**FORM      10-K**

| þ | **ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES** **EXCHANGE                ACT OF 1934** |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

**OR**

|  ̈ | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES** **EXCHANGE                ACT OF 1934** |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

**001-33192**

*www.bmhc.com*

**Building      Materials Holding Corporation**

| **Delaware**                                           |   | **91-1834269**                                                  |
|--------------------------------------------------------|--------|-----------------------------------------------------------------|
| (State                of                incorporation) |   | (IRS                Employer                Identification No.) |

**Four      Embarcadero Center, Suite 3200, San Francisco, CA 94111**

**(415)      627-9100**

|   |                                                          |   | Name                  of each                  exchange   |
|--------|---------------------------------------------------------------|--------|-----------------------------------------------------------|
|   | Title                    of                    each Class     |   | on                    which                    registered |
|   |                                                          |   |                                                      |
|   | **Common                  Stock, $0.001 par value per share** |   | **New                  York Stock Exchange**              |

**None      **

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| Large accelerated              filer              þ | Accelerated filer               ̈ | Non-accelerated              filer  ̈ |
|----------------------------------------------------------|---------------------------------------|-------------------------------------------|

**Documents      Incorporated by Reference**

| (1) | Portions                of                the Proxy Statement to be delivered to shareholders in connection                with the                Annual Meeting of Shareholders on May 1, 2007, are incorporated by                reference in Part III of this Form                10-K. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Building      Materials Holding Corporation

**FORM      10-K**

|                        |                    |                                                                                                                                             | Page   |
|-----------------------------|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **PART                I**   |                    |                                                                                                                                             |        |
|                        | Item                1.  | Business                                                                                                                                         |   | 3  |
|                        | Item                1A. | Risk                Factors                                                                                                                      |   | 13  |
|                        | Item                1B. | Unresolved                Staff Comments                                                                                                         |   | 17  |
|                        | Item                2.  | Properties                                                                                                                                       |   | 18  |
|                        | Item                3.  | Legal                Proceedings                                                                                                                 |   | 19  |
|                        | Item                4.  | Submission                of Matters to a Vote of Security                Holders                                                                |   | 20  |
|                        |                    |                                                                                                                                             |   |   |
| **PART                II**  |                    |                                                                                                                                             |   |
|                        | Item                5.  | Market                for Registrant’s Common Equity, Related Stockholder                Matters and Issuer Purchases of Equity Securities |   | 21  |
|                        | Item                6.  | Selected                Financial Data                                                                                                           |   | 23  |
|                        | Item                7.  | Management’s                Discussion and Analysis of Financial Condition                and Results of Operations                        |   | 24  |
|                        | Item                7A. | Quantitative                and Qualitative Disclosures About Market                Risk                                                         |   | 43  |
|                        | Item                8.  | Financial                Statements and Supplementary                Data                                                                        |   | 44  |
|                        | Item                9.  | Changes                in and Disagreements With Accountants on Accounting                and Financial Disclosure                               |   | 78  |
|                        | Item                9A. | Controls                and Procedures                                                                                                           |   | 78  |
|                        | Item                9B. | Other                Information                                                                                                                 |   | 78  |
|                        |                    |                                                                                                                                             |   |   |
| **PART                III** |                    |                                                                                                                                             |   |
|                        | Item                10. | Directors,                Executive Officers and Corporate                Governance                                                             |   | 79  |
|                        | Item                11. | Executive                Compensation                                                                                                            |   | 84  |
|                        | Item                12. | Security                Ownership of Certain Beneficial Owners and                Management and Related Stockholder Matters                     |   | 84  |
|                        | Item                13. | Certain                Relationships and Related Transactions, and                Director Independence                                          |   | 84  |
|                        | Item                14. | Principal                Accounting Fees and Services                                                                                            |   | 84  |
|                        |                    |                                                                                                                                             |   |   |
| **PART                IV**  |                    |                                                                                                                                             |   |
|                        | Item                15. | Exhibits,                Financial Statement Schedules                                                                                           |   | 85  |
|                        |                    |                                                                                                                                             |   |   |
|                        |                    | Signatures                                                                                                                                       |   | 92  |

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**Introduction      - Risk Factors and Forward-Looking Statements**

*There      are a      number of business risks and uncertainties that affect our operations and      therefore could cause future results to differ from past financial performance      or expected results and ultimately affect the trading price of our common      shares. Information regarding these risks and uncertainties is contained in      Item      1A of this Form 10-K under the caption Risk Factors.*

*Certain      statements in this Form 10-K including those related to expectations about      homebuilding activity in our markets, demographic trends supporting homebuilding      and anticipated sales and operating income are forward-looking statements within      the meaning of the Private Securities Litigation Reform Act of 1995. Statements      that are not historical or current facts, including statements about our      expectations, anticipated financial results and future business prospects are      forward-looking statements. While these statements represent our current      judgment on what the future may hold and we believe these judgments are      reasonable, these statements involve risks and uncertainties that are important      factors that could cause our actual results to differ materially from those      in      forward-looking statements. These factors include, but are not limited to,      the      risks and uncertainties cited in Item 1A of this Form 10-K under the caption      Risk Factors. Undue reliance should not be placed on such forward-looking      statements, as such statements speak only as of the date of the filing of our      2006 Annual Report on Form 10-K. We undertake no obligation to update      forward-looking statements.*

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**PART      I**

| **ITEM              1.** | **Business** |
|--------------------------|--------------|

*General      *

**SelectBuild**
**BMC      West,**

*Industry      Overview*

**SelectBuild**

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Table          of Contents

**BMC      West**

*Acquisition      Strategy*

**SelectBuild      **

*2006*

| ·   | distribution                services in Southern California |
|--------------------|-------------------------------------------------------------|

| ·   | remaining                49%                interest in our existing business providing concrete services in                Arizona |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | window                installation services in Phoenix, Arizona |
|--------------------|-----------------------------------------------------------------|

| ·   | framing                services in Southern California |
|--------------------|--------------------------------------------------------|

| ·   | concrete                services in Northern Arizona |
|--------------------|------------------------------------------------------|

| ·   | wall                panel                and truss manufacturer in Palm Springs, California |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | remaining                20%                interest in our existing business providing concrete block masonry                and                concrete services in Florida |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | framing                services in Palm Springs, California and Reno,                Nevada |
|--------------------|---------------------------------------------------------------------------------------------|

*2005*

| ·   | framing                    services in San Diego,                    California |
|--------------------|---------------------------------------------------------------------------------|

| ·   | concrete                  and                  plumbing services in Las Vegas, Nevada and Southern                  California |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | additional                    20% interest in our existing business providing concrete block                    masonry and                    concrete services in Florida (initial purchase of 60% January                    2003) |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 51%                    interest                    in concrete services in Arizona |
|--------------------|------------------------------------------------------------------------------------|

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Table          of Contents

| ·   | 73%                    interest                    in plumbing services in Phoenix and Tucson, Arizona |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | stucco                  services in Las Vegas, Nevada |
|--------------------|-------------------------------------------------------|

| ·   | 51%                    interest                    in framing services in Chicago,                    Illinois |
|--------------------|----------------------------------------------------------------------------------------------------------------|

*2004*

| ·   | window                        installation services in Napa,                        California |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | 51%                      interest                      in a truss manufacturer in Fort Pierce,                      Florida |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·   | remaining                        49%                        interest in our existing framing services business in Northern                        California                        (initial purchase of 51% July 2002) |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | distribution                  services in Tucson, Arizona |
|--------------------|-----------------------------------------------------------|

**BMC      West**

*2006*

| ·   | building                materials distribution and truss manufacturing in Eastern                Idaho |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | building                materials distribution and millwork services in Houston, Texas |
|--------------------|----------------------------------------------------------------------------------------|

*2005*

| ·   | truss                manufacturer in McCall, Idaho |
|--------------------|----------------------------------------------------|

*2004*

| ·   | framing                services in Denver, Colorado |
|--------------------|-----------------------------------------------------|

|                                 |   | **2006** |    | **2005** |   | **2004** |   |
|--------------------------------------|--------|----------|---------|----------|--------|----------|--------|
| Construction                Services |   |     | **59**  | **%**    |   | 54       | %      |   | 43 | % |
| Building                Products     |   |     | **41**  |     |   | 46       |   |   | 57 |   |
|                                 |   |     | **100** | **%**    |   | 100      | %      |   | 100 | % |

*Competitive      Strengths*

*Strategically      located in growing and diverse markets*

*Superior      quality turnkey construction services*

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Table          of Contents

*Full      offering of manufactured products and other services*

*Significant      economies of scale*
*.*

*Strong      balance sheet with access to additional capital*

*Variable      cost structure*

*Experienced      management team*

*Focus      on Service*
*.*
* *

*Our      Customers*

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Table          of Contents

**SelectBuild**
**BMC      West**

*Competition*

**SelectBuild**
**BMC      West**

*Sales      and Marketing*

**SelectBuild      **

**BMC      West**

*Business      Segments*

----

Table            of Contents

|                                                   |   | **2006** |          | **2005** |   | **2004**  |   |
|--------------------------------------------------------|--------|----------|---------------|----------|--------|-----------|--------|
| **SelectBuild**                                        |   |     |          |     |   |      |   |   |   |   |
|    Construction                services |   | **$**    | **1,691,973** |     | $      | 1,358,333 |   | $ | 744,932 |   |
|    Building                products     |   |     | **39,841**    |     |   | 35,553    |   |   | 8,769 |   |
|                                                   |   | **$**    | **1,731,814** |     | $      | 1,393,886 |   | $ | 753,701 |   |
| **BMC                West**                            |   |     |          |     |   |      |   |   |   |   |
|    Construction                services |   | **$**    | **234,104**   |     | $      | 228,176   |   | $ | 159,430 |   |
|    Building                products     |   |     | **1,279,251** |     |   | 1,290,098 |   |   | 1,177,894 |   |
|                                                   |   | **$**    | **1,513,355** |     | $      | 1,518,274 |   | $ | 1,337,324 |   |
| **      ****Total**      |   | **$**    | **3,245,169** |     | $      | 2,912,160 |   | $ | 2,091,025 |   |

|                                          |   | **Sales**       |          | **Income                  (1)****(Loss)****Before****Taxes                  and** |   | **Depreciation** |   |                      |          |                    |   |
|-----------------------------------------------|--------|-----------------|---------------|-----------------------------------------------------------------------------------|--------|------------------|--------|---------------------------|---------------|-------------------------|--------|
|                                          |   | **Total**  |          | **Inter-****Segment**                                                             |   | **Trade**   |   | **Minority****Interests** |          | **and****Amortization** |   | **Capital                  (2)****Expenditures** |   | **Assets**  |   |
| **Year              Ended December 31, 2006** |   |            |          |                                                                              |   |             |   |                      |          |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| SelectBuild                                   |   | **$**           | **1,744,092** |                                                                              | **$**  | **(12,278**      | **)**  | **$**                     | **1,731,814** |                    | **$**  | **148,416** |   | **$** | **30,002** |   | **$** | **33,409** |   | **$** | **722,328** |   |
| BMC                West                       |   |            | **1,515,121** |                                                                              |   | **(1,766**       | **)**  |                      | **1,513,355** |                    |   | **124,523** |   |   | **12,178** |   |   | **33,135** |   |   | **487,703** |   |
| Corporate                                     |   |            | **—**   |                                                                              |   | **—**      |   |                      | **—**   |                    |   | **(75,484** | **)** |   | **3,104** |   |   | **6,174** |   |   | **118,880** |   |
|                                          |   | **$**           | **3,259,213** |                                                                              | **$**  | **(14,044**      | **)**  | **$**                     | **3,245,169** |                    |   | **197,455** |   | **$** | **45,284** |   | **$** | **72,718** |   | **$** | **1,328,911** |   |
| Interest                Expense               |   |            |          |                                                                              |   |             |   |                      |          |                    |   | **29,082** |   |   |   |   |   |   |   |   |   |   |
|                                          |   |            |          |                                                                              |   |             |   |                      |          |                    | **$**  | **168,373** |   |   |   |   |   |   |   |   |   |   |
| **Year              Ended December 31, 2005** |   |            |          |                                                                              |   |             |   |                      |          |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| SelectBuild                                   |   | $               | 1,395,182     |                                                                              | $      | (1,296           | )      | $                         | 1,393,886     |                    | $      | 160,957 |   | $ | 13,695 |   | $ | 62,611 |   | $ | 623,877 |   |
| BMC                West                       |   |            | 1,519,903     |                                                                              |   | (1,629           | )      |                      | 1,518,274     |                    |   | 151,030 |   |   | 11,218 |   |   | 17,335 |   |   | 447,619 |   |
| Corporate                                     |   |            | ―       |                                                                              |   | ―          |   |                      | ―       |                    |   | (72,631 | ) |   | 2,450 |   |   | ― |   |   | 79,029 |   |
|                                          |   | $               | 2,915,085     |                                                                              | $      | (2,925           | )      | $                         | 2,912,160     |                    |   | 239,356 |   | $ | 27,363 |   | $ | 79,946 |   | $ | 1,150,525 |   |
| Interest                Expense               |   |            |          |                                                                              |   |             |   |                      |          |                    |   | 14,420 |   |   |   |   |   |   |   |   |   |   |
|                                          |   |            |          |                                                                              |   |             |   |                      |          |                    | $      | 224,936 |   |   |   |   |   |   |   |   |   |   |
| **Year              Ended December 31, 2004** |   |            |          |                                                                              |   |             |   |                      |          |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| SelectBuild                                   |   | $               | 753,956       |                                                                              | $      | (255             | )      | $                         | 753,701       |                    | $      | 59,689 |   | $ | 8,216 |   | $ | 14,382 |   | $ | 268,498 |   |
| BMC                West                       |   |            | 1,338,470     |                                                                              |   | (1,146           | )      |                      | 1,337,324     |                    |   | 96,083 |   |   | 11,740 |   |   | 17,036 |   |   | 409,160 |   |
| Corporate                                     |   |            | ―       |                                                                              |   | ―          |   |                      | ―       |                    |   | (47,664 | ) |   | 2,859 |   |   | ― |   |   | 65,386 |   |
|                                          |   | $               | 2,092,426     |                                                                              | $      | (1,401           | )      | $                         | 2,091,025     |                    |   | 108,108 |   | $ | 22,815 |   | $ | 31,418 |   | $ | 743,044 |   |
| Interest                Expense               |   |            |          |                                                                              |   |             |   |                      |          |                    |   | 13,560 |   |   |   |   |   |   |   |   |   |   |
|                                          |   |            |          |                                                                              |   |             |   |                      |          |                    | $      | 94,548 |   |   |   |   |   |   |   |   |   |   |

|  | · | In                2006, $1.8 million for                the carrying amount of goodwill and $0.4 million for the carrying                amount                of certain customer relationships for                SelectBuild. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | In                2005, $1.3 million for                goodwill and certain customer relationships for                SelectBuild. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|  | · | In                2004, $1.3 million for                the carrying amount of certain properties held for sale and $1.0                million                for the carrying amount of goodwill for BMC                West. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

*Operating      Strategy*

*Purchasing*

*Management      Information Systems*

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Table          of Contents

*Safety      and Risk Management*

*Employees*

*Executive      Officers*

| Name                                           |   | Age    |   | Position                and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------------------------------------------|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Robert                E.                Mellor |   | 63     |   | Chairman                of the Board, President and Chief Executive OfficerMr.                Mellor                became Chairman of the Board of Directors in 2002 and has been President                and Chief Executive Officer since 1997. He has been a director since                1991.                He was previously Of Counsel with the law firm of Gibson, Dunn &                Crutcher LLP from 1990 to 1997. He is a director for Coeur d’Alene Mines                Corporation, The Ryland Group and Monro Muffler Brake. He is                also on the board of councilors of Save-the-Redwoods League. He does                not                serve on the audit committee of any of these boards. Mr. Mellor will                not                stand for re-election to the Board of Monro Muffler Brake in                2007. |

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Table          of Contents

| William                M.                Smartt |   | 64     |   | Senior                Vice President and Chief Financial OfficerMr.                Smartt                has been a Senior Vice President and Chief Financial Officer since                April                2004. Prior to joining the Company, he was an independent consultant                from                August 2001 to March 2004. From 1992 to 2001, he was Executive Vice                President, Chief Financial and Administrative Officer of DHL Express,                a                leader in international air express services. His previous experience                as a                Chief Financial Officer included 10 years with Di Giorgio                Corporation, a Fortune 500 Company, whose product lines included                the                distribution of building materials, prefabricated components and                framing                services. |
|-------------------------------------------------|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Michael                D.                Mahre  |   | 47     |   | Senior                Vice President - Corporate Development, President and Chief Executive                Officer - SelectBuildMr.                Mahre was                elected a Senior Vice President in 2003. He was elected Vice President                of                Corporate Development in 2001 and Chief Executive Officer of SelectBuild                in 2002. He joined the Company in 1999 as Director of Financial Planning                and Analysis. Mr. Mahre was a principal of The Cambria Group, a private                equity investment firm, from 1997 to 1998.                                                                                                                                                                                                                                                                                                                       |
|                                            |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Stanley                M.                Wilson |   | 62     |   | Senior                Vice President, President and Chief Executive Officer - BMC                WestMr.                Wilson                was elected President and CEO of BMC West in 2004 and was appointed                Senior                Vice President in 2003. He was elected Vice President in 2000 and                was                General Manager of the Pacific Division of BMC West from 1993 to                2003. Mr.                Wilson has been with the company since its beginning in 1987. His                previous                experience includes 20 years with the building materials distribution                business of Boise Cascade Corporation.                                                                                                                                                                                                                    |
|                                            |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Eric                R.                Beem      |   | 37     |   | Vice                President and ControllerMr.                Beem was                appointed Vice President in January 2006 and Controller in April                2005. He                joined the Company as Accounting Manager in 1996. Mr. Beem is a Certified                Public Accountant and his experience includes 3 years with an                international public accounting firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                            |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Mark                R.                Kailer    |   | 53     |   | Vice                President, Treasurer and Investor RelationsMr.                Kailer                has been Vice President and Treasurer since 2003. He joined the Company                in                2000 as Assistant Treasurer. He was previously Senior Manager of                Treasury                Services at Circle International Group, a publicly-traded global                logistics                company based in San Francisco, from 1997 to                2000.                                                                                                                                                                                                                                                                                                                                                                                                                         |

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Table          of Contents

| Jeffrey                F.                Lucchesi |   | 53     |   | Senior                Vice President, Chief Information OfficerMr.                Lucchesi                joined the Company in August 2004 as Senior Vice President and Chief                Information Officer. From 2000 to 2004, he was Senior Vice President                of                Worldwide Operations for Corio, Inc., an enterprise application service                provider. Mr. Lucchesi also served from 1994 to 2000 as Vice President                and                Chief Information Officer for DHL Express, a leader in international                air                express services. |
|---------------------------------------------------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Steven                H.                Pearson   |   | 59     |   | Senior                Vice President - Human ResourcesMr.                Pearson                has been Senior Vice President of Human Resources since 2001. From                1987                through 2001 he served as Vice President of Human Resources. Mr.                Pearson                has been with the Company since its beginning in 1987. His previous                experience also includes 18 years in the human resource function                of Boise                Cascade Corporation.                                                                                                 |
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Paul                S.                Street      |   | 58     |   | Senior                Vice President, Chief Administrative Officer, General Counsel and                Corporate SecretaryMr.                Street                joined the Company in 1999 as Senior Vice President, General Counsel                and                Corporate Secretary and has been Chief Administrative Officer since                2001.                He previously served as our outside General Counsel & Secretary while                a partner of the law firm of Moffatt, Thomas, Barrett, Rock &                Fields.                                                          |

----

| **ITEM              1A.** | **Risk                Factors** |
|---------------------------|---------------------------------|

*Risks      Related to Our Business*

*Our      business is dependent on demand for and supply of single-family homes which      is      influenced by changes in the overall condition of the U.S. economy, including      interest rates, job formation, consumer confidence and other important      factors.*

*There      are risks associated with our business model.*

*The      integration of acquired businesses may not result in anticipated cost savings      and revenue synergies being fully realized or may take longer to realize than      expected.*

| ·   | the                uncertainty that an acquired business will achieve anticipated operating                results; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | significant                expenses to integrate; |
|--------------------|---------------------------------------------------|

| ·   | diversion                of                management attention; |
|--------------------|------------------------------------------------------------------|

| ·   | departure                of                key personnel from the acquired                business; |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | effectively                managing entrepreneurial spirit and                decision-making; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | integration                of different information systems; |
|--------------------|--------------------------------------------------------------|

| ·   | managing                new                construction service trades; |
|--------------------|-------------------------------------------------------------------------|

| ·   | unanticipated                costs and exposure to unforeseen liabilities;                and |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | impairment                of                assets. |
|--------------------|-----------------------------------------------------|

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Table          of Contents

*Our      growth is dependent upon our ability to identify suitable acquisition      candidates.*

*Our      success is dependent upon the availability of and our ability to attract, train      and retain qualified individuals.*

*An      inability to implement and maintain cost structures that align with revenue      growth may have an adverse impact on our operating results.*

*Changes      in the business models of customers may limit our ability to provide      construction services and building products required by our      customers.*

*Our      operating results are affected by fluctuations in our costs and the availability      of sourcing channels for commodity wood products, concrete, steel and other      building materials.*

*Our      business is subject to intense competition.*

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Table          of Contents

*Weather      conditions, including natural catastrophic events, may cause our operating      results to fluctuate each quarter.*

*The      nature of our business exposes us to construction defect and product liability      claims as well as other legal proceedings.*

*We      may be adversely affected by disruptions in our information      systems.*

*Actual      and perceived vulnerabilities as a result of terrorist activities and armed      conflict may adversely impact consumer confidence and our      business.*

*Federal,      state and other regulations could impose substantial costs and/or restrictions      on our business.*

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Table          of Contents

*Numerous      other matters of a local and regional scale, including those of a political,      economic, business, competitive or regulatory nature may have an adverse impact      on our business.*

*Risks      Related to Our Shares*

*Our      share price may fluctuate significantly, which may make it difficult for      shareholders to trade*
*our      shares when desired or at attractive prices.*

*Anti-takeover      defenses in our governing documents and certain provisions under Delaware law      could*
*prevent      an acquisition of our company or limit the price that investors might be willing      to pay for our shares.*

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| **ITEM              1B.** | **Unresolved                Staff Comments** |
|---------------------------|----------------------------------------------|

----

| **ITEM              2.** | **Properties** |
|--------------------------|----------------|

| **SelectBuild** |   | **BMC                West** |   | **Corporate** |
|-----------------|--------|-----------------------------|--------|---------------|
| **Location**    |   | **Properties**              |   | **Location**  |   | **Properties** |   | **Location** |   | **Properties** |
| Arizona         |   | 15                     |   | Arizona       |   | 3 |   | California |   | 1 |
| California      |   | 23                     |   | California    |   | 7 |   | Idaho |   | 1 |
| Florida         |   | 12                     |   | Colorado      |   | 18  |   | Nevada |   | 1 |
| Illinois        |   | 1                           |   | Idaho         |   | 11  |   |   |   |   |
| Nevada          |   | 9                           |   | Montana       |   | 6 |   |   |   |   |
| Virginia        |   | 1                           |   | Nevada        |   | 3 |   |   |   |   |
|            |   |                        |   | Oregon        |   | 2 |   |   |   |   |
|            |   |                        |   | Texas         |   | 27  |   |   |   |   |
|            |   |                        |   | Utah          |   | 6 |   |   |   |   |
|            |   |                        |   | Washington    |   | 5 |   |   |   |   |

----

| **ITEM              3.** | **Legal                Proceedings** |
|--------------------------|--------------------------------------|

----

| **ITEM              4.** | **Submission                of Matters to a Vote of Security                Holders** |
|--------------------------|---------------------------------------------------------------------------------------|

----

**PART      II**

| **ITEM                5.** | **Market                for Registrant's Common Equity, Related Stockholder Matters and Issuer                Purchases of Equity                Securities** |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Common      Shares*

|                          |   | **2006**       |       | **2005**      |   |
|-------------------------------|--------|----------------|------------|---------------|--------|
|                          |   |  **High** |       |  **Low** |   | **Cash****Dividends****Declared** |   |  **High** |   |  **Low** |   | **Cash****DividendsDeclared** |   |
|                          |   |           |       |          |   |   |   |   |   |   |   |   |   |
| First                quarter  |   |           | **$40.32** |          |   | **$32.27** |   |   | **$0.10** |   |   | $24.87 |   |   | $17.00 |   |   | $                   0.04 |   |
| Second                quarter |   |           | **$**38.29 |          |   | **$25.36** |   |   | **$0.10** |   |   | $36.13 |   |   | $22.00 |   |   | $                   0.05 |   |
| Third                quarter  |   |           | **$28.01** |          |   | **$20.84** |   |   | **$0.10** |   |   | $48.66 |   |   | $34.68 |   |   | $0.075 |   |
| Fourth                quarter |   |           | **$27.72** |          |   | **$23.95** |   |   | **$0.10** |   |   | $48.11 |   |   | $34.11 |   |   | $0.075 |   |

*Share      Performance Graph*

| ·   | NYSE                Index |
|--------------------|---------------------------|

| ·   | Philadelphia                Housing Sector Index and |
|--------------------|------------------------------------------------------|

| ·   | Peer                Group                Index |
|--------------------|------------------------------------------------|

----

Table          of Contents

| ·  Avatar                Holdings Inc.            | ·  Lennar                Corp.                     | ·  Simpson                Manufacturing Co. Inc.    |
|------------------------------------------------------------------|-------------------------------------------------------------------|--------------------------------------------------------------------|
| ·  Beazer                Homes                USA | ·  Masco                Corp.                      | ·  Standard                Pacific Corp.            |
| ·  Builders                FirstSource            | ·  Meritage                Homes Corp.             | ·  Toll                Brothers                Inc. |
| ·  Brookfield                Homes                | ·  MDC                Holdings                Inc. | ·  Universal                Forest Products, Inc.   |
| ·  D.R.                Horton                Inc. | ·  NVR                Inc.                         | ·  USG                Corp.                RT  |
| ·  KB                Home                    | ·  Ryland                Group                Inc. |                                                               |

**Five        Year Cumulative Return**

----

| **ITEM              6.** | **Selected                Financial Data**  |
|--------------------------|--------------------------------------------------|

**Selected      Financial Data**

|                                                            |   | **Year                Ended December 31** |          |
|-----------------------------------------------------------------|--------|-------------------------------------------|---------------|
|                                                            |   | **2006**                                  |          | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** |   |
| Sales                (1)                                        |   |                                      |          |   |   |   |   |   |   |   |   |
| Construction                services                            |   | **$**                                     | **1,926,077** |   | $ | 1,586,509 |   | $ | 904,362 |   | $ | 498,052 |   | $ | 293,063 |   |
| Building                products                                |   |                                      | **1,319,092** |   |   | 1,325,651 |   |   | 1,186,663 |   |   | 917,019 |   |   | 868,431 |   |
| Total                sales                                      |   | **$**                                     | **3,245,169** |   | $ | 2,912,160 |   | $ | 2,091,025 |   | $ | 1,415,071 |   | $ | 1,161,494 |   |
|                                                            |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from                operations (2)        |   | **$**                                     | **197,455**   |   | $ | 239,356 |   | $ | 108,108 |   | $ | 40,429 |   | $ | 39,121 |   |
|                                                            |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                       |   | **$**                                     | **102,074**   |   | $ | 129,507 |   | $ | 53,910 |   | $ | 19,929 |   | $ | 7,015 | (3) |
|                                                            |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                per share (4)          |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                           |   |                                      | **$3.57**     |   |   | $4.61 |   |   | $2.00 |   |   | $0.75 |   |   | $0.27 |   |
| Diluted                                                         |   |                                      | **$3.45**     |   |   | $4.41 |   |   | $1.94 |   |   | $0.74 |   |   | $0.26 |   |
|                                                            |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Annual                cash                dividends declared    |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| per                share                (4)                     |   |                                      | **$0.40**     |   |   | $0.24 |   |   | $0.14 |   |   | $0.105 |   |   | $0.025 |   |
|                                                            |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Working                capital                                  |   | **$**                                     | **242,800**   |   | $ | 304,459 |   | $ | 284,173 |   | $ | 216,898 |   | $ | 170,492 |   |
| Total                assets                                     |   | **$**                                     | **1,328,911** |   | $ | 1,150,525 |   | $ | 743,044 |   | $ | 604,199 |   | $ | 503,074 |   |
| Long-term                debt, net of current portion           |   | **$**                                     | **349,161**   |   | $ | 278,169 |   | $ | 206,419 |   | $ | 186,773 |   | $ | 157,375 |   |
| Shareholders’                equity                       |   | **$**                                     | **572,629**   |   | $ | 470,061 |   | $ | 327,678 |   | $ | 271,010 |   | $ | 251,300 |   |
|                                                            |   |                                      |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                flows                provided by operations |   | **$**                                     | **273,418**   |   | $ | 198,294 |   | $ | 33,374 |   | $ | 12,479 |   | $ | 35,726 |   |

|                              |                                                                                                                                                                                                                             | **2006** |   | **2005**    | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** |   |
|-----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------|-------------|------------|----------|------------|----------|------------|----------|--------|
| (1)      | Acquisitions              provided              sales of:                                                                                                                                                                        |     | **$**  | **701,604** |       | $        | 403,919    |     | $          | 221,407  |   | $ | 155,176 |   | $ | 117,371 |   |
| (2)                               | Acquisitions              provided income                                                                                                                                                                                   |     |   |        |       |     |       |     |       |     |   |   |   |   |   |   |   |
|                         | (loss)                from                operations of:                                                                                                                                                                         |     | **$**  | **55,454**  |       | $        | 31,588     |     | $          | 2,764    |   | $ | (3,628 | ) | $ | 9,827 |   |
| (3)                               | The              transitional impairment analysis of              goodwill resulted in an impairment of $11.7 million net              of              tax.                                                                      |
| (4)                               | All                share and                per share information for all periods presented has been adjusted                to                reflect a two for one split of our common shares in February                2006. |
|                              |                                                                                                                                                                                                                             |

----

| **ITEM              7.** | **Management's                Discussion and Analysis of Financial Condition and Results****of****Operations** |
|--------------------------|----------------------------------------------------------------------------------------------------------------|

**Business      Environment and Executive Overview**

**SelectBuild**
**BMC      West**

----

Table          of Contents

***Acquisition      History***

**SelectBuild**

*2006*

| ·   | distribution                  services in Southern California |
|--------------------|---------------------------------------------------------------|

| ·   | remaining                  49%                  interest in our existing business providing concrete services in                  Arizona |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | window                  installation services in Phoenix, Arizona |
|--------------------|-------------------------------------------------------------------|

| ·   | framing                  services in Southern California |
|--------------------|----------------------------------------------------------|

| ·   | concrete                  services in Northern Arizona |
|--------------------|--------------------------------------------------------|

| ·   | wall                  panel                  and truss manufacturer in Palm Springs, California |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | remaining                  20%                  interest in our existing business providing concrete block masonry                  and                  concrete services in Florida |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | framing                  services in Palm Springs, California and Reno,                  Nevada |
|--------------------|-------------------------------------------------------------------------------------------------|

*2005*

| ·   | framing                      services in San Diego,                      California |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | concrete                    and                    plumbing services in Las Vegas, Nevada and Southern                    California |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | additional                      20% interest in our existing business providing concrete block                      masonry and                      concrete services in Florida (initial purchase of 60% January                      2003) |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 51%                      interest                      in concrete services in Arizona |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | 73%                      interest                      in plumbing services in Phoenix and Tucson, Arizona |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | stucco                    services in Las Vegas, Nevada |
|--------------------|---------------------------------------------------------|

| ·   | 51%                      interest                      in framing services in Chicago,                      Illinois |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

*2004*

| ·   | window                          installation services in Napa,                          California |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | 51%                        interest                        in a truss manufacturer in Fort Pierce,                        Florida |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | remaining                          49%                          interest in our existing framing services business in Northern                          California                          (initial purchase of 51% July 2002) |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | distribution                    services in Tucson, Arizona |
|--------------------|-------------------------------------------------------------|

**BMC      West**

*2006*

| ·   | building                materials distribution and truss manufacturing in Eastern                Idaho |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | building                materials distribution and millwork services in Houston, Texas |
|--------------------|----------------------------------------------------------------------------------------|

*2005*

| ·   | truss                manufacturer in McCall, Idaho |
|--------------------|----------------------------------------------------|

----

Table          of Contents

*2004*

| ·   | framing                services in Denver, Colorado |
|--------------------|-----------------------------------------------------|

***Performance      Measurements***

| ●Sales                                                    | ●Management                  of working capital         |
|-----------------------------------------------------------------|---------------------------------------------------------------|
| ●Income                  from                  operations | ●Return                  on                  investment |

**RESULTS      OF OPERATIONS**

***2006      COMPARED WITH 2005***

|                                                             |   | **Year                Ended December 31** |      |
|------------------------------------------------------------------|--------|-------------------------------------------|-----------|
|                                                             |   | **2006**                                  |      | **2005** |   |
| **Sales**                                                        |   |                                      |      |   |   |   |   |   |   |
| Construction                services                             |   | **$**                                     | **1,926** |   |   | **59.4** | **%** | $ | 1,586 |   |   | 54.5 | % |
| Building                products                                 |   |                                      | **1,319** |   |   | **40.6** |   |   | 1,326 |   |   | 45.5 |   |
| **Total                sales**                                   |   |                                      | **3,245** |   |   | **100.0** |   |   | 2,912 |   |   | 100.0 |   |
|                                                             |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| **Costs                and operating expenses**                  |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Cost                of goods                sold                 |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Construction                services                             |   |                                      | **1,557** |   |   | **80.8** |   |   | 1,286 |   |   | 81.1 |   |
| Building                products                                 |   |                                      | **961**   |   |   | **72.9** |   |   | 968 |   |   | 73.0 |   |
| Total                cost of                goods sold           |   |                                      | **2,518** |   |   | **77.6** |   |   | 2,254 |   |   | 77.4 |   |
| Impairment                of                assets               |   |                                      | **2**     |   |   | **—** |   |   | 1 |   |   | ― |   |
| Selling,                general and administrative expenses      |   |                                      | **532**   |   |   | **16.4** |   |   | 421 |   |   | 14.5 |   |
| Other                income,                net                  |   |                                      | **(4**    | **)** |   | **(0.1** | **)** |   | (3 | ) |   | (0.1 | ) |
| Total                costs                and operating expenses |   |                                      | **3,048** |   |   | **93.9** |   |   | 2,673 |   |   | 91.8 |   |
| **Income                from operations**                        |   |                                      | **197**   |   |   | **6.1** |   |   | 239 |   |   | 8.2 |   |
|                                                             |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Interest                expense                                  |   |                                      | **29**    |   |   | **0.9** |   |   | 14 |   |   | 0.5 |   |
| Income                taxes                                      |   |                                      | **57**    |   |   | **1.8** |   |   | 80 |   |   | 2.8 |   |
| Minority                interest income, net of income taxes     |   |                                      | **(9**    | **)** |   | **(0.3** | **)** |   | (15 | ) |   | (0.5 | ) |
|                                                             |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| **Net                income**                                    |   | **$**                                     | **102**   |   |   | **3.1** | **%** | $ | 130 |   |   | 4.4 | % |
|                                                             |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| **Earnings                per diluted share**                    |   |                                      | **$3.45** |   |   |   |   |   | $4.41 |   |   |   |   |

----

Table          of Contents

***Consolidated      Financial Results***

|                                                   |   | **2006** |      | **2005** |   | **$                Change** |   | **%                Change** |   |
|--------------------------------------------------------|--------|----------|-----------|----------|--------|-----------------------------|--------|-----------------------------|--------|
| **Sales**                                              |   |     |      |     |   |                        |   |                        |   |
|    Construction                services |   | **$**    | **1,926** |          |   | $                           | 1,586  |                             |   | $ | 340 |  |   |   | 21 | % |   |
|    Building                products     |   |     | **1,319** |          |   |                        | 1,326  |                             |   |   | (7 | ) |   |   | (1 | )% |   |
|                                                   |   | **$**    | **3,245** |          |   | $                           | 2,912  |                             |   | $ | 333 |  |   |   | 11 | % |   |
|                                                   |   |     |      |          |   |                        |   |                             |   |   |   |  |   |   |   |  |   |
| **Income                from operations**              |   | **$**    | **197**   |          |   | $                           | 239    |                             |   | $ | (42 | ) |   |   | (18 | )% |   |

----

Table          of Contents

*Interest      Expense*

*Income      Taxes*

***Business      Segments***

|                    |   | **2006**        |        | **2005**                                     |   |
|-------------------------|--------|-----------------|-------------|----------------------------------------------|--------|
|                    |   |  **Sales** |        | **Income                from****Operations** |   |  **Sales** |   | **Income                from****Operations** |   |
| SelectBuild             |   | **$**           | **1,732**   |                                              |   | **$** | **148** |  |   | $ | 1,394 |  |   | $ | 161 |  |   |
| BMC                West |   |            | **1,513**   |                                              |   |   | **124** |  |   |   | 1,518 |  |   |   | 151 |  |   |
| Corporate               |   |            | **—** |                                              |   |   | **(75** | **)** |   |   | ― |  |   |   | (73 | ) |   |
|                    |   | **$**           | **3,245**   |                                              |   | **$** | **197** |  |   | $ | 2,912 |  |   | $ | 239 |  |   |

***SelectBuild***

|                                                |   | **2006** |      | **2005** |   | **$                Change** |    | **%                Change** |   |
|-----------------------------------------------------|--------|----------|-----------|----------|--------|-----------------------------|---------|-----------------------------|--------|
| **Sales**                                           |   | **$**    | **1,732** |          |   | $                           | 1,394   |                             |   | $ | 338 |  |   |   | 24 | % |   |
|    Less:                Acquisitions |   |     | **(644**  | **)**    |   |                        | — |                             |   |   | (644 | ) |   |   | — |  |   |
|                                                |   | **$**    | **1,088** |          |   | $                           | 1,394   |                             |   | $ | (306 | ) |   |   | (22 | )% |   |
|                                                |   |     |      |     |   |                        |    |                        |   |   |   |   |   |
| **Income                from operations**           |   | **$**    | **148**   |          |   | $                           | 161     |                             |   | $ | (13 | ) |   |   | (8 | )% |   |
|    Less:                Acquisitions |   |     | **(54**   | **)**    |   |                        | — |                             |   |   | (54 | ) |   |   | — |  |   |
|                                                |   | **$**    | **94**    |          |   | $                           | 161     |                             |   | $ | (67 | ) |   |   | (42 | )% |   |

----

Table          of Contents

| ·   | reduced                operating leverage resulting from a 22% decline in sales from comparable                operations, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | compensation                and integration expenses associated with a regional operating structure                and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | operating                expenses and non-cash amortization associated with recent                acquisitions. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

***BMC      West***

|                                                |   |  **2006** |      |  ******2005****** |   |  **$                Change**  |    |   | **%                Change**  |   |
|-----------------------------------------------------|--------|----------------|-----------|------------------------|--------|-----------------------------------------|---------|--------|-----------------------------------|--------|
| **Sales**                                           |   | **$**          | **1,513** |                        |   | $                                       | 1,518   |        |                              | $      | (5 | ) |   |   | — |  |   |
|    Less:                Acquisitions |   |           | **(58**   | **)**                  |   |                                    | — |        |                              |   | (58 | ) |   |   | — |  |   |
|                                                |   | **$**          | **1,455** |                        |   | $                                       | 1,518   |        |                              | $      | (63 | ) |   |   | (4 | )% |   |
|                                                |   |           |      |                   |   |                                    |    |   |                              |   |   |   |   |
| **Income                from operations**           |   | **$**          | **124**   |                        |   | $                                       | 151     |        |                              | $      | (27 | ) |   |   | (18 | )% |   |
|    Less:                Acquisitions |   |           | **(1**    | **)**                  |   |                                    | ― |        |                              |   | (1 | ) |   |   | — |  |   |
|                                                |   | **$**          | **123**   |                        |   | $                                       | 151     |        |                              | $      | (28 | ) |   |   | (19 | )% |   |

| ·   | compensation                expenses for additional personnel to support increased sales                volume, |
|--------------------|-----------------------------------------------------------------------------------------------------------------|
| ·   | expenses                from                acquisitions not present in the prior period                and |
|--------------------|-------------------------------------------------------------------------------------------------------------|
| ·   | higher                delivery and occupancy expenses. |
|--------------------|--------------------------------------------------------|

***Corporate***

----

Table          of Contents

|                                  |   | **2006** |    | **2005** |   | **$                Change** |   | **%                Change** |   |
|---------------------------------------|--------|----------|---------|----------|--------|-----------------------------|--------|-----------------------------|--------|
| **Operating                expenses** |   |     | **$75** |          |   |                        | $73    |                             |   |   | $2 |  |   |   | 3 | % |   |

***2005      COMPARED WITH 2004***

|                                                             |   | **Year                Ended December 31** |   |
|------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                             |   | **2005**                                  |   | **2004** |   |
| **Sales**                                                        |   |                                      |   |   |   |   |   |   |   |
| Construction                services                             |   | $                                         | 1,586  |   |   | 54.5 | % | $ | 904 |   |   | 43.2 | % |
| Building                products                                 |   |                                      | 1,326  |   |   | 45.5 |   |   | 1,187 |   |   | 56.8 |   |
| **Total                sales**                                   |   |                                      | 2,912  |   |   | 100.0 |   |   | 2,091 |   |   | 100.0 |   |
|                                                             |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Costs                and operating expenses**                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Cost                of goods                sold                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Construction                services                             |   |                                      | 1,286  |   |   | 81.1 |   |   | 768 |   |   | 85.0 |   |
| Building                products                                 |   |                                      | 968    |   |   | 73.0 |   |   | 898 |   |   | 75.6 |   |
| Total                cost of                goods sold           |   |                                      | 2,254  |   |   | 77.4 |   |   | 1,666 |   |   | 79.7 |   |
| Impairment                of                assets               |   |                                      | 1      |   |   | ― |   |   | 2 |   |   | 0.1 |   |
| Selling,                general and administrative expenses      |   |                                      | 421    |   |   | 14.5 |   |   | 317 |   |   | 15.2 |   |
| Other                income,                net                  |   |                                      | (3     | ) |   | (0.1 | ) |   | (2 | ) |   | (0.1 | ) |
| Total                costs                and operating expenses |   |                                      | 2,673  |   |   | 91.8 |   |   | 1,983 |   |   | 94.9 |   |
| **Income                from operations**                        |   |                                      | 239    |   |   | 8.2 |   |   | 108 |   |   | 5.1 |   |
|                                                             |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Net                income**                                    |   | $                                         | 130    |   |   | 4.4 | % | $ | 54 |   |   | 2.6 | % |
|                                                             |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Earnings                per diluted share**                    |   |                                      | $4.41  |   |   |   |   |   | $1.94 |   |   |   |   |

----

Table          of Contents

***Consolidated      Financial Results***

|                                                   |   | **2005** |   | **2004** |   | **$                Change** |   | **%                Change** |   |
|--------------------------------------------------------|--------|----------|--------|----------|--------|-----------------------------|--------|-----------------------------|--------|
| **Sales**                                              |   |     |   |     |   |                        |   |                        |   |
|    Construction                services |   | $        | 1,586  |          |   | $                           | 904    |                             |   | $ | 682 |  |   |   | 75 | % |   |
|    Building                products     |   |     | 1,326  |          |   |                        | 1,187  |                             |   |   | 139 |  |   |   | 12 | % |   |
|                                                   |   | $        | 2,912  |          |   | $                           | 2,091  |                             |   | $ | 821 |  |   |   | 39 | % |   |
|                                                   |   |     |   |     |   |                        |   |                        |   |   |   |   |   |
| **Income                from operations**              |   | $        | 239    |          |   | $                           | 108    |                             |   | $ | 131 |  |   |   | 121 | % |   |

***Business      Segments***

|                    |   | **2005**        |    | **2004**                                     |   |
|-------------------------|--------|-----------------|---------|----------------------------------------------|--------|
|                    |   |  **Sales** |    | **Income                from****Operations** |   |  **Sales** |   | **Income                from****Operations** |   |
| SelectBuild             |   | $               | 1,394   |                                         | $      | 161 |   | $ | 754 |   | $ | 60 |   |
| BMC                West |   |            | 1,518   |                                         |   | 151 |   |   | 1,337 |   |   | 96 |   |
| Corporate               |   |            | ― |                                         |   | (73 | ) |   | ― |   |   | (48 | ) |
|                    |   | $               | 2,912   |                                         | $      | 239 |   | $ | 2,091 |   | $ | 108 |   |

----

Table          of Contents

***SelectBuild***

|                                                |   | **2005** |   | **2004** |   | **$                Change** |   | **%                Change** |   |
|-----------------------------------------------------|--------|----------|--------|----------|--------|-----------------------------|--------|-----------------------------|--------|
| **Sales**                                           |   | $        | 1,394  |     | $      | 754                         |   | $                           | 640    |   |   | 85 | % |   |
|    Less:                Acquisitions |   |     | (385   | )        |   | ―                     |   |                        | (385   | ) |   | ― |  |   |
|                                                |   | $        | 1,009  |     | $      | 754                         |   | $                           | 255    |   |   | 34 | % |   |
|                                                |   |     |   |     |   |                        |   |                        |   |   |   |   |   |
| **Income                from operations**           |   | $        | 161    |     | $      | 60                          |   | $                           | 101    |   |   | 168 | % |   |
|    Less:                Acquisitions |   |     | (31    | )        |   | ―                     |   |                        | (31    | ) |   | ― |  |   |
|                                                |   | $        | 130    |     | $      | 60                          |   | $                           | 70     |   |   | 117 | % |   |

***BMC      West***

|                                                |   | **2005** |    | **2004** |   | **$                Change** |   | **%                Change** |    |
|-----------------------------------------------------|--------|----------|---------|----------|--------|-----------------------------|--------|-----------------------------|---------|
| **Sales**                                           |   | $        | 1,518   |     | $      | 1,337                       |   | $                           | 181     |   |   | 14 | % |   |
|    Less:                Acquisitions |   |     | (19     | )        |   | ―                     |   |                        | (19     | ) |   | ― |  |   |
|                                                |   | $        | 1,499   |     | $      | 1,337                       |   | $                           | 162     |   |   | 12 | % |   |
|                                                |   |     |    |     |   |                        |   |                        |    |   |   |   |   |
| **Income                from operations**           |   | $        | 151     |     | $      | 96                          |   | $                           | 55      |   |   | 57 | % |   |
|    Less:                Acquisitions |   |     | ― |     |   | ―                     |   |                        | ― |   |   | ― |  |   |
|                                                |   | $        | 151     |     | $      | 96                          |   | $                           | 55      |   |   | 57 | % |   |

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Table          of Contents

***Corporate***

|                                  |   | **2005** |   | **2004** |   | **$                Change** |   | **%                Change** |   |
|---------------------------------------|--------|----------|--------|----------|--------|-----------------------------|--------|-----------------------------|--------|
| **Operating                expenses** |   |     | $73    |          |   |                        | $48    |                             |   |   | $25 |  |   |   | 52 | % |   |

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Table          of Contents

**LIQUIDITY      AND CAPITAL RESOURCES**

*Operations*

*Capital      Investment and Acquisitions*

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Table          of Contents

*Financing*

*Revolver*

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Table          of Contents

*Term      Note*

*Other*

*Expansion      of Credit Facility, Covenants and Maturities*

| 2007       |   | $      | 8,143   |   |
|------------|--------|--------|---------|--------|
| 2008       |   |   | 4,894   |   |
| 2009       |   |   | 4,208   |   |
| 2010       |   |   | 3,898   |   |
| 2011       |   |   | 3,716   |   |
| Thereafter |   |   | 332,445 |   |
|       |   | $      | 357,304 |   |

*Hedging      Activities*

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Table          of Contents

*Equity*

**OFF-BALANCE      SHEET ARRANGEMENTS**

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Table          of Contents

**DISCLOSURES      OF CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS**

|                                                                                                        |   | **Payments                Due by Period**             |    |             |   |
|-------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|---------|------------------|--------|
| **Contractual                Obligations**                                                                  |   | **Less                than****1                Year** |    | **1-3****Years** |   | **3-5                Years** |   | **More                than****5                Years** |   | **Total** |   | **Fair                Value** |   |
| Long-term                debt                                                                               |   |                                                  | $7.9    |             |   | $8.9 |   |   | $7.6 |   |   | $332.4 |   |   | $356.8 |   |   | $355.8 |   |
| Capital                lease                obligations                                                     |   |                                                  | 0.2     |             |   | 0.3 |   |   | — |   |   | — |   |   | 0.5 |   |   | 0.4 |   |
| Operating                leases                                                                             |   |                                                  | 26.4    |             |   | 43.9 |   |   | 24.2 |   |   | 15.4 |   |   | 109.9 |   |   | 109.9 |   |
| Unconditional                purchase obligations                                                           |   |                                                  | — |             |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Other                long-term commitments                                                                  |   |                                                  | — |             |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
|                                                                                                        |   |                                                  | $34.5   |             |   | $53.1 |   |   | $31.8 |   |   | $347.8 |   |   | $467.2 |   |   | $466.1 |   |
|                                                                                                        |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                rate                swap contracts                                                  |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional                principal amount of interest rate exchange agreements                maturing  |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Variable                to fixed                      |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   | $200.0 |   |   | 0.9 |   |
|             Average                pay rate     |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   | 5.09% |   |   |   |   |
|             Average                receive rate |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   | 5.12% |   |   |   |   |
|                                                                                                        |   |                                                  |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   | $467.0 |   |

**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

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Table          of Contents

**CRITICAL      ACCOUNTING ESTIMATES**

*Revenue      Recognition for Construction Services*

|  | · | *Estimated                  Losses on Uncompleted Contracts and Changes in Contract                  Estimates* |
|--|--------|-----------------------------------------------------------------------------------------------------------------|

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Table          of Contents

*Goodwill*

*Insurance      Deductible Reserves*

*Warranties*

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Table          of Contents

*Share-based      Compensation*

**RECENT      ACCOUNTING PRINCIPLES**

*Considering      the      Effect of Prior Year Misstatements when Quantifying Misstatements in Current      Year Financial Statements*

*Accounting      for      Uncertainty in Income Taxes. *

**BUSINESS      RISKS AND FORWARD-LOOKING STATEMENTS**

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Table          of Contents

| ·   | demand                for                and supply of single-family homes which is influenced by changes                in the                overall condition of the U.S. economy, including interest rates,                job                formation, consumer confidence and other important                factors; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·                 | our                business                model; |
|----------------------------------|---------------------------------------------------|

| ·   | the                integration of acquired businesses may not result in anticipated                cost                savings and revenue synergies being fully realized or may take longer                to                realize than expected; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                ability                to identify suitable acquisition                candidates; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | availability                of and our ability to attract, train and retain qualified                individuals; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | our                ability                to implement and maintain cost structures that align with revenue                growth; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·                 | changes                in                the business models of our customers may limit our ability to provide                construction services and building products required by our                customers; |
|----------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | fluctuations                in our costs and availability of sourcing channels for commodity                wood                products, concrete, steel and other building                materials; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | intense                competition; |
|--------------------|-------------------------------------|

| ·   | weather                conditions including natural catastrophic                events; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | exposure                to                construction defect and product liability claims as well as other                legal                proceedings; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | disruptions                in our information systems; |
|--------------------|--------------------------------------------------------|

| ·   | actual                and                perceived vulnerabilities as a result of terrorist activities and                armed                conflict; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | costs                and/or                restrictions associated with federal, state and other regulations;                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | numerous                other matters of a local and regional scale, including those of a                political, economic, business, competitive or regulatory                nature. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | price                for our                shares may fluctuate significantly;                and |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | anti-takeover                defenses and certain provisions could prevent an acquisition of our                company or limit share price. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

| **ITEM              7A.** | **Quantitative                and Qualitative Disclosures About Market                Risk** |
|---------------------------|----------------------------------------------------------------------------------------------|

*Inventory      Price Risk*

*Interest      Rate Risk*

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Table          of Contents

| **ITEM              8.** | **Financial                Statements and Supplementary Data**  |
|--------------------------|----------------------------------------------------------------------|

**Building      Materials Holding Corporation**

**Consolidated      Statements of Income**

**(thousands,      except per share data)**

|                                                                                    |   | **Year                  Ended December 31**  |          |
|-----------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------------|
|                                                                                    |   | **2006**                                          |          | **2005** |   | **2004** |   |
| **Sales**                                                                               |   |                                              |          |   |   |   |   |
|    Construction                  services                                |   | **$**                                             | **1,926,077** |   | $ | 1,586,509 |   | $ | 904,362 |   |
|    Building                  products                                    |   |                                              | **1,319,092** |   |   | 1,325,651 |   |   | 1,186,663 |   |
| **      Total                  sales**                    |   |                                              | **3,245,169** |   |   | 2,912,160 |   |   | 2,091,025 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| **Costs                  and operating expenses**                                       |   |                                              |          |   |   |   |   |   |   |   |
|    Cost                  of goods sold                                   |   |                                              |          |   |   |   |   |   |   |   |
|       Construction                  services              |   |                                              | **1,557,324** |   |   | 1,285,949 |   |   | 768,407 |   |
|       Building                  products                  |   |                                              | **960,565**   |   |   | 967,877 |   |   | 897,725 |   |
|    Impairment                  of assets                                 |   |                                              | **2,237**     |   |   | 1,320 |   |   | 2,274 |   |
|    Selling,                  general and administrative expenses         |   |                                              | **531,958**   |   |   | 420,862 |   |   | 317,002 |   |
|    Other                  income, net                                    |   |                                              | **(4,370**    | **)** |   | (3,204 | ) |   | (2,491 | ) |
|       Total                  costs and operating expenses |   |                                              | **3,047,714** |   |   | 2,672,804 |   |   | 1,982,917 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| **Income                  from operations**                                             |   |                                              | **197,455**   |   |   | 239,356 |   |   | 108,108 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| Interest                  expense                                                       |   |                                              | **29,082**    |   |   | 14,420 |   |   | 13,560 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| Income                  before                  income taxes and minority interests     |   |                                              | **168,373**   |   |   | 224,936 |   |   | 94,548 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| Income                  taxes                                                           |   |                                              | **56,806**    |   |   | 79,915 |   |   | 35,198 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| Minority                  interests income, net of income taxes                         |   |                                              | **(9,493**    | **)** |   | (15,514 | ) |   | (5,440 | ) |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| **Net                  income**                                                         |   | **$**                                             | **102,074**   |   | $ | 129,507 |   | $ | 53,910 |   |
|                                                                                    |   |                                              |          |   |   |   |   |   |   |   |
| **Net                  income per share:**                                              |   |                                              |          |   |   |   |   |   |   |   |
|    Basic                                                                 |   |                                              | **$3.57**     |   |   | $4.61 |   |   | $2.00 |   |
|    Diluted                                                               |   |                                              | **$3.45**     |   |   | $4.41 |   |   | $1.94 |   |

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Table          of Contents

**Building      Materials Holding Corporation**

**Consolidated      Balance Sheets**

**(thousands,      except share data)**

|                                                          |   | **December                  31** |     |   |            | **December                  31** |
|---------------------------------------------------------------|--------|----------------------------------|----------|--------|-----------------|----------------------------------|
|                                                          |   | **2006**                         | **2005** |   |            |                             | **2006** | **2005** |
| **ASSETS**                                                    |   |                             |     |   |            |                             | **LIABILITIES,                  MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY** |   |   |   |   |   |
| Cash                  and cash                  equivalents   | **$**  | **74,272 **                 |     | $      | 30,078     |                             |   |   |   |   |   |   |
| Marketable                  securities                        |   | **4,337 **                  |     |   | 3,645      |                             | Accounts                  payable | **$** | **110,961 ** |   | $ | 146,627  |
| Receivables,                  net of allowances               |   |                             |     |   |            |                             | Accrued                  compensation |   | **48,552 ** |   |   | 65,928  |
|    of                  $4,487 and $3,756       |   | **279,829 **                |     |   | 363,527    |                             | Insurance                  deductible reserves |   | **24,931 ** |   |   | 21,872  |
| Inventory                                                     |   | **144,366 **                |     |   | 168,282    |                             | Other                  accrued                  liabilities |   | **103,402 ** |   |   | 51,579  |
| Unbilled                  receivables                         |   | **43,527 **                 |     |   | 56,128     |                             | Billings                  in                  excess of costs and estimated |   |   |   |   |   |
| Deferred                  income taxes                        |   | **8,914 **                  |     |   | 5,768      |                             | earnings |   | **27,622 ** |   |   | 33,799  |
| Prepaid                  expenses and other                   |   | **11,166 **                 |     |   | 6,967      |                             | Current                  portion of long-term debt |   | **8,143 ** |   |   | 10,131  |
|    Total                  current assets       |   | **566,411 **                |     |   | 634,395    |                             | Total                  current                  liabilities |   | **323,611 ** |   |   | 329,936  |
|                                                          |   |                             |     |   |            |                             |   |   |   |   |   |   |
| Property                  and                  equipment      |   |                             |     |   |            |                             | Deferred                  income taxes |   | **9,138 ** |   |   | 6,911  |
|    Land                                        |   | **62,367 **                 |     |   | 47,328     |                             | Insurance                  deductible reserves |   | **25,841 ** |   |   | 20,753  |
|    Buildings                  and improvements |   | **139,602 **                |     |   | 118,556    |                             | Long-term                  debt |   | **349,161 ** |   |   | 278,169  |
|    Equipment                                   |   | **188,285 **                |     |   | 166,633    |                             | Other                  long-term liabilities |   | **41,390 ** |   |   | 30,689  |
|    Construction                  in progress   |   | **8,579 **                  |     |   | 9,485      |                             | Total                  liabilities |   | **749,141 ** |   |   | 666,458  |
|    Accumulated                  depreciation   |   | **(139,342)**                    |     |   | (121,525)       |                             |   |   |   |   |   |   |
| Marketable                  securities                        |   | **53,513 **                 |     |   | 28,875     |                             | Minority                  interests |   | **7,141 ** |   |   | 14,006  |
| Deferred                  loan                  costs         |   | **5,481 **                  |     |   | 3,616      |                             |   |   |   |   |   |   |
| Other                  long-term assets                       |   | **27,223 **                 |     |   | 20,465     |                             | Commitments                  and contingent liabilities |   | **— ** |   |   | ―  |
| Other                  intangibles, net                       |   | **108,792 **                |     |   | 55,227     |                             |   |   |   |   |   |   |
| Goodwill                                                      |   | **308,000 **                |     |   | 187,470    |                             | Shareholders’                  equity |   |   |   |   |   |
|    Total                  assets               | **$**  | **1,328,911 **              |     | $      | 1,150,525  |                             | Common                  shares,                  $0.001 par value: |   |   |   |   |   |
|                                                          |   |                             |     |   |            |                             | authorized                  50                  million; issued and |   |   |   |   |   |
|                                                          |   |                             |     |   |            |                             | outstanding                  29,153,331 and 28,758,580 |   |   |   |   |   |
|                                                          |   |                             |     |   |            |                             | shares |   | **29 ** |   |   | 29  |
|                                                          |   |                             |     |   |            |                             | Additional                  paid-in capital |   | **154,405 ** |   |   | 143,780  |
|                                                          |   |                             |     |   |            |                             | Unearned                  compensation |   | **— ** |   |   | (2,698) |
|                                                          |   |                             |     |   |            |                             | Retained                  earnings |   | **418,927 ** |   |   | 328,463  |
|                                                          |   |                             |     |   |            |                             | Accumulated                  other comprehensive |   |   |   |   |   |
|                                                          |   |                             |     |   |            |                             | (loss)                  income,                  net |   | **(732)** |   |   | 487  |
|                                                          |   |                             |     |   |            |                             | Total                  shareholders’ equity |   | **572,629 ** |   |   | 470,061  |
|                                                          |   |                             |     |   |            |                             | Total                  liabilities, minority interests andshareholders’equity | **$** | **1,328,911 ** |   | $ | 1,150,525  |

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Table          of Contents

**Building      Materials Holding Corporation**

**Consolidated      Statements of Shareholders’ Equity**

**(thousands)**

|                                                                                                                                         |   |                                           |        |                                     |   |          |   |              |        |                                     |   |  **Accumulated                  Other****Comprehensive                  Income (Loss)**   |   |            |        |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-------------|-----------------------------------------------|--------|--------------------|--------|------------------------|-------------|-----------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|----------------------|-------------|
|                                                                                                                                         |   |                                           |        |                                     |   |          |   |              |        |                                     |   |  **Net                  Unrealized Gain (Loss) From**                                     |   |            |        |
|                                                                                                                                         |   | **Common                  Shares**   |        |  **Additional                  Paid-In** |   |  **Unearned** |   |  **Retained**     |        |  **Interest                  Rate Swap** |   |  **Marketable**                                                                                     |   |            |        |
|                                                                                                                                         |   | **Shares**                                     |        |  **Amount**                              |   |  **Capital**  |   |  **Compensation** |        | ** Earnings**                            |   |  **Contracts**                                                                                      |   |  **Securities** |        |  **Total** |   |
| **Balance                  at December 31, 2003**                                                                                            |   |                                           | **26,667**  |                                          | **$**  | **27**             |   | **$**                  | **115,268** |                                          | **$**  | **―**                                                                                              |   | **$**                | **155,715** |   | **$** | **―** |   | **$** | **―** |   | **$** | **271,010** |   |
|                                                                                                                                         |   |                                           |        |                                          |   |                    |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Net                  income                                                                                                |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | 53,910      |   |   | — |   |   | — |   |   | 53,910 |   |
|    Unrealized                  loss                                                                                           |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | (2,215 | ) |   | — |   |   | (2,215 | ) |
|       Tax                  benefit for unrealized loss                                                         |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | 853 |   |   | — |   |   | 853 |   |
|    Unrealized                  gain                                                                                           |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | 5 |   |   | 5 |   |
|       Taxes                  for unrealized gain                                                               |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | (2 | ) |   | (2 | ) |
| **   Comprehensive                  income**                                                                                  |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   | 52,551 |   |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Share                  options exercised                                                                                   |   |                                           | 825         |                                          |   | 1                  |   |                   | 5,008       |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 5,009 |   |
|       Tax                  benefit for share options exercised                                                 |   |                                           | —     |                                          |   | —            |   |                   | 2,041       |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 2,041 |   |
|    Shares                  issued from Director Plan                                                                          |   |                                           | 33          |                                          |   | —            |   |                   | 285         |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 285 |   |
|    Shares                  issued from Employee Plan                                                                          |   |                                           | 31          |                                          |   | —            |   |                   | 356         |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 356 |   |
|    Issuance                  of restricted shares                                                                             |   |                                           | 149         |                                          |   | —            |   |                   | 1,622       |                                          |   | (1,622                                                                                                   | )      |                 | —     |   |   | — |   |   | — |   |   | ― |   |
|       Earned                  compensation expense                                                             |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | 239                                                                                                      |   |                 | —     |   |   | — |   |   | — |   |   | 239 |   |
|    Cash                  dividends on common shares                                                                           |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | (3,813      | ) |   | — |   |   | — |   |   | (3,813 | ) |
| **Balance                  at December 31, 2004**                                                                                            |   |                                           | **27,705**  |                                          |   | **28**             |   |                   | **124,580** |                                          |   | **(1,383**                                                                                               | **)**  |                 | **205,812** |   |   | **(1,362** | **)** |   | **3** |   |   | **327,678** |   |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Net                  income                                                                                                |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | 129,507     |   |   | — |   |   | — |   |   | 129,507 |   |
|    Unrealized                  gain                                                                                           |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | 3,412 |   |   | — |   |   | 3,412 |   |
|       Taxes                  for unrealized gain                                                               |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | (1,314 | ) |   | — |   |   | (1,314 | ) |
|    Unrealized                  loss                                                                                           |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | (410 | ) |   | (410 | ) |
|       Tax                  benefit for unrealized loss                                                         |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | 158 |   |   | 158 |   |
|    **Comprehensive                  income**                                                                                  |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   | **131,353** |   |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Share                  options exercised                                                                                   |   |                                           | 861         |                                          |   | 1                  |   |                   | 4,904       |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 4,905 |   |
|       Tax                  benefit for share options exercised                                                 |   |                                           | —     |                                          |   | —            |   |                   | 9,140       |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 9,140 |   |
|    Shares                  issued from Director Plan                                                                          |   |                                           | 14          |                                          |   | —            |   |                   | 380         |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 380 |   |
|    Shares                  issued from Employee Plan                                                                          |   |                                           | 36          |                                          |   | —            |   |                   | 1,160       |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 1,160 |   |
|    Shares                  issued for acquisition                                                                             |   |                                           | 34          |                                          |   | —            |   |                   | 1,000       |                                          |   | —                                                                                                  |   |                 | —     |   |   | — |   |   | — |   |   | 1,000 |   |
|    Issuance                  of restricted shares                                                                             |   |                                           | 109         |                                          |   | —            |   |                   | 2,616       |                                          |   | (2,616                                                                                                   | )      |                 | —     |   |   | — |   |   | — |   |   | ― |   |
|       Earned                  compensation expense                                                             |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   | 1,301                                                                                                    |   |                 | —     |   |   | — |   |   | — |   |   | 1,301 |   |
|    Cash                  dividends on common shares                                                                           |   |                                           | —     |                                          |   | —            |   |                   | —     |                                          |   |                                                                                           |   |                 | (6,856      | ) |   | — |   |   | — |   |   | (6,856 | ) |
| **Balance                  at December 31, 2005**                                                                                            |   |                                           | **28,759**  |                                          |   | **29**             |   |                   | **143,780** |                                          |   | **(2,698**                                                                                               | **)**  |                 | **328,463** |   |   | **736** |   |   | **(249** | **)** |   | **470,061** |   |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Net                  income                                                                                                |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **102,074** |   |   | **—** |   |   | **—** |   |   | **102,074** |   |
|    Unrealized                  loss                                                                                           |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **(880** | **)** |   | **—** |   |   | **(880** | **)** |
|       Tax                  benefit for unrealized loss                                                         |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **332** |   |   | **—** |   |   | **332** |   |
|    Unrealized                  gain                                                                                           |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **262** |   |   | **—** |   |   | **262** |   |
|       Taxes                  for unrealized gain                                                               |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **(101** | **)** |   | **—** |   |   | **(101** | **)** |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Realized                  gain                                                                                             |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **(1,459** | **)** |   | **—** |   |   | **(1,459** | **)** |
|       Taxes                  for realized gain                                                                 |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **562** |   |   | **—** |   |   | **562** |   |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Unrealized                  loss                                                                                           |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **127** |   |   | **127** |   |
|       Tax                  benefit for unrealized loss                                                         |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **(62** | **)** |   | **(62** | **)** |
| **   Comprehensive                  income**                                                                                  |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   | **100,855** |   |
|                                                                                                                                         |   |                                           |        |                                          |   |               |   |                   |        |                                          |   |                                                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |
|    Reclassify                  unearned compensation -       restricted                  shares |   |                                           | **—** |                                          |   | **—**        |   |                   | **(2,698**  | **)**                                         |   | **2,698**                                                                                                |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **—** |   |
|    Earned                  compensation - options                                                                             |   |                                           | **—** |                                          |   | **—**        |   |                   | **5,103**   |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **5,103** |   |
|    Earned                  compensation - restricted shares                                                                   |   |                                           | **—** |                                          |   | **—**        |   |                   | **3,107**   |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **3,107** |   |
|    Issuance                  of restricted shares                                                                             |   |                                           | **138**     |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **—** |   |
|    Share                  options exercised                                                                                   |   |                                           | **176**     |                                          |   | **—**        |   |                   | **1,292**   |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **1,292** |   |
|       Tax                  benefit for share options exercised                                                 |   |                                           | **—** |                                          |   | **—**        |   |                   | **1,457**   |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **1,457** |   |
|    Shares                  issued from Director Plan                                                                          |   |                                           | **12**      |                                          |   | **—**        |   |                   | **415**     |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **415** |   |
|    Shares                  issued from Employee Plan                                                                          |   |                                           | **68**      |                                          |   | **—**        |   |                   | **1,949**   |                                          |   | **—**                                                                                              |   |                 | **—** |   |   | **—** |   |   | **—** |   |   | **1,949** |   |
|    Cash                  dividends on common shares                                                                           |   |                                           | **—** |                                          |   | **—**        |   |                   | **—** |                                          |   | **—**                                                                                              |   |                 | **(11,610** | **)** |   | **—** |   |   | **—** |   |   | **(11,610** | **)** |
| **Balance                  at December 31, 2006**                                                                                            |   |                                           | **29,153**  |                                          | **$**  | **29**             |   | **$**                  | **154,405** |                                          | **$**  | **—**                                                                                              |   | **$**                | **418,927** |   | **$** | **(548** | **)** | **$** | **(184** | **)** | **$** | **572,629** |   |

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Table          of Contents

**Building      Materials Holding Corporation**

**Consolidated      Statements of Cash Flows**

**(thousands)**

|                                                                                                                                                                            |   |  **Year                  Ended December 31**     |         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------------|
|                                                                                                                                                                            |   |  **2006**                                                            |         |  **2005** |   |  **2004** |   |
| **Operating                  Activities**                                                                                                                                       |   |                                                                 |         |    |   |    |   |
|    Net                  income                                                                                                                                   |   | **$**                                                                     | **102,074**  |   | $ | 129,507 |   | $ | 53,910 |   |
|    Items                  in net income not using (providing) cash:                                                                                              |   |                                                                      |         |   |   |   |   |   |  |   |
|       Minority                  interests, net                                                                                                    |   |                                                                      | **9,493**    |   |   | 15,514 |   |   | 5,440 |   |
|       Depreciation                  and amortization                                                                                              |   |                                                                      | **45,284**   |   |   | 27,363 |   |   | 22,815 |   |
|       Deferred                  loan cost amortization                                                                                            |   |                                                                      | **1,359**    |   |   | 704 |   |   | 497 |   |
|       Impairment                  of assets                                                                                                       |   |                                                                      | **2,237**    |   |   | 1,320 |   |   | 2,274 |   |
|       Share-based                  compensation                                                                                                   |   |                                                                      | **8,917**    |   |   | 1,855 |   |   | 577 |   |
|       Loss                  (gain) on sale of assets, net                                                                                         |   |                                                                      | **207**      |   |   | (194 | ) |   | 334 |   |
|       Realized                  gain on interest rate swap contracts                                                                              |   |                                                                      | **(1,459**   | **)** |   | — |   |   | — |   |
|       Realized                  loss on marketable securities                                                                                     |   |                                                                      | **206**      |   |   | — |   |   | — |   |
|       Deferred                  income taxes                                                                                                      |   |                                                                      | **(1,125**   | **)** |   | (3,473 | ) |   | (7,490 | ) |
|       Tax                  benefit for share options                                                                                              |   |                                                                      | —      |   |   | 9,140 |   |   | 2,041 |   |
|                       Changes in assets and liabilities, net of effects of acquisitions                  and                  sales of business units: |   |                                                                      |         |   |   |   |   |   |  |   |
|             Receivables,                  net                                                                       |   |                                                                      | **128,381**  |   |   | (19,049 | ) |   | (45,687 | ) |
|             Inventory                                                                                               |   |                                                                      | **43,873**   |   |   | (3,332 | ) |   | (40,258 | ) |
|             Unbilled                  receivables                                                                   |   |                                                                      | **22,702**   |   |   | (8,378 | ) |   | (8,571 | ) |
|             Prepaid                  expenses and other current assets                                              |   |                                                                      | **(3,915**   | **)** |   | 4,340 |   |   | (1,895 | ) |
|             Accounts                  payable                                                                       |   |                                                                      | **(43,483**  | **)** |   | 1,852 |   |   | 11,413 |   |
|             Accrued                  compensation                                                                   |   |                                                                      | **(18,823**  | **)** |   | 24,465 |   |   | 15,643 |   |
|             Insurance                  deductible reserves                                                          |   |                                                                      | **3,059**    |   |   | 5,777 |   |   | 3,045 |   |
|             Other                  accrued liabilities                                                              |   |                                                                      | **1,483**    |   |   | (4,611 | ) |   | 5,777 |   |
|             Billings                  in excess of costs and estimated earnings                                     |   |                                                                      | **(29,734**  | **)** |   | (1,911 | ) |   | (795 | ) |
|             Other                  long-term assets and liabilities                                                 |   |                                                                      | **1,588**    |   |   | 18,181 |   |   | 13,057 |   |
|       Other,                  net                                                                                                                 |   |                                                                      | **1,094**    |   |   | (776 | ) |   | 1,247 |   |
| Cash                  flows                  provided by operating activities                                                                                                   |   |                                                                      | **273,418**  |   |   | 198,294 |   |   | 33,374 |   |
|                                                                                                                                                                            |   |                                                                      |         |   |   |   |   |   |  |   |
| **Investing                  Activities**                                                                                                                                       |   |                                                                      |         |   |   |   |   |   |  |   |
|    Purchases                  of property and equipment                                                                                                          |   |                                                                      | **(52,873**  | **)** |   | (46,540 | ) |   | (27,652 | ) |
|    Acquisitions                  and investments in businesses, net of cash acquired                                                                             |   |                                                                      | **(201,754** | **)** |   | (203,201 | ) |   | (22,738 | ) |
|    Proceeds                  from dispositions of property and equipment                                                                                         |   |                                                                      | **2,944**    |   |   | 1,358 |   |   | 12,278 |   |
|    Purchase                  of marketable securities                                                                                                            |   |                                                                      | **(54,700**  | **)** |   | (20,623 | ) |   | (19,375 | ) |
|    Proceeds                  from sales of marketable securities                                                                                                 |   |                                                                      | **29,270**   |   |   | 6,546 |   |   | 349 |   |
|    Other,                  net                                                                                                                                   |   |                                                                      | **(3,150**   | **)** |   | 892 |   |   | (871 | ) |
| Cash                  flows                  used by investing activities                                                                                                       |   |                                                                      | **(280,263** | **)** |   | (261,568 | ) |   | (58,009 | ) |
|                                                                                                                                                                            |   |                                                                      |         |   |   |   |   |   |   |   |
| **Financing                  Activities**                                                                                                                                       |   |                                                                      |         |   |   |   |   |   |   |   |
|    Net                  (payments) borrowings under revolver                                                                                                     |   |                                                                      | **(77,500**  | **)** |   | (3,700 | ) |   | 20,800 |   |
|    Borrowings                  under term note                                                                                                                   |   |                                                                      | **350,000**  |   |   | 75,000 |   |   | ― |   |
|    Principal                  payments on term notes                                                                                                             |   |                                                                      | **(197,750** | **)** |   | (1,251 | ) |   | (1,250 | ) |
|    Net                  payments on other notes                                                                                                                  |   |                                                                      | **(6,109**   | **)** |   | (7,605 | ) |   | (932 | ) |
|    (Decrease)                  increase in book overdrafts                                                                                                       |   |                                                                      | **(2,902**   | **)** |   | 17,404 |   |   | 5,411 |   |
|    Proceeds                  from share options exercised                                                                                                        |   |                                                                      | **1,292**    |   |   | 4,905 |   |   | 5,008 |   |
|    Tax                  benefit for share options                                                                                                                |   |                                                                      | **1,457**    |   |   | — |   |   | — |   |
|    Dividends                  paid                                                                                                                               |   |                                                                      | **(10,853**  | **)** |   | (5,807 | ) |   | (3,505 | ) |
|    Deferred                  financing costs                                                                                                                     |   |                                                                      | **(3,224**   | **)** |   | (2,236 | ) |   | (175 | ) |
|    Distributions                  to minority interests                                                                                                          |   |                                                                      | **(5,731**   | **)** |   | (2,792 | ) |   | (728 | ) |
|    Other,                  net                                                                                                                                   |   |                                                                      | **2,359**    |   |   | (62 | ) |   | (4 | ) |
| Cash                  flows                  provided by financing activities                                                                                                   |   |                                                                      | **51,039**   |   |   | 73,856 |   |   | 24,625 |   |
|                                                                                                                                                                            |   |                                                                      |         |   |   |   |   |   |   |   |
| **Increase                  (Decrease) in Cash and Cash Equivalents**                                                                                                           |   |                                                                      | **44,194**   |   |   | 10,582 |   |   | (10 | ) |
|                                                                                                                                                                            |   |                                                                      |         |   |   |   |   |   |   |   |
|    Cash                  and cash equivalents, beginning of year                                                                                                 |   |                                                                      | **30,078**   |   |   | 19,496 |   |   | 19,506 |   |
|    Cash                  and cash equivalents, end of year                                                                                                       |   | **$**                                                                     | **74,272**   |   | $ | 30,078 |   | $ | 19,496 |   |
|                                                                                                                                                                            |   |                                                                      |         |   |   |   |   |   |   |   |
| **Supplemental                  Disclosure of Cash Flow Information**                                                                                                           |   |                                                                      |         |   |   |   |   |   |   |   |
|    Accrued                  but unpaid dividends                                                                                                                 |   | **$**                                                                     | **2,915**    |   | $ | 2,158 |   | $ | 1,108 |   |
|    Cash                  paid for interest                                                                                                                       |   | **$**                                                                     | **28,185**   |   | $ | 13,682 |   | $ | 12,902 |   |
|    Cash                  paid for income taxes                                                                                                                   |   | **$**                                                                     | **69,568**   |   | $ | 70,553 |   | $ | 37,777 |   |
|                                                                                                                                                                            |   |                                                                      |         |   |   |   |   |   |   |   |
| **Supplemental                  Schedule of Non-cash Investing Activities**                                                                                                     |   |                                                                      |         |   |   |   |   |   |   |   |
|    Fair                  value of assets acquired                                                                                                                |   | **$**                                                                     | **285,957**  |   | $ | 337,924 |   | $ | 25,353 |   |
|    Liabilities                  assumed                                                                                                                          |   | **$**                                                                     | **84,203**   |   | $ | 132,114 |   | $ | 2,615 |   |
|    Cash                  paid                                                                                                                                    |   | **$**                                                                     | **201,754**  |   | $ | 203,201 |   | $ | 22,738 |   |

----

Table          of Contents

***Notes      to Consolidated Financial Statements***

***1.***
***Summary      of Significant Accounting Policies***

*Nature      of Operations*

*Principles      of Consolidation*

*Use      of Estimates*

*Revenue        Recognition for Construction Services*

*Estimated        Losses on Uncompleted Contracts and Changes in Contract        Estimates*

* *
*Goodwill*

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Table            of Contents

* *
*Insurance        Deductible Reserves*

*Warranties*

* *
*Share-based        Compensation*

*Cash      and Cash Equivalents*

*Receivables*

*Inventory      Valuation*

----

Table          of Contents

*Unbilled      Receivables and Billings in Excess of Costs and Estimated      Earnings*

*Property      and Equipment*

*Long-lived      Assets*

*Revenue      Recognition *

*Shipping      and Handling*

*Reclassifications*

----

Table          of Contents

*Common      Share Split*

*Recent      Accounting Principles*

*Considering      the      Effect of Prior Year Misstatements when Quantifying Misstatements in Current      Year Financial Statements*

*Accounting      for      Uncertainty in Income Taxes. *

----

Table          of Contents

***2.***
***Net      Income Per Share***

|                                                                                                                                  |   | **Year                Ended December 31**     |        |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-------------|
|                                                                                                                                  |   | **2006**                                                          |        |  **2005** |   |  **2004** |   |
| Net                income                                                                                                             |   | **$**                                                             | **102,074** |   | $ | 129,507 |   | $ | 53,910 |   |
|                                                                                                                                  |   |                                                              |        |   |   |   |   |   |   |   |
| Weighted                average shares used to determine                basic net income per share                               |   |                                                              | **28,603**  |   |   | 28,101 |   |   | 26,988 |   |
| Net                effect of                dilutive stock options and restricted                stock                           |   |                                                              | **986**     |   |   | 1,261 |   |   | 859 |   |
|    Weighted                average shares used to determine                diluted net income per share** ** |   |                                                              | **29,589**  |   |   | 29,362 |   |   | 27,847 |   |
|                                                                                                                                  |   |                                                              |        |   |   |   |   |   |   |   |
| Net                income                per share:                                                                                   |   |                                                              |        |   |   |   |   |   |   |   |
|    Basic                                                                                                               |   |                                                              | **$3.57**   |   |   | $4.61 |   |   | $2.00 |   |
|    Diluted                                                                                                             |   |                                                              | **$3.45**   |   |   | $4.41 |   |   | $1.94 |   |
|                                                                                                                                  |   |                                                                   |        |   |   |   |   |   |   |   |
| Annual                cash                dividends declared per share                                                                |   |                                                              | **$0.40**   |   |   | $0.24 |   |   | $0.14 |   |

| ·   | 403,100                shares in 2006, |
|--------------------|----------------------------------------|

| ·   | no                shares in                2005 and |
|--------------------|-----------------------------------------------------|

| ·   | no                shares in                2004. |
|--------------------|--------------------------------------------------|

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Table          of Contents

***3.***
***Accounting      for Share-Based Compensation***

*Share-Based      Payment*

|                                                                            |   | **2006** |      |
|---------------------------------------------------------------------------------|--------|----------|-----------|
| Income                before                income taxes and minority interests |   | **$**    | **5,103** |   |
| Net                income                                                       |   | **$**    | **3,276** |   |
|                                                                            |   |     |      |   |
| Net                income                per share:                             |   |     |      |   |
|    Basic                                                         |   |     | **$0.11** |   |
|    Diluted                                                       |   |     | **$0.11** |   |

*Pro      Forma Information for the Periods Prior to January 1, 2006*

*Accounting      for      Stock-Based Compensation*

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Table          of Contents

|                                                                                                                                                                                   |   |  **Year                Ended December 31**    |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                                                                                                                                                   |   |  **2005**                                               |    |  **2004**  |   |
| Net                income,                as reported                                                                                                                                  |   | $                                                                 | 129,507 |   | $ | 53,910 |   |
| Add:                Share-based employee compensation expense determined under                APB 25,                net of related tax effects                                   |   |                                                              | 555     |   |   | 659 |   |
| Deduct:                Share-based employee compensation expense determined                under fair value method for all awards, net of related tax                effects |   |                                                              | (2,497  | ) |   | (1,892 | ) |
| Pro                forma net                income                                                                                                                                     |   | $                                                                 | 127,565 |   | $ | 52,677 |   |
|                                                                                                                                                                                   |   |                                                              |    |   |   |   |   |
| Basic                net                income per share:                                                                                                                              |   |                                                              |    |   |   |   |   |
|    As                reported                                                                                                                                           |   |                                                              | $4.61   |   |   | $2.00 |   |
|    Pro                forma                                                                                                                                             |   |                                                              | $4.54   |   |   | $1.95 |   |
|                                                                                                                                                                                   |   |                                                              |    |   |   |   |   |
| Diluted                net                income per share:                                                                                                                            |   |                                                              |    |   |   |   |   |
| As                reported                                                                                                                                                             |   |                                                              | $4.41   |   |   | $1.94 |   |
| Pro                forma                                                                                                                                                               |   |                                                              | $4.34   |   |   | $1.89 |   |

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Table          of Contents

***4.***
***Impairment      of Assets***

| ·   | $1.8                million                for the carrying amount of goodwill in the second quarter and |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | $0.4                million                for the carrying amount of certain customer relationships in the                second                quarter. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.5                million                for the carrying amount of certain customer relationships in the                second                quarter and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.8                million                for the carrying amount of goodwill in the fourth                quarter. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3                million                for the carrying amount of certain properties in the first quarter                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0                million                for the carrying amount of goodwill in the fourth                quarter. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

***5.***
***Acquisitions      and Minority Interests***

| ·   | In                December                2006, SelectBuild acquired a distribution services business in Southern                California for approximately $1.6 million in cash of which $0.6 million                has been retained for the settlement period. This purchase price                is                subject to working capital adjustment. Information required to complete                the purchase price allocation is not yet available. Final allocation                of                the purchase price will be completed as soon as this information                is                available. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                August                2006, SelectBuild acquired a window installation business in Arizona                for                approximately $13.9 million in cash of which $0.5 million has been                retained for the settlement period. This purchase price is subject                to                working capital adjustment. Information required to complete the                purchase                price allocation is not yet available. Final allocation of the purchase                price will be completed as soon as this information is available. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                July 2006,                SelectBuild acquired a framing services business in Southern California                for approximately $78.6 million in cash of which $3.8 million has                been                retained for the settlement period. This purchase price is subject                to                working capital adjustment. Additional cash payments may be required                based                on operating performance through June 2009. Information required                to                complete the purchase price allocation is not yet available. Final                allocation of the purchase price will be completed as soon as this                information is available. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                June 2006,                BMC West acquired a building materials distribution and truss                manufacturing business in Eastern Idaho for approximately $5.1 million                in                cash of which $0.1 million has been retained for the settlement period.                This purchase price is subject to working capital adjustment. Information                required to complete the purchase price allocation is not yet available.                Final allocation of the purchase price will be completed as soon                as this                information is available. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                April                2006, SelectBuild acquired a concrete services business in Northern                Arizona for approximately $1.5 million in                cash. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                April                2006, SelectBuild acquired a wall panel and truss manufacturing business                in Palm Springs, California for $6.7 million in                cash. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                February                2006, BMC West acquired three facilities providing building materials                distribution and millwork services in Houston, Texas for $20.6 million                in                cash. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| ·   | In                January                2006, SelectBuild acquired framing businesses in Palm Springs, California                and Reno, Nevada for $57.1 million in cash. Additional cash payments                may                be required based on operating performance through December                2009. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                October                2005, SelectBuild acquired a framing services business in San Diego,                California for $72.6 million in cash. Additional cash payments may                be                required based on operating performance through September 2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                September                2005, SelectBuild acquired a concrete and plumbing services business                in                Las Vegas, Nevada and Southern California for $85.6 million in cash. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                September                2005, BMC West acquired a truss manufacturing business in McCall,                Idaho                for $1.3 million in cash. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                June 2005,                SelectBuild acquired a stucco business in Las Vegas, Nevada for $5.9                million in cash. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                November                2006, SelectBuild acquired the remaining 49% interest in BBP Companies                for                $22.8 million in cash of which $22.7 million is payable and included                in                other accrued liabilities. In July 2005, we acquired an initial 51%                interest for $9.4 million in cash and $1.0 million of our common                shares.                Information required to complete the purchase price allocation is                not yet                available. Final allocation of the purchase price will be completed                as                soon as this information is available. BBP Companies provide concrete                services to high-volume production homebuilders in                Arizona. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January                2006, SelectBuild acquired the remaining 20% interest in WBC Construction,                LLC for $35.7 million in cash of which $33.1 million is payable and                included in other accrued liabilities. Information required to complete                the purchase price allocation is not yet available. Final allocation                of                the purchase price will be completed as soon as this information                is                available. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                July 2005,                SelectBuild acquired an additional 13% interest in Riggs Plumbing,                LLC                (Riggs Plumbing) for $1.4 million in cash. In April 2005, we acquired                an                initial 60% interest for $17.8 million in cash. The remaining 27%                is owned                by Riggs & Associates, LLC and is recognized as minority interest.                Riggs Plumbing provides plumbing services to high-volume builders                in the                Phoenix and Tucson markets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

| ·   | In                January                2005, SelectBuild acquired a 51% interest in RCI Construction, LLC                (RCI                Construction) for $4.9 million in cash. The remaining 49% is owned                by                Residential Carpentry, Inc. and is recognized as minority interest.                RCI                Construction provides framing services to high-volume builders in                the                greater Chicago area. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          |     |              |     |   |
|---------------------------------------------------------------|----------|-------------------|----------|--------|
|                                                          | **2006** |              | **2005** |   |   | **2006** |   | **2005** |
| Cash                  and cash                  equivalents   | **$**    | **— ** |     | $      | 1,644  |   | Accounts                  payable | **$** | **10,376 ** |   | $ | 46,078  |
| Receivables                                                   |     | **44,683 **  |     |   | 106,407  |   | Accrued                  compensation |   | **1,447 ** |   |   | 7,385  |
| Inventory                                                     |     | **19,957 **  |     |   | 11,559  |   | Insurance                  deductible reserves |   | **— ** |   |   | 3,192  |
| Unbilled                  receivables                         |     | **10,101 **  |     |   | 30,554  |   | Other                  accrued                  liabilities |   | **50,340 ** |   |   | 30,014  |
| Deferred                  income taxes                        |     | **— ** |     |   | (6,527) |   | Billings                  in                  excess of costs and |   |   |   |   |   |
| Prepaid                  expenses and other                   |     | **263 **     |     |   | 4,057  |   |    estimated                  earnings |   | **23,557 ** |   |   | 24,436  |
|                                                          |     |              |     |   |   |   | Current                  portion of long-term    debt |   | **— ** |   |   | 5,605  |
|    Total                  current assets  |     | **75,004 **  |     |   | 147,694  |   |    Total                  current liabilities |   | **85,720 ** |   |   | 116,710  |
|                                                          |     |              |     |   |   |   |   |   |   |   |   |   |
| Property                  and                  equipment      |     | **19,845 **  |     |   | 33,406  |   | Deferred                  income taxes |   | **937 ** |   |   | 8,528  |
| Other                  long-term assets                       |     | **42 **      |     |   | 18  |   | Long-term                  debt |   | **— ** |   |   | 10,048  |
| Other                  intangibles, net                       |     | **68,692 **  |     |   | 46,824  |   | Other                  long-term liabilities |   | **8,173 ** |   |   | ―  |
| Goodwill                                                      |     | **122,374 ** |     |   | 109,982  |   |    Total                  liabilities |   | **94,830 ** |   |   | 135,286  |
|                                                          |     |              |     |   |   |   |   |   |   |   |   |   |
|                                                          |     |              |     |   |   |   | Minority                  interests |   | **(10,627)** |   |   | (3,172) |
|    Total                  assets               | **$**    | **285,957 ** |     | $      | 337,924  |   |    Total                  liabilities and minority   interests | **$** | **84,203 ** |   | $ | 132,114  |

|                                                   |   | **2006** |                |  **2005** |   |
|--------------------------------------------------------|--------|----------|---------------------|----------------|--------|
| Sales                - as                reported      |   | **$**    | **3,245,169**       |           | $      | 2,912,160 |   |
| Pro                forma                Sales          |   | **$**    |  **3,322,258** |           | $      | 3,703,094 |   |
|                                                   |   |     |                |           |   |   |   |
| Net                income -                as reported |   | **$**    | **102,074**         |           | $      | 129,507 |   |
| Pro                forma Net                income     |   | **$**    |  **107,799**   |           | $      |  162,934 |   |
|                                                   |   |     |                |           |   |   |   |
| Net                income                per share:    |   |     |                |           |   |   |   |
|    Diluted                - as reported |   |     | **$3.45**           |           |   | $4.41 |   |
|    Pro                forma Diluted     |   |     |  **$3.64**     |           |   |  $5.55 |   |

|                            |   | **Call                Options**                                   |   | **Put                Options**                                    |
|---------------------------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| Riggs                Plumbing   |   | April                2008                through March 2013       |   | April                2008                through March 2013       |
| RCI                Construction |   | January                2008                through January 2012   |   | January                2008                through January 2012   |
| A-1                Truss        |   | September              2004 through August 2014                   |   | September                2009 through August 2014                 |
| WBC                Mid-Atlantic |   | October                2003                through September 2010 |   | December                2006                through December 2008 |

----

Table          of Contents

***6.***
***Marketable      Securities***

|                                                    |   | **2006**  |       |  **2005**  |   |
|---------------------------------------------------------|--------|----------------|------------|----------------------|--------|
| Cash                and cash                equivalents |   | $              | —    |                 | $      | 415 |   |
| U.S.                government and agencies             |   |           | **25,661** |                 |   | 7,838 |   |
| Asset                backed                securities   |   |           | **18,278** |                 |   | 13,391 |   |
| Corporate                securities                     |   |           | **13,911** |                 |   | 10,876 |   |
|                                                    |   | **$**          | **57,850** |                 | $      | 32,520 |   |

|                                                   |   |  **2006**  |       |  **2005** |   |
|--------------------------------------------------------|--------|----------------------|------------|----------------|--------|
| Less                than one                year       |   | $                    | **4,337**  |           | $      | 3,645 |   |
| Due                in one to                two years  |   |                 | **16,648** |           |   | 9,893 |   |
| Due                in two to                five years |   |                 | **36,865** |           |   | 18,982 |   |
|                                                   |   | **$**                | **57,850** |           | $      | 32,520 |   |

----

Table          of Contents

***7.***
***Intangible      Assets and Goodwill***

|                                                      |   |  **December                31, 2006**      |        |
|-----------------------------------------------------------|--------|--------------------------------------------------------------------------|-------------|
|                                                      |   |  **Gross****Carrying                Amount**                        |        |  **Accumulated                Amortization** |   |  **Net                Carrying Amount** |   |
|    Customer                relationships   |   | **$**                                                                    | **122,498** |   | $ | **(22,125** | **)** | **$** | **100,373** |   |
|    Covenants                not to compete |   |                                                                     | **13,094**  |   |   | **(4,802** | **)** |   | **8,292** |   |
|    Trade                names              |   |                                                                     | **204**     |   |   | **(159** | **)** |   | **45** |   |
|    Other                                   |   |                                                                     | **146**     |   |   | **(64** | **)** |   | **82** |   |
|                                                      |   | **$**                                                                    | **135,942** |   | $ | **(27,150** | **)** | **$** | **108,792** |   |

|                                                      |   | **December                31, 2005**     |   |
|-----------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                      |   | **Gross****Carrying                Amount**             |   |  **Accumulated                Amortization**  |   |  **Net                Carrying Amount** |   |
|    Customer                relationships   |   | $                                                            | 58,926 |   | $ | (9,165 | ) | $ | 49,761 |   |
|    Covenants                not to compete |   |                                                         | 7,541  |   |   | (2,307 | ) |   | 5,234 |   |
|    Trade                names              |   |                                                         | 204    |   |   | (91 | ) |   | 113 |   |
|    Other                                   |   |                                                         | 146    |   |   | (27 | ) |   | 119 |   |
|                                                      |   | $                                                            | 66,817 |   | $ | (11,590 | ) | $ | 55,227 |   |

|                                                       |   |  **SelectBuild** |        |  **BMC                West** |   |  **Total** |   |
|------------------------------------------------------------|--------|-----------------------|-------------|-----------------------------------|--------|-----------------|--------|
| Balance                at                December 31, 2004 |   | $                     | 60,253      |                              | $      | 20,063          |   | $ | 80,316 |   |
| Impairment                                                 |   |                  | (763        | )                                 |   | ―         |   |   | (763 | ) |
| Goodwill                acquired                           |   |                  | 107,778     |                              |   | 139             |   |   | 107,917 |   |
| Balance                at                December 31, 2005 |   | $                     | 167,268     |                              | $      | 20,202          |   | $ | 187,470 |   |
|    Purchase                price adjustment |   |                  | (1,927      | )                                 |   | (16             | )      |   | (1,943 | ) |
|    Impairment                               |   |                  | (1,839      | )                                 |   | —         |   |   | (1,839 | ) |
| Goodwill                acquired                           |   |                  | 123,621     |                              |   | 691             |   |   | 124,312 |   |
| **Balance                at December 31, 2006**            |   | **$**                 | **287,123** |                              | **$**  | **20,877**      |   | **$** | **308,000** |   |

----

Table          of Contents

***8.***
***Debt***

|                                         |   |        |        |                                         |   |   **Notional                  Amount of Interest** |   | **Effective                  Interest Rate** |        |
|----------------------------------------------|--------|-------------|-------------|----------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------|-------------|
| **As                  of December 31, 2006** |   | **Balance** |        | **Stated****Interest                  Rate** |   |  **Rate****Swaps**                                      |   | **Average****for                  Year**     |        | **As                  of****December                  31** |   |
| Revolver                                     |   | **$**       | **—** |                                         |   | LIBOR                  plus 1.25% or Prime plus 0.00%        |   | **$**                                        | **―** |   |   | **6.50** | **%** |   |   | **n/a** |  |   |
|                                         |   |        |        |                                         |   |                                                         |   |                                         |        |   |   |   |   |   |   |   |

| Term                  note                        |   |   | **349,125** |   |   | LIBOR                  plus 2.50% or Prime plus 1.25% |   |   | **200,000** |   |   | **6.72**    | **%**  |   |   | **6.97**    | **%** |   |
|---------------------------------------------------|--------|--------|-------------|--------|--------|-------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|--------|--------|-------------|-------|--------|
|                                              |   |   |        |   |   |                                                  |   |   |        |   |   |        |   |   |   |        |
| Other                                             |   |   | **8,179**   |   |   | Various                                               |   |   | **—** |   |   | **—** |        |   |   | **—** |       |   |
|                                              |   |   | **357,304** |   |   |                                                       |   | **$**  | **200,000** |   |   |        |   |   |        |        |
|                                              |   |   |        |   |   |                                                       |   |   |        |   |   |        |   |   |        |        |
| Less:  Current                  portion |   |   | **8,143**   |   |   |                                                       |   |   |             |   |   |             |   |   |        |        |
|                                              |   | **$**  | **349,161** |   |   |                                                       |   |   |             |   |   |             |   |   |        |        |

|                                              |   |        |    |                                         |   |  **Notional                  Amount of Interest** |   | **Effective                  Interest Rate** |    |
|---------------------------------------------------|--------|-------------|---------|----------------------------------------------|--------|--------------------------------------------------------|--------|----------------------------------------------|---------|
| **As                  of December 31, 2005**      |   | **Balance** |    | **Stated****Interest                  Rate** |   | **Rate****Swaps**                                      |   | **Average                  for Year**        |    | **As                  of****December                  31** |   |
| Revolver                                          |   | $           | 77,500  |                                         |   | LIBOR                  plus 0.75% or Prime plus 0.00%  |   | $                                            | ― |   |   | 5.37 | % |   |   | 6.08 | % |   |
|                                              |   |        |    |                                         |   |                                                   |   |                                         |    |   |   |   |   |   |   |   |
| Term                  note                        |   |        | 75,000  |                                         |   | LIBOR                  plus 0.75% or Prime plus 0.00%  |   |                                         | ― |   |   | 4.52 | % |   |   | 5.28 | % |   |
|                                              |   |        |    |                                         |   |                                                   |   |                                         |    |   |   |   |   |   |   |   |
| Term                  note                        |   |        | 121,875 |                                         |   | LIBOR                  plus 1.75%                      |   |                                         | 100,000 |   |   | 6.23 | % |   |   | 6.17 | % |   |
|                                              |   |        |    |                                         |   |                                                   |   |                                         |    |   |   |   |   |   |   |   |
| Other                                             |   |        | 13,925  |                                         |   | Various                                                |   |                                         | ― |   |   | ― |  |   |   | ― |  |   |
|                                              |   |        | 288,300 |                                         |   |                                                   |   | $                                            | 100,000 |   |   |  |   |   |  |   |
|                                              |   |        |    |                                         |   |                                                   |   |                                         |         |   |   |  |   |   |  |   |
| Less:  Current                  portion |   |        | 10,131  |                                         |   |                                                   |   |                                         |         |   |   |  |   |   |  |   |
|                                              |   | $           | 278,169 |                                         |   |                                                   |   |                                         |         |   |   |  |   |   |  |   |

*Revolver*

----

Table          of Contents

*Term      Note*

*Other*

*Expansion      of Credit Facility, Covenants and Maturities*

| 2007       |   | $      | 8,143   |   |
|------------|--------|--------|---------|--------|
| 2008       |   |   | 4,894   |   |
| 2009       |   |   | 4,208   |   |
| 2010       |   |   | 3,898   |   |
| 2011       |   |   | 3,716   |   |
| Thereafter |   |   | 332,445 |   |
|       |   | $      | 357,304 |   |

*Hedging      Activities*

----

Table          of Contents

***9.***
***Shareholders’      Equity***

*Preferred      Shares*

*Common      Shares*

|                                               | **Unissued                Shares**                |
|----------------------------------------------------|---------------------------------------------------|
| Employee                Stock Purchase Plan        | 70,902         |
| 2004                Incentive and Performance Plan | 736,466        |

*Shareholders’      Rights Plan*

*Dividends*

|                          |   |  **2006**  |   |  **2005**  |   |  **2004** |   |
|-------------------------------|--------|----------------------|--------|----------------------|--------|----------------|--------|
| Fourth                quarter |   | $                    | 0.10   |                 | $      | 0.075          |   | $ | 0.04 |   |
| Third                quarter  |   |                 | 0.10   |                 |   | 0.075          |   |   | 0.04 |   |
| Second                quarter |   |                 | 0.10   |                 |   | 0.05           |   |   | 0.03 |   |
| First                quarter  |   |                 | 0.10   |                 |   | 0.04           |   |   | 0.03 |   |
|                          |   | $                    | 0.40   |                 | $      | 0.24           |   | $ | 0.14 |   |

----

Table          of Contents

***10.***
***Employee Benefit Plans***

*Retirement      Plans*

*Cash      Equity Plan*

*Employee      Stock Purchase Plan*

*2004      Incentive and Performance Plan*

*Options*

| ·   | Grants                of                options under the 2004 Incentive and Performance Plan vest ratably                over                three years from the date of grant and expire after seven years if                unexercised. Options were awarded with exercise prices equal to the                fair                value of the shares on the date of grant. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| ·   | In                February                2000, our Board of Directors adopted the 2000 Stock Incentive Plan                which                our shareholders approved in May 2000. No further grants are made                under                this plan. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                February                1997, the Board of Directors authorized issuance of 100,000 options                as an                additional incentive to attract a member of senior management. These                options vested in February 2002 and expire after ten years if unexercised.                These options were awarded with exercise prices equal to the fair                value of                the shares on the date of grant. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Share-Based      Payment, *

|   **Grant****Year** |   |    **Grant                  Month** |   | **Grant****Date                  Fair**** Value                  of****Shares** |   |  **Risk                  Free**** Interest****Rate** |   |   **Expected****Volatility** |   |  **Expected****Dividend****Yield** |   |  **Expected****Term**** (Years)** |
|-------------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------|--------|-----------------------------------------|--------|---------------------------------------------|
| 2006                          |   | September                                          |   | $28.01                                                                               |   | 4.51%                                                          |   | 55.58%                                 |   | 1.59%                                   |   | 4.72                                        |
| 2006                          |   | January                                            |   | $37.93                                                                               |   | 3.77%                                                          |   | 48.58%                                 |   | 0.70%                                   |   | 5.60                                        |
| 2005                          |   | May                                                |   | $28.36                                                                               |   | 4.29%                                                          |   | 54.16%                                 |   | 0.68%                                   |   | 7.00                                        |
| 2005                          |   | February                                           |   | $22.77                                                                               |   | 4.10%                                                          |   | 54.16%                                 |   | 0.84%                                   |   | 6.84                                        |
| 2004                          |   | May                                                |   |   $8.50                                                                    |   | 4.56%                                                          |   | 54.25%                                 |   | 1.45%                                   |   | 7.00                                        |
| 2004                          |   | February                                           |   |   $7.88                                                                    |   | 4.09%                                                          |   | 54.68%                                 |   | 1.45%                                   |   | 7.50                                        |
| 2003                          |   | April                                              |   |   $6.97                                                                    |   | 3.94%                                                          |   | 55.42%                                 |   | 1.33%                                   |   | 8.50                                        |

----

Table          of Contents

|                                                                                                                                                      |   | **2006**   |      | **2005**                                           |   | **2004**                                                               |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|----------------------------------------------------|--------|------------------------------------------------------------------------|--------|
|                                                                                                                                                      |   | **Shares** |      | **Weighted                Average Exercise Price** |   | **Weighted                Average Remaining Contractual Term (years)** |   | **Intrinsic                Value** |   | **Shares** |   | **Weighted                Average Exercise Price** |   | **Shares** |   | **Weighted                Average Exercise Price** |   |
| Outstanding                at                beginning of                the                period                                                   |   |       | **2,300** |                                               | **$**  | **                 9.73**                                         |   |   | **5.7** |   |   |   |   |   | 2,756 |   | $ |                  6.44 |   |   | 3,042 |   | $ |                  6.10 |   |
|    Granted                                                                                                                                 |   |       | **409**   |                                               | **$**  | **37.88**                                                              |   |   |   |   |   |   |   |   | 424 |   | $ | 22.88 |   |   | 609 |   | $ |                  8.42 |   |
|    Exercised                                                                                                                               |   |       | **(176**  | **)**                                              | **$**  | **                 7.34**                                         |   |   |   |   |   |   |   |   | (861 | ) | $ |                  5.70 |   |   | (824 | ) | $ |                  6.07 |   |
|    Forfeited                                                                                                                               |   |       | **(12**   | **)**                                              | **$**  | **21.98**                                                              |   |   |   |   |   |   |   |   | (19 | ) | $ |                  8.41 |   |   | (71 | ) | $ | 13.29 |   |
| Outstanding                at                end of the period                                                                                       |   |       | **2,521** |                                               | **$**  | **14.41**                                                              |   |   | **5.1** |   |   |   |   |   | 2,300 |   | $ |                  9.73 |   |   | 2,756 |   | $ |                  6.44 |   |
|                                                                                                                                                      |   |       |      |                                               |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable                at                end of the period                                                                                       |   |       | **1,676** |                                               | **$**  | **                 8.20**                                         |   |   | **4.9** |   |   |   |   |   | 1,428 |   | $ |                  6.32 |   |   | 1,913 |   | $ |                  5.76 |   |
|                                                                                                                                                      |   |       |      |                                               |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In-the-money:                                                                                                                                             |   |       |      |                                               |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Outstanding                                                                                                                             |   |       | **2,108** |                                               | **$**  | **                 9.84**                                         |   |   |   |   | **$** | **31,299** |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Exercisable                                                                                                                             |   |       | **1,656** |                                               | **$**  | **                 7.85**                                         |   |   |   |   | **$** | **27,887** |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                      |   |       |      |                                               |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average fair value                of                options granted                at                fair value         |   |       |      |                                               | **$**  | **18.00**                                                              |   |   |   |   |   |   |   |   |   |   | $ | 12.38 |   |   |   |   | $ |                  4.16 |   |
| Weighted                average fair value                of                options granted                above                fair value |   |       |      |                                               |   | **                    —**                    |   |   |   |   |   |   |   |   |   |   |   |                     — |   |   |   |   | $ |                  4.39 |   |
|                                                                                                                                                      |   |       |      |                                               |   |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| ·   | $31.3                million                for options **outstanding** |
|--------------------|-------------------------------------------------------------------------|

| ·   | $27.9                million                for options **exercisable**                (vested) |
|--------------------|-------------------------------------------------------------------------------------------------|

**exercised**

|                                          |   | **Options                  Outstanding**  |   | **Options                  Exercisable**                                        |
|-----------------------------------------------|--------|------------------------------------------------|--------|--------------------------------------------------------------------------------------|
| **Range                  of Exercise Prices** |   | **Options****Outstanding**                     |   | **Weighted****Average****Remaining****Contractual****Life                  (Years)** |   | **Weighted****Average****Exercise                  Price** |   | **Shares****Exercisable** |   | **Weighted****Average****Exercise                  Price** |
| $4.84                  to $5.97               |   |    555,000                      |   | 3.5                                                                                  |   |  $4.94 |   |   555,000 |   |   $4.94 |
| $6.19                  to $6.97               |   |    342,396                      |   | 6.1                                                                                  |   |  $6.95 |   |   342,396 |   |   $6.95 |
| $7.00                  to $7.88               |   |    466,812                      |   | 6.0                                                                                  |   |  $7.38 |   |   415,064 |   |   $7.31 |
| $8.70                  to $9.75               |   |    337,994                      |   | 4.3                                                                                  |   |  $8.70 |   |   211,998 |   |   $8.70 |
| $22.77                  to $28.36             |   |    415,998                      |   | 5.1                                                                                  |   | $22.90 |   |   134,011 |   | $22.88 |
| $37.93                  to $38.16             |   |    403,100                      |   | 6.1                                                                                  |   | $37.93 |   |     18,000 |   | $37.93 |
|  $4.84                  to $38.16        |   | 2,521,300                                      |   | 5.1                                                                                  |   | $14.41 |   | 1,676,469 |   |   $8.20 |

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Table          of Contents

*Restricted      Shares*

| ·   | Grants                of                restricted shares vest three years from the date of grant. Under                certain                circumstances some or all of the restricted shares may vest earlier.                Compensation expense is recognized over the vesting period. Compensation                expense recognized was $3.1 million in 2006, $1.3 million in 2005                and $0.2                million in 2004. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                        | **2006**          |   | **2005**                                                                              |   | **2004**      |
|-----------------------------------------------------------------------------------------------------------------------------|-------------------|--------|---------------------------------------------------------------------------------------|--------|---------------|
|                                                                                                                        | **Shares**        |   | **Weighted****Average****Grant                  Date****Fair                  Value** |   | **Shares**    |   | **Weighted                  Average****Grant                  Date**** Fair                  Value** |   | **Shares** |   | **Weighted                  Average****Grant                  Date****Fair                  Value** |
| Nonvested                  at                     beginning                  of the    period | **258 **     |   | **$16.46**                                                                            |   | 149      |   | $10.89 |   | —  |   |        — |
|    Granted                                                                                                   | **139 **     |   | **$37.83**                                                                            |   | 118      |   | $23.18 |   | 149  |   | $10.89 |
|    Vested                                                                                                    | **— ** |   | **       —**                                 |   | —  |   |        — |   | —  |   |        — |
|    Forfeited                                                                                                 | **(1)**           |   | **$37.93**                                                                            |   | (9)           |   | $12.62 |   | —  |   |        — |
| Nonvested                  at                  end of    the                  period                         | **396 **     |   | **$23.91**                                                                            |   | 258      |   | $16.46 |   | 149  |   | $10.89 |

*Shares*

| ·   | In                May 2006,                we issued 12,000 shares to non-employee directors and recognized                compensation expense of $0.4 million. These shares vest immediately,                however trading is restricted for one year from the date of grant. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                May 2005,                we issued 14,000 shares to non-employee directors and recognized                compensation expense of $0.4 million. These shares vest immediately,                however trading is restricted for one year from the date of grant. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                July 2004,                we issued 33,600 shares to non-employee directors and recognized                compensation expense of $0.3 million. These shares vest immediately,                however trading is restricted for one year from the date of grant. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                     |   | **Number                of Securities to be Issued Upon Exercise of Outstanding Options,                Warrants                and Rights** |      | **Weighted                Average Exercise Price of Outstanding Options, Warrants and                Rights** |   | **Number                of Securities Remaining Available for Future Issuance Under Equity                Compensation Plans** |   |
|------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity                compensation plans approved                by security holders     |   |                                                                                                                                         | 2,916,800 |                                                                                                          | $      | 12.45                                                                                                                          |   |   | 736,466 |   |
| Equity                compensation plans not approved                by security holders |   |                                                                                                                                         | —   |                                                                                                          |   | —                                                                                                                        |   |   | — |   |
|       Total                                                |   |                                                                                                                                         | 2,916,800 |                                                                                                          | $      | 12.45                                                                                                                          |   |   | 736,466 |   |

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Table          of Contents

***11.***
***Income      Taxes***

|                                   |   | **2006**  |                           | **2005**  |   | **2004**                  |   |
|----------------------------------------|--------|----------------|--------------------------------|----------------|--------|--------------------------------|--------|
| Current                  income taxes  |   |           |                           |      |   |                           |   |
|    Federal              |   | **$**          | **53,918**                     |           | $      | 72,650                         |   | $ | 37,185 |   |
|    State                |   |           | **4,013**                      |           |   | 10,738                         |   |   | 5,503 |   |
|                                   |   |           | **57,931**                     |           |   | 83,388                         |   |   | 42,688 |   |
|                                   |   |           |                           |           |   |                           |   |   |   |   |
| Deferred                  income taxes |   |           |                           |           |   |                           |   |   |   |   |
|    Federal              |   |           | **(1,043**                     | **)**          |   | (3,157                         | )      |   | (6,809 | ) |
|    State                |   |           | **(82**                        | **)**          |   | (316                           | )      |   | (681 | ) |
|                                   |   |           | **(1,125**                     | **)**          |   | (3,473                         | )      |   | (7,490 | ) |
|                                   |   |           |       |           |   |       |   |   |         |   |
|                                   |   | **$**          | **56,806**                     |           | $      | 79,915                         |   | $ | 35,198 |   |

|                                                                     |   | **2006** |     | **2005** |   | **2004** |   |
|--------------------------------------------------------------------------|--------|----------|----------|----------|--------|----------|--------|
| Statutory                rate                                            |   |     | **35.0** | **%**    |   |     | 35.0   | % |   |   | 35.0 | % |   |
| State                income                taxes, net of federal benefit |   |     | **1.3**  |          |   |     | 3.5    |  |   |   | 3.3 |  |   |
| Non-deductible                items                                      |   |     | **0.4**  |          |   |     | 0.2    |  |   |   | ― |  |   |
| Earnings                of                minority interests             |   |     | **(1.5** | **)**    |   |     | (2.3   | ) |   |   | (2.3 | ) |   |
| Domestic                production deduction                             |   |     | **(0.8** | **)**    |   |     | (0.8   | ) |   |   | ― |  |   |
| Other                                                               |   |     | **(0.7** | **)**    |   |     | (0.1   | ) |   |   | 1.2 |  |   |
|                                                                     |   |     | **33.7** | **%**    |   |     | 35.5   | % |   |   | 37.2 | % |   |

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Table          of Contents

|                                                                          |   | **2006**     |        | **2005**     |   |
|-------------------------------------------------------------------------------|--------|--------------|-------------|--------------|--------|
| Deferred                tax                assets:                            |   |    |        |    |   |
|    Accounts                receivable                          |   | **$**        | **756**     |         | $      | 589 |   |
|    Inventory                                                   |   |         | **1,594**   |         |   | ― |   |
|    Accrued                compensation                         |   |         | **11,645**  |         |   | 13,506 |   |
|    Insurance                reserves                           |   |         | **6,184**   |         |   | 5,526 |   |
|    Share-based                compensation                     |   |         | **3,681**   |         |   | 593 |   |
|    Other                accrued liabilities                    |   |         | **2,502**   |         |   | 3,487 |   |
|    State                taxes and credits                      |   |         | **2,629**   |         |   | 345 |   |
|    Investment                in partnership interests          |   |         | **2,634**   |         |   | 466 |   |
|    Other                                                       |   |         | **437**     |         |   | 156 |   |
|                                                                          |   |         | **32,062**  |         |   | 24,668 |   |
| Less:                Valuation allowance                                      |   |         | **(1,507**  | **)**        |   | (345 | ) |
|                                                                          |   |         | **30,555**  |         |   | 24,323 |   |
|                                                                          |   |         |        |         |   |   |   |
| Deferred                tax                liabilities:                       |   |         |        |         |   |   |   |
|    Inventory                                                   |   |         | **—** |         |   | 3,116 |   |
|    Revenue                recognition                          |   |         | **2,495**   |         |   | — |   |
|    Prepaid                expenses and other                   |   |         | **1,503**   |         |   | 1,889 |   |
|    Property                and equipment                       |   |         | **360**     |         |   | 367 |   |
|    Depreciation                                                |   |         | **14,088**  |         |   | 14,145 |   |
|    Goodwill                and other intangibles, net          |   |         | **12,333**  |         |   | 5,489 |   |
|    Other                                                       |   |         | **—** |         |   | 460 |   |
|                                                                          |   |         | **30,779**  |         |   | 25,466 |   |
|                                                                          |   |         |        |         |   |   |   |
| Net                deferred                tax liabilities                    |   | **$**        | **(224**    | **)**        | $      | (1,143 | ) |
|                                                                          |   |         |        |         |   |   |   |
| Classified                in                the balance sheet as:             |   |         |        |         |   |   |   |
|    Deferred                income tax benefit (current assets) |   | **$**        | **8,914**   |         | $      | 5,768 |   |
|    Deferred                income taxes (long-term liability)  |   |         | **(9,138**  | **)**        |   | (6,911 | ) |
|                                                                          |   | **$**        | **(224**    | **)**        | $      | (1,143 | ) |

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Table          of Contents

***12.***
***Financial Instruments***

| ·   | $0.2                million                less than the amount of debt reported on the consolidated balance                sheet at                December 31, 2006 and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.7                million                less than the amount of debt reported on the consolidated balance                sheet at                December 31, 2005. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

***13.***
***Commitments and Contingencies***

*Operating      Leases*

*Warranties*

|                                                                        |   | **2006** |       |  **2005** |   |  **2004** |   |
|-----------------------------------------------------------------------------|--------|----------|------------|----------------|--------|----------------|--------|
| Balance                at                beginning of the period            |   | **$**    | **5,404**  |           | $      | 258            |   | $ | 139 |   |
|    Provision                for warranties                   |   |     | **3,009**  |           |   | 2,925          |   |   | 366 |   |
|    Provision                for warranties from acquisitions |   |     | **117**    |           |   | 3,345          |   |   | — |   |
|    Warranty                charges                           |   |     | **(1,375** | **)**          |   | (1,124         | )      |   | (247 | ) |
| Balance                at                end of the period             |   | **$**    | **7,155**  |           | $      | 5,404          |   | $ | 258 |   |

*Legal      Proceedings*

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Table          of Contents

***14.***
***Segment Information***

*SelectBuild*

*BMC      West*

*Corporate*

|                                            |   | **Sales** |          | **Income****(Loss)****Before****Taxes                and** |   | **Depreciation**  |   |                      |          |                    |   |
|-------------------------------------------------|--------|-----------|---------------|------------------------------------------------------------|--------|------------------------|--------|---------------------------|---------------|-------------------------|--------|
|                                            |   | **Total** |          | **Inter-****Segment**                                      |   | **Trade**              |   | **Minority****Interests** |          | **and****Amortization** |   | **Capital                (1)****Expenditures** |   | **Assets** |   |
| **Year                Ended December 31, 2006** |   |      |          |                                                       |   |                   |   |                      |          |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| SelectBuild                                     |   | **$**     | **1,744,092** |                                                       | **$**  | **(12,278**            | **)**  | **$**                     | **1,731,814** |                    | **$**  | **148,416** |   | **$** | **30,002** |   | **$** | **33,409** |   | **$** | **722,328** |   |
| BMC                West                         |   |      | **1,515,121** |                                                       |   | **(1,766**             | **)**  |                      | **1,513,355** |                    |   | **124,523** |   |   | **12,178** |   |   | **33,135** |   |   | **487,703** |   |
| Corporate                                       |   |      | **—**   |                                                       |   | **—**            |   |                      | **—**   |                    |   | **(75,484** | **)** |   | **3,104** |   |   | **6,174** |   |   | **118,880** |   |
|                                            |   | **$**     | **3,259,213** |                                                       | **$**  | **(14,044**            | **)**  | **$**                     | **3,245,169** |                    |   | **197,455** |   | **$** | **45,284** |   | **$** | **72,718** |   | **$** | **1,328,911** |   |
| Interest                Expense                 |   |      |          |                                                       |   |                   |   |                      |          |                    |   | **29,082** |   |   |   |   |   |   |   |   |   |   |
|                                            |   |      |          |                                                       |   |                   | **$**  | **168,373**               |          |                    |   |   |   |   |   |   |   |   |
|                                            |   |      |          |                                                       |   |                   |   |                      |          |                    |   |   |   |   |   |
| **Year                Ended December 31, 2005** |   |      |          |                                                       |   |                   |   |                      |          |                    |   |   |   |   |   |
| SelectBuild                                     |   | $         | 1,395,182     |                                                       | $      | (1,296                 | )      | $                         | 1,393,886     |                    | $      | 160,957 |   | $ | 13,695 |   | $ | 62,611 |   | $ | 623,877 |   |
| BMC                West                         |   |      | 1,519,903     |                                                       |   | (1,629                 | )      |                      | 1,518,274     |                    |   | 151,030 |   |   | 11,218 |   |   | 17,335 |   |   | 447,619 |   |
| Corporate                                       |   |      | ―       |                                                       |   | ―                |   |                      | ―       |                    |   | (72,631 | ) |   | 2,450 |   |   | ― |   |   | 79,029 |   |
|                                            |   | $         | 2,915,085     |                                                       | $      | (2,925                 | )      | $                         | 2,912,160     |                    |   | 239,356 |   | $ | 27,363 |   | $ | 79,946 |   | $ | 1,150,525 |   |
| Interest                Expense                 |   |      |          |                                                       |   |                   |   |                      |          |                    |   | 14,420 |   |   |   |   |   |   |   |   |   |   |
|                                            |   |      |          |                                                       |   |                   | $      | 224,936                   |          |                    |   |   |   |   |   |   |   |   |
|                                            |   |      |          |                                                       |   |                   |   |                      |          |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| **Year                Ended December 31, 2004** |   |      |          |                                                       |   |                   |   |                      |          |                    |   |   |   |   |   |
| SelectBuild                                     |   | $         | 753,956       |                                                       | $      | (255                   | )      | $                         | 753,701       |                    | $      | 59,689 |   | $ | 8,216 |   | $ | 14,382 |   | $ | 268,498 |   |
| BMC                West                         |   |      | 1,338,470     |                                                       |   | (1,146                 | )      |                      | 1,337,324     |                    |   | 96,083 |   |   | 11,740 |   |   | 17,036 |   |   | 409,160 |   |
| Corporate                                       |   |      | ―       |                                                       |   | ―                |   |                      | ―       |                    |   | (47,664 | ) |   | 2,859 |   |   | ― |   |   | 65,386 |   |
|                                            |   | $         | 2,092,426     |                                                       | $      | (1,401                 | )      | $                         | 2,091,025     |                    |   | 108,108 |   | $ | 22,815 |   | $ | 31,418 |   | $ | 743,044 |   |
| Interest                Expense                 |   |      |          |                                                       |   |                   |   |                      |          |                    |   | 13,560 |   |   |   |   |   |   |   |   |   |   |
|                                            |   |      |          |                                                       |   |                   | $      | 94,548                    |          |                    |   |   |   |   |   |   |   |   |

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Table          of Contents

***15.      Quarterly Results of Operations (unaudited)***

|                                                              |       | **Fourth **  |        | **Third**    |   | **Second**   |       | **First**    |        |
|-------------------------------------------------------------------|------------|------------------------|-------------|--------------|--------|--------------|------------|--------------|-------------|
| **2006**                                                          |       |              |        |    |   |    |       |    |        |
| **Sales**                                                         |       | **$**                  | **608,021** | ** **   | **$**  | **830,599**  | ** ** | **$**        | **921,992** | ** ** | **$** | **884,557** | ** ** |
| **Income                from operations**                         | ** ** | **$**                  | **14,481**  | ** **   | **$**  | **64,271**   | ** ** | **$**        | **64,317**  | ** ** | **$** | **54,386** | ** ** |
| **Net                income**                                     | ** ** | **$**                  | **4,482**   | ** **   | **$**  | **35,348**   | ** ** | **$**        | **34,175**  | **(1)** | **$** | **28,069** |   |
|                                                              |       |                   |        |         |   |         |       |         |        |   |   |   |   |
| **Net                income per diluted common share**            |       |                   | **$0.15**   |         |   | **$1.20**    |       |         | **$1.16**   |   |   | **$0.95** |   |
| **Common                share prices:**                           |       |                   |        |         |        |         |       |         |        |   |  |   |   |
| **High**                                                          |       |                   | **$27.72**  |         |   | **$28.01**   |       |         | **$38.29**  |   |   | **$40.32** |   |
| **Low**                                                           |       |                   | **$23.95**  |         |   | **$20.84**   |       |         | **$25.36**  |   |   | **$32.27** |   |
|                                                              |       |                   |        |         |   |         |       |         |        |   |   |   |   |
| 2005                                                              |       |                   |        |         |   |         |       |         |        |   |   |   |   |
| Sales                                                             |       | $                      | 817,883     |         | $      | 819,828      |       | $            | 701,521     |   | $ | 572,928 |   |
| Income                from                operations              |       | $                      | 62,336      |         | $      | 75,820       |       | $            | 60,892      |   | $ | 40,308 |   |
| Net                income                                         |       | $                      | 33,481      | (2)          | $      | 41,564       |       | $            | 33,314      | (3) | $ | 21,148 |   |
|                                                              |       |                   |        |         |   |         |       |         |        |   |   |   |   |
| Net                income                per diluted common share |       |                   | $1.13       |         |   | $1.40        |       |         | $1.14       |   |   | $0.73 |   |
| Common                share                prices:                |       |                   |        |         |   |         |       |         |        |   |   |   |   |
| High                                                              |       |                   | $48.11      |         |   | $48.66       |       |         | $36.13      |   |   | $24.87 |   |
| Low                                                               |       |                   | $34.05      |         |   | $34.68       |       |         | $22.00      |   |   | $17.00 |   |

|   | (1) | Includes                    impairments of $1.1 million net of tax for goodwill and $0.3                    million net                    of tax for certain customer relationships of                    SelectBuild. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes                  impairment of $0.5 million net of tax for goodwill of                  SelectBuild. |
|--------|-----|---------------------------------------------------------------------------------------------------------------|

|   | (3) | Includes                impairment of $0.3 million net of tax for certain customer relationships                of SelectBuild. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**Management’s      Report on Internal Control Over Financial Reporting**

*Internal      Control - Integrated Framework *

| February                20,                2007 | */s/                Robert E. Mellor*                                                                                                                      |   | */s/                William M. Smartt*                                                                                            |
|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|                                            | Robert                E.                Mellor*Chairman                of the Board, President**and                Chief                Executive Officer* |   | William                M.                Smartt*Senior                Vice President and Chief**Financial                Officer* |

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Table          of Contents

**Report      of Independent Registered Public Accounting Firm**

*Share-Based      Payment*

----

Table          of Contents

**Report      of Independent Registered Public Accounting Firm**

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Table          of Contents

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Table          of Contents

| **ITEM              9.** | **Changes                in and Disagreements with Accountants on Accounting and                Financial** **Disclosure** |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------|

| **ITEM              9A.** | **Controls                and Procedures**  |
|---------------------------|--------------------------------------------------|

*Conclusion      Regarding the Effectiveness of Disclosure Controls and      Procedures*

*Changes      in Internal Controls*

*Management’s      Report on Internal Control Over Financial Reporting*

*Report      of Independent Registered Public Accounting Firm on Internal Control Over      Financial Reporting*

| **ITEM              9B.** | **Other                Information** |
|---------------------------|--------------------------------------|

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Table          of Contents

**PART      III**

| **ITEM              10.** | **Directors,                Executive Officers and Corporate                Governance** |
|---------------------------|------------------------------------------------------------------------------------------|

*Directors*

| Name                                                 |   | Age    |   | Position                and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------------------------------------------------------|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                 |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Robert                E.                Mellor       |   | 63     |   | Mr.                Mellor                became Chairman of the Board of Directors in 2002 and has been President                and Chief Executive Officer since 1997. He has been a director since                1991.                He was previously Of Counsel with the law firm of Gibson, Dunn &                Crutcher LLP from 1990 to 1997. He is a director for Coeur d’Alene Mines                Corporation, The Ryland Group and Monro Muffler Brake. He is also                on the                board of councilors of Save-the-Redwoods League. He does not serve                on the                audit committee of any of these boards. Mr. Mellor will not stand                for                re-election to the board of Monro Muffler Brake in                2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                 |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Sara                L.                Beckman        |   | 50     |   | Dr.                Beckman                has served as a director since 2002. She is a member of the Operations                and                Information Technology Management group at the Haas School of Business                at                University of California - Berkeley where she has been for nearly 20                years. Her teaching and research focus on operations strategy and                innovation management. She also held several corporate positions                at                Hewlett-Packard Company and was a consultant for Booz, Allen and                Hamilton.                Additionally, she consults with corporate clients on customer-focused                design and innovation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                 |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Eric                S.                Belsky         |   | 46     |   | Dr.                Belsky has served as a director since 2005. He is a specialist in                housing                finance, economics and policy. He has nearly 20 years experience                conducting research on a wide range of housing and urban topics for                public                and private sector organizations and clients. He currently is the                Executive Director of the Joint Center for Housing Studies at Harvard                University and has been for over 5 years. Since 2004, he has been                a                Lecturer in the Harvard Graduate School of Design. He                also served                as Research Director for the Millennial Housing Commission 2001-2002,                a                bipartisan commission appointed by the United States Congress.                Dr.                Belsky also serves as a director of Champion Enterprises,                Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                 |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| James                K.                Jennings, Jr. |   | 65     |   | Mr.                Jennings                has served as a director since 2003. Since January 2005, Mr. Jennings                has                served as Executive Vice President and Secretary of both Ashbrook                Simon-Hartley GP, LLC, and Ashbrook Simon-Hartley Operations GP,                LLC, the                general partners of limited partnerships which own the assets of                a                manufacturer of waste water treatment equipment with operations in                the                U.S., U.K. and Chile. Since October 2003, he has been Executive Vice                President, Chief Financial Officer and Director of Atreides Capital,                LLC,                a private equity investment firm that specializes in the acquisition                and                operation of middle market manufacturing and distribution companies.                During 2003, he served as Executive Vice President, Chief Financial                Officer and Director of Consolidation Partners, L.L.C., a privately-held                merchant banking organization. Prior to that, he served as Executive                Vice                President and Chief Financial Officer of Loomis, Fargo & Co. and its                predecessor organization, both cash-in-transit service providers,                from 1994 to January 2003. |

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| Norman                J.                Metcalfe                 |   | 64     |   | Mr.                Metcalfe has served as a director since 2005. For the past 8 years he                has managed his own investment and real estate business. He has served                as                Vice Chairman and Chief Financial Officer of The Irvine Company,                one of                the nation's largest real estate and community development companies.                Mr.                Metcalfe also serves on the boards of The Ryland Group and The Tejon                Ranch                Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------------------------------------------------------------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| David                M.                Moffett    |   | 55     |   | Mr.                Moffett has served as a director since 2006. In February 2007, Mr.                Moffett                retired as Vice Chairman and Chief Financial Officer for U.S. Bancorp                where he served since 1993. He was also previously the chairman of                the                U.S. Bancorp Asset Liability Policy Committee and a member of its                Managing      Committee and Credit Policy Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                             |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| R.                Scott                Morrison, Jr.             |   | 67     |   | Mr.                Morrison                has served as a director since 2004. For over 5 years he has been                the                owner and President of Morrison Properties, a real estate development                firm, and a partner in City Center Business Offices, a company that                rents                business suites on a short-term basis and is based in Fort Lauderdale,                Florida. He is formerly a partner and divisional President for Florida                based Arvida Corporation, a real estate firm. Mr. Morrison is also                a                development principal in the Boca Raton Innovation Center now known                as the                Florida Atlantic Research Park. Mr. Morrison was also a limited partner                in                Memphis Prince, L.P., d/b/a Audubon Park Place, which owns a 120                unit                apartment building in Memphis, Tennessee, until 2005 when it was                sold and                he served as the President of the general partner, RSM II, Inc, until                2005                when it was dissolved. The limited partnership filed for protection                under                Chapter 11 of the federal bankruptcy laws in late 2003 and the court                approved a reorganization plan late in 2004. |
|                                                             |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Peter                S.                O’Neill             |   | 69     |   | Mr.                O’Neill                has served as a director since 1993. In 1979, he founded O’Neill                Enterprises, LLC., a residential development and homebuilding company.                Since 2003, he has served as chairman of PON, LLC and related companies,                a                residential real estate firm. Mr. O’Neill serves on the Board of Trustees                and as a member of the Governance Committee for Albertson College                of                Idaho. He is a member of the Urban Land Institute and is currently                serving                as a director of IDACORP and Idaho Power                Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

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| Richard                G.                Reiten |   | 67     |   | Mr.                Reiten                has served as a director since 2001. He has been a director for Northwest                Natural Gas since 1996 and was Chairman of the Board from 2000 to                2005 and                recently re-appointed the Chairman of the Board in 2006. Mr. Reiten                was                also President and CEO from 1997 to 2002 and President and COO in                1996 of                Northwest Natural Gas. He is a director of U.S. Bancorp, Regence                Group,                IDACORP and National Fuel and Gas. Mr. Reiten is past Chairman of                the                Board for the American Gas Association and serves on the board of                the                Associated Electric & Gas Insurance Services Limited. He is also a                trustee of the Board of The Nature Conservancy of Oregon, the Oregon                Business Council and the Oregon Community Foundation.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-------------------------------------------------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Norman                R.                Walker  |   | 63     |   | Mr.                Walker is                nominated for election to the board for the first time and was appointed                as a director in September 2006. He is a retired partner of                PricewaterhouseCoopers LLP (PwC), a position held for more than 26                years.                He most recently served as a National Risk Management Partner, Audit                and                Business Advisory Services from 1992 to 2003 with PwC and is currently                the                Chief Financial Officer of the Diocese of Bridgeport in Connecticut.                Mr.                Walker’s professional and business activities also include serving as                Chairman of the Ethics Division Technical Standards Committee of                the                American Institute of Certified Public Accountants, President of                PricewaterhouseCoopers LLP Foundation and Chair and President of                the                University of Oregon Foundation Board of Trustees. He is currently                an                Emeritus Trustee of the University of Oregon Foundation, member of                the                Business Advisory Council of Lundquist College of Business at the                University of Oregon, and a Trustee of the Bank Street College in                New                York. |

*Executive      Officers*

| Name                                           |   | Age    |   | Position                and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|------------------------------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Robert                E.                Mellor |   | 63     |   | Chairman                of the Board, President and Chief Executive OfficerMr.                Mellor                became Chairman of the Board of Directors in 2002 and has been President                and Chief Executive Officer since 1997. He has been a director since                1991.                He was previously Of Counsel with the law firm of Gibson, Dunn &                Crutcher LLP from 1990 to 1997. He is a director for Coeur d’Alene Mines                Corporation, The Ryland Group and Monro Muffler Brake. He is also                on the                board of councilors of Save-the-Redwoods League. He does not serve                on the                audit committee of any of these boards. Mr. Mellor will not stand                for                re-election to the Board of Monro Muffler Brake in                2007. |

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| William                M.                Smartt   |   | 64     |   | Senior                Vice President and Chief Financial OfficerMr.                Smartt                has been a Senior Vice President and Chief Financial Officer since                April                2004. Prior to joining the Company, he was an independent consultant                from                August 2001 to March 2004. From 1992 to 2001, he was Executive Vice                President, Chief Financial and Administrative Officer of DHL Express,                a                leader in international air express services. His previous experience                as a                Chief Financial Officer included 10 years with Di Giorgio                Corporation, a Fortune 500 Company, whose product lines included                the                distribution of building materials, prefabricated components and                framing                services. |
|---------------------------------------------------|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Michael                D.                Mahre    |   | 47     |   | Senior                Vice President - Corporate Development, President and Chief Executive                Officer - SelectBuildMr.                Mahre was                elected a Senior Vice President in 2003. He was elected Vice President                of                Corporate Development in 2001 and Chief Executive Officer of BMC                Construction in 2002. He joined the Company in 1999 as Director of                Financial Planning and Analysis. Mr. Mahre was a principal of The                Cambria                Group, a private equity investment firm, from 1997 to                1998.                                                                                                                                                                                                                                                                                    |
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Stanley                M.                Wilson   |   | 62     |   | Senior                Vice President, President and Chief Executive Officer - BMC                WestMr.                Wilson                was elected President and CEO of BMC West in 2004 and was appointed                Senior                Vice President in 2003. He was elected Vice President in 2000 and                was                General Manager of the Pacific Division of BMC West from 1993 to                2003. Mr.                Wilson has been with the company since its beginning in 1987. His                previous                experience includes 19 years with the building materials distribution                business of Boise Cascade Corporation.                                                                                                                                                                                                                    |
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Eric                R.                Beem        |   | 37     |   | Vice                President and ControllerMr.                Beem was                appointed Vice President in January 2006 and Controller in April                2005. He                joined the Company as Accounting Manager in 1996. Mr. Beem is a Certified                Public Accountant and his experience includes 3 years with an                international public accounting firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Mark                R.                Kailer      |   | 53     |   | Vice                President, Treasurer and Investor RelationsMr.                Kailer                has been Vice President and Treasurer since 2003. He joined the Company                in                2000 as Assistant Treasurer. He was previously Senior Manager of                Treasury                Services at Circle International Group, a publicly-traded global                logistics                company based in San Francisco, from 1997 to 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                              |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Jeffrey                F.                Lucchesi |   | 53     |   | Senior                Vice President, Chief Information OfficerMr.                Lucchesi                joined the Company in August 2004 as Senior Vice President and Chief                Information Officer. From 2000 to 2004, he was Senior Vice President                of                Worldwide Operations for Corio, Inc., an enterprise application service                provider. Mr. Lucchesi also served from 1994 to 2000 as Vice President                and                Chief Information Officer for DHL Express, a leader in international                air                express services.                                                                                                                                                                                                                                                                                                |

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| Steven                H.                Pearson |   | 59     |   | Senior                Vice President - Human ResourcesMr.                Pearson                has been Senior Vice President of Human Resources since 2001. From                1987                through 2001 he served as Vice President of Human Resources. Mr.                Pearson                has been with the Company since its beginning in 1987. His previous                experience also includes 18 years in the human resource function                of Boise                Cascade Corporation.                                        |
|-------------------------------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            |   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Paul                S.                Street    |   | 58     |   | Senior                Vice President, Chief Administrative Officer, General Counsel and                Corporate SecretaryMr.                Street                joined the Company in 1999 as Senior Vice President, General Counsel                and                Corporate Secretary and has been Chief Administrative Officer since                2001.                He previously served as our outside General Counsel & Secretary while                a partner of the law firm of Moffatt, Thomas, Barrett, Rock &                Fields. |

*Certain      Relationships and Legal Proceedings*

*Audit      Committee and Financial Expert*

*Section      16(a) Beneficial Ownership Reporting Compliance*

*Code      of Ethics *

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| **ITEM              11.** | **Executive                Compensation** |
|---------------------------|-------------------------------------------|

| **ITEM              12.** | **Security                Ownership of Certain Beneficial Owners and Management and Related****Stockholder                Matters** |
|---------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| **ITEM              13.** | **Certain                Relationships and Related Transactions, and Director                Independence** |
|---------------------------|-------------------------------------------------------------------------------------------------------------|

| **ITEM              14.** | **Principal                Accounting Fees and                Services** |
|---------------------------|--------------------------------------------------------------------------|

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**PART      IV**

| **ITEM              15.** | **Exhibits,                Financial Statement Schedules** |
|---------------------------|------------------------------------------------------------|

| (a)    | The                  following                  documents are filed as part of this Annual Report on Form                  10-K: |
|--------|----------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                             |   |   |   |   |   |
|   | 1.                                                                                                                               | Financial                  Statements as                  filed                  under Item 8 - Financial Statements and Supplementary                  Data: |
|   |                                                                                                                             | ·  Consolidated                  Statements of Income for the years ended December 31, 2006, 2005                  and                  2004 |
|   |                                                                                                                             | ·  Consolidated                  Balance Sheets as of December 31, 2006 and 2005 |
|   |                                                                                                                             | ·  Consolidated                  Statements of Shareholders’ Equity for the years ended December 31, 2006,                  2005 and 2004 |
|   |                                                                                                                             | ·  Consolidated                  Statements of Cash Flows for the years ended December 31, 2006,                  2005 and                  2004 |
|   |                                                                                                                             | ·  Notes                  to                  Consolidated Financial Statements |
|   |                                                                                                                             | ·  Management’s                  Report on Internal Control Over Financial Reporting |
|   |                                                                                                                             | ·  Reports                  of                  Independent Registered Public Accounting Firm |
|   |                                                                                                                             |   |   |   |
|   | 2.                                                                                                                               | Financial                  Statement Schedules: |   |   |   |   |
|   |                                                                                                                             | ·  Schedule                  II -                  Valuation and Qualifying Accounts for the years ended December                  31, 2006,                  2005 and 2004 (page 86) |
|   |                                                                                                                             | ·  Report                  of                  Independent Registered Public Accounting Firm (page 87) |
|   |                                                                                                                             |   |
|   |                                                                                                                             | Schedules                  other than those listed are omitted because they are not applicable                  or the                  required                  information is presented in the financial statements and related                  disclosures. |
|   |                                                                                                                             |   |
|   | 3.                                                                                                                               | Exhibits: |   |   |   |   |
|   |                                                                                                                             | A                  list of the                  exhibits required to be filed as part of this report are presented                  in the                  Exhibit                  Index                  (pages 88 - 91). |

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**Schedule      II**

**Valuation      and Qualifying Accounts**

*(thousands)*

**Deductions      to Accounts Receivable:  Allowance for Returns, Discounts and Doubtful      Accounts**

| **Description**                                            |   | **Balance                at Beginning****of                Year** | ** ** | **Additions                Charged to Costs and Expenses** | ** ** | **Additions                Charged to Other Accounts** | ** ** | **Deductions(1)** | ** **                        | **Balance                at End of Year** |   |
|------------------------------------------------------------|--------|-------------------------------------------------------------------|------------|------------------------------------------------------------|------------|--------------------------------------------------------|------------|-------------------|-----------------------------------|-------------------------------------------|--------|
|                                                       |   |                                                              |       |                                                       |       |                                                   |       |              |                              |                                      |   |
| **Year                Ended December 31, 2006**            |   | **$**                                                             | **3,756**  |                                                       | **$**      | **1,181**                                              |       | **$**             | **                 ―** |                                      | **$**  | **                  450** |   | **$** | **4,487** |   |
| Year                Ended                December 31, 2005 |   | $                                                                 | 4,367      |                                                       | $          |                   447                        |       | $                 |                  ―     |                                      | $      | 1,058 |   | $ | 3,756 |   |
| Year                Ended                December 31, 2004 |   | $                                                                 | 2,425      |                                                       | $          | 2,804                                                  |       | $                 |                  ―     |                                      | $      |                   862 |   | $ | 4,367 |   |

| (1)   | Represents                write-offs of uncollectible receivables, net of                recoveries. |
|-----------------|------------------------------------------------------------------------------------------------------|

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**Report      of Independent Registered Public Accounting Firm**

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**Exhibit      Index Filed with the Annual Report on Form 10-K**

**For      the Year Ended December 31, 2006**

|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **Incorporated                by Reference** |
|--------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|
| **Exhibit**        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| **Number**         |   | **Exhibit                Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **Form**                                     |   | **File                No.** |   | **Exhibit** |   | **Filing                Date** |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 3.50     |   | Amended                Certificate of Incorporation filed with the Delaware Secretary of                State on                September 23, 1997                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 8-K12G3                                      |   | 000-23135 |   | 3.(i)                1 |   | September                24,                1997 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 3.50.1             |   | Certificate                of Amendment to Certificate of Incorporation of Building Materials                Holding                Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 10-K                                         |   | 000-23135 |   | 3.50.1 |   | February                27,                2006 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 3.60.1   |   | Amended                and                Restated By-laws                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 10-Q                                         |   | 000-23135 |   | 3.70 |   | November                14,                2001 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 4.70     |   | Rights                Agreement Dated September 19, 1997, as Amended November 5,                1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 10-K405                                      |   | 000-23135 |   | 10.27 |   | March                30,                1999 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 10.10    |   | Second                Amended and Restated Credit Agreement dated as of November 10, 2006                among                Building Materials Holding Corporation, BMC West Corporation and                other                Subsidiary Guarantors, Wells Fargo Bank, National Association, as                Administrative Agent, Joint Lead Arranger, Joint Book Manager Swingline                Lender and L/C Issuer, JPMorgan Chase Bank, N.A., as Document Agent,                Suntrust Bank as Joint Lead Arranger and Co-Syndication Agent, BNP                Paribas                as Joint Lead Arranger and Co-Syndication Agent and other Financial                Institutions Party Hereto |   | 8-K                                          |   | 000-23135 |   | 10.10 |   | November                14,                2006 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 10.20*        |   | Amended                and                Restated 1992 Non-Qualified                Stock Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 10-K                                         |   | 000-23135 |   | 10.33 |   | March                28,                1997 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 10.20.1*           |   | Non-Qualified                Option Agreement Between Michael Mahre and BMC West Corporation Pursuant                to the 1992 Non-Qualified Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 10-K                                         |   | 000-23135 |   | 10.20.1 |   | February                27,                2006 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 10.21*        |   | Amended                and                Restated 1993 Employee Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 10-K                                         |   | 000-23135 |   | 10.34 |   | March                28,                1997 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 10.21.1*      |   | Non-Statutory                Stock Option Agreement Pursuant to the Amended and Restated 1993                Employee                Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 10-K                                         |   | 000-23135 |   | 10.21.1 |   | February                27,                2006 |
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |   |   |   |   |   |   |
| 10.22*        |   | Second                Amended and Restated Non-Employee Director Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 10-K                                         |   | 000-23135 |   | 10.22 |   | February                27,                2006 |

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|           |   |                                                                                                                                               |   | **Incorporated                by Reference** |
|----------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|
| **Exhibit**    |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| **Number**     |   | **Exhibit                Description**                                                                                                             |   | **Form**                                     |   | **File                No.** |   | **Exhibit** |   | **Filing                Date** |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.23*    |   | Building                Materials Holding Corporation 2000 Stock Incentive Plan                                                                    |   | S-8                                          |   | 333-44260 |   | 4 |   | August                22,                2000 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.23.1*  |   | Non-Statutory                Stock Option Agreement Pursuant to the 2000 Stock Incentive Plan                                                      |   | 10-K                                         |   | 000-23135 |   | 10.23.1 |   | February                27,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.24*    |   | Building                Materials Holding Corporation Employee Stock Purchase Plan                                                                 |   | S-8                                          |   | 333-47122 |   | 4 |   | October                2,                2000 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.25*    |   | Building                Materials Holding Corporation 2004 Incentive and Performance                Plan                                           |   | S-8                                          |   | 333-117237 |   | 4 |   | July                8,                2004 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.25.1*  |   | Stock                Option                Agreement Pursuant to the 2004 Incentive and Performance Plan                                           |   | 10-K                                         |   | 000-23135 |   | 10.25.1 |   | February                27,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.25.2*       |   | Restricted                Stock Agreement Pursuant to the 2004 Incentive and Performance Plan                (filed                with this Form) |   |                                         |   |   |   |   |   |   |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.26*         |   | Cash                Equity                Plan                                                                                                     |   | 10-K                                         |   | 000-23135 |   | 10.26 |   | February                27,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.27*         |   | Stock                Option                Agreement of BMC West Corporation and Robert E. Mellor                                                  |   | S-8                                          |   | 333-136632 |   | 4 |   | August                14,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.40*    |   | Building                Materials Holding Corporation 2006 Annual Incentive Program BMHC                Officers                                   |   | 10-Q                                         |   | 000-23135 |   | 10.40 |   | August                1,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.41*    |   | Building                Materials Holding Corporation 2006 Annual Incentive Program SelectBuild                Construction Participants           |   | 10-Q                                         |   | 000-23135 |   | 10.41 |   | August                1,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.42*         |   | Building                Materials Holding Corporation 2006 Annual Incentive Program BMC West                Officers and Key Staff                 |   | 10-Q                                         |   | 000-23135 |   | 10.42 |   | August                1,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.43*         |   | Building                Materials Holding Corporation 2005 Deferred Compensation Plan for                Directors                                 |   | 10-K                                         |   | 000-23135 |   | 10.43 |   | February                27,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.44*         |   | Building                Materials Holding Corporation 1999 Deferred Compensation Plan for                Directors (filed with this Form)          |   |                                         |   |   |   |   |   |   |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.45*         |   | Building                Materials Holding Corporation 2005 Deferred Compensation Plan for                Executives                                |   | 10-K                                         |   | 000-23135 |   | 10.44 |   | February                27,                2006 |
|           |   |                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| 10.46*         |   | Building                Materials Holding Corporation 1999 Deferred Compensation Plan for                Executives (filed with this Form)         |   |                                         |   |   |   |   |   |   |

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Table          of Contents

|             |   |                                                                                                                                                                          |   | **Incorporated                by Reference** |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|
| **Exhibit**      |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| **Number**       |   | **Exhibit                Description**                                                                                                                                        |   | **Form**                                     |   | **File                No.** |   | **Exhibit** |   | **Filing                Date** |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.47*           |   | Building                Materials Holding Corporation General Terms and Conditions BMHC Officers                and BMHC Key Management 2006 Long-Term Cash Incentive Plan    |   | 10-Q                                         |   | 000-23135 |   | 10.45 |   | August                1,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.48*           |   | Building                Materials Holding Corporation General Terms and Conditions BMHC Officers                and BMHC Key Management 2005 Long-Term Cash Incentive Plan    |   | 10-K                                         |   | 000-23135 |   | 10.45 |   | February                27,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.49*           |   | Building                Materials Holding Corporation General Terms and Conditions BMHC Officers                and BMHC Key Management 2004 Long-Term Cash Incentive Plan    |   | 10-K                                         |   | 000-23135 |   | 10.46 |   | February                27,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.60*           |   | Building                Materials Holding Corporation 2005 Executives Supplemental Retirement                Income Plan                                                      |   | 10-K                                         |   | 000-23135 |   | 10.60.1 |   | February                27,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.61*           |   | Building                Materials Holding Corporation 2002 Executives Supplemental Retirement                Income Plan as Amended and Restated December 31, 2002            |   | 10-K                                         |   | 000-23135 |   | 10.60 |   | February                27,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.70*      |   | Severance                Plan for Certain Executive Officers, Senior Management and Key Employees                of the Company and its Subsidiaries                          |   | 10-Q                                         |   | 000-23135 |   | 10.70 |   | August                1,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.80            |   | Amended                Form                of Indemnity Agreement Between Building Materials Holding Corporation                and                its Officers and Directors |   | 10-K                                         |   | 000-23135 |   | 10.7.1 |   | March                26,                2003 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.90*      |   | Employment                Agreement by and Between Robert E. Mellor and Building Materials                Holding                Corporation as of June 28, 2006              |   | 10-Q                                         |   | 000-23135 |   | 10.90 |   | August                1,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 10.91*      |   | Employment                Agreement by and Between William M. Smartt and Building Materials                Holding                Corporation as of April 1, 2006             |   | 10-Q                                         |   | 000-23135 |   | 10.91 |   | August                1,                2006 |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 21.0   |   | Subsidiaries                of Building Materials Holding Corporation (filed with this                Form)                                                                   |   |                                         |   |   |   |   |   |   |
|             |   |                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |
| 23.1   |   | Consent                of                KPMG LLP (filed with this Form)                                                                                                      |   |                                         |   |   |   |   |   |   |

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Table          of Contents

|                                                                                 |   |                                                                                                                                                                                                            |   | **Incorporated                by Reference** |
|--------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|
| **Exhibit**                                                                          |   |                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
| **Number**                                                                           |   | **Exhibit                Description**                                                                                                                                                                          |   | **Form**                                     |   | **File                No.** |   | **Exhibit** |   | **Filing                Date** |
|                                                                                 |   |                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
| 31.1                                                                       |   | CEO                Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                (filed with this Form)                                                                 |   |                                         |   |   |   |   |   |   |
|                                                                                 |   |                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
| 31.2                                                                       |   | CFO                Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                (filed with this Form)                                                                 |   |                                         |   |   |   |   |   |   |
|                                                                                 |   |                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
| 32.1                                                                       |   | CEO                and CFO                Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act                of 2002                (filed with this Form)                                         |   |                                         |   |   |   |   |   |   |
|                                                                                 |   |                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
| 99.1                                                                            |   | Annual CEO Certification                of                Compliance with the New York Stock Exchange Corporate Governance                Listing                Standards(filed with this                Form) |   |                                         |   |   |   |   |   |   |
|                                                                                 |   |                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
| *                Indicates a                management contract or compensatory plan |   |                                                                                                                                                                                                            |   |                                         |   |   |

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Table          of Contents

**SIGNATURES**

|                                 |                                                                                                                                          | Building              Materials Holding Corporation |
|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|
|                            |                                                                                                                                     |                                           |
| Date:              February 21, 2007 |                                                                                                                                               | /s/              Robert E. Mellor                   |
|                                 | Robert              E. Mellor                                                                                                                 |
|                                 | Chairman                of                the Board, President and Chief Executive Officer (Principal Executive                Officer)  |

| **Signature**                                            | ** ** | **Title**                                                                                                                               | ** ** | **Date**                                        |
|----------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Robert E.                Mellor       |       | Chairman                of                the Board, President and Chief Executive Officer (Principal Executive                Officer) |       | February                21,                2007 |
| Robert                E.                Mellor           |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                William                M. Smartt      |       | Senior                Vice                President and Chief Financial Officer (Principal Financial                Officer)            |       | February                21,                2007 |
| William                M.                Smartt          |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Eric R.                Beem           |       | Vice                President and Controller (Principal                Accounting Officer)                                              |       | February                21,                2007 |
| Eric                R.                Beem               |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Sara L.                Beckman        |       | Director                                                                                                                                |       | February                21,                2007 |
| Sara                L.                Beckman            |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Eric S.                Belsky         |       | Director                                                                                                                                |       | February                21,                2007 |
| Eric                S.                Belsky             |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                James K.                Jennings, Jr. |       | Director                                                                                                                                |       | February                21,                2007 |
| James                K.                Jennings, Jr.     |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Norman J.                Metcalfe     |       | Director                                                                                                                                |       | February                21,                2007 |
| Norman                J.                Metcalfe         |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                David M.                Moffett       |       | Director                                                                                                                                |       | February                21,                2007 |
| David                M.                Moffett           |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                R. Scott                Morrison, Jr. |       | Director                                                                                                                                |       | February                21,                2007 |
| R.                Scott                Morrison, Jr.     |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Peter S.                O’Neill |       | Director                                                                                                                                |       | February                21,                2007 |
| Peter                S.                O’Neill     |       |                                                                                                                                    |       |                                            |
|                                                     |       |                                                                                                                                    |       |                                            |
| /s/                Richard                G. Reiten      |       | Director                                                                                                                                |       | February                21,                2007 |
| Richard                G.                Reiten          |       |                                                                                                                                    |       |                                            |

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Table          of Contents

| **List                of Exhibits Filed** |
|-------------------------------------------|
|                                      |   |
| **Exhibit**                               |   |
| **Number**                                | **Exhibit                Description** |
|                                      |   |
| 10.25.2                                   | Restricted                Stock Agreement Pursuant to the 2004 Incentive and Performance                Plan |
|                                      |   |
| 10.44*                                    | Building                Materials Holding Corporation 1999 Deferred Compensation Plan for                Directors |
|                                      |   |
| 10.46*                                    | Building                Materials Holding Corporation 1999 Deferred Compensation Plan for                Executives |
|                                      |   |
| 21.0                                      | Subsidiaries                of Building Materials Holding Corporation |
|                                      |   |
| 23.1                                      | Consent                of                KPMG LLP |
|                                      |   |
| 31.1                                      | CEO                Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002 |
|                                      |   |
| 31.2                                      | CFO                Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002 |
|                                      |   |
| 32.1                                      | CEO                and CFO                Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act                of                2002 |
|                                      |   |
| 99.1                                      | Annual CEO Certification                of                Compliance with the New York Stock Exchange Corporate Governance                Listing                Standards |

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