**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**                                                                                                                                     |   |               |
|                                                                                                                                                                                  |   |               |
|  **Item                1**-                Financial                Statements (unaudited)                                                                                       |   | 2                  |
|                                                                                                                                                                                  |   |               |
| Consolidated                Statements of Operations for the Three and Nine                Months Ended September                30, 2007                and                2006 |   | 2                  |
|                                                                                                                                                                                  |   |               |
|    Consolidated                Balance Sheets as of September 30, 2007 and                December 31, 2006                                                            |   | 3                  |
|                                                                                                                                                                                  |   |               |
|    Consolidated                Statements of Shareholders’ Equity for the Nine                Months Ended September                30, 2007 and 2006            |   | 4                  |
|                                                                                                                                                                                  |   |               |
|    Consolidated                Statements of Cash Flows for the Nine Months                Ended September                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                                             |   | 50                 |
|                                                                                                                                                                                  |   |               |
| ** Item                4**                - Controls and Procedures                                                                                                              |   | 51                 |
|                                                                                                                                                                                  |   |               |
| **PART                II - OTHER INFORMATION**                                                                                                                                        |   |               |
|                                                                                                                                                                                  |   |               |
| ** Item                1**                - Legal Proceedings                                                                                                                    |   | 52                 |
|                                                                                                                                                                                  |   |               |
| ** Item                1A**                - Risk Factors                                                                                                                        |   | 53                 |
|                                                                                                                                                                                  |   |               |
| ** Item                2**                - Unregistered Sales of Equity Securities and Use of                Proceeds                                                           |   | 57                 |
|                                                                                                                                                                                  |   |               |
| ** Item                3**                - Defaults Upon Senior Securities                                                                                                      |   | 58                 |
|                                                                                                                                                                                  |   |               |
| ** Item                4**                - Submission of Matters to a Vote of Security                Holders                                                                   |   | 59                 |
|                                                                                                                                                                                  |   |               |
| ** Item                5**                - Other Information                                                                                                                    |   | 60                 |
|                                                                                                                                                                                  |   |               |
| ** Item                6**                - Exhibits                                                                                                                             |   | 61                 |
|                                                                                                                                                                                  |   |               |
| **SIGNATURES**                                                                                                                                                                        |   | 62                 |

----

**Item      1 - Financial Statements**

**Building      Materials Holding Corporation**

**Consolidated      Statements of Operations**

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

**(unaudited)**

|                                                                                                                                                           |   | **Three                Months Ended****September                30** |        | **Nine                Months Ended****September                30** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|-------------|---------------------------------------------------------------------|--------|
|                                                                                                                                                           |   | **2007**                                                             |        |  **2006**                                                      |   |  **2007** |   |  **2006** |   |
| **Sales**                                                                                                                                                      |   |                                                                 |        |                                                           |   |    |   |    |   |
|    Construction                services                                                                                                         |   | **$**                                                                | **351,738** |                                                                | $      | 485,790 |   | **$** | **1,076,735** |   | $ | 1,595,579 |   |
|    Building                products                                                                                                             |   |                                                                 | **266,542** |                                                                |   | 332,004 |   |   | **789,078** |   |   | 1,010,920 |   |
| **      Total                sales**                                                                                             |   |                                                                 | **618,280** |                                                                |   | 817,794 |   |   | **1,865,813** |   |   | 2,606,499 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
| **Costs                and operating expenses**                                                                                                                |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
|    Cost                of goods sold                                                                                                            |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
|       Construction                services                                                                                       |   |                                                                 | **307,192** |                                                                |   | 400,371 |   |   | **927,459** |   |   | 1,314,028 |   |
|       Building                products                                                                                           |   |                                                                 | **193,073** |                                                                |   | 238,676 |   |   | **572,578** |   |   | 737,168 |   |
|    Impairment                of assets                                                                                                          |   |                                                                 | **—** |                                                                |   | — |   |   | **—** |   |   | 2,237 |   |
|    Selling,                general and administrative       expenses                                         |   |                                                                 | **109,718** |                                                                |   | 117,790 |   |   | **332,729** |   |   | 377,311 |   |
|    Other                income, net                                                                                                             |   |                                                                 | **(1,838**  | **)**                                                               |   | (1,777 | ) |   | **(14,189** | **)** |   | (4,026 | ) |
|       Total                costs and operating expenses                                                                          |   |                                                                 | **608,145** |                                                                |   | 755,060 |   |   | **1,818,577** |   |   | 2,426,718 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
| **Income                from operations**                                                                                                                      |   |                                                                 | **10,135**  |                                                                |   | 62,734 |   |   | **47,236** |   |   | 179,781 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
| Interest                expense                                                                                                                                |   |                                                                 | **8,751**   |                                                                |   | 8,566 |   |   | **26,470** |   |   | 20,621 |   |
|  **Income                from continuing operations****   before                income taxes and minority****   interests** |   |                                                                 | **1,384**   |                                                                |   | 54,168 |   |   | **20,766** |   |   | 159,160 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
| Income                taxes                (benefit)                                                                                                           |   |                                                                 | **(148**    | **)**                                                               |   | 17,370 |   |   | **5,674** |   |   | 55,068 |   |
| Minority                interests income, net of income taxes                                                                                                  |   |                                                                 | **(414**    | **)**                                                               |   | (2,398 | ) |   | **(790** | **)** |   | (8,472 | ) |
| **Income                from continuing operations**                                                                                                           |   |                                                                 | **1,118**   |                                                                |   | 34,400 |   |   | **14,302** |   |   | 95,620 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
|    Income                from discontinued operations       prior                to sale                          |   |                                                                 | **1,178**   |                                                                |   | 1,537 |   |   | **3,220** |   |   | 3,193 |   |
|    Gain                on sale of discontinued operations                                                                                       |   |                                                                 | **3,722**   |                                                                |   | — |   |   | **3,722** |   |   | — |   |
|    Income                taxes                                                                                                                  |   |                                                                 | **1,850**   |                                                                |   | 589 |   |   | **2,625** |   |   | 1,221 |   |
| **Income                from discontinued operations**                                                                                                         |   |                                                                 | **3,050**   |                                                                |   | 948 |   |   | **4,317** |   |   | 1,972 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
| **Net                income**                                                                                                                                  |   | **$**                                                                | **4,168**   |                                                                | $      | 35,348 |   | **$** | **18,619** |   | $ | 97,592 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
| **Net                income per share:**                                                                                                                       |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
|    Continuing                operations                                                                                                         |   |                                                                      | **$0.04**   |                                                                |   | $1.20 |   |   | **$0.50** |   |   | $3.35 |   |
|    Discontinued                operations                                                                                                       |   |                                                                 | **0.10**    |                                                                |   | 0.04 |   |   | **0.15** |   |   | 0.07 |   |
|       Basic                                                                                                                      |   |                                                                 | **$0.14**   |                                                                |   | $1.24 |   |   | **$0.65** |   |   | $3.42 |   |
|                                                                                                                                                           |   |                                                                 |        |                                                                |   |   |   |   |   |   |   |   |   |
|    Continuing                operations                                                                                                         |   |                                                                 | **$0.04**   |                                                                |   | $1.17 |   |   | **$0.48** |   |   | $3.23 |   |
|    Discontinued                operations                                                                                                       |   |                                                                 | **0.10**    |                                                                |   | 0.03 |   |   | **0.15** |   |   | 0.07 |   |
|       Diluted                                                                                                                    |   |                                                                 | **$0.14**   |                                                                |   | $1.20 |   |   | **$0.63** |   |   | $3.30 |   |

----

**Building      Materials Holding Corporation**

**Consolidated      Balance Sheets**

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

**(unaudited)**

|                                                                |   | **September                  30** |   | **December                  31** |      |   |                                                                                                    | **September                  30** |          | **December                  31** |   |
|---------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------|-----------|--------|---------------------------------------------------------------------------------------------------------|-----------------------------------|---------------|----------------------------------|--------|
|                                                                |   | **2007**                          |   | **2006**                         |      |   |                                                                                                    | **2007**                          |          | **2006**                         |   |
| **Assets**                                                          |   |                              |   |                             |      |   | **Liabilities,                  Minority Interests and****Shareholders’                  Equity** |                              |          |                             |   |   |   |
| Cash                  and cash                  equivalents         | **$**  | **33,604**                        |   | $                                | 74,272    |   |                                                                                                    |                              |          |                             |   |   |   |
| Marketable                  securities                              |   | **6,623**                         |   |                             | 4,337     |   | Accounts                  payable                                                                       | **$**                             | **115,432**   |                             | $      | 109,129 |   |
| Receivables,                  net of allowances                     |   |                              |   |                             |      |   | Accrued                  compensation                                                                   |                              | **42,079**    |                             |   | 48,180 |   |
|    of                  $4,968 and $4,487             |   | **292,048**                       |   |                             | 276,497   |   | Insurance                  deductible reserves                                                          |                              | **28,824**    |                             |   | 24,931 |   |
| Inventory                                                           |   | **135,954**                       |   |                             | 141,457   |   | Other                  accrued                  liabilities                                             |                              | **36,419**    |                             |   | 103,145 |   |
| Unbilled                  receivables                               |   | **54,585**                        |   |                             | 43,527    |   | Billings                  in                  excess of costs and estimated                             |                              |          |                             |   |   |   |
| Deferred                  income taxes                              |   | **11,456**                        |   |                             | 8,914     |   |    earnings                                                                              |                              | **30,412**    |                             |   | 27,622 |   |
| Prepaid                  expenses and other                         |   | **15,075**                        |   |                             | 11,153    |   | Current                  portion of long-term debt                                                      |                              | **4,971**     |                             |   | 8,143 |   |
| Assets                  of                  discontinued operations |   | **1,560**                         |   |                             | 6,254     |   | Liabilities                  of                  discontinued operations                                |                              | **2,348**     |                             |   | 2,461 |   |
| **   Current                  assets**               |   | **550,905**                       |   |                             | 566,411   |   | **   Current                  liabilities**                                              |                              | **260,485**   |                             |   | 323,611 |   |
|                                                                |   |                              |   |                             |      |   |                                                                                                    |                              |          |                             |   |   |   |
| Property                  and                  equipment            |   |                              |   |                             |      |   | Deferred                  income taxes                                                                  |                              | **13,951**    |                             |   | 9,138 |   |
|    Land                                              |   | **62,736**                        |   |                             | 61,217    |   | Insurance                  deductible reserves                                                          |                              | **26,542**    |                             |   | 25,841 |   |
|    Buildings                  and improvements       |   | **138,095**                       |   |                             | 136,659   |   | Long-term                  debt                                                                         |                              | **373,885**   |                             |   | 349,161 |   |
|    Equipment                                         |   | **193,658**                       |   |                             | 186,956   |   | Other                  long-term liabilities                                                            |                              | **39,211**    |                             |   | 41,390 |   |
|    Construction                  in progress         |   | **7,305**                         |   |                             | 8,579     |   |                                                                                                    |                              |          |                             |   |   |   |
|    Accumulated                  depreciation         |   | **(154,119**                      | **)**  |                             | (136,020  | )      | Minority                  interests                                                                     |                              | **3,028**     |                             |   | 7,141 |   |
| Marketable                  securities                              |   | **52,192**                        |   |                             | 53,513    |   |                                                                                                    |                              |          |                             |   |   |   |
| Deferred                  loan                  costs               |   | **4,639**                         |   |                             | 5,481     |   | Commitments                  and contingent liabilities                                                 |                              | **—**   |                             |   | — |   |
| Other                  long-term assets                             |   | **31,112**                        |   |                             | 26,975    |   |                                                                                                    |                              |          |                             |   |   |   |
| Other                  intangibles, net                             |   | **98,966**                        |   |                             | 108,792   |   | Shareholders’                  equity                                                             |                              |          |                             |   |   |   |
| Goodwill                                                            |   | **320,841**                       |   |                             | 308,000   |   | Common                  shares,                  $0.001 par value:                                      |                              |          |                             |   |   |   |
| Assets                  of                  discontinued operations |   | **—**                       |   |                             | 2,348     |   | authorized                  50                  million; issued                                         |                              |          |                             |   |   |   |
|                                                                | **$**  | **1,306,330**                     |   | $                                | 1,328,911 |   | and                    outstanding 29.4 and 29.2                                                        |                              |          |                             |   |   |   |
|                                                                |   |                              |   |                             |      |   |                        million shares                                |                              | **29**        |                             |   | 29 |   |
|                                                                |   |                              |   |                             |      |   | Additional                  paid-in capital                                                             |                              | **161,876**   |                             |   | 154,405 |   |
|                                                                |   |                              |   |                             |      |   | Retained                  earnings                                                                      |                              | **428,752**   |                             |   | 418,927 |   |
|                                                                |   |                              |   |                             |      |   | Accumulated                  other comprehensive income                  (loss), net               |                              | **(1,429**    | **)**                            |   | (732 | ) |
|                                                                |   |                              |   |                             |      |   | **      Shareholders’                  equity**                     |                              | **589,228**   |                             |   | 572,629 |   |
|                                                                |   |                              |   |                             |      |   |                                                                                                    | **$**                             | **1,306,330** |                             | $      | 1,328,911 |   |

----

**Building      Materials Holding Corporation**

**Consolidated      Statements of Shareholders’Equity**

**(thousands)**

**(unaudited)**

|                                                                                   |   |                               |        |                       |   |              |   |                   |        | **Accumulated                  Other****Comprehensive                  Income (Loss)** |   |                |   |
|----------------------------------------------------------------------------------------|--------|------------------------------------|-------------|----------------------------|--------|-------------------|--------|------------------------|-------------|----------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                   |   |                               |        |                       |   |              |   |                   |        | **Net                  Unrealized Gain****(Loss)****From**                             |   |                |   |
|                                                                                   |   |                               |        | **Additional **  |   |              |   |                   |        | **Interest **                                                                |   |                |   |   |   |
|                                                                                   |   | **Common                  Shares** |        | **Paid-In**                |   | **Unearned**      |   | **Retained**           |        | **Rate                    Swap**                                                       |   | **Marketable**      |   |   |   |
|                                                                                   |   | **Shares**                         |        |  **Amount**           |   |  **Capital** |   |  **Compensation** |        |  **Earnings**                                                                     |   |  **Contracts** |   |  **Securities** |   |  **Total** |   |
| **Balance                  at December 31, 2005**                                      |   |                               | **28,759**  |                       | **$**  | **29**            |   | **$**                  | **143,780** |                                                                                   | **$**  | **(2,698**          | **)**  | **$** | **328,463** |   | **$** | **736** |   | **$** | **(249** | **)** | **$** | **470,061** |   |
|                                                                                   |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                            |   |                               | —     |                       |   | —           |   |                   | —     |                                                                                   |   | —             |   |   | 97,592 |   |   | — |   |   | — |   |   | 97,592 |   |
| Unrealized                  gain                                                       |   |                               | —     |                       |   | —           |   |                   | —     |                                                                                   |   | —             |   |   | — |   |   | 478 |   |   | 281 |   |   | 759 |   |
| Taxes                  for                  unrealized gain                            |   |                               | —     |                       |   | —           |   |                   | —     |                                                                                   |   | —             |   |   | — |   |   | (184 | ) |   | (108 | ) |   | (292 | ) |
| **Comprehensive                  income**                                              |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   | **98,059** |   |
|                                                                                   |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassify                  unearned compensation - restricted                  shares |   |                               | —     |                       |   | —           |   |                   | (2,698      | )                                                                                      |   | 2,698               |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Earned                  compensation - options                                         |   |                               | —     |                       |   | —           |   |                   | 3,900       |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | 3,900 |   |
| Earned                  compensation - restricted shares                               |   |                               | —     |                       |   | —           |   |                   | 2,310       |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | 2,310 |   |
| Issuance                  of                  restricted shares                        |   |                               | 138         |                       |   | —           |   |                   | —     |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Share                  options                  exercised                              |   |                               | 75          |                       |   | —           |   |                   | 663         |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | 663 |   |
| Tax                  benefit                  for share options exercised              |   |                               | —     |                       |   | —           |   |                   | 707         |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | 707 |   |
| Shares                  issued                  from Director Plan                     |   |                               | 12          |                       |   | —           |   |                   | 415         |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | 415 |   |
| Shares                  issued                  from Employee Plan                     |   |                               | 51          |                       |   | —           |   |                   | 1,511       |                                                                                   |   | —             |   |   | — |   |   | — |   |   | — |   |   | 1,511 |   |
| Cash                  dividends                  on common shares                      |   |                               | —     |                       |   | —           |   |                   | —     |                                                                                   |   | —             |   |   | (8,696 | ) |   | — |   |   | — |   |   | (8,696 | ) |
| **Balance                  at September 30, 2006**                                     |   |                               | **29,035**  |                       | **$**  | **29**            |   | **$**                  | **150,588** |                                                                                   | **$**  | **—**         |   | **$** | **417,359** |   | **$** | **1,030** |   | **$** | **(76** | **)** | **$** | **568,930** |   |
|                                                                                   |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at December 31, 2006**                                      |   |                               | **29,153**  |                       | **$**  | **29**            |   | **$**                  | **154,405** |                                                                                   | **$**  | **—**         |   | **$** | **418,927** |   | **$** | **(548** | **)** | **$** | **(184** | **)** | **$** | **572,629** |   |
|                                                                                   |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                            |   |                               | **—** |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **18,619** |   |   | **—** |   |   | **—** |   |   | **18,619** |   |
| Unrealized                  loss                                                       |   |                               | **—** |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **—** |   |   | **(1,797** | **)** |   | **—** |   |   | **(1,797** | **)** |
| Tax                  benefit                  for unrealized loss                      |   |                               | **—** |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **—** |   |   | **678** |   |   | **—** |   |   | **678** |   |
|                                                                                   |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                  gain                                                       |   |                               | **—** |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **639** |   |   | **639** |   |
| Taxes                  for                  unrealized gain                            |   |                               | **—** |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **(217** | **)** |   | **(217** | **)** |
| **Comprehensive                  income**                                              |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   | **17,922** |   |
|                                                                                   |   |                               |        |                       |   |              |   |                   |        |                                                                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earned                  compensation - options                                         |   |                               | **—** |                       |   | **—**       |   |                   | **3,928**   |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **3,928** |   |
| Earned                  compensation - restricted shares                               |   |                               | **—** |                       |   | **—**       |   |                   | **2,445**   |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **2,445** |   |
| Tax                  benefit                  for vested restricted shares             |   |                               | **—** |                       |   | **—**       |   |                   | **167**     |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **167** |   |
| Issuance                  of                  restricted shares                        |   |                               | **158**     |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **—** |   |
| Share                  options                  exercised                              |   |                               | **27**      |                       |   | **—**       |   |                   | **167**     |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **167** |   |
| Tax                  benefit                  for share options exercised              |   |                               | **—** |                       |   | **—**       |   |                   | **82**      |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **82** |   |
| Shares                  issued                  from Director Plan                     |   |                               | **27**      |                       |   | **—**       |   |                   | **405**     |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **405** |   |
| Shares                  issued                  from Employee Plan                     |   |                               | **12**      |                       |   | **—**       |   |                   | **277**     |                                                                                   |   | **—**         |   |   | **—** |   |   | **—** |   |   | **—** |   |   | **277** |   |
| Cash                  dividends                  on common shares                      |   |                               | **—** |                       |   | **—**       |   |                   | **—** |                                                                                   |   | **—**         |   |   | **(8,794** | **)** |   | **—** |   |   | **—** |   |   | **(8,794** | **)** |
| **Balance                  at September 30, 2007**                                     |   |                               | **29,377**  |                       | **$**  | **29**            |   | **$**                  | **161,876** |                                                                                   | **$**  | **—**         |   | **$** | **428,752** |   | **$** | **(1,667** | **)** | **$** | **238** |   | **$** | **589,228** |   |

----

**Building      Materials Holding Corporation**

**Consolidated      Statements of Cash Flows**

**(thousands)**

**(unaudited)**

|                                                                                                                                                                                        |   | **Nine                Months Ended****September                30** |        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|-------------|
| **Operating                Activities**                                                                                                                                                     |   | **2007**                                                            |        |  **2006** |   |
|    Net                income                                                                                                                                                 |   | **$**                                                               | **18,619**  |   | $ | 97,592 |   |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
|    Items                in net income not using (providing) cash:                                                                                                            |   |                                                                |        |   |   |   |   |
|       Minority                interests, net                                                                                                                  |   |                                                                | **790**     |   |   | 8,472 |   |
|       Depreciation                and amortization                                                                                                            |   |                                                                | **36,509**  |   |   | 33,277 |   |
|       Deferred                loan cost amortization                                                                                                          |   |                                                                | **842**     |   |   | 685 |   |
|       Impairment                of assets                                                                                                                     |   |                                                                | **—** |   |   | 2,237 |   |
|       Share-based                compensation                                                                                                                 |   |                                                                | **6,722**   |   |   | 6,851 |   |
|       Gain                on sale of discontinued operations                                                                                                  |   |                                                                | **(3,722**  | **)** |   | — |   |
|       Gain                on sale of assets, net                                                                                                              |   |                                                                | **(8,738**  | **)** |   | (126 | ) |
|       Realized                loss on marketable securities                                                                                                   |   |                                                                | **15**      |   |   | 231 |   |
|       Deferred                income taxes                                                                                                                    |   |                                                                | **3,649**   |   |   | 2,509 |   |
|       Changes                in assets and liabilities, net of effects of acquisitions and divestitures                of business                units: |   |                                                                |        |   |   |   |   |
|             Receivables,                net                                                                                     |   |                                                                | **(14,498** | **)** |   | 31,834 |   |
|             Inventory                                                                                                           |   |                                                                | **5,482**   |   |   | 11,751 |   |
|             Unbilled                receivables                                                                                 |   |                                                                | **(11,058** | **)** |   | 2,323 |   |
|             Prepaid                expenses and other current assets                                                            |   |                                                                | **(3,946**  | **)** |   | (2,745 | ) |
|             Accounts                payable                                                                                     |   |                                                                | **9,543**   |   |   | (13,899 | ) |
|             Accrued                compensation                                                                                 |   |                                                                | **(6,173**  | **)** |   | (5,033 | ) |
|             Insurance                deductible reserves                                                                        |   |                                                                | **3,893**   |   |   | 2,243 |   |
|             Other                accrued liabilities                                                                            |   |                                                                | **(10,294** | **)** |   | 15,608 |   |
|             Billings                in excess of costs and estimated earnings                                                   |   |                                                                | **2,790**   |   |   | (6,787 | ) |
|             Other                long-term assets and liabilities                                                               |   |                                                                | **(10,595** | **)** |   | (8 | ) |
|       Other,                net                                                                                                                               |   |                                                                | **461**     |   |   | (19 | ) |
| **Cash                flows provided by operating activities**                                                                                                                              |   |                                                                | **20,291**  |   |   | 186,996 |   |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
| **Investing                Activities**                                                                                                                                                     |   |                                                                |        |   |   |   |   |
|    Purchases                of property and equipment                                                                                                                        |   |                                                                | **(21,771** | **)** |   | (47,805 | ) |
|    Acquisitions                and investments in businesses, net of cash acquired                                                                                           |   |                                                                | **(76,440** | **)** |   | (200,725 | ) |
|    Proceeds                from dispositions of property and equipment                                                                                                       |   |                                                                | **16,325**  |   |   | 1,823 |   |
|    Proceeds                from sale of discontinued operations                                                                                                              |   |                                                                | **9,592**   |   |   | — |   |
|    Purchase                of marketable securities                                                                                                                          |   |                                                                | **(26,447** | **)** |   | (38,492 | ) |
|    Proceeds                from sales of marketable securities                                                                                                               |   |                                                                | **26,161**  |   |   | 20,540 |   |
|    Other,                net                                                                                                                                                 |   |                                                                | **(290**    | **)** |   | (3,188 | ) |
| **Cash                flows used by investing activities**                                                                                                                                  |   |                                                                | **(72,870** | **)** |   | (267,847 | ) |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
| **Financing                Activities**                                                                                                                                                     |   |                                                                |        |   |   |   |   |
|    Net                borrowings under revolver                                                                                                                              |   |                                                                | **28,700**  |   |   | 110,700 |   |
|    Principal                payments on term notes                                                                                                                           |   |                                                                | **(2,625**  | **)** |   | (2,813 | ) |
|    Net                payments on other notes                                                                                                                                |   |                                                                | **(4,523**  | **)** |   | (984 | ) |
|    (Decrease)                Increase in book overdrafts                                                                                                                     |   |                                                                | **(275**    | **)** |   | 1,793 |   |
|    Proceeds                from share options exercised                                                                                                                      |   |                                                                | **167**     |   |   | 663 |   |
|    Tax                benefit for share-based payments                                                                                                                       |   |                                                                | **249**     |   |   | 707 |   |
|    Dividends                paid                                                                                                                                             |   |                                                                | **(8,771**  | **)** |   | (7,951 | ) |
|    Deferred                financing costs                                                                                                                                   |   |                                                                | **—** |   |   | (583 | ) |
|    Distributions                to minority interests                                                                                                                        |   |                                                                | **(1,223**  | **)** |   | (3,980 | ) |
|    Other,                net                                                                                                                                                 |   |                                                                | **212**     |   |   | 540 |   |
| **Cash                flows provided by financing activities**                                                                                                                              |   |                                                                | **11,911**  |   |   | 98,092 |   |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
| **(Decrease)                Increase in Cash and Cash Equivalents**                                                                                                                         |   |                                                                | **(40,668** | **)** |   | 17,241 |   |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
|    Cash                and cash equivalents, beginning of period                                                                                                             |   |                                                                | **74,272**  |   |   | 30,078 |   |
|    Cash                and cash equivalents, end of period                                                                                                                   |   | **$**                                                               | **33,604**  |   | $ | 47,319 |   |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information**                                                                                                                         |   |                                                                |        |   |   |   |   |
|    Accrued                but unpaid dividends                                                                                                                               |   | **$**                                                               | **2,938**   |   | $ | 2,903 |   |
|    Cash                paid for interest                                                                                                                                     |   | **$**                                                               | **25,595**  |   | $ | 18,905 |   |
|    Cash                paid for income taxes                                                                                                                                 |   | **$**                                                               | **7,569**   |   | $ | 60,505 |   |
|                                                                                                                                                                                        |   |                                                                |        |   |   |   |   |
| **Supplemental                Disclosure of Investing Activities**                                                                                                                          |   |                                                                |        |   |   |   |   |
|    Fair                value of assets acquired                                                                                                                              |   | **$**                                                               | **12,999**  |   | $ | 262,755 |   |
|    Liabilities                assumed                                                                                                                                        |   | **$**                                                               | **840**     |   | $ | 62,030 |   |
|    Cash                paid for acquisitions made this period                                                                                                                |   | **$**                                                               | **12,159**  |   | $ | 181,664 |   |
|    Cash                paid for acquisitions made in prior period                                                                                                            |   | **$**                                                               | **64,281**  |   | $ | 19,061 |   |

----

***Notes      to Consolidated Financial Statements***

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

*Basis      of Presentation*

|   | · | the                operating                results of these operations are presented separately from continuing                operations within the caption of discontinued operations                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | related                assets and liabilities are separately classified in the consolidated                balance sheet. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

*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*

----

*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.***
***Discontinued      Operations***

|   | · | In                September                2007, BMC West sold three building materials distribution businesses                in                Western Colorado for $11.4 million consisting of $9.6 million cash                and a                $1.8 million note receivable. As a result, we recognized an initial                gain                of $3.7 million. These business units were previously reported as                a                component of BMC West and were approximately 3% of sales. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    |   |  **September                        30** |      |     |   |
|-------------------------|--------|-----------------------------------------------|-----------|----------|--------|
|          |   | **2007**                                      |      | **2006** |   | **2006** |   |
| Assets        |   | **$**                                         | **1,560** |     | $      | 9,683 |   | $ | 8,602 |   |
| Liabilities   |   | **$**                                         | **2,348** |     | $      | 3,219 |   | $ | 2,461 |   |

|                                                                                        |   | **Three                    Months Ended September 30** |       | **Nine                    Months Ended September 30** |   |    |   |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|------------|-------------------------------------------------------|--------|--------------|--------|
|                                                                                        |   | **2007**                                               |       | **2006**                                              |   | **2007**     |   | **2006** |   | **2006** |   |
| Sales                                                                                       |   |                                                   |       |                                                  |   |         |   |   |   |   |   |   |   |   |   |   |
|    Building                    Products                                      |   | **$**                                                  | **11,093** |                                                  | $      | 12,805       |   | **$** | **29,691** |   | $ | 30,649 |   | $ | 41,903 |   |
| Income                    from                    discontinued    operations |   | **$**                                                  | **3,050**  |                                                  | $      | 948          |   | **$** | **4,317** |   | $ | 1,972 |   | $ | 2,971 |   |

----

***3.***
***Net      Income Per Share***

|                                                                                                                                                                    |   | **Three                  Months Ended****September                  30** |       | **Nine                  Months Ended****September                  30** |   |     |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|--------|----------|--------|
|                                                                                                                                                                    |   | **2007**                                                                 |       | **2006**                                                                |   | **2007** |   | **2006** |   | **2006** |   |
| Income                  from                  continuing    operations                                                                                   |   | **$**                                                                    | **1,118**  |                                                                    | $      | 34,400   |   | **$** | **14,302** |   | $ | 95,620 |   | $ | 99,103 |   |
| Income                  from                  discontinued    operations                                                                                 |   |                                                                     | **3,050**  |                                                                    |   | 948      |   |   | **4,317** |   |   | 1,972 |   |   | 2,971 |   |
|    Net                  income                                                                                                                           |   | **$**                                                                    | **4,168**  |                                                                    | $      | 35,348   |   | **$** | **18,619** |   | $ | 97,592 |   | $ | 102,074 |   |
|                                                                                                                                                                    |   |                                                                     |       |                                                                    |   |     |   |   |   |   |   |   |   |   |   |   |
|    Weighted                  average       shares                  - basic                                                 |   |                                                                     | **28,945** |                                                                    |   | 28,617   |   |   | **28,800** |   |   | 28,573 |   |   | 28,603 |   |
|    Effect                  of dilutive:                                                                                                                  |   |                                                                     |       |                                                                    |   |     |   |   |   |   |   |   |   |   |   |   |
|       Share                  options                                                                                                      |   |                                                                     | **512**    |                                                                    |   | 776      |   |   | **598** |   |   | 846 |   |   | 830 |   |
|       Restricted                  shares                                                                                                  |   |                                                                     | **99**     |                                                                    |   | 159      |   |   | **142** |   |   | 150 |   |   | 156 |   |
|    Weighted                  average       shares                  - assuming       dilution |   |                                                                     | **29,556** |                                                                    |   | 29,552   |   |   | **29,540** |   |   | 29,569 |   |   | 29,589 |   |
|                                                                                                                                                                    |   |                                                                     |       |                                                                    |   |     |   |   |   |   |   |   |   |   |   |   |
| Net                  income                  per share:                                                                                                                 |   |                                                                     |       |                                                                    |   |     |   |   |   |   |   |   |
|    Continuing                  operations                                                                                                                |   |                                                                     | **$0.04**  |                                                                    |   | $1.20    |   |   | **$0.50** |   |   | $3.35 |   |   | $3.47 |   |
|    Discontinued                  operations                                                                                                              |   |                                                                     | **0.10**   |                                                                    |   | 0.04     |   |   | **0.15** |   |   | 0.07 |   |   | 0.10 |   |
|       Basic                                                                                                                               |   |                                                                     | **$0.14**  |                                                                    |   | $1.24    |   |   | **$0.65** |   |   | $3.42 |   |   | $3.57 |   |
|                                                                                                                                                                    |   |                                                                     |       |                                                                    |   |     |   |   |   |   |   |   |   |   |   |   |
|    Continuing                  operations                                                                                                                |   |                                                                     | **$0.04**  |                                                                    |   | $1.17    |   |   | **$0.48** |   |   | $3.23 |   |   | $3.35 |   |
|    Discontinued                  operations                                                                                                              |   |                                                                     | **0.10**   |                                                                    |   | 0.03     |   |   | **0.15** |   |   | 0.07 |   |   | 0.10 |   |
|       Diluted                                                                                                                             |   |                                                                     | **$0.14**  |                                                                    |   | $1.20    |   |   | **$0.63** |   |   | $3.30 |   |   | $3.45 |   |
|                                                                                                                                                                    |   |                                                                     |       |                                                                    |   |     |   |   |   |   |   |   |   |   |   |   |
| Cash                  dividends declared    per                  share                                                                                   |   |                                                                     | **$0.10**  |                                                                    |   | $0.10    |   |   | **$0.30** |   |   | $0.30 |   |   | $0.40 |   |

|   | · | options                with                exercise prices greater than the average market value of the common                shares                (options out-of-the-money) and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | unrecognized                compensation expense for restricted shares with after-tax proceeds                greater                than the average market value of the common shares |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | **Three                  Months Ended****September                  30** |                            | **Nine                  Months Ended****September                  30** |   |                   |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------------|---------------------------------|-------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                    |   | **2007**                                                                 |                            |  **2006**                                                          |   | **2007**                    |   |  **2006** |   |  **2006** |   |
| Average                  market value of shares         |   |                                                                     | **$13**                         |                                                                    |   | $25                         |   |   | **$17** |   |   | $31 |   |   | $30 |   |
| Share                  options:                         |   |                                                                     |                            |                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |
|    Exercise                  price range |   |                                                                     | **$15                  to $38** |                                                                    |   | $23                  to $38 |   |   | **$15                  to $38** |   |   | $23                  to $38 |   |   | $23                  to $38 |   |
|    Not                  dilutive         |   |                                                                     | **1,328**                       |                                                                    |   | 819                         |   |   | **1,328** |   |   | 819 |   |   | 819 |   |
| Restricted                  shares:                     |   |                                                                     |                            |                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |
|    Grant                  price range    |   |                                                                     | **$18                  to $42** |                                                                    |   | $34                  to $42 |   |   | **$34** |   |   | $— |   |   | $— |   |
|    Not                  dilutive         |   |                                                                     | **299**                         |                                                                    |   | 139                         |   |   | **2** |   |   | — |   |   | — |   |

----

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

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

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

----

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

|   | · | In                March                2007, SelectBuild acquired a concrete services business in Fresno,                California for approximately $0.7 million in cash. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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                paid in the third quarter of 2007 for 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                September                2007, SelectBuild acquired the remaining 49% interest in SelectBuild                Trim                for $0.5 million in cash which is payable in the fourth quarter.                In                January 2007, SelectBuild formed this venture for an initial 51%                interest                for $0.5 million in cash. SelectBuild Trim provides door and molding                installation services in Las Vegas,                Nevada. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | In                September                2007, SelectBuild acquired the remaining 49% interest in A-1 Building                Components, LLC (A-1 Truss) for $5.0 million in cash of which $4.0                million                is payable in the fourth quarter. 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 September 2004, SelectBuild acquired an initial 51% interest for                $2.3                million in cash. A-1 Truss manufactures trusses in Fort Pierce, Florida. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                May 2007,                SelectBuild acquired the remaining 33% interest in SelectBuild                Mid-Atlantic (WBC Mid-Atlantic) for no consideration pursuant to                the                operating agreement. In October 2003, SelectBuild acquired an initial                67%                interest for $5.1 million in cash and $0.2 million of our common                shares.                SelectBuild Mid-Atlantic provides framing services to production                homebuilders in Delaware, Maryland and                Virginia. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 production homebuilders 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 production homebuilders                in                Arizona. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                January                2006, SelectBuild acquired the remaining 20% interest in SelectBuild                Florida (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. SelectBuild Florida provides                concrete block masonry and concrete service to production homebuilders                in                Florida. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   | **September                  30** |       | **December                  31** |   |    |   | **September                  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       |                             |   | **(56,266** | **)** |   | 50,340 |   |
| Prepaid                  expenses and other                 |   |                              | **18**     |                             |   | 263     |   |                              | Billings                  in excess of costs and |                             |   |   |   |   |   |   |
|                                              |   |                              |       |                             |   |    |   |                              | estimated                  earnings              |                             |   | — |   |   | 23,557 |   |
| **   Current                  assets ** |   |                              | **18**     |                             |   | 75,004  |   |                              | **Current                  liabilities**         |                             |   | **(56,266** | **)** |   | 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                     |   |                              | **2,502**  |                             |   | 68,692  |   |                              | Minority                  interests              |                             |   | **(3,680** | **)** |   | (10,627 | ) |
| Goodwill                                                    |   |                              | **12,841** |                             |   | 122,374 |   |                              |                                             |                             |   |   |   |   |   |   |
|                                                        |   | **$**                             | **15,577** |                             | $      | 285,957 |   |                              |                                             |                             | **$**  | **(60,863** | **)** | $ | 84,203 |   |

----

|                                                                                                                 |   | **Three                  Months Ended****September                  30** |        | **Nine                  Months Ended****September                  30** |   |
|----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-------------|-------------------------------------------------------------------------|--------|
|                                                                                                                 |   | **2007**                                                                 |        | **2006**                                                                |   | **2007** |   | **2006** |   |
| Sales                  - as                  reported                                                                |   | **$**                                                                    | **618,280** |                                                                    | $      | 817,794 |   | **$** | **1,865,813** |   | $ | 2,606,499 |   |
| Pro                  forma                  Sales                                                                    |   | **$**                                                                    | **618,280** |                                                                    | $      | 820,035 |   | **$** | **1,866,577** |   | $ | 2,685,880 |   |
|                                                                                                                 |   |                                                                     |        |                                                                    |   |   |   |   |   |   |   |   |   |
| Income                  from                  continuing    operations                  - as reported |   | **$**                                                                    | **1,118**   |                                                                    | $      | 34,400 |   | **$** | **14,302** |   | $ | 95,620 |   |
| Pro                  forma                  Income from    continuing                  operations     |   | **$**                                                                    | **1,476**   |                                                                    | $      | 34,537 |   | **$** | **15,090** |   | $ | 100,451 |   |
|                                                                                                                 |   |                                                                     |        |                                                                    |   |   |   |   |   |   |   |   |   |
| Income                  from                  continuing    operations                  per share:    |   |                                                                     |        |                                                                    |   |   |   |   |   |   |   |   |   |
|    Diluted                  - as reported                                                             |   |                                                                          | **$0.04**   |                                                                    |   | $1.17 |   |  | **$0.48** |   |  | $3.23 |   |
|    Pro                  forma Diluted                                                                 |   |                                                                     | **$0.05**   |                                                                    |   | $1.17 |   |  | **$0.51** |   |  | $3.40 |   |

|                                    | **Call                  Options**                                     | **Put                  Options**                                      |
|-----------------------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------------------|
| SelectBuild                  Mechanical | December                  2009                  through December 2014 | December                  2009                  through December 2014 |
| SelectBuild                  Illinois   | January                  2008                  through January 2012   | January                  2008                  through January 2012   |

----

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

|                                                      |   | **September                  30** |       | **December                  31** |   |
|-----------------------------------------------------------|--------|-----------------------------------|------------|----------------------------------|--------|
|                                                      |   | **2007**                          |       | **2006**                         |   |
| U.S.                  government and agencies             |   | **$**                             | **26,005** |                             | $      | 25,661 |   |
| Asset                  backed                  securities |   |                              | **16,681** |                             |   | 18,278 |   |
| Corporate                  securities                     |   |                              | **16,129** |                             |   | 13,911 |   |
|                                                      |   | **$**                             | **58,815** |                             | $      | 57,850 |   |

|                                                  |   | **September                  30** |       | **December                  31** |   |
|-------------------------------------------------------|--------|-----------------------------------|------------|----------------------------------|--------|
|                                                  |   | **2007**                          |       | **2006**                         |   |
| Less                  than 1                  year    |   | **$**                             | **6,623**  |                             | $      | 4,337 |   |
| Due                  in 1 to 2                  years |   |                              | **16,705** |                             |   | 16,648 |   |
| Due                  in 2 to 5                  years |   |                              | **35,194** |                             |   | 36,865 |   |
| More                  than 5                  years   |   |                              | **293**    |                             |   | — |   |
|                                                  |   | **$**                             | **58,815** |                             | $      | 57,850 |   |

----

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

|                                                       |   | **September                  30, 2007**       |        |
|------------------------------------------------------------|--------|-----------------------------------------------|-------------|
|                                                       |   | **Gross****Carrying                  Amount** |        | **Accumulated                  Amortization** |   | **Net                  Carrying****Amount** |   |
| Customer                  relationships                    |   | **$**                                         | **123,560** |   | **$** | **(31,155** | **)** | **$** | **92,405** |   |
| Covenants                  not                  to compete |   |                                          | **12,179**  |   |   | **(6,200** | **)** |   | **5,979** |   |
| Trade                  names                               |   |                                          | **204**     |   |   | **(204** | **)** |   | **—** |   |
| Favorable                  leases                          |   |                                          | **780**     |   |   | **(198** | **)** |   | **582** |   |
|                                                       |   | **$**                                         | **136,723** |   | **$** | **(37,757** | **)** | **$** | **98,966** |   |

|                                                           |   | **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 |   |
| Favorable                    leases                            |   |                                            | 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 |   |            | (182        | )                             |   | —    |   |   | (182 | ) |
|                     Goodwill acquired         |   |            | 13,023      |                          |   | —    |   |   | 13,023 |   |
| **Balance                  at September 30, 2007**      |   | **$**           | **299,964** |                          | **$**  | **20,877** |   | **$** | **320,841** |   |

|                                                    |   | **SelectBuild** |       | **BMC                  West** |   | **Total** |   |
|---------------------------------------------------------|--------|-----------------|------------|-------------------------------|--------|-----------|--------|
| **Balance                  at December 31, 2006**       |   | $               | 33,939     |                          | $      | 7,423     |   | $ | 41,362 |   |
|                     Purchase price adjustment |   |            | (4,656     | )                             |   | —   |   |   | (4,656 | ) |
| **Balance                  at September 30, 2007**      |   | **$**           | **29,283** |                          | **$**  | **7,423** |   | **$** | **36,706** |   |

----

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

| **As                  of September 30, 2007**     |   |    |        | **Notional****Amount                  of**         |   | **Effective                  Interest Rate**                                                                                                                                         |   |
|---------------------------------------------------|--------|--------------|-------------|----------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                              |   | **Balance**  |        |  **Stated****Interest                  Rate** |   | ** Interest**** Rate                  Swaps**                                                                                                                              |   | **Average                  for Quarter** |   | **As                  of****September                  30** |   |
| Revolver                                          |   | **$**        | **28,700**  |                                               |   | **LIBOR                  plus**** 1.50%                  or**** ****Prime                  plus****0.25%****and                  0.25****commitment                  fee** |   | **$** | **—** |   |   | **8.0**%**** |   |   | **10.8**%**** |   |
| Term                  note                        |   |         | **346,500** |                                               |   | **LIBOR                  plus**** 2.50%                  or****Prime                  plus****1.25%**                                                                           |   |   | **200,000** |   |   | **7.7**%**** |   |   | **7.8**%**** |   |
| Other                                             |   |         | **3,656**   |                                               |   | **Various**                                                                                                                                                                          |   |   | **—** |   |   | **—** |   |   | **—** |   |
|                                              |   |         | **378,856** |                                               |   |                                                                                                                                                                                 |   | **$** | **200,000** |   |   |  |   |   |  |   |
|                                              |   |         |        |                                               |   |                                                                                                                                                                                 |   |   |  |   |   |  |   |   |  |   |
| Less:  Current                  portion |   |         | **4,971**   |                                               |   |                                                                                                                                                                                 |   |   |  |   |   |  |   |   |  |   |
|                                              |   | **$**        | **373,885** |                                               |   |                                                                                                                                                                                 |   |   |  |   |   |  |   |   |  |   |

| **As                  of                  December 31, 2006** |   |    |    | **Notional****Amount                  of**         |   | **Effective                  Interest Rate**                                                                                                           |   |
|---------------------------------------------------------------|--------|--------------|---------|----------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                          |   | **Balance**  |    |  **Stated****Interest                  Rate** |   | **Interest**** Rate                    Swaps**                                                                                                    |   | **Average****for                  Year** |   | **As                  of****December                  31** |   |
| Revolver                                                      |   | $            | — |                                               |   | LIBOR                  plus 1.25%                  or Prime                  plus 0.00%and                    0.225% commitment                    fee |   | $ | ― |   |   | 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       |   | $      | 1,277   |   |
|------------|--------|--------|---------|--------|
| 2008       |   |   | 4,792   |   |
| 2009       |   |   | 4,109   |   |
| 2010       |   |   | 3,824   |   |
| 2011       |   |   | 32,409  |   |
| Thereafter |   |   | 332,445 |   |
|       |   | $      | 378,856 |   |

*Hedging      Activities*

----

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

*Preferred      Shares*

*Common      Shares*

| Employee                  Stock Purchase Plan        |   |   | **4,767**  |   |
|------------------------------------------------------|--------|--------|------------|--------|
| 2004                  Incentive and Performance Plan |   |   | **42,563** |   |

*Shareholders’      Rights Plan*

*Dividends*

|                            |   | **2007** |        | **2006** |   |
|---------------------------------|--------|----------|-------------|----------|--------|
| First                  quarter  |   |     | **$0.10**   |     |   | $0.10 |   |
| Second                  quarter |   |     | **0.10**    |     |   | 0.10 |   |
| Third                  quarter  |   |     | **0.10**    |     |   | 0.10 |   |
| Fourth                  quarter |   |     | **—** |     |   | 0.10 |   |
|                            |   |          | **$0.30**   |     |   | $0.40 |   |

*Repurchase      Program*

----

***10.***
***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.                Under certain circumstances some or all of the options may vest earlier.                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. Under                certain                circumstances some or all of the options may vest earlier. Options                were                awarded with exercise prices equal to the closing share price of                our                common shares on the date of grant. No further grants will be made                under                this plan. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Share-Based      Payment, *

|                                                    |   | **Nine                  Months Ended****September                  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 |   |   |

|                                                                                       |   | **September                  30****2007** |      | **September                  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                                                                     |   |   |   |   |   | 409 |   |   | $38 |   |   | 409 |   |   | $38 |   |
|    Exercised                                                                |   |                                      | **(26**   | **)**                                                |   | **                     $6**                                            |   |   |   |   |   | (75 | ) |   |                      $9 |   |   | (176 | ) |   |                      $7 |   |
|    Forfeited                                                                |   |                                      | **(34**   | **)**                                                |   | **$30**                                                                     |   |   |   |   |   | (12 | ) |   | $22 |   |   | (12 | ) |   | $22 |   |
| Outstanding                  at end of the   period                         |   |                                      | **3,002** |                                                 |   | **$15**                                                                     |   |   | **4.7** |   |   | 2,622 |   |   | $14 |   |   | 2,521 |   |   | $14 |   |
|                                                                                       |   |                                      |      |                                                 |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable                  at end    of                  the period       |   |                                      | **2,045** |                                                 |   | **$11**                                                                     |   |   | **4.1** |   |   | 1,619 |   |   |                      $8 |   |   | 1,658 |   |   |                      $8 |   |

|                                                           |   | **Nine                  Months Ended****September                  30** |   |     |   |
|----------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|----------|--------|
|                                                           |   | **2007**                                                                |   | **2006** |   | **2006** |   |
| Weighted                  average grant-date fair value        |   | **$8**                                                                  |   |     | $18    |   |   | $18 |   |   |
| Intrinsic                  value of options exercised          |   | **$282**                                                                |   |     | $1,837 |   |   | $3,840 |   |   |
| Fair                  value of                  options vested |   | **$4,473**                                                              |   |     | $2,457 |   |   | $2,955 |   |   |

----

|                                             |   | **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**  |   |   |   |   |   |   | **2.7** |   |   | **540** |   | **$5** |   |   |   |   |   |
| $6                    to                    $7   |   |                                       | **335**   |                                         | **$7**  |   |   |   |   |   |   | **5.4** |   |   | **335** |   | **$7** |   |   |   |   |   |
| $7                    to                    $8   |   |                                       | **467**   |                                         | **$7**  |   |   |   |   |   |   | **5.2** |   |   | **415** |   | **$7** |   |   |   |   |   |
| $8                    to                    $9   |   |                                       | **332**   |                                         | **$9**  |   |   |   |   |   |   | **3.6** |   |   | **332** |   | **$9** |   |   |   |   |   |
| $14                    to                    $19 |   |                                       | **532**   |                                         | **$18** |   |   |   |   |   |   | **6.5** |   |   | **5** |   | **$18** |   |   |   |   |   |
| $22                    to                    $29 |   |                                       | **413**   |                                         | **$23** |   |   |   |   |   |   | **4.4** |   |   | **280** |   | **$23** |   |   |   |   |   |
| $37                    to                    $39 |   |                                       | **383**   |                                         | **$38** |   |   |   |   |   |   | **5.3** |   |   | **138** |   | **$38** |   |   |   |   |   |
|                                             |   |                                       | **3,002** |                                         |    |   |   |   |   |   |   |   |   |   | **2,045** |   |   |   |   |   |   |   |
| In-the-money:                                    |   |                                       |      |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Outstanding                    |   |                                       | **1,674** |                                         |    |   |   | **$6,347** |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Exercisable                    |   |                                       |      |                                         |    |   |   |   |   |   |   |   |   |   | **1,622** |   |   |   |   |   | **$6,239** |   |

*Restricted      Shares*

----

|                                                                   |   | **September                  30****2007** |     | **September                  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**    |   |   | 139 |   |   | $38 |   |   | 139 |   |   | $38 |   |
|    Vested                                               |   |                                      | **(142** | **)**                                                                                             |   | **$11**    |   |   | — |   |   | $— |   |   | — |   |   | $— |   |
|    Forfeited                                            |   |                                      | **(14**  | **)**                                                                                             |   | **$26**    |   |   | (1 | ) |   | $38 |   |   | (1 | ) |   | $38 |   |
| Nonvested                  at                  end of the period       |   |                                      | **412**  |                                                                                              |   | **$26**    |   |   | 396 |   |   | $24 |   |   | 396 |   |   | $24 |   |

|                                                                         |   | **Nine                    Months Ended****September                    30** |   |     |     |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|----------|----------|
|                                                                         |   | **2007**                                                                    |   | **2006** |     | **2006** |   |
| Weighted                    average grant-date fair value                    |   | **$18**                                                                     |   |     | $38      |   |   | $38 |   |   |
| Fair                    value                    granted                     |   | **$3,034**                                                                  |   |     | $5,220   |   |   | $5,220 |   |   |
| Fair                    value of                    restricted shares vested |   | **$1,556**                                                                  |   |     | $— |   |   | $— |   |   |

*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      |   |                  **3,414**                                                                                                                                              |   |                                                                                                                                                         |        | **$13**                                                                                                                                                   |   |   | **43** |   |
| Equity                  compensation plans not approved                  by                  security holders |   |                  **—**                                                                                                                                            |   |                                                                                                                                                         |   | **—**                                                                                                                                               |   |   | **—** |   |
|       Total                                                                     |   |  **3,414**                                                                                                                                                              |        |                                                                                                                                                         |        | **$13**                                                                                                                                                   |   |   | **43** |   |

----

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

----

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

|   | · | $2.0                million                more than the amount of debt reported on the consolidated balance                sheet at                September 30, 2007 and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

*Warranties*

|                                                                                                                               |   | **Three                  Months Ended****September                  30** |        | **Nine                  Months Ended****September                  30** |   |     |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-------------|-------------------------------------------------------------------------|--------|----------|--------|
|                                                                                                                               |   | **2007**                                                                 |        | **2006**                                                                |   | **2007** |   | **2006** |   | **2006** |   |
| Balance                  at                  beginning of    the                  period                            |   | **$**                                                                    | **7,002**   |                                                                    | $      | 7,163    |   | **$** | **7,155** |   | $ | 5,404 |   | $ | 5,404 |   |
|    Provision                  for warranties                                                                        |   |                                                                     | **691**     |                                                                    |   | 472      |   |   | **1,036** |   |   | 2,885 |   |   | 3,009 |   |
|    Provision                  for warranties       from                  acquisitions |   |                                                                     | **—** |                                                                    |   | 22       |   |   | **—** |   |   | 117 |   |   | 117 |   |
|    Warranty                  charges                                                                                |   |                                                                     | **(505**    | **)**                                                                   |   | (331     | )      |   | **(1,003** | **)** |   | (1,080 | ) |   | (1,375 | ) |
| Balance                  at                  end of the    period                                                   |   | **$**                                                                    | **7,188**   |                                                                    | $      | 7,326    |   | **$** | **7,188** |   | $ | 7,326 |   | $ | 7,155 |   |

*Legal      Proceedings*

----

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

*SelectBuild*

*BMC      West*

*Corporate*

----

|                                                       |   |   | **Sales**     |   |       | **Income****(Loss)                  from Continuing****Operations****Before** |   |      |          |   |   |                                                    |   |   |                                    |   |
|------------------------------------------------------------|--------|--------|---------------|--------|------------|-------------------------------------------------------------------------------|--------|-----------|---------------|--------|--------|---------------------------------------------------------|--------|--------|-----------------------------------------|--------|
|                                                       |   |   | **Total**     |   |       | **Inter-****Segment**                                                         |   |      | **Trade**     |   |   | **Taxes                  and****Minority****Interests** |   |   | **Depreciation****and****Amortization** |   |   | **Capital****(1)****Expenditures** |   |   | **Assets** |   |
| **Three                  Months Ended September 30, 2007** |   |   |          |   |       |                                                                          |   |      |          |   |
| SelectBuild                                                |   | **$**  | **298,597**   |   | **$**      | **(45**                                                                       | **)**  | **$**     | **298,552**   |   | **$**  | **3,408**                                               |   | **$**  | **8,127**                               |   | **$** | **749** |   | **$** | **736,456** |   |
| BMC                  West                                  |   |   | **320,312**   |   |       | **(584**                                                                      | **)**  |      | **319,728**   |   |   | **20,623**                                              |   |   | **3,038**                               |   |   | **4,671** |   |   | **420,887** |   |
| Corporate                                                  |   |   | **—**   |   |       | **—**                                                                   |   |      | **—**   |   |   | **(13,896**                                             | **)**  |   | **1,196**                               |   |   | **354** |   |   | **147,427** |   |
| Discontinued                     operations |   |   | **—**   |   |       | **—**                                                                   |   |      | **—**   |   |   | **—**                                             |   |   | **—**                             |   |   | **4** |   |   | **1,560** |   |
|                                                       |   | **$**  | **618,909**   |   | **$**      | **(629**                                                                      | **)**  | **$**     | **618,280**   |   |   | **10,135**                                              |   | **$**  | **12,361**                              |   | **$** | **5,778** |   | **$** | **1,306,330** |   |
| Interest                  expense                          |   |   |          |   |       |                                                                          |   |      |          |   |   | **8,751**                                               |   |   |                                    |   |   |   |   |   |   |   |
|                                                       |   |   |          |   |       |                                                                          | **$**  | **1,384** |          |   |   |                                                    |   |   |                                    |   |   |   |
|                                                       |   |   |          |   |       |                                                                          |   |      |          |   |   |                                                    |   |   |                                    |
| **Three                  Months Ended September 30, 2006** |   |   |          |   |       |                                                                          |   |      |          |   |
| SelectBuild                                                |   | $      | 448,743       |   | $          | (10,729                                                                       | )      | $         | 438,014       |   | $      | 36,918                                                  |   | $      | 8,467                                   |   | $ | 10,400 |   | $ | 800,592 |   |
| BMC                  West                                  |   |   | 380,140       |   |       | (360                                                                          | )      |      | 379,780       |   |   | 31,403                                                  |   |   | 3,107                                   |   |   | 11,853 |   |   | 504,511 |   |
| Corporate                                                  |   |   | —       |   |       | —                                                                       |   |      | —       |   |   | (5,587                                                  | )      |   | 790                                     |   |   | 1,788 |   |   | 107,061 |   |
| Discontinued                     operations |   |   | —       |   |       | —                                                                       |   |      | —       |   |   | —                                                 |   |   | —                                 |   |   | 4 |   |   | 9,683 |   |
|                                                       |   | $      | 828,883       |   | $          | (11,089                                                                       | )      | $         | 817,794       |   |   | 62,734                                                  |   | $      | 12,364                                  |   | $ | 24,045 |   | $ | 1,421,847 |   |
| Interest                  expense                          |   |   |          |   |       |                                                                          |   |      |          |   |   | 8,566                                                   |   |   |                                    |   |   |   |   |   |   |   |
|                                                       |   |   |          |   |       |                                                                          | $      | 54,168    |          |   |   |                                                    |   |   |                                    |   |   |   |
|                                                       |   |   |          |   |       |                                                                          |   |      |          |   |   |                                                    |   |   |                                    |
| **Nine                  Months Ended September 30, 2007**  |   |   |          |   |       |                                                                          |   |      |          |   |
| SelectBuild                                                |   | **$**  | **937,952**   |   | **$**      | **(178**                                                                      | **)**  | **$**     | **937,774**   |   | **$**  | **21,696**                                              |   | **$**  | **24,126**                              |   | **$** | **8,029** |   | **$** | **736,456** |   |
| BMC                  West                                  |   |   | **929,246**   |   |       | **(1,207**                                                                    | **)**  |      | **928,039**   |   |   | **63,219**                                              |   |   | **8,965**                               |   |   | **11,423** |   |   | **420,887** |   |
| Corporate                                                  |   |   | **—**   |   |       | **—**                                                                   |   |      | **—**   |   |   | **(37,679**                                             | **)**  |   | **3,289**                               |   |   | **2,455** |   |   | **147,427** |   |
| Discontinued                     operations |   |   | **—**   |   |       | **—**                                                                   |   |      | **—**   |   |   | **—**                                             |   |   | **—**                             |   |   | **79** |   |   | **1,560** |   |
|                                                       |   | **$**  | **1,867,198** |   | **$**      | **(1,385**                                                                    | **)**  | **$**     | **1,865,813** |   |   | **47,236**                                              |   | **$**  | **36,380**                              |   | **$** | **21,986** |   | **$** | **1,306,330** |   |
| Interest                  expense                          |   |   |          |   |       |                                                                          |   |      |          |   |   | **26,470**                                              |   |   |                                    |   |   |   |   |   |   |   |
|                                                       |   |   |          | **$**  | **20,766** |                                                                          |   |      |          |   |   |                                                    |   |   |                                    |
|                                                       |   |   |          |   |       |                                                                          |   |      |          |   |   |                                                    |   |   |                                    |
| **Nine                  Months Ended September 30, 2006**  |   |   |          |   |       |                                                                          |   |      |          |   |
| SelectBuild                                                |   | $      | 1,450,415     |   | $          | (12,172                                                                       | )      | $         | 1,438,243     |   | $      | 130,091                                                 |   | $      | 22,030                                  |   | $ | 31,008 |   | $ | 800,592 |   |
| BMC                  West                                  |   |   | 1,169,809     |   |       | (1,553                                                                        | )      |      | 1,168,256     |   |   | 99,471                                                  |   |   | 8,957                                   |   |   | 30,976 |   |   | 504,511 |   |
| Corporate                                                  |   |   | —       |   |       | —                                                                       |   |      | —       |   |   | (49,781                                                 | )      |   | 2,146                                   |   |   | 5,078 |   |   | 107,061 |   |
| Discontinued                     operations |   |   | —       |   |       | —                                                                       |   |      | —       |   |   | —                                                 |   |   | —                                 |   |   | 27 |   |   | 9,683 |   |
|                                                       |   | $      | 2,620,224     |   | $          | (13,725                                                                       | )      | $         | 2,606,499     |   |   | 179,781                                                 |   | $      | 33,133                                  |   | $ | 67,089 |   | $ | 1,421,847 |   |
| Interest                  expense                          |   |   |          |   |       |                                                                          |   |      |          |   |   | 20,621                                                  |   |   |                                    |   |   |   |   |   |   |   |
|                                                       |   |   |          |   |       |                                                                          | $      | 159,160   |          |   |   |                                                    |   |   |                                    |   |   |   |
|                                                       |   |   |          |   |       |                                                                          |   |      |          |   |   |                                                    |   |   |                                    |
| **Year                  Ended December 31, 2006**          |   |   |          |   |       |                                                                          |   |      |          |   |
| SelectBuild                                                |   | $      | 1,744,092     |   | $          | (12,278                                                                       | )      | $         | 1,731,814     |   | $      | 148,416                                                 |   | $      | 30,002                                  |   | $ | 33,409 |   | $ | 722,328 |   |
| BMC                  West                                  |   |   | 1,473,219     |   |       | (1,766                                                                        | )      |      | 1,471,453     |   |   | 119,737                                                 |   |   | 11,987                                  |   |   | 33,107 |   |   | 479,101 |   |
| Corporate                                                  |   |   | —       |   |       | —                                                                       |   |      | —       |   |   | (75,484                                                 | )      |   | 3,104                                   |   |   | 6,174 |   |   | 118,880 |   |
| Discontinued                     operations |   |   | —       |   |       | —                                                                       |   |      | —       |   |   | —                                                 |   |   | —                                 |   |   | 28 |   |   | 8,602 |   |
|                                                       |   | $      | 3,217,311     |   | $          | (14,044                                                                       | )      | $         | 3,203,267     |   |   | 192,669                                                 |   | $      | 45,093                                  |   | $ | 72,718 |   | $ | 1,328,911 |   |
| Interest                  expense                          |   |   |          |   |       |                                                                          |   |      |          |   |   | 29,082                                                  |   |   |                                    |   |   |   |   |   |   |   |
|                                                       |   |   |          |   |       |                                                                          | $      | 163,587   |          |   |   |                                                    |   |   |                                    |   |   |   |

----

***15.***
***Quarterly      Results of Operations***

|                                                                         |   | **First** |        | **Second** |   | **Third**   |   | **Fourth** |        |
|------------------------------------------------------------------------------|--------|-----------|-------------|------------|--------|-------------|--------|------------|-------------|
| **2007**                                                                     |   |      |        |       |   |        |   |       |        |
| Sales                                                                        |   | **$**     | **561,342** |       | **$**  | **686,191** |   | **$**      | **618,280** |   | **$** | **—** |   |
| Income                  (loss)                  from continuing operations   |   | **$**     | **(5,417**  | **)**      | **$**  | **18,601**  |   | **$**      | **1,118**   |   | **$** | **—** |   |
|    Income                  from discontinued operations       |   | **$**     | **451**     |       | **$**  | **816**     |   | **$**      | **3,050**   |   | **$** | **—** |   |
|                                                                         |   |      |        |       |   |        |   |       |        |   |   |   |   |
|    Net                  income (loss) per share:              |   |      |        |       |   |        |   |       |        |   |   |   |   |
|       Continuing                  operations   |   |      | **$(0.19**  | **)**      |   | **$0.63**   |   |       | **$0.04**   |   | **** | **$—** |   |
|       Discontinued                  operations |   |      | **0.02**    |       |   | **0.03**    |   |       | **0.10**    |   |   | **—** |   |
|          Diluted                |   |      | **$(0.17**  | **)**      |   | **$0.66**   |   |       | **$0.14**   |   | **** | **$—** |   |
|                                                                         |   |      |        |       |   |        |   |       |        |   |   |   |   |
| Common                  share                  prices:                       |   |      |        |       |   |        |   |       |        |   |   |   |   |
| High                                                                         |   |      | **$24.93**  |       |   | **$18.36**  |   |       | **$15.23**  |   | **** | **$—** |   |
| Low                                                                          |   |      | **$18.11**  |       |   | **$13.34**  |   |       | **$10.58**  |   | **** | **$—** |   |
|                                                                         |   |      |        |       |   |        |   |       |        |   |   |   |   |
| **2006**                                                                     |   |      |        |       |   |        |   |       |        |   |   |   |   |
| Sales                                                                        |   | $         | 876,993     |       | $      | 911,712     |   | $          | 817,794     |   | $ | 596,768 |   |
| Income                  from                  continuing operations          |   | $         | 27,738      |       | $      | 33,482      |   | $          | 34,400      |   | $ | 3,483 |   |
| Income                  from                  discontinued operations        |   | $         | 331         |       | $      | 693         |   | $          | 948         |   | $ | 999 |   |
|                                                                         |   |      |        |       |   |        |   |       |        |   |   |   |   |
| Net                  income                  per share:                      |   |      |        |       |   |        |   |       |        |   |   |   |   |
| Continuing                  operations                                       |   |      | $0.94       |       |   | $1.13       |   |       | $1.17       |   |   | $0.12 |   |
| Discontinued                  operations                                     |   |      | 0.01        |       |   | 0.03        |   |       | 0.03        |   |   | 0.03 |   |
|       Diluted                                  |   |      | $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                49%                interest in our existing door and molding installation services business                in Las Vegas, Nevada (September) |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | remaining                49%                interest in our existing truss manufacturer business in Fort Pierce,                Florida (September) |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | remaining                33%                interest in our existing framing services business in Delaware, Maryland                and Virginia (May) |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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**

***THIRD      QUARTER OF 2007 COMPARED TO 2006***

|                                                                                                                                    |   | **Three                  Months Ended****September                  30** |        |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-------------|
|                                                                                                                                    |   | **2007**                                                                 |        | **2006** |   |
| **Sales**                                                                                                                               |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| Construction                  services                                                                                                  |   | **$**                                                                    | **352**     |   |   | 57.0 | % | $ | 486 |   |   | 59.4 | % |
| Building                  products                                                                                                      |   |                                                                     | **266**     |   |   | 43.0 |   |   | 332 |   |   | 40.6 |   |
| **Total                  sales**                                                                                                        |   |                                                                     | **618**     |   |   | 100.0 |   |   | 818 |   |   | 100.0 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| **Costs                  and operating expenses**                                                                                       |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| Cost                  of goods                  sold                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| Construction                  services                                                                                                  |   |                                                                     | **307**     |   |   | 87.2 |   |   | 400 |   |   | 82.3 |   |
| Building                  products                                                                                                      |   |                                                                     | **193**     |   |   | 72.6 |   |   | 239 |   |   | 72.0 |   |
| Selling,                  general and administrative expenses                                                                           |   |                                                                     | **110**     |   |   | 17.8 |   |   | 118 |   |   | 14.4 |   |
| Other                  income,                  net                                                                                     |   |                                                                     | **(2**      | **)** |   | (0.3** ** | ) |   | (2 | ) |   | (0.2** ** | ) |
| Total                  costs                  and operating expenses                                                                    |   |                                                                     | **608**     |   |   | 98.4 |   |   | 755 |   |   | 92.3 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| **Income                  from operations**                                                                                             |   |                                                                     | **10**      |   |   | 1.6 |   |   | 63 |   |   | 7.7 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                                       |   |                                                                     | **9**       |   |   | 1.5 |   |   | 9 |   |   | 1.1 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| **Income                  from continuing operations before****   income                  taxes and minority interests** |   |                                                                     | **1**       |   |   | 0.1 |   |   | 54 |   |   | 6.6 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| Income                  taxes                  (benefit)                                                                                |   |                                                                     | **—** |   |   | — |   |   | 18 |   |   | 2.2 |   |
| Minority                  interests income, net of income taxes                                                                         |   |                                                                     | **—** |   |   | — |   |   | (2 | ) |   | 0.2 |   |
| **Income                  from continuing operations**                                                                                  |   |                                                                     | **1**       |   |   | 0.1 |   |   | 34 |   |   | 4.2 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| Income                  from                  discontinued operations prior to       sale                 |   |                                                                     | **1**       |   |   | 0.2 |   |   | 2 |   |   | 0.2 |   |
| Gain                  on sale                  of discontinued operations                                                               |   |                                                                     | **4**       |   |   | 0.6 |   |   | — |   |   | — |   |
| Income                  taxes                                                                                                           |   |                                                                     | **2**       |   |   | 0.3 |   |   | 1 |   |   | 0.1 |   |
| **Income                  from discontinued operations**                                                                                |   |                                                                     | **3**       |   |   | 0.5 |   |   | 1 |   |   | 0.1 |   |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| **Net                  income**                                                                                                         |   | **$**                                                                    | **4**       |   |   | 0.6 | % | $ | 35 |   |   | 4.3 | % |
|                                                                                                                                    |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
| **Net                  income per share:**                                                                                              |   |                                                                     |        |   |   |   |   |   |   |   |   |   |   |
|    Continuing                  operations                                                                                |   |                                                                     | **$0.04**   |   |   |   |   |   | $1.17 |   |   |   |   |
|    Discontinued                  operations                                                                              |   |                                                                     | **0.10**    |   |   |   |   |   | 0.03 |   |   |   |   |
|       Diluted                                                                                             |   |                                                                     | **$0.14**   |   |   |   |   |   | $1.20 |   |   |   |   |

----

***Consolidated      Financial Results***

|                                                     |   | **2007**                       |    | **2006**                       |   | **$                  Change**  |   | **%                  Change**  |   |
|----------------------------------------------------------|--------|--------------------------------|---------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
| **Sales**                                                |   |                      |    |                      |   |                      |   |                      |   |
|    Construction                  services |   | **$**                          | **352** |                           | $      | 486                            |   | $                              | (134   | ) |   | (28 | )% |
|    Building                  products     |   |                           | **266** |                           |   | 332                            |   |                           | (66    | ) |   | (20 | )% |
|                                                     |   | **$**                          | **618** |                           | $      | 818                            |   | $                              | (200   | ) |   | (24 | )% |
|                                                     |   |                           |         |                           |   |                                |   |                           |        |   |   |  |   |
| **Income                  from operations**              |   | **$**                          | **10**  |                           | $      | 63                             |   | $                              | (53    | ) |   | (84 | )% |

*Income      Taxes*

----

***Business      Segments***

|                      |   | **2007**  |        | **2006**                                    |
|---------------------------|--------|-----------|-------------|---------------------------------------------|
|                      |   | **Sales** |        | **Income                  from Operations** |   | **Sales** |   | **Income                  from Operations** |   |
| SelectBuild               |   | **$**     | **298**     |                                        | **$** | **3** |   | $ | 438 |   | $ | 37 |   |
| BMC                  West |   |      | **320**     |                                        |   | **21** |   |   | 380 |   |   | 31 |   |
| Corporate                 |   |      | **—** |                                        |   | **(14** | **)** |   | — |   |   | (5 | ) |
|                      |   | **$**     | **618**     |                                        | **$** | **10** |   | $ | 818 |   | $ | 63 |   |

***SelectBuild***

|                                                  |   | **2007** |    | **2006** |   | **$                  Change** |   | **%                  Change** |    |
|-------------------------------------------------------|--------|----------|---------|----------|--------|-------------------------------|--------|-------------------------------|---------|
| **Sales**                                             |   | **$**    | **298** |     | $      | 438                           |   | $                             | (140    | ) |   | (32 | )% |
|    Less:                  Acquisitions |   |     | **(5**  | **)**    |   | —                       |   |                          | (5      | ) |   | — |   |
|                                                  |   | **$**    | **293** |     | $      | 438                           |   | $                             | (145    | ) |   | (33 | )% |
|                                                  |   |     |         |     |   |                               |   |                          |         |   |   |  |   |
| **Income                  from operations**           |   | **$**    | **3**   |     | $      | 37                            |   | $                             | (34     | ) |   | (92 | )% |
|    Less:                  Acquisitions |   |     | — |     |   | —                       |   |                          | — |   |   | — |   |
|                                                  |   | **$**    | **3**   |     | $      | 37                            |   | $                             | (34     | ) |   | (92 | )% |

***BMC      West***

|                                        |   | **2007** |    | **2006** |   | **$                  Change** |   | **%                  Change** |   |
|---------------------------------------------|--------|----------|---------|----------|--------|-------------------------------|--------|-------------------------------|--------|
| **Sales**                                   |   | **$**    | **320** |     | $      | 380                           |   | $                             | (60    | ) |   | (16 | )% |
|                                        |   |     |         |     |   |                               |   |                          |        |   |   |  |   |
| **Income                  from operations** |   | **$**    | **21**  |     | $      | 31                            |   | $                             | (10    | ) |   | (32 | )% |

----

|   | · | reductions                in                the number of employees and related expenses as well as incentive                compensation and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

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

***Corporate***

|                                    |   | **2007** |   | **2006** |   | **$                  Change** |   | **%                  Change** |   |
|-----------------------------------------|--------|----------|--------|----------|--------|-------------------------------|--------|-------------------------------|--------|
| **Operating                  expenses** |   | **$**    | **14** |     | $      | 5                             |   | $                             | 9      |   |   | 180 | % |

----

***NINE      MONTHS OF 2007 COMPARED TO 2006***

|                                                                                                                                    |   | **Nine                  Months Ended****September                  30** |        |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|-------------|
|                                                                                                                                         |   | **2007**                                                                |        | **2006**                       |   |
| **Sales**                                                                                                                               |   |                                                                    |        |   |   |
| Construction                  services                                                                                                  |   | **$**                                                                   | **1,077**   |   |   | 57.7 | % | $ | 1,595 |   |   | 61.2 | % |
| Building                  products                                                                                                      |   |                                                                    | **789**     |   |   | 42.3 |   |   | 1,011 |   |   | 38.8 |   |
| **Total                  sales**                                                                                                        |   |                                                                    | **1,866**   |   |   | 100.0 |   |   | 2,606 |   |   | 100.0 |   |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| **Costs                  and operating expenses**                                                                                       |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| Cost                  of goods                  sold                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| Construction                  services                                                                                                  |   |                                                                    | **927**     |   |   | 86.1 |   |   | 1,314 |   |   | 82.4 |   |
| Building                  products                                                                                                      |   |                                                                    | **573**     |   |   | 72.6 |   |   | 737 |   |   | 72.9 |   |
|    Impairment                  of assets                                                                                 |   |                                                                    | **—** |   |   | — |   |   | 2 |   |   | 0.1 |   |
| Selling,                  general and administrative expenses                                                                           |   |                                                                    | **333**     |   |   | 17.8 |   |   | 377 |   |   | 14.5 |   |
| Other                  income,                  net                                                                                     |   |                                                                    | **(14**     | **)** |   | (0.7 | ) |   | (4 | ) |   | (0.2 | ) |
| Total                  costs                  and operating expenses                                                                    |   |                                                                    | **1,819**   |   |   | 97.5 |   |   | 2,426 |   |   | 93.1 |   |
|                                                                                                                                    |   |                                                                    |        |   |   |   |   |   |   |   |   |   |   |
| **Income                  from operations**                                                                                             |   |                                                                    | **47**      |   |   | 2.5 |   |   | 180 |   |   | 6.9 |   |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| Interest                  expense                                                                                                       |   |                                                                    | **26**      |   |   | 1.4 |   |   | 21 |   |   | 0.8 |   |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| **Income                  from continuing operations before****   income                  taxes and minority interests** |   |                                                                    | **21**      |   |   | 1.1 |   |   | 159 |   |   | 6.1 |   |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| Income                  taxes                  (benefit)                                                                                |   |                                                                    | **5**       |   |   | 0.3 |   |   | 55 |   |   | 2.1 |   |
| Minority                  interests income, net of income taxes                                                                         |   |                                                                    | **(1**      | **)** |   | — |   |   | (8 | ) |   | 0.3 |   |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| **Income                  from continuing operations**                                                                                  |   |                                                                    | **15**      |   |   | 0.8 |   |   | 96 |   |   | 3.7 |   |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| Income                  from                  discontinued operations prior to       sale                 |   |                                                                    | **3**       |   |   | 0.2 |   |   | 3 |   |   | 0.1 |   |
| Gain                  on sale                  of discontinued operations                                                               |   |                                                                    | **4**       |   |   | 0.2 |   |   | — |   |   | — |   |
| Income                  taxes                                                                                                           |   |                                                                    | **3**       |   |   | 0.2 |   |   | 1 |   |   | — |   |
| **Income                  from discontinued operations**                                                                                |   |                                                                    | **4**       |   |   | 0.2 |   |   | 2 |   |   | 0.1 |   |
|                                                                                                                                    |   |                                                               |        |   |   |    |   |    |   |   |   |   |   |
| **Net                  income**                                                                                                         |   | **$**                                                                   | **19**      |   |   | 1.0 | % | $ | 98 |   |   | 3.8 | % |
|                                                                                                                                    |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
| **Net                  income per share:**                                                                                              |   |                                                                    |             |   |   |  |   |   |  |   |   |  |   |
|    Continuing                  operations                                                                                |   | **$**                                                                   | **0.48**    |   |   |  |   | $ | 3.23 |   |   |  |   |
|    Discontinued                  operations                                                                              |   |                                                                    | **0.15**    |   |   |  |   |   | 0.07 |   |   |  |   |
|       Diluted                                                                                             |   | **$**                                                                   | **0.63**    |   |   |  |   | $ | 3.30 |   |   |  |   |

----

***Consolidated      Financial Results***

|                                                   |   | **2007**           |      | **2006**           |   | **$                Change** |   | **%                Change** |   |
|--------------------------------------------------------|--------|--------------------|-----------|--------------------|--------|-----------------------------|--------|-----------------------------|--------|
| **Sales**                                              |   |     |      |     |   |              |   |              |   |
|    Construction                services |   | **$**              | **1,077** |               | $      | 1,595                       |   | $                           | (518   | ) |   | (32 | )% |
|    Building                products     |   |               | **789**   |               |   | 1,011                       |   |                        | (222   | ) |   | (22 | )% |
|                                                   |   | **$**              | **1,866** |               | $      | 2,606                       |   | $                           | (740   | ) |   | (28 | )% |
|                                                   |   |               |           |               |   |                             |   |                        |        |   |   |  |   |
| **Income                from operations**              |   | **$**              | **47**    |               | $      | 180                         |   | $                           | (133   | ) |   | (74 | )% |

|   | · | lower                sales,                particularly construction services and the impact to sales of a decrease                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               |   | **$**     | **938**     |                                        | **$**  | **22** |   | $ | 1,438 |   | $ | 130 |   |
| BMC                  West |   |      | **928**     |                                        |   | **63** |   |   | 1,168 |   |   | 99 |   |
| Corporate                 |   |      | **—** |                                        |   | **(38** | **)** |   | — |   |   | (49 | ) |
|                      |   | **$**     | **1,866**   |                                        | **$**  | **47** |   | $ | 2,606 |   | $ | 180 |   |

***SelectBuild***

|                                                  |   | **2007** |    | **2006** |   | **$                  Change** |   | **%                  Change** |   |
|-------------------------------------------------------|--------|----------|---------|----------|--------|-------------------------------|--------|-------------------------------|--------|
| **Sales**                                             |   | **$**    | **938** |     | $      | 1,438                         |   | $                             | (500   | ) |   | (35 | )% |
|    Less:                  Acquisitions |   |     | **(70** | **)**    |   | —                       |   |                          | (70    | ) |   | — |   |
|                                                  |   | **$**    | **868** |     | $      | 1,438                         |   | $                             | (570   | ) |   | (40 | )% |
|                                                  |   |     |         |     |   |                               |   |                          |        |   |   |  |   |
| **Income                  from operations**           |   | **$**    | **22**  |     | $      | 130                           |   | $                             | (108   | ) |   | (83 | )% |
|    Less:                  Acquisitions |   |     | **(8**  | **)**    |   | —                       |   |                          | (8     | ) |   | — |   |
|                                                  |   | **$**    | **14**  |     | $      | 130                           |   | $                             | (116   | ) |   | (89 | )% |

----

***BMC        West***

|                                                    |   | **2007** |        | **2006** |   | **$****Change** |   | **%****Change** |    |
|---------------------------------------------------------|--------|----------|-------------|----------|--------|-----------------|--------|-----------------|---------|
| **Sales**                                               |   | **$**    | **928**     |     | $      | 1,168           |   | $               | (240    | ) |   | (21 | )% |
|    Less:                    Acquisitions |   |     | **(9**      | **)**    |   | —         |   |            | (9      | ) |   | — |   |
|                                                    |   | **$**    | **919**     |     | $      | 1,168           |   | $               | (249    | ) |   | (21 | )% |
|                                                    |   |     |        |     |   |            |   |            |    |   |   |   |   |
| **Income                    from operations**           |   | **$**    | **63**      |     | $      | 99              |   | $               | (36     | ) |   | (36 | )% |
|    Less:                    Acquisitions |   |     | **—** |     |   | —         |   |            | — |   |   | — |   |
|                                                    |   | **$**    | **63**      |     | $      | 99              |   | $               | (36     | ) |   | (36 | )% |

|   | · | reductions                  in                  the number of employees and related expenses as well as incentive                  compensation and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

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

***Corporate***

|                                      |   | **2007** |   | **2006** |   | **$****Change** |   | **%****Change** |   |
|-------------------------------------------|--------|----------|--------|----------|--------|-----------------|--------|-----------------|--------|
| **Operating                    expenses** |   | **$**    | **38** |     | $      | 49              |   | $               | (11    | ) |   | (22 | )% |

----

**LIQUIDITY        AND CAPITAL RESOURCES**

*Operations*

*Capital        Investment and Acquisitions*

*Financing*

----

*Revolver*

*Term        Note*

*Other*

*Expansion        of Credit Facility, Covenants and Maturities*

| 2007       |   | $      | 1,277   |   |
|------------|--------|--------|---------|--------|
| 2008       |   |   | 4,792   |   |
| 2009       |   |   | 4,109   |   |
| 2010       |   |   | 3,824   |   |
| 2011       |   |   | 32,409  |   |
| Thereafter |   |   | 332,445 |   |
|       |   | $      | 378,856 |   |

*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*

----

**PART      II - OTHER INFORMATION**

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

----

**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.*

----

*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      trends 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.*

----

*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. *

----

*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.*

----

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

----

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

----

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

----

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

----

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

| (a)    |   | Exhibits   |   |                                                                                                                                  |
|--------|--------|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|   |   |       |   |                                                                                                                                  |
|   |   | **Number** |   | **Description**                                                                                                                       |
|   |   |       |   |                                                                                                                                  |
|   |   | 11.0       |   | Statement                regarding computation of earnings per share (see Note 3 to Consolidated                Financial Statements) |
|   |   |       |   |                                                                                                                                  |
|   |   | 31.1       |   | Section                302                Certification                                                                               |
|   |   |       |   |                                                                                                                                  |
|   |   | 31.2       |   | Section                302                Certification                                                                               |
|   |   |       |   |                                                                                                                                  |
|   |   | 32.0       |   | Section                906                Certifications                                                                              |

----

**SIGNATURES**

|                                                 |                                                                                                                                                                                                |                                  |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                 | BUILDING MATERIALS              HOLDING              CORPORATION                                                                                                                                    |
|                                            |                                                                                                                                                                                           |                             |
| Date:                October                31, 2007 |                                                                                                                                                                                                     | */s/                Robert E. Mellor* |
|                                                 | Robert                E.                MellorChairman                of                the Board, President and Chief                Executive Officer(Principal                Executive Officer) |

|                                                 |                                                                                                                                                                                       |                                   |
|------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
| Date:                October                31, 2007 |                                                                                                                                                                                            | */s/                William M. Smartt* |
|                                                 | William                M.                SmarttSenior                Vice                President and Chief                Financial Officer (Principal                Financial Officer) |

----