United States
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                               FORM 10-K/AAA
                             (Amendment No. 3)

(Mark One)
[X]  Annual  Report  Pursuant  to Section 13 or  15(d)  of  the  Securities
Exchange Act of 1934 for the Fiscal Year Ended December 26, 1998
                                    or
[ ]  Annual  Report  Pursuant to Section 13 or 15(d)  of  the  Securities
Exchange Act of 1934 for the Transition Period From ______ To ______

                        Commission File No. 1-14967

                                WICKES INC.
                                -----------
          (Exact name of registrant as specified in its charter)

          Delaware                             36-3554758
          --------                             ----------
     (State of Incorporation)           (IRS Employer Identification No.)

          706 North Deerpath Drive, Vernon Hills, Illinois  60061
          -------------------------------------------------------
                 (Address of principal executive offices)

                              (847) 367-3400
                              --------------
           (Registrant's telephone number, including area code)

       Securities Registered Pursuant to Section 12 (b) of the Act:
                                   None
                                   ----
       Securities Registered Pursuant to Section 12 (g) of the Act:
                 Common Stock, par value of $.01 per share
                 -----------------------------------------
   Indicate by check mark whether the registrant (1) has filed all  reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days.  Yes [X]  No [  ]

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

   As  of  February 28, 1999, the Registrant had 8,210,947 shares of Common
Stock, par value $.01 per share, and no shares of Class B Non-Voting Common
Stock,  par  value  $.01 per share, outstanding, and the  aggregate  market
value  of  outstanding voting stock (based on the last sale  price  on  the
Nasdaq  National Market of Common Stock on that date) held by nonaffiliates
was  approximately $16,100,000 (includes the market value of all such stock
other  than  shares  beneficially  owned  by  10%  stockholders,  executive
officers and directors).



<PAGE> 2
                             TABLE OF CONTENTS
                                                                 Page No.
                                  PART IV

Item 14.  Exhibits, Financial Statement Schedules,
           and Reports on Form 8-K                                  3

SIGNATURES                                                          4


                                     2



<PAGE> 3

                                  PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
----------------------------------------------------------------
         FORM 8-K.
         --------
(a)  List of Documents Filed as a Part of this Report:
-----------------------------------------------------
(1)  Financial Statements:                               Page No.
-------------------------                                --------
Report of Independent Accountants                           F-1

Consolidated balance sheets as of December 26, 1998
  and December 27, 1997                                     F-2

Consolidated statements of operations for the years
  ended December 26, 1998, December 27, 1997 and
  December 28, 1996                                         F-3

Consolidated statements of changes in common
  stockholders' equity for the years ended
  December 26, 1998, December 27, 1997 and
  December 28, 1996                                         F-4

Consolidated statements of cash flows for the
  years ended December 26, 1998, December 27, 1997
  and December 28, 1996                                     F-5

Notes to consolidated financial statements                  F-6


(3)  Exhibits
-------------
     23.1  Consent of PricewaterhouseCoopers LLP.


                                     3

<PAGE> Page 4

                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 3
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                    WICKES INC.

Date:  January 21, 2000             By: /s/ J. Steven Wilson
                                    --------------------
                                    J. Steven Wilson
                                    Chairman and Chief Executive Officer


                                    By: /s/ John M. Lawrence
                                    ------------------------
                                    John M. Lawrence
                                    Controller
                                    (Principal Accounting Officer)




                                     4

<PAGE> F-1


                     REPORT OF INDEPENDENT ACCOUNTANTS




To the Stockholders and Board of Directors
of Wickes Inc.

In  our  opinion,  the  accompanying consolidated balance  sheets  and  the
related  consolidated  statements of operations, changes  in  stockholders'
equity  and  cash  flows  present fairly, in  all  material  respects,  the
financial position of Wickes Inc. and its subsidiaries at December 26, 1998
and  December 27, 1997, and the results of their operations and their  cash
flows  for  each of the three years ended December 26, 1998,  December  27,
1997   and  December  28,  1996,  in  conformity  with  generally  accepted
accounting principles. These financial statements are the responsibility of
the  Company's management; our responsibility is to express an  opinion  on
these financial statements based on our audits.  We conducted our audits of
these  statements in accordance with generally accepted auditing  standards
which  require  that  we plan and perform the audit  to  obtain  reasonable
assurance  about  whether the financial statements  are  free  of  material
misstatement.   An  audit  includes examining, on a  test  basis,  evidence
supporting  the  amounts  and  disclosures  in  the  financial  statements,
assessing the accounting principles used and significant estimates made  by
management,  and  evaluating the overall financial statement  presentation.
We  believe  that  our audits provide a reasonable basis  for  the  opinion
expressed above.

As discussed in Note 16 to the consolidated financial statements, Wickes Inc.
has restated previously issued consolidated financial statements to change its
accounting for a barter transaction.



                                                 PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
February 23, 1999 except for Note 16, as to which the date is August 31, 1999.






                                     F-1


<PAGE> F-2

                       WICKES INC. AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS

                  December 26, 1998 and December 27, 1997
                     (in thousands except share data)

<TABLE>
<CAPTION>
                                                          1998         1997
        ASSETS                                            ----         ----
<S>                                                  <C>          <C>
Current assets:
 Cash                                                $      65    $      79
 Accounts receivable, less allowance for doubtful
   accounts of $4,393 in 1998 and $3,765 in 1997        92,926       81,788
 Notes receivable                                        1,095        3,200
 Inventory                                             103,716      102,706
 Deferred tax asset                                      8,857        8,955
 Prepaid expenses                                        2,808        1,246
                                                       -------      -------
   Total current assets                                209,467      197,974

 Property, plant and equipment, net                     45,830       46,763
 Trademark (net of accumulated amortization
   of $10,496 in 1998 and $10,274 in 1997)               6,523        6,745
 Deferred tax asset                                     17,482       17,054
 Rental equipment (net of accumulated depreciation
   of $572 in 1998 and $176 in 1997)                     1,883        2,030
 Other assets (net of accumulated amortization
   of $9,502 in 1998 and $8,053 in 1997)                10,998       12,786
                                                       -------      -------
   Total assets                                      $ 292,183    $ 283,352
                                                       =======      =======

        LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
 Current maturities of long-term debt                $      16    $      46
 Accounts payable                                       54,017       41,190
 Accrued liabilities                                    20,089       22,279
                                                        ------       ------
   Total current liabilities                            74,122       63,515

Long-term debt, less current maturities                191,961      193,061
Other long-term liabilities                              2,952        2,775
Commitments and contingencies (Note 8)

Stockholders' equity (Note 9):
 Preferred stock (no shares issued)
 Common stock (8,207,268 shares issued and
  outstanding in 1998 and 8,176,205 shares
  issued and outstanding in 1997)                           82           82
 Additional paid-in capital                             86,787       86,675
 Accumulated deficit                                   (63,721)     (62,756)
                                                        ------       ------
   Total stockholders' equity                           23,148       24,001
                                                       -------      -------
   Total liabilities & stockholders' equity          $ 292,183    $ 283,352
                                                       =======      =======

</TABLE>

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

                                     F-2


<PAGE> F-3

                       WICKES INC. AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 26, 1998, December 27, 1997, and December 28, 1996
                     (in thousands, except share data)

<TABLE>
<CAPTION>
                                                    1998       1997       1996
                                                    ----       ----       ----
<S>                                               <C>        <C>        <C>
Net sales                                         $910,272   $884,082   $848,535
Cost of sales                                      694,800    681,056    659,072
                                                   -------    -------    -------
  Gross profit                                     215,472    203,026    189,463
                                                   -------    -------    -------

Selling, general and administrative expense        186,853    185,385    162,329
Depreciation, goodwill and trademark amortization    5,253      4,863      5,367
Provision for doubtful accounts                      2,915      1,707      1,067
Restructuring and unusual items                      5,932       (559)       745
Other operating income                              (6,837)   (10,689)    (6,796)
                                                   -------    -------    -------
                                                   194,116    180,707    162,712
                                                   -------    -------    -------
  Income from operations                            21,356     22,319     26,751

Interest expense                                    21,632     21,417     21,750
Equity in loss of affiliated company                     -      1,516      3,183
                                                    ------     ------     ------
  (Loss)income before income taxes                   (276)       (614)     1,818

Provision (benefit) for income taxes:
  Current                                            1,019      1,099      1,010
  Deferred                                            (330)      (153)       300
                                                    ------     ------     ------
      Net (loss) income                           $   (965)  $ (1,560)  $    508
                                                    ======     ======     ======
Basic and diluted (loss)/income per common share  $  (0.12)  $  (0.19)  $    .07
                                                    ======     ======     ======
Weighted average common shares - for basic       8,197,542  8,168,257  7,207,761
                                                 =========  =========  =========
Weighted average common shares - for diluted     8,197,542  8,168,257  7,221,082
                                                 =========  =========  =========

</TABLE>



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

                                     F-3


<PAGE> F-4

                       WICKES INC. AND SUBSIDIARIES

        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 For the Years Ended December 28, 1996, December 27, 1997 and December 26, 1998
                   (in thousands, except for share data)

<TABLE>
<CAPTION>
                                   Common Stock    Additional                    Total
                                   ------------      Paid-in     Accumulated  Stockholders'
                                  Shares  Amount     Capital       Deficit       Equity
                                  ------  ------     -------       -------       ------
<S>                             <C>        <C>      <C>          <C>           <C>
Balance at December 30, 1995    6,143,473  $  61    $ 76,772     $ (61,704)    $ 15,129

Net income                                     -           -           508          508
Issuance of common stock, net   2,015,874     21       9,841             -        9,862
                                ---------    ---      ------        ------       ------
Balance at December 28, 1996    8,159,347     82      86,613       (61,196)      25,499

Net loss                                       -           -        (1,560)      (1,560)
Issuance of common stock, net      16,858      -          62             -           62
                                ---------    ---      ------        ------       ------
Balance at December 27, 1997    8,176,205     82      86,675       (62,756)      24,001

Net loss                                       -           -          (965)        (965)
Issuance of common stock, net      31,063      -         112             -          112
                                ---------    ---      ------        ------       ------
Balance at December 26, 1998    8,207,268  $  82    $ 86,787     $ (63,721)    $ 23,148
                                =========    ===      ======        ======       ======



</TABLE>


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

                                     F-4

<PAGE> F-5


                       WICKES INC. AND SUBSIDIARIES

                   CONSOLIDATED STATEMENT OF CASH FLOWS

For the Years Ended December 26, 1998, December 27, 1997, and December 28, 1996
                              (in thousands)
<TABLE>
<CAPTION>
                                                         1998      1997      1996
                                                         ----      ----      ----
<S>                                                  <C>       <C>       <C>
Cash flows from operating activities:
Net (loss)/income                                    $   (965) $ (1,560) $    508
 Adjustments to reconcile net (loss)/income to
   net cash provided by/(used in) operating activities:
 Equity in loss of affiliated company                       -     1,516     3,183
 Depreciation expense                                   4,785     4,395     4,904
 Amortization of trademark                                222       222       222
 Amortization of goodwill                                 246       246       242
 Amortization of deferred financing costs               1,447     1,401     1,781
 Provision for doubtful accounts                        2,915     1,707     1,067
 Gain on sale of assets                                (1,834)   (6,180)     (940)
 Deferred tax (benefit)/provision                        (330)     (153)      300
 Changes in assets and liabilities:
  (Increase) decrease in accounts receivable          (14,053)  (12,285)    9,515
  Decrease (increase) in notes receivable               2,105    (3,200)        -
  (Increase) decrease in inventory                     (1,010)   (2,034)    9,967
  Increase (decrease) in accounts payable
    and accrued liabilities                            10,814    (4,590)  (10,907)
  Increase in deferred gain                                 -      (670)        -
  Increase in prepaids and other assets                (1,715)   (3,369)   (1,132)
                                                       ------    ------    ------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES     2,627   (24,554)   18,710
                                                       ------    ------    ------
Cash flows from investing activities:
 Purchases of property, plant and equipment            (5,854)   (7,758)   (2,893)
 Proceeds from sales of property, plant and equipment   4,231    13,798     5,303
                                                       ------    ------    ------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES    (1,623)    6,040     2,410
                                                       ------    ------    ------
Cash flows from financing activities:
 Net (repayment) borrowing under revolving
  line of credit                                       (1,084)   16,732   (28,708)
 Reductions of note payable                               (46)     (134)     (428)
 Net proceeds from issuance of common stock               112        62     9,862
                                                       ------    ------    ------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES    (1,018)   16,660   (19,274)
                                                       ------    ------    ------

NET (DECREASE) INCREASE IN CASH                           (14)   (1,854)    1,846
Cash at beginning of period                                79     1,933        87
                                                       ------    ------    ------
CASH AT END OF PERIOD                                $     65  $     79  $  1,933
                                                       ======    ======    ======
Supplemental schedule of cash flow information:
 Interest paid                                       $ 20,885  $ 19,791  $ 20,372
 Income taxes paid                                        987     1,344     1,518

</TABLE>

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

                                     F-5

<PAGE> F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restatement
-----------

The Company has restated the condensed consolidated balance sheets as of
December 26, 1998 and the condensed consolidated statements of operations
for the year ended December 26, 1998 to reflect a pre-tax non-cash charge
of approximately $844,000 for a one time barter transaction (see Note 16).


1.  Description of Business
---------------------------

Wickes  Inc.  (formerly  Wickes  Lumber Company),  through  its  sales  and
distribution  facilities, markets lumber, building materials  and  services
primarily  to  professional contractors, repair and remodelers  and  do-it-
yourself  home owners, principally in the Midwest, Northeast  and  Southern
United   States.   Wickes  Inc.'s  wholly-owned  subsidiaries  are:  Lumber
Trademark  Company ("LTC"), a holding company for the "Flying W" trademark,
and  GLC  Division, Inc. ("GLC"), which subleases certain  real  estate  to
Wickes Inc.

In  June  1997, the FASB issued SFAS Statement No. 131, "Disclosures  about
Segments  of  an  Enterprise  and  Related Information."   This  statement,
effective  for  financial  statements  for  fiscal  years  beginning  after
December  15,  1997,  requires  that a public  business  enterprise  report
financial  and  descriptive  information  about  its  reportable  operating
segments.   Generally, financial information is required to be reported  on
the basis that it is used internally for evaluating segment performance and
deciding  how  to allocate resources to segments.  Based on this  criteria,
the  Company has determined that it operates in one business segment,  that
being  the  supply  and  distribution of lumber and building  materials  to
building  professionals  and  do-it-yourself customers,  primarily  in  the
Midwest, Northeast, and South.  Thus, all information required by SFAS  No.
131  is included in the Company's financial statements.  No single customer
represented more than 10% of the Company's total sales in 1998,  1997,  and
1996.


2.   Accounting Policies
------------------------

Principles of Consolidation
---------------------------

The  consolidated financial statements present the results  of  operations,
financial  position, and cash flows of Wickes Inc. and all its wholly-owned
subsidiaries  (the "Company").  All significant intercompany balances  have
been eliminated.

Fiscal Year
-----------

The Company's fiscal year ends on the last Saturday in December.

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid investments with a maturity date of
three months or less to be cash equivalents.

                                     F-6

<PAGE> F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable
-------------------

The  Company  extends  credit  primarily  to  qualified  contractors.   The
accounts  receivable  balance  excludes  consumer  receivables,   as   such
receivables  are sold on a nonrecourse basis.  The remaining  accounts  and
notes receivable represent credit extended to professional contractors  and
professional  repair  and  remodelers, generally  on  a  non-collateralized
basis.

Inventory
---------

Inventory consists principally of finished goods.  The Company utilizes the
first-in,  first-out (FIFO) cost flow assumption for valuing its inventory.
Inventory  is valued at the lower of cost or market, but not in  excess  of
net realizable value.

Property, Plant and Equipment
-----------------------------

Property, plant and equipment are stated at cost and are depreciated  under
the  straight-line method.  Estimated lives used range from 15 to 39  years
for  buildings  and improvements.  Leasehold improvements  are  depreciated
over the life of the lease.  Machinery and equipment lives range from 3  to
10  years.   Expenditures  for  maintenance  and  repairs  are  charged  to
operations  as incurred.  Gains and losses from dispositions  of  property,
plant,  and equipment are included in the Company's statement of operations
as other operating income. Once a facility is closed and the real estate is
held for sale the Company discontinues depreciation on the real estate.

Rental Equipment
----------------

Rental  equipment  consists  of hand tools and  power  equipment  held  for
rental.  This equipment is depreciated under the straight line method  over
a 5 to 10 year life.

Other Assets
------------

Other  assets  consist primarily of deferred financing costs  and  goodwill
which are being amortized on the straight line method, goodwill over 30  to
35  years  and  deferred  financing costs over the expected  terms  of  the
related debt agreements.

The  Company's investment in an international operation was recorded  under
the equity method.  The Company's share of losses is reflected as equity in
loss  of  affiliated company on the Consolidated Statements of  Operations.
As  of December 27, 1997 the Company's investment had been reduced to  zero
and there is no obligation to make additional investments.

Amortization expense for deferred financing costs is reflected as  interest
expense on the Company's Consolidated Statements of Operations.

                                     F-7

<PAGE> F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Trademark
---------

The  Company's  "Flying  W"  trademark is being amortized  over  a  40-year
period.

Accounts Payable
----------------

The  Company  includes outstanding checks in excess of in-transit  cash  in
accounts payable.  There was $8,232,000 in outstanding checks in excess  of
in-transit cash at December 26, 1998 and $3,273,000 at December 27, 1997.

Postretirement Benefits Other Than Pensions
-------------------------------------------

The  Company  provides  certain  health and  life  insurance  benefits  for
eligible retirees and their dependents.  The Company accounts for the costs
of  these  postretirement benefits over the employees' working  careers  in
accordance  with  Statement  of  Financial Accounting  Standards  No.  106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."

Postemployment Benefits
-----------------------

The  Company  provides certain other postemployment benefits  to  qualified
former or inactive employees.  The Company accounts for the costs of  these
postemployment  benefits in the period when it is probable that  a  benefit
will  be  provided  in  accordance with Statement of  Financial  Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits."

Income Taxes
------------

The  Company  accounts  for income taxes in accordance  with  Statement  of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."  Tax
provisions  and credits are recorded at statutory rates for  taxable  items
included  in  the consolidated statements of operations regardless  of  the
period for which such items are reported for tax purposes.  Deferred income
taxes  are recognized for temporary differences between financial statement
and  income  tax  bases  of assets and liabilities  for  which  income  tax
benefits will be realized in future years.  Deferred tax assets are reduced
by  a  valuation  allowance when the Company cannot make the  determination
that  it is more likely than not that some portion of the related tax asset
will be realized.

Earnings Per Common Share
-------------------------

Earnings  per  common share is calculated in accordance with  Statement  of
Financial  Accounting  Standards No. 128, "Earnings Per  Share."   Weighted
average  shares outstanding have been adjusted for common shares underlying
options and warrants.

                                     F-8

<PAGE> F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------

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

Impairment of Long-Lived Assets
-------------------------------

The  Company evaluates assets held for use and assets to be disposed of  in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment  of Long-Lived Assets and for Long-Lived
Assets to  be  Disposed Of."    This   statement  requires  that  long-lived
assets  and   certain identifiable intangibles held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.  There was no
impairment  of  the Company's long-lived and intangible assets  other  than
assets  held  for  sale  which  has been provided  for.   The  Company  has
historically  reviewed excess property held for sale and  when  appropriate
recorded  these assets at the lower of their carrying amount or fair  value
(see Note 5).

Stock-Based Compensation
------------------------

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based  Compensation,"  encourages,  but  does  not  require  companies   to
recognize  compensation  expense for grants of stock,  stock  options,  and
other equity instruments to employees based on fair value accounting rules.
Although expense recognition for employee stock-based compensation  is  not
mandatory,  the pronouncement requires companies that choose not  to  adopt
the fair value accounting to disclose the pro forma net income and earnings
per share under the new method.  The Company elected not to adopt Statement
of  Financial  Accounting Standards No. 123, but to continue to  apply  APB
Opinion  25.   As  required, the Company has disclosed the  pro  forma  net
income  and  pro  forma  earnings per share as  if  the  fair  value  based
accounting  methods in this Statement had been used to account  for  stock-
based compensation cost (see Note 9).

Recently Issued Accounting Pronouncements
-----------------------------------------

Statement  of  Financial  Accounting Standards  No.  133,  "Accounting  for
Derivative   Instruments   and  Hedging  Activities,"    standardizes   the
accounting for derivative instruments by requiring that all derivatives  be
recognized  as  assets and liabilities and measured  at  fair  value.   The
statement is effective for fiscal years beginning after June 15, 1999.  The
Company believes adoption of the statement will not have a material  effect
on its financial statements.

                                     F-9

<PAGE> F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.  Restructuring and Unusual Charges
-------------------------------------

During  the  fourth  quarter of 1995, the Company committed  to  and  began
implementing a restructuring plan ("1995 Plan") to improve return on assets
by  closing or consolidating under-performing operating centers, decreasing
the   corresponding  overhead  to  support  these  building  centers,   and
initiating  actions  to strengthen its capital structure.   The  costs  for
closing these building centers were based on management estimates of  costs
to  exit these markets and actual historical experience.  Included in  1995
results of operations is a $17.8 million charge, including $12.6 million in
anticipated  losses  on  the  disposition  of  closed  center  assets   and
liabilities  and  $2.2  million in severance and  postemployment  benefits,
relating to the 1995 Plan and other one time costs.

The  major  components of this charge include the write-down of  assets  to
their  net  realizable value, liabilities associated with  closed  building
centers  held  for  sale,  postemployment  benefits  to  qualified   former
employees as a result of the center closings, and other charges related  to
the strengthening of the Company's capital structure.  Also included was  a
charge for unusual employment related claims expensed in the fourth quarter
of 1995.

During  1996,  the Company continued executing the 1995 Plan,  through  the
consolidation and closing of 18 building centers and the improvement of its
overall  capital  structure through the issuance  of  new  shares  and  the
modification of its bank revolving credit agreement.


After extensive review of the 1995 Plan, and changes in business conditions
in  certain  markets  in  which  the Company  operates,  the  Company  made
adjustments to the 1995 Plan and incurred other one time costs resulting in
a net $0.7 million charge to results of operations in the fourth quarter of
1996  for restructuring and unusual items.  These adjustments included  (i)
the determination that three of the centers identified in the 1995 Plan for
closure had significantly improved market conditions and would remain open,
resulting  in  a  $1.5 million credit to restructuring  expense,  (ii)  the
extension  of the 1995 plan to include the closing (substantially completed
by  the  end  of  1996) of three building centers not previously  included,
resulting  in a $1.3 million charge for the write  down of working  capital
assets  and  liabilities to their net realizable value and a  $0.1  million
charge  for  severance  and postemployment benefits  for  approximately  90
employees, (iii) a $1.1 million charge for impairment in the carrying value
of real estate held for sale at four previously closed centers, and (iv)  a
$0.3  million  credit with respect to the resolution of a claim  below  the
reserved amount.

During  1997, the Company recorded a $1.5 million restructuring charge  for
discontinued   programs  and  reductions  in  its  corporate   headquarters
workforce.  The  $1.5  million  included  approximately  $0.9  million  for

                                     F-10

<PAGE> F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

severance  and  postemployment benefits for approximately  25  headquarters
employees.   The  discontinued  programs included  the  Company's  mortgage
lending,  utilities marketing and certain internet programs.   This  charge
was  offset by a $2.1 million reduction in accrued costs for the  Company's
1995  Plan, which was completed.   The $2.1 million reversal included  four
centers  identified  in  the 1995 Plan for closure that  had  significantly
improved  market conditions and would remain open, as well as a  change  in
the  estimate  of  facility carrying costs for sold  facilities  and  those
remaining to be sold.

During  the  first quarter of 1998 the Company implemented a  restructuring
plan  (the  "1998 Plan") which resulted in the closing or consolidation  of
eight  sales and distribution and two manufacturing facilities in February,
the  sale  of  two sales and distribution facilities in March, and  further
reductions  in  headquarters staffing.  As a result of the 1998  Plan,  the
Company  recorded  a  restructuring charge of $5.4  million  in  the  first
quarter and an additional charge of $0.5 million in the third quarter.  The
$5.9  million  charge  included $4.1 million in  estimated  losses  on  the
disposition  of  closed facility assets and liabilities,  $2.1  million  in
severance  and  postemployment benefits related to the  1998  plan,  and  a
benefit of $300,000 for adjustments to prior years' restructuring accruals.
The  $4.1  million  in estimated losses includes the write-down  of  assets
(excluding real estate), to their net realizable value, of $3.4 million and
$700,000 in real estate carrying costs.  The $2.1 million in severance  and
postemployment benefits covered approximately 250 employees,  25  of  which
were  headquarters employees, that were released as a result of  reductions
in  headquarters  staffing  and the closing or  consolidation  of  the  ten
operating facilities.  The $300,000 benefit from prior years was  a  result
of  accelerated  sales of previously closed facilities  during  the  fourth
quarter of 1997 and first quarter of 1998.  The acceleration of these sales
resulted  in  a change in the estimate of facility carrying costs  for  the
sold   facilities.   At  December  26,  1998  the  accrued  liability   for
restructuring had been reduced to zero.

For further information regarding the sale of closed center real estate see
Note 5.


4.  Acquisitions
----------------

During  1998 the Company acquired the operating assets of Eagle  Industries
Inc.,  a component manufacturer, for a total cost of $1.8 million in  cash.
The  acquisition  was accounted for as a purchase and  the  cost  has  been
allocated on the basis of the fair market value of the assets acquired  and
liabilities   assumed.  These  operations  have  been   included   in   the
accompanying   consolidated  financial  statements  from  their   date   of
acquisition. The Company had no acquisitions in 1997 or 1996.

                                     F-11

<PAGE> F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.  Property, Plant, and Equipment
----------------------------------

Property, plant and equipment is summarized as follows:

<TABLE>
<CAPTION>
                                       December 26,   December 27,
                                           1998           1997
                                           ----           ----
                                              (in thousands)
 <S>                                     <C>            <C>
  Land and improvements                   $12,115        $12,781
  Buildings                                26,341         27,584
  Machinery and equipment                  32,257         30,619
  Leasehold improvements                    3,059          2,584
  Construction in progress                    846            844
                                           ------         ------

  Gross property, plant, and equipment     74,618         74,412
  Less:  accumulated depreciation         (32,661)       (31,178)
                                           ------         ------

  Property, plant, and equipment
    in use, net                            41,957         43,234
  Assets held for sale, net                 3,873          3,529
                                           ------         ------

  Property, plant, and equipment, net     $45,830        $46,763
                                           ======         ======
</TABLE>


Sale of Real Estate
-------------------

Except  for  the sale/leaseback of the Company's Succasunna, NJ  sales  and
distribution facility in 1997, which included a $3,000,000 note  receivable
that  was collected within 60 days, all sales of real estate have been  for
cash.

In  1998, the Company sold nine pieces of real estate, eight of which  were
sales  and distribution facilities and one an excess parcel of land, for  a
net  gain of $1.6 million.  Eight of the properties sold had been held  for
sale  since  the first quarter of 1998 and had not been previously  written
down  from  their original net book value.  The ninth property,  which  had
been held for sale since 1989, had been previously written down by $709,000
from its original net book value and sold at a net loss of $59,000.

In 1997, the Company sold 12 pieces of real estate for a net gain of $6.0
million.  These transactions included the sale/leaseback of the Company's
headquarters and the Succasunna sales and distribution facility and the
sale of nine sales and distribution facilities and one excess parcel of
land.  Of the properties sold, one sales and distribution facility was held
for sale since 1989, had been previously written down $99,600 from its
original net book value, and sold at a loss of $100,400.  The other 11
properties had not been previously marked down from book value and had been
held for sale since 1992 (2 properties), 1995 (4 properties), 1996 (2
properties) and 1997 (3 properties).

                                     F-12

<PAGE> F13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In 1996, the Company sold six sales and distribution facilities for a net
gain of $1.7 million.  None of these properties had been previously written
down from their original net book value.  Five had been held for sale since
1995, and one since 1990.

The  Company  reviews assets held for sale in accordance with Statement  of
Financial  Accounting  Standards No. 121.  In 1997  and  1996  the  Company
recorded   losses  of  $156,000  and  $1,065,000,  to  report  land,   land
improvements and buildings held for sale at their fair value.  The  Company
did  not record any impairment to the cost of assets held for sale in 1998.
Fair  value  is determined by local market real estate values of properties
similar to the Company's excess real estate.  These charges are included in
the caption "restructuring and unusual items" on the Consolidated Statement
of  Operations. Of the five properties that were revalued in 1997 and  1996
two have sold at a net loss and three are still held for sale.


6.   Accrued Liabilities
------------------------

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                       December 26,    December 27,
                                           1998            1997
                                           ----            ----
                                             (in thousands)

     <S>                                <C>             <C>
     Accrued payroll                    $  9,498        $  8,148
     Accrued interest                        667           1,367
     Accrued liability insurance           4,966           4,173
     Accrued restructuring charges             -           1,348
     Other                                 4,958           7,243
                                          ------          ------
     Total accrued liabilities          $ 20,089        $ 22,279
                                          ======          ======

</TABLE>

                                     F-13

<PAGE> F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.  Long-Term Debt
------------------

Long-term debt obligations are summarized as follows:

<TABLE>
<CAPTION>
                                                    December 26,   December 27,
                                                        1998           1997
                                                        ----           ----
                                                          (in thousands)

     <S>                                             <C>           <C>
     Revolving line of credit, interest payable
     at .75% above prime or 2.25% over LIBOR,
     principal due March 31, 2001                    $  91,961     $  93,045

     Senior subordinated notes, interest payable
     at 11-5/8% semi-annually, principal due
     December 15, 2003                                 100,000       100,000

     Other                                                  16            62
                                                       -------       -------

     Total long-term debt                              191,977       193,107
     Less current maturities                               (16)          (46)
                                                       -------       -------

     Total long-term debt less current maturities    $ 191,961     $ 193,061
                                                       =======       =======

</TABLE>

Revolving Line of Credit
------------------------

At  December 26, 1998 the Company had a revolving line of credit, which was
to  expire on March 31, 2001.  Under this line of credit the Company  could
borrow against certain levels of accounts receivable and inventory, up to a
maximum  credit  limit of $130,000,000.  At December 26, 1998,  the  amount
available  for additional borrowing was $32,680,000.  A commitment  fee  of
1/2  of  1%  was  payable  on the unused portion of  the  commitment.   The
weighted-average interest rate for the years ending December 26,  1998  and
December 27, 1997 was approximately 8.2% and 8.8% respectively.

Substantially all of the Company's accounts receivable, inventory,  general
intangibles and certain machinery and equipment were pledged as  collateral
for  the  revolving  line  of credit.  Covenants  under  the  related  debt
agreements  required, among other restrictions, that the  Company  maintain
certain financial ratios and certain levels of consolidated net worth.   In
addition,  the  debt  agreement  restricted  among  other  things,  capital
expenditures,  the  incurrence of additional debt, asset sales,  dividends,
investments, and acquisitions without prior approval from the lender.

The  revolving credit agreement was amended and restated on April  11,1997.
Among other things, the amendment and restatement (i) extended the term  of
the  facility  to March 2001, (ii) reduced the interest rate premiums  over
LIBOR  and  over  prime by 75 basis points, (iii) included  provisions  for

                                     F-14

<PAGE> F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


further interest rate premium reductions if certain performance levels  are
achieved,  (iv) modified certain covenants, and (v) provided for  increases
in the amount of capital expenditures allowed by the agreement equal to the
proceeds received from the sale of certain excess real estate.

On  June  16, 1997 the Company entered into an interest rate swap agreement
which  effectively fixed the interest rate at 8.11% (subject to adjustments
in certain circumstances), for three years, on $40 million of the Company's
borrowings under its floating rate revolving line of credit (see Note 12).

On  December  24,  1997, the second amended and restated  revolving  credit
agreement  was amended to incorporate, among other things, a  reduction  in
the  fixed charge and net worth levels for the fourth quarter of  1997  and
first quarter of 1998.

On February 17, 1999 the Company repaid all indebtedness under this line of
credit with the proceeds of a new revolving credit agreement (see Note 15).

Senior Subordinated Notes
-------------------------

On October 22, 1993, the Company issued $100,000,000 in principal amount of
10-year unsecured senior subordinated notes.  Interest on the notes is  11-
5/8%,   payable  semi-annually.   Covenants  under  the  related  indenture
restrict  among other things, the payment of dividends, the  prepayment  of
certain debt, the incurrence of additional debt if certain financial ratios
are not met, and the sale of certain assets unless the proceeds are applied
to  the  notes.   In  addition, the notes require that, upon  a  change  in
control  of  the Company, the Company must offer to purchase the  notes  at
101% of the principal thereof, plus accrued interest.

Aggregate Maturities
--------------------

The aggregate amounts of long-term debt maturities, before giving effect to
the new revolving credit agreement, by fiscal year are as follows:

<TABLE>
<CAPTION>
               Year                         Amount
               ----                         -------
                                        (in thousands)
              <S>                         <C>
               1999                       $      16
               2000                               -
               2001                          91,961
               2002                               -
               2003                         100,000


</TABLE>

                                     F-15

<PAGE> F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.  Commitments and Contingencies
---------------------------------

At  December  26, 1998, the Company had accrued approximately $152,000  for
remediation  of  certain  environmental  and  product  liability   matters,
principally underground storage tank removal.

Many  of  the  sales  and  distribution facilities presently  and  formerly
operated by the Company contained underground petroleum storage tanks.  All
such tanks known to the Company located on facilities owned or operated  by
the  Company  have  been  filled or removed in accordance  with  applicable
environmental laws in effect at the time.  As a result of reviews  made  in
connection  with  the  sale  or possible sale of  certain  facilities,  the
Company  has  found  petroleum contamination of soil and  ground  water  on
several of these sites and has taken, and expects to take, remedial actions
with   respect   thereto.   In  addition,  it  is  possible  that   similar
contamination  may exist on properties no longer owned or operated  by  the
Company   the  remediation  of  which  the  Company  could  under   certain
circumstances  be held responsible.  Since 1988, the Company  has  incurred
approximately  $2.0  million  of costs, net  of  insurance  and  regulatory
recoveries, with respect to the filling or removing of underground  storage
tanks and related investigatory and remedial actions. Insignificant amounts
of  contamination have been found on excess properties sold over  the  past
four years.  The Company has currently reserved $60,000 for estimated clean
up costs at 15 of its locations.

The  Company has been identified as having used two landfills which are now
Superfund  clean up sites, for which it has been requested to  reimburse  a
portion  of  the  clean-up  costs.  Based on the amounts  claimed  and  the
Company's  prior  experience,  the Company has  established  a  reserve  of
$45,000 for these matters.

The  Company is one of many defendants in two class action suits  filed  in
August of 1996 by approximately 200 claimants for unspecified damages as  a
result  of  health  problems claimed to have been caused by  inhalation  of
silica dust, a byproduct of concrete and mortar mix, allegedly generated by
a  cement  plant with which the Company has no connection other than  as  a
customer.  The Company has entered into a cost sharing agreement  with  its
insurers, and any liability is expected to be minimal.

The Company is one of many defendants in approximately 100 actions, each of
which  seeks unspecified damages, in various Michigan state courts  against
manufacturers and building material retailers by individuals who  claim  to
have  suffered  injuries from products containing  asbestos.  Each  of  the
plaintiffs  in these actions is represented by one of two law  firms.   The
Company  is aggressively defending these actions and does not believe  that
these  actions  will have a material adverse effect on the Company.   Since
1993, the Company has settled 16 similar actions for insignificant amounts,
and another 186 of these actions have been dismissed.  As of March 15, 1999
none of these suits have made it to trial.

                                     F-16

<PAGE> F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Losses  in  excess  of the $152,000 reserved as of December  26,  1998  are
possible but an estimate of these amounts cannot be made.

On November 3, 1995, a complaint styled Morris Wolfson v. J. Steven Wilson,
Kenneth M. Kirschner, Albert Ernest, Jr., Claudia B. Slacik, Jon F. Hanson,
Robert  E.  Mulcahy,  Frederick  H.  Schultz,  Wickes  Lumber  Company  and
Riverside  Group, Inc. was filed in the Court of Chancery of the  State  of
Delaware  in and for New Castle County (C.A. No. 14678).  As amended,  this
complaint alleges, among other things, that the sale by the Company in 1996
of 2 million newly-issued shares of the Company's Common Stock to Riverside
Group,  Inc., the Company's largest stockholder, was unfair and constituted
a  waste of assets and that the Company's directors in connection with  the
transaction breached their fiduciary duties.  The amended complaint,  among
other  things,  seeks  on  behalf of a purported  class  of  the  Company's
shareholders equitable relief or to obtain unspecified damages with respect
to  the  transaction (see Note 9).  There was no activity in this  suit  in
1998.

The  Company  is  involved  in various other legal  proceedings  which  are
incidental  to the conduct of its business.  The Company does  not  believe
that  any of these proceedings will have a material adverse effect  on  the
Company's financial position, results of operations or liquidity.

Leases
------

The  Company has entered into operating leases for corporate office  space,
retail  space, equipment and other items.  These leases provide for minimum
rents.   These  leases  generally include options to renew  for  additional
periods.   Total  rent expense under all operating leases was  $12,193,000,
$10,616,000,  and  $10,076,000  for the  years  ended  December  26,  1998,
December 27, 1997, and December 28, 1996, respectively.

Future  minimum  commitments  for noncancelable  operating  leases  are  as
follows:

<TABLE>
<CAPTION>

               Year                              Amount
               ----                              ------
                                             (in thousands)
              <C>                              <C>
               1999                            $  8,821
               2000                               6,972
               2001                               5,688
               2002                               4,745
               2003                               2,878
               Thereafter                        24,478
                                                 ------
                 Subtotal                      $ 53,582
               Less:  Sublease income           (10,995)
                                                 ------
                 Total                         $ 42,587
                                                 ======

</TABLE>

                                     F-17

<PAGE> F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.  Stockholders' Equity
------------------------

Preferred Stock
---------------

As  of  December  26, 1998 the Company had authorized 3,000,000  shares  of
preferred stock, none of which is issued or outstanding.

Common Stock
------------

The  Company  currently has one class of common stock:  Common  Stock,  par
value  $.01  per  share.  In April 1998 all 499,768 outstanding  shares  on
Class  B Non-Voting Common Stock were converted to 499,768 shares of Common
Stock.   The  Class  B Non-Voting Common Stock ceased to be  authorized  in
April  1998.  At December 26, 1998 there were 20,000,000 shares  of  Common
Stock authorized and 8,207,268 shares issued and outstanding.  In addition,
at  December  26,  1998, 898,986 shares of Common Stock were  reserved  for
issuance  under  the  Company's  1993 Long-Term  Incentive  Plan  and  1993
Director Incentive Plan.

Private Sale of Common Stock
----------------------------

On  June 20, 1996, pursuant to a stock purchase agreement dated January 11,
1996, the Company sold 2,000,000 newly-issued shares of its Common Stock to
Riverside  Group, Inc., the Company's largest stockholder, for $10  million
in  cash.  Prior to the sale the terms of the stock purchase agreement were
reviewed  and  recommended to the boards of directors of both companies  by
committees comprised of the independent directors of each company.

Warrants
--------

The  Company's unexercised outstanding warrants for 3,068 shares of  Common
Stock  expired  in  May  1998 and as of December 26,  1998  there  were  no
warrants outstanding nor Common Stock reserved for issuance under warrants.

Stock Compensation Plans
------------------------

As of December 26, 1998, the Company has two stock-based compensation plans
(both  fixed option plans), which are described below. Under the 1993 Long-
Term  Incentive plan as amended on November 30, 1994, the Company may grant
options  and  other awards to its employees with respect to up  to  835,000
shares  of  common  stock.   Under the 1993 Director  Incentive  plan,  the
Company may grant options and other awards to directors with respect to  up
to  75,000  shares.   The exercise price of grants equals  or  exceeds  the
market price at the date of grant.  The options have a maximum term  of  10
years.  For non-officers, the options generally become exercisable in equal

                                     F-18

<PAGE> F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


installments  over  a  three  year period from  the  date  of  grant.   For
officers,  the vesting periods are based on graded calendar year schedules,
which can vary by officer.

Since  the  Company  applies APB Opinion 25 and related interpretations  in
accounting  for  its  plans, no compensation cost has  been  recognized  in
conjunction  with  these plans.  Had compensation cost  for  the  Company's
stock-based  compensation  plans  been  determined  consistent  with   FASB
Statement  123, the Company's net income and earnings per share would  have
been reduced to the pro forma amounts indicated below (in thousands, except
per share data):

<TABLE>
<CAPTION>

Year                                   1998           1997        1996
----                                   ----           ----        ----
<S>                                   <C>          <C>          <C>
Net (loss) income   As reported       $  (965)       $(1,560)      $508
                    Pro forma         $(1,082)       $(1,772)      $321

Basic and diluted   As reported       $  (.12)       $  (.19)      $.07
  (loss) earnings   Pro forma         $  (.13)       $  (.22)      $.04
  per share

</TABLE>


The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes option-pricing model with the following weighted-average
assumptions  used  for  grants  in  1998,  1997,  and  1996,  respectively:
dividend  yield of 0% for all years, expected volatility of 48%,  43%,  and
42%;  risk-free interest rates of 5.6%, 6.6%, and 6.2%; and expected  lives
of 5.6, 6.6, and 6.5 years.

A  summary  of the status of the Company's fixed stock option plans  as  of
December  26,  1998, December 27, 1997, and December 28, 1996  and  changes
during the years ended on those dates is presented as follows:

                                     F-19

<PAGE> F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                            1998              1997               1996
                            ----              ----               ----
                          Weighted           Weighted           Weighted
                          Average            Average            Average
                          Exercise           Exercise           Exercise
Fixed Options          Shares   Price    Shares   Price     Shares   Price
-------------          ------   -----    ------   -----     ------   -----
<S>                   <C>      <C>       <C>      <C>      <C>      <C>
Outstanding beginning
  of  year            668,283  $10.09    612,282  $10.94    446,686  $15.32
Granted               238,750  $ 3.45    108,350   $5.12    264,721  $ 4.60
Exercised             (11,014) $ 4.55          -     n/a          -     n/a
Forfeited-nonvested   (97,070) $ 9.71    (46,981) $ 8.22    (59,793) $13.18
Forfeited-exercisable (64,686) $ 9.71     (5,168) $22.36    (36,632) $15.32
Expired                     -     n/a          -     n/a          -     n/a
Canceled                    -     n/a       (200) $15.00     (2,700) $ 5.12
                      --------            -------            -------

Outstanding end
 of year              734,263  $ 7.67    668,283  $10.09    612,282  $10.94

Options exercisable
 at year end          256,627  $11.39    214,402  $14.26    146,775  $15.60

Options available for
 future grant at
 year end             164,723            241,717            297,718


</TABLE>


Weighted-average fair value of options granted during the year where:

<TABLE>
<CAPTION>
                                              1998         1997         1996
                                              ----         ----         ----
  <S>                                        <C>          <C>          <C>
  Exercise price equals market price         $1.62        $2.77        $2.40
  Exercise price exceeds market price          n/a          n/a          n/a
  Exercise price is less than market price     n/a          n/a          n/a

</TABLE>

The  following  table  summarizes information  about  fixed  stock  options
outstanding at December 26, 1998:

<TABLE>
<CAPTION>
                          Options  Outstanding           Options Exercisable
                      ---------------------------       ----------------------
                               Weighted-
                                Average      Weighted-                Weighted-
     Range of      Number      Remaining      Average     Number       Average
     Exercise   Outstanding   Contractual    Exercise   Exercisable   Exercise
      Prices    at 12/26/98      Life          Price    at 12/26/98     Price
      ------    -----------      ----          -----    -----------     -----

 <S>            <C>            <C>            <C>        <C>            <C>
 $ 3.06 - $ 5.75   503,640     8.47 years     $ 4.16       93,304       $ 4.18
 $10.95 - $23.25   230,623     5.71 years     $15.36       163,323      $15.51

</TABLE>

                                     F-20

<PAGE> F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Earnings Per Share
------------------

The  Company calculates earnings per share in accordance with Statement  of
Financial  Accounting Standards No. 128. As required by this statement  the
Company has adopted the new standards for computing and presenting earnings
per  share  for  1997,  and for all prior period earnings  per  share  data
presented.   The  following is the reconciliation  of  the  numerators  and
denominators of the basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                               1998          1997          1996
                                               ----          ----          ----
<S>                                        <C>          <C>             <C>
Numerators:
  Net (loss) income - for basic and
     diluted EPS                            $(965,000)   $(1,560,000)   $ 508,000
                                              =======      =========      =======

Denominators:
  Weighted average common
     shares - for basic EPS                 8,197,542      8,168,257    7,207,761
     Common shares from warrants                    -          6,913       10,751
     Common shares from options                51,425         13,250        2,570
                                            ---------      ---------    ---------
  Weighted average common
     shares - for diluted EPS               8,248,967      8,188,420    7,221,082
                                            =========      =========    =========

</TABLE>

In  years  where  net losses are incurred, diluted weighted average  common
shares  are not used in the calculation of diluted EPS as it would have  an
anti-dilutive  effect  on EPS.  In addition, options to  purchase  348,000,
385,000  and  302,000 weighted average shares of common stock during  1998,
1997  and 1996, respectively,  were not included in the diluted EPS as  the
options' exercise prices were greater than the average market price.


10.  Employee Benefit Plans
---------------------------

401(k) Plan
-----------

The   Company   sponsors  a  defined  contribution  401(k)  plan   covering
substantially  all of its full-time employees.  Additionally,  the  Company
provides  matching contributions up to a maximum of 2.5% of   participating
employees' salaries and wages.  Total expenses under the plan for the years
ended  December  26, 1998, December 27, 1997, and December  28,  1996  were
$1,480,000, $1,606,000, and $1,392,000, respectively.

                                     F-21

<PAGE> F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Postretirement Benefits Other than Pensions
-------------------------------------------

The  Company  provides life and health care benefits to retired  employees.
Generally, employees who have attained an age of 60, have rendered 10 years
of  service  and  are currently enrolled in the medical  benefit  plan  are
eligible  for  postretirement benefits.  The Company accrues the  estimated
cost  of  retiree  benefit  payments,  other  than  pensions,  during   the
employee's active service period.

The  following  tables  reconcile the postretirement  benefit,  the  plan's
funded  status  and  actuarial assumptions, as  required  by  Statement  of
Financial  Accounting  Standard  No.  132,  "Employers'  Disclosures  about
Pensions and Other Postretirement Benefits."

<TABLE>
<CAPTION>
                                                       December 26,  December 27,
                                                            1998         1997
                                                            ----         ----
                                                             (in thousands)
  <S>                                                     <C>          <C>
  Change in accumulated postretirement benefit obligation:
     Benefit obligation at beginning of year              $ 2,578      $ 3,290
     Service cost                                             233          197
     Interest cost                                            170          176
     Participant contributions                                  -            -
     Claims paid                                             (216)        (265)
     Actuarial gains                                         ( 16)        (751)
     Plan amendments                                            -          (69)
                                                            -----        -----
     Benefit obligation at year end                       $ 2,749      $ 2,578
                                                            =====        =====

  Change in plan assets:
     Fair value of plan assets                                  -           -

  Reconciliation of funded status:
     Funded status                                        $(2,749)    $(2,578)
     Unrecognized transition obilgation                         -           -
     Unrecognized prior service cost                          (49)        (59)
     Unrecognized actuarial gain                             (154)       (138)
                                                            -----       -----
     Net amount recognized as other
         long-term liabilities                            $(2,952)    $(2,775)
                                                            =====       =====


  Weighted average assumptions as of year end:
     Discount rate                                           6.75%       7.25%
     Expected return on assets                                n/a         n/a
     Medical trend                                           6.00%       6.00%

</TABLE>

                                     F-22

<PAGE> F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                    December 26,  December 27,  December 28,
                                         1998         1997          1996
                                         ----         ----          ----
                                                  (in thousands)
  <S>                                    <C>          <C>           <C>
  Components of net periodic benefit cost:
     Service cost                        $ 233        $ 197         $ 276
     Interest cost                         171          176           210
     Expected return on plan assets        n/a          n/a           n/a
     Amortization of transition obligation   -            -             -
     Amortization of prior service cost    (10)         (10)            -
     Amortization of actuarial loss          -            -            33
                                          ----         ----          ----
  Net periodic benefit cost              $ 394        $ 363         $ 519
                                          ====         ====          ====
</TABLE>
<TABLE>
<CAPTION>
                                    December 26,  December 27,  December 28,
                                         1998         1997          1996
                                         ----         ----          ----
 <S>                                    <C>          <C>           <C>
  Weighted average assumptions used in
    computing net periodic benefit cost:
     Discount rate                        7.25%        7.75%         7.25%
     Expected return on plan assets        n/a          n/a          n /a
     Medical trend                        6.00%        6.00%         6.00%

</TABLE>
<TABLE>
<CAPTION>
                                                 1% Increase     1% Decrease
                                                 -----------     -----------
                                                        (in thousands)
 <S>                                             <C>             <C>
  Health care cost trend sensitivity:
     Effect on total service cost and
       interest cost components                      $ 17           $ (16)
     Effect on postretirement benefit obligation       57             (54)

</TABLE>


Postemployment Benefits
-----------------------

The Company provides certain postemployment benefits to qualified former or
inactive  employees  who are not retirees.  These benefits  include  salary
continuance,  severance, and healthcare.  Salary continuance and  severance
pay  is based on normal straight-line compensation and is calculated  based
on  years  of  service.  Additional severance pay is  granted  to  eligible
employees  who are 40 years of age or older and have been employed  by  the
Company  five  or  more years.  The Company accrues the estimated  cost  of
benefits provided to former or inactive employees who have not yet  retired
over  the  employees' service period or as an expense at the  date  of  the
event  triggering the benefit.  The Company incurred postemployment benefit
income  of  $39,000, $28,000 and $31,000 for the years ended  December  26,
1998,  December 27, 1997 and December 28, 1996, respectively.  The decrease
in  benefits  is the result of the winding down of a more costly  long-term
disability program that was in place prior to April 1993.

                                     F-23

<PAGE> F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11.     Income Taxes
--------------------

The  Company  and its subsidiaries file a consolidated federal  income  tax
return.   As  of  December  26, 1998, the Company has  net  operating  loss
carryforwards  available  to offset income of approximately  $44.0  million
expiring in the years 2005 through 2018.

On  October  22, 1993, the Company completed a recapitalization plan  which
created  an  ownership change as defined by Section  382  of  the  Internal
Revenue  Code  of 1996.  As a result, certain of the loss carryforwards  of
the  company  are  limited to an annual limitation  of  approximately  $2.6
million a year.  At December 26, 1998, approximately $7.5 million of  these
loss carryforwards were affected by this limitation.

The  income  tax  provision consists of both current and deferred  amounts.
The components of the income tax provision are as follows:

<TABLE>
<CAPTION>

                               December 26,   December 27,   December 28,
                                   1998            1997           1996
                                   ----            ----           ----
                                               (in thousands)
  <S>                             <C>            <C>            <C>
  Taxes currently payable:
     State income tax             $1,019          $1,099         $1,010
     Federal income tax                -               -              -
  Deferred (benefit)/expense        (330)           (153)           300
                                   -----           -----          -----
  Total income tax expense        $  689          $  946         $1,310
                                   =====           =====          =====

</TABLE>

Tax  provisions  and credits are recorded at statutory  rates  for  taxable
items  included in the consolidated statements of operations regardless  of
the  period  for which such items are reported for tax purposes.   Deferred
income  taxes reflect the net effects of temporary differences between  the
carrying amounts of assets and liabilities for financial reporting purposes
and  the  amounts used for income tax purposes.  Management has determined,
based on the Company's positive earnings growth from 1992 through 1994  and
its  expectations for the future, that operating income of the Company will
more likely than not be sufficient to recognize fully its net deferred  tax
assets.   The  components  of the deferred tax assets  and  liabilities  at
December  26,  1998, December 27, 1997 and December 28, 1996, respectively,
are as follows:

                                     F-24

<PAGE> F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                     December 26,    December 27,   December 28,
                                          1998           1997         1996
                                          ----           ----         ----
                                                    (in thousands)
  <S>                                   <C>            <C>          <C>
  Deferred income tax assets:
  Trade accounts receivable              $ 1,727       $ 1,469      $ 1,676
  Inventories                              1,813         1,895        1,954
  Accrued personnel cost                   2,037         2,013        1,936
  Other accrued liabilities                6,051         6,743        6,911
  Net operating loss                      17,151        16,164       16,556
  Other                                    3,337         3,348        2,342
                                          ------        ------       ------
  Gross deferred income tax assets        32,116        31,632       31,375
  Less:  valuation allowance              (1,542)       (1,542)      (1,493)
                                          ------        ------       ------
  Total deferred income tax assets        30,574        30,090       29,882
                                          ------        ------       ------

  Deferred income tax liabilities:
  Property, plant and equipment            1,312         1,394        1,962
  Goodwill and trademark                   2,923         2,687        2,052
  Other accrued income items                   -             -           13
                                          ------        ------       ------
  Total deferred income tax liabilities    4,235         4,081        4,027
                                          ------        ------       ------

  Net deferred tax assets                $26,339       $26,009      $25,855
                                          ======        ======       ======
</TABLE>


The  deferred  tax  provision  results from temporary  differences  in  the
recognition  of certain items of revenue and expense for tax and  financial
reporting purposes.  The sources of these differences and the tax effect of
each are as follows:

<TABLE>
<CAPTION>
                                       December 26,   December 27,   December 28,
                                           1998          1997          1996
                                           ----          ----          ----
                                                      (in thousands)
  <S>                                   <C>            <C>          <C>
  Change in bad debt reserve             $   258      $   (207)    $ (1,517)
  Differences in tax and book
     inventory                               (82)          (60)        (491)
  Settlement of deferred
     compensation                             25            77           86
  Change in accrued liabilities             (692)         (168)      (5,130)
  (Utilization)/creation of NOL              987          (392)       6,700
  AMT credit and capital loss
     carryover                                 -         1,006          942
  Differences in tax and book
     asset basis                              82           568          (56)
  Differences in book and tax
     intangibles                            (248)         (635)        (704)
     Change in accrued income items            -            13           13
  (Increase)/decrease in valuation
     allowance                                 -           (49)        (143)
                                          ------        ------       ------

  Deferred tax benefit/(expense)         $   330       $   153     $   (300)
                                          ======        ======       ======

</TABLE>

                                     F-25

<PAGE> F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The   following  table  summarizes  significant  differences  between   the
provision  for  income  taxes  and  the amount  computed  by  applying  the
statutory federal income tax rates to income before taxes:

<TABLE>
<CAPTION>

                                       December 26,   December 27,   December 28,
                                             1998          1997          1996
                                             ----          ----          ----
                                                      (in thousands)
  <S>                                   <C>            <C>          <C>
  Tax (benefit) computed at
    U.S. statutory tax rate             $    (96)      $  (215)     $   637
  State and local taxes                      662           714          656
  Other                                      123           398         (126)
  Change in valuation allowance                -            49          143
                                          ------        ------       ------
  Total tax provision                    $   689       $   946      $ 1,310
                                          ======        ======       ======

</TABLE>


12.  Financial Instruments
--------------------------

The Company uses financial instruments in its normal course of business  as
a  tool to manage its assets and liabilities.  The Company does not hold or
issue  financial  instruments  for  trading  purposes.   Gains  and  losses
relating to hedging contracts are deferred and recorded in income or as  an
adjustment  to the carrying value of the asset at the time the  transaction
is complete.  Payments or receipts of interest under the interest rate swap
arrangement  are accounted for as an adjustment to interest  expense.   The
fair  value  of  such  financial instruments is determined  through  dealer
quotes.

The  estimated fair values of the Company's material financial  instruments
are as follows:

Long Term Debt
--------------

The fair value of the Company's long-term debt, in accordance with SFAS No.
107, is estimated based on the quoted market prices for the same or similar
issues or on the current rates offered to the Company for debt of the  same
remaining maturities.

<TABLE>
<CAPTION>
                                               Fair             Carrying
                                               Value              Value
                                               ------            -------
                                                    (in thousands)
     <S>                                     <C>               <C>
     1998 Financial Liabilities:
     Long-term Debt
     Revolver                                $ 91,961           $ 91,961
     Senior Subordinated Notes                 84,000            100,000

     1997 Financial Liabilities:
     Long-term Debt
     Revolver                                $ 93,045          $  93,045
     Senior Subordinated Notes                 95,000            100,000

</TABLE>

                                     F-26

<PAGE> F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Lumber Futures Contracts
------------------------

The  Company enters into lumber futures contracts as a hedge against future
lumber  price fluctuations.  All futures contracts are purchased to protect
long-term  pricing commitments on specific future customer  purchases.   At
December  26, 1998 the Company had 22 lumber futures contracts  outstanding
with  a  total  market  value of $1,397,000 and a net  unrealized  gain  of
$1,976.  These contracts all mature in 1999.

Interest Rate Swap
------------------

At  December  26,  1998  the Company had in place  an  interest  rate  swap
agreement which effectively fixed the interest rate on $40 million  of  the
Company's  borrowings under its floating rate revolving line of  credit  at
8.11%  (subject to adjustments in certain circumstances), for three  years.
This interest rate swap was operative while the 30-day LIBOR borrowing rate
remained  below 6.7%.  The agreement also included a floor  LIBOR  rate  at
4.6%.   At  December 23, 1998 the 30-day LIBOR borrowing rate  was  5.625%.
The fair value of the interest rate swap agreement, in accordance with SFAS
No. 107, at December 26, 1998 was a negative $400,000.

On  February  17,  1999,  in conjunction with the Company's  new  revolving
credit  agreement (see Note 15), the Company terminated its  interest  rate
swap  agreement  and entered into a new interest rate swap agreement.  This
new  agreement  effectively fixed the interest rate at  7.75%  (subject  to
adjustments  in certain circumstances), reduced from 8.11%  under  the  old
agreement,  for  three  years, on $40 million of the  Company's  borrowings
under  its  floating  rate  revolving line of  credit.   Unlike  the  prior
agreement, this interest rate swap has no provisions for termination  based
on changes in the 30-day LIBOR borrowing rate.


13.  Related Party Transactions
-------------------------------

In  February  1998,  as part of the determination made by  the  Company  to
discontinue or sell non-core programs, the Company sold certain  operations
to  its majority stockholder for a three-year $870,000 unsecured promissory
note and 10% of future net income of these operations (subject to a maximum
of $429,249 plus interest).  At December 26, 1998 this stockholder had made
payments  of  $115,752 under the promissory note and  was  delinquent  with
respect  to  required payments of approximately $169,474 of  principal  and
interest.

In   1998,  the  Company  paid  approximately  $730,000  in  reimbursements
primarily  to  affiliates of the Company's chairman, for costs  related  to
services  provided to the Company during 1998 by certain employees  of  the
affiliated company and use of a corporate aircraft.  Total payments in 1997
and  1996  for similar services were approximately $1,289,000 and $612,000,
respectively.

                                     F-27

<PAGE> F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In June of 1996, the Company entered into a mortgage lending agreement with
an  affiliate  of the Company's chairman.  In exchange for  providing  home
construction  loans to the Company's customers the Company reimbursed  this
affiliate for certain start-up expenses.  Reimbursements in 1998, 1997  and
1996  were  approximately  $115,000, $1,045,000 and $365,000, respectively,
and  were expensed as incurred.  In late 1997, this affiliate's involvement
in the program ceased.

A  former director and executive officer of the Company was during most  of
1998,  and  all  of 1997 and 1996, a shareholder of the law  firm  that  is
general  counsel  to  the Company.  The Company paid  this  firm  $741,000,
$665,000,  and, $430,000 for legal services provided to the Company  during
1998, 1997, and 1996, respectively.

For  a  description  of the sale of 2,000,000 newly-issued  shares  by  the
Company to Riverside Group, Inc. in 1996, see Note 9.


14.  Other Operating Income
---------------------------

Other  operating  income on the Company's Statement of Operations  includes
the  sale  or  disposal of property, plant and equipment,  service  charges
assessed   customers  on  past  due  accounts  receivables   and   casualty
gains/losses.  The sale of property, plant and equipment includes the  sale
of 9, 12, and 6 pieces of real estate in 1998, 1997 and 1996, respectively.
In  1998  and  1996, gains of $1.0 million and $0.6 million,  respectively,
were  recorded  as a result of the differences between insured  replacement
cost and net book value resulting from fire and storm damage at certain  of
the  Company's  sales  and distribution facilities.   The  following  table
summarizes the major components of other operating income by year.

<TABLE>
<CAPTION>
                                              Other Operating Income
                                                     Gain/(Loss)

                                             1998        1997     1996
                                             ----        ----     ----
                                                  (in thousands)
<S>                                        <C>        <C>        <C>
Sale of property, plant and equipment       $2,111    $ 6,180    $2,005
Accounts receivable service charges          2,331      2,170     2,064
Casualties                                     670      (284)       350
Other                                        1,725      2,623     2,377
                                             -----     ------     -----
Total                                       $6,837    $10,689    $6,796
                                             =====     ======     =====

</TABLE>

                                     F-28

<PAGE> F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.  Subsequent Events
----------------------

New Revolving Credit Agreement
------------------------------

On  February  17,  1999  the Company entered into a  new  revolving  credit
agreement  with a group of financial institutions.  The new revolving  line
of credit provides for, subject to restrictions discussed below, up to $160
million of revolving credit loans and credits.

A  commitment  fee  of 0.25% is payable on the unused  amount  of  the  new
revolving  line of credit.  Until delivery to the lenders of the  Company's
financial  statements  for the period ending June  26,  1999,  interest  on
amounts  outstanding  under the new revolving  line  of  credit  will  bear
interest  at a spread above the base rate of BankBoston, N.A. of 0.50%,  or
2.00% above the applicable LIBOR rate.  After that time, depending upon the
Company's rolling four-quarter interest coverage ratio, amounts outstanding
under the new revolving line of credit will bear interest at a spread above
the  base  rate  of  from  0% to 0.75% or from 1.50%  to  2.25%  above  the
applicable LIBOR rate.

Substantially  all  of  the  Company's accounts receivable,  inventory  and
general intangibles are pledged as collateral for the new revolving line of
credit.   Availability  is limited to 85% of eligible  accounts  receivable
plus 60% of eligible inventory, with these percentages subject to change in
the permitted discretion of the agent for the lenders.  Covenants under the
related  debt  documents  require, among other  things,  that  the  Company
maintain unused availability under the new revolving line of credit  of  at
least  $15  million  (subject  to increase in  certain  circumstances)  and
maintain  certain  levels of tangible capital funds.   In  addition,  these
documents   restrict,  among  other  things,  capital   expenditures,   the
incurrence  of  additional debt, asset sales, dividends,  investments,  and
acquisitions.

In  conjunction  with  the  new  revolving credit  agreement,  the  Company
terminated its existing interest rate swap agreement and entered into a new
interest rate swap agreement (see Note 12).


16.     Barter Transaction
--------------------------
At any given time approximately 1% to 2% of the Company's total inventory will
be  classified  as  delete  or  obsolete  merchandise.   Delete  or  obsolete
merchandise consists of inventory that, while in good sellable condition, will
be discontinued for one of several business reasons.  This inventory, which may
consist of items from any of the Company's product lines, historically has been
marked down in value by approximately 20% to 30% of its original cost.


                                     F-29

<PAGE> F-30

In  September  of  1998, the  Company  entered into a transaction in which it
exchanged  delete/obsolete  merchandise,  with an impaired book value of $1.2
million, for barter credits at a stated value of $1.6 million.  As part of the
barter transaction the Company had agreed to sell the merchandise for the new
owner,  on a clearance basis,  and  remit the proceeds, up to $350,000, to the
owner.  The Company entered into the transaction to free valuable showroom and
storage  space  for new  merchandise.   The value of this merchandise had been
previously  reduced  from  its  original cost of approximately $1.6 million to
$1.2 million, based on the Company's most recent sales information.  Initially
the exchange  was  considered to be a non-monetary exchange, as outlined under
APB 29 and EITF 93-11, and no further impairment was recorded  at  that  time.
The barter credits were recorded as a prepaid expense with  a  value  of  $1.2
million.

Subsequent  to  the second quarter of 1999, the Company restated its September
1998  financial statements to account for the barter transaction as a monetary
transaction,  upon  receiving  written  confirmation  from a second "Big Five"
accounting  firm  and  after  careful  review  and concurrence of its Board of
Directors Audit Committee.  A non-cash charge of $844,000 has now been recorded
to reduce the value of the inventory exchanged, and the resulting book value of
the barter credits, from approximately $1.2 million to $350,000.  As  a  result
of this change, the Company will also record increased future earnings for each
dollar of barter credits used in excess of $350,000.

The following table reconciles the amounts previously reported to the amounts
currently being reported in the condensed consolidated statements of operations
for  the  year  ended December 26, 1998 (amounts in thousands, except per share
data).
<TABLE>
<CAPTION>
                                                           Restatement
                                         Previously        for Barter
                                          Reported         Transaction      As Restated
                                          --------         -----------      -----------
<S>                                      <C>              <C>              <C>
Income (loss) before income taxes         $    568         $  (844)         $   (276)
Provision for income taxes                   1,019            (330)              689
                                             -----           -----             -----
Net loss                                  $   (451)        $  (514)         $   (965)
                                             =====           =====             =====
Basic and diluted loss
 per common share                         $  (0.06)        $ (0.06)         $  (0.12)
                                             =====           =====             =====

</TABLE>
                                     F-30