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BMC West Corp – ‘10-Q’ for 9/30/98

As of: Friday, 11/13/98 · For: 9/30/98 · Accession #: 1047469-98-40555 · File #: 0-19335 · Correction: This Filing was Deleted by the SEC on 12/15/98. `®`

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/13/98  BMC West Corp                     10-Q        9/30/98    3:258K                                   Merrill Corp/New/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      20     64K 
 2: EX-10.3     Material Contract                                     83    288K 
 3: EX-27       Financial Data Schedule                                2      6K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Form 8-K Financial Statements Item 1 Item 5 Item 6 Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Other Information Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1 -. Financial Statements
10	Management's Discussion and Analysis of Financial Condition and Results of Operations
17	Item 1
"	Item 1. Legal Proceedings
18	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 5
"	Item 5. Other Information
"	Item 6
"	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 20 TOC ↑Top Previous Next ↓Bottom Just 1st
 
      SECURITIES AND EXCHANGE COMMISSION
     WASHINGTON, D.C.  20549

     FORM 10-Q

_X_  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act  
of 1934                                                               

For the quarterly period ended   September 30, 1998    or                       
    --------------------
___  Transition report pursuant to Section 13 or 15(d) of the Securities        
Exchange Act of 1934                                                  

For the transition period from ________________ to ________________             

Commission file number 0-19335                                                  

    BUILDING MATERIALS HOLDING CORPORATION

Delaware                                         91-1834269                     
(State of other jurisdiction of                  (IRS Employer                  
incorporation or organization)                   Identification No.)            

  Building Materials Holding Corporation
   One Market Plaza, Steuart Tower, Ste 2650, San Francisco, CA  94105
   Telephone:  (415)227-1650

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 month (or for such shorter period that the registrant was      
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days.                                              

Yes __X__ No _____                                                              

 Class                                   Shares Outstanding as
-----                                   of November 1, 1998:

Common stock $.001 par value            12,643,439          
                              ----------

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      BUILDING MATERIALS HOLDING CORPORATION

     INDEX

                                                                [Download Table]

                                                                        Page 
                                                                       Number
                                                                       ------
                                                                             
PART I -- FINANCIAL INFORMATION                                              

      Item 1 - Financial Statements                                          

      Condensed Consolidated Statements of Income for the three and          
      nine months ended September 30, 1998 and 1997                       4  

      Condensed Consolidated Balance Sheets as of September 30,              
      1998 and December 31, 1997                                          5  

      Condensed Consolidated Statements of Cash Flows for the nine           
      months ended September 30, 1998 and 1997                            6  

      Notes to Condensed Consolidated Financial Statements                7  

      Item 2 - Management's Discussion and Analysis of Financial             
      Condition and Results of Operations                                10  

PART II -- OTHER INFORMATION                                                 

      Item 1 - Legal Proceedings                                         17  

      Item 4 - Submission of Matters to a Vote of Security Holders       18  

      Item 5 - Other Information                                         18  

      Item 6 - Exhibits and Reports on Form 8-K                          18  

SIGNATURES                                                               19  

INDEX TO EXHIBITS                                                        20  

EXHIBITS                                                                 21  

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PART I - FINANCIAL INFORMATION                                                  

The condensed consolidated financial statements included herein have been       
prepared by Building Materials Holding Corporation ("BMHC" or the "Company")on a
consolidated basis, without audit, pursuant to the rules and regulations of the 
Securities and Exchange Commission.  BMHC was formed on September 23, 1997 in a 
holding company reorganization in which BMC West Corporation, the former        
registrant, became a wholly owned subsidiary of BMHC.  This new structure was   
adopted to centralize certain administrative functions as the Company expands   
its participation in the consolidation of the contractor focused building       
materials distribution industry.  All references to the "Company" will mean BMHC
on a consolidated basis if referring to periods after September 23, 1997, or BMC
West Corporation for all preceding periods.                                     

In the opinion of management, all adjustments necessary to present fairly the   
financial results for the periods presented have been included.  The adjustments
made were of a normal, recurring nature.  Certain information and footnote      
disclosures normally included in the consolidated financial statements have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission, although the Company believes that the disclosures are     
adequate to make the information presented not misleading.  It is recommended   
that these condensed consolidated financial statements be read in conjunction   
with the audited consolidated financial statements and notes thereto included in
the Company's 1997 Annual Report.                                               

Due to the seasonal nature of BMHC's business, the condensed consolidated       
results of operations and resulting cash flows for the periods presented are not
necessarily indicative of the results that might be expected for the fiscal     
year.                                                                           

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      BUILDING MATERIALS HOLDING CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
     (In Thousands, Except Per Share Data)

                                                                [Download Table]

                                 Three Months Ended        Nine Months Ended    
                              Sept. 30,      Sept. 30,  Sept. 30,      Sept. 30,
                                1998           1997       1998           1997   
                              --------       --------   --------       -------- 
                                                                                
Net sales                     $249,757       $201,950   $659,405       $539,335 

Cost of sales                  188,649        155,513    499,728        415,121 
                              --------       --------   --------       -------- 
Gross profit                    61,108         46,437    159,677        124,214 

Selling, general and                                                            
 administrative expense         47,763         37,717    132,722        105,462 

Other income                       220            487      1,044          1,378 
                              --------       --------   --------       -------- 
Income from operations                                                          
                                13,565          9,207     27,999         20,130 

Interest expense                 2,547          2,245      7,718          6,695 
                              --------       --------   --------       -------- 
Income before income taxes      11,018          6,962     20,281         13,435 

Income taxes                     4,295          2,750      7,954          5,307 
                              --------       --------   --------       -------- 
Net income                    $  6,723       $  4,212   $ 12,327       $  8,128 
                              --------       --------   --------       -------- 
                              --------       --------   --------       -------- 
Net income per common share:                                                    
Basic                            $0.53          $0.36      $0.99          $0.69 
                              --------       --------   --------        ------- 
                              --------       --------   --------        ------- 
Diluted                          $0.53          $0.35      $0.98          $0.67 
                              --------       --------   --------       -------- 
                              --------       --------   --------       -------- 

The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           

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      BUILDING MATERIALS HOLDING CORPORATION
     CONDENSED CONSOLIDATED BALANCE SHEETS
     (In Thousands, Except Share Data)

                                                                [Download Table]

                                                  September 30,  December 31,
                                                       1998          1997    
                                                  -------------  ------------
                                                                             
ASSETS                                                                       
Current assets                                                               
   Cash                                               $10,588     $   8,177  
   Receivables, net                                   104,361        84,872  
   Inventories                                         83,940        78,162  
   Deferred income tax benefit                          2,132         2,131  
   Prepaid expenses                                     1,221         3,481  
                                                     --------      --------  
      Total current assets                            202,242       176,823  

Property, plant and equipment, net                    133,845       118,240  
Deferred loan costs                                       983         1,324  
Goodwill, net                                          38,480        38,193  
Other                                                   5,363         5,793  
                                                     --------      --------  
Total assets                                         $380,913      $340,373  
                                                     --------      --------  
                                                     --------      --------  
LIABILITIES AND SHAREHOLDERS' EQUITY                                         
Current liabilities                                                          
   Current portion of long-term debt                 $      0      $  1,150  
   Accounts payable                                    51,186        43,204  
   Accrued compensation                                 9,016         6,469  
   Sales tax payable                                    4,314         3,398  
   Other accrued expenses                              12,763         3,990  
                                                     --------      --------  
      Total current liabilities                        77,279        58,211  

Long-term debt, net of current portion                118,700       113,410  
Deferred income taxes                                   4,722         4,722  
Other long-term liabilities                             2,873         3,079  

Shareholders' equity                                                         
   Common stock, $.001 par value, 20,000,000                                 
    shares authorized, 12,643,439 and 12,331,088                             
    shares outstanding at Sept. 30, 1998 and                                 
    December 31, 1997, respectively                        13            12  
   Additional paid-in capital                         108,165       104,107  
   Retained earnings                                   69,161        56,832  
                                                     --------      --------  
      Total shareholders' equity                      177,339       160,951  
                                                     --------      --------  
Total liabilities and shareholders' equity           $380,913      $340,373  
                                                     --------      --------  
                                                     --------      --------  

The accompanying notes are an integral part of these condensed consoldiated     
financial statements.                                                           

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      BUILDING MATERIALS HOLDING CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
      (In Thousands)

                                                                [Download Table]

                                                      Nine Months Ended     
                                                  Sept. 30,        Sept. 30,
                                                    1998             1997   
                                                  ---------        ---------
                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES                                        
Net income                                        $ 12,327         $  8,128 
Adjustments to reconcile net income to cash                                 
 provided by (used in) operating activities:                                
   Depreciation and amortization                     9,830            8,317 
   Gain on sales of assets                             (59)            (430)
   Stock option compensation                            16               -- 
   Provision for other long-term liabilities          (206)              -- 
Changes in working capital items, net of                                    
 Effects of acquisitions and divestitures            2,982            2,989 
Other                                                   10             (559)
                                                  --------         -------- 
Net cash provided by operating activities           24,900           18,445 
                                                  --------         -------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                        
Purchases of property and equipment                (14,210)          (9,927)
Payments for acquisitions                          (13,076)         (10,259)
Proceeds from sales of property and equipment          615            1,337 
                                                  --------         -------- 
Net cash used in investing activities              (26,671)         (18,849)
                                                  --------         -------- 
                                                  --------         -------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                        
Repayment of note payable                               --             (561)
Net borrowings under revolving credit agreements     5,290            1,920 
Redemption of Class B preferred stock                   --           (1,000)
Principal payments on debt                          (1,124)              -- 
Financing costs                                         --             (201)
Other                                                   16              (84)
                                                  --------         -------- 
Net cash provided by financing activities            4,182               74 
                                                  --------         -------- 
                                                  --------         -------- 
Net increase (decrease) in cash                      2,411             (330)
Cash, beginning of period                            8,177            7,066 
                                                  --------         -------- 
Cash, end of period                               $ 10,588         $  6,736 
                                                  --------         -------- 
                                                  --------         -------- 
SUPPLEMENTAL CASH FLOW INFORMATION:                                         
Cash paid during the year for -                                             
   Interest                                       $  5,743         $  5,060 
   Income taxes                                   $  2,765         $  4,019 

The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           

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      BUILDING MATERIALS HOLDING CORPORATION
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   WORKING CAPITAL CHANGES                                                    

Changes in working capital items, net of acquisitions, for the nine months ended
September 30, 1998 and 1997 are as follows (in thousands):                      

                                                                [Download Table]

                                                      1998            1997   
                                                    --------        -------- 
                                                                             
(Increase)in accounts receivable                    $(15,905)       $(16,512)
(Increase)decrease in inventories                     (2,890)          9,495 
Decrease in prepaid expenses                           2,267             958 
Increase in accounts payable and accrued                                     
 expenses                                             17,865           7,413 
Increase in interest payable                           1,645           1,635 
                                                    --------        -------- 
                                                    $  2,982        $  2,989 
                                                    --------        -------- 
                                                    --------        -------- 

2.   LONG-TERM DEBT                                                             
Long-term debt consisted of the following(in thousands):                        

                                                                [Download Table]

                                                 September 30,  December 31,
                                                     1998           1997    
                                                 -------------  ------------
                                                                            
Revolving credit agreement borrowings              $ 40,000       $ 34,710  
9.18% unsecured senior notes                         50,000         50,000  
8.10% unsecured senior notes                         25,000         25,000  
Other                                                 3,700          4,850  
                                                   --------       --------  
                                                    118,700        114,560  
     Less current portion                                --          1,150  
                                                   --------       --------  
                                                   $118,700       $113,410  
                                                   --------       --------  
                                                   --------       --------  

During the third quarter of 1998, BMHC renegotiated its revolving credit        
agreement with Wells Fargo Bank.  The amended and restated credit agreement was 
effective September 30, 1998 and expires February 29, 2000.  The amended and    
restated revolving credit agreement increased the Company's borrowing capacity  
from $70 million under the previous revolving credit agreement to $100 million  
for the period September 30, 1998 to March 31, 1999.  After March 31, 1999, the 
borrowing capacity will return to $70 million until the revolving credit        
agreement's expiration on February 29, 2000.  Other conditions and covenants    
related to limitations on capital expenditures and                              

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operating leases were also changed to allow more flexibility for the Company    
in meeting its operating needs.                                                 

3.   EARNINGS PER SHARE                                                         

Earnings per share was determined as follows:                                   

                                                        [Enlarge/Download Table]

                                                Three Months Ended              Nine Months Ended       
                                          ------------------------------  ------------------------------
                                          September 30,    September 30,  September 30,    September 30,
                                              1998             1997           1998              1997    
                                          -------------    -------------  -------------    -------------
                                                                                                        
COMPUTATION OF BASIC                                                                                    
 EARNINGS PER SHARE:                                                                                    
Net income                                 $6,723,000       $4,212,000     $12,327,000       $8,128,000 
Class B preferred stock accretion                  --               --              --           (6,500)
                                           ----------       ----------     -----------       ---------- 
Net income available to common                                                                          
 shareholders                              $6,723,000       $4,212,000     $12,327,000       $8,121,500 
                                           ----------       ----------     -----------       ---------- 
                                           ----------       ----------     -----------       ---------- 
Weighted average shares outstanding        12,642,656       11,833,728      12,463,589       11,830,365 
                                           ----------       ----------     -----------       ---------- 
                                           ----------       ----------     -----------       ---------- 
BASIC EARNINGS PER SHARE                        $0.53            $0.36           $0.99            $0.69 
                                           ----------       ----------     -----------       ---------- 
                                           ----------       ----------     -----------       ---------- 
COMPUTATION OF DILUTED                                                                                  
 EARNINGS PER SHARE:                                                                                    
Net income available to common                                                                          
 shareholders                              $6,723,000       $4,212,000     $12,327,000       $8,121,500 
                                           ----------       ----------     -----------       ---------- 
                                           ----------       ----------     -----------       ---------- 
Weighted average shares outstanding        12,642,656       11,833,728      12,463,589       11,830,365 

Net effect of dilutive stock options                                                                    
 based on the treasury stock method using                                                               
 average market price                         142,530          218,188         145,973          216,131 
                                           ----------       ----------     -----------       ---------- 
Weighted average diluted shares                                                                         
 outstanding                               12,785,186       12,051,916      12,609,562       12,046,496 
                                           ----------       ----------     -----------       ---------- 
                                           ----------       ----------     -----------       ---------- 
DILUTED EARNINGS PER SHARE                      $0.53            $0.35           $0.98            $0.67 
                                           ----------       ----------     -----------       ---------- 
                                           ----------       ----------     -----------       ---------- 

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4.   ACQISITIONS                                                                

 During the second and third quarters of 1998, the Company completed six
  acquisitions involving three building materials centers and seven value-
added facilities located in Colorado, Montana, Oregon, Texas and      
Washington.  Three of the value-added facilities were integrated into 
existing operations.  The total consideration given was $17.3 million,
    consisting of $12.9 million in cash, 299,343 shares of common stock valued
   at $4.0 million, and $384,000 in the settlement of debt and other assumed
operating liabilities.  The payment of the Company's common stock,    
   settlement of debt and other assumed operating liabilities are considered
    non-cash transaction for purposes of the Condensed Consolidated Statements
of Cash Flows.                                                        

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS     

The following table sets forth for the periods indicated the percentage         
relationship to net sales of certain costs, expenses and income items.  The     
table and subsequent discussion should be read in conjunction with the condensed
consolidated financial statements and the notes thereto appearing elsewhere     
herein and in the Company's Annual Report on Form 10-K for the year ended       
December 31, 1997.                                                              

                                                                [Download Table]


                          For The Three Months Ended  For The Nine Months Ended
                          --------------------------  -------------------------
                          Sept. 30,        Sept. 30,  Sept. 30,       Sept. 30,
                            1998             1997       1998            1997   
                          ---------        --------   ---------       ---------
                                                                               
Net sales                   100.0%           100.0%     100.0%          100.0% 
Gross profit                 24.5             23.0       24.2            23.0  
Selling, general and                                                           
  administrative expense     19.1             18.7       20.1            19.6  
Other income                   .1               .2         .2              .3  
Income from operations        5.4              4.6        4.2             3.7  
Interest expense              1.0              1.1        1.2             1.2  
Income taxes                  1.7              1.4        1.2             1.0  
Net income                    2.7              2.1        1.9             1.5  

THIRD QUARTER OF 1998 COMPARED TO THE THIRD QUARTER OF 1997                     

Net sales for the three months ended September 30, 1998 were $249.8 million, up 
23.7% from the third quarter of 1997 when sales were $202.0 million.  The       
largest portion of this increase was due to acquisitions contributing $35.4     
million.  The increase in net sales also resulted from a 7.1% increase over the 
third quarter of 1997 in sales at facilities that operated for at least two     
months in both the second quarter of 1997 and the second quarter of 1998 ("same-
store sales"). Sales in the quarter were positively affected by higher commodity
wood product prices.  The price increase contributed to an overall price        
inflator of 2.5%, the effect of which increased sales by approximately $5.0     
million.  Adjusting for the price inflation, real same-store sales increased    
approximately 4.6% over the year-ago quarter.                                   

Gross profit as a percentage of sales increased to 24.5% in the third quarter of
1998 from 23.0% in the third quarter of 1997, primarily as a result of on-      

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going efforts by the Company to improve margins through its increased focus     
on value-added products, such as roof trusses, pre-hung doors, millwork and     
pre-assembled windows.                                                          

Selling, general and administrative (SG&A) expense was $47.8 million in the     
third quarter of 1998 as compared to $37.7 million in 1997, and increased as a  
percentage of net sales from 18.7% in 1997 to 19.1% in 1998.  The Company       
attributes this partially to increases in value-added sales that carry higher   
SG&A expenses and integrating new operating locations that were not included in 
the comparable period.                                                          

Interest expense of $2.5 million in the third quarter of 1998 increased from    
$2.2 million in the same period of 1997, primarily due to increased borrowings  
under the Company's revolving line of credit to support higher working capital  
as a result of increased sales and acquisitions made during the previous 12     
months.                                                                         

Income taxes were provided at an estimated annual effective tax rate of 39.0%   
for the period ended September 30, 1998 and 39.5% for the period ended          
September 30, 1997.                                                             

As a result of the foregoing factors, net income increased by $2.5 million, or  
59.6% to $6.7 million, or 2.7% of net sales in the third quarter of 1998, as    
compared to $4.2 million, or 2.1% of net sales, in the third quarter of 1997.   

FIRST NINE MONTHS OF 1998 COMPARED WITH THE FIRST NINE MONTHS OF 1997           

Net sales for the nine months ended September 30, 1998 were $659.4 million, up  
22.3% from the first nine months of 1997 when sales were $539.3 million. The    
largest portion of this increase was due to acquisitions contributing $82.9     
million.   The increase in net sales also resulted from an increase of 8.1% in  
same-store sales, over the first nine months of 1997. Sales in the 1998 period  
were negatively affected by lower commodity wood product prices.  Price         
decreases contributed to an overall price deflator of 1.2%, the effect of which 
decreased sales by approximately $6.5 million.  Excluding price deflation, same-
store sales increased 9.3%.                                                     

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Gross profit as a percentage of sales improved to 24.2% in the first nine months
of 1998 from 23.0% in the first nine months of 1997, primarily as a result of on
going efforts by the Company to improve margins through its increased focus on  
value-added products, such as roof trusses, pre-hung doors, millwork and pre-   
assembled windows.                                                              

Selling, general and administrative (SG&A) expense, was $132.7 million in the   
first nine months of 1998 as compared to $105.5 million in 1997, and increased  
as a percentage of net sales to 20.1% in 1998 from 19.6% in 1997. The Company   
attributes this partially to increases in value-added sales that carry higher   
SG&A expenses and integrating new operating locations that were not included in 
the comparable period.                                                          

Interest expense increased to $7.7 million in the first nine months of 1998 from
$6.7 million in the same period of 1997, primarily due to increased borrowings  
under the Company's revolving line of credit to support higher working capital  
as a result of increased sales and acquisitions made during the previous 12     
months.                                                                         

Income taxes were provided at an estimated annual effective tax rate of 39.2%   
for the nine month period ended September 30, 1998 and 39.5% for the nine month 
period ended September 30, 1997.                                                

As a result of the foregoing factors, net income increased by $4.2 million, or  
51.7% to $12.3 million, or 1.9% of net sales in the first nine months of 1998,  
as compared to $8.1 million, or 1.5% of net sales, in the first nine months of  
1997.                                                                           

LIQUIDITY AND CAPITAL RESOURCES                                                 

At September 30, 1998 the Company had $118.7 million of long-term debt          
outstanding, consisting of $78.7 million of term borrowings under fixed rate    
notes, and $40 million of variable rate debt under the revolving credit         
agreement.                                                                      

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In the first nine months of 1998, the Company generated $24.9 million of cash   
from operating activities.  Working capital increased from $118.6 million at    
December 31, 1997 to $125.0 million at September 30, 1998, due primarily to     
increased sales and acquisitions made during the previous 12 months and due to  
the seasonality in the Company's accounts receivable and inventories.           

Based on its ability to generate cash from operations and the available         
borrowing capacity at September 30, 1998 of $60 million under the revolving     
credit agreement (availability of which is subject to the satisfaction of       
certain customary borrowing conditions), the Company believes it will have      
sufficient funds to meet its currently anticipated requirements.                

YEAR 2000 SYSTEM ISSUE                                                          

  As is the case with most other companies, the Year 2000 computer problem
creates risks for BMHC.  However, the Company believes that the risks of the    
Year 2000 computer problem are not as severe for the building materials industry
as compared to other more technology dependent industries, because the building 
materials industry, in general, and the Company and its professional contractor 
customers, in particular, are not as heavily dependent upon computerized        
systems. Except for production of millwork and trusses, the Company is primarily
a distributor of building materials to its customers and is dependent upon rail 
and truck transportation for timely receipt and delivery of inventory.  The     
Company could be affected if its transportation suppliers are materially and    
adversely affected by the Year 2000 computer problems.                          

The following discussion summarizes management's present analyses and 
proposed plans with respect to the anticipated material impacts of the Year 2000
computer problem on the Company's primary operations.  The discussion focuses on
"mission critical" systems, which management believes are important to the      
Company's day to day functional operations.  The Year 2000 problem may also     
impact systems that are not mission critical or information technology related. 
These systems, which may include telephone, electronic mail, elevators, heating 
and air conditioning equipment, and security will be tested                     

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and any problems addressed on a case-by-case basis, but none are expected to    
be material to the Company's results of operations or financial condition.      
It is expected that assessment, remediation and contingency planning            
activities will be on-going throughout 1998 and 1999 with the goal of           
appropriately resolving all significant internal systems and third party        
issues.                                                                         

STATE OF READINESS                                                              

BMHC has evaluated the impact of the Year 2000 computer problem on its
mission critical systems.  The mission critical systems that have been          
identified are:                                                                 

  -    The retail system software used in each of the operations for sales
transactions, inventory and in-store accounting             

-    The corporate financial and accounting system                    

-    The millwork configuration and order entry system                

-    The truss production and engineering system                      

-    The payroll system, which is operated by a third party vendor    

 Each of the five mission critical systems is in the process of becoming
Year 2000 compliant or management is verifying with the original vendor that the
existing systems are Year 2000 compliant.  The current status of the readiness  
effort with respect to the five mission critical systems is as follows:         

-    The retail system is being upgraded in a two-step process that   
 involves hardware and operating system improvements that were
         originally scheduled for 1998.  The upgrade process is well underway,
       and the process is well understood.  The final software upgrade for
       Year 2000 compliance, as warranted by the vendor, is expected to be
          available in early 1999 and is expected to be fully implemented in the
         summer of 1999.  The remainder of the year will be used to thoroughly
test the system.                                            

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 -    The corporate financial and accounting system is in the process of
         being upgraded to the Year 2000 compliant version as warranted by the
         vendor.  This upgrade was originally planned for 1998.  The system is
          anticipated to be fully compliant prior to the end of 1998.  Extensive
          testing to verify the vendor's level of compliance will occur in 1999.

 -    It has been determined that the current millwork software will not
      meet the long term needs of the Company, and a decision to replace
        this software package has been made.  However, due to the complexity
       of implementing a new system, it has also been decided to bring the
        current system to a Year 2000 compliant state.  This project will be
    performed by the original vendor of the software.  The Year 2000
          compliant version of the current software is scheduled for delivery in
         the spring of 1999.  Additionally, a replacement software package has
been identified that is warranted by the vendor as Year 2000
         compliant.  The new system is scheduled to come on-line in July 1999.
       In both cases, testing of the software will occur during the latter
half of 1999.                                               

 -    The vendors for the truss production system and outsourced payroll
       system have advised the Company that the systems are currently Year
        2000 compliant or are scheduled to be Year 2000 compliant by the end
         of 1998.  Verification and testing of these systems for compliance is
   currently underway, and should be completed by the end of 1998.

COST TO ADDRESS YEAR 2000 ISSUES                                                

    Much of the cost to address Year 2000 issues was budgeted and scheduled as
part of routine maintenance of the Company's systems.  Since these costs were   
identified and planned for in the budget cycle, the financial impact on the     
Company is not expected to be material in any one year.  However, it is         
anticipated that the total cost of becoming Year 2000 compliant for all systems 
currently in use by the Company will be approximately $1.5 million.  To date    
approximately $400,000 has been spent in remediation of Year 2000 issues.       

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RISKS OF YEAR 2000 ISSUES FOR BMHC                                              

Even in a most likely worst case scenario for BMHC, the risks due to  
failure to accomplish Year 2000 remediations are not expected to have a material
adverse effect on the results of operations or financial condition of the       
Company.  Each of the Company's operating locations currently has procedures in 
place to deal with the failure of the retail system.  In this instance, the     
increased amount of hand processing of accounting and inventory tracking would  
result in higher overtime and payroll expense.  However, it is not anticipated  
that there will be a material impact on the ability of the Company to deliver   
products to customers.  In order to reduce the risks of delays in transportation
of inventory either to the Company or its customers, the Company intends to     
monitor Year 2000 compliance by its transportation suppliers and will consider a
build-up of certain inventories in the fourth quarter of 1999, if appropriate.  
The Company does not expect that the cost of a short-term increase in its       
inventory levels to protect against Year 2000 risks will be material to the     
Company's financial condition or operating results.                             

Since each of the systems perform specified functions that are well   
understood by staff personnel in the operating locations and at the corporate   
office, complete failure of all of the systems could be worked around to perform
the necessary functions of the systems.  It is extremely unlikely that this     
would occur as steps to avoid this possibility are being taken.                 

CONTINGENCY PLANS                                                               

    The Company believes that temporary solutions to most failures are readily
and economically available.  For example, the dates on the systems could be set 
to dates prior to 2000 that have the same days of the week.  This would involve 
a data conversion and hand correcting of dates on printed documents, but could  
be accomplished in just a few days.  Also, personal computers with spreadsheets 
could be used to maintain accounting and inventory information as well as       
corporate financial data.  Millwork configuration is unaffected by the date     
change, but dates would need to be changed for order                            

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tracking if the system were not capable of dealing with dates after December    
31, 1999.  Processing of payroll could be done with personal computers.         
Truss engineering would need validation by the plate manufacturer to ensure     
structural integrity.  Finally, the Company can increase inventory levels to    
mitigate risks of Year 2000 transportation problems.  All of these plans        
could be put in place in a short time frame, and would mitigate nearly all      
the material risks to the Company. Further evaluation of contingency plans      
will be made, if necessary, as test results from the various systems become     
available.                                                                      

SUMMARY                                                                         

 BMHC has proactively identified and is in the process of correcting the
Year 2000 issues that it believes could have a material impact on the Company.  
It is anticipated that all systems will be capable of functioning in a normal   
fashion upon the change of the millennium.  It is not anticipated that BMHC will
suffer any loss of revenue due to Year 2000 issues.  The Company is also in the 
process of requesting from all of its significant vendors a statement regarding 
their preparations for the Year 2000 date change.  Since the Year 2000 issue was
anticipated in the budget cycle over the last two years, no material impact is  
expected on the results of operations or cash flows in any period or on the     
overall financial condition of the Company.  Also, no projects were canceled or 
delayed as a result of Year 2000 remediation activities.                        

PART II -- OTHER INFORMATION                                                    

ITEM 1.     LEGAL PROCEEDINGS                                                   
The Company is involved in litigation and administrative
 proceedings primarily arising in the normal course of its
        business.  In the opinion of management, the Company's recovery,
     if any, or the Company's liability, if any, under any pending
     litigation or administrative proceedings would not materially
affect its financial condition or operations.           

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ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 

None                                                    

ITEM 5.     OTHER INFORMATION                                                   

None                                                    

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                                    

(a)         Exhibits                                                            
Exhibit 27 - Financial Data Schedule                    

(b)         Reports on Form 8-K                                                 
None                                                    

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    SIGNATURES

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.                                          

                        BUILDING MATERIALS HOLDING CORPORATION

Date:  November 10, 1998         /s/ Robert E. Mellor                           
                               ---------------------------------------------
  Robert E. Mellor
                    President, Chief Executive Officer
                            and Director (Principal Executive Officer)

Date:  November 10, 1998         /s/ Ellis C. Goebel                            
                               ---------------------------------------------
 Ellis C. Goebel
                             Senior Vice President-Finance and Treasurer
               (Principal Financial Officer)

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INDEX TO EXHIBITS 

BUILDING MATERIALS HOLDING CORPORATION

Quarterly Report on Form 10-Q 
For the Quarter Ended September 30, 1998

                                                                [Download Table]


                                                                        Page 
Exhibit      Description                                               Number
-------      -----------                                               ------
                                                                             
 27          Financial Data Schedule                                     20  

 10.3        Third Amended and Restated Credit                           23  
             Agreement among Wells Fargo Bank,                               
             National Association, as Agent, BMC                             
             West Corporation, and The Banks Named                           
             Herein dated September 30, 1998                                 

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	2/29/00	7
	12/31/99	17
	3/31/99	7
Deleted on:	12/15/98
Filed on:	11/13/98
	11/10/98	19
	11/1/98	1
For Period End:	9/30/98	1	20
	12/31/97	5	13
	9/30/97	2	12
	9/23/97	3		8-K
				List all Filings

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BMC West Corp – ‘10-Q’ for 9/30/98

As of: Friday, 11/13/98 · For: 9/30/98 · Accession #: 1047469-98-40555 · File #: 0-19335 · Correction: This Filing was Deleted by the SEC on 12/15/98. ®

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As of: Friday, 11/13/98 · For: 9/30/98 · Accession #: 1047469-98-40555 · File #: 0-19335 · Correction: This Filing was Deleted by the SEC on 12/15/98. `®`

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