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**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**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**

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**Back            to Table of Contents**

**FORM        10-Q**

**INDEX**

|                                                                                                                                                                                    | **Page****Number** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
|                                                                                                                                                                                    |               |
| **PART                  I - FINANCIAL INFORMATION**                                                                                                                                     |               |
|                                                                                                                                                                                    |               |
| **Item                  1**-                  Financial                  Statements (unaudited)                                                                                         |               |
| Consolidated                  Statements of Income for the Three and Nine                  Months Ended September 30, 2006 and 2005                                                     | 2                  |
| Consolidated                  Balance Sheets as of September 30, 2006 and                  December 31, 2005                                                                            | 3                  |
| Consolidated                  Statements of Shareholders’ Equity for the Nine Months Ended September 30,                  2006 and                  2005                          | 4                  |
| Consolidated                  Statements of Cash Flows for the Nine Months Ended                  September 30, 2006 and 2005                                                           | 5                  |
| Notes                  to Consolidated Financial                  Statements                                                                                                            | 7                  |
|                                                                                                                                                                                    |               |
| **Item                  2**                  -                  Management's Discussion and Analysis of Financial Condition and                  Results of                  Operations | 28                 |
|                                                                                                                                                                                    |               |
| **Item                  3**                  -                  Quantitative and Qualitative Disclosures about Market                  Risk                                             | 42                 |
|                                                                                                                                                                                    |               |
| **Item                  4**                  - Controls                  and Procedures                                                                                                 | 43                 |
|                                                                                                                                                                                    |               |
|                                                                                                                                                                                    |               |
| **PART                  II - OTHER INFORMATION**                                                                                                                                        |               |
|                                                                                                                                                                                    |               |
| **Item                  1**                  - Legal                  Proceedings                                                                                                       | 44                 |
|                                                                                                                                                                                    |               |
| **Item                  1A**                  - Risk                  Factors                                                                                                           | 44                 |
|                                                                                                                                                                                    |               |
| **Item                  2**                  -                  Unregistered Sales of Equity Securities and Use of                  Proceeds                                            | 47                 |
|                                                                                                                                                                                    |               |
| **Item                  3**                  - Defaults                  Upon Senior Securities                                                                                         | 47                 |
|                                                                                                                                                                                    |               |
| **Item                  4**                  - Submission                  of Matters to a Vote of Security Holders                                                                     | 48                 |
|                                                                                                                                                                                    |               |
| **Item                  5**                  - Other                  Information                                                                                                       | 48                 |
|                                                                                                                                                                                    |               |
| **Item                  6**                  -                  Exhibits                                                                                                                | 48                 |
|                                                                                                                                                                                    |               |
| **SIGNATURES**                                                                                                                                                                          | 49                 |

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**Back            to Table of Contents**

**Item            1**-**Financial Statements**

**Building      Materials Holding Corporation**

**Consolidated      Statements of Income**

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

**(unaudited)**

|                                                                                    |   |                                    |                               |                                   |   |
|-----------------------------------------------------------------------------------------|--------|-----------------------------------------|------------------------------------|----------------------------------------|--------|
|                                                                                    |   | **Three                  Months Ended** |                               | **Nine                  Months Ended** |   |
|                                                                                    |   | **September                  30**       |                               | **September                  30**      |   |
|                                                                                    |   | **2006**                                |                               |  **2005**                         |   | **2006** |   |  **2005** |   |
| **Sales**                                                                               |   |                                    |                               |                              |   |   |   |    |   |
|    Construction                  services                                |   | **$**                                   | **485,790**                        |                                   | $      | 459,626 |   | **$** | **1,595,579** |   | $ | 1,096,560 |   |
|    Building                  products                                    |   |                                    | **344,809**                        |                                   |   | 360,202 |   |   | **1,041,569** |   |   | 997,717 |   |
| **      Total                  sales**                    |   |                                    | **830,599**                        |                                   |   | 819,828 |   |   | **2,637,148** |   |   | 2,094,277 |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
| **Costs                  and operating expenses **                                 |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
|    Cost                  of goods sold                                   |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
|       Construction                  services              |   |                                    | **391,901**                        |                                   |   | 371,963 |   |   | **1,292,081** |   |   | 889,336 |   |
|       Building                  products                  |   |                                    | **248,190**                        |                                   |   | 261,384 |   |   | **759,934** |   |   | 730,811 |   |
|    Impairment                  of assets                                 |   |                                    | **—**                        |                                   |   | — |   |   | **2,237** |   |   | 463 |   |
|    Selling,                  general and administrative expenses         |   |                                    | **128,041**                        |                                   |   | 112,084 |   |   | **404,012** |   |   | 299,426 |   |
|    Other                  income, net                                    |   |                                    | **(1,804**                         | **)**                                  |   | (1,423 | ) |   | **(4,090** | **)** |   | (2,779 | ) |
|       Total                  costs and operating expenses |   |                                    | **766,328**                        |                                   |   | 744,008 |   |   | **2,454,174** |   |   | 1,917,257 |   |
|                                                                                    |   |                                    |                     |                                   |   |    |   |   |                    |   |   |    |   |
| **Income                  from operations**                                             |   |                                    | **64,271**                         |                                   |   | 75,820 |   |   | **182,974** |   |   | 177,020 |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                       |   |                                    | **8,566**                          |                                   |   | 3,629 |   |   | **20,621** |   |   | 10,177 |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
| Income                  before                  income taxes and minority interests     |   |                                    | **55,705**                         |                                   |   | 72,191 |   |   | **162,353** |   |   | 166,843 |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
| Income                  taxes                                                           |   |                                    | **17,959**                         |                                   |   | 25,474 |   |   | **56,289** |   |   | 58,855 |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
| Minority                  interests income, net of income taxes                         |   |                                    | **(2,398**                         | **)**                                  |   | (5,153 | ) |   | **(8,472** | **)** |   | (11,962 | ) |
|                                                                                    |   |                                    |                     |                                   |   |                     |   |   |                     |   |   |                     |   |
| **Net                  income**                                                         |   | **$**                                   | **35,348**                         |                                   | $      | 41,564 |   | **$** | **97,592** |   | $ | 96,026 |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
| **Net                  income per share:**                                              |   |                                    |                               |                                   |   |   |   |   |   |   |   |   |   |
|    Basic                                                                 |   |                                    | **$1.24**                          |                                   |   | $1.47 |   |   | **$3.42** |   |   | $3.43 |   |
|    Diluted                                                               |   |                                    | **$1.20**                          |                                   |   | $1.40 |   |   | **$3.30** |   |   | $3.28 |   |

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**Back            to Table of            Contents**

**Building        Materials Holding Corporation**

**Consolidated        Balance Sheets**

**(thousands,        except share data)**

**(unaudited)**

|                                                                   |   |                        |          |                         |   |      |                                                                                  |   |                                                                                                     |   |                         |                     |
|------------------------------------------------------------------------|--------|-----------------------------|---------------|------------------------------|--------|-----------|---------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|------------------------------|--------------------------|
|                                                                   |   | **September****30****2006** |          | **December 31****2005** |   |      |                                                                                  |   | **September****30****2006**                                                                              |   | **December 31****2005** |                     |
| **Assets**                                                             |   |                        |          |                         |   |      | **Liabilities,                    Minority Interests and Shareholders’ Equity** |   |                                                                                                     |   |                         |                     |
| Cash                    and cash equivalents                           |   | **$**                       | **47,319**    |                         | $      | 30,078    |                                                                                  |   | Accounts                    payable                                                                      |   | **$**                        | **144,676**              |   | $ | 146,627 |   |
| Marketable                    securities                               |   |                        | **3,006**     |                         |   | 3,645     |                                                                                  |   | Accrued                    compensation                                                                  |   |                         | **62,346**               |   |   | 65,928 |   |
| Receivables,                    net of allowances of $5,256 and $3,756 |   |                        | **376,471**   |                         |   | 363,527   |                                                                                  |   | Insurance                    deductible reserves                                                         |   |                         | **24,115**               |   |   | 21,872 |   |
| Inventory                                                              |   |                        | **176,493**   |                         |   | 168,282   |                                                                                  |   | Other                    accrued                    liabilities                                          |   |                         | **92,095**               |   |   | 51,579 |   |
| Unbilled                    receivables                                |   |                        | **63,906**    |                         |   | 56,128    |                                                                                  |   | Billings                    in                    excess of costs and estimated earnings                 |   |                         | **50,569**               |   |   | 33,799 |   |
| Deferred                    income taxes                               |   |                        | **4,158**     |                         |   | 5,768     |                                                                                  |   | Current                    portion of long-term debt                                                     |   |                         | **13,758**               |   |   | 10,131 |   |
| Prepaid                    expenses and other                          |   |                        | **10,074**    |                         |   | 6,967     |                                                                                  |   |                                                                                                     |   |                         |      |   |   |       |   |
| **Total                    current assets**                            |   |                        | **681,427**   |                         |   | 634,395   |                                                                                  |   | **Total                    current liabilities**                                                         |   |                         | **387,559**              |   |   | 329,936 |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   |                                                                                                     |   |                         |                     |   |   |   |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   | Deferred                    income taxes                                                                 |   |                         | **5,661**                |   |   | 6,911 |   |
| Property                    and                    equipment           |   |                        |          |                         |   |      |                                                                                  |   | Insurance                    deductible reserves                                                         |   |                         | **24,885**               |   |   | 20,753 |   |
|    Land                                                 |   |                        | **62,541**    |                         |   | 47,328    |                                                                                  |   | Long-term                    debt                                                                        |   |                         | **381,718**              |   |   | 278,169 |   |
|    Buildings                    and improvements        |   |                        | **132,106**   |                         |   | 118,556   |                                                                                  |   | Other                    long-term liabilities                                                           |   |                         | **39,709**               |   |   | 30,689 |   |
|    Equipment                                            |   |                        | **187,629**   |                         |   | 166,633   |                                                                                  |   | **Total                    liabilities**                                                                 |   |                         | **839,532**              |   |   | 666,458 |   |
|    Construction                    in progress          |   |                        | **16,826**    |                         |   | 9,485     |                                                                                  |   |                                                                                                     |   |                         |                     |   |   |   |   |
|    Accumulated                    depreciation          |   |                        | **(135,879**  | **)**                        |   | (121,525  | )                                                                                     |   | Minority                    interests                                                                    |   |                         | **13,385**               |   |   | 14,006 |   |
| Marketable                    securities                               |   |                        | **47,417**    |                         |   | 28,875    |                                                                                  |   |                                                                                                     |   |                         |                     |   |   |   |   |
| Deferred                    loan                    costs              |   |                        | **3,514**     |                         |   | 3,616     |                                                                                  |   | Commitments                    and contingent liabilities                                                |   |                         | **—**              |   |   | ―  |   |
| Other                    long-term assets                              |   |                        | **28,119**    |                         |   | 20,465    |                                                                                  |   |                                                                                                     |   |                         |                     |   |   |   |   |
| Other                    intangibles, net                              |   |                        | **100,511**   |                         |   | 55,227    |                                                                                  |   | Shareholders’                    equity                                                            |   |                         |                     |   |   |   |   |
| Goodwill                                                               |   |                        | **297,636**   |                         |   | 187,470   |                                                                                  |   | Common                    shares, $0.001 par                                                             |   |                         |                     |   |   |   |   |
| **Total                    assets**                                    |   | **$**                       | **1,421,847** |                         | $      | 1,150,525 |                                                                                  |   | value:                    authorized 50 million                                                          |   |                         |                     |   |   |   |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   | shares;                    issued and outstanding 29,035,127 and 28,758,580 shares                       |   |                         | **29**                   |   |   | 29 |   |
|                                                                   |   |                        |               |                         |   |      |                                                                                  |   |    Additional                    paid-in capital                                          |   |                         | **150,588**              |   |   | 143,780 |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   |    Unearned                    compensation                                               |   |                         | **—**              |   |   | (2,698 | ) |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   |    Retained                    earnings                                                   |   |                         | **417,359**              |   |   | 328,463 |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   | Accumulated                    other comprehensive income, net                                           |   |                         | **954**                  |   |   | 487 |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   | **Total                    shareholders’ equity**                                                  |   |                         | **568,930**              |   |   | 470,061 |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   |                                                                                                     |   |                         |                     |   |   |   |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   | **Total                    liabilities, minority interests and shareholders'                    equity** |   | **$**                        | **1,421,847**            |   | $ | 1,150,525 |   |
|                                                                   |   |                        |          |                         |   |      |                                                                                  |   |                                                                                                     |   |                         |                     |   |   |   |   |

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**Back              to Table of              Contents**

**Building        Materials Holding Corporation**

**Consolidated        Statements of Shareholders’Equity**

**(thousands)**

**(unaudited)**

|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  |                                                                           |         |              |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|------------|--------|--------------|--------------------------------|--------|-------------------------------------|-------------------|----------|--------------------|---------------------------------------|--------------------------------------------------------------------------------|--------------|-------------------|--------|
|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  | Accumulated                  OtherComprehensive                  Income (Loss) |         |              |   |
|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  | Net                  Unrealized Gain (Loss) From                               |         |              |   |
|                                                                                                                                         |       |   |         | Common                  Shares |   | Additional                  Paid-In |              | Unearned |               | Retained                              | Interest                  Rate                  Swap                           | Marketable   |              |   |   |
|                                                                                                                                         |       |   |         | Shares                         |   |                                | Amount            |     | Capital            |                                  | Compensation                                                                   |         | Earnings          |   | Contracts |   | Securities |   | Total |
| **Balance                  at December 31, 2004**                                                                                            | **27,705** |   | **$**        | **28**                         |   | **$**                               | **124,580 ** |     | **$**              | **(1,383)**                           |                                                                           | **$**        | **205,812 ** |   | **$** | **(1,362)** |   | **$** | **3 ** |   | **$** | **327,678 ** |
|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  |                                                                           |         |              |   |   |   |   |   |   |   |   |   |
|    Net                  income                                                                                                | —    |   |         | —                        |   |                                | —      |     |               | —                          |                                                                           |         | 96,026       |   |   | —  |   |   | —  |   |   | 96,026  |
|    Unrealized                  gain                                                                                           | —    |   |         | —                        |   |                                | —      |     |               | —                          |                                                                           |         | —      |   |   | 2,741  |   |   | —  |   |   | 2,741  |
|       Taxes                  for unrealized gain                                                               | —    |   |         | —                        |   |                                | —      |     |               | —                          |                                                                           |         | —      |   |   | (1,053) |   |   | —  |   |   | (1,053) |
|    Unrealized                  loss                                                                                           | —    |   |         | —                        |   |                                | —      |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | (327) |   |   | (327) |
|       Tax                  benefit for unrealized loss                                                         | —    |   |         | —                        |   |                                | —      |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | 126  |   |   | 126  |
| **   Comprehensive                  income**                                                                                  |       |   |         |                           |   |                                |              |     |               |                                  |                                                                           |         |              |   |   |   |   |   |   |   |   | 97,513  |
|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  |                                                                           |         |              |   |   |   |   |   |   |   |   |   |   |   |   |
|    Issuance                  of restricted shares                                                                             | 116        |   |         | —                        |   |                                | 2,652        |     |               | (2,652)                               |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | ―  |
|       Earned                  compensation expense                                                             | —    |   |         | —                        |   |                                | —      |     |               | 985                              |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | 985  |
|    Share                  options exercised                                                                                   | 835        |   |         | —                        |   |                                | 4,746        |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | 4,746  |
|       Tax                  benefit for share options exercised                                                 | —    |   |         | —                        |   |                                | 8,640        |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | 8,640  |
|    Shares                  issued from Director Plan                                                                          | 14         |   |         | —                        |   |                                | 381          |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | 381  |
|    Shares                  issued from Employee Plan                                                                          | 26         |   |         | —                        |   |                                | 786          |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | 786  |
|    Shares                  issued for acquisition                                                                             | 34         |   |         | —                        |   |                                | 1,000        |     |               | —                          |                                                                           |         | —      |   |   | —  |   |   | —  |   |   | 1,000  |
|    Cash                  dividends on common shares                                                                           | —    |   |    | —                        |   |                           | —      |     |     | —                          |                                                                           |    | (4,698)           |   |    | —  |   |    | —  |   |   | (4,698) |
| **Balance                  at September 30, 2005**                                                                                           | **28,730** |   | **$**        | **28**                         |   | **$**                               | **142,785 ** |     | **$**              | **(3,050)**                           |                                                                           | **$**        | **297,140 ** |   | **$** | **326 ** |   | **$** | **(198)** |   | **$** | **437,031**  |
|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  |                                                                           |         |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                         |       |   |         |                           |   |                                |              |     |               |                                  |                                                                           |         |              |   |   |   |   |   |   |   |   |   |
| **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 ** |

----

**Back              to Table of              Contents**

**Building        Materials Holding Corporation**

**Consolidated        Statements of Cash Flows**

**(thousands)**

**(unaudited)**

|                                                                                                                                        |                                   |
|---------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
|                                                                                                                                        | **Nine                  Months Ended** |
|                                                                                                                                        | **September                  30**      |
| **Operating                  Activities**                                                                                                   | **2006**                               |   | **2005** |
|    Net                  income                                                                                               | **$**                                  | **97,592 ** |   | $ | 96,026  |
|    Items                  in net income not using (providing) cash:                                                          |                                   |   |   |   |   |
|       Minority                  interests, net                                                                |                                   | **8,472 ** |   |   | 11,962  |
|       Depreciation                  and amortization                                                          |                                   | **33,277 ** |   |   | 18,201  |
|       Deferred                  loan cost amortization                                                        |                                   | **                       685 ** |   |   | 671  |
|       Impairment                  of assets                                                                   |                                   | **2,237 ** |   |   | 463  |
|       Share-based                  compensation                                                               |                                   | **6,851 ** |   |   | 1,485  |
|       Gain                  on sale of assets, net                                                            |                                   | **(126)** |   |   | (12) |
|       Realized                  loss on marketable securities, net                                            |                                   | ** 231 ** |   |   | **—**  |
|       Deferred                  income taxes                                                                  |                                   | **2,509 ** |   |   | (1,924) |
|       Tax                  benefit for share options                                                          |                                   | **— ** |   |   | 8,640  |
|       Changes                  in assets and liabilities, net of effects of acquisitions:                     |                                   |   |   |   |   |
|             Receivables,                  net                                   |                                   | **31,834 ** |   |   | (43,988) |
|             Inventory                                                           |                                   | **11,751 ** |   |   | (9,880) |
|             Unbilled                  receivables                               |                                   | **2,323 ** |   |   | (14,043) |
|             Prepaid                  expenses and other current assets          |                                   | **(2,745)** |   |   | 5,061  |
|             Accounts                  payable                                   |                                   | **(13,899)** |   |   | 19,720  |
|             Accrued                  compensation                               |                                   | **(5,033)** |   |   | 22,779  |
|             Insurance                  deductible reserves                      |                                   | **2,243 ** |   |   | 5,486  |
|             Other                  accrued liabilities                          |                                   | **15,608 ** |   |   | 4,795  |
|             Billings                  in excess of costs and estimated earnings |                                   | **(6,787)** |   |   | 4,486  |
|             Other                  long-term assets and liabilities             |                                   | **(8)** |   |   | 11,813  |
|       Other,                  net                                                                             |                                   | **(19)** |   |   | (642) |
|    Cash                  flows provided by operating activities                                                              |                                   | **186,996 ** |   |   | 141,099  |
|                                                                                                                                        |                                   |   |   |   |   |
| **Investing                  Activities**                                                                                                   |                                   |   |   |   |   |
|    Purchases                  of property and equipment                                                                      |                                   | **(47,805)** |   |   | (32,219) |
|    Acquisitions                  and investments in businesses, net of cash acquired                                         |                                   | **(200,725)** |   |   | (138,443) |
|    Proceeds                  from dispositions of property and equipment                                                     |                                   | **1,823 ** |   |   | 639  |
|    Purchase                  of marketable securities                                                                        |                                   | **(38,492)** |   |   | (12,857) |
|                     Proceeds from maturities of marketable securities                                                             |                                   | **20,540**  |   |   | 4,399  |
|    Other,                  net                                                                                               |                                   | **(3,188)** |   |   | 822  |
|    Cash                  flows used by investing activities                                                                  |                                   | **(267,847)** |   |   | (177,659) |
|                                                                                                                                        |                                   |   |   |   |   |
| **Financing                  Activities**                                                                                                   |                                   |   |   |   |   |
|    Net                  borrowings (payments) under revolver                                                                 |                                   | **110,700 ** |   |   | (21,900) |
|    Borrowings                  under term note                                                                               |                                   | **— ** |   |   | 75,000  |
|    Principal                  payments on term note                                                                          |                                   | **(2,813)** |   |   | (939) |
|    Net                  payments on other notes payable                                                                      |                                   | **(984)** |   |   | (4,376) |
|    Increase                  in book overdrafts                                                                              |                                   | **1,793 ** |   |   | 18,073  |
|    Proceeds                  from share options exercised                                                                    |                                   | **663 ** |   |   | 4,746** ** |
|    Tax                  benefit for share options                                                                            |                                   | **707 ** |   |   | —  |
|    Dividends                  paid                                                                                           |                                   | **(7,951)** |   |   | (3,652) |
|    Deferred                  financing costs                                                                                 |                                   | **(583)** |   |   | (2,266) |
|    Distributions                  to minority interests                                                                      |                                   | **(3,980)** |   |   | (1,792) |
|    Other,                  net                                                                                               |                                   | **540 ** |   |   | (379) |
|    Cash                  flows provided by financing activities                                                              |                                   | **98,092 ** |   |   | 62,515  |
|                                                                                                                                        |                              |     |   |    |      |
| **Increase                  in Cash and Cash Equivalents**                                                                                  |                                   | **17,241 ** |   |   | 25,955  |
|                                                                                                                                        |                                   |   |   |   |   |
|    Cash                  and cash equivalents, beginning of period                                                           |                                   | **30,078 ** |   |   | 19,496  |
|    Cash                  and cash equivalents, end of period                                                                 | **$**                                  | **47,319 ** |   | $ | 45,451** ** |
|                                                                                                                                        |                                   |   |   |   |   |
| **Supplemental                  Disclosure of Cash Flow Information**                                                                       |                                   |   |   |   |   |
|    Accrued                  but unpaid dividends                                                                             | **$**                                  | **2,903 ** |   | $ | 2,155  |
|    Cash                  paid for interest                                                                                   | **$**                                  | **18,905 ** |   | $ | 9,715  |
|    Cash                  paid for income taxes                                                                               | **$**                                  | **60,505 ** |   | $ | 46,355  |
|                                                                                                                                        |                                   |   |   |   |   |

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| **Supplemental                  Disclosure of Investing Activities**                                                               |   |              |   |   |          |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|---------------|
|    Fair                  value of assets acquired                                                                   | **$**  | **262,755 ** |   | $      | 229,762  |
|    Liabilities                  assumed                                                                             | **$**  | **62,030 **  |   | $      | 88,681   |
|    Cash                  paid for acquisitions and investments in businesses, net of cash                  acquired | **$**  | **200,725 ** |   | $      | 138,443  |

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**Notes        to Consolidated Financial Statements**

| **1.** | **Basis                  of Presentation** |
|--------|--------------------------------------------|

*Common        Share Split*

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| **2.** | **Net                  Income Per Share** |
|--------|-------------------------------------------|

|                                                                                                                                                          | **Three                  Months Ended****September                  30** |       | **Nine                  Months Ended****September                  30** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|
|                                                                                                                                                          |                                                                     | **2006**   |                                                                    |   | 2005 |   |   | **2006** |   |   | 2005 |
| Net                  income                                                                                                                                   | **$**                                                                    | **35,348** |                                                                    | $ | 41,564 |   | **$** | **97,592** |   | $ | 96,026 |
|                                                                                                                                                          |                                                                     |       |                                                                    |   |   |   |   |   |   |   |   |
| Weighted                  average shares    used                  to determine basic net    income                  per share   |                                                                     | **28,617** |                                                                    |   | 28,285 |   |   | **28,573** |   |   | 27,972 |
| Net                  effect of                  dilutive share   options                  and restricted shares ** **                |                                                                     | **935**    |                                                                    |   | 1,326 |   |   | **996** |   |   | 1,273 |
| Weighted                  average shares used    to                  determine diluted net    income                  per share |                                                                     | **29,552** |                                                                    |   | 29,611 |   |   | **29,569** |   |   | 29,245 |
|                                                                                                                                                          |                                                                     |       |                                                                    |   |   |   |   |   |   |   |   |
| Net                  income                  per share:                                                                                                       |                                                                     |       |                                                                    |   |   |   |   |   |   |   |   |
|    Basic                                                                                                                                       |                                                                     | **$1.24**  |                                                                    |   | $1.47 |   |   | **$3.42** |   |   | $3.43 |
|    Diluted                                                                                                                                     |                                                                     | **$1.20**  |                                                                    |   | $1.40 |   |   | **$3.30** |   |   | $3.28 |
|                                                                                                                                                          |                                                                     |       |                                                                    |   |   |   |   |   |   |   |   |
| Cash                  dividends declared per    share                                                                                          |                                                                     | **$0.10**  |                                                                    |   | $0.075 |   |   | **$0.30** |   |   | $0.165 |

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

*Share-Based        Payment*

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

*Accounting          for          Stock-Based Compensation*

|                                                                                                                                                                                                                                                    | **Three                  Months Ended** |                                                               | **Nine                  Months Ended** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|--------------------------------------------------------------------|----------------------------------------|
|                                                                                                                                                                                                                                                    | **September                  30**       |                                                               | **September                  30**      |
|                                                                                                                                                                                                                                                         | **2005**                                |                                                               | **2005**                               |
| Net                  income,                  as reported                                                                                                                                                                                               | $                                       | 41,564           |                                   | $ | 96,026           |
|    Add:  Share-based employee compensation      expense determined under APB 25, net of      related tax effects |                                    | 214              |                                   |   | 559           |

|    Deduct:  Share-based employee compensation      expense determined under fair value method       for all awards, net of related tax effects |   | (782)                 |   |   | (2,103)               |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------|
| Pro forma net income                                                                                                                                                                                                                                                                            | $      | 40,996           |   | $      | 94,482           |
|                                                                                                                                                                                                                                                                                                           |   |                                                               |   |   |                                                               |
|                                                                                                                                                                                                                                                                                                           |   |                                                               |   |   |                                                               |
| Diluted net income per share:                                                                                                                                                                                                                                                              |   |                                                               |   |   |                                                               |
|    As reported                                                                                                                                                                                                                                                                             |   | $1.40            |   |   | $3.28            |
|    Pro forma                                                                                                                                                                                                                                                                               |   | $1.38            |   |   | $3.23            |

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| **4.** | **Impairment                  of Assets** |
|--------|-------------------------------------------|

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

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

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| **5.** | **Acquisitions                  and Minority Interests** |
|--------|----------------------------------------------------------|

|   | · | In                    August                    2006, SelectBuild acquired a window installation business in                    Arizona for                    approximately $13.8 million in cash of which $0.5 million is                    subject to                    working capital adjustment. Information required to complete                    the purchase                    price is not yet available. Final allocation of the purchase                    price will be                    completed as soon as this information is available. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  July 2006,                  SelectBuild acquired a framing services business in Southern California                  for approximately $78.7 million in cash of which $3.9 million has                  been                  retained for the settlement period. This purchase price is subject                  to                  working capital adjustment. An additional cash payment may be required                  based on operating performance through June 2009. Information required                  to                  complete the purchase price is not yet available. Final allocation                  of the                  purchase price will be completed as soon as this information is                  available. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

|   | · | In                  January                  2006, SelectBuild acquired framing businesses in Palm Springs,                  California                  and Reno, Nevada for $57.1 million in                  cash. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

|   | · | In                  January                  2006, SelectBuild acquired the remaining 20% interest in WBC Construction,                  LLC for $33.5 million in cash of which $30.9 million is payable                  in                  December 2006. An additional cash payment may be required based                  on                  operating performance through December 2006. Information required                  to                  complete the purchase price allocation is not yet available. Final                  allocation of the purchase price will be completed as soon as this                  information is available. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  July 2005,                  SelectBuild acquired a 51% interest in BBP Companies for $9.4 million                  in                  cash and $1.0 million of our common shares. The remaining 49% is                  owned by                  BBP Concrete and is recognized as minority interest. BBP Companies                  provide                  concrete services to high-volume production homebuilders in Arizona. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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|                                                          | **September                  30** | December                  31 |   |               | **September                  30** | December                  31 |
|---------------------------------------------------------------|-----------------------------------|------------------------------|--------|--------------------|-----------------------------------|------------------------------|
|                                                          | **2006**                          |                         | 2005   |               |                              | **2006**                     |   | 2005 |
| Cash                  and cash                  equivalents   | **$**                             | **―**** **        |   | $                  | 1,644                        |                         | Accounts                  payable | **$** | **10,376 ** |   | $ | 46,078  |
| Receivables                                                   |                              | **44,778 **             |   |               | 106,407                      |                         | Accrued                  compensation |   | **1,451 ** |   |   | 7,385  |
| Inventory                                                     |                              | **19,962 **             |   |               | 11,559                       |                         | Insurance                  deductible reserves |   | **―**** ** |   |   | 3,192  |
| Unbilled                  receivables                         |                              | **10,101 **             |   |               | 30,554                       |                         | Other                  accrued                  liabilities |   | **24,908 ** |   |   | 30,014  |
| Deferred                  income taxes                        |                              | **―**** **        |   |               | (6,527)                           |                         | Billings                  in                  excess of costs and |   |   |   |   |   |
| Prepaid                  expenses and other                   |                              | **277 **                |   |               | 4,057                        |                         |    estimated                  earnings |   | **23,557 ** |   |   | 24,436  |
|                                                          |                    |               |   |     |               |                         | Current                  portion of long-term    debt |      | **―**** ** |   |     | 5,605  |
|    Total                  current assets  |                              | **75,118 **             |   |               | 147,694                      |                         |    Total                  current liabilities |   | **60,292 ** |   |   | 116,710  |
|                                                          |                              |                         |   |               |                              |                         |   |   |   |   |   |   |
| Property                  and                  equipment      |                              | **19,284 **             |   |               | 33,406                       |                         | Deferred                  income taxes |   | **(2,149)** |   |   | 8,528  |
| Other                  long-term assets                       |                              | **28 **                 |   |               | 18                           |                         | Long-term                  debt |   | **―**** ** |   |   | 10,048  |
| Other                  intangibles, net                       |                              | **56,313 **             |   |               | 46,824                       |                         | Other                  long-term liabilities |    | **9,000 ** |   |    | ―  |
| Goodwill                                                      |                              | **112,012 **            |   |               | 109,982                      |                         |    Total                  liabilities |   | **67,143 ** |   |   | 135,286  |
|                                                          |                              |                         |   |               |                              |                         |   |   |   |   |   |   |
|                                                          |                    |               |   |          |                    |                         | Minority                  interests |    | **(5,113)** |   |    | (3,172) |
|    Total                  assets               | **$**                             | **262,755 **            |   | $                  | 337,924                      |                         |    Total                  liabilities and minority       interests | **$** | **62,030 ** |   | $ | 132,114  |

|                                              | **Three                  Months Ended** |        | **Nine                  Months Ended** |
|---------------------------------------------------|-----------------------------------------|-------------|----------------------------------------|
|                                              | **September                  30**       |        | **September                  30**      |
|                                                   |                                    | **2006**    |                                   |   | 2005 |   |   | **2006** |   |   | 2005 |
| Sales                                             |                                    |        |                                   |   |   |   |   |   |   |   |   |
|    As reported                | **$**                                   | **830,599** |                                   | $ | 819,828 |   | **$** | **2,637,148** |   | $ | 2,094,277 |
|    Pro forma                  | **$**                                   | **832,076** |                                   | $ | 1,016,316 |   | **$** | **2,714,237** |   | $ | 2,781,577 |
|                                              |                                    |        |                                   |   |   |   |   |   |   |   |   |
| Net income                                   |                                    |        |                                   |   |   |   |   |   |   |   |   |
|    As reported                | **$**                                   | **35,348**  |                                   | $ | 41,564 |   | **$** | **97,592** |   | $ | 96,026 |
|    Pro forma                  | **$**                                   | **36,778**  |                                   | $ | 48,911 |   | **$** | **104,286** |   | $ | 125,499 |
|                                              |                                    |        |                                   |   |   |   |   |   |   |   |   |
| Diluted net income per share: |                                    |        |                                   |   |   |   |   |   |   |   |   |
|    As reported                |                                    | **$1.20**   |                                   |   | $1.40 |   |   | **$3.30** |   |   | $3.28 |
|    Pro forma                  |                                    | **$1.24**   |                                   |   | $1.65 |   |   | **$3.53** |   |   | $4.29 |

|                              | **Call                  Options**                                     |                                                                  | **Put                  Options**                                    |
|-----------------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------------------|---------------------------------------------------------------------|
| BBP                  Companies    | July                  2008                  through June 2015         |                                                                  | July                  2008                  through June 2015       |
| Riggs                  Plumbing   | April                  2008                  through March 2013       |                                                                  | April                  2008                  through March 2013     |
| RCI                  Construction | January                  2008                  through January 2012   |                                                                  | January                  2008                  through January 2012 |
| A-1                  Truss        | September                  2004 through August 2014                   | September                  2009 through August 2014                   |
| WBC                  Mid-Atlantic | October                  2003                  through September 2010 | December                  2006                  through December 2008 |

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| **6.** | **Marketable                  Securities** |
|--------|--------------------------------------------|

|                                                      |   | **September                  30** |   |   | December                  31 |
|-----------------------------------------------------------|--------|-----------------------------------|--------|--------|------------------------------|
|                                                           |   | **2006**                          |   |   | 2005                         |
| Money                  market                  funds      | **$**  | **―**                       |   | $      | 415                          |
| U.S.                  government and agencies             |   | **24,434**                        |   |   | 7,838                        |
| Asset                  backed                  securities |   | **14,101**                        |   |   | 13,391                       |
| Corporate                  securities                     |   | **11,888**                        |   |   | 10,876                       |
|                                                      | **$**  | **50,423**                        |   | $      | 32,520                       |

|                                                 |   | **September                  30** |   |   | December                  31 |
|------------------------------------------------------|--------|-----------------------------------|--------|--------|------------------------------|
|                                                      |   | **2006**                          |   |   | 2005                         |
| Less                  than one                  year | **$**  | **3,006**                         |   | $      | 3,645                        |
| One                  to two                  years   |   | **14,928**                        |   |   | 9,893                        |
| Two                  to five                  years  |   | **32,489**                        |   |   | 18,982                       |
|                                                 | **$**  | **50,423**                        |   | $      | 32,520                       |

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| **7.** | **Intangible                  Assets and Goodwill** |
|--------|-----------------------------------------------------|

|                                                        | **September                  30, 2006**       |
|-------------------------------------------------------------|-----------------------------------------------|
|                                                        | **Gross****Carrying                  Amount** |   | **Accumulated****Amortization** |   | **Net                  Carrying****Amount** |
|    Customer                  relationships   | $                                             | 105,960  |   | $ | (18,104) |   | **$** | **87,856 ** |
|    Covenants                  not to compete |                                          | 16,730  |   |   | (4,229) |   |   | **12,501 ** |
|    Trade                  names              |                                          | 204  |   |   | (141) |   |   | **63 ** |
|    Other                                     |                                          | 146  |   |   | (55) |   |   | **91 ** |
|                                                        | $                                             | 123,040  |   | $ | (22,529) |   | **$** | **100,511 ** |

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

|                                                            |            |              |                          |   |             |
|-----------------------------------------------------------------|-----------------|-------------------|-------------------------------|--------|------------------|
|                                                            | **SelectBuild** |              | **BMC                  West** |   | **Total**        |
| Balance                  at                  December 31, 2005  | $               | 167,268      |                          | $      | 20,202      |   | $ | 187,470  |
|    Purchase                  price adjustment    |            | (1,253)           |                          |   | —     |   |   | (1,253) |
|    Impairment                                    |            | (1,839)           |                          |   | —     |   |   | (1,839) |
|    Goodwill                  acquired            |            | 112,592      |                          |   | 666         |   |   | 113,258  |
| Balance                  at                  September 30, 2006 | **$**           | **276,768 ** |                          | **$**  | **20,868 ** |   | **$** | **297,636 ** |

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| **8.** | **Debt** |
|--------|----------|

| **As                  of September 30, 2006**     |   | **Stated****Interest                  Rate** |              | **Notional****Amount                  of****Interest****Rate                  Swaps** |   | **Effective                  Interest Rate** |
|---------------------------------------------------|--------|----------------------------------------------|-------------------|---------------------------------------------------------------------------------------|--------|----------------------------------------------|
|                                              |   | **Balance**                                  |              |                                                                                  |   | **Average****for                  Quarter**  | **As                  of****September                  30** |
| Revolver                                          | **$**  | **188,200 **                            |              | LIBOR                  plus                  0.75% or Prime plus 0.00%                |   | **$**                                        | **― ** |   | **6.57%** |   | **6.75%** |
|                                              |   |                                         |              |                                                                                  |   |                                         |   |   |   |   |   |
| Term                  note                        |   | **73,125 **                             |              | LIBOR                  plus                  0.75% or Prime plus 0.00%                |   |                                         | **― ** |   | **6.25%** |   | **6.12%** |
|                                              |   |                                         |              |                                                                                  |   |                                         |   |   |   |   |   |
| Term                  note                        |   | **120,937 **                            |              | LIBOR                  plus                  1.75%                                    |   |                                         | **100,000 ** |   | **6.34%** |   | **6.31%** |
|                                              |   |                                         |              |                                                                                  |   |                                         |   |   |   |   |   |
| Other                                             |   | **13,214 **                             |              | Various                                                                               |   |                                         | **― ** |   | **―   ** |   | **―   ** |
|                                              |   |                                         | **395,476 ** |                                                                                  |   |                                         | **$** | **100,000 ** |   |   |   |   |
|                                              |   |                                         |              |                                                                                  |   |                                         |   |   |   |   |   |   |
| Less:  Current                  portion |   | **13,758 **                             |              |                                                                                  |   |                                         |   |   |   |   |   |
|                                              |   | **$**                                        | **381,718 ** |                                                                                  |   |                                         |   |   |   |   |   |   |

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

*Revolver*

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**Back            to Table of Contents**

*Term        Notes*

*Other*

*Covenants        and Maturities*

|            |   |   |    |   |
|------------|--------|--------|---------|--------|
| 2006       |   | $      | 5,504   |   |
| 2007       |   |   | 13,958  |   |
| 2008       |   |   | 14,142  |   |
| 2009       |   |   | 77,835  |   |
| 2010       |   |   | 282,608 |   |
| Thereafter |   |   | 1,429   |   |
|       |   | $      | 395,476 |   |

*Hedging        Activities*

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**Back                to Table of Contents**

| **9.** | **Shareholders’                  Equity** |
|--------|-------------------------------------------------|

*Preferred        Shares*

*Common        Shares*

|                                                      |   | **Unissued                  Shares** |    |
|------------------------------------------------------|--------|--------------------------------------|---------|
| Employee                  Stock Purchase Plan        |   |                                 | 88,347  |   |
| 2004                  Incentive and Performance Plan |   |                                 | 736,466 |   |

*Shareholders’Rights        Plan*

*Dividends*

|   |   |   |
|--------|--------|--------|
|   | · | $0.10                    per                    share in the third quarter of 2006 |
|--------|--------|------------------------------------------------------------------------------------|
|   | · | $0.10                    per                    share in the second quarter of 2006 |
|--------|--------|-------------------------------------------------------------------------------------|
|   | · | $0.10                    per                    share in the first quarter of 2006 |
|--------|--------|------------------------------------------------------------------------------------|

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| **10.** | **Employee                  Benefit Plans** |
|---------|---------------------------------------------|

*Retirement        Plans*

*Cash        Equity Plan*

*Employee            Stock Purchase Plan*

*2004          Incentive and Performance Plan*

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*Options*

|   | · | During                  2006,                  we granted 409,100 options to employees. These options vest ratably                  over                  three years from the date of grant and expire after seven years                  if                  unexercised. These options were awarded with exercise prices equal                  to the                  fair value of the shares on the date of                  grant. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  2005, we                  granted 424,000 options to employees. These options vest ratably                  over                  three years from the date of grant and expire after seven years                  if                  unexercised. These options were awarded with exercise prices equal                  to the                  fair value of the shares on the date of                  grant. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  2004, we                  granted 402,000 options to employees. These options vest ratably                  over                  three years from the date of grant and expire after seven years                  if                  unexercised. These options were awarded with exercise prices equal                  to the                  fair value of the shares on the date of                  grant. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  2004, we                  granted 207,000 options to employees under the 2000 Stock Incentive                  Plan.                  These options vest ratably through the end of the fourth year from                  the                  date of grant and expire after ten years if unexercised. These                  options                  were awarded with exercise prices equal to the fair value of the                  shares on                  the date of grant. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  2003, we                  granted 371,500 options to employees under the 2000 Stock Incentive                  Plan.                  These options vest ratably through the end of the fourth year from                  the                  date of grant and expire after ten years if unexercised. These                  options                  were awarded with exercise prices equal to the fair value of the                  shares on                  the date of grant. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                 |   | **Options                    Outstanding**  |   | **Options                    Exercisable**                                                             |
|------------------------------------------------------|--------|--------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|
| **Range                    of Exercise Prices**      |   | **Options****Outstanding**                       |   | **Weighted****Average                    Remaining****Contractual****Life                    (Years)** |   | **Weighted****Average****Exercise                    Price** |   | **Options****Exercisable** |   | **Weighted****Average****Exercise                    Price** |
|    $4.84                    to $5.97  |   | 555,000                                          |   | 3.71                                                                                                   |   |  $4.94 |   | 555,000 |   |  $4.94 |
|    $6.00                    to $6.97  |   | 443,154                                          |   | 4.77                                                                                                   |   |  $6.79 |   | 355,030 |   |  $6.75 |
|    $7.00                    to $7.88  |   | 466,812                                          |   | 6.09                                                                                                   |   |  $7.38 |   | 363,316 |   |  $7.23 |
|    $8.70                    to $9.75  |   | 337,994                                          |   | 4.59                                                                                                   |   |  $8.70 |   | 211,998 |   |  $8.70 |
|  $22.77                    to $28.36            |   | 415,998                                          |   | 5.39                                                                                                   |   | $22.90 |   | 134,011 |   | $22.88 |
|  $37.93                    to $38.16            |   | 403,100                                          |   | 6.30                                                                                                   |   | $37.93 |   |   18,000 |   | $37.93 |
|    $4.84                    to $38.16 |   | 2,622,058                         |   | 5.09                                                                                                   |   | $14.09 |   | 1,637,355    |   |  $8.16 |

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|   **Grant****Year** |   |    **Grant                    Date** |   |  **Grant****Date****Fair****Value** |   |  **Risk                    Free****Interest****Rate** |   |   **Expected****Volatility** |   |  **Expected****Dividend****Yield** |   |  **Expected****Term****(Years)** |
|-------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------|--------|------------------------------------------------------------|--------|----------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|
| 2006                          |   | January                    2006                     |   | $37.93                                   |   | 3.77%                                                      |   | 48.58%                                 |   | 0.70%                                   |   | 5.94                                  |
| 2005                          |   | May                    2005                         |   | $28.36                                   |   | 4.29%                                                      |   | 54.16%                                 |   | 0.68%                                   |   | 7.00                                  |
| 2005                          |   | February                    2005                    |   | $22.77                                   |   | 4.10%                                                      |   | 54.16%                                 |   | 0.84%                                   |   | 6.84                                  |
| 2004                          |   | May                    2004                         |   |   $8.50                        |   | 4.56%                                                      |   | 54.25%                                 |   | 1.45%                                   |   | 7.00                                  |
| 2004                          |   | February                    2004                    |   |   $7.88                        |   | 4.09%                                                      |   | 54.68%                                 |   | 1.45%                                   |   | 7.50                                  |
| 2003                          |   | April                    2003                       |   |   $6.97                        |   | 3.94%                                                      |   | 55.42%                                 |   | 1.33%                                   |   | 8.50                                  |

*Restricted        Shares*

|   | · | During                  2006,                  we issued 139,000 restricted shares to employees. These restricted                  shares                  vest three years from the date of grant. The weighted-average fair                  value                  of the restricted shares granted was $37.83 per                  share. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  2005, we                  issued 118,000 restricted shares to employees. These restricted                  shares                  vest three years from the date of grant. The weighted-average fair                  value                  of the restricted shares granted was $23.19 per                  share. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  2004, we                  issued 149,000 restricted shares to employees. These restricted                  shares                  vest three years from the date of grant. The weighted-average fair                  value                  of the restricted shares granted was $10.90 per                  share. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Shares*

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

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

|                                                                                                                            |   | **September                  30** |               | **December                  31**             |
|---------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------------------|----------------------------------------------|
|                                                                                                                            |   | **2006**                          |               | **2005**                                     |
|                                                                                                                                 |   | **Shares**                        |     | **Weighted****Average****Exercise****Price** |   | **Shares** |     | **Weighted****Average****Exercise****Price** |
| Outstanding                  at beginning of the period                                                                         |   | **2,557,412 **               |               | **  $8.75**                        |   | 2,904,796  |   |  $6.11 |
|    Granted                                                                                                       |   | **548,100 **                 |               | **$28.28**                                   |   | 542,000  |   | $17.90 |
|    Exercised                                                                                                     |   | **(75,238)**                      |               | **  $8.81**                        |   | (861,384) |   |  $5.70 |
|    Forfeited                                                                                                     |   | **(12,716)**                      |               | **$20.25**                                   |   | (28,000) |   |  $5.56 |
| Outstanding                  at end of the period                                                                               |   | **3,017,558 **               |               | **$12.25**                                   |   | 2,557,412  |   |  $8.75 |
|                                                                                                                            |   |                              |               |                                         |   |   |   |   |
| Options                  exercisable at end of the period                                                                       |   | **1,637,355 **               |               | **  $8.16**                        |   | 1,425,300  |   |  $6.32 |
| Weighted                  average fair value of options    granted                  at fair value for the period |   | **$37.88 **                  |               |                                         |   | $22.88  |   |   |

|                                                                                                               |   | **Number                  of Securities to be****Issued                  Upon Exercise of****Outstanding                  Options,****Warrants                  and Rights** |   | **Weighted                  Average****Exercise                  Price of****Outstanding                  Options,****Warrants                  and Rights** |   | **Number                  of Securities****Remaining                  Available for****Future                  Issuance Under Equity****Compensation                  Plans** |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity                  compensation plans   approved                  by security holders     |   | 2,917,588                                                                                                                                                                    |   | $12.45                                                                                                                                                       |   | 736,466                                                                                                                                                                       |
| Equity                  compensation plans not   approved                  by security holders |   |   100,000                                                                                                                                                          |   |   $6.25                                                                                                                                            |   | **       ―**                                                                                                                         |
|       Total                                                                     |   | 3,017,558                                                                                                                                                                    |   | $12.25                                                                                                                                                       |   | 736,466                                                                                                                                                                       |
|                                                                                                          |   |                                                                                                                                                                         |   |                                                                                                                                                         |   |                                                                                                                                                                          |

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| **11.** | **Income                  Taxes** |
|---------|-----------------------------------|

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| **12.** | **Legal                  Proceedings** |
|---------|----------------------------------------|

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| **13.** | **Segment                  Information** |
|---------|------------------------------------------|

*SelectBuild*

*BMC          West*

*Corporate*

|                                                       | **Sales**               | **Income****(Loss)****Before****Taxes                  and****Minority****Interests** | **Depreciation****and****Amortization** | **Capital****(1)****Expenditures**        | **Assets**                            |
|------------------------------------------------------------|-------------------------|---------------------------------------------------------------------------------------|-----------------------------------------|-------------------------------------------|---------------------------------------|
| **Segment**                                                | **Inter-****Segment**   | **Trade**                                                                             |
|                                                       |                    |                                                                                  |
| **Three                  Months Ended September 30, 2006** |                    |                                                                                  |                                    |                                      |                                  |
| SelectBuild                                                | **$448,743**            | **$(10,729)**                                                                         | **$438,014**                            | **$36,918**                               | **$ 8,467**                      | **$1,753** | **$   778,717** |
| BMC                  West                                  | **  392,945** | **     (360)**                                               | **  392,585**                 | **  32,940**                    | **  3,153**                 | **   20,505  ** | **     505,641 ** |
| Corporate                                                  | **―**             | **―**                                                                           | **―**                             | **                    (5,587)** | **     789** | **   1,788 ** | **     137,489 ** |
|                                                       | **$841,688**            | **$(11,089)**                                                                         | **$830,599**                            | ** 64,271**                          | **$12,409 **                     | **$24,046 ** | **$1,421,847** |
| Interest                  Expense                          |                    |                                                                                  | **   8,566**             |                                      |                                  |   |
|                                                       |                    |                                                                                  | **$55,705**                             |                                      |                                  |   |

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| **Three                  Months Ended September 30, 2005** |                |                                |                          |                     |                        |
|------------------------------------------------------------|---------------------|-------------------------------------|-------------------------------|--------------------------|-----------------------------|
| SelectBuild                                                | $403,013            | $  (613)                  | $402,400                      | $47,118             | $3,481                      | $31,601  | $                   530,590    |
| BMC                  West                                  |   418,073 |                     (645) |   417,428           |   43,644  |  2,835                 |    1,773 |  476,894 |
| Corporate                                                  | ―             | ―                             | ―                       |  (14,942)           |     589 |       495 |    77,319 |
|                                                       | $812,086            | $(1,258)                            | $819,828                      |   75,820  | $6,905                      | $33,869 | $1,084,803    |
| Interest                  Expense                          |                |                                |    3,629  |                     |                        |   |
|                                                       |                |                                | $72,191                  |                     |                        |   |

|                                                           |                                                      |                                  |                                                            |                                             |                        |
|-----------------------------------------------------------|-----------------------------------------------------------|---------------------------------------|-----------------------------------------------------------------|--------------------------------------------------|-----------------------------|
| **Nine                  Months Ended September 30, 2006** |                                                      |                                  |                                                            |                                             |                        |
| SelectBuild                                               | **$1,450,415**                                            | **$(12,172)**                         | **$1,438,243**                                                  | **$ 130,091**                               | **$22,030**                 | **$31,008** | **$   778,717** |
| BMC                  West                                 | **   1,200,458**                           | **  (1,553)**               | **     1,198,905   **   | **   102,664**                    | **   9,101** | ** 31,003** | **     505,641** |
| Corporate                                                 | **―**                                               | **―**                           | **―**                                                     | **                     (49,781)** | **   2,146** | **   5,078** | **     137,489** |
|                                                      | **$2,650,873**                                            | **$(13,725)**                         | **$2,637,148**                                                  | **  182,974**                          | **$33,277**                 | **$67,089** | **$1,421,847** |
| Interest                  Expense                         |                                                      |                                  | **    20,621**                              |                                             |                        |   |
|                                                      |                                                      |                                  | **$162,353**                                                    |                                             |                        |   |
|                                                      |                                                      |                                  |                                                            |                                             |                        |
| **Nine                  Months Ended September 30, 2005** |                                                      |                                  |                                                            |                                             |                        |
| SelectBuild                                               | $   949,162                                | $(885)                                | $   948,277                                      | $ 112,406                                   | $ 8,008                | $42,751 | $                     530,590   |
| BMC                  West                                 |      1,147,122    |   (1,122)    |      1,146,000     |    113,549                   |    8,380     |  12,663 |   476,894 |
| Corporate                                                 | ―                                                   | ―                               | ―                                                         |                     (48,935)           |    1,813     |       1,372    |     77,319 |
|                                                      | $2,096,284                                                | $(2,007)                    | $2,094,277                                                      |                    177,020             | $18,201                     | $56,786 | $1,084,803   |
| Interest                  Expense                         |                                                      |                                  |      10,177                  |                                             |                        |   |
|                                                      |                                                      |                                  | $ 166,843                                        |                                             |                        |   |

|   | *(1)* | *Property                  and equipment from acquisitions are included as capital expenditures.* |
|--------|-------|---------------------------------------------------------------------------------------------------|

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

**Business        Environment and Executive Overview**

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

|   | · | window                  installation services in Phoenix, Arizona (August                  2006) |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | framing                  services in Southern California (July                  2006) |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | building                  materials distributor and truss manufacturer in Eastern Idaho (June                  2006) |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | concrete                  services in Northern Arizona (April 2006) |
|--------|--------|---------------------------------------------------------------------|
|   | · | wall                  panel                  and truss manufacturer in Palm Springs, California (April                  2006) |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

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|   | · | building                  materials distributor and millwork services in Houston, Texas (February                  2006) |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | remaining                  20%                  interest in our existing business providing concrete block masonry                  and                  concrete services in Florida (January                  2006) |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | framing                  services in Palm Springs, California and Reno, Nevada (January                  2006) |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

**RESULTS        OF OPERATIONS**

**Third        Quarter of 2006 Compared to 2005**

|                                                                                                                                       | **Three                  Months Ended September 30** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|
|                                                                                                                                            | **2006**                                             |   | 2005 |
| **Sales**                                                                                                                                  |                                                 |   |   |   |   |   |   |
|                     Construction services                                                                                   | **$**                                                | **485.8 ** | **58.5%** |   | $ | 459.6  | 56.1% |
|    Building products                                                                                                   |                                            | **344.8 ** | **41.5   ** |   |    | 360.2  | 43.9    |
| **      Total sales**                                                                                   |                                                 | **830.6 ** | **100.0   ** |   |   | 819.8  | 100.0    |
|                                                                                                                                       |                                                 |   |   |   |   |   |   |
| **Costs and operating expenses**                                                                                            |                                                 |   |   |   |   |   |   |
|    Cost of goods sold                                                                                        |                                                 |   |   |   |   |   |   |
|       Construction services                                                                             |                                                 | **391.9 ** | **80.7   ** |   |   | 372.0  | 80.9    |
|       Building products                                                                                 |                                            | **248.2 ** | **72.0   ** |   |     | 261.4  | 72.6    |
|          Total cost of goods sold                                         |                                                 | **640.1 ** | **77.1   ** |   |   | 633.4  | 77.3    |
|    Selling, general and       administrative expenses                     |                                                 | **128.0 ** | **15.4   ** |   |   | 112.1  | 13.7    |
|    Other income, net                                                                                         |                                            | **(1.8)** | **(0.2)****  ** |   |     | (1.5) | (0.2)   |
|       Total costs and operating         expenses |                                                 | **766.3 ** | **92.3   ** |   |   | 744.0  | 90.8    |
|                                                                                                                                       |                                       |      |      |   |      |      |      |
| **Income                  from operations**                                                                                                |                                                 | **64.3 ** | **7.7                    ** |   |   | 75.8  | 9.2    |
|                                                                                                                                       |                                                 |   |   |   |   |   |   |
|                     Interest expense                                                                                             |                                                 | **8.6 ** | **1.0  ** |   |   | 3.6  | 0.4    |
|                                                                                                                                       |                                                 |   |   |   |   |   |   |
|                     Income taxes                                                                                                 |                                                 | **18.0 ** | **2.2  ** |   |   | 25.5  | 3.1    |
|                                                                                                                                       |                                                 |   |   |   |   |   |   |
|                     Minority interest income, net     of                  income taxes                  |                                                 | **(2.4)** | **   (0.3)                 ** |   |   | (5.1) | (0.6)   |
|                                                                                                                                       |                                       |     |     |   |     |     |     |
| **Net                  income**                                                                                                            | **$**                                                | **35.3 ** | **4.2%** |   | $ | 41.6  | 5.1% |
|                                                                                                                                       |                                                 |   |   |   |   |   |   |
| **Income                  per diluted share**                                                                                              |                                                 | **$1.20 ** |   |   |   | $1.40  |   |

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*Consolidated        Financial Results*

|                                                       | **2006**                                    |   | **2005** |                                    | **$****Change** | **%****Change** |
|------------------------------------------------------------|---------------------------------------------|--------|----------|-----------------------------------------|-----------------|-----------------|
| **Sales**                                                  |                                        |   |     |                                    |            |            |
|    Construction                    services | **$    486**            |        |     | $    460            |                 |            | $    26  |  | 6%  |  |
|    Building                    products     | **345**                                     |        |     | 360                                     |                 |            | (15) |  | (4)% |  |
|                                                       | **$    831**            |        |     | $    820            |                 |            | $    11  |  | 1% |  |
|                                                       |                                        |   |     |                                    |            |            |
| **Income                    from operations**              | **$      64** |        |     | $      76 |                 |            | $   (12) |  | (16)% |  |

|   | · | operating                  expenses associated with acquisitions and compensation associated                  with                  implementing a regional management structure, partially offset                  by a                  reduction in incentive compensation at SelectBuild                  and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | compensation                  for additional personnel as well as delivery expenses to sustain                  sales                  volume at BMC West. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Interest        Expense*

*Income          Taxes*

*Business          Segments*

|                      | **2006**                                     |         | **2005**                                       |
|---------------------------|----------------------------------------------|--------------|------------------------------------------------|
|                           | **Sales**                                    |    | **Income                  from****Operations** |   | **Sales** |    | **Income                  from****Operations** |
| SelectBuild               | **$      438** |              |                                           | **$               37 ** |  |   | $      402 |  |   | $               47  |  |
| BMC                  West | **393**                                      |              |                                           | **33 ** |  |   | 418 |  |   | 44  |  |
| Corporate                 | **―**                                  |              |                                           | **(6)** |  |   | ― |  |   | (15) |  |
|                      | **$      831** |              |                                           | **$               64 ** |  |   | $      820 |  |   | $               76  |  |

*SelectBuild*

|                                                 | **2006**                                    |     | **2005** |                    | **$****Change** | **%****Change** |
|-------------------------------------------------|---------------------------------------------|--------------------|----------|-----------------------------------|-----------------|-----------------|
| **Sales**                                       | **$   438 **            |                    |     | $   402            |                 |            | $                        36  |  | 9%  |  |
|    Less:  Acquisitions | **(148)**                                   |                    |     | ―                           |                 |            | (148) |  | ―    |  |
|                                            | **$   290 **            |                    |     | $   402            |                 |            | $    (112) |  | (28)% |  |
|                                            |                                        |               |     |                              |            |            |
| **Income                  from operations**     | **$     37 ** |                    |     | $     47 |                 |            | $                       (10) |  | (21)% |  |
|    Less:  Acquisitions | **(11)**                                    |                    |     | ―                           |                 |            | (11) |  | ―    |  |
|                                            | **$     26 ** |                    |     | $     47 |                 |            | $      (21) |  | (45)% |  |

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*BMC          West*

|                                                 | **2006**                                    |   | **2005** |                              | **$****Change** | **%****Change** |
|-------------------------------------------------|---------------------------------------------|--------|----------|-----------------------------------|-----------------|-----------------|
| **Sales**                                       | **$   393 **            |        |     | $   418            |                 |            | $     (25) |  | (6)% |  |
|    Less:  Acquisitions | **(19)**                                    |        |     | ―                           |                 |            | (19) |  | ―    |  |
|                                            | **$   374 **            |        |     | $   418            |                 |            | $     (44) |  | (11)% |  |
|                                            |                                        |   |     |                              |            |            |
| **Income                  from operations**     | **$     33 ** |        |     | $     44 |                 |            | $     (11) |  | (25)% |  |
|    Less:  Acquisitions | **(1)**                                     |        |     | ―                           |                 |            | (1) |  | ―    |  |
|                                            | **$     32 ** |        |     | $     44 |                 |            | $     (12) |  | (27)% |  |

*Corporate*

|                                                                                        | **2006**           |   | **2005**        |   | **$****Change**  | **%****Change** |
|----------------------------------------------------------------------------------------|--------------------|--------|-----------------|--------|------------------|-----------------|
| **Corporate                  general and****administrative                  expenses** | **$  6** |   | $  15 |   | $  (9) | (60)%           |

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**Nine        Months of 2006 Compared to 2005**

|                                                                                                                                       | **Nine                    Months Ended September 30** |
|--------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
|                                                                                                                                            | **2006**                                              |   | 2005 |
| **Sales**                                                                                                                                  |                                                  |   |   |   |   |   |   |
|                       Construction services                                                                                 | **$**                                                 | **1,595.6 ** | **60.5%** |   | $ | 1,096.6  | 52.4% |
|    Building products                                                                                                   |                                             | **1,041.5 ** | **39.5   ** |   |    | 997.7  | 47.6    |
| **      Total sales**                                                                                   |                                                  | **2,637.1 ** | **100.0   ** |   |   | 2,094.3  | 100.0    |
|                                                                                                                                       |                                                  |   |   |   |   |   |   |
| **Costs and operating expenses**                                                                                            |                                                  |   |   |   |   |   |   |
|    Cost of goods sold                                                                                        |                                                  |   |   |   |   |   |   |
|       Construction services                                                                             |                                                  | **1,292.1 ** | **81.0   ** |   |   | 889.3  | 81.1    |
|       Building products                                                                                 |                                             | **759.9 ** | **73.0   ** |   |     | 730.8  | 73.2    |
|          Total cost of goods sold                                         |                                                  | **2,052.0 ** | **77.8   ** |   |   | 1,620.1  | 77.4    |
| Impairment                    of assets                                                                                                    |                                                  | **2.2 ** | **0.1   ** |   |   | 0.5  | —     |
|    Selling, general and       administrative expenses                     |                                                  | **404.0 ** | **15.3   ** |   |   | 299.4  | 14.3    |
|    Other income, net                                                                                         |                                             | **(4.1)** | **(0.1)****  ** |   |     | (2.7) | (0.2)   |
|       Total costs and operating         expenses |                                                  | **2,454.1 ** | **93.1   ** |   |   | 1,917.3  | 91.5    |
|                                                                                                                                       |                                        |      |      |   |      |      |      |
| **Income                    from operations**                                                                                              |                                                  | **183.0 ** | **6.9   ** |   |   | 177.0  | 8.5    |
|                                                                                                                                       |                                                  |   |   |   |   |   |   |
|                       Interest expense                                                                                           |                                                  | **20.6 ** | **0.8   ** |   |   | 10.2  | 0.5    |
|                                                                                                                                       |                                                  |   |   |   |   |   |   |
|                       Income taxes                                                                                               |                                                  | **56.3 ** | **2.1   ** |   |   | 58.9  | 2.8    |
|                                                                                                                                       |                                                  |   |   |   |   |   |   |
|                       Minority interest income, net     of                    income taxes              |                                                  | **(8.5)** | **   (0.3)                   ** |   |   | (11.9) | (0.6)   |
|                                                                                                                                       |                                        |     |     |   |     |     |     |
| **Net                    income**                                                                                                          | **$**                                                 | **97.6 ** | **3.7%** |   | $ | 96.0  | 4.6% |
|                                                                                                                                       |                                                  |   |   |   |   |   |   |
| **Income                    per diluted share**                                                                                            |                                                  | **$3.30 ** |   |   |   | $3.28  |   |

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*Consolidated        Financial Results*

|                                                          | **2006**                                     |     | **2005** |                                 | **$****Change** | **%****Change** |
|----------------------------------------------------------|----------------------------------------------|--------------------|----------|------------------------------------------------|-----------------|-----------------|
| **Sales**                                                |                                         |               |     |                                           |            |            |
|    Construction                  services | **$   1,596**                 |                    |     | $   1,096                       |                 |            | $    500 |  | 46% |  |
|    Building                  products     | **1,041**                                    |                    |     | 998                                            |                 |            | 43 |  | 4% |  |
|                                                     | **$   2,637**                 |                    |     | $                    2,094           |                 |            | $    543 |  | 26% |  |
|                                                     |                                         |               |     |                                           |            |            |
| **Income                  from operations**              | **$      183** |                    |     | $                      177 |                 |            | $                        6 |  | 3% |  |

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|   | · | operating                    expenses associated with acquisitions and compensation related                    to                    implementing a regional management structure at SelectBuild                    and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | compensation                    for additional personnel as well as delivery expenses to sustain                    sales                    volume at BMC West. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Interest            Expense*

*Income            Taxes*

*Business            Segments*

|                      | **2006**                     |               | **2005**                                       |
|---------------------------|------------------------------|--------------------|------------------------------------------------|
|                           | **Sales**                    |     | **Income                  from****Operations** |   | **Sales** |     | **Income                  from****Operations** |
| SelectBuild               | **$   1,438** |                    |                                           | **$              130 ** |  |   | $      948 |  |   | $                112  |  |
| BMC                  West | **1,199**                    |                    |                                           | **103 ** |  |   | 1,146 |  |   | 114  |  |
| Corporate                 | **―**                  |                    |                                           | **(50)** |  |   | ― |  |   | (49) |  |
|                      | **$   2,637** |                    |                                           | **$              183 ** |  |   | $   2,094 |  |   | $               177  |  |

*SelectBuild*

|                                                 | **2006**                                    |   | **2005** |                   | **$****Change** | **%****Change** |
|-------------------------------------------------|---------------------------------------------|--------|----------|------------------------|-----------------|-----------------|
| **Sales**                                       | **$ 1,438 **                      |        |     | $   948 |                 |            | $   490  |  | 52%   |  |
|    Less:  Acquisitions | **(587)**                                   |        |     | ―                |                 |            | (587) |  | ―      |  |
|                                            | **$   851 **            |        |     | $   948 |                 |            | $    (97) |  |                    (10)%  |  |
|                                            |                                        |   |     |                   |            |            |
| **Income                  from operations**     | **$   130 **            |        |     | $   112 |                 |            | $     18  |  | 16%   |  |
|    Less:  Acquisitions | **(47)**                                    |        |     | ―                |                 |            | (47) |  | ―      |  |
|                                            | **$     83 ** |        |     | $   112 |                 |            | $    (29) |  | (26)%  |  |

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*BMC            West*

|                                                 | **2006**                                     |   | **2005** |                                                 | **$****Change** | **%****Change** |
|-------------------------------------------------|----------------------------------------------|--------|----------|------------------------------------------------------|-----------------|-----------------|
| **Sales**                                       | **$   1,199 **           |        |     | $   1,146                             |                 |            | $   53  |  | 5% |  |
|    Less:  Acquisitions | **(43)**                                     |        |     | ―                                              |                 |            | (43) |  | ―    |  |
|                                            | **$   1,156 **           |        |     | $   1,146                             |                 |            | $    10  |  | 1% |  |
|                                            |                                         |   |     |                                                 |            |            |
| **Income                  from operations**     | **$     103 ** |        |     | $                       114 |                 |            | $                   (11)  |  | (10)% |  |
|    Less:  Acquisitions | **(1)**                                      |        |     | ―                                              |                 |            | (1)  |      | ―    |  |
|                                            | **$    102 **       |        |     | $                       114      |                 |            | $  (12)  |  | (11)% |  |

*Corporate*

|                                                                                        | **2006**            |   | **2005**        |   | **$****Change** | **%****Change** |
|----------------------------------------------------------------------------------------|---------------------|--------|-----------------|--------|-----------------|-----------------|
| **Corporate                  general and****administrative                  expenses** | **$  50** |   | $  49 |   | $  1  | 2%              |

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**LIQUIDITY        AND CAPITAL RESOURCES**

**Cash        Flows**

*Operations*

*Capital          Investments and Acquisitions*

|   | · | window                  installation service in Phoenix, Arizona (August                  2006) |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | framing                  services in Southern California (July                  2006) |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | building                  materials distribution and truss manufacturing business in Eastern                  Idaho                  (June 2006) |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | wall                  panel                  and truss manufacturing business in Palm Springs, California (April                  2006) |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | concrete                  services business in Northern Arizona (April                  2006) |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | three                  facilities providing building materials distribution and millwork                  services                  in Houston, Texas (February 2006) |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | an                  additional                  20% interest in our existing business providing concrete block                  masonry and                  concrete services in Florida (August                  2005) |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | businesses                  providing framing services in Palm Springs, California and Reno,                  Nevada                  (January 2006) |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | concrete                    services in Las Vegas, Nevada and concrete and plumbing services                    in                    Southern California (September                    2005) |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 51%                    interest                    in a concrete services business in Phoenix and Tucson, Arizona                    (July                    2005) |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 73%                    interest                    in a plumbing service business in Phoenix and Tucson, Arizona                    (April and                    July 2005) |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                    stucco                    business in Las Vegas, Nevada (June 2005) |
|--------|--------|------------------------------------------------------------------------------------------|
|   | · | a                    51%                    interest in a framing services business in Chicago, Illinois                    (January                    2005) |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Financing*

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**Credit        Facility**

*Revolver*

*Term        Notes*

*Other*

*Covenants          and Maturities*

|            |   |   |    |   |
|------------|--------|--------|---------|--------|
| 2006       |   | $      | 5,504   |   |
| 2007       |   |   | 13,958  |   |
| 2008       |   |   | 14,142  |   |
| 2009       |   |   | 77,835  |   |
| 2010       |   |   | 282,608 |   |
| Thereafter |   |   | 1,429   |   |
|       |   | $      | 395,476 |   |

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*Hedging        Activities*

**Equity**

*Preferred        Shares *

*Common          Shares*

*Shelf        Registration*

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**OFF-BALANCE        SHEET ARRANGEMENTS**

**CRITICAL        ACCOUNTING ESTIMATES**

|   | · | revenue                  recognition for construction                  services |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | estimated                  losses on uncompleted contracts and changes in contract                  estimates |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | goodwill |
|--------|--------|----------|

|   | · | insurance                  deductible reserves |
|--------|--------|------------------------------------------------|

|   | · | share-based                  compensation |
|--------|--------|-------------------------------------------|

**BUSINESS          RISKS AND FORWARD-LOOKING STATEMENTS**

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|   | · | demand                  for                  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; |
|--------|--------|-------------------------------------------------------|

|   | · | 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 and acquire suitable acquisition                  candidates; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

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

|   | · | implementation                  of cost structures that align with revenue                  growth; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | changes                  in                  the business models of 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; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | 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; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                  to                  various 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | share                  price                  fluctuations and |
|--------|--------|----------------------------------------------------------------|

|   | · | potential                  share price limitations due to anti-takeover defenses in our governing                  documents and certain provisions under Delaware                  law. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*Commodity        Risk*

*Interest        Rate Risk*

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

**Evaluation        of Disclosure Controls and Procedures**

**Changes        in Internal Controls Over Financial Reporting**

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**PART          II - OTHER INFORMATION**

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

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

***Risks        Related to Our Business***

***Our        business is dependent on demand for 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; |
|--------|--------|-----------------------------------------------------|

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|   | · | 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          growth may have an adverse impact on our operating          results.***

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

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

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***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.***

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***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 sell***
***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**

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**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                  2) |
|   |   |       |   |                                                                                                 |
|   |   | 31.1       |   | Section                  302                  Certification                                          |
|   |   |       |   |                                                                                                 |
|   |   | 31.2       |   | Section                  302                  Certification                                          |
|   |   |       |   |                                                                                                 |
|   |   | 32.0       |   | Section                  906                  Certifications                                         |

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**SIGNATURES**

|                                    | BUILDING                  MATERIALS HOLDING CORPORATION                                                                                                                                        |
|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                    |                                                                                                                                                                                           |   |
|                                    |                                                                                                                                                                                           |   |
| Date:                  November 3, 2006 | */s/                  Robert E. Mellor*                                                                                                                                                        |   |
|                                    | Robert                  E.                  MellorChairman                  of                  the Board, President and Chief Executive Officer(Principal                  Executive Officer) |
|                                    |                                                                                                                                                                                           |   |
|                                    |                                                                                                                                                                                           |   |
| Date:                  November 3, 2006 | */s/                  William M. Smartt*                                                                                                                                                       |   |
|                                    | William                  M.                  SmarttSenior                  Vice                  President and Chief Financial Officer (Principal                  Financial Officer)          |

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