
     1996, and the three months ended March 31, 1996 and 1997 (unaudited)...........     F-4
  Consolidated Statements of Changes in Stockholders' Equity for the years ended
     December 31, 1994, 1995, and 1996, and the three months ended March 31,
     1997(unaudited)................................................................     F-5
  Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995,
     and 1996, and the three months ended March 31, 1996 and 1997 (unaudited).......     F-6
Notes to Consolidated Financial Statements..........................................     F-7
</TABLE>
 
                                       F-1
<PAGE>   55
 
                         REPORT OF INDEPENDENT AUDITORS
 
Board of Directors
Schuff Steel Company
 
     We have audited the accompanying balance sheets of Schuff Steel Company as
of December 31, 1996 and 1995, and the related statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Schuff Steel Company at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Phoenix, Arizona
March 21, 1997, except for Note 13
  as to which the date is May 8, 1997
 
                                       F-2
<PAGE>   56
 
                              SCHUFF STEEL COMPANY
 
                          CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)
 
   
<TABLE>
<CAPTION>
                                                     DECEMBER 31
                                                 -------------------     MARCH 31        PRO FORMA
                                                  1995        1996         1997        MARCH 31, 1997
                                                 -------     -------    -----------    --------------
                                                                        (UNAUDITED)     (UNAUDITED)
<S>                                              <C>         <C>        <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents....................  $   289     $ 7,253      $ 4,750         $  4,750
  Restricted funds on deposit..................      220       2,249        2,896            2,896
  Receivables..................................   11,287      16,885       18,654           18,654
  Costs and recognized earnings in excess of
     billings on uncompleted contracts.........    1,076         871        1,332            1,332
  Inventories..................................    7,770      11,311       14,164           14,164
  Prepaid expenses.............................      218         178          504              504
                                                 -------     -------      -------
          TOTAL CURRENT ASSETS.................   20,860      38,747       42,300           42,300
Property and equipment.........................   12,325      14,274       15,253           15,253
Less amortization and accumulated
  depreciation.................................    8,103       9,158        9,495            9,495
                                                 -------     -------      -------
                                                   4,222       5,116        5,758            5,758
Intangible pension asset.......................      120         106          102              102
Other assets...................................       58          --           --               --
                                                 -------     -------      -------
                                                 $25,260     $43,969      $48,160         $ 48,160
                                                 =======     =======      =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.............................  $ 3,985     $ 4,043      $ 2,350         $  2,350
  Accrued payroll and employee benefits........      933       1,539        2,830            2,830
  Other accrued liabilities....................      562         367        1,023            1,023
  Stockholder distributions payable............    1,071       4,555        4,775           11,775
  Billings in excess of costs and recognized
     earnings on uncompleted contracts.........    5,940      19,623       22,407           22,407
  Current portion of long-term debt............      404         144          317              317
                                                 -------     -------    -----------    --------------
          TOTAL CURRENT LIABILITIES............   12,895      30,271       33,702           40,702
Long-term debt, less current portion...........    5,271       2,753        2,777            2,777
Accrued pension cost...........................      326         263          245              245
Stockholders' equity
  Preferred Stock, $.001 par
     value -- authorized 1,000,000 shares, none
     issued....................................       --          --           --               --
  Common Stock, $.001 par value -- authorized
     20,000,000 shares, 5,000,000 shares issued
     and outstanding...........................        5           5            5                5
  Additional paid-in-capital...................       15          15           15               15
  Unfunded pension losses......................     (426)       (519)        (541)            (541)
  Retained earnings............................    7,174      11,181       11,957            4,957
                                                 -------     -------    -----------    --------------
                                                   6,768      10,682       11,436            4,436
                                                 -------     -------    -----------    --------------
                                                 $25,260     $43,969      $48,160         $ 48,160
                                                 =======     =======    =========      ===========
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-3
<PAGE>   57
 
                              SCHUFF STEEL COMPANY
 
                       CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS EXCEPT PER SHARE DATA)
 
   
<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                               YEAR ENDED DECEMBER 31               MARCH 31
                                          --------------------------------     -------------------
                                           1994        1995         1996        1996        1997
                                          -------     -------     --------     -------     -------
                                                                                   (UNAUDITED)
<S>                                       <C>         <C>         <C>          <C>         <C>
Revenues................................  $68,199     $62,090     $103,912     $10,410     $25,507
Cost of revenues........................   58,874      54,222       86,998       8,418      21,655
                                          -------     -------     --------     -------     -------
          GROSS PROFIT..................    9,325       7,868       16,914       1,992       3,852
General and administrative expenses.....    4,915       5,284        6,715       1,357       2,081
                                          -------     -------     --------     -------     -------
          OPERATING INCOME..............    4,410       2,584       10,199         635       1,771
Interest expense........................     (718)       (752)        (452)       (147)        (95)
Other income............................       67         618          303          52          96
                                          -------     -------     --------     -------     -------
          NET INCOME....................  $ 3,759     $ 2,450     $ 10,050     $   540     $ 1,772
                                          =======     =======     ========     =======     =======
Pro forma net income data (unaudited)
  Net income as reported................                          $ 10,050                 $ 1,772
  Pro forma tax provision...............                             4,020                     710
                                                                  --------                 -------
  Pro forma net income..................                          $  6,030                 $ 1,062
                                                                  ========                 =======
Pro forma net income per share..........                          $   1.02                 $  0.18
                                                                  ========                 =======
Shares used in computation..............                             5,926                   5,926
                                                                  ========                 =======
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-4
<PAGE>   58
 
                              SCHUFF STEEL COMPANY
 
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                              COMMON STOCK     ADDITIONAL   UNFUNDED
                                             ---------------    PAID-IN     PENSION    RETAINED
                                             SHARES   AMOUNT    CAPITAL      LOSSES    EARNINGS    TOTAL
                                             ------   ------   ----------   --------   --------   -------
<S>                                          <C>      <C>      <C>          <C>        <C>        <C>
Balance January 1, 1994....................  5,000      $5        $ 15       $ (536)   $  5,836   $ 5,320
  Changes in unfunded pension losses.......     --      --          --          (27)         --       (27)
  Distributions to stockholders............     --      --          --           --      (3,020)   (3,020)
  Net income...............................     --      --          --           --       3,759     3,759
                                                        --
                                             -----                 ---         ----     -------   -------
Balance December 31, 1994..................  5,000       5          15         (563)      6,575     6,032
  Changes in unfunded pension losses.......     --      --          --          137          --       137
  Distributions to stockholders............     --      --          --           --      (1,851)   (1,851)
  Net income...............................     --      --          --           --       2,450     2,450
                                                        --
                                             -----                 ---         ----     -------   -------
Balance December 31, 1995..................  5,000       5          15         (426)      7,174     6,768
  Changes in unfunded pension losses.......     --      --          --          (93)         --       (93)
  Distributions to stockholders............     --      --          --           --      (6,043)   (6,043)
  Net income...............................     --      --          --           --      10,050    10,050
                                                        --
                                             -----                 ---         ----     -------   -------
Balance December 31, 1996..................  5,000       5          15         (519)     11,181    10,682
  Changes in unfunded pension losses
     (unaudited)...........................     --      --          --          (22)         --       (22)
  Distributions to stockholders
     (unaudited)...........................     --      --          --           --        (996)     (996)
  Net income (unaudited)...................     --      --          --           --       1,772     1,772
                                                        --
                                             -----                 ---         ----     -------   -------
Balance March 31, 1997 (unaudited).........  5,000      $5        $ 15       $ (541)   $ 11,957   $11,436
                                             =====      ==         ===         ====     =======   =======
</TABLE>
 
                            See accompanying notes.
 
                                       F-5
<PAGE>   59
 
                              SCHUFF STEEL COMPANY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED
                                                   YEAR ENDED DECEMBER 31            MARCH 31
                                               ------------------------------   ------------------
                                                 1994       1995       1996       1996      1997
                                               --------   --------   --------   --------   -------
                                                                                   (UNAUDITED)
<S>                                            <C>        <C>        <C>        <C>        <C>
OPERATING ACTIVITIES
Net income...................................  $  3,759   $  2,450   $ 10,050   $    540   $ 1,772
Adjustment to reconcile net income to net
  cash provided by operating activities:
  Depreciation and amortization..............     1,248      1,248      1,267        297       361
  Gain on disposal of property and
     equipment...............................       (10)       (20)       (13)        (9)      (12)
  Changes in operating assets and
     liabilities:
     Restricted funds on deposit.............        --       (220)    (2,029)        --      (647)
     Receivables.............................       248      4,092     (5,598)    (1,264)     (522)
     Costs and recognized earnings in excess
       of billings on uncompleted
       contracts.............................        79     (1,014)       205      1,015       137
     Inventories.............................    (1,104)    (2,461)    (3,541)    (4,496)   (2,757)
     Prepaid expenses........................        80         47         40       (269)     (233)
     Accounts payable........................       376      1,882         58     (3,558)   (2,482)
     Accrued payroll and employee benefits...       124       (322)       606        284     1,266
     Other accrued liabilities...............      (325)      (362)      (195)     4,105       627
     Billings in excess of costs and
       recognized earnings on uncompleted
       contracts.............................     2,291       (566)    13,683      7,266     2,777
     Accrued pension cost....................       (73)       (97)      (142)       (31)      (36)
                                               --------   --------   --------   --------   -------
          NET CASH PROVIDED BY OPERATING
            ACTIVITIES.......................     6,693      4,657     14,391      3,880       251
INVESTING ACTIVITIES
Increase in receivables from stockholders....      (227)        --       (185)        --        --
Repayment of receivables from stockholders...       191         45         18         12        --
Acquisitions of property and equipment.......    (1,615)      (814)    (2,337)      (294)     (310)
Proceeds from disposals of property and
  equipment..................................        21         30        189         13        32
Purchase of business.........................        --         --         --         --      (427)
                                               --------   --------   --------   --------   -------
          NET CASH USED IN INVESTING
            ACTIVITIES.......................    (1,630)      (739)    (2,315)      (269)     (705)
FINANCING ACTIVITIES
Proceeds from revolving line of credit and
  long-term borrowings.......................    67,977     64,558     33,500     16,025        --
Principal payments on revolving line of
  credit and long-term debt..................   (70,553)   (66,436)   (36,278)   (17,785)   (1,273)
Cash distributions to stockholders...........    (2,537)    (1,814)    (2,334)      (586)     (776)
                                               --------   --------   --------   --------   -------
          NET CASH USED IN FINANCING
            ACTIVITIES.......................    (5,113)    (3,692)    (5,112)    (2,346)   (2,049)
                                               --------   --------   --------   --------   -------
          INCREASE (DECREASE) IN CASH AND
            CASH EQUIVALENTS.................       (50)       226      6,964      1,265    (2,503)
Cash and cash equivalents at beginning of
  period.....................................       113         63        289        289     7,253
                                               --------   --------   --------   --------   -------
          CASH AND CASH EQUIVALENTS AT END OF
            PERIOD...........................  $     63   $    289   $  7,253   $  1,554   $ 4,750
                                               ========   ========   ========   ========   =======
</TABLE>
 
                            See accompanying notes.
 
                                       F-6
<PAGE>   60
 
                              SCHUFF STEEL COMPANY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Description of Business
 
     Schuff Steel Company ("the Company") is a steel fabrication and erection
contractor based in Phoenix, Arizona. The Company's construction projects are
located primarily in Arizona, Nevada, California and South America.
 
  Principles of Consolidation
 
     As more fully described in Note 13, the Company acquired B&K Steel
Fabrications, Inc. (B&K Steel) on January 31, 1997 and accounted for the
transaction using the purchase method. Effective as of that date, B&K Steel
became a wholly owned subsidiary of the Company. Accordingly, commencing with
the three month period ended March 31, 1997 the Company began consolidating the
financial statements of B&K Steel from the date of acquisition. All intercompany
transactions have been eliminated for the three months ended March 31, 1997.
Financial statements for the years ended December 31, 1994, 1995 and 1996 are
not consolidated since the Company had no subsidiaries during those periods.
 
  Interim Financial Information
 
     The consolidated financial statements for the three months ended March 31,
1996 and 1997 are unaudited but include all adjustments (consisting only of
normal recurring adjustments) that the Company considers necessary for a fair
presentation of financial position and results of operations. Operating results
for the three months ended March 31, 1997 are not necessarily indicative of the
results that may be expected for any future periods.
 
  Operating Cycle
 
     Balance sheet items expected to be paid or received within one year are
classified as current. Assets and liabilities relating to long-term construction
contracts are included in current assets and current liabilities in the
accompanying balance sheet, since they will be realized or liquidated in the
normal course of contract completion, although completion may require more than
one year.
 
  Revenue and Cost Recognition
 
     The Company performs its services primarily under fixed-price contracts and
recognizes revenues and costs from construction projects using the percentage of
completion method. Under this method, revenue is recognized based upon the ratio
of the costs incurred to date to the total estimated costs to complete the
project. Revenue recognition begins when progress is sufficient to estimate
final results with reasonable accuracy. Costs include all direct material and
labor costs related to contract performance, subcontractor costs, indirect
labor, and fabrication plant overhead costs, which are charged to contract costs
as incurred. Revenues relating to changes in the scope of a contract are
recognized when the customer has authorized the change, the work is commenced
and the Company has made an estimate of the amount that is probable of being
paid for the change. Revisions in estimates during the course of contract work
are reflected in the accounting period in which the facts requiring the revision
become known. Provisions for estimated losses on uncompleted contracts are made
in the period a loss on a contract becomes determinable.
 
     Construction contracts with customers generally provide that billings are
to be made monthly in amounts which are commensurate with the extent of
performance under the contracts. Contract receivables arise principally from the
balance of amounts due on progress billings on jobs under construction.
Retentions on
 
                                       F-7
<PAGE>   61
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
contract receivables are amounts due on progress billings which are withheld
until the completed project has been accepted by the customer.
 
     Costs and recognized earnings in excess of billings on uncompleted
contracts primarily represent revenue earned under the percentage of completion
method which has not been billed, and also include costs incurred in excess of
the billings on contracts for which sufficient work has not been performed to
allow for the recognition of revenue. Billings in excess of related costs and
recognized earnings on uncompleted contracts represent amounts billed on
contracts in excess of the revenue allowed to be recognized under the percentage
of completion method on those contracts.
 
  Cash and cash equivalents
 
     Cash consists of cash in noninterest bearing checking accounts. Cash
equivalents consist of investments in a money market mutual fund which is
invested in financial instruments and securities issued and guaranteed by the
U.S. Treasury, the U.S. government or its agencies or instrumentalities. All
such investments are completely liquid and are made through the Company's bank
pursuant to an investment and custody agreement.
 
  Restricted Funds on Deposit
 
     Restricted funds on deposit represent funds in an interest bearing escrow
account which is maintained in lieu of contract receivable retentions for a
specific contract.
 
  Inventories
 
     Inventories, primarily steel components which have been charged to specific
contracts, are stated at the lower of cost or market under the first-in,
first-out method.
 
  Property and Equipment
 
     Property and equipment is stated at cost and is depreciated over the
estimated useful lives, which generally range from five to ten years, of the
related assets using the straight line method. Leasehold improvements are
amortized over the shorter of the lease term or the estimated useful life.
Amortization of leasehold improvements is included in depreciation and
amortization.
 
  Income Taxes
 
     In 1987, the stockholders of the Company elected under Subchapter S of the
Internal Revenue Code to include the Company's income in their own income for
federal and state income tax purposes. As a result, the Company was not subject
to federal or state income taxes at December 31, 1996. At December 31, 1996, the
Company's tax basis differed from the amounts used for financial reporting
purposes. The income tax basis was higher by approximately $750,000.
Accordingly, if the Company converted to a C corporation as of December 31,
1996, it would have recorded a net deferred tax asset of approximately $300,000
and recorded a deferred tax benefit of the same amount to reflect the tax effect
of cumulative differences at conversion. At December 31, 1996 and March 31,
1997, retained earnings included approximately $9,900,000 and $10,700,000,
respectively, of income taxed directly to stockholders.
 
  Fair Value of Financial Instruments
 
     Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments", requires that the Company disclose
estimated fair values of financial instruments. Cash and cash equivalents,
restricted funds on deposit, receivables, accounts payable, and other accrued
liabilities are
 
                                       F-8
<PAGE>   62
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
carried at amounts that reasonably approximate their fair values. The Company
believes the carrying amount of their long-term debt approximates fair value at
December 31, 1996.
 
  Concentrations of Credit Risk
 
     Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
receivables. The Company maintains cash and cash equivalents, restricted funds
on deposit and certain other financial instruments with large financial
institutions. The Company performs periodic evaluations of the relative credit
standing of those financial institutions that are considered in the Company's
investment strategy. Concentrations of credit risk with respect to receivables
are limited as the Company's customers tend to be larger general contractors on
adequately funded projects and the Company has certain lien rights.
 
  Use of Estimates
 
     The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles necessarily 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 balance sheet date and the reported amounts of revenues and expenses during
the reporting period for long-term contracts.
 
     The Company has a substantial history of making reasonably dependable
estimates of the extent of progress towards completion, contract revenues, and
contract costs on its long-term contracts. The estimates inherent in such
provisions are periodically evaluated and revisions are made as required to
reflect the most up-to-date information. However, due to uncertainties inherent
in the estimation process, actual results could differ materially from those
estimates.
 
  Long-Lived Assets
 
     The Company adopted the provisions of Financial Accounting Standards Board
Statement No. 121 (FAS 121), "Accounting for the Impairment of Long-Lived Assets
to Be Disposed Of", which requires impairment losses to be recorded on
long-lived assets used in operations, such as equipment and improvements and
intangible assets, when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of the assets. Based upon its assessment as of December 31,
1996 and March 31, 1997, management does not believe there are any adjustments
required to its long-lived assets as a result of implementing FAS 121.
 
   
  Pro Forma Data
    
 
   
     The pro forma consolidated balance sheet as of March 31, 1997 includes
adjustments to increase stockholder distributions payable and reduce retained
earnings by $7,000,000 to show the effect of the S corporation distribution
expected to be made from the proceeds of the Company's planned initial public
offering.
    
 
   
     Pro forma net income per share is computed using weighted average common
shares outstanding and common stock equivalents if dilutive. Pro forma tax
provision is based on the effective tax rate that the Company believes would
have been incurred had the Company not been a S corporation for income tax
purposes. That rate of 40% is comprised of a 34% federal statutory rate plus an
effective state tax rate net of federal benefit of 6%. Under Securities and
Exchange Commission Staff Accounting Bulletin (SAB) 83, common stock equivalents
include the dilutive effect of stock options granted within one year of an
initial public offering at prices less than the anticipated offering price for
all years presented. Under SAB 55,
    
 
                                       F-9
<PAGE>   63
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
   
common stock equivalents also include the number of shares expected to be issued
in an initial public offering for which the net offering proceeds will be used
to make stockholder distributions.
    
 
  Impact of Recently Issued Accounting Standards
 
   
     Statement of Financial Accounting Standards No. 128 (FAS 128), "Earnings
Per Share", issued by the Financial Accounting Standards Board in February 1997,
is effective for periods ending after December 15, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact is expected to result in an increase in pro forma
primary earnings per share for the year ended December 31, 1996 of $0.19 and for
the quarter ended March 31, 1997 of $0.03. The impact of FAS 128 on the
calculation of fully diluted pro forma earnings per share for these periods is
not expected to be material.
    
 
2. RECEIVABLES AND CONTRACTS IN PROGRESS
 
     Receivables consist of the following at:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                          -------------------     MARCH 31
                                                           1995        1996         1997
                                                          -------     -------     --------
                                                                   (IN THOUSANDS)
    <S>                                                   <C>         <C>         <C>
    Contract receivables:
      Contracts in progress.............................  $ 7,362     $11,566     $14,170
      Unbilled retentions...............................    3,632       5,112       4,379
                                                          -------     -------     -------
                                                           10,994      16,678      18,549
    Notes receivable....................................      125          65          49
    Other receivables...................................      168         142          56
                                                          -------     -------     -------
                                                          $11,287     $16,885     $18,654
                                                          =======     =======     =======
</TABLE>
 
     Substantially all of the Company's receivables are due from general
contractors located in Arizona, California and Nevada.
 
     Costs and estimated earnings on completed and uncompleted contracts consist
of the following at:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                         ---------------------     MARCH 31
                                                           1995         1996         1997
                                                         --------     --------     --------
                                                                   (IN THOUSANDS)
    <S>                                                  <C>          <C>          <C>
    Costs incurred on completed and contracts in
      progress.........................................  $127,028     $162,648     $121,548
    Estimated earnings.................................    18,324       23,058       17,285
                                                         --------     --------     --------
                                                          145,352      185,706      138,833
    Less progress billings.............................   150,216      204,458      159,908
                                                         --------     --------     --------
                                                         $ (4,864)    $(18,752)    $(21,075)
                                                         ========     ========     ========
    Included in the accompanying consolidated balance
      sheets under the following captions:
      Costs and recognized earnings in excess of
         billings on uncompleted contracts.............  $  1,076     $    871     $  1,332
      Billings in excess of costs and recognized
         earnings on uncompleted contracts.............    (5,940)     (19,623)     (22,407)
                                                         --------     --------     --------
                                                         $ (4,864)    $(18,752)    $(21,075)
                                                         ========     ========     ========
</TABLE>
 
                                      F-10
<PAGE>   64
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
3. INVENTORIES
 
     Inventories consist of the following at:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                           ------------------     MARCH 31
                                                            1995       1996         1997
                                                           ------     -------     --------
                                                                   (IN THOUSANDS)
    <S>                                                    <C>        <C>         <C>
    Raw materials........................................  $1,351     $   665     $   882
    Fabrication in process...............................   6,052      10,032      12,668
    Finished goods.......................................     367         614         614
                                                           ------     -------     -------
                                                           $7,770     $11,311     $14,164
                                                           ======     =======     =======
</TABLE>
 
     The Company separately identifies and values the portion of its inventory
that is undergoing fabrication processes to prepare it for direct sale to a
customer or shipment to an erection site for use on a customer construction
project. Such amounts are reflected as fabrication in process inventory.
 
4. PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31
                                                            -------------------     MARCH 31
                                                             1995        1996         1997
                                                            -------     -------     --------
                                                                     (IN THOUSANDS)
    <S>                                                     <C>         <C>         <C>
    Property and equipment:
      Leasehold improvements..............................  $ 1,498     $ 2,334     $ 2,388
      Furniture and fixtures..............................       91          91         189
      Transportation equipment............................    1,273       1,308       1,419
      Machinery and equipment.............................    7,134       7,995       8,638
      Cranes..............................................      648         654         644
      Office equipment....................................      275         285         291
      Detailing equipment.................................       83          83          83
      EDP equipment.......................................    1,323       1,524       1,601
                                                            -------     -------     -------
                                                             12,325      14,274      15,253
      Less amortization and accumulated depreciation......    8,103       9,158       9,495
                                                            -------     -------     -------
                                                            $ 4,222     $ 5,116     $ 5,758
                                                            =======     =======     =======
</TABLE>
 
                                      F-11
<PAGE>   65
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
5. LONG-TERM DEBT
 
     Long-term debt consists of the following at:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31
                                                              -----------------     MARCH 31
                                                               1995       1996        1997
                                                              ------     ------     --------
                                                                      (IN THOUSANDS)
    <S>                                                       <C>        <C>        <C>
    Note payable to a bank under a revolving line of credit
      agreement maturing in 1998, with interest payable
      monthly at the bank's prime rate plus 0.25 percent....  $1,647     $   --      $   --
    Subordinated note payable to a related party, payable in
      monthly installments of $12,037, plus interest at the
      bank's prime rate plus 2.50 percent, maturing in
      1999..................................................   3,053      2,897       2,265
    Notes payable to individuals under a stock purchase
      agreement payable in annual installments of $159,250
      plus interest at 5.73 percent, maturing in 2002.......      --         --         796
    Note payable to a bank, paid in full in 1996............     975         --          --
    Other...................................................      --         --          33
                                                              ------     ------      ------
                                                               5,675      2,897       3,094
    Less current portion....................................     404        144         317
                                                              ------     ------      ------
                                                              $5,271     $2,753      $2,777
                                                              ======     ======      ======
</TABLE>
 
     The Company's revolving line of credit agreement is subject to renewal on
June 30, 1998 and is collateralized by contract receivables, equipment and raw
materials inventory. This agreement permits the Company to borrow up to an
amount equal to 75 percent of qualifying contract receivables and in total shall
not exceed $6,500,000, with further reductions to availability based upon, among
other restrictions, billings in excess of costs levels. As of December 31, 1996
and March 31, 1997, there was no availability for future borrowings under the
Company's revolving line of credit agreement. On March 31, 1997, the Company
modified its revolving line of credit agreement to permit borrowings of up to
$1,000,000 regardless of availability under the formula. The agreement was
subsequently modified to temporarily increase the minimum borrowing permitted
regardless of the formula to $2,500,000 through July 31, 1997. The Company made
interest payments on its line of credit of $272,160, $271,653, and $63,798 for
the years ended December 31, 1994, 1995 and 1996, respectively, and $48,366 and
$4,701 for the three months ended March 31, 1996 and 1997, respectively.
 
     The subordinated note payable to a related party is a long-term loan from a
partnership owned by related parties which include the Company's stockholders.
The partnership obtained the funds loaned to the Company from a bank under terms
similar to those included in the loan it made to the Company. In April 1996, the
partnership refinanced its loan with the same bank used by the Company. Under
the terms of the new loan agreement between the partnership and the bank, the
Company has guaranteed repayment of the partnership's loan, which amounted to
$2,921,736 at December 31, 1996 and $2,883,954 at March 31, 1997.
 
     Principal amounts of long-term debt maturing subsequent to December 31,
1996 are: 1997 -- $144,444, 1998 -- $144,444 and 1999 -- $2,608,396. The Company
made interest payments of $402,959, $449,439 and $420,050 for the years ended
December 31, 1994, 1995 and 1996, respectively, and $133,747 and $55,419 for the
three months ended March 31, 1996 and 1997, respectively, on its long-term debt.
 
                                      F-12
<PAGE>   66
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
6. EMPLOYEE BENEFIT PLANS
 
     The Company maintains a 401(k) retirement savings plan which covers
eligible employees and which permits participants to contribute to the plan,
subject to Internal Revenue Code restrictions. The plan also permits the Company
to make discretionary matching contributions, which amounted to $34,952 during
the year ended December 31, 1996 (none in 1994 or 1995) and $8,738 and $10,065
for the three month periods ended March 31, 1996 and 1997, respectively.
 
     In 1996, the Company adopted the "Supplemental Retirement and Deferred
Compensation Plan" for certain management employees. The Plan is an unfunded
deferred compensation plan whereby the Company contributes an amount equal to 10
percent of annual net profits after deducting distributions payable to
stockholders, as defined in the Plan. During the year ended December 31, 1996,
total expense recognized by the Company was $528,900, which is currently
scheduled for distribution to eligible employees in 1997. This plan was
terminated effective January 1, 1997.
 
     Substantially all of the Company's fabrication and erection workforce is
subject to collective bargaining agreements. The Company made contributions to
union sponsored benefit plans of $764,013, $883,225 and $1,122,119 during the
years ended December 31, 1994, 1995 and 1996, respectively, and $176,572 and
$409,148 during the three months ended March 31, 1996 and 1997, respectively.
Information from the administrators of these plans is not available to permit
the Company to determine its share of accumulated benefits and related assets.
 
     The Company has a 401(k) defined contribution retirement savings plan for
union steelworkers. Currently, only participants contribute to this plan on a
voluntary basis, subject to Internal Revenue Code restrictions. All account
balances are 100 percent vested.
 
     The Company has a second noncontributory defined benefit plan that is
maintained for union steelworkers and provides for pension and disability
benefits. During 1989, the Company reached agreement with the local
representatives of the United Steelworkers of America to freeze all pension
credits effective December 31, 1988. All pension credits are 100 percent vested.
The unfunded portion of the plan is being reduced by continued contributions by
the Company. The Company currently contributes 60 cents for each hour worked by
each participant. The Company's funding policy is to make monthly contributions
to the plan sufficient to at least meet minimum funding amounts required by law.
 
     Currently, the plan is party to an insurance contract whereby the insurer
provides benefits under the plan. Company contributions are held by the insurer
in a collective investment fund which is managed by the insurer and which is
invested in stocks, bonds and money market instruments. The net assets available
for plan benefits are reflected at contract value, which approximates market
value.
 
     The Company accounts for pension expense under its noncontributory defined
benefit pension plan under the provisions of Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions."
 
     The weighted average discount rate used in determining the actuarial
present value of accumulated and projected benefit obligations was decreased
from 7.0 percent in 1995 to 6.5 percent in 1996. As a result of this change, the
projected benefit obligation increased by $207,242. The expected long-term rate
of return on plan assets was 8.5 percent in both 1995 and 1996. The weighted
average rate of compensation increase is not applicable because the benefit is
not pay related.
 
                                      F-13
<PAGE>   67
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
     The following table sets forth the funded status of the plan as provided by
consulting actuaries at December 31, 1995 and 1996 and as estimated by
management at March 31, 1997:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31
                                                              -----------------     MARCH 31
                                                               1995       1996        1997
                                                              ------     ------     --------
                                                                      (IN THOUSANDS)
    <S>                                                       <C>        <C>        <C>
    Actuarial present value of accumulated and projected
      benefit obligations, all of which are fully vested....  $1,752     $2,003      $ 2,051
    Plan assets at fair value...............................   1,426      1,740        1,806
                                                              ------     ------       ------
    Funded status -- projected benefit obligation in excess
      of plan assets........................................  $  326     $  263      $   245
                                                              ======     ======       ======
    Comprised of:
      Prepaid pension cost before adjustment to recognize
         additional minimum liability.......................  $  220     $  362      $   399
      Unrecognized net loss.................................    (426)      (519)        (541)
      Unrecognized net obligation...........................    (120)      (106)        (103)
                                                              ------     ------       ------
    Adjustment to recognize minimum liability...............  $ (326)    $ (263)     $  (245)
                                                              ======     ======       ======
    Net pension cost includes the following components:
      Service costs.........................................  $   50     $   50      $    13
      Interest cost on projected benefit obligation.........     118        122           32
      Actual return on plan assets..........................    (291)      (231)         (45)
      Net amortization and deferral.........................     223        128           14
                                                              ------     ------       ------
    Net period pension cost.................................  $  100     $   69      $    14
                                                              ======     ======       ======
</TABLE>
 
7. STOCKHOLDERS' EQUITY
 
     Due to the Company's income tax status as a qualified S corporation, only
one class of stock may be issued and outstanding, and all outstanding shares
must be identical as to the rights of the holders in the profits and assets of
the Company, although differences in voting rights are permitted.
 
     The Company has the authority to issue a total of two hundred thousand
shares of no par value stock, of which fifty thousand shares must be Class A
Common Stock, fifty thousand shares must be Class B Common Stock, and one
hundred thousand shares must be Preferred Stock. The Class A Common Stock and
the Class B Common Stock are identical in all respects except that the holders
of the Class B Common Stock have no voting power for any purpose and are not
entitled to notice of any meeting of stockholders. As of December 31, 1995 and
1996, only Class A Common Stock had been issued (See Note 13).
 
     The Company also has the authority to issue preferred stock in amounts with
such designations, preferences, voting rights, privileges and such other
restrictions and qualifications as the Board of Directors may, by resolution,
establish. The Company has not set aggregate or per share amounts at which
preferred shares may be called or are subject to redemption through sinking fund
operations or otherwise. No preferred stock has been issued.
 
     It is the policy of the Company to also make distributions to stockholders
in such amounts as are required to enable them to pay income taxes attributable
to their allocable share of taxable income from the Company. Pursuant to
provisions in the Company's revolving line of credit agreement, the Company is
also permitted at its discretion to declare an annual dividend to the
stockholders providing the Company maintains certain financial criteria.
 
                                      F-14
<PAGE>   68
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
     Following is an analysis of stockholder distributions for the years ended
December 31, 1994, 1995 and 1996 and the three months ended March 31, 1996 and
1997:
 
<TABLE>
<CAPTION>
                                                                               THREE MONTHS
                                                                                   ENDED
                                               YEAR ENDED DECEMBER 31            MARCH 31
                                            ----------------------------     -----------------
                                             1994       1995       1996       1996       1997
                                            ------     ------     ------     ------     ------
                                                              (IN THOUSANDS)
    <S>                                     <C>        <C>        <C>        <C>        <C>
    Stockholder distributions payable at
      beginning of period.................  $  981     $1,297     $1,071     $1,071     $4,555
    Additions (deductions):
      Life insurance premiums.............     346        346        346         87         87
      Current year income taxes...........   1,821      1,217      5,105        284        909
      Prior year income taxes.............      35        (93)       (73)        --         --
      Less: Prior year refunds applied to
         current year taxes...............     (17)       (79)       (35)        --         --
      Current year dividend...............     554        460        700         --         --
      Prior year dividend.................     281         --         --         --         --
                                            ------     ------     ------     ------     ------
                                             3,020      1,851      6,043        371        996
    Cash distributions:
      Life insurance premiums.............     226        226        226         57         57
      Current year income taxes...........   1,111        369        925         --         --
      Prior year income taxes.............     918        691        798        529        304
      Current year dividend...............      --        128        185         --         --
      Prior year dividend.................     282        400        200         --        415
                                            ------     ------     ------     ------     ------
                                             2,537      1,814      2,334        586        776
    Noncash distributions applied to
      receivables from stockholders.......     167        263        225         29         --
                                            ------     ------     ------     ------     ------
    Stockholder distributions payable at
      end of period.......................  $1,297     $1,071     $4,555     $  827     $4,775
                                            ======     ======     ======     ======     ======
</TABLE>
 
8. STOCK OPTIONS
 
     The Company established a qualified stock option plan ("the Plan")
effective February 5, 1997. The exercise price of the options, as well as the
vesting period, are established by the Company's Board of Directors. A summary
of activity under the Plan is as follows:
 
<TABLE>
<CAPTION>
                                                                           OUTSTANDING OPTIONS
                                                                          ---------------------
                                                             SHARES                   WEIGHTED-
                                                            AVAILABLE                  AVERAGE
                                                              UNDER                   EXERCISE
                                                             OPTION       NUMBER        PRICE
                                                            ---------     -------     ---------
    <S>                                                     <C>           <C>         <C>
    Balance at February 5, 1997 (inception of Plan).......         --          --       $  --
      Authorized..........................................    600,000          --          --
      Granted.............................................         --     345,500        5.00
      Exercised...........................................         --          --          --
      Canceled............................................         --          --          --
                                                              -------     -------       -----
    Balance at March 31, 1997.............................    600,000     345,500       $5.00
                                                              =======     =======       =====
    Exercisable at March 31, 1997.........................                     --
                                                                          =======
</TABLE>
 
                                      F-15
<PAGE>   69
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
     All options granted in 1997 had an exercise price of $5.00 per share which
was equal to the fair value of the Company's common stock, at the date of grant,
as estimated by its Board of Directors. The weighted-average remaining
contractual life of those options is approximately five years.
 
     The Company's 1997 Stock Option Plan has authorized the grant of options up
to 600,000 shares to officers, directors or key employees of the Company. All
options have ten year terms and generally vest ratably over five years from the
date of grant. The fair value of options granted during the three months ended
March 31, 1997 was $1.26.
 
     The Company has elected to follow Accounting Principles Board Opinion
Number 25 (APB 25), "Accounting for Stock Issued to Employees", and related
interpretations in accounting for its stock options issued to employees because,
as discussed below, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123 (FAS 123), "Accounting for
Stock-Based Compensation", requires use of option valuation models that were not
developed for use in valuing stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the fair value of the
underlying stock on the date of grant, no compensation expense is recognized.
 
     Pro forma information regarding net income and pro forma earnings per share
is required by FAS 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method of FAS 123. The fair
value for these options was estimated at the date of grant using a Black Scholes
Option pricing model with the following weighted-average assumptions:
 
<TABLE>
<CAPTION>
                                                                 THREE MONTHS
                                                                ENDED MARCH 31
                                                                     1997
                                                                --------------
                <S>                                             <C>
                Contractual term of the award.................      10 years
                Expected life of award........................       5 years
                Volatility....................................           .01
                Fair value of stock at grant date.............         $5.00
                Option exercise price.........................         $5.00
                Risk-free interest rate.......................     6 percent
</TABLE>
 
     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models requires the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
 
     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. The Company's
pro forma net income under FAS 123 is not materially different from historical
results.
 
9. RELATED PARTY TRANSACTIONS
 
   
     The Company leases certain property from a partnership owned by related
parties including the Company's stockholders. Effective March 1, 1997, the
Company terminated the existing lease and executed a new 20-year lease with the
same partnership. The lease requires monthly lease payments ranging from $24,611
in 1997 to $50,427 in 2000 and thereafter with additional stipulated rent
increases every five years based on the Consumer Price Index. The Company is
also obligated to pay the partnership any taxes related to the lease payments,
which are expected to approximate $132,000 in 1997. Rent expense under the
related party lease
    
 
                                      F-16
<PAGE>   70
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
totaled $252,683, $263,561, and $273,570 for the years ended December 31, 1994,
1995 and 1996, respectively, and $68,699 and $69,104 for the three months ended
March 31, 1996 and 1997, respectively.
 
   
     Effective March 1, 1997, the Company also executed a 20-year lease of
certain property with the partnership discussed above. Such property was part of
the acquisition discussed in Note 13. The lease requires monthly lease payments
of $28,333 with additional stipulated rent increases every five years based on
the Consumer Price Index. The Company is also obligated to pay the partnership
any taxes related to the lease payments, which are expected to approximate
$81,000 in 1997. The Company has guaranteed the debt of the partnership relating
to this property. The outstanding balance of such debt was $2,191,583 at March
31, 1997.
    
 
     Future minimum rentals (excluding taxes), by year, and in the aggregate
under these noncancelable operating leases at December 31, 1996, are as follows:
 
<TABLE>
<CAPTION>
                                                                 (IN THOUSANDS)
                <S>                                              <C>
                1997...........................................     $    575
                1998...........................................          754
                1999...........................................          896
                2000...........................................          941
                2001...........................................          945
                Thereafter.....................................       14,335
                                                                     -------
                                                                    $ 18,446
                                                                     =======
</TABLE>
 
     The Company also leases certain property, vehicles, and equipment from
nonrelated parties for which it incurred rent expense of $158,506, $134,032 and
$232,955 for the years ended December 31, 1994, 1995 and 1996, respectively, and
$55,224 and $94,809 for the three months ended March 31, 1996 and 1997,
respectively.
 
10. SIGNIFICANT CUSTOMERS
 
     The Company had revenues from certain customers that were in excess of 10
percent of the respective year's revenues as follows (for years in which the
respective customer's revenue were less than 10% no percentage is stated):
 
<TABLE>
<CAPTION>
                                                                                THREE MONTHS
                                                YEAR ENDED DECEMBER 31         ENDED MARCH 31
                                              --------------------------       ---------------
                                              1994       1995       1996       1996       1997
                                              ----       ----       ----       ----       ----
    <S>                                       <C>        <C>        <C>        <C>        <C>
    Customer A..............................    --       11.2%        --         --         --
    Customer B..............................    --         --       13.7%        --         --
    Customer C..............................    --         --         --       25.5%        --
    Customer D..............................  10.0%      10.4%      13.4%      28.7%      18.0%
    Customer E..............................    --         --       19.5%        --       35.4%
    Customer F..............................    --         --       11.5%        --         --
    Customer G..............................  18.6%      14.4%        --         --         --
</TABLE>
 
     During the years ended December 31, 1995 and 1996 and the three months
ended March 31, 1997 the Company's revenues included approximately $1,894,000,
$14,280,000 and $2,328,000, respectively, relating to projects carried out
internationally for which approximately $0, $1,776,000 and $463,369 was in
accounts receivable at December 31, 1995, 1996 and March 31, 1997, respectively.
 
                                      F-17
<PAGE>   71
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
11. OTHER INCOME
 
     During 1995, the Company received $175,000 as a result of a settlement with
third parties relating to damages to Company equipment. In addition, the Company
received $371,194 from a claim related to misappropriation of funds by a former
employee.
 
12. CONTINGENCIES
 
   
     The Company is involved from time to time through the ordinary course of
business in certain claims, litigation, and assessments. Due to the nature of
the construction industry, the Company's employees from time to time become
subject to injury, or even death, while employed by the Company. The Company
does not believe there are any such contingencies at December 31, 1996 or March
31, 1997 for which the eventual outcome would have a material adverse impact on
the Company.
    
 
     During 1996, the primary contractor on the Company's largest contract has
claimed that the Company was liable under delay provisions and is seeking
damages. While the Company believes that the reasons for the delay were such
that the Company should not be liable, the Company has reduced expected revenues
by approximately $900,000 due to this uncertainty.
 
   
     During 1996, the Company was named as a defendant in a lawsuit relating to
an incident at one of its worksites whereby one of its employees was killed in a
crane accident. The Company believes the loss, if any, relating to the incident
will be fully insured and does not expect the ultimate outcome of the matter to
have a material adverse impact on its financial position.
    
 
   
     Relating to the incident set forth in the prior paragraph, the Company has
been named as a defendant in a lawsuit brought by the crane operator who claims
he was assaulted by employees of the Company after the incident. The Company's
insurance carrier has declined coverage. However, management does not expect the
amount of loss, if any, relating to the ultimate resolution of this matter to
have a material adverse impact on its financial position, regardless of whether
or not the insurance carrier ultimately provides coverage.
    
 
13. SUBSEQUENT EVENT
 
   
     On January 31, 1997, the Company acquired 100 percent of the outstanding
capital stock of B&K Steel Fabrications, Inc. ("B&K"), a steel fabricator
located in Gilbert, Arizona, for $1,223,194, consisting of $426,944 in cash and
$796,250 in two promissory notes payable in annual installments over five years
including interest at 5.73 percent. In addition, the Company prepaid $1,090,000
of the subordinated note payable discussed in Note 5 to enable a related party
lessor to the Company to acquire the real property upon which B&K is located,
and certain equipment attached to the property. The acquisition was not
significant to the Company under the definitions used by the Securities and
Exchange Commission, and will be accounted for under the purchase method of
accounting. After assigning fair values to the tangible assets acquired, and
liabilities assumed, there was no goodwill generated by the purchase. The
results of operations of B&K will be included in those of the Company commencing
February 1, 1997. Had the purchase taken place as of January 1, 1996, the
combined business would have had revenues of $113,291,000, income before taxes
of $10,165,000, pro forma net income (using a 40 percent effective tax rate) of
$6,099,000 and pro forma net income per share of $1.03. However, such
information may not be indicative of future operations of the combined business.
    
 
   
     Subsequent to March 31, 1997 the Company entered into a lease agreement
with a partnership owned by related parties including the Company's stockholders
for additional office space acquired by the partnership that is adjacent to the
Company's existing principal office and shop facilities. The lease commences May
1, 1997 and expires on April 30, 2017. The lease requires monthly rental
payments of $11,250, subject to increase every five years based on a Consumer
Price Index formula. The Company is also obligated to pay the
    
 
                                      F-18
<PAGE>   72
 
                              SCHUFF STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
     (THE INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
                                   UNAUDITED)
 
   
partnership any taxes related to the lease payments, which are expected to
approximate $32,000 in 1997. In conjunction with the lease, the Company has
guaranteed the related debt incurred by the partnership to acquire the property
in the amount of $999,999.
    
 
     On May 8, 1997, the Company effected a 50,000 for one common stock split.
Accordingly, all shares of common stock have been restated in the financial
statements to reflect the effect of this stock split. At the same time, the
Company also reincorporated in Delaware and changed its authorized shares and
classes of stock. The information set forth in the financial statements reflect
the authorized shares after having given effect to the reincorporation.
 
                                      F-19
<PAGE>   73
 
             ======================================================
 
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY OF THE UNDERWRITERS, OR ANY OTHER
PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
                            ------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Prospectus Summary....................     3
Risk Factors..........................     8
The Company...........................    13
S Corporation Distribution............    14
Use of Proceeds.......................    15
Dividend Policy.......................    15
Capitalization........................    16
Dilution..............................    17
Selected Consolidated Financial and
  Operating Data......................    18
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................    20
Business..............................    27
Management............................    40
Principal Stockholders................    44
Certain Relationships and Related
  Transactions........................    45
Description of Capital Stock..........    47
Shares Eligible for Future Sale.......    49
Underwriting..........................    50
Legal Matters.........................    51
Experts...............................    51
Additional Information................    52
Index to Consolidated Financial
  Statements..........................   F-1
Report of Independent Auditors........   F-2
Consolidated Financial Statements.....   F-3
</TABLE>
 
                            ------------------------
 
UNTIL           , 1997 (25 CALENDAR DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF THE DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR ALLOTMENTS OR
SUBSCRIPTIONS.
             ======================================================
 
             ======================================================
                                2,200,000 SHARES
 
                                  SCHUFF LOGO
 
                                  SCHUFF STEEL
                                    COMPANY
 
                                  COMMON STOCK
 
                            ------------------------
 
                                   PROSPECTUS
                            ------------------------
 
                              PRINCIPAL FINANCIAL
                                SECURITIES, INC.
 
   
                                CRUTTENDEN ROTH
    
   
                                  INCORPORATED
    
                                          , 1997
             ======================================================
<PAGE>   74
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     Other expenses in connection with the issuance and distribution of the
securities to be registered hereunder, all of which will be paid by the
registrant, will be substantially as follows:
 
   
<TABLE>
<CAPTION>
                                       ITEM                                      AMOUNT
    --------------------------------------------------------------------------  --------
    <S>                                                                         <C>
    SEC Registration Fee......................................................  $  9,200
    NASD Filing Fee...........................................................  $  3,536
    Nasdaq National Market Listing Fee........................................  $ 35,500
    *Blue Sky Fees and Expenses (including legal fees)........................  $  5,000
    *Accounting Fees and Expenses.............................................  $125,000
    *Legal Fees and Expenses..................................................  $175,000
    *Consulting Fees..........................................................  $139,000
    *Printing and Engraving...................................................  $ 90,000
    *Registrar and Transfer Agent's Fees......................................  $ 20,000
    *Underwriters' Expenses...................................................  $ 40,000
    *Miscellaneous Expenses...................................................  $ 32,764
                                                                                --------
              Total...........................................................  $675,000
                                                                                ========
</TABLE>
    
 
- ---------------
* Estimated
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Company's Certificate of Incorporation provides that a director of the
Company shall not be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability for: (i) any breach of the director's duty of loyalty to the Company
or its stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) liability for
payments of dividends or stock purchases or redemptions in violation of Section
174 of the Delaware General Corporation Law; or (iv) any transaction from which
the director derived an improper personal benefit. In addition, the Company's
Certificate of Incorporation provides that the Company shall to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than such law permitted the corporation to provide prior
to such amendment), indemnify and hold harmless any person who was or is a
party, or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that such person
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan (hereinafter an "Indemnitee")
against expenses, liabilities and losses (including attorneys' fees, judgments,
fines, excise taxes or penalties paid in connection with the Employee Retirement
Income Security Act of 1974, as amended, and amounts paid in settlement)
reasonably incurred or suffered by such Indemnitee in connection therewith;
provided, however, that except as otherwise provided with respect to proceedings
to enforce rights to indemnification, the Company shall indemnify any such
Indemnitee in connection with a proceeding (or part thereof) initiated by such
Indemnitee only if such proceeding or part thereof was authorized by the board
of directors of the Company.
 
     The right to indemnification set forth above includes the right to be paid
by the Company the expenses (including attorneys' fees) incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, an advancement of
expenses
 
                                      II-1
<PAGE>   75
 
incurred by an Indemnitee in his capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such Indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Company of an undertaking, by or on behalf of
such Indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is not further right to
appeal that such Indemnitee is not entitled to be indemnified for such expenses
under this section or otherwise. The rights to indemnification and to the
advancement of expenses conferred herewith are contract rights and continue as
to an Indemnitee who has ceased to be a director, officer, employee or agent and
inures to the benefit of the Indemnitee's heirs, executors and administrators.
 
     The Delaware General Corporation Law provides that indemnification is
permissible only when the director, officer, employee, or agent acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful. The
Delaware General Corporation Law also precludes indemnification in respect of
any claim, issue, or matter as to which an officer, director, employee, or agent
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine that, despite such adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
 
     The Company has agreed to indemnify the Underwriters and their controlling
persons, and the Underwriters have agreed to indemnify the Company and its
controlling persons, against certain liabilities, including liabilities under
the Securities Act. Reference is made to the Underwriting Agreement filed as
part of the Exhibits hereto.
 
     For information regarding the Company's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 17 hereof.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.
 
     On May 8, 1997, the Company reincorporated from Arizona to Delaware by way
of a merger in which the predecessor of the Company, an Arizona corporation,
merged with and into a newly created Delaware subsidiary of the Company. In the
merger, each share of the Arizona corporation's issued and outstanding common
stock was exchanged for 50,000 shares of the Delaware corporation's common stock
and each option to purchase one share of the Arizona corporation's common stock
was exchanged for 50,000 options to purchase shares of the Delaware
corporation's common stock. All share figures set forth above give effect to
this exchange ratio. Exemption from registration for this transaction was
claimed pursuant to Section 4(2) of the Securities Act regarding transactions by
an issuer not involving any public offering and/or pursuant to Rule 145 under
the Securities Act regarding transactions the sole purpose of which is to change
an issuer's domicile solely within the United States.
 
     On February 5, 1997, the Company granted stock options to purchase a total
of 6.91 shares of its common stock at an exercise price of $250,000 per share.
All of these options vest over a five year period with 20% of such options of
each grantee vesting on each anniversary of the date of grant. After the
reincorporation, the options were exchanged for 345,500 options to purchase the
Company's Common Stock at an exercise price of $5.00 per share. Exemption from
restriction for these transactions was claimed pursuant to Section 4(2) of the
Securities Act regarding transactions by an issuer not involving any public
offering.
 
                                      II-2
<PAGE>   76
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
 
     (a) Exhibits:
 
   
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                  DESCRIPTION OF EXHIBIT
- --------   -----------------------------------------------------------------------------------
<S>        <C>
 1.1       Form of Underwriting Agreement by and between Principal Financial Securities, Inc.,
           Cruttenden Roth Incorporated and the Registrant
 1.2       Consulting Agreement by and between D. Ronald Yagoda and the Registrant*
 3.1(a)    Certificate of Incorporation of the Registrant*
 3.1(b)    Certificate of Amendment of Certificate of Incorporation of the Registrant*
 3.2       Bylaws of the Registrant*
 4.1       Certificate of Incorporation of the Registrant (filed as Exhibit 3.1)*
 4.6       Form of Certificate representing Common Stock
 5         Form of Opinion of Snell & Wilmer L.L.P. regarding the legality of the Common Stock
           being registered*
10.1(a)    Loan Agreement dated June 30, 1996 between the Registrant and Bank One, Arizona,
           NA*
10.1(b)    Variable Rate Revolving Line of Credit Note dated June 30, 1996*
10.2(a)    Revolving Line of Credit Loan Agreement and Addendum dated June 30, 1995 between
           the Registrant and Bank One, Arizona, NA*
10.2(b)    Variable Rate Revolving Line of Credit Note and Addendum dated June 30, 1995*
10.2(c)    Modification Agreement dated June 30, 1996 between the Registrant and Bank One,
           Arizona, NA*
10.2(d)    Continuing Guaranty dated June 30, 1995 between David A. Schuff, Nancy A. Schuff
           and Bank One, Arizona, NA*
10.2(e)    Continuing Guaranty dated June 30, 1995 between Scott A. Schuff and Bank One,
           Arizona, NA*
10.2(f)    Modification Agreement dated March 31, 1997 between the Registrant and Bank One,
           Arizona, NA*
10.2(g)    Modification Letter Agreement dated May 7, 1997 between the Registrant and Bank
           One, Arizona NA*
10.3(a)    Loan Agreement and Addendum dated June 30, 1995 between the Registrant and Bank
           One, Arizona, NA*
10.3(b)    Variable Rate Line of Credit Note and Addendum dated June 30, 1995*
10.3(c)    Modification Agreement dated June 30, 1996 between the Registrant and Bank One,
           Arizona, NA*
10.4       Continuing Guaranty dated April 22, 1996 between the Registrant and Bank One,
           Arizona, NA*
10.5       Guaranty of Payment dated April 22, 1997 between the Registrant and Bank One,
           Arizona, NA*
10.6       Guaranty of Payment dated January 31, 1997 between the Registrant and Bank One,
           Arizona, NA*
10.7       Promissory Note dated December 31, 1989 between the Registrant and 19th
           Avenue/Buchanan Limited Partnership*
10.8       Lease dated March 1, 1997 for 420 S. 19th Avenue in Phoenix, Arizona between 19th
           Avenue/Buchanan Limited Partnership and the Registrant*
10.9       Lease dated March 1, 1997 for 619 N. Cooper Road in Gilbert, Arizona between 19th
           Avenue/Buchanan Limited Partnership and the Registrant*
10.10      Lease dated May 1, 1997 for 1841 W. Buchanan Street in Phoenix, Arizona between
           19th Avenue/Buchanan Limited Partnership and the Registrant*
10.11      Schuff Steel Company Supplemental Retirement and Deferred Compensation Plan*
10.12(a)   Schuff Steel Company 1997 Stock Option Plan*
10.12(b)   Form of Incentive Stock Option Agreement for 1997 Stock Option Plan*
</TABLE>
    
 
                                      II-3
<PAGE>   77
 
   
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                  DESCRIPTION OF EXHIBIT
- --------   -----------------------------------------------------------------------------------
<S>        <C>
10.12(c)   Form of Non-Qualified Stock Option Agreement for 1997 Stock Option Plan*
10.13      Form of Indemnity Agreement between the Registrant and its directors
11         Earnings per Share Computation
21         List of Subsidiaries *
23.1       Consent of Ernst & Young LLP, independent auditors
23.2       Consent of Snell & Wilmer L.L.P. (included in Exhibit 5)*
24         Power of Attorney (see signature page included in Registration Statement)*
27         Financial Data Schedule*
99.1       Consent of Edward M. Carson*
99.2       Consent of H. Wilson Sundt*
99.3       Consent of Dennis DeConcini*
99.4       Consent of Kenneth F. Zylstra*
99.5       Consent of Dennis Randall*
</TABLE>
    
 
- ---------------
   
 *  Previously filed.
    
 
     (b) Financial Statement Schedules:
 
     The financial statement schedules have been omitted since they are not
applicable.
 
ITEM 17.  UNDERTAKINGS.
 
     The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denomination and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
 
     The undersigned Registrant hereby undertakes that:
 
          (1) For the purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4), or 497(b) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.
 
          (2) For the purposes of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein and this offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
                                      II-4
<PAGE>   78
 
                                   SIGNATURES
 
   
     Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Phoenix, State of Arizona, on June 10, 1997.
    
 
                                          SCHUFF STEEL COMPANY
 
                                          By: /s/ Scott A. Schuff
 
                                          --------------------------------------
                                              Scott A. Schuff
                                            President, and Chief Executive
                                              Officer
 
   
     Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
    
 
   
<TABLE>
<CAPTION>
           NAME AND SIGNATURE                             TITLE                      DATE
- ----------------------------------------  -------------------------------------  -------------
 
<S>                                       <C>                                    <C>
 
          /s/ David A. Schuff             Chairman of the Board of Directors     June 10, 1997
- ----------------------------------------
            David A. Schuff
 
          /s/ Scott A. Schuff             President, Chief Executive Officer     June 10, 1997
- ----------------------------------------  and Director (Principal executive
            Scott A. Schuff               officer)
 
         /s/ Kenneth F. Zylstra           Vice President and Chief Financial     June 10, 1997
- ----------------------------------------  Officer (Principal financial and
           Kenneth F. Zylstra             accounting officer)
</TABLE>
    
 
                                      II-5
<PAGE>   79
 
                               INDEX OF EXHIBITS
 
   
<TABLE>
<CAPTION>
EXHIBIT                                                                           SEQUENTIALLY
NUMBER                            DESCRIPTION OF EXHIBIT                          NUMBERED PAGE
- -------   ----------------------------------------------------------------------  -------------
<S>       <C>                                                                     <C>
 1.1      Form of Underwriting Agreement between Principal Financial Securities,
          Inc., Cruttenden Roth Incorporated and the Registrant
 1.2      Consulting Agreement by and between D. Ronald Yagoda and the
          Registrant*
 3.1(a)   Certificate of Incorporation of the Registrant*
 3.1(b)   Certificate of Amendment of Certificate of Incorporation of the
          Registrant*
 3.2      Bylaws of the Registrant*
 4.1      Certificate of Incorporation of the Registrant (filed as Exhibit 3.1)*
 4.6      Form of Certificate representing Common Stock
 5        Form of Opinion of Snell & Wilmer L.L.P. regarding the legality of the
          common stock being registered*
10.1(a)   Loan Agreement dated June 30, 1996 between the Registrant and Bank
          One, Arizona, NA*
10.1(b)   Variable Rate Revolving Line of Credit Note dated June 30, 1996*
10.2(a)   Revolving Line of Credit Loan Agreement and Addendum dated June 30,
          1995 between the Registrant and Bank One, Arizona, NA*
10.2(b)   Variable Rate Revolving Line of Credit Note and Addendum dated June
          30, 1995*
10.2(c)   Modification Agreement dated June 30, 1996 between the Registrant and
          Bank One, Arizona, NA*
10.2(d)   Continuing Guaranty dated June 30, 1995 between David A. Schuff, Nancy
          A. Schuff and Bank One, Arizona, NA*
10.2(e)   Continuing Guaranty dated June 30, 1995 between Scott A. Schuff and
          Bank One, Arizona, NA*
10.2(f)   Modification Agreement dated March 31, 1997 between the Registrant and
          Bank One, Arizona, NA*
10.2(g)   Modification Letter Agreement dated May 7, 1997 between the Registrant
          and Bank One, Arizona, NA*
10.3(a)   Loan Agreement and Addendum dated June 30, 1995 between the Registrant
          and Bank One, Arizona, NA*
10.3(b)   Variable Rate Line of Credit Note and Addendum dated June 30, 1995*
10.3(c)   Modification Agreement dated June 30, 1996 between the Registrant and
          Bank One, Arizona, NA*
10.4      Continuing Guaranty dated April 22, 1996 between the Registrant and
          Bank One, Arizona, NA*
10.5      Guaranty of Payment dated April 22, 1997 between the Registrant and
          Bank One, Arizona, NA*
10.6      Guaranty of Payment dated January 31, 1997 between the Registrant and
          Bank One, Arizona, NA*
10.7      Promissory Note dated December 31, 1989 between the Registrant and
          19th Avenue/Buchanan Limited Partnership*
10.8      Lease dated March 1, 1997 for 420 S. 19th Avenue in Phoenix, Arizona
          between 19th Avenue/Buchanan Limited Partnership and the Registrant*
</TABLE>
    
<PAGE>   80
 
   
<TABLE>
<CAPTION>
EXHIBIT                                                                           SEQUENTIALLY
NUMBER                            DESCRIPTION OF EXHIBIT                          NUMBERED PAGE
- -------   ----------------------------------------------------------------------  -------------
<S>       <C>                                                                     <C>
10.9      Lease dated March 1, 1997 for 619 N. Cooper Road in Gilbert, Arizona
          between 19th Avenue/Buchanan Limited Partnership and the Registrant*
10.10     Lease dated May 1, 1997 for 1841 W. Buchanan Street in Phoenix,
          Arizona between 19th Avenue/Buchanan Limited Partnership and the
          Registrant*
10.11     Schuff Steel Company Supplemental Retirement and Deferred Compensation
          Plan*
10.12(a)  Schuff Steel Company 1997 Stock Option Plan*
10.12(b)  Form of Incentive Stock Option Agreement for 1997 Stock Option Plan*
10.12(c)  Form of Non-Qualified Stock Option Agreement for 1997 Stock Option
          Plan*
10.13     Form of Indemnity Agreement between the Registrant and its directors
11        Earnings per Share Computation
21        List of Subsidiaries*
23.1      Consent of Ernst & Young LLP, independent auditors
23.2      Consent of Snell & Wilmer L.L.P. (included in Exhibit 5)*
24        Power of Attorney (see signature page included in Registration
          Statement)*
27        Financial Data Schedule*
99.1      Consent of Edward M. Carson*
99.2      Consent of H. Wilson Sundt*
99.3      Consent of Dennis DeConcini*
99.4      Consent of Kenneth F. Zylstra*
99.5      Consent of Dennis Randall*
</TABLE>
    
 
- ---------------
   
* Previously filed.
    

<PAGE>   1
                                                                     Exhibit 1.1

                                2,200,000 Shares

                              SCHUFF STEEL COMPANY

                                  Common Stock

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


                             UNDERWRITING AGREEMENT


                                                                   June __, 1997

Principal Financial Securities, Inc.
Cruttenden Roth Incorporated
As Representatives of the Several Underwriters
c/o Principal Financial Securities, Inc.
1445 Ross Avenue, Suite 4800
Dallas, Texas  75202

Dear Sirs:

         Schuff Steel Company, a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I annexed hereto (the
"Underwriters") an aggregate of 2,200,000 shares of Common Stock, par value
$.001 per share (the "Common Stock"), of the Company. The aggregate of 2,200,000
shares to be purchased from the Company are herein called the "Firm Shares." In
addition, the Company has agreed to sell to the Underwriters, upon the terms and
conditions set forth herein, up to 330,000 additional shares of Common Stock
(the "Additional Shares") to cover over-allotments by the Underwriters, if any.
The Firm Shares and, to the extent such option is exercised, the Additional
Shares are hereinafter collectively referred to as the "Shares."

         The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters, on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.

         SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-1, including a
prospectus subject to completion, relating to the Shares. Such registration
statement (including all financial schedules and exhibits), as amended at the
time when it
<PAGE>   2
becomes effective and as thereafter amended by any post-effective amendment, is
referred to in this Agreement as the "Registration Statement." The term
"Prospectus" as used in this Agreement means (i) the prospectus in the form
included in the Registration Statement, or (ii) if the prospectus included in
the Registration Statement omits information in reliance upon Rule 430A under
the Act and such information is included in a prospectus filed with the
Commission pursuant to Rule 424(b) under the Act or as part of a post-effective
amendment to the Registration Statement after the Registration Statement becomes
effective, the prospectus as so filed, or (iii) if the prospectus included in
the Registration Statement omits information in reliance upon Rule 430A under
the Act and such information is included in a term sheet (as described in Rule
434(b) under the Act) filed with the Commission pursuant to Rule 424(b) under
the Act, the prospectus included in the Registration Statement and such term
sheet, taken together. The Prospectus subject to completion in the form included
in the Registration Statement dated May 8, 1997, and as such prospectus is
amended from time to time until the date upon which the Registration Statement
is declared effective by the Commission is referred to in this Agreement as the
"Prepricing Prospectus." The term "Registration Statement" shall include any
registration statement filed by the Company pursuant to Rule 462(b) of the Act
to register a portion of the Common Stock.

         SECTION 2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees
to sell 2,200,000 Firm Shares to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company at a purchase
price of $____ per Share (the "purchase price per Share"), the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares as adjusted pursuant to Section 10 hereof).

         The Company also agrees to sell up to 330,000 Additional Shares to the
Underwriters and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, the Underwriters shall have the right for 30 days
from the date of this Agreement to purchase from the Company up to 330,000
Additional Shares at the purchase price per Share for the Firm Shares. The
Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments as you may determine to avoid factional shares) which bears the same
proportion to the number of Additional Shares to be sold as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares as adjusted pursuant to Section 10 hereof) bears to
2,200,000.

         SECTION 3. TERMS OF PUBLIC OFFERING. The Company has been advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
<PAGE>   3
         SECTION 4.   DELIVERY OF THE SHARES AND PAYMENT THEREFOR.
Delivery or registry of and payment for the Firm Shares shall be made at the
offices of Principal Financial Securities, Inc., 1445 Ross Avenue, Suite 4800,
Dallas, Texas, at 10:00 a.m., Dallas, Texas time, on the fourth full business
day following the date of this Agreement (the "Closing Date"). The place of
delivery for the Firm Shares and the Closing Date may be varied by agreement
between you and the Company.

         Delivery or registry of and payment for any Additional Shares shall be
made at the offices of Principal Financial Securities, Inc., 1445 Ross Avenue,
Suite 4800, Dallas, Texas, at 10:00 a.m., Dallas, Texas time, on such date or
dates (the "Additional Closing Date") (which may be the same as the Closing Date
but shall in no event be earlier than the Closing Date nor earlier than three
nor later than ten business days after the giving of the notice hereinafter
referred to) as shall be specified in a written notice from you on behalf of the
Underwriters to the Company of the Underwriters' determination to purchase a
number, specified in such notice, of Additional Shares. Such notice may be given
to the Company by you at any time within 30 days after the date of this
Agreement. The place of delivery for the Additional Shares and the Additional
Closing Date may be varied by agreement between you and the Company.

         Firm Shares shall be registered in the name of the nominee of the
Depository Trust Company ("DTC"), Cede & Co., and credited to the accounts of
such Underwriters as the Representatives shall request, upon notice to the
Company at least 48 hours prior to the Closing Date, with any transfer taxes
payable in connection with the transfer of the Firm Shares to the Underwriters
duly paid, against payment by or on behalf of the Underwriters to the account of
the Company of the aggregate purchase price therefor by wire transfer in
immediately available funds. The Company will make the certificate or
certificates for the Firm Shares available for checking and packaging by the
Representatives at the offices in New York, New York of the Company's transfer
agent or registrar or of the Representatives at least 24 hours prior to the
Closing Date. One or more certificates in definitive form representing any
Additional Shares purchased shall be delivered, or, if such Additional Shares
are to be held through DTC, such Additional Shares shall be registered and
credited, on the Additional Closing Date in the same manner, and upon the same
terms and conditions set forth for the delivery and payment for Firm Shares.

         SECTION 5. AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters as follows:

                  (a) The Company will use commercially reasonable efforts to
         cause the Registration Statement to become effective and will advise
         you promptly and, if requested by you, will confirm such advice in
         writing (i) when the Registration Statement has become effective and
         when any post-effective amendment thereto becomes effective, (ii) if
         Rule 430A under the Act is employed, when the Prospectus or term sheet
         (as described in Rule 434(b) under the Act) has been timely filed
         pursuant to Rule 424(b) under the Act, (iii) of any request by the
         Commission for amendments or supplements to the Registration Statement,
         any Prepricing Prospectus or the Prospectus or for additional
<PAGE>   4
         information, (iv) of the issuance by the Commission of any stop order
         suspending the effectiveness of the Registration Statement or of the
         suspension of qualification of the Shares for offering or sale in any
         jurisdiction or the initiation (or threatened initiation) of any
         proceeding for such purposes, and (v) within the period of time
         referred to in Section 5(e) below, of any change in the Company's
         condition (financial or other), business, backlog of contracts,
         prospects, leases, properties, net worth or results of operations, or
         of any event that comes to the attention of the Company that makes any
         statement made in the Registration Statement or the Prospectus (as then
         amended or supplemented) untrue in any material respect or that
         requires the making of any additions thereto or changes therein in
         order to make the statements therein not misleading, or of the
         necessity to amend or supplement the Prospectus (as then amended or
         supplemented) to comply with the Act or any other law. If at any time
         the Commission shall issue any stop order suspending the effectiveness
         of the Registration Statement, the Company will use commercially
         reasonable efforts to obtain the withdrawal of such order at the
         earliest possible time.

                  (b) The Company will furnish to you, without charge, three
         signed copies of the Registration Statement as originally filed with
         the Commission and of each amendment thereto, including financial
         statements and all exhibits thereto, and will also furnish to you,
         without charge, such number of conformed copies of the Registration
         Statement as originally filed and of each amendment thereto as you may
         reasonably request.

                  (c) The Company will not file any amendment to the
         Registration Statement or make any amendment or supplement to the
         Prospectus of which you shall not previously have been advised (with a
         reasonable opportunity to review such amendment or supplement) or to
         which you have reasonably objected after being so advised.

                  (d) Prior to the execution and delivery of this Agreement, the
         Company has delivered or will deliver to you, without charge, in such
         quantities as you have requested or may hereafter reasonably request,
         copies of each form of the Prepricing Prospectus. The Company consents
         to the use, in accordance with the provisions of the Act and with the
         securities or "Blue Sky" laws of the jurisdictions in which the Shares
         are offered by the several Underwriters and by dealers, prior to the
         date of the Prospectus, of each Prepricing Prospectus so furnished by
         the Company.

                  (e) As soon after the execution and delivery of this Agreement
         as is reasonably practicable and thereafter from time to time for such
         period as in the reasonable opinion of counsel for the Underwriters a
         prospectus is required by the Act to be delivered in connection with
         sales by any Underwriter or a dealer, the Company will deliver to each
         Underwriter and each dealer, without charge, as many copies of the
         Prospectus (and of any amendment or supplement thereto) as they may
         reasonably request. The Company consents to the use of the Prospectus
         (and of any amendment or supplement thereto) in accordance with the
         provisions of the Act and with the securities
<PAGE>   5
         or Blue Sky laws of the jurisdictions in which the Shares are offered
         by the several Underwriters and by all dealers to whom Shares may be
         sold, both in connection with the offering and sale of the Shares and
         for such period of time thereafter as the Prospectus is required by the
         Act to be delivered in connection with sales by any Underwriter or
         dealer. If during such period of time any event shall occur that in the
         judgment of the Company or in the opinion of counsel for the
         Underwriters is required to be set forth in the Prospectus (as then
         amended or supplemented) or should be set forth therein in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading, or if it is necessary to
         supplement or amend the Prospectus to comply with the Act or any other
         law, the Company will forthwith prepare and file with the Commission an
         appropriate supplement or amendment thereto, and will furnish to each
         Underwriter and to each dealer who has previously requested
         Prospectuses, without charge, a reasonable number of copies hereof.

                  (f) The Company will cooperate with you and counsel for the
         Underwriters in connection with any filings and notifications regarding
         the offering and sale of Shares by the several Underwriters and by
         dealers under the securities or Blue Sky laws of such jurisdictions as
         you may reasonably designate and will file such consents to service of
         process or other documents as may be reasonably necessary in order to
         effect such registration or qualification; provided that in no event
         shall the Company be obligated to qualify to do business in any
         jurisdiction where it is not now so qualified, to subject itself to
         taxation as a result of doing business in any jurisdiction where it is
         not now so subject to taxation, to qualify as a dealer in securities in
         any jurisdiction or to take any action which would subject it to
         service of process in suits, other than those arising out of the
         offering or sale of the Shares, in any jurisdiction where it is not now
         so subject.

                  (g) The Company will make generally available to its security
         holders a consolidated earnings statement, which need not be audited,
         covering a period of at least twelve months commencing after the
         effective date of the Registration Statement and ending not later than
         15 months thereafter, as soon as reasonably practicable after the end
         of such period, which consolidated earnings statement shall satisfy the
         provisions of Section 11(a) of the Act and Rule 158 promulgated
         thereunder.

                  (h) During the period of five years hereafter, the Company
         will furnish to you (i) as soon as available, a copy of each report of
         the Company filed with the Commission under the Securities Exchange Act
         of 1934, as amended (the "Exchange Act") or mailed to stockholders and
         (ii) from time to time such other information concerning the Company as
         you may reasonably request.

                  (i) If this Agreement shall terminate or shall be terminated
         after execution pursuant to any provisions hereof (other than as a
         result of a failure by the Representatives or any Underwriter to
         fulfill their or its obligations hereunder) or if this Agreement shall
         be terminated by the Underwriters because of any failure or refusal on
         the part of the Company to comply with the terms or fulfill any of the
         conditions of this
<PAGE>   6
         Agreement, the Company agrees to reimburse the Representatives for all
         out-of-pocket expenses (including fees and expenses of counsel for the
         Underwriters) reasonably incurred by you in connection herewith.

                  (j) The Company will apply the net proceeds from the sale of
         the Shares to be sold by it hereunder substantially in accordance with
         the description set forth in the Prospectus under the caption "Use of
         Proceeds."

                  (k) If Rule 430A under the Act is employed, the Company will
         timely file a Prospectus or term sheet (as described in Rule 434(b)
         under the Act) pursuant to Rule 424(b) under the Act.

                  (l) Except as provided in this Agreement, the Company will not
         offer, sell, contract to sell or otherwise dispose of any Common Stock
         or rights to purchase Common Stock, or any securities convertible into
         or exercisable or exchangeable for shares of Common Stock except to the
         Underwriters pursuant to this Agreement, for a period of 180 days from
         the date of the Prospectus without the prior written consent of the
         Representatives; provided, however, that the Company may issue options
         to purchase shares of Common Stock pursuant to the Company's 1997 Stock
         Option Plan, and options to purchase that number of shares of Common
         Stock set forth in the Registration Statement may be granted to
         non-employee directors upon their appointment to the Board of Directors
         of the Company.

                  (m) The Company will not, directly or indirectly, take any
         action that would constitute, or any action designed or that might
         reasonably be expected to cause or result in or constitute, under the
         Act, the Exchange Act or otherwise, stabilization or manipulation of
         the price of any security of the Company to facilitate the sale or
         resale of the Shares.

         (n) If at any time during the 25-day period after the first date that
         any of the Shares are released by you for sale to the public, any
         publication or event relating to or affecting the Company shall occur
         as a result of which in your opinion the market price of the Common
         Stock (including the Shares) has been or is likely to be materially
         affected (regardless of whether such rumor, publication or event
         necessitates a supplement to or amendment of the Prospectus), the
         Company will, after written notice from you advising the Company to the
         effect set forth above, forthwith consult with you concerning the
         advisability and substance of, and, if appropriate, disseminate, a
         press release or other public statement responding to or commenting on
         such publication or event.

                  (o) The Company will list the Shares which it agrees to sell
         under this Agreement, subject to notice of issuance, on the Nasdaq
         National Market on or before the date the Registration Statement
         becomes effective.
<PAGE>   7
                  (p) The Company will file a revocation of its election to be
         taxed under subchapter S of the Internal Revenue Code and such election
         shall have become effective prior to the Closing Date.

         SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter on the date hereof, and shall be
deemed to represent and warrant to each Underwriter on the Closing Date and the
Additional Closing Date, as the case may be, that:

                  (a) Each Prepricing Prospectus included as part of the
         Registration Statement as originally filed or as part of any amendment
         or supplement thereto, or filed pursuant to Rule 424(a) under the Act,
         complied when so filed with the provisions of the Act.

                  (b) The Commission has not issued any order preventing or
         suspending the use of any Prepricing Prospectus, and the Prepricing
         Prospectus included as part of the Registration Statement declared
         effective by the Commission complies as to form with the requirements
         of the Act. The Registration Statement, in the form in which it becomes
         effective and also in such form as it may be when any post-effective
         amendment thereto shall become effective, and the Prospectus, and any
         supplement or amendment thereto when filed with the Commission under
         Rule 424(b) under the Act, will comply with the provisions of the Act
         and will not at any such times contain an untrue statement of a
         material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein, in light of the
         circumstances under which they were made, not misleading, except that
         this representation and warranty does not apply to statements in or
         omissions from the Registration Statement or the Prospectus (or any
         amendment or supplement thereto) made in reliance upon and in
         conformity with information relating to any Underwriter furnished to
         the Company in writing by or on behalf of any Underwriter through you
         expressly for use therein.

                  (c) The authorized and outstanding capital stock of the
         Company conforms to the description thereof in the Registration
         Statement and the Prospectus as of the date set forth therein. All the
         outstanding shares of Common Stock of the Company have been duly
         authorized by all necessary corporate action on the part of the Company
         and validly issued, are fully paid and nonassessable and were not
         issued in violation of or subject to any preemptive rights arising
         under the Company's Certificate of Incorporation or Bylaws or under the
         Delaware General Corporation Law or similar rights; the Shares to be
         issued and sold to the Underwriters by the Company hereunder have been
         duly authorized by all necessary corporate action on the part of the
         Company and, when issued and delivered to the Underwriters against
         payment therefor in accordance with the terms hereof, will be validly
         issued, fully paid and nonassessable and will not have been issued in
         violation of or subject to any preemptive rights arising under the
         Company's Certificate of Incorporation or Bylaws or under the Delaware
         General Corporation Law or similar rights; the capital stock of the
         Company conforms in all material respects to the description thereof in
         the Registration Statement and the Prospectus (or any amendment
<PAGE>   8
         or supplement thereto); and upon delivery of certificates for the
         Shares pursuant to the terms of this Agreement and payment for the
         Shares the Underwriters will receive valid and marketable title to the
         Shares, free and clear of any voting trust arrangements, liens,
         encumbrances, equities, claims or defects in title to the several
         Underwriters purchasing the Shares in good faith and without notice of
         any lien, claim or encumbrance.

                  (d) The Company is a corporation duly organized and validly
         existing in good standing under the laws of the State of Delaware with
         full corporate power and authority to own, lease and operate its
         properties and to conduct its business as presently conducted and as
         described in the Registration Statement and the Prospectus (and any
         amendment or supplement thereto), and is duly registered and qualified
         to conduct its business and is in good standing in each jurisdiction or
         place where the nature of its properties or conduct of its business
         requires such registration or qualification, except where the failure
         to so register or qualify does not have a material adverse effect on
         the condition (financial or other), business, backlog of contracts,
         prospects, leases, properties, net worth or results of operations of
         the Company.

                  (e) Each of the subsidiaries of the Company identified in
         Exhibit 21 to the Registration Statement ("Subsidiary" or,
         collectively, the "Subsidiaries") is a corporation duly organized,
         validly existing and in good standing in its jurisdiction of
         incorporation or is a limited or general partnership duly formed and
         validly existing in its jurisdiction of organization, as the case may
         be, and each Subsidiary has full corporate or partnership power and
         authority to own, lease and operate its properties and to conduct its
         business as presently conducted and as described in the Registration
         Statement and the Prospectus (and any amendment or supplement thereto),
         and is duly registered and qualified to conduct its business and is in
         good standing in each jurisdiction or place where the nature of its
         properties or the conduct of its business requires such qualification
         or registration, except where the failure to so qualify or register
         does not have a material adverse effect on the condition (financial or
         other), business, prospects, properties, net worth or results of
         operations of the Company and the Subsidiaries, taken as a whole. All
         of the outstanding shares of capital stock of, or partnership or other
         equity ownership interests in, each of the Subsidiaries has been duly
         authorized and validly issued, are fully paid and nonassessable, and
         are owned by the Company directly or indirectly through one of the
         other Subsidiaries, free and clear of any lien, adverse claim, security
         interest, equity or other encumbrance. Except for the Subsidiaries, the
         Company does not own a material interest in or control, directly or
         indirectly, any other corporation, partnership, joint venture,
         association, trust or other business organization or entity.

                  (f) The domestication merger (as described in the Prospectus)
         has been completed and carried out in compliance with all federal and
         state securities laws and the corporate laws of the states of Delaware
         and Arizona. Pursuant to the domestication merger, the Company has
         succeeded to all of the rights, privileges, immunities and powers of
         Schuff Steel Company, an Arizona corporation (the "Former Company"),
         and all assets and liabilities formerly belonging to the Former Company
         have been transferred
<PAGE>   9
         by operation of law to and vested in the Company, unimpaired by the
         domestication merger.

                  (g) Prior to the date upon which the Registration Statement is
         declared effective, the S Corporation Distribution (as defined in the
         Prospectus) shall have been duly authorized and properly declared in
         compliance with applicable law. Authorization, declaration and payment
         of the S Corporation Distribution, as such events occur, will not be
         prohibited by, and will not constitute a breach of, any material
         agreement or debt facility to which the Company is a party.
<PAGE>   10
                  (h) There are no legal or governmental proceedings pending or,
         to the knowledge of the Company, threatened against the Company or any
         of the Subsidiaries, or to which any of their property, is subject,
         that are required to be described in the Registration Statement or the
         Prospectus (or any amendment or supplement thereto) but are not
         described as required. Except as required to be described in the
         Prospectus and so described, there is no action, suit, inquiry,
         proceeding, or investigation by or before any court or governmental or
         other regulatory or administrative agency or commission pending or, to
         the best knowledge of the Company, threatened against or involving the
         Company or any Subsidiary, nor is there any basis for such action,
         suit, inquiry, proceeding or investigation. There are no agreements,
         contracts, indentures, leases or other instruments that are required to
         be described in the Registration Statement or the Prospectus (or any
         amendment or supplement thereto) or to be filed as an exhibit to the
         Registration Statement that are not described or filed as required. All
         agreements, contracts, indentures, leases or other instruments
         described in the Registration Statement or the Prospectus (or any
         amendment or supplement thereto) or filed as an exhibit to the
         Registration Statement have been duly authorized, executed and
         delivered by the Company or a Subsidiary, constitute valid and binding
         agreements of the Company or such Subsidiary and are enforceable
         against the Company or such Subsidiary in accordance with the terms
         thereof, except insofar as the enforcement may be limited by (i) any
         bankruptcy, reorganization, insolvency, fraudulent conveyance or
         transfer, moratorium or similar laws affecting the enforcement of
         creditors' rights generally, and (ii) general principles of equity and
         public policy (regardless of whether such is considered at law or in
         equity).

                  (i) Neither the Company nor any Subsidiary is in violation of
         its certificate or articles of incorporation or bylaws, or other
         organizational documents, or of any law, ordinance, administrative or
         governmental rule or regulation applicable to the Company or any
         Subsidiary or of any decree of any court or governmental agency or body
         having jurisdiction over the Company or any Subsidiary, or in default
         in the performance of any obligation, agreement or condition contained
         in any bond, debenture, note or any other evidence of indebtedness or
         in any material agreement, indenture, lease or other instrument to
         which the Company or any Subsidiary is a party or by which any of their
         respective properties may be bound, except for such violations or
         defaults which would not have a material adverse effect on the
         condition (financial or otherwise), business, prospects, properties,
         net worth or results of operations of the Company and the Subsidiaries,
         taken as a whole.

                  (j) The execution and delivery of this Agreement and the
         performance by the Company of its obligations under this Agreement have
         been duly and validly authorized by the Company, and this Agreement has
         been duly executed and delivered by the Company and constitutes the
         valid and legally binding agreement of the Company, enforceable against
         the Company in accordance with its terms.
<PAGE>   11
                  (k) None of the issuance and sale of the Shares, the
         execution, delivery or performance of this Agreement by the Company nor
         the consummation by the Company of the transactions contemplated hereby
         (i) is or may be void or voidable by any person or entity, (ii)
         requires any consent, approval, authorization or other order of or
         registration or filing with, any court, regulatory body, administrative
         agency or other governmental body, agency or official (except such as
         may be required for the registration of the Shares under the Act and
         compliance with the securities or Blue Sky laws of various
         jurisdictions and the clearance of the offering of the Shares with the
         National Association of Securities Dealers, Inc. (the "NASD"), all of
         which will be, or have been, effected in accordance with this
         Agreement) or conflicts or will conflict with or constitutes or will
         constitute a breach of, or a default under, the certificate or articles
         of incorporation or bylaws, or other organizational documents, of the
         Company or any Subsidiary, or (iii) conflicts or will conflict with or
         constitutes a breach of, or a default under, any agreement, contract,
         indenture, lease or other instrument to which the Company or any
         Subsidiary is a party or by which any of them or any of their
         respective properties may be bound, or violates any statute, law,
         regulation or filing or judgment, injunction, order or decree
         applicable to the Company or any Subsidiary or any of their respective
         properties, or results in the creation or imposition of any lien,
         charge or encumbrance upon any property or assets of the Company or any
         Subsidiary pursuant to the terms of any agreement or instrument to
         which any of them is a party or by which any of them may be bound or to
         which any of their property or assets is subject.

                  (l) Each contract, agreement or arrangement to which the
         Company or any Subsidiary is a party or by which it is bound, or to
         which any of the property or assets of the Company or any Subsidiary is
         subject, which is material to the condition (financial or other),
         business, backlog of contracts, prospects, leases, properties, net
         worth or results of operations of the Company and its Subsidiaries,
         taken as a whole, has been duly and validly authorized, executed and
         delivered by the Company or such Subsidiary, as applicable, and neither
         the Company nor any Subsidiary is in breach or default of any
         obligation, agreement, covenant or condition contained in any such
         contract, agreement or arrangement, except for such breaches or
         defaults as would not have a material adverse effect on the condition
         (financial or other), business, backlog of contracts, prospects,
         leases, properties, net worth or results or operations of the Company
         and its Subsidiaries, taken as a whole; the Company knows of no present
         condition or fact which would prevent compliance by the Company or any
         Subsidiary or any other party thereto with the terms of any such
         contract, agreement or arrangement in all material respects; neither
         the Company nor any of its Subsidiaries has any present intention to
         exercise any rights that it may have to cancel any such contract,
         agreement or arrangement or otherwise to terminate its rights and
         obligations thereunder, and none of them has any knowledge that any
         other party to any such contract, agreement or arrangement has any
         intention not to render full performance in all material respects as
         contemplated by the terms thereof.

                  (m) Except as described in the Prospectus, the Company does
         not have outstanding and at the Closing Date (and the Additional
         Closing Date, if applicable) will
<PAGE>   12
         not have outstanding any options to purchase, or any warrants to
         subscribe for, or any securities or obligations convertible into or
         exchangeable for, or any contracts or commitments to issue or sell, any
         shares of Common Stock or any such warrants or convertible or
         exchangeable securities or obligations. No holder of securities of the
         Company has rights to the registration of any securities of the Company
         because of the filing of the Registration Statement.

                  (n) Ernst & Young LLP, the certified public accountants who
         have certified the financial statements filed as part of the
         Registration Statement and the Prospectus (or any amendment or
         supplement thereto) are independent public accountants as required by
         the Act.

                  (o) The financial statements, together with related schedules
         and notes, forming part of the Registration Statement and the
         Prospectus (and any amendment or supplement thereto), present fairly in
         all material respects the consolidated financial position, results of
         operations and changes in financial position of the Company and the
         Subsidiaries on the basis stated in the Registration Statement at the
         respective dates or for the respective periods to which they apply;
         such statements and related schedules and notes have been prepared in
         accordance with generally accepted accounting principles consistently
         applied throughout the periods involved, except as disclosed therein;
         and the other financial and statistical information and data included
         in the Registration Statement and Prospectus (and any amendment or
         supplement thereto) are accurately presented and prepared on a basis
         consistent with such financial statements and the books and records of
         the Company.

                  (p) Except as disclosed in the Registration Statement and the
         Prospectus (or any amendment or supplement thereto), subsequent to the
         respective dates as of which such information is given in the
         Registration Statement and the Prospectus (or any amendment or
         supplement thereto), neither the Company nor any Subsidiary has
         incurred any liability or obligation, direct or contingent, or entered
         into any transaction, not in the ordinary course of business, that is
         material to the Company and the Subsidiaries, taken as a whole, and
         there has not been any material change in the capital stock, or
         material increase in the short-term debt or long-term debt, of the
         Company or any Subsidiary, or any development involving or which may
         reasonably be expected to involve a potential future material adverse
         change in the condition (financial or other), business, backlog of
         contracts, prospects, leases, properties, net worth or results of
         operations of the Company and the Subsidiaries, taken as a whole.

                  (q) The Company or each Subsidiary, as the case may be, has
         good and marketable title to all its properties (real and personal)
         described in the Prospectus as being owned by them, in each case free
         and clear of all liens, claims, security interests or other
         encumbrances except such as are described in the Registration Statement
         and the Prospectus or in a document filed as an exhibit to the
         Registration Statement, and the
<PAGE>   13
         property (real and personal) held under lease by each of the Company or
         the Subsidiaries, as the case may be, is held by it under valid,
         subsisting and enforceable leases.
<PAGE>   14
                  (r) The Company has not distributed and will not distribute
         prior to the Closing Date any offering material in connection with the
         offering and sale of the Shares other than the Prepricing Prospectus,
         the Registration Statement, the Prospectus and such other materials as
         may be permitted by the Act.

                  (s) The Company has not taken, directly or indirectly, any
         action which constituted, or any action designed or which might
         reasonably be expected to cause or result in or constitute, under the
         Act, the Exchange Act or otherwise, stabilization or manipulation of
         the price of any security of the Company to facilitate the sale or
         resale of the Shares.

                  (t) The Company is not an "investment company," an "affiliated
         person" of, or "promoter" or "principal underwriter" for an investment
         company within the meaning of the Investment Company Act of 1940, as
         amended.

                  (u) The Company and each of the Subsidiaries have all permits,
         licenses, franchises, approvals, consents and authorizations of
         governmental or regulatory authorities or private persons or entities
         (hereinafter "permit" or "permits") as are necessary to own its
         properties and to conduct its business in the manner described in the
         Prospectus, subject to such qualifications as may be set forth in the
         Prospectus, except where the failure to have obtained any such permit
         has not and will not have a material adverse effect upon the condition
         (financial or other), business, backlog of contracts, prospects,
         leases, properties, net worth or results of operations of the Company
         and the Subsidiaries, taken as a whole; the Company and each of the
         Subsidiaries have fulfilled and performed all of their material
         obligations with respect to each such permit and no event has occurred
         which allows, or after notice or lapse of time would allow, revocation
         or termination of any such permit or result in any other material
         impairment of the rights of the holder of any such permit, subject in
         each case to such qualification as may be set forth in the Prospectus;
         and such permits contain no restrictions that are materially burdensome
         to the Company or any Subsidiary.

                  (v) The Company and each Subsidiary are insured by insurers of
         recognized financial responsibility against such losses and risks and
         in such amounts as are prudent and customary in the businesses in which
         they are engaged; and neither the Company nor any Subsidiary has reason
         to believe that it will not be able to renew its existing insurance
         coverage as and when such coverage expires or to obtain similar
         coverage from similar insurers as may be necessary to continue its
         business at a comparable cost.

                  (w) The Company and the Subsidiaries have existing contractual
         arrangements sufficient to provide payment and performance bonds
         required by anticipated operations; and neither the Company nor any
         Subsidiary has reason to believe that the Company will not be able to
         renew such arrangements as and when they expire or to institute similar
         arrangements as may be necessary to obtain desired payment and
         performance bonds at a comparable cost.
<PAGE>   15
                  (x) The Company and the Subsidiaries have complied and will
         comply in all material respects with wage and hour determinations
         issued by the U.S. Department of Labor under the Service Contract Act
         of 1965 and the Fair Labor Standards Act in paying its employees'
         salaries, fringe benefits and other compensation for the performance of
         work or other duties in connection with contracts with the U.S.
         government, and have complied and will comply in all material respects
         with the requirements of the Americans with Disabilities Act of 1990,
         the Family and Medical Leave Act of 1993, the Employee Retirement
         Income Security Act of 1974, the Civil Rights Act of 1964 (Title VII),
         the Age Discrimination in Employment Act and state labor laws, each as
         amended, except where the failure to comply with any such requirements
         has not, and will not, have a material adverse effect on the condition
         (financial or other) business, prospects, properties, net worth or
         results of operations of the Company and the Subsidiaries taken as a
         whole.

                  (y) The Company and the Subsidiaries maintain a system of
         internal accounting controls sufficient to provide reasonable
         assurances that (i) transactions are executed in accordance with
         management's general or specific authorizations; (ii) transactions are
         recorded as necessary to permit preparation of financial statements in
         conformity with generally accepted accounting principles and to
         maintain accountability for assets; (iii) access to assets is permitted
         only in accordance with management's general or specific
         authorizations; and (iv) the recorded accountability for assets is
         compared with existing assets at reasonable intervals and appropriate
         action is taken with respect to any differences.

                  (z) Each employee benefit plan or arrangement which the
         Company or any of its Subsidiaries sponsors or maintains has been
         operated and maintained in all material respects in compliance with all
         applicable laws and regulations including, but not limited to, the
         Employee Retirement Income Security Act of 1974 and the Consolidated
         Omnibus Budget Reconciliation Act of 1985, and each such employee
         benefit plan or arrangement and all amendments thereto intended to
         qualify under Section 401(a) of the Internal Revenue Code have been
         determined by the Internal Revenue Service to so qualify and the trusts
         created thereunder have been determined to be exempt from tax under the
         provision of Section 501(a) of the Internal Revenue Code. All ERISA
         plans of the Company have been maintained and administered in
         compliance in all material respects with the requirements of ERISA and
         the Internal Revenue Code.

                  (aa) The Company and the Subsidiaries have obtained all
         required permits, licenses and other authorizations, if any, which are
         required under federal, state, regional, county, local and foreign
         statutes, codes, ordinances and other laws relating to pollution or
         protection of the environment, including laws relating to emissions,
         discharges, releases, spilling, injecting, leaching, or disposing into
         the environment or threatened releases of pollutants, contaminants,
         chemicals or industrial, hazardous or toxic materials or wastes into
         the environment (including, without limitation, ambient air, surface
         water, ground water, land surface, or subsurface strata) or otherwise
         relating to the manufacture,
<PAGE>   16
         processing, distribution, use, treatment, storage, disposal, discharge
         into the environment, transport, or handling of pollutants,
         contaminants, chemicals or industrial, hazardous or toxic materials or
         wastes, or any regulation, rule, code, plan, order, decree, judgment,
         injunction, notice or demand letter issued, entered, promulgated, or
         approved thereunder ("Environmental Laws"), except for such permits,
         licenses and other authorizations which if not obtained would not have
         a material adverse effect on the condition (financial or other),
         business, backlog of contracts, prospects, leases, properties, net
         worth or results of operations of the Company and the Subsidiaries
         taken as a whole. The Company and the Subsidiaries are in material
         compliance with all terms and conditions of all required permits,
         licenses, and authorizations, and are also in material compliance with
         all other limitations, restrictions, conditions, standards,
         prohibitions, requirements, obligations, schedules and timetables
         contained in the Environmental Laws. There is no pending or, to the
         best knowledge of the Company after due inquiry, threatened civil or
         criminal litigation, notice of violation, warning letter or
         administrative proceeding relating in any way to the Environmental Laws
         (including, without limitation, notices, demand letters or claims under
         the Resource Conservation and Recovery Act of 1976, as amended
         ("RCRA"), the Comprehensive Environmental Response, Compensation and
         Liability Act of 1980, as amended ("CERCLA"), as amended by the
         Superfund Amendments Reauthorization Act of 1987 ("SARA"), the Toxic
         Substances Control Act of 1976, the Emergency Planning and Community
         Right-to-Know Act of 1986, the Clean Water Act of 1977, and the Clear
         Air Act of 1966, all as amended, and similar foreign, state, or local
         laws) involving the Company. The Company and the Subsidiaries have
         provided you with all testing results and documentation pertaining to
         environmental conditions on or under all properties owned or operated
         by the Company or the Subsidiaries, including all testing results and
         documentation pertaining to any contaminants or pollutants present in
         soil or groundwater. There have not been and there are not any past,
         present, or foreseeable future events, conditions, circumstances,
         activities, practices, incidents, actions or plans involving the
         Company which may interfere with or prevent continued compliance, or
         which may give rise to any common law or legal liability, or otherwise
         form the basis of any present or future claim, action, demand, suit,
         proceeding, hearing, study or investigation, based on or related to the
         manufacture, processing, distribution, use, treatment, storage,
         disposal, arrangement for disposal, transport, arrangement for
         transport or handling, or the emission, discharge, release, or
         threatened release into the environment, of any pollutant, contaminant,
         chemical or industrial, hazardous or toxic material or waste,
         including, without limitation, any liability arising, or any claim,
         action, demand, suit, proceeding, hearing, study or investigation which
         may be brought, under RCRA, CERCLA, SARA, or similar foreign, state,
         regional, county, or local laws. The Company and the Subsidiaries are
         in material compliance with the Occupational Safety and Health Act
         ("OSHA") and any comparable state laws. To the best knowledge of the
         Company after due inquiry, there is no pending or threatened civil or
         criminal litigation, notice of violation, warning letter, or
         administrative proceeding pertaining to alleged violations of OSHA or
         any comparable state law.
<PAGE>   17
                  (bb) All federal, state and local tax returns required to be
         filed by or on behalf of the Company and each Subsidiary with respect
         to all periods ended prior to the date of this Agreement have been
         filed (or are the subject of valid extensions) with the appropriate
         federal, state and local authorities and all such tax returns, as
         filed, are accurate in all material respects. All federal, state and
         local taxes (including estimated tax payments) required to be shown on
         all such tax returns or claimed to be due from or with respect to the
         business of the Company and each Subsidiary have been paid or reflected
         as a liability on the financial statements of the Company and the
         Subsidiaries for appropriate periods. All deficiencies asserted as a
         result of any federal, state or local tax audits have been paid or
         finally settled and, except as previously disclosed to the
         Representatives in writing, no issue has been raised in any such audit
         which by application of the same or similar principals, reasonably
         could be expected to result in a proposed deficiency for any other
         period not so audited. To the best knowledge of the Company, no state
         of facts exists or has existed which would constitute grounds for the
         assessment of any tax liability with respect to the periods which have
         not been audited by appropriate federal, state or local authorities.
         There are no outstanding agreements or waivers extending the statutory
         period of limitation applicable to any federal, state or local tax
         return for any period.

                  (cc) No relationship, direct or indirect, exists between or
         among the Company or any Subsidiary on the one hand, and the directors,
         officers, stockholders, customers or suppliers of the Company or any
         Subsidiary on the other hand, which is required by the Act to be
         described in the Registration Statement and the Prospectus which is not
         so described.

         SECTION 7. EXPENSES. The Company hereby agrees with the several
Underwriters that the Company will pay or cause to be paid the costs and
expenses associated with the following: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for packaging) of such copies of the Registration Statement,
each Prepricing Prospectus, the Prospectus, and all amendments or supplements to
any of them as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the offering of the Shares; (iv) the printing
(or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Shares; (v)
the registration of the Common Stock under the Exchange Act and the listing of
the Shares on the Nasdaq National Market; (vi) the reasonable fees and expenses
of counsel for the Underwriters relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
memoranda; (vii) the filing fees in connection with any filings required to be
made with the NASD in connection with the offering; (viii) the transportation
and other expenses to the extent incurred by or on behalf of representatives of
the Company in connection
<PAGE>   18
with the presentations to prospective purchasers of the Shares; (ix) the fees
and expenses of the Company's accountants and the fees and expenses of counsel
for the Company; and (x) the performance by the Company of its other obligations
under this Agreement. Notwithstanding the foregoing, in the event that the
proposed offering is terminated for the reasons set forth in Section 5(i)
hereof, the Company agrees to reimburse the Underwriters as provided in Section
5(i).

         SECTION 8. INDEMNIFICATION AND CONTRIBUTION. The Company agrees to
indemnify and hold harmless you and each other Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Prepricing Prospectus or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon an untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to an
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph with respect to
any Prepricing Prospectus shall not inure to the benefit of any Underwriter (or
to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the
Shares by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the Company
has delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending.

         If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
against the Company, such Underwriter or such controlling person shall promptly
notify in writing the party or parties against whom indemnification is being
sought (the "indemnifying party" or "indemnifying parties"), and such
indemnifying party or parties shall assume the defense thereof, including the
employment of counsel reasonably acceptable to such Underwriter or such
controlling person and payment of all fees and expenses. Such Underwriter or any
such controlling person shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the indemnifying party or parties has or have agreed in
writing to pay such fees and expenses, (ii) the indemnifying party or parties
has or have failed to assume the defense and employ counsel reasonably
acceptable to the Underwriter or such controlling person within a reasonable
period of time following notice from such Underwriter or such controlling
person, or (iii) the named parties to any such action (including any impleaded
parties) include
<PAGE>   19
both such Underwriter or such controlling person and the indemnifying party or
parties, and such Underwriter or such controlling person shall have been advised
by such counsel that representation of such indemnified party and any
indemnifying party or parties by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party or parties shall
not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person). The indemnifying party or parties shall
not be liable for any settlement of any such action effected without its or
their prior written consent, but if settled with such prior written consent, or
if there be a final judgment for the plaintiff in any such action, the
indemnifying party or parties agree to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment, but in
the case of a judgment only to the extent stated in the immediately preceding
paragraph.

         Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, and any person who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with respect
to information relating to such Underwriter furnished in writing by or on behalf
of such Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action or claim shall be brought or asserted against the
Company, any of its directors, any such officers, or any such controlling person
based on the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph, such
Underwriter shall have the rights and duties given to the Company by the
preceding paragraph (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officers, and any such controlling persons
shall have the rights and duties given to the Underwriters by the immediately
preceding paragraph.

         If the indemnification provided for in this Section 8 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
<PAGE>   20
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Shares hereunder, any determination of the relative
benefits received by the Company or the Underwriters from the offering of the
Shares shall include the net proceeds (before deducting expenses) received by
the Company, and the underwriting discounts and commissions received by the
Underwriters, from the sale of such Additional Shares, in each case computed on
the basis of the respective amounts set forth in the notes to the table on the
cover page of the Prospectus. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

         The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8 was determined by a pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in this Section 8 shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule I
hereto (or such numbers of Firm Shares increased as set forth in Section 10
hereof) and not joint.

         No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
<PAGE>   21
         Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.

         SECTION 9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:

                  (a) The Registration Statement shall have become effective not
         later than 2:00 p.m., Dallas, Texas time, on the date hereof, or at
         such later date and time as shall be consented to in writing by you,
         and all filings required by Rules 424(b) and 430A under the Act shall
         have been timely made prior to the Closing Date.

                  (b) Subsequent to the effective date of the Registration
         Statement there shall not have occurred (i) any change, or any
         development involving or which might reasonably be expected to involve
         a potential future material adverse change, in the condition (financial
         or other), business, backlog of contracts, prospects, leases,
         properties, net worth or results of operations of the Company or the
         Subsidiaries not contemplated by the Prospectus (or any supplement
         thereto) that in your opinion, as Representatives of the several
         Underwriters, would materially and adversely affect the market for the
         Shares, or (ii) any event or development relating to or involving the
         Company, the Subsidiaries, or any officer or director of the Company or
         the Subsidiaries which makes any statement in the Prospectus untrue or
         which, in the opinion of the Company and its counsel or the
         Underwriters and their counsel, requires the making of any addition to
         or change in the Prospectus in order to state a material fact required
         by the Act or any other law to be stated therein or necessary in order
         to make the statements therein not misleading, if amending or
         supplementing the Prospectus to reflect such event or development
         would, in your opinion, as Representatives of the several Underwriters,
         materially adversely affect the market for the Shares.

                  (c) You shall have received on the Closing Date (and the
         Additional Closing Date, if any) an opinion of Snell & Wilmer, L.L.P.,
         counsel for the Company, dated the Closing Date (and the Additional
         Closing Date, if any), satisfactory to you, to the effect that:
<PAGE>   22
                           (i) The Company is a corporation duly incorporated
                  and validly existing in good standing under the laws of the
                  State of Delaware with full corporate power and authority to
                  own, lease and operate its properties and to conduct its
                  business as described in the Registration Statement and the
                  Prospectus (and any amendment or supplement thereto), and is
                  duly registered and qualified to conduct its business as a
                  foreign corporation in good standing in the State of Arizona.

                           (ii) The authorized capital stock of the Company is
                  as set forth under the caption "Capitalization" in the
                  Prospectus as of the dates stated therein and the authorized
                  capital stock of the Company conforms in all material respects
                  as to legal matters to the description thereof contained in
                  the Prospectus under the caption "Description of Capital
                  Stock."

                           (iii) All shares of capital stock of the Company
                  outstanding prior to the issuance of the Shares to be issued
                  and sold by the Company hereunder have been duly authorized
                  and validly issued, are fully paid and nonassessable and have
                  not been issued in violation of or subject to any preemptive
                  rights arising under the Company's Certificate of
                  Incorporation or Bylaws or under the Delaware General
                  Corporation Law or, to the knowledge of such counsel, similar
                  rights that entitle or will entitle any person to acquire any
                  Shares upon issuance of such shares of capital stock by the
                  Company.

                           (iv) All offers and sales of the Company's capital
                  stock prior to the date hereof were made in compliance with or
                  were the subject of an available exemption from the
                  registration provisions of the Act and the registration
                  provisions of all other applicable state and federal laws or
                  regulations.

                           (v) The Shares to be issued and sold to the
                  Underwriters by the Company hereunder have been duly
                  authorized by all necessary corporate action on the part of
                  the Company and, when issued and delivered to the Underwriters
                  against payment therefor in accordance with the terms hereof,
                  will be validly issued, fully paid and nonassessable and will
                  have not been issued in violation of or subject to any
                  preemptive rights under the Company's Certificate of
                  Incorporation or Bylaws or under the Delaware General
                  Corporation Law or, to the knowledge of such counsel after
                  reasonable inquiry, similar rights that entitle or will
                  entitle any person to acquire any Shares upon the issuance of
                  such shares of capital stock by the Company.

                           (vi) The form of certificate for the Shares conforms
                  to the requirements of the Delaware General Corporation Law.

                           (vii) The domestication merger (as described in the
                  Prospectus) has been completed and carried out in compliance
                  with all federal and state securities
<PAGE>   23
                  laws and the corporate laws of the states of Delaware and
                  Arizona. Pursuant to the domestication merger, the Company has
                  succeeded to all of the rights, privileges, immunities and
                  powers of Schuff Steel Company, an Arizona corporation (the
                  "Former Company"), and all assets and liabilities formerly
                  belonging to the Former Company have been transferred by
                  operation of law to and vested in the Company, unimpaired by
                  the domestication merger.

                           (viii) The S Corporation Distribution has been duly
                  authorized and properly declared in compliance with applicable
                  law. Authorization, declaration and payment of the S
                  Corporation Distribution, as such events occur, will not
                  conflict with or cause a breach of any material agreement to
                  which the Company is a party.

                           (ix) The Registration Statement has become effective
                  under the Act and, to the knowledge of such counsel, no stop
                  order suspending the effectiveness of the Registration
                  Statement has been issued and no proceedings for that purpose
                  are pending before or contemplated by the Commission.

                           (x) The Company has the requisite corporate power and
                  authority to enter into this Agreement and to issue, sell and
                  deliver the Shares to be sold by it to the Underwriters as
                  provided herein, and this Agreement has been duly authorized,
                  executed and delivered by the Company and is a valid, legal
                  and binding agreement of the Company enforceable against the
                  Company in accordance with its terms, except insofar as
                  indemnification provisions may be limited by applicable law
                  and as to which such counsel need not express an opinion, and
                  except as the enforcement may be limited by (A) any
                  bankruptcy, reorganization, insolvency, fraudulent conveyance
                  or transfer, moratorium or similar laws affecting the
                  enforcement of creditor's rights generally, and (B) general
                  principles of equity (regardless of whether such is considered
                  at law or in equity).

                           (xi) Neither the offer, sale or delivery of the
                  Shares, the execution, delivery or performance of this
                  Agreement, compliance by the Company with all provisions
                  hereof nor consummation by the Company of the transactions
                  contemplated hereby conflicts or will conflict with or
                  constitutes or will constitute a breach of, or a default
                  under, the certificate or articles of incorporation or bylaws,
                  or other organizational documents, of the Company or any
                  Subsidiary or any agreement, indenture, lease or other
                  instrument to which the Company or any Subsidiary is a party
                  or by which it or any of their properties is bound that is
                  made an exhibit to the Registration Statement, or results or
                  will result in the creation or imposition of any lien, charge
                  or encumbrance upon any property or assets of the Company or
                  any Subsidiary; nor will any such action (other than
                  performance of the Company's indemnification obligations
                  hereunder, concerning which no opinion need be expressed)
                  result in any violation of any existing law, regulation,
<PAGE>   24
                  ruling (assuming compliance with all applicable state
                  securities and Blue Sky laws), judgment, injunction, order or
                  decree known to such counsel after reasonable inquiry,
                  applicable to the Company, the Subsidiaries or any of their
                  respective properties.

                           (xii) To the best knowledge of such counsel after due
                  inquiry, no consent, approval, authorization or other order
                  of, or registration or filing with, any court, regulatory
                  body, administrative agency or other governmental body, agency
                  or official is required on the part of the Company (except
                  such as have been obtained under the Act or such as may be
                  required under state securities or Blue Sky laws governing the
                  purchase and distribution of the Shares) for the valid
                  issuance and sale of the Shares to the Underwriters under this
                  Agreement.
<PAGE>   25
                           (xiii) The Registration Statement and the Prospectus
                  and any supplements or amendments thereto (except for the
                  financial statements and the schedules (including the notes
                  thereto and the auditors report thereon) included therein, the
                  other financial and statistical information included therein,
                  and the exhibits thereto as to which such counsel need not
                  express any opinion) comply as to form in all material
                  respects with the requirements of the Act.

                           (xiv) To the best knowledge of such counsel after due
                  inquiry, (A) other than as described or contemplated in the
                  Registration Statement or the Prospectus (or any amendment or
                  supplement thereto), there are no legal or governmental
                  proceedings pending or threatened against the Company or any
                  Subsidiary, or to which the Company or any Subsidiary, or any
                  of their respective property, is subject, that are required to
                  be described in the Registration Statement or Prospectus (or
                  any amendment or supplement thereto) that are not described as
                  required therein, and (B) there are no agreements, contracts,
                  indentures or other instruments that are required to be
                  described in the Registration Statement or the Prospectus or
                  to be filed as an exhibit to the Registration Statement that
                  are not described or filed as required, as the case may be.

                           (xv) Such counsel has reviewed all agreements,
                  contracts, indentures, leases or other documents or
                  instruments described in the Registration Statement and the
                  Prospectus (other than routine contracts entered into by the
                  Company or any Subsidiary for the purchase of materials
                  entered into in the normal course of business) and such
                  agreements, contracts, indentures, leases or other documents
                  or instruments are fairly summarized or described therein, and
                  filed as exhibits thereto as required (provided that such
                  counsel need not express any opinion as to the completeness of
                  such descriptions).

                           (xvi) To the best knowledge of such counsel after due
                  inquiry, the descriptions in the Prospectus under the captions
                  "Business -- Governmental Regulation" and "Business --
                  Environmental Regulation" of statutes, regulations or legal or
                  governmental proceedings are accurate and present fairly the
                  information required to be shown (provided that counsel need
                  not express any opinion as to the completeness of such
                  descriptions).

                           (xvii) The Company is not an "investment company" or
                  an "affiliated person" of, or "promoter" or "principal
                  underwriter" for, an "investment company," as such terms are
                  defined in the Investment Company Act of 1940, as amended.

         In rendering such opinion, counsel may rely, to the extent they deem
such reliance proper, as to matters of fact upon certificates of officers of the
Company and of government officials and in rendering the opinion set forth in
paragraph (viii) above, state that they have relied on oral advice of the
Commission that the Commission has declared the Registration Statement effective
<PAGE>   26
under the Act. Copies of all such certificates shall be furnished to you and
your counsel on the Closing Date (and the Additional Closing Date, if
applicable). Such counsel shall also be entitled to state that its opinion is
limited to the federal laws of the United States of America, the laws of the
State of Arizona and the Delaware General Corporation Law.

         In rendering such opinion, in each case where such opinion is qualified
by "the best knowledge of such counsel after reasonable inquiry," such counsel
may rely as to matters of fact upon certificates of executive and other officers
and employees of the Company or its Subsidiaries as you and such counsel shall
deem are appropriate and such other procedures as you and such counsel shall
mutually agree; provided, however, in each such case, such counsel shall state
that it has no knowledge contrary to the information contained in such
certificates or developed by such procedures and knows of no reason why you
should not reasonably rely upon the information contained in such certificates
or developed by such procedures.

         In addition, such counsel shall state the following: Such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants of the Company
and your representatives at which the contents of the Registration Statement and
the Prospectus and related matters were discussed. Although such counsel has not
verified the accuracy or completeness of the statements contained in the
Registration Statement or the Prospectus and is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, such
counsel advises you that, on the basis of the foregoing (relying as to
materiality to a large extent upon officers and other representatives of the
Company and your representatives), no facts have come to the attention of such
counsel which lead such counsel to believe that the Registration Statement
(other than (i) the financial statements and schedules (including the notes
thereto and the auditors' reports thereon) included therein, (ii) the other
financial and statistical information included therein and (iii) the exhibits
thereto, as to which such counsel has not been asked to comment), as of the time
it became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus (other than
(i) the financial statements (including the notes thereto and the auditors'
report thereon) included therein and (ii) the other financial and statistical
information included therein, as to which such counsel has not been asked to
comment), as of the issue date thereof, contained any untrue statement of a
material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

                  (d) You shall have received on the Closing Date (and the
         Additional Closing Date, if any) an opinion of Plattner, Schneidman &
         Schneider P.C., general counsel to the Company, dated the Closing Date
         (and the Additional Closing Date, if any), satisfactory to you, to the
         effect that:

                           (i) The Company is duly registered and qualified to
                  conduct business and is in good standing in each jurisdiction
                  or place where the nature of its
<PAGE>   27
                  properties or the conduct of its business requires such
                  registration or qualification, except where the failure so to
                  register or qualify does not and will not have a material
                  adverse effect on the condition (financial or other),
                  business, backlog of contracts, properties, leases, net worth
                  or results of operations of the Company and the Subsidiaries
                  taken as a whole.

                           (ii) Each of the Subsidiaries is a corporation duly
                  organized and validly existing in good standing under the laws
                  of the jurisdiction of its organization or is duly formed and
                  validly existing as a limited or general partnership, as the
                  case may be, with full corporate or partnership power and
                  authority to own, lease and operate its properties and to
                  conduct its business as described in the Registration
                  Statement and the Prospectus (and any amendment or supplement
                  thereto); and is duly registered and qualified to conduct its
                  business and is in good standing in each jurisdiction or place
                  where the nature of its properties or the conduct of its
                  business requires such registration or qualification, except
                  where the failure to so register or qualify does not and will
                  not have a material adverse effect on the condition (financial
                  or other), business, backlog of contracts, prospects, leases,
                  properties, net worth or results of operation of the Company
                  and the Subsidiaries, taken as a whole, and all of the
                  outstanding shares of capital stock of, or partnership or
                  other equity ownership interests in, each of the Subsidiaries
                  have been duly authorized by all necessary corporate or
                  partnership action and validly issued, and are fully paid and
                  nonassessable, and are owned by the Company directly, or
                  indirectly through one of the other Subsidiaries, free and
                  clear of any security interest, or to the best knowledge of
                  such counsel after reasonable inquiry, any other voting trust
                  arrangements, liens, encumbrances, equities, claims or defects
                  in title.

                           (iii) Neither the Company nor any Subsidiary is in
                  violation of its certificate or articles of incorporation or
                  bylaws, or other organizational documents, or to the best
                  knowledge of such counsel after reasonable inquiry, is in
                  default in the performance of any obligation, agreement or
                  condition contained in any material bond, indenture, note or
                  other evidence of indebtedness or in any other contract or
                  agreement material to the Company and the Subsidiaries, taken
                  as a whole.

                           (iv) To the best knowledge of such counsel after
                  reasonable inquiry, neither the Company nor any Subsidiary is
                  in violation of any law, ordinance, administrative or
                  governmental rule or regulation applicable to the Company or
                  any Subsidiary or any of their respective properties, or of
                  any decree of any court or governmental agency or body having
                  jurisdiction over the Company or any Subsidiary or any of
                  their respective properties, except where such violation does
                  not and will not have a material adverse effect on the
                  condition (financial or other), business, backlog of
                  contracts, prospects, leases, properties, net worth or results
                  of operation of the Company and the Subsidiaries, taken as a
                  whole.
<PAGE>   28
                           (v) To the best knowledge of such counsel after
                  reasonable inquiry, the Company and each Subsidiary has such
                  permits, licenses, franchises, approvals, consents and
                  authorizations of governmental or regulatory authorities
                  ("permits"), as are necessary to own their properties and to
                  conduct their business in the manner described in the
                  Prospectus, subject to such qualifications as may be set forth
                  in the Prospectus, except where the failure to have obtained
                  any such permit has not and will not have a material adverse
                  effect on the condition (financial or other), business,
                  backlog of contracts, prospects, leases, properties, net worth
                  or results of operations of the Company and the Subsidiaries,
                  taken as a whole; the Company and each Subsidiary has
                  fulfilled and performed all of their obligations with respect
                  to such permits and no event has occurred which allows, or
                  after notice or lapse of time would allow, revocation or
                  termination thereof or result in any other material impairment
                  of the rights of the holder of any such permit, subject in
                  each case to such qualification as may be set forth in the
                  Prospectus; and such permits contain no restrictions that are
                  materially burdensome to the Company or any Subsidiary.

         In addition, such counsel shall state the following: Such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants of the Company
and your representatives at which the contents of the Registration Statement and
the Prospectus and related matters were discussed. Although such counsel has not
verified the accuracy or completeness of the statements contained in the
Registration Statement or the Prospectus and is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, such
counsel advises you that, on the basis of the foregoing (relying as to
materiality to a large extent upon officers and other representatives of the
Company and your representatives), no facts have come to the attention of such
counsel which lead such counsel to believe that the Registration Statement
(other than (i) the financial statements and schedules (including the notes
thereto and the auditors' reports thereon) included therein, (ii) the other
financial and statistical information included therein and (iii) the exhibits
thereto, as to which such counsel has not been asked to comment), as of the time
it became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus (other than
(i) the financial statements (including the notes thereto and the auditors'
report thereon) included therein and (ii) the other financial and statistical
information included therein, as to which such counsel has not been asked to
comment), as of the issue date thereof, contained any untrue statement of a
material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

                  (e) You shall have received on the Closing Date (and the
         Additional Closing Date, if any) an opinion of Blackwell Sanders
         Matheny Weary & Lombardi LLP, counsel for the Underwriters, dated the
         Closing Date (and the Additional Closing Date, if any),
<PAGE>   29
         with respect to the issuance and sale of the Firm Shares, the
         Registration Statement and other related matters as you may reasonably
         request and the Company and its counsel shall have furnished to your
         counsel such documents as they may reasonably request for the purpose
         of enabling them to pass upon such matters.

                  (f) You shall have received letters addressed to you and dated
         the date hereof and the Closing Date (and the Additional Closing Date,
         if any) from Ernst & Young LLP, independent certified public
         accountants, substantially in the forms heretofore approved by you.

                  (g) (i) No stop order suspending the effectiveness of the
         Registration Statement shall have been issued and no proceedings for
         that purpose shall have been taken or, to the knowledge of the Company,
         shall be contemplated by the Commission at or prior to the Closing
         Date; (ii) there shall not have been any change in the capital stock of
         the Company nor any increase in the short-term or long-term debt of the
         Company (other than in the ordinary course of business) from that set
         forth or contemplated in the Registration Statement or the Prospectus
         (or any amendment or supplement thereto), or any development involving
         or which may reasonably be expected to involve a potential future
         material adverse change in the condition (financial or other),
         business, backlog of contracts, prospects, leases, properties, net
         worth or results of operations of the Company and the Subsidiaries,
         taken as a whole; (iii) the Company and the Subsidiaries shall not have
         any liabilities or obligations, direct or contingent (whether or not in
         the ordinary course of business) that are material to the Company and
         the Subsidiaries, taken as a whole, other than those reflected in the
         Registration Statement or the Prospectus (or any amendment or
         supplement thereto); and (iv) the representations and warranties of the
         Company contained in this Agreement shall be true and correct on and as
         of the date hereof and on and as of the Closing Date (and the
         Additional Closing Date, if any) as if made on and as of the Closing
         Date (and the Additional Closing Date, if any), and you shall have
         received a certificate, dated the Closing Date (and the Additional
         Closing Date, if any) and signed by the chief executive officer or
         president and the chief financial officer or treasurer of the Company
         (or such other officers as are acceptable to you) to the effect set
         forth in this Section 9(g) and in Section 9(h) hereof.

                  (h) The Company shall not have failed at or prior to the
         Closing Date (and the Additional Closing Date, if any) to have
         performed or complied with any of its agreements herein contained and
         required to be performed or complied with by it hereunder at or prior
         to the Closing Date (and the Additional Closing Date, if any).

                  (i) The Company shall have furnished or caused to have been
         furnished to you such further certificates and documents as you shall
         have reasonably requested.

                  (j) At or prior to the Closing Date, you shall have received
         the written commitment of each of the Company's directors and executive
         officers and certain other stockholders not to offer, sell, contract to
         sell or otherwise dispose of any shares of
<PAGE>   30
         Common Stock or rights to purchase Common Stock or any securities
         convertible into or exercisable or exchangeable for Common Stock, other
         than in accordance with this Agreement for a period of 180 days after
         commencement of the public offering of the Shares by the Underwriters
         without the prior written consent of Principal Financial Securities,
         Inc.

                  (k) The domestication merger shall have been completed.

                  (l) Prior to the date the Registration Statement becomes
         effective, the Shares which the Company agrees to sell pursuant to this
         Agreement shall have been listed, subject to notice of issuance, on the
         Nasdaq National Market.

         All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you.

         The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of the Additional
Closing Date of the conditions set forth in this Section 9, except that, if the
Additional Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (i) shall be dated as
of the Additional Closing Date and the opinions called for by paragraphs (c),
(d) and (e) shall be revised to reflect the sale of Additional Shares.

         SECTION 10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective upon the later of (a) the execution and delivery hereof by the parties
hereto, or (b) release of oral notification of the effectiveness of the
Registration Statement by the Commission.

         If any one or more of the Underwriters shall fail or refuse to purchase
Firm Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Shares, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I hereto bears to the aggregate number
of Firm Shares set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as may be specified in the Agreement Among
Underwriters, to purchase the Firm Shares which such defaulting Underwriter or
Underwriters agreed, but failed or refused, to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
96 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
which does not result in termination of this Agreement, either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven (7) days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any
<PAGE>   31
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement.

         SECTION 11. TERMINATION OF AGREEMENT. This Agreement shall be subject
to termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or the Additional Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, American Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited, (ii) trading of
the Shares on the Nasdaq National Market shall have been suspended or materially
limited, whether as the result of a stop order by the Commission or otherwise,
(iii) a general moratorium on commercial banking activities in New York, Texas,
or Arizona shall have been declared by either federal or state authorities, (iv)
there shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions or other material event the effect of which on the financial
markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (v) the Company or any Subsidiary shall have, in the
sole judgment of the Representatives, sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident, or other calamity, whether or not covered by insurance, or
from any labor disputes or any legal or governmental proceeding, or there shall
have been any material adverse change (including, without limitation, a material
change in management or control of the Company) in the condition (financial or
other), business, backlog of contracts, prospects, leases, properties, net worth
or results of operations of the Company and the Subsidiaries, taken as a whole.
Notice of such cancellation shall be promptly given to the Company and its
counsel by facsimile or telephone and shall be subsequently confirmed by letter.

         SECTION 12. INFORMATION FURNISHED BY THE UNDERWRITERS. The Company
acknowledges that the paragraph of text immediately following footnote (3) on
the front cover page of the Prospectus, the stabilizing legend appearing as the
first paragraph of text on page 2 of the Prospectus, and the statements in the
first and third paragraphs under the caption "Underwriting" in the Prospectus
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 6(b) and 8 hereof.

         SECTION 13. MISCELLANEOUS. Except as otherwise provided in Sections 5,
10 and 11 hereof, notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be delivered

                  (i)      if to the Company:

                           Schuff Steel Company
                           420 South 19th Avenue
                           Phoenix, Arizona 85069
<PAGE>   32
                           Attention:  Scott A. Schuff, President and
                                       Chief Executive Officer
                            Facsimile: (602) 251-0348
<PAGE>   33
                           with copy to:

                           Snell & Wilmer, L.L.P.
                           One Arizona Center
                           Phoenix, Arizona 85004-0001
                           Attention:  Steven D. Pidgeon
                           Facsimile:  (602) 382-6070

                  (ii)     if to the Underwriters:

                           Principal Financial Securities, Inc.
                           1445 Ross Avenue, Suite 4800
                           Dallas, Texas 75202
                           Attention:  Bruce M. Swenson
                           Facsimile:  (214) 880-6945

                           and to:

                           Cruttenden Roth Incorporated
                           11150 Santa Monica Blvd., Suite 750
                           Los Angeles, California  90025
                           Attention:  Christopher Jennings
                           Facsimile:  (310) 235-2199

                           with copy to:

                           Blackwell Sanders Matheny Weary & Lombardi LLP
                           2300 Main Street, Suite 1100
                           Kansas City, Missouri 64108
                           Attention: Gary D. Gilson
                           Facsimile: (816) 983-8080

         This Agreement has been and is solely for the benefit of the several
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 8 hereof, and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither of the terms
"successor" and "successors and assigns" as used in this Agreement shall include
a purchaser from you of any of the Shares in his status as such purchaser.

         SECTION 14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to choice of law principles thereunder. This Agreement may be
signed in various counterparts which together shall constitute one and the same
instrument. This Agreement shall
<PAGE>   34
be effective when, but only when, at least one counterpart hereof shall have
been executed on behalf of each party hereto.

         If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.

                                      Very truly yours,

                                      SCHUFF STEEL COMPANY


                                      By:______________________________________
                                      Name:____________________________________
                                      Title:___________________________________


CONFIRMED as of the date first above 
written, on behalf of itself and the
several Underwriters named in Schedule I hereto.

Principal Financial Securities, Inc.
Cruttenden Roth Incorporated

By: PRINCIPAL FINANCIAL SECURITIES, INC.


By:_________________________________
     Authorized Representative
<PAGE>   35
                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                                       NUMBER OF
NAME                                                                   FIRM SHARES
- ----                                                                   -----------
<S>                                                                    <C>
Principal Financial Securities, Inc.
Cruttenden Roth Incorporated



TOTAL..................................................................2,200,000
</TABLE>

<PAGE>   1
                                   [GRAPHIC]

NUMBER                                                                SHARES

SS

                          [SCHUFF STEEL COMPANY LOGO]

COMMON STOCK                                                       COMMON STOCK



INCORPORATED UNDER THE LAWS                                SEE REVERSE FOR
 OF THE STATE OF DELAWARE                                CERTAIN DEFINITIONS


                                                          CUSIP 808156 10 3

This Certifies that


is the record holder of



FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE,
OF

                              SCHUFF STEEL COMPANY

transferable on the books of the Corporation in person or by duly authorized
attorney on surrender of this certificate properly endorsed. This certificate
shall not be valid until countersigned and registered by the Transfer Agent and
Registrar.

WITNESS the facsimile seal of the Corporation and the signatures of its duly
authorized officers.

Dated: 


    [SIGNATURE]                                                [SIGNATURE]
                        [CORPORATE SEAL, DELAWARE]
     SECRETARY                                                  PRESIDENT

COUNTERSIGNED AND REGISTERED:
HARRIS TRUST COMPANY OF CALIFORNIA
TRANSFER AGENT
AND REGISTRAR

BY

AUTHORIZED SIGNATURE
<PAGE>   2
         The Corporation shall furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation's Secretary at the principal office of the Corporation.
     
         The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

         TEN COM  -        as tenants in common
         TEN ENT  -        as tenants by the entireties
         JT TEN   -        as joint tenants with right of
                           survivorship and not as tenants
                           in common
         
         
UNIF GIFT MIN ACT -                          Custodian 
                     -----------------------           -------------------------
                          (Cust)                                (Minor)
                  under Uniform Gifts to Minors

                  Act 
                      ---------------------------------------------------------
                                                  (State)

UNIF TRF MIN ACT  -                     Custodian (until age                 )
                      -----------------                      ----------------
                      (Cust)

                                               under Uniform Transfers
                  ----------------------------
                          (Minor)

                  to Minors Act 
                                ----------------------------------------------
                                                  (State)

Additional abbreviations may also be used though not in the above list.

  FOR VALUE RECEIVED,                  hereby sell, assign and transfer unto
                     ------------------

     PLEASE INSERT SOCIAL SECURITY OR OTHER
         IDENTIFYING NUMBER OF ASSIGNEE


- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)


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


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


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

                                                                          Shares
- --------------------------------------------------------------------------
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

                                                                        Attorney
- ------------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated
      --------------------------
                                       X
                                          -----------------------------------

                                       X
                                          -----------------------------------

                                    NOTICE:

                                    THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
                                    CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
                                    THE FACE OF THE CERTIFICATE IN EVERY
                                    PARTICULAR, WITHOUT ALTERATION OR
                                    ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed



By                                
   -------------------------------

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.


<PAGE>   1
                                                                   EXHIBIT 10.13

                              INDEMNITY AGREEMENT


        By this INDEMNITY AGREEMENT (this "Agreement"), Schuff Steel Company, a
Delaware corporation (the "Company"), and the undersigned member of its Board
of Directors ("Indemnitee") warrant, covenant and agree as follows:

        WHEREAS, Indemnitee is a member of the Board of Directors of the
Company and in such capacity is performing a valuable service for the Company;
and 

        WHEREAS, the Company's Certificate of Incorporation provides for
indemnification of directors and others to the fullest extent authorized by the
Delaware General Corporation Law ("DGCL"); and

        WHEREAS, the DGCL provides that the indemnification rights provided
thereunder are not exclusive, and that agreements may be entered into between
Company and the members of its Board of Directors with respect to
indemnification; and

        WHEREAS, in order to induce Indemnitee to serve as a member of the
Board of Directors of the Company, the Company desires to enter into this
contract with Indemnitee;

        NOW, THEREFORE, in consideration of Indemnitee's continued service as a
director after the date hereof the parties hereto agree as follows:

        1. Indemnification of Indemnitee. Subject to Section 2 below, the
Company shall hold harmless and indemnify Indemnitee against any and all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with
any threatened, pending or completed action, suit or proceeding, whether,
civil, criminal, administrative or investigative to which Indemnitee is, was or
at any time becomes a party, or is threatened to be made a party, by reason of
the fact that Indemnitee is, was or at any time becomes a director, officer,
employee or agent of the Company, or is or was serving or at any time serves at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, to the
extent currently set forth in the Company's Certificate of Incorporation, a copy
of which is attached hereto as Exhibit A. No amendment or termination of the
Company's Certificate of Incorporation shall affect or terminate the contracted
rights granted to the Indemnitee hereunder.

        2. Limitations on Indemnification. No indemnity pursuant to Section 1
hereof shall be paid by the Company:

                (a) Except to the extent the aggregate of losses to be
        indemnified hereunder exceeds the amount of losses for which the
        Indemnitee is indemnified pursuant to any policy of insurance purchased
        and maintained by the Company;

                (b) In respect to remuneration paid to Indemnitee if it shall be
        determined by a final judgment or other final adjudication that such
        remuneration was in violation of law;

                (c) On account of any suit in which final judgment is rendered
        against Indemnitee or an accounting of profits made from the purchase or
        sale by Indemnitee of securities of the Company pursuant to the
        provisions of Section 16(b) of the Securities Exchange Act of 1934 and
        amendments thereto or similar provisions of any law; or
<PAGE>   2
                (d)    If a final decision by a court having jurisdiction in 
        the matter shall determine that such indemnification is not lawful;

        3.      Continuation of Indemnification.  All obligations of the Company
hereunder shall continue during the period Indemnitee is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Indemnitee was a director
of the Company or serving in any other capacity referred to herein.

        4.      Notification and Defense of Claim.  Indemnitee shall promptly
notify the Company of any matter which is or may be the subject of any
indemnification claim hereunder. Promptly after receipt by Indemnitee of notice
of the commencement of any action, suit or proceeding, Indemnitee will notify
the Company thereof. With respect to any such action, suit or proceeding:

                (a)    The Company will be entitled to participate therein at
        its own expense;

                (b)    Except as otherwise provided below, to the extent that it
        may wish, the Company jointly with any other indemnifying party may
        assume the defense thereof, with counsel reasonably satisfactory to
        Indemnitee. After notice from the Company to Indemnitee of its election
        so to assume the defense thereof, the Company will not be liable to
        Indemnitee for any legal or other expenses subsequently incurred by
        Indemnitee in connection with the defense thereof other than reasonable
        costs of investigation or as otherwise provided below. Indemnitee shall
        have the right to employ counsel in such action, suit or proceeding but
        the fees and expenses of such counsel incurred after notice from the
        Company of its assumption of the defense thereof shall be at the expense
        of Indemnitee unless (i) the employment of counsel by Indemnitee has
        been authorized by the Company, (ii) Indemnitee shall have reasonably
        concluded that there may be a material conflict of interest between the
        Company and Indemnitee in the conduct of the defense of such action or
        (iii) the Company shall not in fact have employed counsel to assume the
        defense of such action, in each of which cases the fees and expenses of
        counsel shall be borne by the Company. The Company shall not be entitled
        to assume the defense of any action, suit or proceeding brought by or on
        behalf of the Company or as to which Indemnitee shall have made the
        determination provided for in (ii) above.

                (c)    The Company shall not be liable to indemnify Indemnitee
        under the Agreement for any amounts paid in settlement of any action or 
        claim effected without its written consent. The Company shall not settle
        any action or claim in any manner which would impose any material
        penalty or limitation on Indemnitee without Indemnitee's written
        consent. Neither the Company nor Indemnitee will unreasonably withhold
        its or his consent to any settlement proposed by the other of any matter
        for which indemnity is provided hereunder, including any settlement
        including a penalty or limitation on the Indemnitee. 

        5.  Prepaid Expenses.  The expenses (including attorneys' fees)
incurred by Indemnitee in investigating, defending, or appealing any
threatened, pending or completed action, suit or proceeding covered hereunder,
whether civil, criminal, administrative or investigative, including without
limitation any action by or in the right of the Company (other than expenses
to be paid directly by the Company in assuming the defense of any matter
covered hereby under Section 4(b) hereof), shall be paid in advance by the
Company. 

                                       2


        
<PAGE>   3
        6.  Repayment of Expenses. Indemnitee shall reimburse the Company for
all expenses paid by the Company in defending any civil or criminal action,
suit or proceeding against Indemnitee in the event and only to the extent that
it shall be finally determined that Indemnitee is not entitled to be
indemnified by the Company for such expenses under this Agreement or otherwise.

        7.  Other Rights and Remedies. The rights provided by any provision of
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under any provision of law or of the Company's
Certificate of Incorporation, any Bylaw, this or other agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while occupying any of
the positions or having any of the relationships referred to in Section 1 of
this Agreement, and shall continue after Indemnitee has ceased to occupy such
position or have such relationship.

        8.  Enforcement. In the event Indemnitee is required to bring any
action to enforce rights or to collect monies due under this Agreement and is
successful in such action, the Company shall reimburse Indemnitee for all of
Indemnitee's reasonable fees and expenses in bringing and pursuing such action.

        9.  Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.

       10.  Miscellaneous. This Agreement shall be interpreted and enforced in
accordance with the laws of Delaware. This Agreement shall be binding upon
Indemnitee and upon Company, its successors and assigns, and shall inure to the
benefit of Indemnitee, his heirs, personal representatives and assigns and to
the benefit of the Company, its successors and assigns. No amendment,
modification, termination or cancellation of this Agreement, other than
pursuant to Section 9, shall be effective unless in writing signed by both
parties hereto.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of             , 1997.

                                SCHUFF STEEL COMPANY

                                By
                                  ---------------------------------------

                                Its
                                   --------------------------------------


                                Indemnitee

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




                                       3


<PAGE>   1
                                                                    Exhibit 11
                                                                    


          STATEMENT RE: COMPUTATION OF PRO FORMA NET INCOME PER SHARE
                              SCHUFF STEEL COMPANY



<TABLE>
<CAPTION>
                                                                                         Three Months
                                                                          Year Ended        Ended
                                                                          December 31,     March 31,
                                                                              1996           1997
                                                                          ------------   ------------
                                                                             (In thousands, except
                                                                                per share data)
<S>                                                                        <C>               <C>
Historical weighted average shares outstanding(1)...................          5,000          5,115
Common share options issued within twelve months of the planned
  initial public offering(2)........................................            173             58
Common shares attributable to stockholder distribution
  from offering proceeds(3).........................................            753            753
                                                                             ------         ------
Weighted average shares outstanding.................................          5,926          5,926
                                                                             ======         ======
Pro forma net income................................................         $6,030         $1,062
                                                                             ======         ======
Pro forma net income per share......................................         $ 1.02         $ 0.18
                                                                             ======         ======
</TABLE>
- ---------------
(1) Common stock equivalents, which were dilutive, were included in the
    computation of weighted average number of shares outstanding from the date 
    of grant.
(2) These items are treated as common stock equivalents from inception since
    they were issued at prices below the expected initial public offering price 
    of the Company's common shares during the twelve month period immediately 
    preceding the offering, and are computed using the treasury stock method 
    assuming an estimated initial public offering price of $10.00 per share.
(3) These items were treated as common stock equivalents based upon the number
    of common shares expected to be issued in the initial public offering at the
    estimated initial public offering price of $10.00 per share for which the 
    net proceeds are expected to be used to make a $7 million stockholder 
    distribution.

<PAGE>   1
                                                                 Exhibit 23.1

                        CONSENT OF INDEPENDENT AUDITORS

        We consent to the reference to our firm under the caption "Experts" and
"Selected Consolidated Financial and Operating Data," and to the use of our
report dated March 21, 1997, except for Note 13 as to which the date is May 8,
1997, in Amendment No. 1 to the Registration Statement (Form S-1 No. 333-26711)
and related Prospectus of Schuff Steel Company for the registration of 2,530,000
shares of its common stock. 


                                        ERNST & YOUNG LLP


Phoenix, Arizona
June 9, 1997


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