<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 May 27, 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)

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    /     /

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    /     /

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
July 2, 2000


<PAGE>2


PAYLESS CASHWAYS, INC.



                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements.

STATEMENTS OF OPERATIONS (Unaudited) (1)


<TABLE>
<CAPTION>
                                                          Thirteen Weeks Ended                 Twenty-Six Weeks Ended
                                                   ------------------------------        -------------------------------
                                                           May 27,        May 29,               May 27,          May 29,
(In thousands, except per share amounts)                    2000           1999                  2000             1999
                                                   ------------------------------        -------------------------------

<S>                                                 <C>                <C>                <C>                <C>
Income

     Net sales                                      $    421,730       $    492,728       $     768,843      $    884,601
     Other income                                            871                719               1,335             1,064
                                                    -------------------------------       -------------------------------
                                                         422,601            493,447             770,178           885,665

Costs and expenses

     Cost of merchandise sold                            311,818            366,713             561,524           652,652
     Selling, general and administrative                  89,378            108,683             183,201           215,200
     Special (credits) charges, net (2) and (3)               --             (5,400)                 --           (5,400)
     Provision for depreciation and amortization (4)       6,137              9,223              15,073            18,159
     Interest expense                                     10,636              8,909              20,722            17,522
                                                    -------------------------------        ------------------------------
                                                         417,969            488,128             780,520           898,133
                                                    -------------------------------        -------------------------------

               INCOME (LOSS) BEFORE INCOME TAXES           4,632              5,319             (10,342)          (12,468)

Federal and state income taxes                             3,398              2,503              (6,334)           (5,323)
                                                    -------------------------------       --------------------------------

                               NET INCOME (LOSS)    $      1,234       $      2,816       $      (4,008)         $ (7,145)
                                                    ===============================       ================================


Weighted average common shares outstanding                20,000             20,000              20,000            20,000
                                                    -------------------------------       --------------------------------
Net income (loss) per common share-basic (5)        $       0.06               0.14       $      (0.20)             (0.36)
                                                    ===============================       ================================

Weighted average common and dilutive
     common equivalent shares outstanding                 20,224             20,156              20,000            20,000
                                                    -------------------------------       --------------------------------

Net income (loss) per common share-diluted (5)      $       0.06               0.14       $      (0.20)             (0.36)
                                                    ===============================       ================================




See notes to condensed financial statements
</TABLE>



<PAGE>3


CONDENSED BALANCE SHEETS (Unaudited) (1)

<TABLE>
<CAPTION>
                                                                    May 27,            November 27,              May 29,
(In thousands)                                                       2000                   1999                  1999
                                                               ---------------------------------------------------------
<S>                                                             <C>                    <C>                   <C>
ASSETS

     CURRENT ASSETS

       Cash and cash equivalents                                $      1,135           $       1,111         $     7,054
       Merchandise inventories (6)                                   374,111                 349,332             385,934
       Prepaid expenses and other current assets                      15,849                  22,013              21,917
       Income taxes receivable                                           675                     679                 773
       Deferred income taxes                                              --                      --               2,138
                                                                --------------------------------------------------------
                                        TOTAL CURRENT ASSETS         391,770                 373,135             417,816

     OTHER ASSETS

       Real estate held for sale                                       5,898                   8,851              13,247
       Deferred financing costs                                        3,443                   3,944               2,572
       Other                                                           1,433                   1,549               1,569

     LAND, BUILDINGS, EQUIPMENT AND SOFTWARE                         414,267                 407,812             406,814
       Allowance for depreciation and amortization                   (81,467)                (66,900)            (51,037)
                                                                --------------------------------------------------------

TOTAL LAND, BUILDINGS, EQUIPMENT AND SOFTWARE                        332,800                 340,912             355,777
                                                                --------------------------------------------------------
                                                                $    735,344           $     728,391         $   790,981
                                                                ========================================================


LIABILITIES AND SHAREHOLDERS' EQUITY

     CURRENT LIABILITIES
       Current portion of long-term debt                        $        174          $      3,265          $     10,156
       Trade accounts payable                                         51,881                51,480                74,210
       Other current liabilities                                      74,433                88,645               100,350
           Income taxes payable                                        1,646                 1,851                 2,013
       Deferred income taxes                                           7,923                 2,157                    --
                                                                --------------------------------------------------------
                                   TOTAL CURRENT LIABILITIES         136,057               147,398               186,729

     LONG-TERM DEBT, less portion
       classified as current liability (7)                           407,881               374,154               395,736

     NON-CURRENT LIABILITIES
       Deferred income taxes                                          19,163                31,263                35,931
       Other                                                          22,954                22,279                18,297

     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                                           (34,511)              (30,503)              (29,512)
                                                                ---------------------------------------------------------
                                  TOTAL SHAREHOLDERS' EQUITY         149,289               153,297               154,288
                                                                --------------------------------------------------------
                                                                $    735,344          $    728,391          $    790,981
                                                                ========================================================


See notes to condensed financial statements
</TABLE>


<PAGE>4


CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (1)
<TABLE>
<CAPTION>
                                                                                         Twenty-Six Weeks Ended
                                                                             ---------------------------------------------
                                                                                   May 27,                      May 29,
(In thousands)                                                                      2000                         1999
                                                                             ---------------------------------------------
<S>                                                                          <C>                                 <C>

Cash Flows from Operating Activities

     Net loss                                                                $          (4,008)                  $ (7,145)
     Adjustments to reconcile net loss to net cash
       Used in operating activities:
         Non-cash special credits (2)                                                       --                     (10,600)
         Depreciation and amortization                                                  15,073                      18,159
         Deferred income taxes                                                          (6,334)                     (5,323)
         Non-cash interest                                                                 660                         797
         Other                                                                            (678)                        480
     Changes in assets and liabilities                                                 (32,627)                    (27,492)
                                                                             ----------------------------------------------
     NET CASH USED IN OPERATING ACTIVITIES                                             (27,914)                    (31,124)

Cash Flows from Investing Activities

     Additions to land, buildings and equipment                                         (8,049)                    (30,293)
     Proceeds from sale of land, buildings and equipment                                 5,630                       8,378
     Decrease (increase) in other assets                                                   116                         (74)
                                                                             -----------------------------------------------
     NET CASH USED IN INVESTING ACTIVITIES                                              (2,303)                    (21,989)

Cash Flows from Financing Activities

     Principal payments on long-term debt                                               (8,121)                    (13,733)
     Net proceeds from revolving credit facility                                        38,757                      72,000
     Other                                                                                (395)                        (50)
                                                                             ----------------------------------------------
     NET CASH PROVIDED BY FINANCING ACTIVITIES                                          30,241                      58,217
                                                                             ----------------------------------------------
     Net increase in cash and cash equivalents                                              24                       5,104
     Cash and cash equivalents, beginning of period                                      1,111                       1,950
                                                                             ---------------------------------------------
     Cash and cash equivalents, end of period                                $           1,135            $          7,054
                                                                             =============================================

See notes to condensed financial statements
</TABLE>



<PAGE>5


NOTES TO CONDENSED FINANCIAL STATEMENTS

Twenty-six weeks ended May 27, 2000, and May 29, 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  (credits)   charges,   net,  in  the  accompanying
       statements of operations for the periods ended May 29, 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 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)    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 ended May 27, 2000 was a
       $2.8  million   reduction  in  the   provision   for   depreciation   and
       amortization.

(5)    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 twenty-six  weeks ended May
       27, 2000, and May 29, 1999, the impact of considering  such stock options
       would be antidilutive.

(6)    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 than reported at May 27,
       2000, and $1.4 million lower than reported at May 29, 1999, respectively.

(7)      Long-term debt consisted of the following:
<TABLE>
<CAPTION>
                                                                    May 27,             November 27,             May 29,
       (In thousands)                                                2000                   1999                  1999
                                                                ----------------------------------------------------------
       <S>                                                      <C>                    <C>                    <C>
       1999 Credit Agreement, variable interest rate            $    222,143           $    183,386           $        --
       1997 Credit Agreement, variable interest rate                 106,169                109,415               313,220
       Mortgage loan, variable interest rate                          78,875                 83,686                91,654
       Other senior debt                                                 868                    932                 1,018
                                                                ----------------------------------------------------------
                                                                     408,055                377,419               405,892
       Less portion classified as current liability                     (174)                (3,265)              (10,156)
                                                                ----------------------------------------------------------
                                                                $    407,881           $    374,154           $   395,736
                                                                ==========================================================
</TABLE>

<PAGE>6


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

RESULTS OF OPERATIONS

Income

Net sales for the quarter  ended May 27, 2000,  decreased  12.2% on a same store
basis and 14.4% from the same  period in 1999 in total.  (Same  stores are those
open one full year.) Net sales for the first half of 2000  decreased  10.6% on a
same-store basis and 13.1% from the same period of 1999 in total. The same-store
sales  decrease for the quarter and the first half of 2000 is  primarily  due to
price  deflation in lumber and  wallboard  products,  competitive  pressures and
certain  actions  taken  during  the  first  half of  fiscal  2000  to  continue
developing a sustainable profit model. These actions included a shift in product
mix to higher  margin  items,  elimination  of certain  non-profitable  customer
relationships  and  products,  and a shift  in  certain  of the  Company's  mass
marketing programs to target more specific customer  segments.  Same-store sales
to professional  customers  during the second quarter of 2000 decreased 6.8% and
same-store sales to do-it-yourself  customers declined 18.2%. 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 $29.2 million in the first half
of 2000 and 1999, respectively.

Costs and Expenses

Cost of  merchandise  sold as a  percent  of sales  was  73.9% and 74.4% for the
second  quarter of 2000 and 1999,  respectively.  For the first half of 2000 and
1999,  cost of  merchandise  sold as a percent  of sales  was  73.0% and  73.8%,
respectively.  The improvement for the second quarter and first half of 2000 was
due to fewer inventory write-downs and markdowns versus the prior year and lower
costs associated with sourcing  programs.  Increased supplier support was also a
positive  factor in the first half of 2000.  The  aforementioned  benefits  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 21.2% and 22.1% of sales for
the second  quarter of 2000 and 1999,  respectively.  For the first half of 2000
and 1999, selling,  general and administrative  expenses were 23.8% and 24.3% of
sales,  respectively.  The decrease as a percent of sales for the second quarter
and first half 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 second
quarter and first half of 2000 decreased  approximately  $19.3 million and $32.0
million,  respectively,  compared  to the same  periods  of the prior  year also
primarily because of reductions in the aforementioned items.

The provision for  depreciation  and  amortization was 1.5% of sales and 1.9% of
sales for the second quarter of 2000 and 1999, respectively.  For the first half
of 2000 and 1999, the provision for  depreciation  and amortization was 2.0% and
2.1% of sales  respectively.  The  decrease as a percent of sales for the second
quarter and first half of 2000  resulted  from a  reassessment  of the estimated
useful  lives  of  certain  fixed  asset  classes  and an  overall  decrease  in
depreciation expense due to store closures during 1999.

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

The income tax benefit for the first half of 2000 was $6.3  million  compared to
$5.3  million  for the  first  half of 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 May 27, 2000, was $1.2 million compared to $2.8
million  for  the  same  period  of  1999.   Excluding  the  effect  of  special
charges/credits and the reassessment of depreciable asset lives, the results for
the second  quarter of 2000 and 1999,  were net income of $0.5 million and a net
loss    of    $0.1    million,     respectively.    For   the   first   half  of

<PAGE>7


2000,  net loss was$4.0 million compared to $7.1 million for the same period  of
1999. Excluding the effect of special  charges/credits  and the reassessment  of
depreciable  asset lives, net loss for the first half of 2000 and  1999    would
have been $5.1 million and $9.9  million,  respectively.  Net  earnings for  the
first half 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 and the tax benefit from the capital loss carry-forward.   The de-
crease in second quarter net earnings  was  due to the  effects  of  non-routine
items  recorded  in 1999  and  the  higher effective tax rate in the current pe-
riod,  somewhat offset by lower depreciation expense  in  the  current   period.
Basic and diluted  income per common share were $0.06 and $0.14 for  the  second
quarters of 2000 and  1999,  respectively,   while basic and  diluted  loss  per
common  share  were  $0.20 and $0.36 for the first  halves  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 used in operating  activities  was $27.9 million for the first half of 2000
compared to $31.1 million for the same period of 1999. The decrease in cash used
in  operating  activities  was  primarily  due to cash  generated  from  regular
operating activities,  an approximate $9.6 million improvement over fiscal 1999.
This  improvement  was partially  offset by a reduction in working capital items
compared  to the first half of 1999.  The  primary  use of cash from  operations
during the first half of both  periods was  seasonal  additions  to  merchandise
inventories.  During the first half of 2000 and 1999,  the Company  used cash of
approximately  $1.8  million  and  $6.7  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 May 27, 2000,  $18.5  million was  available  for
borrowing under the 1999 Credit Agreement.  At May 27, 2000, working capital was
$255.7  million  compared to $225.7  million and $231.1  million at November 27,
1999  and May 29,  1999,  respectively.  The  current  ratios  at May 27,  2000,
November 27, 1999,  and May 29, 1999,  were 2.88 to 1, 2.53 to 1, and 2.24 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 $8.0 million and $30.3 million during the first
half of 2000 and 1999,  respectively,  for  renovation  of  existing  stores and
additional  equipment;  1999  expenditures  also  included  the  purchase of ten
previously leased stores for approximately $14.4 million. The Company intends to
finance the remaining  fiscal 2000 capital  expenditures  of  approximately  $15
million,  consisting primarily of improved technology,  20 to 25 store remodels,
new stores,  additional manufacturing  capabilities and routine maintenance with
funds generated from operations,  sales of real estate, and borrowings under the
1999 Credit  Agreement.  During the first  halves of 2000 and 1999,  the Company
sold  three and six real  estate  properties,  respectively,  related  to stores
previously  closed  for  approximately  $4.2  million  and $7.1  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.  Although 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

<PAGE>8


expected results of operations in the future, cash flow from operations and bor-
rowing  availability under the 1999 Credit  Agreement  should   provide   suffi-
cient liquidity  to  meet  all  cash requirements for the next 12 months without
additional  financing sources.  As a result of the  Chapter 11  filing  in  July
1997,  trade  creditors  significantly shortened  credit  terms.  The    Company
believes  that  progress  with regard to lengthening   terms and  reestablishin
trade credit is  continuing, but availability of trade credit cannot be assured.

FORWARD-LOOKING STATEMENTS

Statements  above  in  the  subsections   entitled  "Costs  and  Expenses,"  and
"Liquidity and Capital  Resources" and in this subsection of this report such as
"estimated",   "believe",  "expect"  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;  the  successful  implementation  of an Internet
ordering  system;  consumer  spending and debt levels;  interest rates;  new and
existing  housing  activity;  commodity  prices;  product mix; 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,  including its
e-commerce  opportunities.  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,
payless.cashways.com.

REVIEW BY INDEPENDENT AUDITORS

The condensed  financial  statements of Payless Cashways,  Inc. for the thirteen
week and twenty-six  week periods ended May 27, 2000 and May 29, 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.

                                                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.

The Annual Meeting of Stockholders was held April 19, 2000.  Stockholders  voted
in favor of the nominees for director:  Peter G. Danis(17,417,344 for, 161,220
withheld) David G Gundling  (17,416,776 for, 161,788  withheld)  and   Donald E.

<PAGE>9

Roller  (17,417,341 for, 161,223 withheld).  Directors    who  were   previously
elected and whose term of office as a director  continued  after   the   meeting
were Max D. Hopper, Peter M. Wood, Millard E. Barron, and H. D. Cleberg.


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

         a.     Exhibits.

                4.0      Long-term  debt instruments  of Payless in amounts  not
                         exceeding ten percent (10%) of the total assets of Pay-
                         less will  be furnished to the Commission upon request.
                10.1(a)* Form of Employment  Agreement  (Form A) between Payless
                         and certain executive officers.

                10.1(b)* Form of Employment  Agreement  (Form B) between Payless
                         and certain executive officers.

                15.1     Letter re unaudited financial information - KPMG LLP.

                27.1     Financial data schedule.

         b.     Reports on Form 8-K.

                No reports on Form 8-K were filed by Payless  during the quarter
                ended May 27, 2000.

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

<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:  July 6, 2000                           By:      /s/Richard B. Witaszak


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