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

                                 FORM 10-K/AA
                               (Amendment No. 2)

(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. 0-22468

                                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 II

Item 6.    Selected Financial Data                                   3
Item 7.    Management's Discussion and Analysis
            of Financial Condition and Results
            of Operations                                            7
Item 8.    Financial Statements and Supplementary Data              21



                                  PART IV

Item 14.  Exhibits, Financial Statement Schedules,
           and Reports on Form 8-K                                  22

SIGNATURES                                                          23


                                     2



<PAGE> 3

                                  PART II


Item 6.  SELECTED FINANCIAL DATA.
--------------------------------
   The  following table presents selected financial data derived  from  the
audited  consolidated financial statements of the Company for each  of  the
five  years in the period ended December 26, 1998.  The following  selected
financial  data  should be read in conjunction with "Item 7.   Management's
Discussion  and Analysis of Financial Condition and Results of  Operations"
and  the  Consolidated  Financial Statements and  Notes  thereto  contained
elsewhere in this report.

   In September of 1999, the Company amended this filing as a result of a
change in the accounting for a barter transaction which occured in September
of 1998.  For a description of the transaction and the resulting changes see
Note 16 of Notes to Consolidated Financial Statements included elsewhere
herein.

                                      3

<PAGE> 4
<TABLE>
<CAPTION>
                       WICKES INC. AND SUBSIDIARIES
                   SELECTED CONSOLIDATED FINANCIAL DATA
             (in thousands, except ratios and per share data)


                              Dec. 26,       Dec. 27,       Dec. 28,       Dec. 30,       Dec. 31,
                                1998           1997           1996           1995           1994
                              --------       --------       --------       --------       --------
<S>                           <C>            <C>            <C>            <C>            <C>
Income Statement Data:
 Net sales                    $910,272       $884,082       $848,535       $972,612       $986,872
 Gross profit                  215,472        203,026        189,463        220,812        233,831
 Selling, general and
  administrative expense       186,853        185,385        162,329        194,629        194,586
 Depreciation, goodwill and
  trademark amortization         5,253          4,863          5,367          5,882          4,543
 Provision for doubtful accounts 2,915          1,707          1,067          6,482          2,457
 Other operating income          6,837         10,689          6,796          5,831          6,772
 Restructuring and unusual
  items (1)                      5,932           (559)           745         17,798          2,000
 Income from operations         21,356         22,319         26,751          1,852         37,017
 Interest expense (2)           21,632         21,417         21,750         24,351         21,663
 Equity in loss of affiliated
  company                            -          1,516          3,183          3,543              -
 Income (loss) before
  income taxes                    (276)          (614)         1,818        (26,042)        15,354
 Income taxes                    1,019          1,099          1,010          1,353          1,660
 Deferred tax (benefit)/
  expense(3)                      (330)          (153)           300        (11,796)       (14,360)
 Net (loss) income                (965)        (1,560)           508        (15,599)        28,054
 Ratio of earnings to
  fixed charges (4)               1.00              -           1.07              -           1.63
 Interest coverage (5)            1.32           1.36           1.61           0.35           2.09
 Adjusted interest coverage (6)   1.61           1.33           1.65           1.15           2.19

Per Share Data:
 Basic and diluted (loss)
  earnings per common share    $ (0.12)       $ (0.19)       $  0.07        $ (2.54)        $ 4.57
 Weighted average common
  shares outstanding         8,197,542      8,168,257      7,221,082      6,135,610      6,154,770

Operating and Other Data:
 EBITDA (7)                    $26,609        $27,182        $32,118        $ 7,734        $41,560
 Adjusted EBITDA (8)            32,541         26,623         32,863         25,532         43,560
 Cash interest expense (9)      20,185         20,016         19,969         22,266         19,882
 Depreciation and amortization   5,253          4,863          5,367          5,882          4,543
 Deferred financing cost
  amortization                   1,447          1,401          1,781          2,085          1,781
 Capital expenditures            5,854          7,758          2,893          7,538          9,760
 Same store sales growth (10)     9.0%           4.7%          (6.4%)         (3.8%)         14.1%
 Sales and distribution facilities
  open at end of period            101            111            108            110            130
 Net cash provided by (used in)
  operating activities           2,627        (24,554)        18,710         15,862          1,331
 Net cash (used in) provided by
  investing activities          (1,623)         6,040          2,410        (10,277)       (41,777)
 Net cash (used in) provided by
  financing activities          (1,018)        16,660        (19,274)        (7,535)        42,480

Balance Sheet data (at period end):
 Working capital              $135,345       $134,459       $116,771       $139,622       $163,511
 Total assets                  292,183        283,352        272,842        302,515        319,573
 Total long-term debt,
  less current maturities      191,961        193,061        176,376        205,221        211,139
 Total stockholders' equity     23,148         24,001         25,499         15,129         30,146

</TABLE>

                                      4


<PAGE> 5

               Notes to Selected Consolidated Financial Data
               ---------------------------------------------
(1)  During the first quarter of 1998 the Company implemented 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.   In
     1997,  the  Company  recorded a $0.6 million credit  as  a  result  of
     finalizing the 1995 restructuring plan.  In 1995, the Company recorded
     a  $17.8  million charge relating to a plan to reduce  the  number  of
     operating  building  centers, the corresponding  overhead  to  support
     those  centers identified, strengthen its capital structure, and other
     unusual items.  The 1995 restructuring plan was adjusted in 1996 by an
     additional  charge  of $0.7 million. In 1994, the Company  recorded  a
     $2.0  million  charge primarily as a result of its  headquarters  cost
     reduction  plan.   See  Note  3  of Notes  to  Consolidated  Financial
     Statements included elsewhere herein.

(2)  Interest expense includes cash interest expense and amortization
     of deferred financing costs  (See Note 9 below).

(3)  The  deferred  tax  benefit recorded in 1994  includes  a  $21.0
     million  reduction of the Company's valuation allowance  for  deferred
     tax assets.

(4)  For purposes of computing this ratio, earnings consist of income
     (loss)  before income taxes and fixed charges.  Fixed charges  consist
     of  cash  interest expense, amortization of deferred financing  costs,
     and a portion of operating lease rental expense that is representative
     of  the  interest  factor  attributable  to  interest  expense.   Such
     earnings were insufficient to cover fixed charges by $0.5 million  and
     $26.0  million for the years ended December 27, 1997 and December  30,
     1995, respectively.

(5)  For purposes of computing this ratio, earnings consists of EBITDA
     (as  defined  in  Note  7 below), which is divided  by  cash  interest
     expense (as defined in Note 9 below).

(6)  For  purposes  of  computing this ratio,  earnings  consists  of
     Adjusted EBITDA (as defined in Note 8 below), which is divided by cash
     interest expense (as defined in Note 9 below).

(7)  EBITDA represents income (loss) before income taxes,  equity  in
     loss  of  affiliated  company,  interest  expense,  depreciation   and
     amortization.   EBITDA  is  not presented  herein  as  an  alternative
     measure   of  operating  results  but  rather  to  provide  additional
     information related to debt service capability, and does not represent
     cash  flow  from  operations,  as defined  by  GAAP  and  may  not  be
     comparable to similarly titled measures reported by other companies.

                                      5

<PAGE> 6

(8)  Adjusted  EBITDA  represents  EBITDA (as  defined  in  Note  7  above)
     adjusted to exclude restructuring and unusual items and is used in the
     adjusted  interest  coverage ratio to reflect debt service  capability
     before  the  effect  of  these restructuring and  unusual  items,  and
     provides  a  truer  measure  of debt service  capability  for  ongoing
     operations.

(9)  Cash  interest expense consists of interest expense less  amortization
     of  deferred  financing costs.  The following table  details  interest
     expense, cash interest expense, and interest paid for each of the five
     years ended December 26, 1998 (in thousands).

<TABLE>
<CAPTION>
                            1998      1997      1996      1995      1994
                           ------    ------    ------    ------    ------
<S>                       <C>       <C>       <C>       <C>       <C>
Interest expense          $21,632   $21,417   $21,750   $24,351   $21,663
Less:
 Amortization of deferred
  financing costs           1,447     1,401     1,781     2,085     1,781
                           ------    ------    ------    ------    ------
Cash interest expense      20,185    20,016    19,969    22,266    19,882

Decrease (increase) in
   accrued  interest          700      (225)      403       557    (1,105)
                           ------    ------    ------    ------    ------
Interest paid             $20,885   $19,791   $20,372   $22,823   $18,777
                           ======    ======    ======    ======    ======
</TABLE>

(10) Same  store  data  reflects average sales for sales  and  distribution
     facilities  and  other facilities that were operated  by  the  company
     throughout both the current and  previous year.  The following table lists,
     by year, the number of locations that were included in this calculation:

                    Year         No. of Facilities
                    ----         -----------------
                    1998               101
                    1997               107
                    1996               101
                    1995               101
                    1994               122

     The  sixteen lumber centers closed on December 29, 1995 were  excluded
     from   the  1995  same  store  figures,  and  two  centers  that  were
     consolidated with another Wickes center, in early 1995, were  included
     in 1995 same store results.

                                       6

<PAGE> 7

Item  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION  AND
---------------------------------------------------------------------------
          RESULTS OF OPERATIONS.
          ---------------------

General
-------
  In September of 1999, the Company amended this filing as a result of a change
in the accounting for a barter transaction which occured in September of 1998.
For a description of the transaction and the resulting changes see Note 16 of
Notes to Consolidated Financial Statements included elsewhere herein.

  The following table sets forth, for the periods indicated, the percentage
relationship to net sales of certain expense and income items.   The  table
and  subsequent discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
                                                   Years Ended
                                         ----------------------------
                                         Dec. 28,  Dec. 27,  Dec. 28,
                                           1998      1997      1996
                                           ----      ----      ----
     <C>                                 <C>       <C>       <C>
     Net sales                            100.0%    100.0%    100.0%
     Gross profit                          23.7      23.0      22.3
     Selling, general and administrative
       expense                             20.5      21.0      19.1
     Depreciation, goodwill and trademark
       amortization                          .6        .6        .6
     Provision for doubtful accounts         .3        .2        .1
     Restructuring and unusual items         .7       (.1)       .1
     Other operating income                 (.7)     (1.2)      (.8)
     Income from operations                 2.3       2.5       3.2
</TABLE>

   The  Company's  operations, as well as those of  the  building  material
industry generally, have reflected substantial fluctuations from period  to
period   as   a  consequence  of  various  factors,  including  levels   of
construction  activity,  general regional and  local  economic  conditions,
weather,  prices  of  commodity  wood  products,  interest  rates  and  the
availability of credit, all of which are cyclical in nature.   The  Company
anticipates  that fluctuations from period to period will continue  in  the
future.   Because  a  substantial percentage of  the  Company's  sales  are
attributable to building professionals, certain of these factors may have a
more  significant  impact  on the Company than on  companies  more  heavily
focused on consumers.

                                      7

<PAGE> 8

   The  Company's first quarter and, occasionally, its fourth  quarter  are
adversely affected by weather patterns in the Midwest and Northeast,  which
result  in seasonal decreases in levels of construction activity  in  these
areas.   The  extent  of such decreases in activity is a  function  of  the
severity  of  winter conditions.  Record setting snow falls throughout  the
Midwest  and  Northeast in January of 1996, adversely affected construction
activity  in  the first quarter of 1996.  Weather conditions in  1997  were
relatively  normal throughout the year. During the first quarter  of  1998,
the  Company  experienced mild winter weather conditions in  the  Company's
Midwest  region,  which was partially offset by increased precipitation  in
the Northeast and South.  Unseasonably warm weather during December of 1998
was followed by excessive snow falls in the Midwest in January of 1999.

   The following table contains selected unaudited quarterly financial data
for the years ended December 26, 1998, December 27, 1997, and  December 28,
1996.   Quarterly  earnings/(loss) per share may  not  total  to  year  end
earnings/(loss)  per  share  due to the issuance of  additional  shares  of
Common Stock during the course of the year.
<TABLE>
<CAPTION>
                         QUARTERLY FINANCIAL DATA
                            Three Months Ended
           (in millions, except per share data and percentages)

                                                               Basic and Diluted
                          Net Sales as a                          Net Earnings
                           % of Annual      Gross    Net Income    /(Loss) per
                Net Sales   Net Sales       Profit     /(Loss)    Common Share
                ---------   ---------       ------   ----------   ------------
<S>              <C>        <C>            <C>        <C>           <C>
1998
  March 28        $168.8      18.5%         $41.0      $(6.8)        $(.83)
  June 27          237.1      26.1           56.1        2.8           .34
  September 26     261.1      28.7           60.2        2.3           .28
  December 26      243.3      26.7           58.2        0.7           .09

1997
  March 29        $159.3      18.0%         $36.9      $(5.2)        $(.63)
  June 28          237.3      26.9           54.3        1.3           .16
  September 27     266.3      30.1           60.3        1.8           .22
  December 27      221.1      25.0           51.5        0.5           .06

1996
  March 30        $152.5      18.0%         $34.9      $(6.2)       $(1.00)
  June 29          228.8      27.0           51.2        1.9           .29
  September 28     255.6      30.1           55.5        2.8           .35
  December 28      211.7      24.9           47.9        2.0           .24
</TABLE>
                                      8

<PAGE> 9

   In  1998 and 1996 the Company recorded charges of $5.9 million and  $0.7
million,  respectively, for restructuring and unusual items.  In  1997  the
Company  recorded a benefit of $0.6 million for restructuring  and  unusual
items.   For additional information on the restructuring and unusual  items
charge  see  Note 3 of Notes to Consolidated Financial Statements  included
elsewhere  herein.   In  addition, in 1996 the Company  received  insurance
premium  adjustments from a former insurance carrier in the amount of  $2.2
million  and  reversed  an  accrual  of $1.5  million  for  other  disputed
insurance  premiums  with this carrier.  Accordingly selling,  general  and
administrative expenses were reduced by $1.0 million during the first three
quarters of 1996 and by $2.7 million in the fourth quarter of 1996.  In the
fourth quarter of 1997, the Company recorded a gain of $4.5 million on  the
sale  of  six  pieces of real estate.  In the fourth quarters of  1998  and
1996, only two and three pieces of real estate were sold for gains of  $0.4
million  and  $0.6 million, respectively.  Gains or losses on the  sale  of
real estate are recorded under other operating income.

   The  Company has historically generated approximately 15% to 20% of  its
annual revenues during the first quarter of each year, and the Company  has
historically recorded a significant net loss for this quarter.  As a result
of  these seasonal factors, the Company's inventories and receivables reach
peak  levels  during the second and third quarters and are generally  lower
during  the first and fourth quarters, depending on sales volume and lumber
prices.

   This  Item 7 contains statements which, to the extent that they are  not
recitations of historical fact, constitute Forward Looking Statements  that
are  made  pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and are inherently subject to uncertainty.  A
number  of  important  factors  could  cause  the  Company's  business  and
financial  results and financial condition to be materially different  from
those stated in the Forward Looking Statements.  Those factors include  but
are  not  limited to the seasonal and cyclical factors discussed  above  in
this  Item  7  and elsewhere in this report, the effects of  the  Company's
substantial  leverage  and  competition,  the  success  of  the   Company's
operational  efforts, and the matters discussed in Note 8 of the  Notes  to
Consolidated Financial Statement included elsewhere herein.


1998 Compared with 1997
-----------------------
   Net Sales
   ---------
   Net  sales for 1998 increased $26.2 million, or 3.0%, to $910.3  million
from  $884.1 million in 1997. Sales for all facilities operated  throughout
both  years  ("same  store")  increased 9.0%.   During  1998,  the  Company
experienced  a  16.2% increase in same store sales to its primary  customer
segment,  the professional home builder, and a 1.2% increase in same  store
sales  to  commercial builders.  Consumer sales declined  3.5%  on  a  same
store basis.
                                      9

<PAGE> 10

   Total  housing starts in the United States increased 9.6% in  1998,  and
starts in the Company's primary geographical market, the Midwest, increased
approximately  9.2%.  The  Company's two other  geographical  markets,  the
Northeast and South, experienced increases of 8.6% and 10.5%, respectively.
Nationally,  single family housing starts, which generate the  majority  of
the  Company's sales to building professionals, experienced an increase  of
12.0%  in 1998, from 1.13 million starts in 1997 to 1.27 million starts  in
1998.

   The  Company  has experienced significant sales increases (averaging  in
excess  of  20%) in its target major markets and at sales and  distribution
facilities that completed showroom resets in 1997 and 1998.

   During the first quarter, the Company experienced a sales benefit  as  a
result  of  mild winter weather conditions in the Company's Midwest region.
This  was partially offset by increased precipitation in the Northeast  and
South,  during  the same period.  The Company, as a whole,  benefited  from
unseasonably  warm  weather during December of  1998.   Weather  conditions
during 1997 were closer to seasonal averages.

  The Company estimates that deflation in lumber prices negatively affected
1998 sales by approximately $28.6 million, when compared with lumber prices
during 1997.

   As  a result of the 1998 Plan, the Company operated ten fewer sales  and
distribution facilities at the end of 1998 than it operated at the  end  of
1997.  The ten sales and distribution facilities that were closed, sold, or
consolidated,  as a result of the 1998 Plan, contributed  an  aggregate  of
$4.0 million to 1998 sales and $46.5 million to 1997 sales.  See " Item  1.
Business - Business Strategy".

   Gross Profit
   ------------
   Gross  profit  increased $12.4 million to 23.7% of net  sales  for  1998
compared with 23.0% of net sales for 1997.  The increase in gross profit is
primarily  due  to  increased sales, improved product costs  and  increased
margins on internally manufactured products.

   The  increase  in  gross  profit  as a percent  of  sales  is  primarily
attributable  to  improved  margins  on internally  manufactured  products,
improved  product  costs  and improved margins on installed  sales.   These
improvements were partially offset by the effects of lumber deflation and a
continued  increase  in the percent of sales attributable  to  professional
builders.   The  Company  estimates that lumber  deflation  in  1998,  when
compared with 1997 price levels, reduced gross profit by approximately $5.5
million. The percent of Company sales attributable to professional builders
increased  to  87.9%  for 1998 compared with 86.5% in  1997.   The  Company
anticipates  that  its  continued focus on the  professional  builder  will
create additional pressure on gross profit margins.  The Company also recorded

                                      10

<PAGE> 11

a charge of $844,000 in the third quarter of 1998 as the result of an exchange
of clearance merchandise for barter credits, see Note 16 of Notes to
Consolidated Financial Statements included elsewhere herein.

   Selling, General, and Administrative Expense
   --------------------------------------------
   In 1998, selling, general, and administrative expense ("SG&A") decreased
as  a  percent  of net sales to 20.5% compared with 21.0% of net  sales  in
1997.  Much of this reduction is attributable to expense  reductions  as  a
result  of  the  Company's  1998 Plan and the completion  of  most  of  the
Company's remerchandising programs during or prior to the end of the second
quarter of 1998.

   In  the  first quarter of 1998, the Company closed eight underperforming
building centers, two component manufacturing facilities and sold  its  two
sales  and  distribution  facilities in  Iowa.   For  further  information,
including the charge taken by the Company in the first quarter of 1998, see
"Restructuring  and Unusual Items" and Note 3 of the Notes to  Consolidated
Financial Statements included elsewhere herein.

   The  Company  experienced decreases from 1997 to 1998, as a  percent  of
sales,  in  maintenance, travel, professional fees, marketing, and  general
office  expenses which were partially offset by increased real estate  rent
and  salaries,  wages  and employee benefits.  The  Company  experienced  a
slight  increase in salaries, wages and employee benefits as a  percent  of
sales by 0.2%.  On a same store basis, the number of total employees at the
average  sales  and distribution facility increased approximately  8%  from
1997.

   Depreciation, Goodwill and Trademark Amortization
   -------------------------------------------------
   Depreciation,  goodwill and trademark amortization costs increased  $0.4
million  in  1998  compared with 1997.  This increase is primarily  due  to
depreciation on rental equipment and facilities implemented or improved  as
a  result  of  the  Company's  major market and  remerchandising  programs,
partially  offset by reduced depreciation on vehicles.  The Company's  tool
rental  program  was  initiated during 1997 and no depreciation  on  rental
equipment was recorded in the first half of 1997.

   Provision for Doubtful Accounts
   -------------------------------
   The  Company extends credit, generally due on the 10th day of the  month
following  the sale, to qualified and approved contractors.  Provision  for
doubtful accounts increased to $2.9 million or 0.3% of sales for 1998  from
$1.7  million or 0.2% of sales for 1997.  While the Company did  experience
several  large  write-offs during 1998, the results were in line  with  its
historical average of approximately 0.3% of sales.

                                      11
<PAGE> 12

   Restructuring and Unusual Items
   -------------------------------
   During  the first quarter of 1998 the Company implemented 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 anticipated losses on the  disposition  of
closed facility assets and liabilities, $2.1 million in severance and  post
employment benefits related to the 1998 plan, and a benefit of $300,000 for
adjustments to prior years' restructuring accruals.   The $4.1  million  in
anticipated  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  post
employment benefits covered approximately 250 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.

   Other Operating Income
   ----------------------
   Other  operating  income decreased to $6.8 million in  1998  from  $10.7
million  in  1997.  The decrease is primarily the result of a  decrease  in
gains  reported on the sale of real estate of closed facilities and  excess
vehicles  and  equipment.  In 1998 the company sold  nine  pieces  of  real
estate  and recorded a gain of $1.6 million, compared with a gain  of  $6.0
million recorded in 1997 for the sale of 12 facilities.  This decrease  was
partially offset by approximately $1.0 million in gains as a result of  the
difference between insured replacement cost and book value as a result of a
fire  and  storm damage at certain of the Company's sales and  distribution
facilities during 1998.

   Interest Expense
   ----------------
   Interest expense increased to $21.6 million in 1998 from $21.4 million in
1997.   This  increase was the result of a increase in average  outstanding
debt under the Company's revolving line of credit of $9.1 million partially
offset  by a decrease in the overall effective borrowing rate of  38  basis
points.   The  increase in average outstanding debt was  due  primarily  to
increases  in  working capital and increased investment in property,  plant
and equipment.

                                      12
<PAGE> 13

   Equity in Loss of Affiliated Company
   ------------------------------------
   The  Company's net investment in Riverside International LLC was reduced
to  zero  as a result of the $1.5 million loss that was recorded  in  1997.
Accordingly,  the Company recorded no equity in loss of affiliated  company
during 1998.

   Provision for Income Taxes
   --------------------------
   In  1998,  and 1997, the Company recorded current income tax expense  of
$1.0 million and $1.1 million, respectively.  Current income tax provisions
for both years consist of state and local tax liabilities.

   A  deferred tax benefit of $0.3 million was also recorded in 1998.  This
compares  with  a deferred tax benefit of $0.2 million in 1997.   The  1998
benefit  results  from  the  loss  before  federal  income  taxes  and  the
establishment  of  a  deferred  tax asset,  in  accordance  with  FAS  109.
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  these net deferred tax assets.  See Note 11 of Notes to Consolidated
Financial Statements included elsewhere herein.

   Net Income
   ----------
   The Company recorded a net loss of $1.0 million in 1998, compared with a
net  loss  of  $1.6 million in 1997, an improvement of $0.6  million.   The
primary components of this improvement include an increase in gross  profit
of  $12.4  million, a decrease in losses  attributable  to  Riverside
International  LLC  of  $1.5  million and a reduction in the provision for
income taxes of $0.3 million.  These improvements  were  partially offset by
a $6.5  million increase in restructuring  and  unusual  items expense, a
reduction in other income of $3.9 million, and increases in SG&A expense  of
$1.5  million  and provision for  doubtful  accounts  of  $1.2 million.


1997 Compared with 1996
-----------------------
   Net Sales
   ---------
   Net  sales for 1997 increased $35.5 million, or 4.2%, to $884.1  million
from  $848.5  million  in 1996.  Same store sales increased  4.7%.   During
1997,  the Company experienced a 4.1% increase in same store sales  to  its
primary  customer  segment,  the professional home  builder,  and  a  16.4%
increase  in same store sales to commercial builders.  Consumer same  store
sales were down 6.8% for the year.

                                      13
<PAGE> 14

   The  Company believes that the following matters contributed to the 1997
sales  increase.  Throughout most of 1997, the Company operated three  more
sales and distribution facilities than it operated during 1996.  Also,  the
Company  believes that showroom Resets at 19 of its sales and  distribution
facilities in 1997, sales training, and big builder initiatives also had  a
positive  effect  on sales.  Finally, weather conditions in  the  Northeast
during  the  first  quarter of 1997 were more favorable compared  with  the
record  snowfalls  recorded  in the first quarter  of  1996.   The  Company
believes that inflation/deflation in lumber prices had negligible impact on
total sales.

   Total  housing starts in the United States were relatively unchanged  in
1997  compared  with  1996.  Starts in the Company's  primary  geographical
market, the Midwest, decreased approximately 5.5%.  The Company's two other
geographical  markets,  the Northeast and South, experienced  increases  in
1997  housing  starts of 3.5% and 1.3%, respectively.   Nationally,  single
family  housing starts, which generate the majority of the Company's  sales
to  building  professionals,  experienced a decrease  of  2.4%,  from  1.16
million starts in 1996 to 1.13 million starts in 1997.

   Gross Profit
   ------------
   Gross  profit  increased $13.6 million to 23.0% of net  sales  for  1997
compared with 22.3% of net sales for 1996.  The increase in gross profit is
primarily  due  to  increases in sales, reductions in  product  costs,  and
increases in sales of manufactured products.

   The  increase  in  gross  profit  as a percent  of  sales  is  primarily
attributable to reduced cost of sales as a result of a concerted effort  to
obtain the best pricing available.  The Company also expanded its sales  of
higher  margin internally manufactured products by approximately  27%  from
1996 to 1997, and experienced a reduction in costs associated with physical
inventory  count  adjustments.  These increases were  partially  offset  by
increased  percent of sales attributable to professional  builders  and  an
increase  in  the  percent of sales attributable to lower margin  commodity
lumber products.  The percent of Company sales attributable to professional
builders increased to 86.5% for 1997 compared with 84.7% in 1996.

   Selling, General, and Administrative Expense
   --------------------------------------------
   In 1997, SG&A increased as a percent of net sales to 21.0% compared with
19.1% of net sales in 1996, primarily as a result of the Company's increase
in sales and distribution facility employees in an effort to increase sales
and market share, expenses associated with showroom remerchandisings in  19
facilities  in  1997, expenses associated with expansion of  the  Company's
Major  Market  program in 1997, and insurance recoveries recorded  in  1996
with respect to prior years.

   Compared to 1996, on a same store basis, the average number of employees
at  the  Company's sales and distribution facilities in 1997  increased  by
approximately 5%.  The Company also experienced an increase in salaries and
wages  in  its non-core operations.  Both were major factors  in  the  1.0%
increase,  as a percentage of sales, of the Company's salaries,  wages  and
employee  benefits.  The Company also experienced increases as a percentage
of sales in travel, office supplies, professional and marketing expenses.

                                      14
<PAGE> 15

   During  1997,  the Company Reset the showrooms of thirteen  Conventional
Market  building  centers  and  six Major  Market  sales  and  distribution
facilities.  Also during 1997, the Company continued its efforts to  expand
its  Major  Markets  program.  See "Item 1. Business - Business  Strategy".
Expenses  associated with these Resets and expansion of the  Major  Markets
program  totaled  approximately $1.8 million  in  1997  and  accounted  for
approximately $1.3 million of the SG&A increase.

   In  1996, the Company recorded $3.7 million of insurance recoveries  for
prior  years'  casualty  insurance  programs.   During  1997,  the  Company
recorded $0.3 million in prior year insurance recoveries.

   In October 1997, the Company announced plans to streamline operations and
to  focus on core operations.  In accordance with these plans, the  Company
discontinued  or  sold  non-core operations that contributed  approximately
$1.5  million  of  SG&A  during 1997.  In addition,  the  Company  effected
headquarters  staffing reductions beginning in October 1997, and  increased
the  amount  of these reductions pursuant to a determination  announced  in
February 1998.

   Depreciation, Goodwill and Trademark Amortization
   -------------------------------------------------
   Depreciation,  goodwill and trademark amortization costs decreased  $0.5
million  in 1997 compared with 1996.  The primary reason for this  decrease
is  that most of the Company-owned delivery vehicles were fully depreciated
in  1997.   Since  1993  the  Company's new  vehicles  have  been  obtained
primarily through operating leases.

   Provision for Doubtful Accounts
   -------------------------------
   Provision  for doubtful accounts increased to $1.7 million  or  0.2%  of
sales  for  1997 from $1.1 million or 0.1% of sales for 1996.  Historically
the  Company's provision for doubtful accounts averages approximately  0.3%
of  sales.  The results achieved in 1996 were a result of increased efforts
to  collect  previously  reserved  accounts  receivable,  especially  those
attributable to the Gerrity Lumber acquisition centers.

   Restructuring and Unusual Items
   -------------------------------
   During  1997  the  Company completed its 1995 Plan.   As  a  result,  it
recorded  a  reduction in accrued costs and a benefit to restructuring  and
unusual  charges of approximately $2.1 million.  This benefit was partially
offset   by   a  $1.5  million  restructuring  charge  for  severance   and
postemployment  benefits  and  anticipated  losses  on  the   disposal   of
discontinued  non-core  programs  and related  reductions  in  headquarters

                                      15
<PAGE> 16

staffing  which was announced by the Company in October of 1997.  The  non-
core programs affected by these reductions included the sale or closing  of
the  Company's mortgage lending, utilities marketing, and internet  service
programs  not directly related to the building supply business.  See  "Item
1. Business - Business Strategy".

   Other Operating Income
   ----------------------
   Other operating income increased to $10.7 million in 1997, compared with
$6.8  million  in 1996.  The increase resulted from gains reported  on  the
sale  of facilities and excess equipment of approximately $6.3 million,  an
increase  of  $4.3  million from the $2.0 million recorded  in  1996.   The
approximately  $0.7 million gain on the sale of the Company's  headquarters
in  Vernon  Hills,  Illinois,  is being amortized  over  a  15-year  period
consistent  with  the Company's lease of the facility.  This  increase  was
partially offset by a $0.6 million gain recorded in 1996 as a result of the
difference between insured replacement cost and book value as a result of a
fire and storm damage at certain of the Company's building centers.

   Interest Expense
   ----------------
   Interest expense decreased to $21.4 million in 1997 from $21.8 million in
1996,  as  a result of a decrease in Company's overall effective  borrowing
rate  of  21  basis  points, partially offset by  an  increase  in  average
outstanding  debt  under the Company's revolving line  of  credit  of  $4.5
million.   The  increase in average outstanding debt was due  primarily  to
reduced net cash flow from operating activities and increased investment in
property, plant and equipment.

   Equity in Loss of Affiliated Company
   ------------------------------------
   During   1997,  the  Company's  equity  in  the  losses  of   Riverside
International LLC was $1.5 million compared with $3.2 million during  1996.
The $1.5 million loss in 1997 reduced the Company's net investment to zero.

   Provision for Income Taxes
   --------------------------
   In  1997 the Company recorded current income tax expense of $1.1 million
compared with $1.0 million in 1996.  Current income tax provisions for both
years consist of state and local tax liabilities.

   A deferred tax benefit of $0.2 million was also recorded for 1997.  This
compares  with  a deferred tax expense of $0.3 million in 1996.   The  1997
benefit results from the loss before income taxes and the establishment  of
a  deferred tax asset, in accordance with FAS 109.  See Note 11 of Notes to
Consolidated Financial Statements included elsewhere herein.

                                      16
<PAGE> 17

   Net Income
   ----------
   The Company experienced a net loss of $1.6 million in 1997 compared with
net  income of $0.5 million in 1996, a change of $2.1 million.  The primary
components of this change consist of an increase in SG&A expense  of  $23.1
million and an increase in provision for doubtful accounts of $0.6 million.
These  unfavorable  changes were partially offset  by  increases  in  gross
profit of $13.6 million and other operating income of $3.9 million, as well
as  decreases in losses attributable to Riverside International LLC of $1.7
million, restructuring and unusual items of $1.3 million, and depreciation,
goodwill and trademark amortization of $0.5 million.


Statements of Financial Accounting Standards
--------------------------------------------
   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.


Liquidity and Capital Resources
-------------------------------
   The  Company's  principal sources of working capital and  liquidity  are
earnings and borrowings under its revolving credit facility.  The Company's
primary  need  for capital resources is to finance inventory  and  accounts
receivable.

   In  1998,  net  cash provided by operating activities amounted  to  $2.6
million.   This  compares with cash used in operating activities  of  $24.6
million  in 1997 and cash provided by operating activities of $18.7 million
in  1996.   The  improvement of $27.2 million is primarily  the  result  of
increases in accounts payable, increased earnings after adjustment for non-
cash  expenses, a decrease in notes receivable, decreased capital  spending
and  smaller  increases  in inventory and other assets  than  the  increase
recorded  in 1997.  These improvements were partially offset by a reduction
in  the proceeds from the sale of property plant and equipment and a larger
increase  in  accounts receivable, when compared to the increase  in  1997.
The   cash   generated  by  operating  activities  was  used  for   capital
expenditures and to reduce the Company's borrowings on it's revolving  line
of  credit.  The Company decreased its capital expenditures in 1998 to $5.9
million from $7.8 million in 1997.

                                      17
<PAGE> 18

   Accounts  receivable at the end of 1998 were $11.1  million,  or  13.6%,
higher  than  at  year end 1997 primarily as a result  of  a  $9.2  million
increase in December 1998 credit sales compared with December 1997  and  an
increase  in  accounts  with extended terms.    Inventory  at  the  end  of
December 1998 was $1.0 million higher than at the end of 1997, primarily as
a  result of significantly higher sales and continued demand for lumber and
building  materials during December, due in part to very favorable  weather
conditions.   The amount of the Company's accounts payable on  any  balance
sheet date may vary from the average accounts payable throughout the period
due  to  the  timing of payments and will tend to increase or  decrease  in
conjunction with an increase or decrease in inventory.

   The Company's capital expenditures consist primarily of the construction
of  facilities for new and existing operations, the remodeling of sales and
distribution  facilities and component manufacturing  facilities,  and  the
purchase of equipment and management information systems.  The Company  may
also from time to time make expenditures to establish or acquire operations
to  expand  or complement its existing operations, especially in its  major
markets.   The Company made $5.9 million in capital expenditures  in  1998.
Approximately  $2.6  million was expended on capital improvements  for  new
operations, showroom resets and expansion of manufacturing operations.  The
Company  expects  to  spend  approximately  $7  million  in  1999.    These
expenditures are expected to be funded by the Company's borrowings and  its
internally  generated  cash flow.  At December  26,  1998,  there  were  no
material commitments for future capital expenditures.

   The  Company  maintained excess availability under its revolving  credit
facility   throughout  1998.   The  Company's  receivables  and   inventory
typically  increase in the second and third quarters of  the  year  due  to
higher  sales  in  the peak building season.  In these  same  periods,  the
Company  typically  reaches its peak utilization of  its  revolving  credit
facility  because of the increased inventory needed for the  peak  building
season.   Except for the third quarter, the Company was in full  compliance
with  all  of the requirements contained in its revolving credit agreement.
At  the end of the third quarter the Company was not in compliance with the
fixed  charge coverage covenant contained in its revolving line of  credit.
The Company's lenders waived the non-compliance.

   On  February  17,  1999 the Company entered into a new revolving  credit
agreement  and  repaid  all  indebtedness  under  and  terminated  its  old
revolving  credit agreement. See Note 15 of Notes to Consolidated Financial
Statements  included  elsewhere herein.  Among other  things,  the  changes
between the old agreement and this new agreement include (i) an initial  25
basis  point reduction in the Company's LIBOR and prime borrowing rates  to
200  basis  points over LIBOR and 50 basis points over prime,  and  further
provisions  for  additional  decreases in the  borrowing  rate  if  certain
interest  coverage  levels are achieved, (ii) an increase  in  the  maximum
credit  line  from $130 million to $160 million, (iii) a  decrease  in  the
unused  line  fee from 50 basis points to 25 basis points, (iv) elimination
of  the fixed charge coverage requirement, (v) extension of the term of the
agreement  to  June  of  2003, (vi) increases,  subject  to  the  permitted

                                      18
<PAGE> 19

discretion  of  the  agent  for the lenders,  in the  percent  of  eligible
accounts receivable to 85% from a range between 80% and 85% and the percent
of  eligible inventory to 60% from a range between 50% and 60%.   Covenants
under  the  new agreement do 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.


   At  February 27, 1999, the Company had outstanding borrowings of  $100.9
million  and  unused availability of $29.5 million under its new  revolving
credit  facility.  The Company currently has excess availability under  its
revolving credit facility and anticipates that funds provided by operations
and under this facility will be adequate for the Company's future needs.

   On  February  17,  1999, in conjunction with the  new  revolving  credit
agreement,  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.  At March 1, 1999 the 30-day LIBOR borrowing rate was
4.94%.

   The  Company's  new  revolving credit facility and the  trust  indenture
relating to the Company's 11-5/8% Senior Subordinated Notes contain certain
covenants  and  restrictions.   Among other things,  the  revolving  credit
facility  prohibits  non-stock  dividends, certain  investments  and  other
"restricted  payments"  by  the  Company.  The  trust  indenture  generally
restricts non-stock dividends and other restricted payments by the  Company
to   50%   of  "cumulative  consolidated  net  income,"  or  if  cumulative
consolidated net income is a loss, minus 100% of such loss, of the  Company
earned  subsequent to October 22, 1993, plus the proceeds of  the  sale  of
certain  equity  securities  after  such  date.   In  addition,  the  trust
indenture   prohibits  non-stock  dividends  and  limits  other  restricted
payments while (as at present) the Company's fixed charge coverage ratio is
less than or equal to 2.0.


Net Operating Loss Carryforwards
--------------------------------
  At December 26, 1998, the Company and its subsidiaries had federal income
tax  net  operating  loss  carryforwards ("NOLs")  of  approximately  $44.0
million.   The NOLs will expire in the years 2005 to 2018 if not previously
utilized.   The  Company's  ability to use  certain  of  the  NOLs  carried
forward, approximately $7.5 million, will be subject to the limitations  of
Section  382  of  the  Internal Revenue Code.  See  Note  11  of  Notes  to
Consolidated Financial Statements included elsewhere herein.

                                      19
<PAGE> 20

Year 2000
---------
   The  Year  2000  problem relates to the inability  of  certain  computer
programs and computer hardware to properly handle dates after December  31,
1999.   As  a  result  businesses may be at risk  for  miscalculations  and
systems failures.

   In  response to the Year 2000 issue, the Company initiated a project  in
early  1997  to  identify, evaluate and implement changes to  its  existing
computerized business systems.  An inventory was developed of all items  of
concern  including vehicles, manufacturing equipment, and security, heating
and  electrical  systems.   Upon completion of the  inventory  a  plan  was
developed  to  evaluate  the  importance  of  each  item,  the  remediation
necessary  to make the item compliant (either modification or replacement),
the  resources necessary to complete the remediation, and a time frame  for
completion.   The  plan  was  then  reviewed  by  an  outside   party   for
completeness.  The plan also includes the steps the Company  is  taking  to
ensure  it  is not at risk for problems that may occur at its suppliers  or
customers.  The  Company has surveyed its customers, suppliers,  and  other
service  providers  to  determine whether they  are  actively  involved  in
projects  to ensure that their products and business systems will  be  Year
2000  compliant.   Management is currently reviewing  their  responses  and
evaluating alternatives for those that are not sufficiently addressing  the
Year 2000 issue.

   The  Company is addressing its software, hardware, and equipment  issues
through a combination of modifications to existing programs and conversions
to  Year 2000 compliant software and equipment.  The Company believes  that
it   is   currently  90%  complete  with  hardware  and  equipment  related
remediation   or  replacement  efforts,  and  70%  complete   in   software
remediation or replacement.  The Company's plan is to be totally  compliant
by  September of 1999.  Certain systems, which have critical dates prior to
September,  are  scheduled  for  earlier  completion  dates  or  have  been
completed.   At  the present time the remediation process is proceeding  as
planned and there are no significant delays expected.

   The  estimated total cost of the project is expected to be $2.7 million.
$500,000 of this cost is for the replacement of systems and equipment which
was accelerated due to the Year 2000 problem, and which will be capitalized
over  the  systems  estimated useful life.  Through February  of  1999  the
Company has expended a total of $1.2 million on Year 2000 remediation.

   If  modifications and conversions, by the Company and those it  conducts
business  with,  are not made in a timely manner, the Year 2000  issue  may
have  a  material  adverse  effect  on the  Company's  business,  financial
condition, and results of operations.  The Company's greatest risk at  this
time  is  with its store operating and accounts receivable systems and  its
inventory  suppliers.   If  the store operating  system  has  problems  the
Company  could experience disruption in its basic distribution  operations.
A  problem  with the Company's accounts receivable system could cause  some

                                      20
<PAGE> 21

short  term  working  capital and cash flow problems  until  the  issue  is
resolved.   While  the Company has extended efforts to  receive  assurances
that  its  product  suppliers  are adequately addressing  this  issue,  the
Company  expects there will be some minimal interruptions in  replenishment
from  some  suppliers,  but  these  should  be  addressed  quickly  through
alternative sources.

   The  Company  has  evaluated each problem area for  various  contingency
responses to mitigate any disruption should remediation be incomplete.   At
present senior management is reviewing critical items to ensure there is at
least  one  workable  alternative to each of its  key  processes  including
inventory  replenishment,  sales  and  accounts  receivable,  payroll,  and
manufacturing  and  delivery  equipment.   Milestones  for  completion   of
critical systems are being closely monitored to minimize the chances  of  a
Year  2000  failure in the key processes.  In addition,  a  plan  is  being
developed to produce backup documents and reports, of critical information,
at December 31, 1999 and for process and system testing to occur on January
1 and 2, to identify and address any unforeseen issues prior to the opening
of business on January 3.

   The  most reasonably likely worst case scenario for a Year 2000  failure
would  involve a brief interruption of the Company's primary field  systems
application.  Given the high level of in-house expertise in the development
and  maintenance of this system, the expectation is that any  such  failure
would  involve  at worst a several day delay in processing.    The  Company
has,  and  will continue to spend a great deal of resources to ensure  that
this  system is compliant and will not be impacted by a Year 2000  failure.
As  a  contingency for a failure scenario, though, the Company has arranged
for  the  printing of key documents (sales orders scheduled  for  the  next
week,  special  orders  placed with suppliers, pricing  masters,  etc.)  on
December 31, at each location, which would allow the operations to continue
to operate, on a manual basis, for at least two weeks before there would be
a  serious  impairment  to  the business.  In  addition,  key  systems  and
operating  staff will be brought in on January 1 and 2, days on  which  the
operating facilities are scheduled to be closed, to perform system  testing
of  the  field  applications and check operating equipment,  utilities  and
other systems. The Company can and has applied program changes to all sales
and distribution facilities in a matter of hours.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
----------------------------------------------------
   Financial  statements of the Company are set forth herein  beginning  on
page F-1.


                                      21
<PAGE> 22

                                  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.

     27.1  Financial data schedule (SEC use only).



                                     22

<PAGE> 23
                                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. 2
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                    WICKES INC.

Date:  October 1, 1999              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)




                                     23

<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
--------------------------

In September of 1998, the Company entered into a transaction in which
it exchanged clearance merchandise, with a book value of $1.2 million, for
barter credits at a stated value of $1.6 million.  No effect to earnings was
recorded at that time and the barter credits were recorded as a prepaid expense
with a value of $1.2 million.  The Company has restated its September 1998
financial statements 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 $1.2 million to $350,000.  As a result of this change,
the Company would record increased future earnings for each dollar of barter
credits used in excess of $350,000.

                                     F-29
<PAGE> F-30

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