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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File Number 000-22715

Schuff International, Inc.

Registrant’s telephone number, including area code:

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

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

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

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

      At March 15, 2002, the aggregate market value of voting stock held by non-affiliates of the Registrant was $6,102,614 based on the closing market price of the Common Stock on such date, as reported by the American Stock Exchange.

      The number of shares of the Registrant’s Common Stock outstanding at March 15, 2002 was 7,292,577.

Documents Incorporated by Reference

Portions of the Registrant’s definitive Proxy Statement relating to its annual meeting of stockholders to be held on May 20, 2002, are incorporated by reference into Part III hereof to the extent provided herein. Except as specifically incorporated by reference herein, the Proxy Statement is not deemed filed as part of this Annual Report on Form 10-K.

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This Annual Report on Form 10-K contains forward-looking statements reflecting management’s beliefs about certain aspects of our future. These statements based on current information that we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking statements include statements regarding future operating results, liquidity, capital expenditures, numbers of personnel, strategic relationships with third parties, and strategy. The forward-looking statements are generally accompanied by words such as “plan,” “estimate,” “expect,” “believe,” “should,” “would,” “could,” “anticipate” or other words that convey uncertainty of future events or outcomes. Our actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with our business. These risks are described throughout this Annual Report on Form 10-K, which you should read carefully. Please review the section under the heading “Certain Risks” for an extended discussion of the risks confronting our business. The forward-looking statements in this Annual Report on Form 10-K should be considered in the context of these risk factors.

PART I

General

      Schuff International, Inc. is a fully integrated fabricator and erector of structural steel and heavy steel plate. We fabricate and erect 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. We also manufacture short- and long-span joists, trusses and girders as well as specialize in the fabrication and erection of large-diameter water pipe, water storage tanks, pollution control scrubbers, tunnel liners, pressure vessels, strainers, filters, separators and a variety of customized projects.

      We seek to differentiate our operations by offering complete, turnkey steel construction services featuring design-build recommendations, engineering, detailing, shop fabrication and field erection. By offering an integrated package of steel construction services from a single source, we believe we are able to respond more efficiently to the design and construction challenges associated with large, complex, “fast track” construction projects.

      We currently operate primarily in the southwestern and southeastern United States with a concentration in Arizona, Nevada, Texas, Florida, Georgia and southern California. We also conduct international operations in South America and Mexico. We have experienced significant growth in revenues over the past five years. Revenues grew from $138.2 million in 1997 to $234.1 million in 2001, although revenues declined from $278.1 million in 2000.

      We offer our integrated steel construction services primarily to general contractors and engineering firms — including, among others, Hunt Construction, Fluor Daniel, Inc., Bechtel Group Inc. and Perini Corporation — that focus on a wide variety of projects, including hotels and casinos, office complexes, hospitals, mining facilities, manufacturing plants, shopping malls and centers, sports stadiums, large-diameter water pipes, power plants, dams, bridges, restaurants, convention facilities, entertainment complexes, airports, schools, churches and warehouses.

      Representative projects include: INVESCO Field at Mile High, home of the National Football League’s Denver Broncos; the Riverside Badlands Tunnel project, consisting of 7.5 miles of 12-foot diameter pipe for the Metropolitan Water District of Southern California; the Large Binocular Telescope on Mount Graham in Arizona; the Assembly Building for the Church of Jesus Christ of Latter Day Saints in Salt Lake City, Utah; Bank One Ballpark, a state-of-the-art baseball stadium featuring a fully retractable steel roof constructed for Major League Baseball’s Arizona Diamondbacks; Sherman Oaks Galleria, Phase II, a new, state-of-the-art stadium-seating theater complex with attached dining and retail space in southern California; Novartis Institute for Functional Genomics Inc., consisting of six separate three-story steel framed buildings in San Diego, California; MGM Grand Hotel & Casino in Las Vegas, one of the world’s largest hotels and casinos;

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      On June 29, 2001, we adopted a holding company form of organizational structure that provides us with a framework that generally allows for greater administrative and operational flexibility. The new structure was consummated by the merger of Schuff Merger Company into Schuff Steel Company, which was the surviving corporation. Prior to the merger, Schuff Merger Company was a wholly-owned subsidiary of Schuff International, Inc., a holding company and initially a wholly owned subsidiary of Schuff Steel Company. As a result of the merger, Schuff Merger Company ceased to exist, and Schuff Steel Company became a wholly-owned subsidiary of Schuff International, Inc., with all of Schuff Steel Company’s outstanding common stock converted, on a share for share basis, into common stock of Schuff International, Inc.

      We have the following subsidiaries:

	•	Schuff Steel Company (“Schuff Steel”) was formed in 1976 and has facilities in Arizona.
	•	Addison Steel, Inc. (“Addison”) was acquired in June 1998 and has facilities in Georgia and Florida.
	•	Quincy Joist Company (Quincy) was acquired in June 1998 and has facilities in Florida and Arizona.
	•	Six Industries, Inc. (“Six”) was acquired in August 1998 and has a facility in Texas.
	•	Aitken, Inc. (“Aitken”) was acquired in August 1998 and has a facility in Texas.
	•	Bannister Steel, Inc. (“Bannister”) was acquired in October 1998 and has a facility in California.
	•	On-Time Steel Management, Inc. (“On-Time”) was formed in August 2001 and has a facility in Arizona.

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 design-build, engineering, detailing, fabrication and erection services. Our subsidiary, Schuff Steel, is one such fully integrated player in our industry, although our Addison, Bannister and Six subsidiaries offer erection capabilities through subcontractors.

      Our Quincy subsidiary manufactures short- and long-span joists and girders. Customers include the subsidiaries of Schuff International and other steel fabricators and contractors throughout the U.S.

      Our On-Time subsidiary bids and contracts for work but subcontracts all of its fabrication and erection labor. We believe that On-Time’s model is ideal for smaller, more traditional steel construction projects that do not require complex design-build work.

      We believe 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 depend on the progress of steel fabrication and erection, timely completion of these phases 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

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      At the same time, we believe we are well positioned to complete smaller, less-complex projects throughout the U.S. Sunbelt. The vast majority of projects that come up for bid are smaller commercial projects between $200,000 and $5 million. We believe that our technology leadership in the industry, among other factors, has enabled us to realize efficiencies that make us more competitive in this higher-margin, faster-turnaround segment of the industry. We believe that our On-Time Steel Management subsidiary, with our “procure-and-subcontract” model, is especially well positioned to compete in this segment of the industry.

      We also believe that the steel fabrication and erection industry is highly fragmented and many of our 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, we believe the industry may experience consolidation.

Business Strategy

      Our objective is to achieve and maintain a leading position in the geographic and project markets in which we compete by providing timely, high-quality services to our customers, continuing to grow internally and generating stable and predictable annual revenue and earnings growth. We are pursuing these objectives with a strategy comprised of the following components:

      Selectively Pursue Large, Complex Projects. Although we will continue to pursue fast track, “design-as-you-go” projects as an important part of our overall business, we will do so with a focus on realizing attractive margins and profits on such projects. Our unique ability to offer a full range of steel construction services and project management capabilities makes us a preferred subcontractor for fast track projects in the markets we serve. This capability often enables us to compete against a few, select firms in a less traditional, more negotiated selection process on these projects, thereby allowing us to realize attractive margins while providing overall cost savings and project flexibility and efficiencies to our customers.

      Expand and Diversify Revenue Base. We are seeking to expand and diversify our revenue base by leveraging our long-term relationships with national and multi-national construction and engineering firms, national and regional accounts and other customers. We also intend to continue to grow our operations by targeting smaller projects that carry higher margins and less risk of large margin fluctuations. We believe that continuing to diversify our revenue base by completing smaller projects, such as low-rise office buildings, power plants and other commercial and industrial structures, will reduce the impact of periodic adverse market or economic conditions as well as potential margin slippage that may accompany larger projects.

      Manage Capacity Through Outsourcing. We increase our project capacity by outsourcing certain amounts of detailing, fabrication and erection work to reputable subcontractors. Outsourcing has enabled us to effectively increase the capacity of our fabrication facilities while usually maintaining margins comparable to in-house services. We believe outsourcing will play a key role in our strategy to continue to expand our presence in selected markets, where we typically provide design engineering, fabrication and project management services and utilize local subcontractors for erection. The ability to expand or contract capacity through the use of outsourcing provides us flexibility to meet changing market demands in a cost-effective manner.

      Evaluate Strategic Acquisitions. We intend to continue to evaluate highly targeted, opportunistic acquisitions that offer us (i) strategically located facilities; (ii) expansion into new geographic markets; (iii) access to new domestic and international customers; and (iv) penetration of new product market segments. Such acquisitions may also provide the additional benefits of increasing purchasing efficiencies with respect to steel and other raw materials, bonding and insurance, more efficiently allocating and utilizing our

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      Maintain Entrepreneurial Environment. We believe our management and operating structure, which emphasizes quality, innovation, flexibility, performance and safety, has contributed significantly to profitability and the ability to develop new business in competitive or difficult economic environments. Our operating structure provides incentives to employees at all levels to focus on pursuing profitable growth opportunities, attaining financial objectives and delivering superior customer service.

      Emphasize Innovative Services. We focus our design/build, engineering, detailing, fabrication, joist manufacturing and erection expertise on distinct product segments requiring unique or innovative techniques, where we typically experience less competition and more advantageous negotiated contract opportunities. We have 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 us 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 we seek to garner a leading share of the geographic and product markets in which we compete, we also seek to diversify our construction projects across a wide range of commercial, industrial, and specialty projects. The following chart sets forth the percentage of revenues attributable to our various principal geographic and project markets for 2001 and 2000:

      For additional information regarding the breakdown of our revenues and operating results, see Note 13 to the Consolidated Financial Statements appearing elsewhere in this report.

      We believe that our combined diversification into new geographic regions and specific product types has enabled and will continue to enable us to expand our revenue base and reduce the impact of periodic market or economic conditions adversely impacting one or more of our market segments.

Growth Strategy

      We believe that the steel fabrication and erection industry consists of large, complex, fast track projects and smaller projects that offer less risk and a more stable source of revenue. Both project types favor companies with extended financial, operational and technical capabilities. We intend to take advantage of these trends by utilizing our integrated service capabilities and financial and management strength. Furthermore, we intend to leverage our joist manufacturing capabilities in the southeastern and southwestern U.S. to provide these higher-margin products to steel fabricators and contractors throughout the U.S. We seek to

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      Promote Internal Growth. We intend to pursue internal growth by adding sales and marketing personnel to dedicated, fast-growing markets in which we are actively pursuing new projects by further developing our engineering and design capabilities and fabrication capacity, and by continually updating our fabrication and detailing equipment and technologies. We believe that these efforts will enhance our market share, revenues, and operating income in our existing and targeted principal markets and improve our operating capacity. We invested $6.4 million in 2000 and $4.4 million in 2001, and we intend to invest approximately $3.0 million in 2002, in new fabrication equipment and technologies. In March 2000, we completed construction of a second joist manufacturing plant located in Buckeye, Arizona, which is operated by our Quincy unit. We are also considering the expansion of certain of our other facilities and production capacities, which would increase 2002 estimated capital expenditures.

      Create Additional Project Opportunities. We believe that our ability to efficiently coordinate and implement numerous design and logistical changes on large or more complex fast track projects, combined with our established long-term relationships with key national and multi-national general contractors and other customers, will provide us with opportunities to market our services in a number of markets in which we have not yet achieved a leading position or conducted significant operations. We will also seek to capture significant market share in selected product markets such as sports stadiums, airports, mining, and smaller commercial and industrial construction projects throughout the U.S. Sunbelt by increasing sales and marketing efforts generally in these markets.

Primary Markets and Products

      Our current principal geographic markets include the southwestern United States — primarily Arizona, Nevada, Texas and southern California — and the southeastern United States — primarily Florida and Georgia. We have also provided our services in other regions of the western United States, such as Utah, New Mexico and Colorado, as well as in selected international markets.

      Southwestern and Western U.S. Markets. We are the leading steel fabrication and erection firm in Arizona and have been a prominent participant in many of Arizona’s largest and most visible public and private projects. We have completed projects in Arizona in a variety of industries, including the semiconductor and computer chip industry and the copper and other mining industries. We also have maintained a strong presence in the California market and intend to achieve a greater share of this geographic market because of an increase in new construction activity. Our typical projects in California include the fabrication and erection of new and expanded hospital facilities, large shopping malls, and commercial and industrial manufacturing, distribution and warehouse facilities, including those for several national and multinational customers.

      Within the southwestern and western United States geographic markets, we also have developed a market share in distinct product segments, particularly in the construction of large-diameter water pipes 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. We have 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 necessary to deliver the system to its ultimate destination. We also have developed a market share in the oil, gas, and petrochemical industries by providing structural steel; strainers, filters, separators and other types of measuring equipment; and pressure vessels. We also have expanded our market share into Utah with the fabrication and erection of the new assembly building for the Church of Jesus Christ of Latter Day Saints and into Colorado with the fabrication and erection of INVESCO Field at Mile High.

      Southeastern U.S. Markets. We are a leading steel fabrication, erection and joist manufacturing firm in Central Florida and Georgia. Many of our projects in these areas are in the commercial and industrial markets and typically range in size from $50,000 to $1.0 million for structural steel fabrication projects and from $5,000 to $500,000 for steel joist manufacturing projects. We also have completed several steel fabrication and

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      International Markets. In South America, our projects have been focused on large copper, gold and aluminum mining and related projects, primarily in Argentina and Chile. In addition, we have completed construction of several airport concourse and terminal facilities in the Caribbean as well as manufacturing facilities in Mexico.

Representative Projects

      Noteworthy or recently completed or awarded projects and key national and regional customers include the following:

	•	INVESCO Field at Mile High. We began erection of this $360 million facility in February 2000, and completed our portion of the project in early 2001. This showcase home of the Denver Broncos NFL team seats over 78,000 for football games, and required approximately 10,000 tons of structural steel, more than 100,000 shop fabrication hours and more than 60,000 field erection hours.
	•	Large Binocular Telescope (LBT) Project. This project is part of the Mount Graham International Observatory and is being built in Arizona at an elevation of 10,700 feet above sea level. Our responsibilities on this project included construction of the base of the observatory structure, fabrication and erection of the rotating structure, and installation of four 84,000-pound steel wheel assemblies upon which the telescope housing will rotate. When completed in 2002, the telescope will see further into space and make sharper images than any other optical telescope.
	•	LDS Assembly Building. Completed in 2000 for the Church of Jesus Christ of Latter Day Saints in Salt Lake City, Utah, this structure features a “King Pin Truss” weighing approximately 340 tons and 10 radial trusses weighing approximately 277 tons each, all of which support the main roof of the building. The entire project required approximately 11,300 tons of structural steel.
	•	Bank One Ballpark. In 1995, we were awarded a contract to provide steel fabrication and erection services for the Bank One Ballpark in Phoenix, a state-of-the-art baseball stadium for Major League Baseball’s Arizona Diamondbacks that features a fully retractable roof consisting of steel components detailed, fabricated and erected by us. The stadium contract generated approximately $61 million in revenues to us. The stadium required over 20,000 tons of structural steel and employed approximately 160 iron workers at the peak of construction.
	•	Sherman Oaks Galleria, Phase II. Completed in May 2000, the project consisted of a new, state-of-the-art stadium-seating theater complex with attached dining and retail space at the existing Sherman Oaks Galleria in southern California. Phase II required approximately 3,900 tons of structural steel.
	•	Drescher Graduate Campus, Pepperdine University, Malibu, California. This project is a 96,000-square-foot facility consisting of six one- and two-story bolted, rigid-frame structures linked by walkways, courtyards and gardens. The new campus will house the Beckman Management Center for the Graziadio School of Business and Management, the School of Public Policy, the Graduate School of Education and Psychology, the Collazo Library and Learning Center, a Student Services Center and the Graziadio Executive Center. The project required approximately 658 tons of structural steel. The new campus is scheduled for completion in early 2002.
	•	Bajo de la Alumbrera. We 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 one of the largest copper mines in the world.
	•	Helford Clinical and Research Hospital at The City of Hope. This project will involve the fabrication and erection of 6,000 tons of structural steel as well as miscellaneous steel and decking for the new 350,000-square-foot, six-story medical facility in Duarte, California, near Los Angeles. Our portion of the project is expected to commence in April 2002 and be completed in the third quarter of 2002.

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	•	New York, New York Hotel and Casino. We were the fabricator and erector for the New York, New York Hotel and Casino in Las Vegas, which required approximately 6,500 tons of structural steel. The hotel was constructed to resemble the New York City skyline, including replicas of the Statue of Liberty, the Brooklyn Bridge and other New York City landmarks.
	•	Paris Hotel & Casino. We were awarded three contracts for the fabrication and erection of the structural steel for the Paris Hotel and Casino in Las Vegas. The project included a 1.2 million- square-foot low-rise area and a 34-story tower, which includes hotel, casino, showroom, convention center and retail shopping areas as well as a 540 foot tall scale replica of the Eiffel Tower, which was built over and penetrated into the casino based on the original engineering drawings for the Eiffel Tower.
	•	Riverside Badlands Tunnel. During 2001, we completed a contract for the fabrication of 7 1/2 miles of 12-foot diameter pipe for the Riverside Badlands Tunnel Project of the Metropolitan Water District of Southern California.
	•	Salt River Siphon Replacement Project. We 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 transports water from the Salt River near Phoenix, Arizona to the major population centers of Arizona.
	•	Walt Disney World Projects. We provided the structural steel fabrication and erection services for several Walt Disney World projects in Orlando, Florida, including the United Kingdom and Canada Pavilion’s at Epcot Center, the Splash Mountain amusement park ride, and the Planet Hollywood Restaurant and Bar, which involved the fabrication of a unique multi-leg spherical steel crown covering the main building.
	•	Orange County, Florida Convention Center. We provided the steel fabrication and erection services and manufactured and erected the steel joists and trusses for multiple phases of this one million square-foot modern convention center, a complex, multi-level facility constructed in the Orlando, Florida area. The project required 6,000 tons of structural steel.
	•	Tropicana Storage Facility. We provided the fabrication and erection of the structural steel housing facility for several one million gallon steel fruit juice storage tanks for Tropicana Products, Inc.’s juice storage center in Fort Pierce, Florida.
	•	Universal Studios. We were a steel fabricator and joist manufacturer for the Universal Studios complex in Orlando, Florida, a large working movie studio and tourist attraction.
	•	National and Regional Customers. We were a preferred subcontractor for steel fabrication and erection services and joist products on a variety of projects for several national and regional customers, including PETsMART, Inc. and Albertson’s, Inc.

Business Operations

      The primary services we provide are engineering and preparation of detail drawings, shop fabrication, and field erection. Following is a description of our principal services.

      Design/Build Expertise. During the design phase of a project, our Registered Structural Engineers review preliminary and completed steel designs and make recommendations regarding types of connections, spans, possible panelization of areas, savings on fabrication techniques, and methods of erection. An integral part of this design phase is preparing a guaranteed maximum price as well as budget pricing as required.

      Engineering and Detailing. We maintain significant in-house structural engineering and detailing capabilities which enable us to implement and coordinate with our 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. Our detailers prepare detail shop drawings of the dimensions, positions, locations, and

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      Shop Fabrication. Our 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, we prepare 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, our 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. We then fabricate fittings and complete welding and inspection of each finished structural piece. We utilize 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. We also manufacture steel joists and girders in lengths ranging from five to 300 feet with a highly efficient and computerized process. The steel joist system is one of the most economical roof systems for most buildings, including office buildings, schools, churches, shopping centers and warehouses.

      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. Our field erection crews erect fabricated steel components in accordance with erection drawings prepared and updated by our detailers. Experienced field supervisors manage the erection process for each project and we employ local union erection personnel as well as reputable subcontract erection companies on an as-needed basis in areas near the project sites.

Project Management

      All contract awards to us 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 our senior management and all projects are assigned to one or more Project Managers, who assume primary responsibility for all aspects of the project. 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. Project Managers coordinate and manage design changes or other changes in scheduled completion deadlines in an effort to minimize overall project delays. We provide production bonuses to our 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 prices of subsequent change orders, and the ability to minimize costs or cost overruns on particularly complex projects or projects that exceed initial cost estimates.

      We believe that a key factor in our success has been our ability to provide through our 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. This often results in overall project cost savings and efficiencies and helps to solidify key customer relationships. In addition to our centralized project management, we also use a high percentage of skilled erection employees local to projects and utilize advanced scheduling systems to enhance our ability to provide project

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Safety and Quality Assurance

      We have adopted important safety policies that are administered and enforced by our top management. We consider workplace accident prevention to be of primary importance in all phases of our operations and provide continual training on safety procedures and techniques to all of our shop and field personnel.

      We use advanced welding and fabrication technologies, and all of our products are fabricated in accordance with applicable industry and specific customer standards and specifications. We have achieved a level three certification by the American Institute of Steel Construction (AISC) with respect to our fabrication operations, the highest level of certification available from AISC. In addition, our 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. We have developed project-specific and company-wide quality assurance and quality control programs, and utilize sophisticated x-ray and ultra-sonic systems to inspect weld seams. Substantially all joist manufacturing projects require companies to be members of the Steel Joist Institute (SJI). We are one of only 17 companies nationwide that belong to the SJI.

Sales and Estimating

      Sales managers lead our domestic sales and marketing efforts. Each sales manager is responsible primarily for our estimating, sales, and marketing efforts in defined geographic areas, including the emerging South American and Mexican markets. In addition, we employ full-time project estimators and chief estimators. Our sales representatives maintain relationships with general contractors, architects, engineers, and other potential sources of business to determine potential new projects under consideration. We generate future projects reports to track the weekly progress of new opportunities. Our sales efforts are further supported by most of our executive officers and engineering personnel, who have substantial experience in the design, fabrication, and erection of structural steel and heavy steel plate.

      We compete for new project opportunities through our relationships and interaction with our active and prospective customer base, which provides us with valuable current market information and sales opportunities. In addition, we are frequently contacted by governmental agencies in connection with public construction projects, and by large private-sector project owners and 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, our estimating division reviews and prepares projected costs of shop, field, detail drawing preparation and crane hours, steel and other raw materials, and other costs. On bid projects, a formal bid is prepared detailing the specific services and materials we plan to provide, payment terms and project completion timelines. Upon acceptance, our bid proposal is finalized in a definitive contract.

Contracting Methods and Performance Bonding

      Our projects are awarded through a competitive bid process or are obtained through negotiation, in either case generally using one of three types of contract pricing approaches: fixed price, cost-plus pricing or unit cost pricing. Under the fixed price approach, we receive the price fixed in the contract, subject to adjustment only for change orders placed by the customer. As a result, we retain all cost savings but are also responsible for cost overruns. Historically, the majority of our contracts have been fixed-price arrangements. Under the cost-plus arrangement, we receive a specified fee in excess of our direct labor and material cost, up to a maximum amount, and thus seek to gain protection against cost overruns and sometimes benefit directly from cost savings. Under unit cost pricing, we receive a specified fee based on pounds or tons of fabricated steel shipped. Such fee includes all material, labor, overhead and profit mark-ups to prepare the steel to the customer’s requirements. Steel fabricated and shipped in excess of quantities quoted is billed to the customer at the original unit cost price per pound or ton.

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      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 we obtain contracts. Generally, our contracts and projects vary in length from one to 12 months, depending on the size and complexity of the project, project owner demands, and other factors.

      Our contract arrangements with customers sometimes require us to provide payment and performance bonds and, in selected cases typically associated with international projects, letters of credit, to partially secure our obligations under our contracts. Bonding requirements typically arise in connection with public works projects and sometimes with respect to certain private contracts. Our payment and performance bonds are obtained through surety companies and typically cover the entire contract price on a project. We believe that our bonding capacity provides a competitive advantage in some cases due to our ability to obtain large bonds and to negotiate more favorable pricing of bonds.

Backlog

      We consider backlog an important indicator of our operating condition because our engineering, detailing, fabrication, and erection services are characterized by long lead times for projects and orders. We define our backlog of contract commitments, letters of intent, notices to proceed and purchase orders as the potential future revenues to be recognized upon performance of contracts and potential contracts. Backlog increases as new contract commitments, letters of intent, notices to proceed and purchase orders 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. At December 31, 2001, our backlog was $161.3 million, of which approximately $48.5 million was attributable to one project for a single customer in Arizona, and approximately $11.8 million was attributable to one project in California. Backlog at December 31, 2000 was $130.5 million. With the exception of the $48.5 million backlog amount in Arizona, we expect most of our backlog as of December 31, 2001 to be recognized as revenues in 2002. A portion, which we are unable to estimate at this time, of the Arizona project will not be recognized as revenues until 2003.

Competition

      The principal geographic and product markets we serve are highly competitive. We compete with other contractors on a local, regional, or national basis, and in certain cases, on an international basis. We have different competitors for each of our services and product segments and within each geographic market we serve. We believe that we can compete effectively for new projects both nationally and internationally and that we are among the largest competitors in our industry. Among the principal competitive factors within the industry are price, timeliness of completion of projects, quality, reputation, and the desire of customers to utilize specific contractors with whom they have favorable relationships and prior experience. Certain of our competitors have financial and operating resources greater than ours.

Governmental Regulation

      Our operations are governed by and subject to government regulations in the United States and in foreign countries in which we operate, 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 our international operations, we are subject to a number of laws and regulations, including those relating to taxation of our earnings and earnings of our personnel and our use of local personnel and suppliers. Our operations are subject to the risk of changes in federal, state, local, and foreign laws and policies which may impose restrictions on our operations, including trade restrictions, expropriation or nationalization decrees, confiscatory tax systems, primary or secondary boycotts or embargoes 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 us. We believe that we are in material compliance with the laws and regulations under which we and our operations are currently governed and have no reason to believe that future compliance with such laws and regulations will have a material and adverse effect on our operations. We cannot determine, however, to what extent our future operations and earnings may be affected by new legislation, new regulations, or changes in or new interpretations of existing regulations.

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      We are subject to licensure and hold licenses in each of the states in the United States in which we operate and in certain local jurisdictions within such states. We believe that we are in material compliance with all contractor licensing requirements in the various states in which we operate. The loss or revocation of any license or the limitation on any of our primary services thereunder in any state in which we conduct substantial operations could prevent us from conducting further operations in such jurisdiction and would have a material adverse effect on our operations.

Environmental Regulation

      Our 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, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances. We are not aware of any non-compliance with environmental laws that could have a material adverse effect on our 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 our operations.

      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 us or our 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. Our facilities have been operated for many years, and substances that are or might be considered hazardous were used at such locations. We do 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, we can give no assurance that we, or entities for which we may be responsible, will not incur liability in connection with the investigation and remediation of facilities we currently own or operate or other locations in a manner that could materially and adversely affect our operations.

Employees

      As of December 31, 2001, we employed approximately 1,200 people. The number of persons we employed on an hourly basis fluctuates directly in relation to the amount of business we perform. Certain of the fabrication and erection personnel we employ 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. We are a party to several separate collective bargaining agreements with these unions in certain of our current operating regions, which expire (if not renewed) at various times in the future. Most of our collective bargaining agreements are subject to automatic annual or other renewal unless either party elects to terminate the agreement on the scheduled expiration date. We consider our relationship with our employees to be good and, other than sporadic and unauthorized work stoppages of an immaterial nature, none of which have been related to our own labor relations, we have not experienced a work stoppage or other labor disturbance.

      We utilize third-party fabrication and erection subcontractors on many of our projects and also subcontract detailing services from time to time when we lack available in-house capacity for such services. Our inability to engage fabrication, erection and detailing subcontractors on terms favorable to us could limit our ability to complete projects in a timely manner or compete for new projects and could have a material adverse effect on our operations.

Suppliers

      We currently purchase a majority of our steel and steel components from several domestic and foreign steel producers and suppliers. However, steel is readily available from numerous foreign and domestic steel

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      Our manufacturing facilities and executive and administrative offices are located at the following sites:

(1)	We lease this facility from a partnership, the general partners of which are David A. Schuff, Nancy A. Schuff and Scott A. Schuff and the limited partners of which are family trusts of Mr. Scott A. Schuff and certain of his siblings (the “Schuff Partnership”). This lease expires on February 28, 2017. Annual rent under the lease is $605,000, subject to increase every five years commencing in 2002 pursuant to a Consumer Price Index formula.
(2)	We lease this facility from the Schuff Partnership expiring on February 28, 2017. Annual rent under the lease is $340,000, subject to increase every five years commencing in 2002 based on a Consumer Price Index formula.
(3)	We lease this facility from the Schuff Partnership expiring April 30, 2017. Annual rent under the lease is $135,000, subject to increase every five years based on a Consumer Price Index formula.

      Under each of the foregoing leases, we are also obligated to pay all taxes, insurance and maintenance costs.

      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 us 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 our operations in one or more jurisdictions. We are a defendant in lawsuits from time to time, including lawsuits arising in the normal course of its business. While

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      We maintain workers compensation insurance that provides full coverage of statutory workers compensation benefits. We also maintain employer liability insurance in our 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 from disease and contractors commercial general liability insurance in the amount of $1,000,000. In addition, we maintain umbrella coverage limits of $30,000,000. We also maintain insurance against property damage caused by fire, flood, explosion and similar catastrophic events that may result in physical damage or destruction of our facilities and property. All policies are subject to various deductibles and coverage limitations. Although our management believes that our insurance is adequate for our present needs, there can be no assurance that we will be able to maintain adequate insurance at premium rates that our management considers commercially reasonable, nor can there be any assurance that such coverage will be adequate to cover all claims that may arise.

      We periodically review the need to maintain a litigation reserve. Currently, we do not believe any reserves for our ongoing litigation are required. We seek 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 our efforts to mitigate losses will be successful or that any losses incurred will not our insurance or estimated reserves thereon.

      During 1998, we filed a claim in the Superior Court of the State of Arizona for the County of Maricopa against the Arizona Professional Baseball Team Limited Partnership and related parties for approximately $8.6 million for additional reimbursement for work that we believed was billable under the terms of the related contract with respect to changes made in completing certain aspects of the Bank One Ballpark project. Our claim was filed with that of the general contractor of the project, Perini/ Tutor-Saliba, along with several other project subcontractors. We have incurred and expensed substantially all of the costs related to this claim. On October 4, 2000, we reached a settlement with the Arizona Professional Baseball Team Limited Partnership and related parties with respect to this claim. We received an initial payment of approximately $2.4 million and received a second and final payment in the second quarter of 2001 of approximately $525,000.

      On March 9, 2001, we filed a claim in the Superior Court of the State of California for the County of Orange against the Hyperion Theatre project we recently completed for Disney’s California Adventure and Bernards Bros. Construction, the general contractor on the project. We claimed we were owed approximately $2.3 million for the unpaid contract balance, additional steel provided and work performed in the erection of structural steel on the project and damages for breach of contract and delay of work. We have incurred and expensed all of the costs related to this claim. A confidential settlement was reached and payment was received in the fourth quarter of 2001.

      On April 16, 2001, Copeland Steel Erectors, Inc. brought suit in the Circuit Court of Orange County Florida against our subsidiary, Addison Steel, Inc., its surety bond and the surety bond of the general contractor, Clark Construction, for payment of additional costs incurred on the Airside 2 Base Terminal project in Orlando, Florida. Clark Construction was the general contractor to the owner, the Greater Orlando Aviation Authority. Addison Steel, Inc. was the structural steel subcontractor to Clark Construction. Copeland Steel Erectors, Inc. was Addison’s erection subcontractor. Copeland’s claim is for approximately $1,100,000 of additional work caused by design deficiencies in the contract documents. Addison Steel, in turn, has brought a cross and third-party claim against Clark Construction for the Copeland claim as well as its own claim for additional work of approximately $400,000 for damages caused due to design deficiencies in the structural steel work. Clark Construction has submitted the claims of Addison (and its subcontractor) to the owner, the Greater Orlando Aviation Authority, as part of its much larger lawsuit in the same court in excess of $22 million for damages caused by the owner due to, among other things, design deficiencies, acceleration directives, extra costs, outstanding change orders and unpaid contract balance and retention. The owner disputes liability and claims that Clark Construction and its subcontractors delayed the project and are not

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      We did not submit any matter to a vote of our security holders during the fourth quarter of 2001.

PART II

Item 5.     Market for the Registrant’s Common Equity Securities and Related Stockholder Matters

      Since July 15, 1999, our common stock has been traded on the American Stock Exchange under the symbol “SHF.” Prior to that date, our common stock was traded on the Nasdaq National Market under the symbol “SHUF.” The common stock commenced public trading on July 1, 1997 in connection with our initial public offering. The following table sets forth the high and low last sale prices of the common stock, as reported by the American Stock Exchange and the Nasdaq National Market, for the periods indicated: