**FORM      10-Q**

**QUARTERLY      REPORT PURSUANT TO SECTION 13 OR      15(d) OF THE SECURITIES **

**EXCHANGE      ACT OF 1934**

**OR**

**TRANSITION      REPORT PURSUANT TO SECTION 13 OR      15(d) OF THE SECURITIES **

**EXCHANGE      ACT OF 1934**

*www.bmhc.com*

**Building      Materials Holding Corporation**

| **Delaware**                                           |   | **91-1834269**                                      |
|--------------------------------------------------------|--------|-----------------------------------------------------|
| (State                of                incorporation) |   | (I.R.S.                Employer Identification No.) |

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

**(415)      627-9100**

**N/A**

----

**FORM      10-Q**

**INDEX**

|                                                                                                                                                                           | **Page                Number** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                                                                                                           |                           |
| **PART                I - FINANCIAL INFORMATION**                                                                                                                              | 2                              |
|                                                                                                                                                                           |                           |
|  **Item                1**- Financial Statements                (unaudited)                                                                                               | 2                              |
|                                                                                                                                                                           |                           |
|    Consolidated                Statements of Operations for the Three and Six                Months Ended June 30, 2007 and 2006                                | 2                              |
|                                                                                                                                                                           |                           |
|    Consolidated                Balance Sheets as of June 30, 2007 and December                31, 2006                                                          | 3                              |
|                                                                                                                                                                           |                           |
|    Consolidated                Statements of Shareholders’ Equity for the Three                and Six Months Ended June 30, 2007                and 2006 | 4                              |
|                                                                                                                                                                           |                           |
|    Consolidated                Statements of Cash Flows for the Six Months Ended                June 30, 2007 and 2006                                          | 5                              |
|                                                                                                                                                                           |                           |
|    Notes                to Consolidated Financial                Statements                                                                                     | 6                              |
|                                                                                                                                                                           |                           |
| ** Item                2** - Management's                Discussion and Analysis of Financial Condition and Results of                Operations                     | 32                             |
|                                                                                                                                                                           |                           |
|  **Item                3** - Quantitative and Qualitative                Disclosures about Market Risk                                                                    | 49                             |
|                                                                                                                                                                           |                           |
| ** Item                4** - Controls and                Procedures                                                                                                       | 50                             |
|                                                                                                                                                                           |                           |
| **PART                II - OTHER INFORMATION**                                                                                                                                 | 51                             |
|                                                                                                                                                                           |                           |
| ** Item                1** - Legal                Proceedings                                                                                                             | 51                             |
|                                                                                                                                                                           |                           |
| ** Item                1A** - Risk                Factors                                                                                                                 | 52                             |
|                                                                                                                                                                           |                           |
| ** Item                2** - Unregistered Sales of                Equity Securities and Use of Proceeds                                                                   | 56                             |
|                                                                                                                                                                           |                           |
| ** Item                3** - Defaults Upon Senior                Securities                                                                                               | 57                             |
|                                                                                                                                                                           |                           |
| ** Item                4** - Submission of Matters                to a Vote of Security Holders                                                                           | 58                             |
|                                                                                                                                                                           |                           |
| ** Item                5** - Other                Information                                                                                                             | 59                             |
|                                                                                                                                                                           |                           |
| ** Item                6** -                Exhibits                                                                                                                      | 60                             |
|                                                                                                                                                                           |                           |
| **SIGNATURES**                                                                                                                                                                 | 61                             |
|                                                                                                                                                                           |                           |

----

**Item      1 - Financial Statements**

**Building      Materials Holding Corporation**

**Consolidated      Statements of Operations**

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

**(unaudited)**

|                                                                                                                                  |   | **Three                Months Ended****June                30** |        | **Six                Months Ended****June                30** |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|-------------|---------------------------------------------------------------|--------|
|                                                                                                                                  |   | **2007**                                                        |        |  **2006**                                                |   |  **2007** |   |  **2006** |   |
| **Sales**                                                                                                                             |   |                                                            |        |                                                     |   |    |   |    |   |
|    Construction                services                                                                                |   | **$**                                                           | **405,989** |                                                          | $      | 560,731 |   | **$** | **724,997** |   | $ | 1,109,789 |   |
|    Building                products                                                                                    |   |                                                            | **291,038** |                                                          |   | 361,261 |   |   | **541,134** |   |   | 696,760 |   |
| **      Total                sales**                                                                    |   |                                                            | **697,027** |                                                          |   | 921,992 |   |   | **1,266,131** |   |   | 1,806,549 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| **Costs                and operating expenses**                                                                                       |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
|    Cost                of goods sold                                                                                   |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
|       Construction                services                                                              |   |                                                            | **344,865** |                                                          |   | 459,526 |   |   | **620,267** |   |   | 913,657 |   |
|       Building                products                                                                  |   |                                                            | **211,740** |                                                          |   | 264,518 |   |   | **392,818** |   |   | 511,744 |   |
|    Impairment                of assets                                                                                 |   |                                                            | **—** |                                                          |   | 2,237 |   |   | **—** |   |   | 2,237 |   |
|    Selling,                general and                administrative       expenses |   |                                                            | **112,470** |                                                          |   | 131,893 |   |   | **226,292** |   |   | 262,494 |   |
|    Other                income, net                                                                                    |   |                                                            | **(10,231** | **)**                                                         |   | (499 | ) |   | **(12,389** | **)** |   | (2,286 | ) |
|       Total                costs and operating expenses                                                 |   |                                                            | **658,844** |                                                          |   | 857,675 |   |   | **1,226,988** |   |   | 1,687,846 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| **Income                from operations**                                                                                             |   |                                                            | **38,183**  |                                                          |   | 64,317 |   |   | **39,143** |   |   | 118,703 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| Interest                expense                                                                                                       |   |                                                            | **9,501**   |                                                          |   | 6,465 |   |   | **17,719** |   |   | 12,055 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| Income                before                income taxes    and                minority interests                      |   |                                                            | **28,682**  |                                                          |   | 57,852 |   |   | **21,424** |   |   | 106,648 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| Income                taxes                                                                                                           |   |                                                            | **9,265**   |                                                          |   | 20,520 |   |   | **6,597** |   |   | 38,330 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| Minority                interests income, net of income    taxes                                                       |   |                                                            | **—** |                                                          |   | (3,157 | ) |   | **(376** | **)** |   | (6,074 | ) |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| **Net                income**                                                                                                         |   | **$**                                                           | **19,417**  |                                                          | $      | 34,175 |   | **$** | **14,451** |   | $ | 62,244 |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
| **Net                income per share:**                                                                                              |   |                                                            |        |                                                          |   |   |   |   |   |   |   |   |   |
|    Basic                                                                                                               |   |                                                            | **$0.67**   |                                                          |   | $1.20 |   |   | **$0.50** |   |   | $2.18 |   |
|    Diluted                                                                                                             |   |                                                            | **$0.66**   |                                                          |   | $1.16 |   |   | **$0.49** |   |   | $2.10 |   |

----

**Building        Materials Holding Corporation**

**Consolidated        Balance Sheets**

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

**(unaudited)**

|                                                            |   | **June                    30** | **December                    31** |   |            |   | **June                    30**                                                            | **December                    31** |
|-----------------------------------------------------------------|--------|--------------------------------|------------------------------------|--------|-----------------|--------|-------------------------------------------------------------------------------------------|------------------------------------|
|                                                            |   | **2007**                       | **2006**                           |   |            |   | **2007**                                                                                  | **2006**                           |
| **Assets**                                                      |   |                           |                               |   |            |   | **Liabilities,                    Minority Interests and****Shareholders’Equity**   |                               |   |   |   |   |
| Cash                    and cash                    equivalents | **$**  | **35,401 **               |                               | $      | 74,272     |   |                                                                                      |                               |   |   |   |   |
| Marketable                    securities                        |   | **8,022 **                |                               |   | 4,337      |   | Accounts                    payable                                                       | **$**                              | **134,544 ** |   | $ | 110,961  |
| Receivables,                    net of allowances               |   |                           |                               |   |            |   | Accrued                    compensation                                                   |                               | **40,725 ** |   |   | 48,552  |
|    of                    $5,158 and $4,487       |   | **328,957 **              |                               |   | 279,829    |   | Insurance                    deductible reserves                                          |                               | **27,716 ** |   |   | 24,931  |
| Inventory                                                       |   | **156,707 **              |                               |   | 144,366    |   | Other                    accrued                    liabilities                           |                               | **39,620 ** |   |   | 103,402  |
| Unbilled                    receivables                         |   | **72,191 **               |                               |   | 43,527     |   | Billings                    in                    excess of costs and estimated           |                               |   |   |   |   |
| Deferred                    income taxes                        |   | **9,015 **                |                               |   | 8,914      |   |    earnings                                                                |                               | **35,833 ** |   |   | 27,622  |
| Prepaid                    expenses and other                   |   | **10,652 **               |                               |   | 11,166     |   | Current                    portion of long-term debt                                      |                               | **5,038 ** |   |   | 8,143  |
| **   Current                    assets**         |   | **620,945 **              |                               |   | 566,411    |   | **   Current                    liabilities**                              |                               | **283,476 ** |   |   | 323,611  |
|                                                            |   |                           |                               |   |            |   |                                                                                      |                               |   |   |   |   |
| Property                    and                    equipment    |   |                           |                               |   |            |   | Deferred                    income taxes                                                  |                               | **12,139 ** |   |   | 9,138  |
|    Land                                          |   | **63,887 **               |                               |   | 62,367     |   | Insurance                    deductible reserves                                          |                               | **25,868 ** |   |   | 25,841  |
|    Buildings                    and improvements |   | **139,700 **              |                               |   | 139,602    |   | Long-term                    debt                                                         |                               | **433,408 ** |   |   | 349,161  |
|    Equipment                                     |   | **193,199 **              |                               |   | 188,285    |   | Other                    long-term liabilities                                            |                               | **36,077 ** |   |   | 41,390  |
|    Construction                    in progress   |   | **5,412 **                |                               |   | 8,579      |   |                                                                                      |                               |   |   |   |   |
|    Accumulated                    depreciation   |   | **(149,961)**                  |                               |   | (139,342)       |   | Minority                    interests                                                     |                               | **3,943 ** |   |   | 7,141  |
| Marketable                    securities                        |   | **50,032 **               |                               |   | 53,513     |   |                                                                                      |                               |   |   |   |   |
| Deferred                    loan                    costs       |   | **4,920 **                |                               |   | 5,481      |   | Commitments                    and contingent liabilities                                 |                               | **— ** |   |   | —  |
| Other                    long-term assets                       |   | **34,741 **               |                               |   | 27,223     |   |                                                                                      |                               |   |   |   |   |
| Other                    intangibles, net                       |   | **102,704 **              |                               |   | 108,792    |   | Shareholders’                    equity                                             |                               |   |   |   |   |
| Goodwill                                                        |   | **318,129 **              |                               |   | 308,000    |   |    Common                    shares, $0.001 par value:                     |                               |   |   |   |   |
|                                                            | **$**  | **1,383,708 **            |                               | $      | 1,328,911  |   |                          authorized 50 million; issued and       |                               |   |   |   |   |
|                                                            |   |                           |                               |   |            |   |                          outstanding 29.4 and 29.2 million  |                               |   |   |   |   |
|                                                            |   |                           |                               |   |            |   |                        shares                                    |                               | **29**  |   |   | 29  |
|                                                            |   |                           |                               |   |            |   |    Additional                    paid-in capital                           |                               | **159,797 ** |   |   | 154,405  |
|                                                            |   |                           |                               |   |            |   |    Retained                    earnings                                    |                               | **427,522 ** |   |   | 418,927  |
|                                                            |   |                           |                               |   |            |   |                     Accumulated other comprehensive                             |                               |   |   |   |   |
|                                                            |   |                           |                               |   |            |   |                           income (loss), net                |                               | **1,449 ** |   |   | (732) |
|                                                            |   |                           |                               |   |            |   | **      Shareholders’                    equity**     |                               | **588,797 ** |   |   | 572,629  |
|                                                            |   |                           |                               |   |            |   |                                                                                      | **$**                              | **1,383,708 ** |   | $ | 1,328,911  |

----

**Building      Materials Holding Corporation**

**Consolidated      Statements of Shareholders’Equity**

**(thousands)**

**(unaudited)**

|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       | **Accumulated                Other****Comprehensive****Income                (Loss)** |       |       |                                                    |       |
|-----------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|------------|----------------------|------------|------------|------------------------------|------------|------------|------------------------------------------|------------|------------|---------------------------------------------------------------------------------------|------------|------------|---------------------------------------------------------|------------|
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       | **Net                Unrealized Gain (Loss) From**                                    |       |       |                                                    |       |
|                                                                                                                                    |       | **Common                Shares** |       |       |  **Additional** |       |       |                         |       |       |                                     |       |       | **Interest**                                                                          |       |       |                                                    |       |   |   |   |
|                                                                                                                                    |       | **Shares**                       |       |       | **Amount**           |       |       | ** Paid-In****Capital** |       |       | **Unearned                Compensation** |       |       | **Retained                Earnings**                                                  |       |       | ** Rate  Swap                Contracts** |       |   | **Marketable                Securities** |   |   | **Total** |   |
| **Balance                at December 31, 2005**                                                                                         |       | **28,759**                       |       | **$**      | **29**               | ** ** | **$**      | **143,780**                  | ** ** | **$**      | **(2,698**                               | **)**      | **$**      | **328,463**                                                                           | ** ** | **$**      | **736**                                                 | ** ** | **$** | **(249** | **)** | **$** | **470,061** |   |
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   |   |   |
|    Net                income                                                                                             |       | —                          |       |       | —              |       |       | —                      |       |       | —                                  |       |       | 62,244                                                                                |       |       | —                                                 |       |   | — |   |   | 62,244 |   |
|    Unrealized                gain                                                                                        |       | —                          |       |       | —              |       |       | —                      |       |       | —                                  |       |       | —                                                                               |       |       | 1,822                                                   |       |   | — |   |   | 1,822 |   |
|       Taxes                for unrealized gain                                                            |       | —                          |       |       | —              |       |       | —                      |       |       | —                                  |       |       | —                                                                               |       |       | (701                                                    | )          |   | — |   |   | (701 | ) |
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   |   |   |
|    Unrealized                loss                                                                                        |       | —                          |       |       | —              |       |       | —                      |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | (165 | ) |   | (165 | ) |
|       Tax                benefit for unrealized loss                                                      |       | —                          |       |       | —              |       |       | —                      |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | 49 |   |   | 49 |   |
| **   Comprehensive                income**                                                                               |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   | **63,249** |   |
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   |   |   |
|    Reclassify                unearned compensation -      restricted                shares |       | —                          |       |       | —              |       |       | (2,698                       | )          |       | 2,698                                    |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | — |   |
|    Earned                compensation - options                                                                          |       | —                          |       |       | —              |       |       | 3,340                        |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | 3,340 |   |
|    Earned                compensation - restricted shares                                                                |       | —                          |       |       | —              |       |       | 1,518                        |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | 1,518 |   |
|    Issuance                of restricted shares                                                                          |       | 138                              |       |       | —              |       |       | —                      |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | — |   |
|    Share                options exercised                                                                                |       | 62                               |       |       | —              |       |       | 576                          |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | 576 |   |
|       Tax                benefit for share options exercised                                              |       | —                          |       |       | —              |       |       | 605                          |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | 605 |   |
|    Shares                issued from Director Plan                                                                       |       | 12                               |       |       | —              |       |       | 415                          |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | 415 |   |
|    Shares                issued from Employee Plan                                                                       |       | 25                               |       |       | —              |       |       | 862                          |       |       | —                                  |       |       | —                                                                               |       |       | —                                                 |       |   | — |   |   | 862 |   |
|    Cash                dividends on common shares                                                                        |       | —                          |       |       | —              |       |       | —                      |       |       | —                                  |       |       | (5,793                                                                                | )          |       | —                                                 |       |   | — |   |   | (5,793 | ) |
| **Balance                at June 30, 2006**                                                                                             |       | **28,996**                       |       | **$**      | **29**               | ** ** | **$**      | **148,398**                  | ** ** | **$**      | **—**                              | ** ** | **$**      | **384,914**                                                                           | ** ** | **$**      | **1,857**                                               | ** ** | **$** | **(365** | **)** | **$** | **534,833** | ** ** |
| ** **                                                                                                                              | ** ** | ** **                       | ** ** | ** ** | ** **           | ** ** | ** ** | ** **                   | ** ** | ** ** | ** **                               | ** ** | ** ** | ** **                                                                            | ** ** | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Balance                at December 31, 2006**                                                                                         | ** ** | **29,153**                       | ** ** | **$**      | **29**               | ** ** | **$**      | **154,405**                  | ** ** | **$**      | **—**                              | ** ** | **$**      | **418,927**                                                                           | ** ** | **$**      | **(548**                                                | **)**      | **$** | **(184** | **)** | **$** | **572,629** |   |
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   |   |   |
|    Net                income                                                                                             |       | **—**                      |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **14,451**                                                                            |       |       | **—**                                             |       |   | **—** |   |   | **14,451** |   |
|    Unrealized                gain                                                                                        |       | **—**                      |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **—**                                                                           |       |       | **3,691**                                               |       |   | **—** |   |   | **3,691** |   |
|       Taxes                for unrealized gain                                                            |       | **—**                      |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **—**                                                                           |       |       | **(1,393**                                              | **)**      |   | **—** |   |   | **(1,393** | **)** |
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   |   |   |
|    Unrealized                loss                                                                                        |       | **—**                      |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **(177** | **)** |   | **(177** | **)** |
|       Tax                benefit for unrealized loss                                                      |       | **—**                      |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **60** |   |   | **60** |   |
| **   Comprehensive                income**                                                                               |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   | **16,632** |   |
|                                                                                                                                    |       |                             |       |       |                 |       |       |                         |       |       |                                     |       |       |                                                                                  |       |       |                                                    |       |   |   |   |   |   |   |
|    Earned                compensation - options                                                                          |       | **—**                      |       |       | **—**          |       |       | **2,565**                    |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **2,565** |   |
|    Earned                compensation - restricted shares                                                                |       | **—**                      |       |       | **—**          |       |       | **1,730**                    |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **1,730** |   |
|    Tax                benefit for vested restricted shares                                                               |       | **—**                      |       |       | **—**          |       |       | **158**                      |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **158** |   |
|    Issuance                of restricted shares                                                                          |       | **170**                          |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **—** |   |
|    Share                options exercised                                                                                |       | **26**                           |       |       | **—**          |       |       | **163**                      |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **163** |   |
|       Tax                benefit for share options exercised                                              |       | **—**                      |       |       | **—**          |       |       | **94**                       |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **94** |   |
|    Shares                issued from Director Plan                                                                       |       | **27**                           |       |       | **—**          |       |       | **405**                      |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **405** |   |
|    Shares                issued from Employee Plan                                                                       |       | **13**                           |       |       | **—**          |       |       | **277**                      |       |       | **—**                              |       |       | **—**                                                                           |       |       | **—**                                             |       |   | **—** |   |   | **277** |   |
|    Cash                dividends on common shares                                                                        |       | **—**                      |       |       | **—**          |       |       | **—**                  |       |       | **—**                              |       |       | **(5,856**                                                                            | **)**      |       | **—**                                             |       |   | **—** |   |   | **(5,856** | **)** |
| **Balance                at June 30, 2007**                                                                                             |       | **29,389**                       |       | **$**      | **29**               | ** ** | **$**      | **159,797**                  | ** ** | **$**      | **—**                              | ** ** | **$**      | **427,522**                                                                           | ** ** | **$**      | **1,750**                                               | ** ** | **$** | **(301** | **)** | **$** | **588,797** |   |

----

**Building      Materials Holding Corporation**

**Consolidated      Statements of Cash Flows**

**(thousands)**

**(unaudited)**

|                                                                                                                                                                                                                                   |       | **Six                  Months Ended****June                  30** |         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------|--------------|
| **Operating                  Activities**                                                                                                                                                                                              |       | **2007**                                                          |         | **2006** |   |
|    Net                  income                                                                                                                                                                                          | ** ** | **$**                                                             | **14,451**   |   | $ | 62,244 |   |
|    Items                  in net income not using (providing) cash:                                                                                                                                                     |       |                                                              |         |   |   |   |   |
|       Minority                  interests, net                                                                                                                                                           |       |                                                              | **376**      |   |   | 6,074 |   |
|       Depreciation                  and amortization                                                                                                                                                     |       |                                                              | **24,111**   |   |   | 20,868 |   |
|       Impairment                  of assets                                                                                                                                                              |       |                                                              | **—**  |   |   | 2,237 |   |
|       Deferred                  loan cost amortization                                                                                                                                                   |       |                                                              | **561**      |   |   | 440 |   |
|       Share-based                  compensation                                                                                                                                                          |       |                                                              | **4,697**    |   |   | 5,401 |   |
|       Gain                  on sale of assets, net                                                                                                                                                       |       |                                                              | **(8,700**   | **)** |   | (91 | ) |
|       Realized                  loss on marketable securities                                                                                                                                            |       |                                                              | **7**        |   |   | — |   |
|                        Deferred income taxes                                                                                                                                                                  |       |                                                              | **2,485**    |   |   | 33 |   |
|       Changes                  in assets and liabilities, net of effects of acquisitions                  of          business                  units: |       |                                                              |         |   |   |   |   |
|             Receivables,                  net                                                                                                                              |       |                                                              | **(49,128**  | **)** |   | (11,659 | ) |
|             Inventory                                                                                                                                                      |       |                                                              | **(12,341**  | ) |   | (18,096 | ) |
|             Unbilled                  receivables                                                                                                                          |       |                                                              | **(28,664**  | **)** |   | (18,784 | ) |
|             Prepaid                  expenses and other current assets                                                                                                     |       |                                                              | **491**      |   |   | (2,549 | ) |
|             Accounts                  payable                                                                                                                              |       |                                                              | **27,746**   |   |   | 25,340 |   |
|             Accrued                  compensation                                                                                                                          |       |                                                              | **(7,783**   | **)** |   | (8,029 | ) |
|             Insurance                  deductible reserves                                                                                                                 |       |                                                              | **2,785**    |   |   | 11,203 |   |
|             Other                  accrued liabilities                                                                                                                     |       |                                                              | **(6,231**   | **)** |   | 13,033 |   |
|             Billings                  in excess of costs and estimated earnings                                                                                            |       |                                                              | **8,211**    |   |   | 8,842 |   |
|             Other                  long-term assets and liabilities                                                                                                        |       |                                                              | **(9,254**   | **)** |   | (3,001 | ) |
|                        Other, net                                                                                                                                                                             |       |                                                              | **(1,332**   | **)** |   | (470 | ) |
| **Cash                  flows (used) provided by operating activities**                                                                                                                                                                |       |                                                              | **(37,512**  | **)** |   | 93,036 |   |
|                                                                                                                                                                                                                                   |       |                                                              |         |   |   |   |   |
| **Investing                  Activities**                                                                                                                                                                                              |       |                                                              |         |   |   |   |   |
|    Purchases                  of property and equipment                                                                                                                                                                 |       |                                                              | **(15,992**  | **)** |   | (28,731 | ) |
|    Acquisitions                  and investments in businesses, net of cash acquired                                                                                                                                    |       |                                                              | **(72,214**  | **)** |   | (100,097 | ) |
|    Proceeds                  from dispositions of property and equipment                                                                                                                                                |       |                                                              | **16,154**   |   |   | 738 |   |
|    Purchase                  of marketable securities                                                                                                                                                                   |       |                                                              | **(17,764**  | **)** |   | (20,723 | ) |
|    Proceeds                  from sales of marketable securities                                                                                                                                                        |       |                                                              | **17,414**   |   |   | 16,313 |   |
|    Other,                  net                                                                                                                                                                                          |       |                                                              | **(1,509**   | **)** |   | (3,308 | ) |
| **Cash                  flows used by investing activities**                                                                                                                                                                           |       |                                                              | **(73,911**  | **)** |   | (135,808 | ) |
|                                                                                                                                                                                                                                   |       |                                                              |         |   |   |   |   |
| **Financing                  Activities**                                                                                                                                                                                              |       |                                                              |         |   |   |   |   |
|    Net                  borrowings under revolver                                                                                                                                                                       |       |                                                              | **87,000**   |   |   | 65,500 |   |
|    Principal                  payments on term notes                                                                                                                                                                    |       |                                                              | **(1,750**   | ) |   | (625 | ) |
|    Net                  payments on other notes                                                                                                                                                                         |       |                                                              | **(4,108**   | **)** |   | (330 | ) |
|    Decrease                  in book overdrafts                                                                                                                                                                         |       |                                                              | **(1,182**   | **)** |   | (5,369 | ) |
|    Proceeds                  from share options exercised                                                                                                                                                               |       |                                                              | **163**      |   |   | 576 |   |
|    Tax                  benefit for share-based payments                                                                                                                                                                |       |                                                              | **253**      |   |   | 605 |   |
|    Dividends                  paid                                                                                                                                                                                      |       |                                                              | **(5,832**   | **)** |   | (5,051 | ) |
|    Deferred                  financing costs                                                                                                                                                                            |       |                                                              | —      |   |   | (1,498 | ) |
|    Distributions                  to minority interests                                                                                                                                                                 |       |                                                              | **(2,203**   | **)** |   | (3,221 | ) |
|    Other,                  net                                                                                                                                                                                          |       |                                                              | **211**      |   |   | (8 | ) |
| **Cash                  flows provided by financing activities**                                                                                                                                                                       |       |                                                              | **72,552**   |   |   | 50,579 |   |
|                                                                                                                                                                                                                                   |       |                                                              |    |   |   |    |   |
| **(Decrease)                  Increase in Cash and Cash Equivalents**                                                                                                                                                                  |       |                                                              | **(38,871**  | **)** |   | 7,807 |   |
|                                                                                                                                                                                                                                   |       |                                                              |         |   |   |   |   |
|    Cash                  and cash equivalents, beginning of period                                                                                                                                                      |       |                                                              | **74,272**   |   |   | 30,078 |   |
|    Cash                  and cash equivalents, end of period                                                                                                                                                            |       | **$**                                                             | **35,401**   |   | $ | 37,885 |   |
|                                                                                                                                                                                                                                   |       |                                                              |         |   |   |   |   |
| **Supplemental                  Disclosure of Cash Flow Information**                                                                                                                                                                  |       |                                                              |         |   |   |   |   |
|    Accrued                  but unpaid dividends                                                                                                                                                                        |       | **$**                                                             | **2,939**    |   | $ | 2,900 |   |
|    Cash                  paid for interest                                                                                                                                                                              |       | **$**                                                             | **16,812**   |   | $ | 11,159 |   |
|    Cash                  paid for income taxes                                                                                                                                                                          |       | **$**                                                             | **1,899**    |   | $ | 46,157 |   |
|                                                                                                                                                                                                                                   |       |                                                              |         |   |   |   |   |
| **Supplemental                  Disclosure of Investing Activities**                                                                                                                                                                   |       |                                                              |         |   |   |   |   |
|    Fair                  value of assets acquired                                                                                                                                                                       |       | **$**                                                             | **9,805**    |   | $ | 122,928 |   |
|    Liabilities                  assumed (extinguished)                                                                                                                                                                  |       | **$**                                                             | **(1,271**   | **)** | $ | 44,492 |   |
|    Cash                  paid for acquisitions made this period                                                                                                                                                         |       | **$**                                                             | **11,076**   |   | $ | 78,436 |   |
|    Cash                  paid for acquisitions made in prior period                                                                                                                                                     |       | **$**                                                             | **61,138**   |   | $ | 21,661 |   |

----

***Notes      to Consolidated Financial      Statements***

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

*Basis      of Presentation*

*Nature      of Operations*

*Principles      of Consolidation*

*Use      of Estimates*

|  | · | *Revenue                Recognition for Construction                Services* |
|--|--------|-------------------------------------------------------------------------------|

----

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

|  | · | *Goodwill* |
|--|--------|------------|

|  | · | *Insurance                Deductible Reserves* |
|--|--------|------------------------------------------------|

|  | · | *Warranties* |
|--|--------|--------------|

|  | · | *Share-based                Compensation* |
|--|--------|-------------------------------------------|

*Cash      and Cash Equivalents*

----

*Receivables*

*Inventory      Valuation*

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

*Property      and Equipment*

|    | · | 10                  to 30 years for buildings and improvements |
|--------------|--------|----------------------------------------------------------------|

|    | · | 7                  to 10 years for machinery and                  fixtures |
|--------------|--------|----------------------------------------------------------------------------|

|    | · | 3                  to 10 years for handling and delivery equipment |
|--------------|--------|--------------------------------------------------------------------|

|    | · | 3                  to 10 years for software development                  costs |
|--------------|--------|--------------------------------------------------------------------------------|

*Long-lived      Assets*

----

*Revenue      Recognition *

*Shipping      and Handling*

*Reclassifications*

*Recent      Accounting Principles*

*The Fair Value Option for Financial      Assets and Financial Liabilities - Including an Amendment of FASB Statement      No.      115*

*Fair Value Measurements*

*Accounting for Uncertainty in Income Taxes. *

----

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

|                                                                                                                                                                                                                                                             |   | **Three                Months Ended****June                30** |       | **Six                Months Ended****June                30** |   |     |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|---------------------------------------------------------------|--------|----------|--------|
|                                                                                                                                                                                                                                                             |   | **2007**                                                        |       | **2006**                                                      |   | **2007** |   | **2006** |   | **2006** |   |
| Net                income                                                                                                                                                                                                                                        |   | **$**                                                           | **19,417** |                                                          | $      | 34,175   |   | **$** | **14,451** |   | $ | 62,244 |   | $ | 102,074 |   |
|                                                                                                                                                                                                                                                             |   |                                                            |       |                                                          |   |     |   |   |   |   |   |   |   |   |   |   |
|    Weighted                average       shares                used to       determine                basic net       income                per share   |   |                                                            | **28,807** |                                                          |   | 28,578   |   |   | **28,788** |   |   | 28,551 |   |   | 28,603 |   |
|    Net                effect of dilutive       share                options and       restricted                shares                                                                |   |                                                            | **709**    |                                                          |   | 1,004    |   |   | **804** |   |   | 1,027 |   |   | 986 |   |
|    Weighted                average       shares                used to       determine                diluted net       income                per share |   |                                                            | **29,516** |                                                          |   | 29,582   |   |   | **29,592** |   |   | 29,578 |   |   | 29,589 |   |
|                                                                                                                                                                                                                                                             |   |                                                            |       |                                                          |   |     |   |   |   |   |   |   |   |   |   |   |
| Net                income                per share:                                                                                                                                                                                                              |   |                                                            |       |                                                          |   |     |   |   |   |   |   |   |   |   |   |   |
|    Basic                                                                                                                                                                                                                                          |   |                                                            | **$0.67**  |                                                          |   | $1.20    |   |   | **$0.50** |   |   | $2.18 |   |   | $3.57 |   |
|    Diluted                                                                                                                                                                                                                                        |   |                                                            | **$0.66**  |                                                          |   | $1.16    |   |   | **$0.49** |   |   | $2.10 |   |   | $3.45 |   |
|                                                                                                                                                                                                                                                             |   |                                                            |       |                                                          |   |     |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends declared    per                share                                                                                                                                                                                |   |                                                            | **$0.10**  |                                                          |   | $0.10    |   |   | **$0.20** |   |   | $0.20 |   |   | $0.40 |   |

|                                                     |   | **Three                Months Ended****June                30** |          | **Six                Months Ended****June                30** |   |     |   |
|----------------------------------------------------------|--------|-----------------------------------------------------------------|---------------|---------------------------------------------------------------|--------|----------|--------|
|                                                     |   | **2007**                                                        |          | **2006**                                                      |   | **2007** |   | **2006** |   | **2006** |   |
| Share                options                not dilutive |   |                                                            | **1,353,032** |                                                          |   | 405,100  |   |   | **814,832** |   |   | 405,100 |   |   | 403,100 |   |

----

***3.***
***Impairment      of Assets***

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

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

----

***4.***
***Acquisitions      and Minority Interests***

| ·   | In                March                2007, SelectBuild acquired a concrete services business in Fresno,                California for approximately $0.7 million in cash of which $0.1 million                has been retained for the settlement period. This purchase price                is                subject to working capital adjustment. Information required to complete                the purchase price allocation is not yet available. Final allocation                of                the purchase price will be completed as soon as this information                is                available. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                December                2006, SelectBuild acquired a distribution services business in Southern                California for $1.6 million in cash. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                August                2006, SelectBuild acquired a window installation business in Arizona                for                $13.9 million in cash. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                July 2006,                SelectBuild acquired a framing services business in Southern California                for $78.6 million in cash. Additional consideration of $3.1 million                was                accrued based on operating performance through June 2007. Additional                cash                payments may be required based on operating performance through June                2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                June 2006,                BMC West acquired a building materials distribution and truss                manufacturing business in Eastern Idaho for $5.1 million in                cash. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | In                February                2006, BMC West acquired 3 facilities providing building materials                distribution and millwork services in Houston, Texas for $20.6 million                in                cash. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| ·   | In                  April                  2007, SelectBuild acquired the remaining 27% interest in Riggs                  Plumbing                  for $10.5 million in cash. In July 2005, SelectBuild acquired an                  additional 13% interest for $1.4 million in cash and in April 2005,                  acquired an initial 60% interest for $17.8 million in cash. Riggs                  Plumbing                  provides plumbing services to high-volume production builders in                  the                  Phoenix and Tucson markets.  |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                November                2006, SelectBuild acquired the remaining 49% interest in BBP Companies                for                $22.8 million in cash. In July 2005, SelectBuild acquired an initial                51%                interest for $9.4 million in cash and $1.0 million of our common                shares.                BBP Companies provide concrete services to high-volume production                homebuilders in Arizona. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January                2006, SelectBuild acquired the remaining 20% interest in WBC Construction,                LLC for $36.0 million in cash. In August 2005, SelectBuild acquired                an                additional 20% interest for $24.8 million in cash and in January                2003,                acquired an initial 60% interest for $22.9 million in cash and $1.0                million of our common shares. WBC provides concrete block masonry                and                concrete service to high-volume homebuilders in                Florida. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        | **June                  30** | **December                  31** |     |   | **June                  30** | **December                  31** |
|-------------------------------------------------------------|------------------------------|----------------------------------|----------|--------|------------------------------|----------------------------------|
|                                                        | **2007**                     |                             | **2006** |   |                         | **2007**                         |   | **2006** |
| Receivables                                                 | **$**                        | **—**                      |     | $      | 44,683                       |                             | Accounts                  payable | **$** | **— ** |   | $ | 10,376  |
| Inventory                                                   |                         | **—**                      |     |   | 19,957                       |                             | Accrued                  compensation |   | **— ** |   |   | 1,447  |
| Unbilled                  receivables                       |                         | **—**                      |     |   | 10,101                       |                             | Other                  accrued                  liabilities |   | **(57,551)** |   |   | 50,340  |
| Prepaid                  expenses and other                 |                         | **15**                           |     |   | 263                          |                             | Billings                  in                  excess of costs and |   |   |   |   |   |
|                                                        |                         |                             |     |   |                         |                             |    estimated                  earnings |   | **— ** |   |   | 23,557  |
| **   Current                  assets ** |                         | **15**                           |     |   | 75,004                       |                             | **   Current                  liabilities** |   | **(57,551)** |   |   | 85,720  |
|                                                        |                         |                             |     |   |                         |                             |   |   |   |   |   |   |
| Property                  and                  equipment    |                         | **216**                          |     |   | 19,845                       |                             | Deferred                  income taxes |   | **(917)** |   |   | 937  |
| Other                  long-term assets                     |                         | **—**                      |     |   | 42                           |                             | Other                  long-term liabilities |   | **— ** |   |   | 8,173  |
| Other                  intangibles, net                     |                         | **2,015**                        |     |   | 68,692                       |                             | Minority                  interests |   | **(1,371)** |   |   | (10,627) |
| Goodwill                                                    |                         | **10,129**                       |     |   | 122,374                      |                             |   |   |   |   |   |   |
|                                                        | **$**                        | **12,375**                       |     | $      | 285,957                      |                             |   | **$** | **(59,839)** |   | $ | 84,203  |

|                                                       | **Three                  Months Ended****June                  30** |        | **Six                  Months Ended****June                  30** |
|------------------------------------------------------------|---------------------------------------------------------------------|-------------|-------------------------------------------------------------------|
|                                                       | **2007**                                                            |        | **2006**                                                          |   | **2007** |   | **2006** |
| Sales                  - as                  reported      | **$**                                                               | **697,027** |                                                              | $ | 921,992 |   | **$** | **1,266,131** |   | $ | 1,806,549 |
| Pro                  forma                  Sales          | **$**                                                               | **697,027** |                                                              | $ | 952,222 |   | **$** | **1,266,895** |   | $ | 1,883,689 |
|                                                       |                                                                |        |                                                              |   |   |   |   |   |   |   |   |
| Net                  income -                  as reported | **$**                                                               | **19,417**  |                                                              | $ | 34,175 |   | **$** | **14,451** |   | $ | 62,244 |
| Pro                  forma Net                  income     | **$**                                                               | **19,886**  |                                                              | $ | 35,379 |   | **$** | **15,282** |   | $ | 66,120 |
|                                                       |                                                                |        |                                                              |   |   |   |   |   |   |   |   |
| Net                  income per                  share:    |                                                                |        |                                                              |   |   |   |   |   |   |   |   |
|    Diluted                  - as reported   |                                                                | **$0.66**   |                                                              |   | $1.16 |   |   | **$0.49** |   |   | $2.10 |
|    Pro                  forma Diluted       |                                                                | **$0.67**   |                                                              |   | $1.20 |   |   | **$0.52** |   |   | $2.24 |

----

|                                | **Call                Options**                                   |                                                              | **Put                Options**                                    |
|-------------------------------------|-------------------------------------------------------------------|-------------------------------------------------------------------|-------------------------------------------------------------------|
| SelectBuild                Trim     | January                2010                through January 2017   |                                                              | January                2010                through January 2017   |
| KBI                Mechanical       | December                2009                through December 2014 |                                                              | December                2009                through December 2014 |
| SelectBuild                Illinois | January                2008                through January 2012   |                                                              | January                2008                through January 2012   |
| A-1                Truss            | September                2004 through August 2014                 | September                2009 through August 2014                 |
| SelectBuild Mid-Atlantic       | October                2003                through September 2010 | December                2006                through December 2008 |

----

***5.***
***Marketable      Securities***

|                                                      | **June                  30** |       | **December                  31** |
|-----------------------------------------------------------|------------------------------|------------|----------------------------------|
|                                                      | **2007**                     |       | **2006**                         |
| U.S.                  government and agencies             | **$**                        | **23,129** |                             | $ | 25,661 |
| Asset                  backed                  securities |                         | **20,194** |                             |   | 18,278 |
| Corporate                  securities                     |                    | **14,731** |                             |    | 13,911 |
|                                                      | **$**                        | **58,054** |                             | $ | 57,850 |

|                                                  | **June                  30** |       | **December                  31** |
|-------------------------------------------------------|------------------------------|------------|----------------------------------|
|                                                  | **2007**                     |       | **2006**                         |
| Less                  than 1                  year    | **$**                        | **8,022**  |                             | $ | 4,337 |
| Due                  in 1 to 2                  years |                         | **12,377** |                             |   | 16,648 |
| Due                  in 2 to 5                  years |                         | **37,465** |                             |   | 36,865 |
| More                  than 5                  years   |                              | **190**    |                             |    | — |
|                                                  | **$**                        | **58,054** |                             | $ | 57,850 |

----

***6.***

***Intangible      Assets and Goodwill***

|                                                       | **June                  30, 2007**            |
|------------------------------------------------------------|-----------------------------------------------|
|                                                       | **Gross****Carrying                  Amount** |   | **Accumulated****Amortization** |   | **Net                  Carrying****Amount** |
| Customer                  relationships                    | **$**                                         | **123,065** |   | **$** | **(27,624)** |   | **$** | **95,441** |
| Covenants                  not                  to compete |                                          | **12,187** |   |   | **(5,567)** |   |   | **6,620** |
| Trade                  names                               |                                          | **204** |   |   | **(193)** |   |   | **11** |
| Other                                                      |                                          | **780** |   |   | **(148)** |   |   | **632** |
|                                                       | **$**                                         | **136,236** |   | **$** | **(33,532)** |   | **$** | **102,704** |

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

|                                                                    | **SelectBuild** |              | **BMC                  West** |   | **Total**        |
|-------------------------------------------------------------------------|-----------------|-------------------|-------------------------------|--------|------------------|
| **Balance                  at December 31, 2006**                       | $               | 287,123      |                          | $      | 20,877      |   | $ | 308,000  |
|   Purchase                  price                  adjustment |            | (155)             |                          |   | —     |   |   | (155) |
|   Goodwill                  acquired                          |            | 10,284       |                          |   | —     |   |   | 10,284  |
| **Balance                  at June 30, 2007**                           | **$**           | **297,252 ** |                          | **$**  | **20,877 ** |   | **$** | **318,129 ** |

----

|                                                                    | **SelectBuild** |       | **BMC                  West** |   | **Total** |
|-------------------------------------------------------------------------|-----------------|------------|-------------------------------|--------|-----------|
| **Balance                  at December 31, 2006**                       | $               | 33,939     |                          | $      | 7,423     |   | $ | 41,362 |
|   Purchase                  price                  adjustment |            | 1,530      |                          |   | —   |   |   | 1,530 |
| **Balance                  at June 30, 2007**                           | **$**           | **35,469** |                          | **$**  | **7,423** |   | **$** | **42,892** |

----

***7.***
***Debt***

| **As                of June 30, 2007**          |   |        |        |                                         |   | **Notional**                                                                          |   | **Effective                Interest Rate** |        |
|-------------------------------------------------|--------|-------------|-------------|----------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|
|                                            |   | **Balance** |        | **Stated****Interest                  Rate** |   | **Amount                  of**** Interest**** Rate                  Swaps** |   | **Average****for****Quarter**              |        | **As                of****June                30** |   |
| Revolver                                        |   | **$**       | **87,000**  |                                         |   | **LIBOR                plus 1.25% or Prime plus 0.00%**                               |   | **$**                                      | **—** |   |   | **7.81**%**** |   |   | **7.67**%**** |   |
| Term                note                        |   |        | **347,375** |                                         |   | **LIBOR                plus 2.50% or Prime plus 1.25%**                               |   |                                       | **200,000** |   |   | **7.70**%**** |   |   | **7.69**%**** |   |
| Other                                           |   |        | **4,071**   |                                         |   | **Various**                                                                           |   |                                       | **—** |   |   | **—** |   |   | **—** |   |
|                                            |   |        | **438,446** |                                         |   |                                                                                  |   | **$**                                      | **200,000** |   |   |  |   |   |  |   |
|                                            |   |        |        |                                         |   |                                                                                  |   |                                       |             |   |   |  |   |   |  |   |
| Less:  Current                portion |   |        | **5,038**   |                                         |   |                                                                                  |   |                                       |             |   |   |  |   |   |  |   |
|                                            |   | **$**       | **433,408** |                                         |   |                                                                                  |   |                                       |             |   |   |  |   |   |  |   |

| **As                of                December 31, 2006** |   |        |    |                                       |   | **Notional**                                                          |   | **Effective                Interest Rate** |    |
|-----------------------------------------------------------|--------|-------------|---------|--------------------------------------------|--------|-----------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                      |   | **Balance** |    | **Stated****Interest                Rate** |   | **Amount                of****Interest****Rate                Swaps** |   | **Average****for**** Year**           |    | **As                of****December                31** |   |
| Revolver                                                  |   | $           | — |                                       |   | LIBOR                plus 1.25% or Prime plus 0.00%                   |   | $                                          | ― |   |   | 6.5% |   |   | n/a |   |
| Term                note                                  |   |        | 349,125 |                                       |   | LIBOR                plus 2.50% or Prime plus 1.25%                   |   |                                       | 200,000 |   |   | 6.7% |   |   | 7.0% |   |
| Other                                                     |   |        | 8,179   |                                       |   | Various                                                               |   |                                       | — |   |   | — |   |   | — |   |
|                                                      |   |        | 357,304 |                                       |   |                                                                       |   | $                                          | 200,000 |   |   |   |   |   |  |   |
|                                                      |   |        |    |                                       |   |                                                                       |   |                                       |    |   |   |   |   |   |  |   |
| Less:  Current                portion           |   |        | 8,143   |                                       |   |                                                                       |   |                                       |         |   |   |  |   |   |  |   |
|                                                      |   | $           | 349,161 |                                       |   |                                                                       |   |                                       |         |   |   |  |   |   |  |   |

*Revolver*

----

*Term      Note*

*Other*

*Expansion      of Credit Facility, Covenants and Maturities*

| 2007       |   | $      | 2,567   |   |
|------------|--------|--------|---------|--------|
| 2008       |   |   | 4,792   |   |
| 2009       |   |   | 4,109   |   |
| 2010       |   |   | 3,824   |   |
| 2011       |   |   | 90,709  |   |
| Thereafter |   |   | 332,445 |   |
|       |   | $      | 438,446 |   |

*Hedging      Activities*

----

***8.***
***Shareholders’      Equity***

*Preferred      Shares*

*Common      Shares*

| Employee                Stock Purchase Plan        |   |   | **19,000** |   |
|----------------------------------------------------|--------|--------|------------|--------|
| 2004                Incentive and Performance Plan |   |   | **2,432**  |   |

*Shareholders’      Rights Plan*

*Dividends*

|                          |   | **2007** |        | **2006** |   |
|-------------------------------|--------|----------|-------------|----------|--------|
| First                quarter  |   |     | **$0.10**   |     |   | $0.10 |   |
| Second                quarter |   |     | **0.10**    |     |   | 0.10 |   |
| Third                quarter  |   |     | **—** |     |   | 0.10 |   |
| Fourth                quarter |   |     | **—** |     |   | 0.10 |   |
|                          |   |     | **$0.20**   |     |   | $0.40 |   |

*Repurchase      Program*

----

| ***9.  *** | ***Employee                Benefit Plans*** |
|----------------------|---------------------------------------------|

*Retirement      Plans*

|  | · | *Savings                and Retirement Plan* |
|--|--------|----------------------------------------------|

|  | · | *Executive                Deferred Compensation* |
|--|--------|--------------------------------------------------|

|  | · | *Supplemental                Retirement* |
|--|--------|------------------------------------------|

----

*Employee        Stock Purchase Plan*

*2004      Incentive and Performance Plan*

*Options*

| ·       | Grants                of                options under the 2004 Incentive and Performance Plan vest ratably                over 3                to 4 years from the date of grant and expire after 7 years if unexercised.                Options were awarded with exercise prices equal to the closing share                price                of our common shares on the date of grant. |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                ·       | In                  February                  2000, our Board of Directors adopted the 2000 Stock Incentive Plan,                  as                  approved by our shareholders in May 2000. Grants of options under                  the 2000                  Stock Incentive Plan vest ratably through the end of the fourth                  year from                  the date of grant and expire after 10 years if unexercised. Options                  were                  awarded with exercise prices equal to the fair value of the shares                  on the                  date of grant. No further grants will be made under this plan. |
|----------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Share-Based Payment, *

|                                                | **Six                Months                Ended****June                30** |   |                      |
|-----------------------------------------------------|------------------------------------------------------------------------------|--------|---------------------------|
|                                                | **2007**                                                                     |   | **2006**                  |   | **2006** |
| Expected                term                (years) | **5.2   **                                                    |   | 5.6**   ** |   | 5.6**   ** |
| Expected                volatility                  | **54.5%  **                                                        |   | 48.6%**  **     |   | 48.6%**  ** |
| Expected                dividend yield              | **2.0%**                                                                     |   | 0.7%                      |   | 0.7% |
| Risk-free                interest rate              | **4.5%**                                                                     |   | 3.8%                      |   | 3.8% |
| Exercise                price                       | **$18   **                                                    |   | $38**   ** |   | $38**   ** |
| Weighted                average fair value          | **$8   **                                                     |   | $18**   ** |   | $18**   ** |

|                                                                                                        | **June                  30****2007** |                                         | **June                  30****2006**                                                     |   | **2006**    |
|-------------------------------------------------------------------------------------------------------------|--------------------------------------|----------------------------------------------|------------------------------------------------------------------------------------------|--------|-------------|
|                                                                                                        | **Shares**                           | **Weighted****Average****Exercise****Price** | **Weighted****Average**** Remaining**** Contractual****Term**** (years)** |   | **Shares**  | **Weighted**** Average**** Exercise****Price** |   | **Shares** | **Weighted**** Average**** Exercise**** Price** |
| Outstanding                  at                  beginning    of                  the period | **2,521 **                      | **$14  **                          | **5.1**                                                                                  |   | 2,300  | $10   |   | 2,300  | $10   |
|    Granted                                                                                   | **541 **                        | **$18  **                          |                                                                                     |   | 407    | $38   |   | 409  | $38   |
|    Exercised                                                                                 | **(26)**                             | **$6**                                       |                                                                                     |   | (62)        | $9 |   | (176) | $7 |
|    Forfeited                                                                                 | **(5)**                              | **$29  **                          |                                                                                     |   | (9)         | $19   |   | (12) | $22   |
| Outstanding                  at                  end of the   period                         | **3,031 **                      | **$15  **                          | **5.0**                                                                                  |   | 2,636  | $14   |   | 2,521  | $14   |
|                                                                                                        |                                 |                                         |                                                                                     |   |        |   |   |   |   |
| Exercisable                  at                  end    of                  the period       | **2,034 **                      | **$11  **                          | **4.4**                                                                                  |   | 1,633  | $8 |   | 1,658  | $8 |

|                                                               | **Six                    Months                    Ended****June                    30** |               |                               |
|--------------------------------------------------------------------|------------------------------------------------------------------------------------------|--------------------|------------------------------------|
|                                                               | **2007**                                                                                 |     | **2006**                           |   | **2006** |
| Weighted                    average grant-date fair value          | **$18**                                                                                  |               | $38                                |   | $38 |
| Intrinsic                    value of options exercised            | **$   276     **                                 |               | $1,570**    ** |   | $3,840     |
| Fair                    value of                    options vested | **$4,382     **                                                 |               | $2,140**    ** |   | $2,638     |

----

|                                       |   | **Options                Outstanding** |   | **Options                Exercisable**       |
|--------------------------------------------|--------|----------------------------------------|--------|----------------------------------------------|
| **Exercise                Price****Range** |   | **Shares**                             |   | **Weighted****Average****Exercise****Price** |   | **Intrinsic****Value** |   | **Weighted****Average****Remaining****Contractual****Life                (years)** |   | **Shares** |   | **Weighted****Average****Exercise****Price** |   | **Intrinsic****Value** |
| $4                to                $6     |   | **540**                                |   | **$5**                                       |   |   |   | **3.0** |   | **540** |   | **$5** |   |   |
| $6                to                $7     |   | **336**                                |   | **$7**                                       |   |   |   | **5.7** |   | **336** |   | **$7** |   |   |
| $7                to                $8     |   | **467**                                |   | **$7**                                       |   |   |   | **5.5** |   | **415** |   | **$7** |   |   |
| $8                to                $9     |   | **332**                                |   | **$9**                                       |   |   |   | **3.8** |   | **332** |   | **$9** |   |   |
| $14                  to $19                |   | **541**                                |   | **$18 **                                |   |   |   | **6.8** |   | **—** |   | **$—** |   |   |
| $22                to $29                  |   | **416**                                |   | **$23 **                                |   |   |   | **4.6** |   | **275** |   | **$23 ** |   |   |
| $37                to $39                  |   | **399**                                |   | **$38 **                                |   |   |   | **5.6** |   | **136** |   | **$38 ** |   |   |
|                                       |   | **3,031**                              |   | **$15 **                                |   |   |   | **5.0** |   | **2,034** |   | **$11 ** |   |   |
| In-the-money:                              |   |                                   |   |                                         |   |   |   |   |   |   |   |   |   |   |
|    Outstanding              |   | **1,675**                              |   |                                         |   | **$12,427** |   |   |   |   |   |   |   |   |
|    Exercisable              |   |                                   |   |                                         |   |   |   |   |   | **1,623** |   |   |   | **$12,101** |

*Restricted      Shares*

----

|                                                                                                     | **June                  30****2007** |   | **June                  30****2006**                                                                |   | **2006**      |
|----------------------------------------------------------------------------------------------------------|--------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|---------------|
|                                                                                                     | **Shares**                           |   | **Weighted                  Average****Grant                  Date****Fair                  Value** |   | **Shares**    |   | **Weighted                  Average**** Grant                  Date****Fair                  Value** |   | **Shares** |   | **Weighted                  Average****Grant                  Date****Fair                  Value** |
| Nonvested                  at                  beginning of   the                  period | **396 **                        |   | **$24**                                                                                             |   | 258      |   | $16     |   | 258  |   | $16 |
|    Granted                                                                                | **172 **                        |   | **$18**                                                                                             |   | 138      |   | $38     |   | 139  |   | $38 |
|    Vested                                                                                 | **(122)**                            |   | **$11**                                                                                             |   | —  |   | $—     |   | —  |   | $— |
|    Forfeited                                                                              | **(2)**                              |   | **$38**                                                                                             |   | (1)           |   | $38     |   | (1) |   | $38 |
| Nonvested                  at                  end of the   period                        | **444 **                        |   | **$25**                                                                                             |   | 395      |   | $24     |   | 396  |   | $24 |

|                                                                 |   | **Six                Months                Ended****June                30** |         |     |   |
|----------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------------|----------|--------|
|                                                                 |   | **2007**                                                                     |    | **2006** |   | **2006** |   |
| Weighted                average grant-date fair value                |   |                                                                         | **$18**      |     |   | $38 |   |   | $38 |   |
| Fair                value                granted                     |   |                                                                         | **$3,087**   |     |   | $5,243 |   |   | $5,258 |   |
| Fair                value of                restricted shares vested |   |                                                                         | **$1,316**   |     |   | $                    — |   |   | $                    — |   |

*Shares*

|                                                                                                    |      | **Number                of Securities to be****Issued                Upon Exercise of****Outstanding                Options,****Warrants                and Rights** |    | **Weighted                Average**** Exercise                Price of****Outstanding                Options,**** Warrants                and Rights** |    | **Number                of Securities****Remaining                Available for****Future                Issuance Under Equity**** Compensation                Plans** |
|---------------------------------------------------------------------------------------------------------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity                compensation plansapproved                by                security holders      | **3,475** |                                                                                                                                                                 | **$13** |                                                                                                                                                             | **2**   |
| Equity                compensation plans not approved                by                security holders | —   |                                                                                                                                                                 | — |                                                                                                                                                             | — |
|       Total                                                               |      | **3,475**                                                                                                                                                            |    | **$13**                                                                                                                                                          |    | **2**                                                                                                                                                                       |

----

***10.***
***Income      Taxes***

----

***11.***
***Financial      Instruments***

| ·                   | $3.7                million                less than the amount of debt reported on the consolidated balance                sheet at                June 30, 2007 and |
|----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

***12.***
***Commitments and Contingencies***

*Warranties*

|                                                                                                                               | **Three                  Months Ended****June                  30** |              | **Six                  Months Ended****June                  30** |   |          |   |
|------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|-------------------|-------------------------------------------------------------------|--------|---------------|--------|
|                                                                                                                               | **2007**                                                            |              | **2006**                                                          |   | **2007**      |   | **2006** |   | **2006** |
| Balance                  at                  beginning of    the                  period                            | **$**                                                               | **7,067 **   |                                                              | $      | 6,818    |   | **$** | **7,155 ** |   | $ | 5,404  |   | $ | 5,404  |
|    Provision                  for warranties                                                                        |                                                                | **232 **     |                                                              |   | 975      |   |   | **345 ** |   |   | 2,413  |   |   | 3,009  |
|    Provision                  for warranties       from                  acquisitions |                                                                | **— ** |                                                              |   | —  |   |   | **— ** |   |   | 95  |   |   | 117  |
|    Warranty                  charges                                                                                |                                                                | **(297)**         |                                                              |   | (630)         |   |   | **(498)** |   |   | (749) |   |   | (1,375) |
| Balance                  at end                  of the    period                                                   | **$**                                                               | **7,002 **   |                                                              | $      | 7,163    |   | **$** | **7,002 ** |   | $ | 7,163  |   | $ | 7,155  |

*Legal      Proceedings*

----

***13.***
***Segment      Information***

*SelectBuild*

*BMC      West*

*Corporate*

----

|                                                |   | **Sales** |                             | **Income****(Loss)****Before** |       |         |   |                                                |          |                                    |   |
|-----------------------------------------------------|--------|-----------|----------------------------------|--------------------------------|------------|--------------|--------|-----------------------------------------------------|---------------|-----------------------------------------|--------|
|                                                |   | **Total** |                             | **Inter-****Segment**          |       | **Trade**    |   | **Taxes                  and**Minority**Interests** |          | **Depreciation****and****Amortization** |   | **Capital****(1)****Expenditures** |   | **Assets** |   |
| **Three                Months Ended June 30, 2007** |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |
| SelectBuild                                         |   | **$**     | **356,824**                      |                           | **$**      | **(73**      | **)**  | **$**                                               | **356,751**   |                                    | **$**  | **15,702** |   | **$** | **7,373** |   | **$** | **1,387** |   | **$** | **798,299** |   |
| BMC                West                             |   |      | **340,777**                      |                           |       | **(501**     | **)**  |                                                | **340,276**   |                                    |   | **33,207** |   |   | **2,864** |   |   | **4,856** |   |   | **455,814** |   |
| Corporate                                           |   |      | **—**                      |                           |       | **—**  |   |                                                | **—**   |                                    |   | **(10,726** | **)** |   | **1,127** |   |   | **1,098** |   |   | **129,595** |   |
|                                                |   | **$**     | **697,601**                      |                           | **$**      | **(574**     | **)**  | **$**                                               | **697,027**   |                                    |   | **38,183** |   | **$** | **11,364** |   | **$** | **7,341** |   | **$** | **1,383,708** |   |
| Interest                Expense                     |   |      |                   |                           |       |    |   |                                                |     |                                    |   | **9,501** |   |   |      |   |   |                  |   |   |    |   |
|                                                |   |      |                             |                           |       |         | **$**  | **28,682**                                          |          |                                    |   |   |   |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| **Three                Months Ended June 30, 2006** |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| SelectBuild                                         |   | $         | 503,342                          |                           | $          | (1,411       | )      | $                                                   | 501,931       |                                    | $      | 47,098 |   | $ | 6,936 |   | $ | 15,024 |   | $ | 776,038 |   |
| BMC                West                             |   |      | 420,637                          |                           |       | (576         | )      |                                                | 420,061       |                                    |   | 39,178 |   |   | 3,050 |   |   | 6,375 |   |   | 506,098 |   |
| Corporate                                           |   |      | —                          |                           |       | —      |   |                                                | —       |                                    |   | (21,959 | ) |   | 695 |   |   | 2,630 |   |   | 96,858 |   |
|                                                |   | $         | 923,979                          |                           | $          | (1,987       | )      | $                                                   | 921,992       |                                    |   | 64,317 |   | $ | 10,681 |   | $ | 24,029 |   | $ | 1,378,994 |   |
| Interest                Expense                     |   |      |                             |                           |       |         |   |                                                |          |                                    |   | 6,465 |   |   |   |   |   |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         | $      | 57,852                                              |          |                                    |   |   |   |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| **Six                Months Ended June 30, 2007**   |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| SelectBuild                                         |   | **$**     | **639,355**                      |                           | **$**      | **(133**     | **)**  | **$**                                               | **639,222**   |                                    | **$**  | **18,288** |   | **$** | **15,999** |   | **$** | **7,280** |   | **$** | **798,299** |   |
| BMC                West                             |   |      | **627,532**                      |                           |       | **(623**     | **)**  |                                                | **626,909**   |                                    |   | **44,638** |   |   | **6,019** |   |   | **6,827** |   |   | **455,814** |   |
| Corporate                                           |   |      | **—**                      |                           |       | **—**  |   |                                                | **—**   |                                    |   | **(23,783** | **)** |   | **2,093** |   |   | **2,101** |   |   | **129,595** |   |
|                                                |   | **$**     | **1,266,887**                    |                           | **$**      | **(756**     | **)**  | **$**                                               | **1,266,131** |                                    |   | **39,143** |   | **$** | **24,111** |   | **$** | **16,208** |   | **$** | **1,383,708** |   |
| Interest                Expense                     |   |      |                             |                           |       |         |   |                                                |          |                                    |   | **17,719** |   |   |   |   |   |   |   |   |   |   |
|                                                |   |      |                             | **$**                          | **21,424** |         |   |                                                |          |                                    |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| **Six                Months Ended June 30, 2006**   |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| SelectBuild                                         |   | $         | 1,001,672                        |                           | $          | (1,443       | )      | $                                                   | 1,000,229     |                                    | $      | 93,173 |   | $ | 13,563 |   | $ | 29,256 |   | $ | 776,038 |   |
| BMC                West                             |   |      | 807,513                          |                           |       | (1,193       | )      |                                                | 806,320       |                                    |   | 69,724 |   |   | 5,948 |   |   | 10,498 |   |   | 506,098 |   |
| Corporate                                           |   |      | —                          |                           |       | —      |   |                                                | —       |                                    |   | (44,194 | ) |   | 1,356 |   |   | 3,290 |   |   | 96,858 |   |
|                                                |   | $         | 1,809,185                        |                           | $          | (2,636       | )      | $                                                   | 1,806,549     |                                    |   | 118,703 |   | $ | 20,867 |   | $ | 43,044 |   | $ | 1,378,994 |   |
| Interest                Expense                     |   |      |                             |                           |       |         |   |                                                |          |                                    |   | 12,055 |   |   |   |   |   |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         | $      | 106,648                                             |          |                                    |   |   |   |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| **Year                Ended December 31, 2006**     |   |      |                             |                           |       |         |   |                                                |          |                                    |   |   |   |   |   |
| SelectBuild                                         |   | $         | 1,744,092                        |                           | $          | (12,278      | )      | $                                                   | 1,731,814     |                                    | $      | 148,416 |   | $ | 30,002 |   | $ | 33,409 |   | $ | 722,328 |   |
| BMC                West                             |   |      | 1,515,121                        |                           |       | (1,766       | )      |                                                | 1,513,355     |                                    |   | 124,523 |   |   | 12,178 |   |   | 33,135 |   |   | 487,703 |   |
| Corporate                                           |   |      | —                          |                           |       | —      |   |                                                | —       |                                    |   | (75,484 | ) |   | 3,104 |   |   | 6,174 |   |   | 118,880 |   |
|                                                |   | $         | 3,259,213                        |                           | $          | (14,044      | )      | $                                                   | 3,245,169     |                                    |   | 197,455 |   | $ | 45,284 |   | $ | 72,718 |   | $ | 1,328,911 |   |
| Interest                Expense                     |   |      |                             |                           |       |         |   |                                                |          |                                    |   | 29,082 |   |   |   |   |   |   |   |   |   |   |
|                                                |   |      |                             |                           |       |         | $      | 168,373                                             |          |                                    |   |   |   |   |   |   |   |   |

----

***14.***
***Quarterly      Results of Operations***

|                                                                                                                                            | **First** |              | **Second** |   | **Third**   |   | **Fourth** |
|-------------------------------------------------------------------------------------------------------------------------------------------------|-----------|-------------------|------------|--------|-------------|--------|------------|
| **2007**                                                                                                                                        |      |              |       |   |        |   |       |
|                      Sales                                                                                                       | **$**     | **569,104 ** |       | **$**  | **697,027** |   |       | **—** |   |   | **—** |
|                      Income from operations                                                                                      | **$**     | **960 **     |       | **$**  | **38,183**  |   |       | **—** |   |   | **—** |
|                      Net income (loss)                                                                                           | **$**     | **(4,966)**       |       | **$**  | **19,417**  |   |       | **—** |   |   | **—** |
|                                                                                                                                            |      |              |       |   |        |   |       |   |   |   |   |
|                      Net income (loss) per diluted common                          share |      | **$(0.17)**       |       |   | **$0.66**   |   |       | **—** |   |   | **—** |
|                      Common share prices:                                                                                        |      |              |       |   |        |   |       |   |   |   |   |
| High                                                                                                                                            |      | **$24.93 **  |       |   | **$18.36**  |   |       | **—** |   |   | **—** |
| Low                                                                                                                                             |      | **$18.11 **  |       |   | **$13.34**  |   |       | **—** |   |   | **—** |
|                                                                                                                                            |      |              |       |   |        |   |       |   |   |   |   |
| **2006**                                                                                                                                        |      |              |       |   |        |   |       |
|                      Sales                                                                                                       | $         | 884,557      |       | $      | 921,992     |   | $          | 830,599    |   | $ | 608,021    |
|                      Income from operations                                                                                      | $         | 54,386       |       | $      | 64,317      |   | $          | 64,271    |   | $ | 14,481    |
|                      Net income                                                                                                  | $         | 28,069       |       | $      | 34,175      |   | $          | 35,348    |   | $ | 4,482    |
|                                                                                                                                            |      |              |       |   |        |   |       |   |   |   |   |
|                      Net income per diluted common share                                                                         |      | $0.95        |       |   | $1.16       |   |       | $1.20    |   |   | $0.15    |
|                      Common share prices:                                                                                        |      |              |       |   |        |   |       |   |   |   |   |
| High                                                                                                                                            |      | $40.32       |       |   | $38.29      |   |       | $28.01    |   |   | $27.72    |
| Low                                                                                                                                             |      | $32.27       |       |   | $25.36      |   |       | $20.84    |   |   | $23.95    |

----

**Item      2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION**

** AND      RESULTS OF OPERATIONS**

**Business      Environment and Executive Overview**

**SelectBuild**
**BMC West**

***Acquisition      History***

**SelectBuild**

*2007*

| ·       | remaining                27%                interest in our existing plumbing services business in Phoenix and                Tucson,                Arizona (April) |
|--------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·       | concrete                services in Fresno, California                (March) |
|--------------------------------------------|-------------------------------------------------------------------------------|

*2006*

| ·       | distribution                services in Southern California                (December) |
|--------------------------------------------|---------------------------------------------------------------------------------------|

|  ·       | remaining                49%                interest in our existing concrete services business in Arizona                (November) |
|--------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·       | window                installation services in Phoenix, Arizona                (August) |
|--------------------------------------------|-----------------------------------------------------------------------------------------|

| ·       | framing                services in Southern California                (July) |
|--------------------------------------------|------------------------------------------------------------------------------|

| ·       | concrete                services in Northern Arizona                (April) |
|--------------------------------------------|-----------------------------------------------------------------------------|

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

----

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

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

**BMC West**

*2006*

| ·       | building                materials distributor and truss manufacturer in Eastern Idaho                (June) |
|--------------------------------------------|-------------------------------------------------------------------------------------------------------------|

| ·       | building                materials distributor and millwork services in Houston, Texas                (February) |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------|

**RESULTS      OF OPERATIONS**

***SECOND      QUARTER OF 2007 COMPARED TO 2006***

|                                                                                   | **Three                  Months Ended****June                  30** |
|----------------------------------------------------------------------------------------|---------------------------------------------------------------------|
|                                                                                   | **2007**                                                            |   | **2006** |
| **Sales**                                                                              |                                                                |   |   |   |   |   |   |   |   |   |   |
|                      Construction services                              | **$**                                                               | **406 ** |   |   | **58.2%** |   | $ | 561  |   |   | 60.8% |
|                      Building products                                  |                                                                | **291 ** |   |   | **41.8   ** |   |   | 361  |   |   | 39.2 ** **  |
| **  Total                  sales**                                           |                                                                | **697 ** |   |   | **100.0   ** |   |   | 922  |   |   | 100.0 ** **  |
|                                                                                   |                                                                |   |   |   |   |   |   |   |   |   |   |
| **Costs                  and operating expenses**                                      |                                                                |   |   |   |   |   |   |   |   |   |   |
|                      Cost of goods sold                                 |                                                                |   |   |   |   |   |   |   |   |   |   |
|    Construction                  services                               |                                                                | **345 ** |   |   | **85.0   ** |   |   | 460  |   |   | 82.0 ** **  |
|    Building                  products                                   |                                                                | **212 ** |   |   | **72.9   ** |   |   | 265  |   |   | 73.4 ** **  |
|    Impairment                  of assets                                |                                                                | **— ** |   |   | **—   ** |   |   | 2  |   |   | 0.2 ** **  |
|    Selling,                  general and administrative expenses        |                                                                | **112 ** |   |   | **16.1   ** |   |   | 132  |   |   | 14.3 ** **  |
|    Other                  income, net                                   |                                                                | **(10)** |   |   | **(1.5)                   ** |   |   | (1) |   |   | — ** **  |
|    Total                  costs and                  operating expenses |                                                                | **659 ** |   |   | **94.5   ** |   |   | 858  |   |   | 93.1 ** **  |
|                                                                                   |                                                                |   |   |   |   |   |   |   |   |   |   |
| **Income                  from operations**                                            |                                                                | **38 ** |   |   | **5.5   ** |   |   | 64  |   |   | 6.9 ** **  |
|                                                                                   |                                                                |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                      |                                                                | **10 ** |   |   | **1.4   ** |   |   | 6  |   |   | 0.7 ** **  |
| Income                  taxes                                                          |                                                                | **9 ** |   |   | **1.4   ** |   |   | 21  |   |   | 2.2 ** **  |
| Minority                  interests income, net of income taxes                        |                                                                | **— ** |   |   | **—   ** |   |   | (3) |   |   | (0.3)** **  |
|                                                                                   |                                                                |   |   |   |   |   |   |   |   |   |   |
| **Net                  income**                                                        | **$**                                                               | **19 ** |   |   | **2.7   ** |   | $ | 34  |   |   | 3.7 ** **  |
|                                                                                   |                                                                |   |   |   |   |   |   |   |   |   |   |
| **Net                  income per diluted share**                                      |                                                                | **$0.66 ** |   |   |   |   |   | $1.16  |   |   |   |

----

***Consolidated      Financial Results***

|                                                     | **2007** |    | **2006** |   | **$****Change** |   | **%**** Change** |
|----------------------------------------------------------|----------|---------|----------|--------|-----------------|--------|-----------------------|
| **Sales**                                                |     |    |     |   |            |   |                  |   |   |   |   |
|    Construction                  services | **$**    | **406** |     | $      | 561             |   | $                     | (155) |   |   | (28)% |
|    Building                  products     |     | **291** |     |   | 361             |   |                  | (70) |   |   | (19)% |
|                                                     | **$**    | **697** |     | $      | 922             |   | $                     | (225) |   |   | (24)% |
|                                                     |     |    |     |   |            |   |                  |   |   |   |   |
| **Income                  from operations**              | **$**    | **38**  |     | $      | 64              |   | $                     | (26) |   |   | (41)% |

----

| ·                    | lower                construction services sales volume and |
|----------------------------------------------------|-------------------------------------------------------------|

| ·      | a                higher                portion of selling, general and administrative expenses from building                products. |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|

*Interest      Expense*

*Income        Taxes*

***Business      Segments***

|                      | **2007**  |        | **2006**                                       |
|---------------------------|-----------|-------------|------------------------------------------------|
|                      | **Sales** |        | **Income                  from****Operations** |   | **Sales** |   | **Income                  from****Operations** |
| SelectBuild               | **$**     | **357**     |                                           | **$** | **15 ** |   | $ | 501 |   | $ | 47  |
| BMC                  West |      | **340**     |                                           |   | **34 ** |   |   | 421 |   |   | 39  |
| Corporate                 |      | **—** |                                           |   | **(11)** |   |   | — |   |   | (22) |
|                      | **$**     | **697**     |                                           | **$** | **38 ** |   | $ | 922 |   | $ | 64  |

***SelectBuild***

|                                                  | **2007** |          | **2006** |   | **$****Change** |   | **%****Change** |
|-------------------------------------------------------|----------|---------------|----------|--------|-----------------|--------|-----------------|
| **Sales**                                             | **$**    | **357 ** |     | $      | 501             |   | $               | (144) |   |   | (29)% |
|    Less:                  Acquisitions |     | **(38)**      |     |   | —         |   |            | (38) |   |   | —    |
|                                                  | **$**    | **319 ** |     | $      | 501             |   | $               | (182) |   |   | (36)% |
|                                                  |     |          |     |   |            |   |            |   |   |   |   |
| **Income                  from operations**           | **$**    | **15 **  |     | $      | 47              |   | $               | (32) |   |   | (68)% |
|    Less:                  Acquisitions |     | **(6)**       |     |   | —         |   |            | (6) |   |   | —    |
|                                                  | **$**    | **9 **   |     | $      | 47              |   | $               | (38) |   |   | (81)% |

| ·       | compensation,                including incentives, |
|--------------------------------------------|----------------------------------------------------|

| ·       | operating                performance payment for a recent acquisition                and |
|--------------------------------------------|------------------------------------------------------------------------------------------|

| ·       | insurance. |
|--------------------------------------------|------------|

----

***BMC      West***

|                                                  | **2007** |              | **2006** |   | **$**** Change** |   | **%****Change** |
|-------------------------------------------------------|----------|-------------------|----------|--------|-----------------------|--------|-----------------|
| **Sales**                                             | **$**    | **340 **     |     | $      | 421                   |   | $               | (81) |   |   | (19)% |
|    Less:                  Acquisitions |     | **— ** |     |   | —               |   |            | —  |   |   | —    |
|                                                  | **$**    | **340 **     |     | $      | 421                   |   | $               | (81) |   |   | (19)% |
|                                                  |     |              |     |   |                  |   |            |   |   |   |   |
| **Income                  from operations**           | **$**    | **34 **      |     | $      | 39                    |   | $               | (5) |   |   | (13)% |
|    Less:                  Acquisitions |     | **— ** |     |   | —               |   |            | —  |   |   | —    |
|                                                  | **$**    | **34 **      |     | $      | 39                    |   | $               | (5) |   |   | (13)% |

| ·                    | compensation,                including incentives, |
|----------------------------------------------------|----------------------------------------------------|

| ·       | delivery                and                handling and |
|--------------------------------------------|---------------------------------------------------------|

| ·       | occupancy. |
|--------------------------------------------|------------|

***Corporate***

|                                    | **2007** |   | **2006** |   | **$Change** |   | **%****Change** |
|-----------------------------------------|----------|--------|----------|--------|-------------|--------|-----------------|
| **Operating                  expenses** | **$**    | **11** |     | $      | 22          |   | $               | (11) |   |   | (50)% |

----

***SIX      MONTHS OF 2007 COMPARED TO 2006***

|                                                                                         | **Six                  Months Ended****June                  30** |
|----------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
|                                                                                         | **2007**                                                          |   | **2006** |
| **Sales**                                                                                    |                                                              |   |   |   |   |   |   |   |   |   |   |
|                      Construction services                                    | **$**                                                             | **725 ** |   |   | **57.3%** |   | $ | 1,110  |   |   | 61.4% |
|                      Building products                                        |                                                              | **541 ** |   |   | **42.7   ** |   |   | 697  |   |   | 38.6    |
| **   Total                  sales**                                           |                                                              | **1,266 ** |   |   | **100.0   ** |   |   | 1,807  |   |   | 100.0    |
|                                                                                         |                                                              |   |   |   |   |   |   |   |   |   |   |
| **Costs                  and operating expenses**                                            |                                                              |   |   |   |   |   |   |   |   |   |   |
|                      Cost of goods sold                                       |                                                              |   |   |   |   |   |   |   |   |   |   |
|    Construction                  services                                     |                                                              | **620 ** |   |   | **85.5   ** |   |   | 914  |   |   | 82.3    |
|    Building                  products                                         |                                                              | **393 ** |   |   | **72.6   ** |   |   | 512  |   |   | 73.5    |
|                      Impairment of assets                                     |                                                              | **— ** |   |   | **—   ** |   |   | 2  |   |   | 0.1    |
|                      Selling, general and administrative expenses             |                                                              | **226 ** |   |   | **17.9   ** |   |   | 262  |   |   | 14.5    |
|                      Other income, net                                        |                                                              | **(12)** |   |   | **(1.0)  ** |   |   | (2) |   |   | (0.1)   |
|     Total                  costs and                  operating expenses |                                                              | **1,227 ** |   |   | **96.9   ** |   |   | 1,688  |   |   | 93.4    |
|                                                                                         |                                                              |   |   |   |   |   |   |   |   |   |   |
| **Income                  from operations**                                                  |                                                              | **39 ** |   |   | **3.1   ** |   |   | 119  |   |   | 6.6    |
|                                                                                         |                                                              |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                            |                                                              | **18 ** |   |   | **1.4   ** |   |   | 12  |   |   | 0.7    |
| Income                  taxes                                                                |                                                              | **7 ** |   |   | **0.6   ** |   |   | 39  |   |   | 2.2    |
| Minority                  interests income, net of income taxes                              |                                                              | **— ** |   |   | **—   ** |   |   | (6) |   |   | (0.3)   |
|                                                                                         |                                                              |   |   |   |   |   |   |   |   |   |   |
| **Net                  income**                                                              | **$**                                                             | **14 ** |   |   | **1.1   ** |   | $ | 62  |   |   | 3.4    |
|                                                                                         |                                                              |   |   |   |   |   |   |   |   |   |   |
| **Net                  income per diluted share**                                            |                                                              | **$0.49 ** |   |   |   |   |   | $2.10  |   |   |   |

***Consolidated      Financial Results***

----

|                                                     | **2007** |      | **2006** |   | **$**** Change** |   | **%****Change** |
|----------------------------------------------------------|----------|-----------|----------|--------|-----------------------|--------|-----------------|
| **Sales**                                                |     |      |     |   |                  |   |            |   |   |   |   |
|    Construction                  services | **$**    | **725**   |     | $      | 1,110                 |   | $               | (385) |   |   | (35)% |
|    Building                  products     |     | **541**   |     |   | 697                   |   |            | (156) |   |   | (22)% |
|                                                     | **$**    | **1,266** |     | $      | 1,807                 |   | $               | (541) |   |   | (30)% |
|                                                     |     |      |     |   |                  |   |            |   |   |   |   |
| **Income                  from operations**              | **$**    | **39**    |     | $      | 119                   |   | $               | (80) |   |   | (67)% |

| ·     | lower                construction services sales volume, |
|--------------------------------|----------------------------------------------------------|

| ·      | decreases                in                commodity wood product prices and |
|--------------------------------------|------------------------------------------------------------------------------|

| ·      | a                higher                portion of selling, general and administrative expenses from building                products. |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|

*Interest      Expense*

*Income        Taxes*

***Business      Segments***

|                      | **2007**  |        | **2006**                                             |
|---------------------------|-----------|-------------|------------------------------------------------------|
|                      | **Sales** |        | **Income                  from**** Operations** |   | **Sales** |   | **Income                  from**** Operations** |
| SelectBuild               | **$**     | **639**     |                                                 | **$** | **18 ** |   | $ | 1,000 |   | $ | 93  |
| BMC                  West |      | **627**     |                                                 |   | **45 ** |   |   | 807 |   |   | 70  |
| Corporate                 |      | **—** |                                                 |   | **(24)** |   |   | — |   |   | (44) |
|                      | **$**     | **1,266**   |                                                 | **$** | **39 ** |   | $ | 1,807 |   | $ | 119  |

----

***SelectBuild***

|                                                  | **2007** |          | **2006** |   | **$****Change** |   | **%**** Change** |
|-------------------------------------------------------|----------|---------------|----------|--------|-----------------|--------|-----------------------|
| **Sales**                                             | **$**    | **639 ** |     | $      | 1,000           |   | $                     | (361) |   |   | (36)% |
|    Less:                  Acquisitions |     | **(65)**      |     |   | —         |   |                  | (65) |   |   | —    |
|                                                  | **$**    | **574 ** |     | $      | 1,000           |   | $                     | (426) |   |   | (43)% |
|                                                  |     |          |     |   |            |   |                  |   |   |   |   |
| **Income                  from operations**           | **$**    | **18 **  |     | $      | 93              |   | $                     | (75) |   |   | (81)% |
|    Less:                  Acquisitions |     | **(9)**       |     |   | —         |   |                  | (9) |   |   | —    |
|                                                  | **$**    | **9 **   |     | $      | 93              |   | $                     | (84) |   |   | (90)% |

| ·                    | compensation,                including incentives, |
|----------------------------------------------------|----------------------------------------------------|

| ·      | operating                performance payment for a recent acquisition                and |
|--------------------------------------|------------------------------------------------------------------------------------------|

| ·      | insurance. |
|--------------------------------------|------------|

***BMC      West***

|                                                  | **2007** |              | **2006** |   | **$Change** |   | **%Change** |
|-------------------------------------------------------|----------|-------------------|----------|--------|-------------|--------|-------------|
| **Sales**                                             | **$**    | **627 **     |     | $      | 807         |   | $           | (180) |   |   | (22)% |
|    Less:                  Acquisitions |     | **(9)**           |     |   | —     |   |        | (9) |   |   | —    |
|                                                  | **$**    | **618 **     |     | $      | 807         |   | $           | (189) |   |   | (23)% |
|                                                  |     |              |     |   |        |   |        |   |   |   |   |
| **Income                  from operations**           | **$**    | **45 **      |     | $      | 70          |   | $           | (25) |   |   | (36)% |
|    Less:                  Acquisitions |     | **— ** |     |   | —     |   |        | —  |   |   | —    |
|                                                  | **$**    | **45 **      |     | $      | 70          |   | $           | (25) |   |   | (36)% |

----

| ·      | compensation,                including incentives and |
|--------------------------------------|-------------------------------------------------------|

| ·      | delivery                and                handling expenses. |
|--------------------------------------|---------------------------------------------------------------|

***Corporate***

|                                    | **2007** |   | **2006** |   | **$Change** |   | **%Change** |
|-----------------------------------------|----------|--------|----------|--------|-------------|--------|-------------|
| **Operating                  expenses** | **$**    | **24** |     | $      | 44          |   | $           | (20) |   |   | (46)% |

----

**LIQUIDITY      AND CAPITAL RESOURCES**

*Operations*

*Capital      Investment and Acquisitions*

| ·      | 2006                acquisition of the remaining interests in a concrete block masonry                and                concrete services business and a concrete services                business, |
|--------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·       | 2007                acquisition of the remaining interest in a plumbing services                business, |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------|

| ·       | 2007                acquisition of a concrete services business                and |
|--------------------------------------------|------------------------------------------------------------------------------------|

| ·       | purchase                price retained for the settlement period for four businesses. |
|--------------------------------------------|--------------------------------------------------------------------------------------------|

*Financing*

----

*Revolver*

*Term      Note*

*Other*

*Expansion      of Credit Facility, Covenants and Maturities*

| 2007       |   | $      | 2,567   |   |
|------------|--------|--------|---------|--------|
| 2008       |   |   | 4,792   |   |
| 2009       |   |   | 4,109   |   |
| 2010       |   |   | 3,824   |   |
| 2011       |   |   | 90,709  |   |
| Thereafter |   |   | 332,445 |   |
|       |   | $      | 438,446 |   |

*Hedging      Activities*

----

*Repurchase      Program*

*Common      Shares*

----

**OFF-BALANCE      SHEET ARRANGEMENTS**

**DISCLOSURES      OF CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS**

----

**CRITICAL        ACCOUNTING ESTIMATES**

|  | · | *Revenue                  Recognition for Construction                  Services* |
|--|--------|-----------------------------------------------------------------------------------|

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

|  | · | *Goodwill* |
|--|--------|------------|

----

|  | · | *Insurance                Deductible Reserves* |
|--|--------|------------------------------------------------|

|  | · | *Warranties* |
|--|--------|--------------|

|  | · | *Share-based                Compensation* |
|--|--------|-------------------------------------------|

----

**RECENT      ACCOUNTING PRINCIPLES**

*The Fair Value Option for Financial      Assets and Financial Liabilities - Including an Amendment of FASB Statement      No.      115*

*Fair Value Measurements*

*Accounting for Uncertainty in Income Taxes. *

**BUSINESS      RISKS AND FORWARD-LOOKING STATEMENTS**

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

| ·       | our                business                model; |
|--------------------------------------------|---------------------------------------------------|

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

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

----

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

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

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

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

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

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

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

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

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

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

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

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

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

----

**Item      3**-*** *****Quantitative and Qualitative      Disclosures about Market Risk**

*Commodity      Risk*

*Interest      Rate Risk*

----

**Item      4***-***Controls and      Procedures** 

*Evaluation      of Disclosure Controls and Procedures*

*Changes      in Internal Controls Over Financial Reporting*

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**PART      II - OTHER INFORMATION**

**Item      1**-**Legal      Proceedings**

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**Item      1A**-**Risk      Factors**

*Risks      Related to Our Business*

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

*There      are risks associated with our business model.*

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*Our      business is subject to intense competition.*

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

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

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

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

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

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

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*Risks      Related to Our Shares*

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

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

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**Item      2**-**Unregistered Sales of Equity      Securities and Use of Proceeds**

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**Item      3**-**Defaults Upon Senior      Securities**

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**Item      4**-**Submission of Matters to a Vote of      Security Holders**

*Election      of Board of Directors*

|                                                 |   | **For**    |   | **Withheld** |
|------------------------------------------------------|--------|------------|--------|--------------|
| Robert                E.                Mellor       |   | 23,494,156 |   | 2,979,615    |
| Sara                L.                Beckman        |   | 23,816,770 |   | 2,657,001    |
| Eric                S.                Belsky         |   | 23,863,120 |   | 2,610,651    |
| James                K.                Jennings, Jr. |   | 23,864,141 |   | 2,609,630    |
| Norman                J.                Metcalfe     |   | 23,867,893 |   | 2,605,878    |
| David                M.                Moffett       |   | 23,820,330 |   | 2,653,441    |
| R.                Scott                Morrison, Jr. |   | 23,819,160 |   | 2,654,611    |
| Peter                S.                O’Neill |   | 23,617,952 |   | 2,855,819    |
| Richard                G.                Reiten      |   | 23,865,891 |   | 2,607,880    |
| Norman                R.                Walker       |   | 23,854,845 |   | 2,618,926    |

*Amended      2004 Incentive and Performance Plan*

| ·       | increase                limitation on annual incentive compensation to $5 million from $1.5                million, |
|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------|

| ·       | eliminate                200% base salary limitation for annual incentive compensation                and |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------|

| ·       | clarify                $5                million annual incentive compensation limitation does not include                options                or share appreciation rights. |
|--------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **For**    |   | **Withheld** |   | **Abstain** |   | **Not                Voted** |
|------------|--------|--------------|--------|-------------|--------|------------------------------|
| 16,500,930 |   | 1,646,601    |   | 52,634      |   | 8,273,606                    |

*Ratification      of Independent Registered Public Accountants*

| **For**    |   | **Withheld** |   | **Abstain** |
|------------|--------|--------------|--------|-------------|
| 26,280,668 |   | 146,674      |   | 46,429      |

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**Item      5**-**Other      Information**

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**Item      6**-**Exhibits**

| (a)    |   | Exhibits   |   |                                                                                                                                                                               |
|--------|--------|------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |       |   |                                                                                                                                                                               |
|   |   | **Number** |   | **Description**                                                                                                                                                                    |
|   |   |       |   |                                                                                                                                                                               |
|   |   | 10.46      |   | Building                Materials Holding Corporation General Terms and Conditions BMC West                Corporation Key Management Long-Term Cash Incentive                Plan |
|   |   |       |   |                                                                                                                                                                               |
|   |   | 11.0       |   | Statement                regarding computation of earnings per share (see Note 2 to Consolidated                Financial Statements)                                              |
|   |   |       |   |                                                                                                                                                                               |
|   |   | 31.1       |   | Section                302                Certification                                                                                                                            |
|   |   |       |   |                                                                                                                                                                               |
|   |   | 31.2       |   | Section                302                Certification                                                                                                                            |
|   |   |       |   |                                                                                                                                                                               |
|   |   | 32.0       |   | Section                906                Certifications                                                                                                                           |

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**SIGNATURES**

|                                              | BUILDING                MATERIALS HOLDING CORPORATION                                                                                                                                 |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Date:                July                31, 2007 | */s/                Robert E. Mellor*                                                                                                                                                      |   |
|                                              | Robert                E.                MellorChairman                of                the Board, President and Chief Executive Officer(Principal                Executive Officer)  |
| Date:                July                31, 2007 | */s/                William M. Smartt*                                                                                                                                                     |   |
|                                              | William                M.                SmarttSenior                Vice                President and Chief Financial Officer (Principal                Financial Officer)                |

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