<PAGE>1

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)
  / X /           Quarterly report pursuant to Section 13 or 15(d) of the  Secu-
                  rities Exchange Act of 1934

                  For the quarterly period ended August 26, 2000

                                       or

  /    /          Transition report pursuant to Section 13 or 15(d) of the Secu-
                  rities Exchange Act of 1934

                  For the transition period from             to

                  Commission file number 0-4437


                                     PAYLESS CASHWAYS, INC.
                      (Exact Name of Registrant as Specified in Its Charter)

       Delaware                                                       42-0945849
(State or Other Jurisdiction of                                 (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


       800 NW Chipman Road, Suite 5900
       P.O. Box 648001
       Lee's Summit, Missouri                                         64064-8001
       (Address of Principal Executive Offices)                       (Zip Code)

       (816) 347-6000

(Registrant's Telephone Number, Including Area Code)

       None

(Former Name,Former Address and Former Fiscal Year,if Changed Since Last Report)

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by  Section  13 or 15(d) of the Securities  Exchange Act of
1934 during the preceding 12 months (or for such shorter  period that the regis-
trant  was required to file such reports), and (2) has  been  subject  to  such
filing requirements for the past 90 days.     YES    / X /       NO    /     /

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark  whether  the registrant  has  filed  all  documents  and
reports  required to be filed  by  Section  12,  13, or 15(d) of the  Securities
Exchange  Act of 1934  subsequent  to the  distribution  of  securities  under a
plan  confirmed  by a court.  YES / X/       NO    /     /

                        APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date. There were 20,000,000 shares of
Common Stock, $.01 par value, outstanding as of September 15, 2000.


<PAGE>2


PAYLESS CASHWAYS, INC.


                        PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements.

STATEMENTS OF OPERATIONS (Unaudited) (1)

<TABLE>
<CAPTION>
                                                           Thirteen Weeks Ended                Thirty-Nine Weeks Ended
                                                    -------------------------------       --------------------------------
                                                         August 26,      August 28,          August 26,        August 28,
(In thousands, except per share amounts)                    2000            1999                2000              1999
                                                    -------------------------------       --------------------------------
<S>                                                 <C>                <C>                <C>                <C>
Income

     Net sales                                      $    391,815       $    492,160       $   1,160,658      $  1,376,761
     Other income                                            403                523               1,738             1,587
                                                    -------------------------------       --------------------------------
                                                         392,218            492,683           1,162,396         1,378,348

Costs and expenses

     Cost of merchandise sold (3)                        284,866            362,217             846,390         1,014,869
     Selling, general and administrative (4)              84,732            108,052             267,933           323,252
     Special charges (credits), net (2) and (3)              ---                ---                 ---            (5,400)
     Provision for depreciation and amortization (5)       7,605             10,563              22,678            28,722
     Interest expense                                     10,606              8,636              31,328            26,158
                                                    -------------------------------       --------------------------------
                                                         387,809            489,468           1,168,329         1,387,601
                                                    -------------------------------       --------------------------------

INCOME (LOSS) BEFORE INCOME TAXES                          4,409              3,215              (5,933)           (9,253)

Federal and state income taxes                             2,056              1,502              (4,278)           (3,821)
                                                    -------------------------------      ---------------------------------

NET INCOME (LOSS)                                   $      2,353       $      1,713       $      (1,655)         $ (5,432)
                                                    ================================      ================================


Weighted average common shares outstanding                20,000             20,000              20,000            20,000
                                                    --------------------------------      --------------------------------

Net income (loss) per common share-basic (6)        $       0.12       $       0.09       $       (0.08)     $       (.27)

                                                    ================================      ================================
Weighted average common and dilutive
     common equivalent shares outstanding                 20,082             20,170              20,000            20,000
                                                    --------------------------------      --------------------------------

Net income (loss) per common share-diluted (6)      $       0.12       $       0.09          $    (0.08)     $       (.27)
                                                    ================================      ================================


See notes to condensed financial statements
</TABLE>



<PAGE>3


CONDENSED BALANCE SHEETS (Unaudited) (1)
<TABLE>
<CAPTION>
                                                                   August 26,            November 27,           August 28,
(In thousands)                                                       2000                   1999                  1999
                                                                ----------------------------------------------------------
<S>                                                             <C>                    <C>                   <C>
ASSETS

     CURRENT ASSETS

       Cash and cash equivalents                                $        990           $       1,111         $     2,241
       Merchandise inventories (7)                                   337,576                 349,332             361,687
       Prepaid expenses and other current assets                      17,263                  22,013              22,716
       Income taxes receivable                                           ---                     679                 773
       Deferred income taxes                                             ---                     ---                  69
                                                                ---------------------------------------------------------
                                        TOTAL CURRENT ASSETS         355,829                 373,135             387,486

     OTHER ASSETS

       Real estate held for sale                                       5,680                   8,851               4,730
       Deferred financing costs                                        3,114                   3,944               2,202
       Other                                                           1,474                   1,549               1,505

     LAND, BUILDINGS, EQUIPMENT & SOFTWARE                           422,412                 407,812             413,902
       Allowance for depreciation and amortization                   (89,047)                (66,900)            (61,486)
                                                                 --------------------------------------------------------
TOTAL LAND, BUILDINGS, EQUIP. AND SOFTWARE                           333,365                 340,912             352,416
                                                                ---------------------------------------------------------

                                                                $    699,462           $     728,391         $   748,339
                                                                =========================================================


LIABILITIES AND SHAREHOLDERS' EQUITY

     CURRENT LIABILITIES
       Current portion of long-term debt (8)                    $      5,178          $      3,265          $     10,160
       Trade accounts payable                                         46,505                51,480                68,000
       Other current liabilities                                      68,546                88,645                96,407
       Income taxes payable                                            1,037                 1,851                 1,924
       Deferred income taxes                                          10,931                 2,157                   ---
                                                                ---------------------------------------------------------
                                   TOTAL CURRENT LIABILITIES         132,197               147,398               176,491

     LONG-TERM DEBT, less portion
       classified as current liability (8)                           373,500               374,154               362,185

     NON-CURRENT LIABILITIES
       Deferred income taxes                                          18,232                31,263                35,364
       Other                                                          23,891                22,279                18,298

     SHAREHOLDERS' EQUITY
       Common stock, $.01 par value, 50,000,000 shares
         authorized, 20,000,000 shares issued                            200                   200                   200
       Additional paid-in capital                                    183,600               183,600               183,600
       Accumulated deficit                                           (32,158)              (30,503)              (27,799)
                                                                ---------------------------------------------------------
                                  TOTAL SHAREHOLDERS' EQUITY         151,642               153,297               156,001
                                                                ---------------------------------------------------------

                                                                $    699,462          $    728,391          $    748,339
                                                                =========================================================


See notes to condensed financial statements
</TABLE>


<PAGE>4


CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (1)
<TABLE>
<CAPTION>
                                                                                         Thirty-Nine Weeks Ended
                                                                             ----------------------------------------------
                                                                                    August 26,                   August 28,
(In thousands)                                                                         2000                         1999
                                                                             ---------------------------------------------
<S>                                                                          <C>                              <C>
Cash Flows from Operating Activities

     Net loss                                                                $          (1,655)               $     (5,432)
     Adjustments to reconcile net loss to net cash
       (used in) provided by operating activities:
         Non-cash special credits (2)                                                      ---                     (10,600)
         Depreciation and amortization                                                  22,678                      28,722
         Deferred income taxes                                                          (4,257)                     (3,821)
         Non-cash interest                                                                 990                       1,217
         Other                                                                          (1,066)                        481
     Changes in assets and liabilities                                                  (8,703)                    (12,046)
                                                                             ----------------------------------------------

     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                 7,987                      (1,479)

Cash Flows from Investing Activities

     Additions to land, buildings, equipment and software                              (14,240)                    (38,757)
     Proceeds from sale of land, buildings and equipment                                 5,740                      15,920
     (Increase) decrease in other assets                                                    75                         (13)
                                                                             ----------------------------------------------

     NET CASH USED IN INVESTING ACTIVITIES                                              (8,425)                    (22,850)

Cash Flows from Financing Activities

     Principal payments on long-term debt                                               (8,275)                    (21,280)
     Net proceeds from revolving credit facility                                         9,534                      46,000
     Other                                                                                (942)                       (100)
                                                                             ----------------------------------------------

     NET CASH PROVIDED BY FINANCING ACTIVITIES                                             317                      24,620
                                                                             ----------------------------------------------

     Net increase (decrease) in cash and cash equivalents                                 (121)                        291
     Cash and cash equivalents, beginning of period                                      1,111                       1,950
                                                                             ---------------------------------------------
     Cash and cash equivalents, end of period                                $             990            $          2,241
                                                                             =============================================


See notes to condensed financial statements
</TABLE>


<PAGE>5


NOTES TO CONDENSED  FINANCIAL  STATEMENTS  (Unaudited)  Thirty-nine  weeks ended
August 26, 2000, and August 28, 1999.

(1)    The  accompanying  condensed  financial  statements have been prepared in
       accordance  with  the  instructions  to Form  10-Q.  To the  extent  that
       information  and  footnotes  required by  generally  accepted  accounting
       principles  for  complete  financial   statements  are  contained  in  or
       consistent  with  the  audited  financial   statements   incorporated  by
       reference  in the  Company's  Form 10-K for the year ended  November  27,
       1999, such information and footnotes have not been duplicated  herein. In
       the  opinion  of  management,  all  adjustments,   consisting  of  normal
       recurring  accruals,  considered  necessary  for a fair  presentation  of
       financial  statements have been reflected herein.  The November 27, 1999,
       condensed  balance  sheet has been  derived  from the  audited  financial
       statements as of that date.

(2)    The Company  recorded a $10.6  million  ($5.6 million after tax) non-cash
       curtailment  gain in the second  quarter of 1999 in  connection  with its
       non-contributory defined benefit pension plan. Benefits under the pension
       plan  were  frozen  effective  June 17,  1999.  The  curtailment  gain is
       included  in  special  charges   (credits),   net,  in  the  accompanying
       statements of operations for the thirty-nine weeks ended August 28, 1999.

(3)    A special charge of $5.2 million ($2.8 million after tax) was recorded in
       the second quarter of fiscal 1999 in connection  with the closing of five
       stores.  In addition,  the Company recorded in the second quarter of 1999
       an  inventory  write-down  of $3.4  million  ($1.8  million  after  tax),
       included  in cost of  merchandise  sold,  in  connection  with the  store
       closings.

(4)    Insurance  expense  in the third  quarter  of fiscal  2000 was  favorably
       impacted by a change in  estimate  in  liability  reserves  for  worker's
       compensation  claims,  as a result of recent  settlements  with insurance
       carriers.  The  approximate  effect  of this  change in  estimate  on the
       thirteen  weeks ended  August 26, 2000 was a $1.9  million  reduction  in
       selling,  general  and  administrative  expense.  Conversely,   operating
       expense was  unfavorably  impacted  by  non-recurring  commercial  credit
       account  write-offs,  resulting from final conversion  issues  associated
       with  the  Company's  change  in  third  party  credit  providers  at the
       beginning of fiscal 2000.

(5)    A  charge  of  $1.1  million  for  accelerated  depreciation  on  certain
       leasehold  improvements  was  recorded  in the  third  quarter  of  1999.
       Additionally,  the Company reassessed the useful lives of certain classes
       of fixed assets during the second quarter of fiscal 2000. The approximate
       effect of this change in estimate on the thirteen  weeks and  thirty-nine
       weeks ended August 26, was a $0.7  million and $2.5 million  reduction in
       the provision for depreciation and amortization, respectively.

(6)    Basic  earnings  per  common  share  have  been  computed  based  on  the
       weighted-average  number of common shares  outstanding during the period.
       Dilutive   earnings  per  common   share  are   computed   based  on  the
       weighted-average  number of common  shares plus  potential  common shares
       outstanding during the period, when dilutive, consisting of certain stock
       options.  Given the net loss  reported  for the  thirty-nine  weeks ended
       August 26, 2000,  and August 28,  1999,  the impact of  considering  such
       stock options would be antidilutive.

(7)    Approximately 80% of the Company's  inventories are valued using the LIFO
       (last-in,  first-out) method.  Because inventory  determination under the
       LIFO  method is only  made at the end of each  fiscal  year  based on the
       inventory levels and costs at that time, interim LIFO determinations must
       necessarily  be based on  management's  estimates  of  expected  year-end
       inventory  levels and costs.  Since future  estimates of inventory levels
       and costs are subject to change,  interim  financial  results reflect the
       Company's most recent estimate of the effect of inflation and are subject
       to  final  year-end  LIFO  inventory  amounts.  If  the  FIFO  (first-in,
       first-out)  method of inventory  accounting had been used by the Company,
       inventories  would have been $3.3 million  lower and $1.7  million  lower
       than reported at August 26, 2000, and August 28, 1999, respectively.


<PAGE>6

 (8)   Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                        August 26,         November 27,         August 28,
       (In thousands)                                                      2000                1999                1999
                                                                       ----------------------------------------------------
       <S>                                                             <C>                 <C>                <C>

       1999 Credit Agreement, variable interest rate                   $    192,920        $    183,386       $        ---
       1997 Credit Agreement, variable interest rate                        106,048             109,415            286,088
       Mortgage loan, variable interest rate                                 78,875              83,686             85,279
       Other senior debt                                                        835                 932                978
                                                                       ----------------------------------------------------
                                                                            378,678             377,419            372,345
       Less portion classified as current liability                          (5,178)             (3,265)           (10,160)
                                                                       ----------------------------------------------------
                                                                       $    373,500        $    374,154       $    362,185
                                                                       ====================================================
</TABLE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

RESULTS OF OPERATIONS

Income

Net sales for the third  quarter of fiscal 2000,  decreased  20.4% from the same
period of fiscal  1999 in total and 18.6% on a  same-store  sales  basis.  (Same
stores are those open one full year.) Net sales for the first three  quarters of
2000 decreased  15.7% from the same period of 1999 in total and decreased  13.4%
on a same-store  sales basis.  The same store sales decrease for the quarter and
the first three  quarters of 2000 is primarily due to  significant  deflation in
lumber  and  wallboard  prices,   competitive  pressures  and  ongoing  business
restructuring  designed to create a  sustainable  profit  model.  This  business
restructuring  included a change in the  Company's  mass  marketing  programs to
target more specific customer segments,  a shift in product mix to higher margin
items  and  elimination  of  certain  unprofitable  customer  relationships  and
products. Same-store sales to professional customers during the third quarter of
2000 decreased 14.3% and same-store sales to do-it-yourself  customers  declined
23.8%.  Sales  decreases  in total for both  periods  are  partially a result of
closing 6 stores in the past twelve  months  whose  sales were $1.3  million and
$41.2 million in the first three quarters of 2000 and 1999, respectively.

Costs and Expenses

Cost of merchandise sold as a percent of sales was 72.7% and 73.6% for the third
quarter of fiscal 2000 and 1999,  respectively.  For the first three quarters of
2000 and 1999,  cost of  merchandise  sold as a  percent  of sales was 72.9% and
73.7%,  respectively.  The  improvement  for the third  quarter  and first three
quarters of 2000 was due to improvements in sourcing and vendor-support programs
and fewer  inventory  write-downs  and  markdowns  versus the prior year.  These
improvements  were partially  offset by price  deflation in lumber and wallboard
products in comparison to the prior year and the  Company's  continued  shift in
sales mix to the lower margin professional customer.

Selling,  general and administrative  expenses were 21.6% and 22.0% of sales for
the third  quarter of fiscal  2000 and 1999,  respectively.  For the first three
quarters of 2000 and 1999,  selling,  general and  administrative  expenses were
23.1% and 23.5% of sales,  respectively.  The decrease as a percent of sales for
the third  quarter and the first three  quarters  of 2000 was due  primarily  to
reductions  in  personnel  expenses,  decreases  in the cost of risk  management
programs  and lower  advertising  and  marketing  costs.  Selling,  general  and
administrative  expenses for the third quarter and first three  quarters of 2000
decreased approximately $23.3 million and $55.3 million, respectively,  compared
to the same periods of the prior year also  primarily  due to  reductions in the
aforementioned items.

The provision for  depreciation  and amortization was 2.0% and 2.1% of sales for
the third  quarter of fiscal  2000 and 1999,  respectively.  For the first three
quarters  of  2000  and  1999,  the  provision  was  2.0%  and  2.1%  of  sales,
respectively.  The decrease as a percent of sales for the third  quarter and the
first three  quarters of 2000 resulted from a $1.1 million  depreciation  charge
for accelerated  depreciation on certain leasehold  improvements recorded in the
third quarter of 1999, a reassessment of the useful lives of certain fixed asset
classes   during  2000  which  reduced  the  provision  for   depreciation   and
amortization  by $0.7 million and $2.5  million for the third  quarter and first
three quarters of 2000,  respectively,  and an overall  decrease in depreciation
expense due to store closures in 1999.

<PAGE>7

Interest  expense  for the third  quarter  and first  three  quarters  increased
compared to the same periods of 1999  primarily due to higher  interest rates in
2000 and, to a lesser extent, higher average borrowing levels in 2000.

The income tax  benefit  for the first  three  quarters  of fiscal 2000 was $4.3
million  compared to $3.8  million for the first three  quarters of fiscal 1999.
The effective tax rates for both periods were  different  from the 35% statutory
rate primarily due to various expenses that are permanently  non-deductible  for
income tax purposes.  In addition,  the effective tax rate for 2000 reflects the
utilization of a long-term capital loss carry-forward resulting from the sale of
a certain partnership interest. Such tax benefits reflect management's estimates
of the annual  effective tax rates at the end of each quarter and are subject to
change throughout the year.

Net Income (Loss)

Net income for the quarter ended August 26, 2000,  was $2.4 million  compared to
$1.7 million for the same period of fiscal 1999. For the first three quarters of
2000, net loss was $1.7 million  compared to $5.4 million for the same period of
1999.  Net earnings for the first three  quarters of 2000  improved  compared to
1999  primarily  due to improved  gross  margin  management,  continued  expense
control,  a  reduction  in  depreciation  expense  due  to the  reassessment  of
estimated useful lives for certain fixed asset classes, the tax benefit from the
capital loss carry-forward and special charges recorded in the second quarter of
1999. The increase in third quarter net earnings was due to significant  expense
reductions and a decrease in depreciation  expense due to the aforementioned and
a charge for  accelerated  depreciation  recorded in the third  quarter of 1999.
These items were offset somewhat by higher interest expense in the third quarter
of 2000.  Basic and diluted net income per common share were $0.12 and $0.09 for
the third  quarter of 2000 and 1999,  respectively,  while basic and diluted net
loss per common  share were $0.08 and $.27 for the first three  quarters of 2000
and 1999, respectively.

NEW ACCOUNTING PRONOUNCEMENTS

In June of 1998,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("FAS") No. 133,  "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement,  as
amended by FAS No. 138,  "Accounting  for  Certain  Derivative  Instruments  and
Certain Hedging Activities- an Amendment of FASB Statement No. 133", establishes
accounting and reporting  standards for derivative  instruments  and all hedging
activities.  It requires  that an entity  recognize  all  derivatives  as either
assets or liabilities at their fair market values. Accounting for changes in the
fair value of a derivative  depends on its  designation and  effectiveness.  For
derivatives that qualify as effective hedges, the change in fair value will have
no impact on earnings until the hedged item affects  earnings.  For  derivatives
that are not designated as hedging  instruments,  or for the ineffective portion
of a hedging  instrument,  the change in fair value will affect  current  period
earnings.  The FASB has delayed the effective date of implementing  the standard
until January 1, 2001, and therefore,  the Company will not be required to adopt
SFAS 133 until the first quarter of fiscal 2001.  The Company does not presently
believe that it will have a significant effect on its financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash  provided  by  operating  activities  was $8.0  million for the first three
quarters of fiscal 2000  compared to cash used in operating  activities  of $1.5
million for the same period of fiscal 1999.  The increase in cash from operating
activities  was primarily  caused by decreases in  merchandise  inventories  and
improved earnings in 2000. During the first three quarters of 2000 and 1999, the
Company used cash of approximately $2.6 million and $3.4 million,  respectively,
in  operating  activities  related  to  the  execution  of  the  1999  and  1998
restructuring plans.

Borrowings  are available  under the 1999 Credit  Agreement to  supplement  cash
generated by  operations.  At August 26, 2000,  $5.3 million was  available  for
borrowing under the 1999 Credit Agreement.  At August 26, 2000,  working capital
was $223.6 million compared to $225.7 million and $211.0 million at November 27,
1999, and August 28, 1999, respectively.  The current ratios at August 26, 2000,
November 27, 1999,  and August 28, 1999,  were 2.69 to 1, 2.53 to 1, and 2.20 to
1, respectively.

The Company's  primary  investing  activities are capital  expenditures  for the
renovation of existing stores,  improved technology,  and additional  equipment.
The Company spent approximately $14.2 million and $38.8 million during the first
three quarters of fiscal 2000 and 1999, respectively, for renovation of existing
stores, additional equipment and technological  improvements;  1999 expenditures
also included the purchase of ten  previously  leased  stores for  approximately

<PAGE>8

$14.4 million.  The Company intends to fund the remaining  estimated fiscal 2000
capital  expenditures  of  approximately  $6 million,  consisting  primarily  of
improved  technology,   10  to  15  store  remodels,   new  stores,   additional
manufacturing   capabilities  and  routine  capital  improvements,   with  funds
generated from operations. During the first three quarters of 2000 and 1999, the
Company sold three and thirteen real estate properties, respectively, related to
stores  previously  closed for  approximately  $4.2 million and $14.4 million of
cash proceeds, respectively, which were applied to outstanding debt.

The Company's most significant financing activity is and will continue to be the
retirement of indebtedness.  The Company's consolidated indebtedness is and will
continue to be substantial. Management believes that, based upon its analysis of
the Company's  financial  condition,  the cash flow  generated  from  operations
during the past 12 months and the expected  results of operations in the future,
cash flow from  operations  and  borrowing  availability  under the 1999  Credit
Agreement should provide sufficient  liquidity to meet all cash requirements for
the next 12 months without additional financing sources.

FORWARD-LOOKING STATEMENTS

Statements made above in Item 2, Management Discussion and Analysis of Financial
Condition and Results of Operations,  such as "estimate",  "believe",  "expect",
"anticipate",  "intend" and similar expressions,  which are not historical,  are
forward-looking statements that involve risks and uncertainties. Such statements
include, without limitation, the Company's expectation as to future performance.

Such forward-looking  statements are made pursuant to the safe harbor provisions
of the  Private  Securities  Litigation  Reform Act of 1995.  There are  certain
important  factors  that could  cause  results to differ  materially  from those
anticipated by the  forward-looking  statements made above. These statements are
based on the current  plans and  expectations  of the Company and  investors are
cautioned that all  forward-looking  statements  involve risks and  uncertainty.
Among the factors that could cause actual  results to differ  materially are the
following: competitor activities; stability of customer demand; stability of the
work  force;  supplier  support;  commodity  prices;  new and  existing  housing
activity;  consumer spending and debt levels; product and customer mix; interest
rates;  growth of certain market  segments;  weather;  an excess of retail space
devoted to the sale of  building  materials;  and the  success of the  Company's
strategy. Additional information concerning these and other factors is contained
in the Company's  Securities and Exchange Commission filings,  including but not
limited to the Form 10-K, copies of which are available from the Company without
charge or on the Company's web site, www.payless.cashways.com.

REVIEW BY INDEPENDENT AUDITORS

The condensed  financial  statements of Payless Cashways,  Inc. for the thirteen
week and  thirty-nine  week periods ended August 26, 2000,  and August 28, 1999,
have been reviewed by KPMG LLP, independent  auditors.  Their report is included
in this filing.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

No  material  changes in the  Company's  exposure to certain  market  risks have
occurred from the discussion  contained in Item 7A, Quantitative and Qualitative
Disclosures  About Market Risk,  filed as part of the Company's Annual Report on
Form 10-K for the fiscal year ended November 27, 1999.


<PAGE>9

                                         PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

There are presently no material legal proceedings to which Payless is a party or
of which its property is subject.

Item 4.  Submission of Matters to a Vote of  Security Holders.

         None.






Item 6.  Exhibits and Reports on Form 8-K.

         a.     Exhibits.

                  4.0    Long-term debt  instruments of  the  Company in amounts
                         not exceeding ten percent (10%) of the total  assets of
                         the Company will be furnished to  the  Commission  upo
                         request.

                 10.1(b)*Form of Employment Agreement (Form B) between the  Com-
                         pany and certain executive officers.

                 15.1    Letter re unaudited financial information -  KPMG LLP.

                 27.1    Financial data schedule.

                 * Represents a management  contract or a  compensatory  plan or
                   arrangement.

         b.     Reports on Form 8-K.

                No  reports  on Form 8-K were  filed by the  Company  during the
                quarter ended August 26, 2000.

<PAGE>10

                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                         PAYLESS CASHWAYS, INC.
                                                         (Registrant)


Date:  September 25, 2000                       By:      /s/Richard B. Witaszak


                                                Richard B. Witaszak, Senior Vice
                                                President-Finance and Chief Fin-
                                                ancial  Office (Principal Finan-
                                                cial   Officer   and   Principal
                                                Accounting Officer)