- Company reports substantial progress on restructuring initiatives

     - Consolidated Sales of $385 million, a 12% increase from first quarter

     - Net loss of $31.9 million, a 6% improvement from first quarter

     - Consolidated gross margin of 18.8%, up from 17.9% in the first quarter

SAN FRANCISCO, Aug. 14 /PRNewswire-FirstCall/ -- Building Materials Holding Corporation (NYSE: BLG), a leading provider of building materials and construction services to professional residential builders and contractors, today reported sales for the second quarter of 2008 decreased 41% to $385 million from $656 million in the same quarter a year ago. For the six months ended June 30, 2008, sales decreased 38% to $728 million from $1.2 billion in the same period of 2007.

Net loss for the second quarter of 2008 was $31.9 million or $1.10 per share compared to net income of $19.4 million or $0.66 per share in the same quarter a year ago. For the six months ended June 30, 2008, net loss was $65.8 million or $2.27 per share compared to net income of $14.5 million or $0.49 per share in the same period of 2007.

    Our operating results in the second quarter included:
    -- Costs associated with closing and consolidating underperforming
       business units as follows:

        o $8.5 million or $0.25 per share for impairments of customer
          relationships and leasehold improvements and
        o $5.8 million or $0.20 per share to exit certain facility operating
          leases and other costs.

    -- $9.4 million or $0.32 per share for income from discontinued operations
       and the related income tax benefit from our concrete services
       operations in Florida.

Commenting on second quarter results, Robert E. Mellor, Chairman and Chief Executive Officer, stated, "While our operating results reflect the continued difficult conditions confronting the homebuilding industry, we made substantial progress in our restructuring program during the second quarter, and also experienced sequential improvements in consolidated sales and gross margin.

"As we recently announced, we obtained a temporary waiver from our lending group, which enables us to borrow up to $60 million on our revolver as we work toward reaching agreement on a permanent amendment to our credit facility. We expect this new amendment to be more in line with the Company's projected performance under current industry conditions. Additionally, we have taken a number of actions aimed at preserving value and enhancing our liquidity going forward. These measures include the wind-down of certain operations, sale of underperforming business units and excess assets and other restructuring initiatives that will generate tax refunds based upon our existing net operating loss carry-back. We anticipate that these initiatives will reduce annualized SG&A expenses by $20 to $25 million and result in one-time cash proceeds of approximately $50 million to the company over the next three to four quarters."

Mr. Mellor concluded, "We believe that, over the long term, favorable underlying demographics and increasing core housing demand will continue to support the growth trajectory of the homebuilding industry. We have taken major steps to realign our business to withstand the continuing challenges of this cyclical downturn and to better position the Company for future growth."

    BMHC Operating Results

                                         (thousands)

                       Three Months Ended           Six Months Ended
                             June 30        %           June 30        %
                         2008      2007   Change    2008       2007  Change
    Sales
      Building
       Products        $198,309  $278,978  (29)%  $377,873   $519,726 (27)%
      Construction
       Services         186,311   377,022  (51)%   349,695    662,448 (47)%
                       $384,620  $656,000  (41)%  $727,568 $1,182,174 (38)%

    (Loss) income
     from operations   $(32,561)  $35,866   n/m   $(50,917)   $34,629  n/m

For the quarter, sales declined 41% to $385 million from $656 million in the same quarter a year ago. For the six months, sales declined 38% to $728 million from $1.2 billion in the same period a year ago. Consistent with the national weakness in new home construction, sales were lower in all our regions. Single-family building permits in the U.S. were down 43% for the quarter.

For the quarter and six months, loss from continuing operations was a result of:

    -- substantially lower sales,
    -- a decline in gross margins due to competitive market conditions,
       particularly for construction services,
    -- impairments of $8.5 million for certain customer relationships and
       leasehold improvements as a result of closing and consolidating
       underperforming business units and
    -- additional expenses of $5.8 million to exit certain operating leases as
       well as other charges.

Loss from continuing operations was offset by lower selling, general and administrative expenses. Despite the additional expense of $5.8 million to exit certain operating leases and other charges, selling, general and administrative expenses were $8.5 million lower for the quarter and $31.8 million lower for the six months compared to the same periods a year ago.

Interest Expense

For the six months, interest expense was 18% or $3.2 million more than the same period a year ago. The increase was principally due to the recognition of unamortized deferred loan costs in connection with the amendment of our credit facility in February 2008.

Income Taxes

Income tax benefit for continuing operations was $0.5 million compared to income tax expense of $8.4 million in the same quarter a year ago. The significant change in our effective tax rate for continuing operations was the result of additional valuation allowance due to uncertainty as to our ability to realize deferred tax assets.

Income from discontinued operations included $17.8 million in the second quarter for the realization of tax benefits resulting from the closure of operations in Florida.

Conference Call and Webcast

Management will host a conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call may be accessed by dialing 800-291-9234 (Domestic), or 617-614-3923 (International), pass code 22261904. A replay will be available through Thursday, August 21, 2008 by dialing 888-286-8010 (Domestic) or 617-801-6888 (International). The required pass code for the replay is 71656932. The live conference call and replay can also be accessed via audio webcast at BMHC's website at http://www.bmhc.com. An archive of the webcast will be available for 90 days following the conclusion of the teleconference.

About BMHC

BMHC is one of the largest providers of building materials and residential construction services in the United States. We serve the homebuilding industry through two recognized brands: as BMC West, we distribute building materials and manufacture building components for professional builders and contractors in the western and southern states; as SelectBuild, we provide construction services to high-volume production homebuilders in key markets across the country. To learn more about BMHC, visit our website at http://www.bmhc.com.

BUSINESS RISKS AND FORWARD-LOOKING STATEMENTS

There are a number of business risks and uncertainties that affect our operations and therefore could cause future results to differ from past performance or expected results. Additional information regarding business risks and uncertainties is contained in Part II Item 1A of our most recent Form 10-Q. These risks and uncertainties may include, however are not limited to:

    -- demand for and supply of single-family homes which is influenced by
       changes in the overall condition of the U.S. economy, including
       interest rates, consumer confidence, job formation and other important
       factors;
    -- our business model;
    -- our ability to implement and maintain cost structures that align with
       revenue trends;
    -- our liquidity is dependent on operating performance, compliance with
       financial covenants and cash resources;
    -- changes in the business models of our customers may limit our ability
       to provide building products and construction services required by our
       customers;
    -- the integration of acquired businesses may not result in anticipated
       cost savings and revenue synergies being fully realized or may take
       longer to realize than expected;
    -- losses of and changes in customers;
    -- availability of and our ability to attract, train and retain qualified
       individuals;
    -- fluctuations in our costs and availability of sourcing channels for
       commodity wood products, concrete, steel and other building materials;
    -- intense competition;
    -- weather conditions including natural catastrophic events;
    -- exposure to construction defect and product liability claims as well as
       other legal proceedings;
    -- disruptions in our information systems;
    -- actual and perceived vulnerabilities as a result of terrorist
       activities and armed conflict;
    -- costs and/or restrictions associated with federal, state and other
       regulations; and
    -- numerous other matters of a local and regional scale, including those
       of a political, economic, business, competitive or regulatory nature.


    Risks related to our shares may include, however are not limited to:
    -- price for our shares may fluctuate significantly; and
    -- anti-takeover defenses and certain provisions could prevent an
       acquisition of our company or limit share price.

Certain statements in the Annual Report to Shareholders including those related to expectations about homebuilding activity in our markets, demographic trends supporting homebuilding and anticipated sales and operating income are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about our expectations, anticipated financial results and future business prospects are forward-looking statements. While these statements represent our current judgment on what the future may hold and we believe these judgments are reasonable, these statements involve risks and uncertainties that are important factors that could cause our actual results to differ materially from those in forward-looking statements. These factors include, however are not limited to, the risks and uncertainties cited in the above paragraph, as well as our ability to reach agreement with our lenders with respect to an amendment to our credit facility, our ability to timely and successfully implement our restructuring program and achieve the benefits that the program is designed to provide, including preserving value, enhancing our liquidity, generating tax refunds, reducing expenses and generating cash proceeds. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date of the filing of this news release. We undertake no obligation to update forward-looking statements.

                               (Tables Follow)



                    Building Materials Holding Corporation
                    Consolidated Statements of Operations
                      (thousands, except per share data)
                                 (unaudited)

                              Three Months Ended Six Months Ended  Year Ended
                                   June 30            June 30      December 31
                               2008      2007      2008      2007     2007
    Sales
      Building products      $198,309  $278,978  $377,873  $519,726  $997,035
      Construction services   186,311   377,022   349,695   662,448 1,182,038
        Total sales           384,620   656,000   727,568 1,182,174 2,179,073

    Costs and operating
     expenses
      Cost of goods sold
        Building products     145,814   202,588   276,497   376,802   722,786
        Construction services 166,491   320,548   317,286   567,991 1,027,796
      Impairment of assets      8,469        --     8,469        --   272,152
      Selling, general and
       administrative expenses 98,693   107,199   182,949   214,794   422,694
      Other income, net        (2,286)  (10,201)   (6,716)  (12,042)   (9,971)
        Total costs and
         operating expenses   417,181   620,134   778,485 1,147,545 2,435,457

    (Loss) income from
     operations               (32,561)   35,866   (50,917)   34,629  (256,384)

      Interest expense          9,246     9,501    20,884    17,719    33,800

    Loss (income) from
     continuing operations
     before income taxes
     and minority interests   (41,807)   26,365   (71,801)   16,910  (290,184)

      Income tax benefit
       (expense)                  457    (8,325)   (3,392)   (4,783)   25,670
      Minority interests loss
       (income)                    24      (156)       63      (641)   (1,253)
    (Loss) income from
     continuing operations    (41,326)   17,884   (75,130)   11,486  (265,767)

      (Loss) income from
       discontinued operations
       prior to sale           (2,195)    2,471    (5,708)    4,778     2,937
      Impairment of assets      6,212        --     6,212        --    64,922
      Gain on sale of
       discontinued operations     --        --        --        --    20,029
      Income tax benefit
       (expense)               17,792      (938)   21,248    (1,813)   (4,990)
    Income (loss) from
     discontinued operations    9,385     1,533     9,328     2,965   (46,946)

    Net (loss) income        $(31,941)  $19,417  $(65,802)  $14,451 $(312,713)

    Net (loss) income per share:
      Continuing operations    $(1.42)    $0.62    $(2.59)    $0.40    $(9.23)
      Discontinued operations    0.32      0.05      0.32      0.10     (1.63)
        Basic                  $(1.10)    $0.67    $(2.27)    $0.50   $(10.86)

      Continuing operations    $(1.42)    $0.61    $(2.59)    $0.39    $(9.23)
      Discontinued operations    0.32      0.05      0.32      0.10     (1.63)
        Diluted                $(1.10)    $0.66    $(2.27)    $0.49   $(10.86)



                    Building Materials Holding Corporation
                         Consolidated Balance Sheets
                      (thousands, except per share data)
                                 (unaudited)

                                                     June 30      December 31
                                                       2008           2007
    Assets
    Cash and cash equivalents                        $56,192        $60,587
    Marketable securities                                787          1,872
    Receivables, net of allowances
     of $8,652 and $4,656                            195,346        200,995
    Inventory                                        104,307        115,524
    Unbilled receivables                              34,793         39,189
    Income tax receivable                             49,894          9,812
    Deferred income taxes                                 --         11,470
    Prepaid expenses and other                         8,200          8,973
    Assets of discontinued operations                 16,492         10,492
      Current assets                                 466,011        458,914

    Property and equipment
      Land                                            40,711         60,052
      Buildings and improvements                     129,596        135,009
      Equipment                                      178,182        185,958
      Construction in progress                        19,855         16,134
      Accumulated depreciation                      (158,732)      (155,083)
    Assets held for sale                              23,968             --
    Marketable securities                             38,882         40,039
    Deferred income taxes                                 --         11,269
    Deferred loan costs                                6,087          4,358
    Other long-term assets                            27,821         30,956
    Other intangibles, net                            47,320         58,310
    Goodwill                                          13,886         14,196
    Assets of discontinued operations                     --         14,732
                                                    $833,587       $874,844



                                                     June 30      December 31
                                                       2008           2007
    Liabilities, Minority Interests
     and Shareholders' Equity

    Accounts payable                                 $68,289        $74,025
    Accrued compensation                              28,224         31,537
    Insurance deductible reserves                     23,082         27,189
    Other accrued liabilities                         42,431         28,989
    Billings in excess of costs and estimated
     earnings                                         29,119         20,977
    Current portion of long-term debt                379,991          4,923
    Liabilities of discontinued operations             7,854          8,533
      Current liabilities                            578,990        196,173

    Insurance deductible reserves                     25,439         27,898
    Long-term debt                                     1,246        343,937
    Other long-term liabilities                       40,575         44,503

    Minority interests                                    --          8,591

    Commitments and contingent liabilities                --             --

    Shareholders' equity
      Common shares, $0.001 par value:
       authorized 50 million shares; issued and
       outstanding 29.5 and 29.2 million shares           29             29
      Additional paid-in capital                     166,642        164,043
      Deferred compensation common shares obligation   1,309          1,427
      Deferred compensation common shares             (1,309)        (1,427)
      Retained earnings                               28,680         94,482
      Accumulated other comprehensive loss, net       (8,014)        (4,812)
        Shareholders' equity                         187,337        253,742
                                                    $833,587       $874,844



                    Building Materials Holding Corporation
                    Consolidated Statements of Cash Flows
                                 (thousands)
                                 (unaudited)

                                                  Six Months Ended  Year Ended
                                                       June 30     December 31
                                                    2008     2007       2007
    Operating Activities
      Net (loss) income                          $(65,802) $14,451  $(312,713)
      Items in net (loss) income not
       using (providing) cash:
        Minority interests (loss) income, net         (63)     376        853
        Depreciation and amortization              20,525   24,111     48,781
        Deferred loan cost amortization             3,188      561      1,123
        Impairment of assets                       14,681       --    337,074
        Share-based compensation                    3,267    4,542      8,944
        Gain on sale of discontinued operations        --       --    (20,029)
        Gain on sale of assets, net                (4,778)  (8,700)    (8,789)
        Realized (gain) loss on marketable
         securities                                  (419)       7       (408)
        Deferred income taxes                      19,671    2,485    (19,452)
        Accrued loss for acquisition purchase
         obligation                                    --       --      5,500
        Changes in assets and liabilities, net
         of effects of acquisitions and
         divestitures of business units:
          Receivables, net                           (363) (49,128)    68,385
          Inventory                                11,049  (12,341)    24,599
          Unbilled receivables                      4,526  (28,664)     3,610
          Income tax receivable                   (40,082)     674     (7,304)
          Prepaid expenses and other current assets   901     (183)      (454)
          Accounts payable                          4,047   27,746    (22,621)
          Accrued compensation                     (3,708)  (7,827)   (16,536)
          Insurance deductible reserves            (5,202)   2,785      3,557
          Other accrued liabilities                (3,689)  (6,032)   (13,033)
          Billings in excess of costs and
           estimated earnings                       7,984    8,211     (3,843)
          Other long-term assets and liabilities   17,009   (9,254)   (12,560)
        Other, net                                 (3,068)  (1,332)     2,595
    Cash flows (used) provided by operating
     activities                                   (20,326) (37,512)    67,279

    Investing Activities
      Purchases of property and equipment         (11,150) (15,992)   (32,995)
      Acquisitions and investments in
       businesses, net of cash acquired            (2,600) (72,214)   (80,961)
      Proceeds from dispositions of
       property and equipment                       8,238   16,154     16,905
      Proceeds from sale of discontinued
       operations                                      --       --     27,176
      Purchase of marketable securities           (26,691) (17,764)   (35,239)
      Proceeds from sales of marketable
       securities                                  28,696   17,414     52,650
      Other, net                                   (2,452)  (1,509)      (628)
    Cash flows used by investing activities        (5,959) (73,911)   (53,092)

    Financing Activities
      Net borrowings under revolver                39,000   87,000         --
      Principal payments on term notes             (5,806)  (1,750)    (3,500)
      Net payments on other notes                    (988)  (4,108)    (4,505)
      Decrease in book overdrafts                  (1,678)  (1,182)    (7,609)
      Proceeds from share options exercised             9      163        203
      (Taxes) tax benefit for share-based
       compensation                                  (792)     253        259
      Dividends paid                               (2,938)  (5,832)   (11,709)
      Deferred financing costs                     (4,917)      --         --
      Distributions to minority interests              --   (2,203)    (1,223)
      Other, net                                       --      211        212
    Cash flows provided (used) by financing
     activities                                    21,890   72,552    (27,872)

    Decrease in Cash and Cash Equivalents          (4,395) (38,871)   (13,685)

      Cash and cash equivalents, beginning
       of period                                   60,587   74,272     74,272
      Cash and cash equivalents, end of period    $56,192  $35,401    $60,587

    Supplemental Disclosure of Cash Flow
     Information
      Accrued but unpaid dividends                    $--   $2,939     $2,938
      Cash paid for interest                      $17,667  $16,812    $32,827
      Cash paid for income taxes                     $952   $1,899     $7,233