CAMERON ASHLEY BUILDING PRODUCTS INC, 10-K, 1998-01-29

CAMERON ASHLEY BUILDING PRODUCTS INC
10-K, 1998-01-29
LUMBER & OTHER CONSTRUCTION MATERIALS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________________________

FORM 10-K
(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act 1934 [Fee Required] For the fiscal year ended October
31, 1997 or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] For the transition period
from __________ to ______________

COMMISSION FILE NUMBER 0-23442
___________________________

CAMERON ASHLEY BUILDING PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)

GEORGIA 58-1984957
(State or other jurisdiction of (I.R.S. Employer Identifica-
incorporation or organization) tion No.)

11651 PLANO ROAD, DALLAS, TEXAS 75243
(Address of principal executive offices) (Zip Code)

214-860-5100
(Registrant's telephone number, including area code)

___________________________

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK
(Title of Class)

Indicate by check 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 Registrant was
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days. Yes X No
------- -------

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the Registrant (7,780,945 shares) on January 23, 1998:
$126,926,665.

The number of shares of Common Stock of the Registrant outstanding as of
January 23, 1998 was 9,330,981 shares.

DOCUMENTS INCORPORATED BY REFERENCE:

THE INFORMATION CALLED FOR BY PART III IS INCORPORATED BY REFERENCE TO THE
DEFINITIVE PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS OF THE
COMPANY TO BE HELD MARCH 3, 1998, WHICH WILL BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION NOT LATER THAN 120 DAYS AFTER OCTOBER 31, 1997.

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PART I

ITEM 1. BUSINESS

GENERAL

Cameron Ashley Building Products, Inc., (together with its principal
operating subsidiaries Wm. Cameron & Co. ("Cameron"), Ashley Aluminum, Inc.
("Ashley"), Cameron Ashley Canada, Inc. ("CA Canada") and Cameron Ashley
Financial Services, Inc. ("CAFS"), (collectively the "Company") is a North
American national distributor of a broad line of building products that are used
principally in home improvement, remodeling and repair work and in new residen-
tial and commercial construction. The Company's product lines include roofing,
millwork, pool and patio enclosure materials, insulation, siding, steel prod-
ucts, industrial metals and a variety of other building materials. The Company
distributes its products through its extensive 145-branch network to independent
building materials dealers, national co-ops, professional builders, large
contractors and mass merchandisers but does not target individual homeowners
directly. The Company also provides financing for home improvement projects
using its existing customer base through CAFS. As a result of its successful
expansion program, the Company currently operates distribution facilities in 31
states and 9 provinces in Canada and serves markets in all 50 states, all of
Canada and parts of Mexico.

HISTORY OF THE BUILDING MATERIALS DISTRIBUTION CHANNEL

Prior to the 1970's, building materials distribution in both rural and
metropolitan markets was handled largely by independent dealers (i.e., lumber-
yards and hardware stores). These dealers, who generally purchased their
products from distributors, sold building products directly to homeowners and
small contractors as well as to large contractors and homebuilders.

The advent of mass merchandisers, such as Home Depot and Lowe's, in the
late 1970's and 1980's altered this distribution channel dramatically in
metropolitan markets as these retailers displaced many metropolitan dealers. A
core strength of these mass merchandisers was marketing a broad range of
competitively priced home improvement and do-it-yourself products to the
homeowner and small contractor. Accordingly, most independent building materi-
als distributors, who traditionally sold building products to metropolitan
dealers, redirected their efforts and worked to (i) sell directly to large
contractors and homebuilders in metropolitan markets, and (ii) provide mass
merchandisers with fill-in and specialty products that mass merchandisers would
not stock in their retail inventory.

This distribution structure remains in place today. In metropolitan areas,
mass merchandisers primarily sell products to retail customers such as homeown-
ers and small contractors. In rural areas, dealers (lumberyards and hardware
stores) sell products to homeowners and small contractors as well as to large
contractors and professional homebuilders. Independent building products
distributors, such as the Company, and major manufacturers, such as Georgia
Pacific and Weyerhaeuser, do not sell directly to retail customers. Instead,
they distribute products to (i) professional homebuilders and contractors in
metropolitan markets, (ii) dealers in rural markets, and (iii) mass merchandis-
ers in metropolitan areas.

INDUSTRY OVERVIEW

According to NATIONAL HOME CENTER NEWS, U.S. wholesale sales by the top 150
building products distributors were approximately $28.3 billion in 1996 compared
to $26.8 billion in 1995. The building products distribution industry is
fragmented and characterized by a large number of small local or regional
distribution companies and a small number of major corporations with national
distribution capability. Many distributors are privately owned, relationship
based companies that emphasize service, delivery and reliability to their
customers. As a result of their small size, however, these companies generally
lack the purchasing power of a larger entity, may lack the resources to offer
multiple brands and broad lines of products and may not possess sophisticated
inventory management and control systems necessary to operate efficiently in
multiple branches. Management believes that the competitive environment faced
by small distributors, coupled with the desire of many owners of such
distributors for liquidity, has prompted a trend toward industry consolidation
and that such consolidation offers significant opportunities to expansion-
oriented distributors such as the Company.

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INDUSTRY CONSOLIDATION

The consolidation trend in the industry is supported and driven by both
(i) the benefits to major building products manufacturers, (ii) the mass
merchandisers' desire for nationwide servicing of their retail stores and (iii)
the national home builders' such as Centex Corp. and D. R. Horton, Inc. desire
for servicing of their sub-divisions. The advent of emerging national building
products distributors, such as the Company, is creating an opportunity for
building products manufacturers to negotiate national or regional supply
arrangements with targeted distributors. Management believes that building
products manufacturers have begun to recognize that reliance on targeted
national distributors helps the manufacturers improve their mix of higher margin
products, control inventory costs, lessen credit risk and maintain product
availability over a broad territory. Management expects that the evolution of
this trend will enable large distributors to expand their services and receive
competitive pricing and purchasing terms from manufacturers.

Management also believes that as mass merchandisers gain retail market
share and seek to control their inventory costs on non-commodity and specialty
products, these companies will become more important customers to the Company.
The Company is increasingly able to offer these mass merchandisers a reliable
supply of fill-in and specialty products on a nationwide basis. This value-
added service enhances the mass merchandisers' ability to (i) offer their retail
customers, particularly the small contractor, the broadest possible selection of
building products and (ii) manage their retail store inventories. The national
home builder will also become a more important customer to the Company as they
seek to reduce invoice processing costs and increase business with suppliers who
can provide multi-market distribution. In many cases, the Company's major
vendors (manufacturers) seek assistance distributing their products to these
mass merchandisers and national home builders.

COMPANY STRATEGY

GENERAL

The Company's primary strategic objective is to continue to establish a
leading national distribution network for a broad range of building products.
The principal elements of the Company's strategy include expanding its revenue
base through selective acquisitions, improving the performance of acquired
businesses, increasing the profitability of existing operations and opening new
operations in growth markets. By pursuing these initiatives, the Company seeks
to: (i) achieve growth and profitability superior to its competition;
(ii) provide building products manufacturers with unified nationwide
distribution capabilities; and (iii) expand its distribution network to serve
mass merchandisers of building materials and home improvement products and
national home builders.

ACQUISITION PROGRAM

In evaluating expansion opportunities, the Company generally seeks to
acquire distributors in order to enter markets in which the Company does not
have a presence or enable the Company to expand its product lines in existing
markets. The Company complements its acquisition activity by selectively
opening new branches. After acquiring or opening a new location, the Company
concentrates on expanding product lines offered at the location and improving
the location's operational efficiency. Since its formation in 1991, the Company
has completed 32 acquisitions and has grown from 40 branches as of December 31,
1991 to 145 branches as of October 31, 1997. Set forth in the table below is a
description of the Company's acquisitions during this period:

NAME OF COMPANY NUMBER OF STATE(S) OR DATE
ACQUIRED LOCATIONS PROVINCE(S) ACQUIRED
- - -------------------------------- --------- --------------- ---------
<S> <C> <C> <C>

Mid-America Siding Supply, Inc. 2 Texas, Arkansas 10/97
Vinyl Wholesale Supply Co. 1 North Carolina 8/97
DMG Supply 3 South Carolina 9/97
Bois Daigle, Ltd. 7 Quebec, Atlantic Canada 5/97
Contractors Supply, Inc. 2 Nebraska 4/97
Ince Holdings, Ltd. (Boyd Division) 16 Eight Canadian Provinces 1/97

</TABLE>

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NAME OF COMPANY NUMBER OF STATE(S) OR DATE
ACQUIRED LOCATIONS PROVINCE(S) ACQUIRED
- - -------------------------------- --------- --------------- ---------
<S> <C> <C> <C>

Midwest Thermal Products, Inc. (and affiliates) 4 Oklahoma, Missouri, Arkansas 12/96
Metro Roofing Supply, Inc. 1 Arkansas 12/96
Dependable Roofing & Materials 1 California 9/96
California Roofers Supply 8 California 7/96
Mile High Roofing & Exterior Supply Co. 3 Colorado 5/96
Jett Supply Co. 3 Colorado, Illinois, Texas 5/96
Premdor, Inc. (distribution facility) 1 Utah 3/96
Star, Inc. (3 subsidiaries) 7 Utah, Oregon, Arizona 9/95
States Dealer Supply, Inc. 1 Oregon 6/95
Zaglin Wholesale 1 Georgia 6/95
Warehouse Moulding & Door Corporation
(dba Albuquerque Door) 2 New Mexico 5/95
Blair Siding 1 Georgia 4/95
CA Co. 4 Washington, Idaho 12/94
Southland Building Products 6 Texas, Louisiana 11/94
Bird Incorporated (5 subsidiaries) 10 Arizona, New York, Kentucky 8/94
Massachusetts, Connecticut, Vermont
Wholesale Building Supply 1 New Mexico 7/94
Bright Aluminum 1 Florida 6/94
Chesapeake Building Supply 1 Maryland 5/94
San Antonio Building Products 1 Texas 12/93
Whitewater Building Products 2 Indiana 8/93
Wholesale Building Supply 1 New Mexico 7/93
New Orleans Building Products 1 Louisiana 3/93
Owens-Corning Fiberglas (Supply division) 1 Michigan 3/93
Owens-Corning Fiberglas (Supply division) 3 Georgia, North Carolina, Illinois, Texas 1/93
Mike's Aluminum 1 Florida 11/92
Thunderbird Steel 1 New Mexico 10/92

</TABLE>

The pro forma information on acquisitions is discussed in Note 3 of the
financial statements.

OPERATING STRATEGY

The Company's operating strategy is focused on integrating acquired
businesses and improving their performance and improving the Company's existing
operations. Key elements of the Company's operating strategy include the
following:

CAPITALIZE ON PURCHASING ECONOMIES. The Company generally negotiates with
its vendors on a company-wide or regional basis to obtain volume discounts and
other favorable terms. Individual branch managers are responsible for selecting
and ordering inventory tailored to the varied needs of customers in their local
markets. As a significant customer to many of its vendors, the Company is able
to obtain competitive pricing and purchasing terms, ensure timely delivery of
products and maintain appropriate inventory availability. See "Business
- - -- Purchasing."

CENTRALIZE MANAGEMENT INFORMATION SYSTEMS AND ADMINISTRATION. The Company
maintains centralized computer systems to support decision making throughout the
organization. The Company's branches are equipped with on-line, real time
management information systems. Acquired branches are converted to the
Company's systems either at the time of acquisition or shortly thereafter. The
Company's management information systems enable management to control and
monitor inventory levels, perform invoicing and order entry, establish delivery
routes and schedules and monitor sales and profitability by branch. Each branch
is, therefore, able to respond to specific customer needs and overall market
demand quickly and to monitor the effects of actions or decisions on performance
and profitability as they occur. Corporate management is able to monitor branch
and regional performance by utilizing the same system. The Company has also
centralized many administrative functions, such as accounting and finance,
employee benefits, insurance, audit, human resources, legal, both to achieve
economies of scale

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and to help branch managers remain focused on maximizing profitability of
their locations. The Company utilizes electronic data interchange ("EDI") as
a means of facilitating the order process with its major suppliers and plans
for additional expansion to include larger customers.

In the fourth quarter of 1997, the Company initiated a re-engineering
project aimed at improving and standardizing Company processes and using a best
practices approach to reduce operating costs. This re-engineering effort will
center around a new enterprise wide information system with J. D. Edwards
software and IBM hardware. Management expects the system to be fully
implemented and the re-engineering to be completed during fiscal 1999. The new
information system will greatly enhance our competitive position by helping
improve customer service, inventory and logistics management, and provide for an
overall reduction of operating costs. The new software has been represented by
J. D. Edwards to be year 2000 compliant. The Company has not tested this
software for compliance at this time but will do so prior to implementation.
Management believes there will be no year 2000 compliance issue.

DECENTRALIZE OPERATIONS. The Company has adopted a decentralized operating
philosophy to maximize the Company's responsiveness to its customers' varied
needs and to give the Company's branch managers a sense of responsibility and
accountability for the performance of their own operations and the Company as a
whole. While the Company negotiates price and purchase terms on a company-wide
or regional basis and uses central management information systems to achieve
economies of scale unavailable to smaller competitors, each branch manager is
responsible for selecting and ordering inventory to meet the needs of his
customers and for creating localized sales promotions and marketing programs.
Further, each branch manager has individual profit-and-loss and asset management
responsibility for his or her branch and receives incentive compensation based
primarily upon the profitability and working investment management of his or her
branch.

BROADEN PRODUCT LINES. The Company develops long-term relationships with
its customers by providing them with a broad range of products at competitive
prices and a high level of service. By broadening product lines, the Company
improves the overall product mix available to its customers and seeks to
enhance gross profit margins by adding higher-margin specialty products to
its branches. Distribution of a wide variety of products also reduces
shipping costs by allowing delivery of more products per truckload, assists
dealers and mass merchandisers in managing their inventory burdens through
greater reliance on the Company and enables dealers to provide "one-stop
shopping" for customers with a variety of product needs. Products offered by
each branch vary according to market, geographic location and customer needs.
Management continually seeks opportunities to enhance the Company's product
offerings through acquisitions of distributors offering complementary product
lines and by establishing relationships with additional suppliers.

DIVERSIFY MARKETS. The Company has established a presence in a substantial
portion of the United States. As a result, the Company's financial performance
is not tied to a single geographic region's economy or other characteristics.
The diversity of the Company's customer base and the wide variety of
applications for the Company's products also decrease the impact of a downturn
in demand in any particular market segment. The Company works to benefit
further from its diversified markets by tailoring product offerings at the
Company's branches to local demand and market conditions. The risks posed by
the cyclical new residential construction market are somewhat mitigated by the
Company's participation in the less cyclical residential rehabilitation and
remodeling market.

OFFER COMPLEMENTARY SERVICES. The Company has developed several
complementary services to offer its customers. In December 1996, the Company
formed CAFS as a wholly-owned captive finance subsidiary. CAFS purchases home
improvement notes receivable which are originated by the Company's dealer and
contractor customers. These notes range from $2,500 to $15,000, are unsecured
and have payment terms from three to fifteen years. During 1997, the branches
that offered the CAFS financial services to its customers experienced a
significant sales increase over the prior year.

Also, in October 1997, the Company purchased a minority interest in Field
Marketing, Inc. dba Field Marketing and Management ("FMM"). FMM is a so-called
"retail-detail" company that offers third party outsourced field services to
fulfill several merchandising tasks, including: manage shelf space/position,
reduce out-of-stocks, point of purchase placement, pricing integrity, product
re-order, product pickup, in-store audits and promotional introductions. Other
industries such as food and drug stores have found that they can take cost out
of the logistical supply chain by using a third party for such in-store
merchandising needs instead of higher-paid, permanent sales and marketing
employees. Third party servicers, such as FMM, allow suppliers to "share" the
merchandising personnel through syndication, at a lower cost, for valuable in-
store representation.

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The Company expects to introduce FMM as a complementary service to its
strategic vendor relationships and to the national home center chains.

FUTURE EXPANSION

Management believes that the building products distribution industry is
poised for further consolidation in response to the competitive disadvantages
faced by small distributors and the increasing demand by mass merchandisers and
building products manufacturers for larger, more efficient distributors. The
industry is characterized by a large number of small local or regional
distribution companies and a small number of major corporations with national
distribution capability. Many independent distributors (i.e. distributors that
are not controlled by building products manufacturers or mass merchandisers) are
privately owned, relationship-based companies that emphasize service, delivery
and reliability to their customers. Management believes that the competitive
environment faced by small distributors, coupled with the desire of many owners
of such distributors for liquidity, has prompted a trend toward industry
consolidation that offers significant opportunities for expansion oriented
distributors such as the Company. Management intends to pursue further
expansion of the Company's distribution network and product lines through
selective acquisitions and internal growth and, in the process, to complete the
Company's national distribution network. Management believes that this
expansion will position the Company to realize fully the economies of scale and
other efficiencies available to a nationwide distributor.

The Company has worked to develop, build and implement a corporate
infrastructure to support continued growth and makes extensive use of computer
information systems, including EDI, to support decision making throughout its
organization. Management believes that the new enterprise wide information
system will readily support additional branches and new services.

PRODUCTS

The Company distributes a variety of building products to independent
dealers, professional builders, contractors and mass merchandisers. Its
principal products and markets are described below.

ROOFING PRODUCTS. Shingles, felt, roof tile, commercial roll roofing,
coatings, asphalt, flashings, vents and other roofing products are distributed
to residential and commercial roofing contractors and dealers, including
lumberyards and, to a lesser extent, mass merchandisers. Principal brands of
roofing products include Bird, Inc., CertainTeed, Elk, GAF, Genstar, Monier,
Owens-Corning and Tamko. Management believes the Company is one of the largest
roofing products wholesalers in the United States.

MILLWORK. Millwork includes doors, door units and component parts,
molding, windows, stair parts, blinds, shutters and screens, which are
distributed to dealers, contractors and builders in the residential construction
industry. The Company's major millwork lines include Premdor and Steves & Sons
(flush doors), ThermaTru (residential entry doors), Abitibi (prefinished
moldings, shutters and architectural work), and a variety of other regional
suppliers.

The Company also pre-hangs door units for large residential builders such
as Perry Homes and D. R. Horton, mass merchandisers and independent dealers.
Millwork is distributed at branches located primarily in the Southwest,
Northeast and Northwest.

POOL AND PATIO ENCLOSURE PRODUCTS. Pool and patio enclosure products
include aluminum extrusions, roof panels, gutters, coil, screen, awnings,
handrails and various other exterior aluminum building products. These products
are sold by the Company to residential contractors and installers, who use them
in construction of pool enclosures, screen rooms, mobile home improvement
projects, carports and roof-over applications. Pool and patio enclosures are
widely used in Florida and along the Gulf Coast. Approximately 81% of the pool
and patio enclosure product line is purchased from a variety of suppliers for
redistribution by the Company. The remaining 19% consists of roll-formed roof
panels, gutters and fold-down window awnings fabricated by the Company. The
Company's fabrication capability allows it to produce a variety of sizes and
styles on an as-needed basis to control inventory costs or fill custom orders.
Management believes the Company is Florida's largest distributor of pool and
patio enclosure products.

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INSULATION. The Company distributes a broad line of insulation materials
to contractors and dealers. Principal brands distributed by the Company include
Owens-Corning and CertainTeed products that are used in both residential and
commercial applications.

WOOD PRODUCTS. Plywood, siding, shelving, brown board, cabinet lumber and
paneling are distributed to dealers throughout the Southwest, Northeast and
Northwest. These products complement the other product lines offered by the
Company. The Company does not sell framing lumber products.

STEEL PRODUCTS. Steel products include rebar, mesh, corrugated metal,
nails, fencing and pneumatics that are distributed to dealers primarily in the
Southwest. Steel products complement the other construction product lines
offered by the Company.

INDUSTRIAL METALS. Industrial aluminum and stainless steel products fall
primarily into two categories: extrusions and sheet. These products are
purchased by sheet metal businesses, fabricators and manufacturers for use in a
variety of products. The Company purchases extruded products for distribution,
while third party processors and the Company cut sheet products from coils to
standard specifications. In addition, the Company has the ability to cut sheet
products to individual specifications.

VINYL SIDING. Vinyl siding consists of siding, soffit and accessories.
The Company purchases vinyl siding from several industry leaders, including
Bird, Inc., CertainTeed, and Owens-Corning, and distributes the product to
builders, contractors and mass merchandisers. In addition, the Company sells
trim coils, shutters, J blocks, gable vents, columns, rainware, doors and
windows to complement this product line.

OTHER BUILDING PRODUCTS. The Company distributes a variety of building
materials such as stucco, aluminum siding, polyethylene, fireplaces, ceiling
tiles, grids, skylights, gutters, sheet rock, nails and fasteners to dealers,
contractors and builders. The product mix offered by each branch is tailored to
the demands of its local market. No other product category in this grouping
accounts for more than 5% of the Company's sales.

The following charts depict the Company's fiscal 1997, 1996 and 1995 net
sales by product type:

FISCAL 1997 FISCAL 1996 FISCAL 1995
----------- ----------- -----------
Roofing 38% 36% 31%
Industrial Metals 4 6 8
Vinyl Siding 7 5 4
Insulation 9 6 10
Millwork 10 10 10
Pool & Patio 9 11 13
Wood 3 5 8
Other Building Products 20 21 16

PURCHASING

The Company generally negotiates the price and other purchase terms with
its vendors on a company-wide or regional basis. The Company negotiates large
block purchases of roofing, insulation, millwork, pool and patio and commodity
products centrally to capture purchasing economies. Branch or regional managers
are responsible for inventory selection and ordering on terms negotiated
centrally, so that the Company remains responsive to local market demand.
Branch managers are also responsible for inventory management at his or her
respective locations.

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Payment, discount and volume purchase programs are negotiated directly by
the Company with its major suppliers, with a significant portion of the
Company's purchases made from suppliers offering these programs. The Company is
a party to distribution agreements with Owens-Corning, CertainTeed and Bird
Incorporated appointing the Company as a distributor of certain of their
respective products on an exclusive or non-exclusive basis, depending on the
product and the territory involved. The agreements also provide certain price
protections for products purchased by the Company from these suppliers.

SALES AND MARKETING

The Company's marketing programs center on fostering strong customer
relationships and providing superior service. Marketing activities include a
broad range of in-store services, customer training and a variety of marketing
programs tailored to customer needs. The Company focuses its marketing efforts
primarily on the residential remodeling and new housing segments and, to a
lesser extent, on the commercial and industrial segments. The Company has a
national accounts marketing staff that is responsible for negotiating programs
and standards for relationships with mass merchandisers, purchasing
cooperatives, national home builders and developers and manufacturers. Branch
sales personnel are responsible for implementing on a local basis the programs
negotiated with these customers.

The Company's sales organization consists of outside field sales personnel
who report directly to their local branch manager and are supported by inside
customer service representatives at the branch. A substantial portion of the
compensation for salespersons takes the form of bonus and commission payments,
and in fiscal 1997 branch managers could earn up to 50% of their base salary in
bonus if branch performance goals were achieved and could earn additional
bonuses measured as a share of the profits of their respective branches if such
goals were exceeded.

BRANCH OPERATIONS

The Company distributes products through its current network of 145
branches, which are strategically located to provide prompt delivery and
responsive customer service. The Company utilizes a decentralized management
structure that emphasizes individual branch profit-and-loss responsibility and
seeks to maximize the benefits of its local market presence. A branch is
typically comprised of warehouse and receiving space, secure outdoor holding
space, office space and product display areas. Local sales efforts are
coordinated and supported at the branches. The bulk of the remaining branch
activities relate to receiving, storing and delivering building products.

All branches are equipped with on-line, real time management information
systems that allow them to control and monitor inventory levels, perform
invoicing and order entry, and establish delivery routes and schedules.
Management also uses the Company's management information systems to monitor
sales and profitability by branch. The Company employs EDI and bar-coding
capability to enhance its ability to serve the needs of mass merchandisers and
national manufacturers. The Company continually monitors systems capacity and
function and adds additional capacity as necessary to support the Company's
continued growth.

Some of the Company's branches are organized into a formal "hub and spoke"
system, with large branches supporting smaller branches or mini-branches. Even
where a formal "hub and spoke" system has not been implemented, full-line
metropolitan branches typically provide fill-in service to smaller and rural
branches. Metropolitan branches are typically larger in square footage and
generally stock a full line of products, while the product mix at rural branches
is typically more limited and market specific.

The Company establishes and maintains overall credit policy and terms at
the corporate level. Branch managers are generally responsible, within the
Company's policy, for overseeing the extension of credit and the collection of
past due accounts up to 30 days. The Company's central credit function assists
branches with major accounts, collects past due accounts beyond 30 days and
determines overall credit lines and credit approval. The Company obtains lien
rights and security interests where appropriate to provide security for larger
accounts. Management keeps credit lines reasonable with respect to customer
needs and financial resources and maintains a low tolerance for exceeding
amounts or terms.

CUSTOMERS

The Company distributes products to a large number and variety of
independent building material dealers, national co-ops, large home builders,
contractors, mass merchandisers and others. The following charts illustrate the
percentages

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of the Company's fiscal 1997, 1996 and 1995 net sales attributable to the
Company's various types of customers:

FISCAL 1997 FISCAL 1996 FISCAL 1995
----------- ----------- -----------
Contractors 56% 59% 54%
Dealers 26% 22% 29%
Mass Merchandisers 11% 11% 7%
Builders 4% 4% 4%
Other 3% 4% 6%

COMPETITION

The Company's competition varies by product line, customer classification
and geographic market. The Company competes with many local and regional
building products distributors. The Company also competes with major
corporations with national distribution capability, such as Georgia-Pacific,
Weyerhaueser and other product manufacturers that engage in direct sales;
however, the Company also acts as a distributor for certain products of these
manufacturers. The Company sells products to large home center chains such as
Builders Square, Eagle Home Centers, Home Depot and Lowe's.

Management believes that the Company's target customers generally select
building products distributors on the basis of product availability,
relationships, service and delivery, geographic coverage, responsiveness and
credit availability. In the opinion of management, the Company competes
effectively on each of these bases. The Company utilizes its purchasing power
with major suppliers to obtain products at prices more favorable than its
smaller competitors. The Company's relative size also permits it to attract
experienced sales and service personnel and gives the Company the resources to
provide company-wide sales, product and service training programs. By working
closely with its customers and utilizing the Company's information systems, the
Company's branches are able to maintain appropriate inventory levels and are
well positioned to deliver completed orders on time. The Company further
differentiates itself from its competition through the creation of Cameron
Ashley Financial Services, Inc. This subsidiary provides financing for home
improvement projects through the Company's customer base.

ENVIRONMENTAL

The Company is subject to federal, state and local environmental laws and
regulations. Management believes the Company is in material compliance with
applicable laws and regulations governing the discharge of hazardous waste into
the environment.

EMPLOYEES

As of October 31, 1997, the Company had 1,973 employees, including 163
corporate and administrative personnel, 1,797 branch employees and 13 CAFS
employees. At the branch level, a total of 1,287 people were employed as
warehouse and manufacturing personnel, truck drivers, office staff and labor
supervisors; and 510 were employed as branch managers and sales personnel. See
"Business -- Sales and Marketing." Unions represent a total of approximately 80
hourly workers at the Company's Chicago, Detroit, San Antonio, New York City,
Hauppauge (New York) and Houston facilities. The Company has not experienced
any work stoppages. The remainder of the Company's employees are not
represented by a union or a collective bargaining unit. Management considers
the Company's employee relations to be satisfactory.

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TRADENAMES

The Company has previously operated under various tradenames in the markets
it served, often retaining the name of an acquired business to preserve its
local identification. In 1995, the Company converted all existing branch
operations to the primary tradename "Cameron Ashley Building Products". New
acquisitions typically convert to the primary tradename within 6 to 12 months
after the purchase date. The tradenames under which the Company has previously
operated include the following: Albuquerque Door, Atlantic Building Products
Company, Boyd Distributors, California Roofers Supply, CA Co., California
Roofers Supply, Cameron Supply, Chesapeake Building Supply, Chicago Supply,
Contractors Supply, Daigle Lumber Ltd. (Boise Daigle Ltee.), Dependable Roofing,
DMG Supply, Greater Louisville Aluminum Company (GLACO), Jett Supply, Metro
Roofing Supply, Mid-America Siding Supply, Midwest Thermal Products, Midwest
Insulation & Roofing, Midwest Insulation & Siding, Mile High Roofing & Exterior
Supply, New York Building Products, PK Supply, Southland Building Products,
Southwest Express, Southwest Roofing Supply, States Dealer Supply, Thunderbird
Steel, United Wholesale Distributors, Vinyl Wholesale Supply Company, Westar
Building Materials, Whitewater Building Products, Wholesale Building Supply and
Zaglin Wholesale. Many local branches will continue to use certain of these
names as secondary tradenames to maintain the associated goodwill.

SEASONALITY

The Company's first quarter and, to a lesser extent, its second quarter,
are typically adversely affected by winter construction cycles and weather
patterns as the level of activity in both the home improvement and new
construction markets decreases. The Company has a concentration of locations in
the sunbelt states, which can offset to some degree the effects of winter
weather in other states. Management closely monitors operating expenses and
inventory levels during seasonally affected periods and, to the extent possible,
controls variable operating costs.

EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company are Ronald R. Ross, Walter J.
Muratori, John H. Bradberry, John L. Crum, John S. Davis, C. Steven Gaffney, F.
Dixon McElwee and Thomas R. Miller.

RONALD R. ROSS (age 45) has been a director of the Company since 1994. Mr.
Ross has served as Chief Executive Officer since September 1996, as Chairman of
the Board of the Company since February 1994 and as Chairman of the Board and
Chief Executive Officer of Cameron since November 1996. From December 1991 to
June 1997, he served as President of Cameron. Mr. Ross was Vice President,
Operations of the Cameron Wholesale division of CertainTeed Corporation, a
building products manufacturer, from September 1987 to September 1991 and served
as Vice President and General Manager of the division until its sale to Cameron
in December 1991.

WALTER J. MURATORI (age 54) has been a director of the Company since 1994.
Mr. Muratori has served as President of the Company since February 1994 and as
President of Cameron and Chairman of the Board of Ashley since June 1997. He
previously served as President of Ashley from October 1991 to June 1997. From
1989 to 1991, Mr. Muratori served as President of Talquin Building Products,
Inc., a division of Florida Progress Corporation and the parent of Ashley. From
1970 to 1986, Mr. Muratori held various sales and management positions at
Ashley.

JOHN H. BRADBERRY (age 47) has served as Executive Vice President and Chief
Accounting Officer of the Company since November 1997 and as Executive Vice
President - Central Division of Cameron since August 1996. Prior thereto, he
served as Vice President - Chief Accounting Officer of the Company from June
1995 to August 1996 and as Vice President - Finance of the Company from December
1991 to June 1995. From December 1991 to August 1996, Mr. Bradberry also served
as Chief Financial Officer of Cameron.

JOHN L. CRUM (age 53) has served as Vice President - Chief Information
Officer of the Company and Executive Vice President of Cameron since April
1997. Prior to joining the Company, Mr. Crum was Group Director, Information
Resources - Building Products at Georgia Pacific Corporation in Atlanta,
Georgia from 1993 to March 1997. He was Director of Information Resources
for the Distribution Division at Georgia Pacific from 1988 to 1993.

JOHN S. DAVIS (age 41) has served as Vice President - General Counsel and
Secretary of the Company since 1994. Prior to joining the Company, he was
employed as Associate Counsel - Mergers and Acquisitions of Electronic Data
Systems Corporation (EDS) from 1990 to 1994.

-9-

<PAGE>

C. STEVEN GAFFNEY (age 49) has served as Vice President of the Company
since 1994 and as President and Chief Executive Officer of Ashley since June
1997. Mr. Gaffney was Executive Vice President of Ashley from 1991 to June
1997. He previously served as President of Ashley from 1989 to 1991 and as its
Vice President from 1986 to 1989.

F. DIXON MCELWEE (age 51) has served as Vice President - Chief Financial
Officer and Treasurer of the Company since June 1995 and Executive Vice
President, Chief Financial Officer and Treasurer of Cameron since November 1996.
From June 1995 to November 1996, he served as Executive Vice President -
Administration of Cameron. Prior to joining the Company, Mr. McElwee was
employed as Managing Director of Meridian Capital from 1992 to June 1995 and as
Managing Director of Quest Capital from 1990 to 1992, each an investment banking
firm.

THOMAS R. MILLER (age 48) has served as Vice President - Human Resources of
the Company since December 1994. From 1980 until December 1994, Mr. Miller
served as Managing Director of Employee Relations for American Airlines, Inc.

ITEM 2. PROPERTIES

The Company operates both owned and leased branches in 31 states. Its
facilities range in size from approximately 15,000 to 150,000 square feet. This
building space is used for warehousing and distribution purposes and, to a
lesser extent, for sales, manufacturing and administrative purposes. The
Company owns a 24,000 square foot office building where its corporate offices
are located near its Dallas, Texas branch. The Company believes its facilities
are adequately maintained and utilized and are suitable for the purposes for
which they are used. See Note 11 to the Consolidated Financial Statements of
the Company for a summary of payments due under the Company's leases.

None of the Company's owned real properties are subject to any major
encumbrances.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company is also involved in litigation and
proceedings in the ordinary course of its business. Management believes that
pending litigation matters, except for the Bradco claim, would not, if decided
adversely to the Company, have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

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

There were no matters submitted for a vote of security holders during the
fourth quarter ended October 31, 1997.

-10-

<PAGE>

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Company trades on the Nasdaq National Market System under the symbol
"CABP". The following table sets forth, for the Company's fiscal periods
indicated, the high and low last sale price per share for the Common Stock, as
reported on the Nasdaq National Market System.

High Low
---- ---
FISCAL 1997
First Quarter . . . . . . . . . . . $14.875 $11.500
Second Quarter. . . . . . . . . . . 15.500 12.375
Third Quarter . . . . . . . . . . . 14.875 12.000
Fourth Quarter. . . . . . . . . . . 19.750 14.375

High Low
---- ---
FISCAL 1996
First Quarter . . . . . . . . . . . $10.625 $ 7.500
Second Quarter. . . . . . . . . . . 9.937 7.750
Third Quarter . . . . . . . . . . . 13.125 9.750
Fourth Quarter. . . . . . . . . . . 13.750 10.125

As of January 23, 1988, there were approximately 62 holders of record of
the Common Stock. The Company has never declared or paid a cash dividend on its
Common Stock and does not intend to pay any cash dividends on its Common Stock
in the foreseeable future. The current policy of the Company's Board of
Directors is to retain all earnings to support operations and finance expansion.
The Credit Agreement restricts the payment of cash dividends without the prior
approval of NationsBank. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources." Future
declaration and payment of dividends, if any, will be determined in light of
then current conditions, including the Company's earnings, operations, capital
requirements, financial condition, restrictions in financing agreements and
other factors deemed relevant by the Board of Directors.

The purchasers of the Senior Notes consisted of a small group of
institutional investors. The sale of Senior Notes was conducted as a limited
offering to accredited investors under the provisions of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and was therefore exempt from registration thereunder.

ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

The selected financial data presented below as of October 31, 1997, 1996,
1995, 1994 and 1993 and for each of the five fiscal years ended October 31,
1997, have been derived from audited consolidated financial statements of the
Company. The historical data set forth below should be read in conjunction with
the consolidated financial statements of the Company, together with the notes
thereto, included elsewhere herein and "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

-11-

<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue . . . . . . . . . . . . . . . . . . . . . $761,590 $604,710 $503,691 $296,268 $224,014
Cost of sales . . . . . . . . . . . . . . . . . . 611,753 485,595 408,528 234,367 173,890
-------- -------- -------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . . 149,837 119,115 95,163 61,901 50,124
Operating expenses . . . . . . . . . . . . . . . . 125,684 95,689 75,927 45,502 38,093
-------- -------- -------- -------- --------
Income from operations . . . . . . . . . . . . . . 24,153 23,426 19,236 16,399 12,031
Interest expense . . . . . . . . . . . . . . . . . 5,750 3,910 3,376 2,333 2,983
-------- -------- -------- -------- --------
Income before income taxes . . . . . . . . . . . . 18,403 19,516 15,860 14,066 9,048
Provision for income taxes . . . . . . . . . . . . 7,084 7,447 5,985 5,366 3,335
-------- -------- -------- -------- --------
Income before extraordinary charge . . . . . . . . 11,319 12,069 9,875 8,700 5,713
-------- -------- -------- -------- --------
Extraordinary charge - early extinguishment of . .
debt, net of income tax . . . . . . . . . . . . - 245 - - -
-------- -------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . $ 11,319 $ 11,824 $ 9,875 $ 8,700 $ 5,713
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income per share before extraordinary charge . $ 1.20 $ 1.31 $ 1.15 $ 1.40 $ 1.14
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income per share . . . . . . . . . . . . . . . $ 1.20 $ 1.28 $ 1.15 $ 1.40 $ 1.14
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average shares outstanding . . . . . . . 9,443 9,196 8,580 6,222 5,026
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

As of October 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
Balance Sheet Data:
Accounts receivable, net . . . . . . . . . $115,687 $ 92,932 $ 75,502 $ 54,789 $ 31,484
Inventories . . . . . . . . . . . . . . . 82,298 64,644 51,780 39,743 29,018
Total assets . . . . . . . . . . . . . . . 293,251 219,670 175,067 126,083 82,217
Accounts payable and accrued expenses . . 88,420 69,795 51,679 44,212 34,192
Long-term debt, less current maturities . 79,480 52,078 38,264 36,606 31,954
Stockholders' equity . . . . . . . . . . . 108,927 95,609 82,986 43,506 13,695

Branches at end of period . . . . . . . . . . 145 107 93 66 49

</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

The building products industry is affected by various factors including
general economic conditions, the level of building activity, weather conditions,
the rate of new home construction, interest rates and the availability of
credit. A significant portion of the Company's products are sold for use in the
home improvement, remodeling and repair market, which is relatively less
affected by these factors than the new residential construction market.

The Company has experienced substantial improvement in its results of
operations since its formation in 1991. These improvements have included
significant increases in sales volume and improvement in the Company's operating
expenses as a percentage of revenue. The Company's revenue have more than
tripled from $224 million in fiscal 1993 to $762 million in fiscal 1997. This
revenue growth has been accomplished largely due to 32 acquisitions completed
since October 1992, increased sales by existing branches and new branch
openings. Further, the Company's operating expenses as a percentage of revenue
have declined from 17.1% in fiscal 1993 to 16.5% in fiscal 1997. Operating
expenses in fiscal 1997 include a charge of $5.1 million or 0.7% and thus for
comparative purposes, operating expenses have declined from 17.1% in fiscal 1993
to 15.8% in fiscal 1997 before such charges.

-12-
<PAGE>

These positive trends have been partially offset by a decline in gross
profit margin, which resulted primarily from the product and sales mix of
acquired businesses. Gross profit as a percentage of revenue declined from
22.4% in fiscal 1993 to 19.7% in fiscal 1996 and fiscal 1997. The businesses
acquired by the Company since October 1992 typically either have had product
lines consisting of narrow assortments of commodity products or have had a
relatively high proportion of products distributed through direct shipments from
manufacturers. Both of these characteristics result in lower selling margins
and a lower gross profit as a percentage of revenue. In implementing its
operating strategy for acquired businesses, management focuses on improving
gross profit as a percentage of revenue, which requires the integration of
additional higher margin product lines. This process takes time to implement
because of market conditions, suppliers' territorial restrictions and conversion
of customers' buying requirements and habits. Although the Company historically
has been able to improve the gross profit margins of acquired businesses and
anticipates further improvements, gross profit as a percentage of revenue will
likely remain near current levels with some improvement as product mix, pricing
and sales mix changes are implemented. In addition, the growth of the Company
through its acquisition strategy since 1991 has reduced the contribution of its
Ashley Aluminum subsidiary as a percentage of the total operation. Ashley is a
speciality products distributor and operates with higher gross profit margins.
Operating expenses, because of the different product and sales mix of acquired
businesses and the consolidation of various corporate functions, have decreased
as a percentage of net sales.

The net effect of these various factors has been a significant increase in
the Company's income from operations from $12.0 million in fiscal 1993 to
$24.2 million in fiscal 1997. Income from operations as a percentage of revenue
increased from 5.3% in fiscal 1993 to 5.5% in fiscal 1994. However, due to the
declining gross profit margin discussed previously, which was not offset by a
reduction in operating expenses, income from operations as a percentage of
revenue decreased to 3.9% in fiscal 1995 and fiscal 1996 and to 3.2% in fiscal
1997. Income from operations in fiscal 1997 includes a charge of $5.6 or 0.7%,
and therefore, before such charges, income from operations was 3.9% of revenue
in fiscal 1997.

During the fourth quarter of fiscal 1997, the Company recorded a pre-tax
charge of $5.6 million which had a $0.36 impact on earnings per share ("EPS")
and consisted of the following:

- A $3.6 million charge which primarily reflects the merger of four
branches in Oregon and Texas and the closure of a small mill
operation. The charge includes the writeoff of future lease
payments on unused facilities in Oregon and Washington, reduction of
inventory to net realizable value, associated severance costs, and
certain costs related to the Company's recent acquisition
activities; and

- A $2.0 million writeoff of unamortized costs related to the Company's
management information system after the installation of a new
enterprise-wide computer system commencing in fiscal 1998 and
certain costs associated with the evaluation of the new system.
Management estimates the new system will require a $9 million to $11
million capital expenditure and expects the system to be fully
operational during fiscal 1999.

The pre-tax charge of $5.6 million was recorded on the Company's income
statement as $500,000 in cost of sales and $5,100,000 in operating expenses.

During the fourth quarter of fiscal 1996, the Company took a $591,000
charge related to the consolidation of its operations in Spokane, Washington
which had a $0.04 impact on EPS. The operations in four separate locations were
relocated into one 120,000 square foot facility to increase efficiency, reduce
costs and better service the customer base.

The following table sets forth information regarding certain components of
revenue for the periods presented in "Selected Financial Data."

-13-

<PAGE>

<TABLE>
<CAPTION>
Fiscal Periods Ended October 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . 80.3 80.3 81.1 79.1 77.6
------ ------ ------ ------ ------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . 19.7 19.7 18.9 20.9 22.4
Operating expenses . . . . . . . . . . . . . . . . . . . . 16.5 15.8 15.0 15.4 17.1
------ ------ ------ ------ ------
Income from operations . . . . . . . . . . . . . . . . . . 3.2(1) 3.9(2) 3.9 5.5 5.3
Interest expense . . . . . . . . . . . . . . . . . . . . . 0.8 0.7 0.7 0.8 1.3
------ ------ ------ ------ ------
Income before income taxes . . . . . . . . . . . . . . . . 2.4 3.2 3.2 4.7 4.0
Provision for income taxes . . . . . . . . . . . . . . . . 0.9 1.2 1.2 1.8 1.5
------ ------ ------ ------ ------
Income before extraordinary charge . . . . . . . . . . . . 1.5% 2.0% 2.0% 2.9% 2.5%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

1) Includes the effect of charges of 0.7% of revenue, as discussed previously.
2) Includes the effect of charges of 0.1% of revenue, as discussed previously.

RESULTS OF OPERATIONS

FISCAL 1997 COMPARED TO FISCAL 1996

Revenue increased 26.0% from $604.7 million in 1996 to $761.6 million in
1997. This increase was due to the 1997 year containing a full 12 months of
sales from the 14 branches acquired or opened in fiscal 1996, as well as the
incremental sales from the 38 branches acquired or opened in fiscal 1997. Same
store sales were level in fiscal 1997 compared to an increase of 2.7% in fiscal
1996. The Company experienced weakness in its Texas, Northwest, and Mountain
States markets offset by strength in its Northeast, Southeast, Midwest,
California, and Arizona markets.

Gross profit as a percentage of revenue remained level at 19.7% in 1996 and
1997, with an overall increase of $30.7 million or 25.8% in 1997, compared to
1996. The fourth quarter charge did not have a material impact on gross profit
as a percentage of revenue.

Operating expenses increased 31.3% from $95.7 million in 1996 to $125.7
million in 1997. These expenses increased as a percentage of revenue from 15.8%
to 16.5%. Operating expenses include both expenses directly attributable to
branch operations and corporate expenses and increased primarily as a result of
acquisitions and new branch openings. Higher revenue and gross profit allowed
for absorption of the overall expense increases without a negative impact to
earnings. Operating expenses in fiscal 1997 include $5.1 million in charges, or
0.7% of 1997 revenue, as discussed previously. Operating expenses excluding
this charge were 15.8% of revenue and slightly higher than 1996 operating
expenses excluding similar charges of 15.7%. The impact of the new finance
subsidiary on operating expenses was 0.2% of revenue and thus for comparative
purposes, operating expenses decreased 0.1% from 1996 to an adjusted 15.6% in
fiscal 1997.

Income from operations increased 3.4% from $23.4 million in 1996 to $24.2
million in 1997 and decreased as a percentage of revenue from 3.9% to 3.2%. The
decrease as a percentage of revenue was primarily due to the charges in the
fourth quarter of 1997. Excluding the charges, income from operations increased
from an adjusted $24.0 million in 1996 to an adjusted $29.8 million in 1997 and
as a percentage of revenue only decreased from 4.0% in 1996 to 3.9 in 1997.

Interest expense increased $1.8 million in 1997 compared to 1996 as a
result of higher borrowings required for 1997 acquisitions offset by a slight
reduction in interest rates primarily on Canadian borrowings. Cameron Ashley
Financial Services incurred approximately $0.3 million of interest in 1997.

As a result of the above factors, income before income taxes decreased
5.6% from $19.5 million in 1996 to $18.4 million in 1997. Net income decreased
4.2% from $11.8 million in 1996 to $11.3 million in 1997, and net income as a
percentage of revenue decreased 0.5% from 2.0% in 1996 to 1.5% in 1997.

-14-
<PAGE>

FISCAL 1996 COMPARED TO FISCAL 1995

Revenue increased 20.1% from $503.7 million in 1995 to $604.7 million in
1996. This increase was due in part to 1996 containing a full 12 months of
revenue from the 27 branches acquired or opened in 1995. These branches along
with existing branches contributed $55.1 million of this increase. In addition,
branches acquired in 1996 contributed approximately $40.1 million of the total
revenue increase of $101.0 million. New branches opened in 1996 contributed
approximately $5.8 million of the revenue increase. Same store sales increased
during 1996 by 2.7%.

Gross profit as a percentage of revenue increased from 18.9% in 1995 to
19.7% in 1996, with an overall increase of $24.0 million or 25.2% in 1996,
compared to 1995. The increase in gross profit as a percentage of revenue was
due primarily to an emphasis on sales of higher margin products while existing
certain less profitable product lines in areas such as the Northwest.
Additionally, aluminum price decreases caused favorable LIFO charges and
improved margins in the Florida markets.

Operating expenses increased 25.7% from $76.1 million in 1995 to $95.7
million in 1996. These expenses increased as a percentage of revenue from 15.1%
to 15.8%. Operating expenses include both expenses directly attributable to
branch operations and corporate expenses and increased primarily as a result of
acquisitions and new branch openings. Higher revenue and gross profit allowed
for absorption of the overall expense increases without a negative impact to
earnings.

During the fourth quarter of 1996, the Company took a $591,000 charge
related to its operations in Spokane, Washington which had a $0.04 impact on
EPS. The operations currently in four separate locations are relocating to one
120,000 square foot facility to increase efficiency, reduce costs and better
service the customer base.

Income form operations increased 23.0% from $19.0 million in 1995 to $23.4
million in 1996 and increased as a percentage of revenue from 3.8% to 3.9%.
These increases were due to the factors described above.

Interest expense increased $0.5 million in 1996 compared to 1995 as a
result of higher borrowings required for 1996 acquisitions offset by a slight
reduction in interest rates.

As a result of the above factors, income before income taxes increased
22.6% from $15.9 million in 1995 to $19.5 million in 1996. Net income increased
19.7% from $9.9 million in 1995 to $11.8 million in 1996, and net income as a
percentage of revenue remained at 2.0% from 1995 to 1996.

EFFECTS OF INFLATION

Management does not believe that inflation has had a material impact on
results of operations for the periods presented. Substantial increases in
costs, however, could have an impact on the Company and the industry.
Management believes that, to the extent inflation affects its costs in the
future, the Company can generally offset inflation by increasing prices if
competitive conditions permit.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary needs for capital resources are to finance
acquisitions, inventories, accounts receivable, notes receivable held for sale
and capital expenditures. Borrowings for working capital typically increase
during periods of sales expansion when higher levels of inventory and
receivables are needed and decrease as inventories and receivables are converted
to cash and are used to pay down debt. During the fourth quarter of fiscal
1997, the Company initiated a re-engineering effort that includes the
implementation of a new enterprise-wide computer system which will require a
capital expenditure estimated at between $9 million and $11 million over the
next two years. Management expects this system to be fully implemented during
fiscal 1999. The Company had $79.5 million of long-term debt, less current
maturities, outstanding as of October 31, 1997, consisting of the indebtedness
described below. See Notes 7 and 8 to the Consolidated Financial Statements of
the Company for a discussion of these borrowings.

SENIOR DEBT: As of October 31, 1997, the Company had $50 million of
unsecured Senior Notes bearing interest at an average of 7 1/8%. These
notes mature at various dates beginning April 15, 2000, with a final
maturity of April 15, 2006.

-15-
<PAGE>

REVOLVING CREDIT AGREEMENT: The Company is a party to a credit agreement
due January 15, 2002, which as of October 31, 1997 permitted revolving
borrowings of up to $80 million U.S. and $25 million Canadian under the
revolving line of credit indebtedness (the "Revolver"). Debt outstanding
under this agreement as of October 31, 1997 was $28.2 million and
borrowings under the Revolver are unsecured.

WAREHOUSE CREDIT LINE: In December 1996, Cameron Ashley Financial Services
entered into a one year $20 million warehouse line of credit agreement with
Bank One, Texas for the purpose of funding home improvement notes
receivable held for sale by Cameron Ashley Financial Services. The line of
credit is secured by the notes receivable held for sale and a $5 million
guarantee from the Company. At October 31, 1997, the balance outstanding
under the warehouse line of credit was $12.2 million.

OTHER DEBT: As of October 31, 1997, the Company had $1.7 million in debt
payable to various sellers of businesses acquired by the Company and to
capital lessors in connection with capital lease obligations. These notes
generally are collateralized by certain assets of the subsidiaries and are
subordinate to the Senior Debt and the Revolver.

Under the terms of the Senior Debt, Warehouse Credit Line and the Revolver,
the Company is subject to various restrictive covenants regarding, among other
things, payment of any dividends, capital expenditures limitations, incurrence
of indebtedness from others in excess of certain amounts and consummation of any
merger or acquisition of an entity that is not engaged in the building materials
distribution business without the consent of the lenders. Financial covenants
include, but are not limited to, maintaining current ratios, minimum net worth
ratios, fixed charges ratios and debt to cash flow ratios.

Net cash generated from operating activities was $22.5 million and $16.7
million for fiscal 1996 and 1997, respectively. Capital expenditures were $8.9
million and $11.2 million in fiscal 1996 and 1997, respectively. Five
acquisitions were made in fiscal 1996 for $24.8 million, and eight acquisitions
were made in fiscal 1997, for $41.9 million.

The Company believes that its current cash position, funds from operations,
and the availability of funds under its credit agreements, will be sufficient to
meet anticipated requirements for working capital for the next twelve months.

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board issued four new standards during
1997 that have various disclosure or reporting requirements. See Note 2 to the
Consolidated Financial Statements of the Company for a discussion of the new
standards. The Company does not expect the adoption of these standards to have
a material impact on its financial position or results of operation.

SEASONALITY AND QUARTERLY FINANCIAL INFORMATION

The Company's fiscal quarters are subject to seasonal fluctuations caused
by construction cycles and weather patterns. See "Business - Seasonality".

The following table sets forth selected quarterly financial information.
This information is derived from unaudited financial statements of the Company
and includes, in the opinion of management, only normal and recurring
adjustments that management considers necessary for a fair statement of the
results for such periods. The operating results for any quarter are not
necessarily indicative of results for any future period.

-16-

<PAGE>

<TABLE>
<CAPTION>
FISCAL 1997
----------------------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . $ 140,848 $ 175,463 $ 219,118 $ 226,161
Gross profit . . . . . . . . . . . . . . . . . . . . . . 28,198 34,767 42,840 44,032
Operating expenses . . . . . . . . . . . . . . . . . . . 24,848 28,372 32,805 39,659
Income from operations . . . . . . . . . . . . . . . . . 3,350 6,395 10,035 4,373 1)
Net income . . . . . . . . . . . . . . . . . . . . . . . 1,423 3,058 5,058 1,780
Net income per share . . . . . . . . . . . . . . . . . . 0.15 0.32 0.54 0.19

Gross profit as a percentage of revenue . . . . . . . . . 20.0% 19.8% 19.6% 19.5%
Operating expenses as a percentage of revenue . . . . . . 17.6% 16.2% 15.0% 17.5%
Income from operations as a percentage of revenue . . . . 2.4% 3.6% 4.6% 1.9%
</TABLE>

1) Includes the effect of charges of $5.6 million taken in fourth quarter of
fiscal 1997 as discussed previously.

<TABLE>
<CAPTION>
FISCAL 1996
----------------------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . $ 120,041 $ 135,085 $ 163,852 $ 185,732
Gross profit . . . . . . . . . . . . . . . . . . . . . . 23,147 26,590 32,176 37,202
Operating expenses . . . . . . . . . . . . . . . . . . . 20,828 21,653 24,190 29,018
Income from operations . . . . . . . . . . . . . . . . . 2,319 4,937 7,986 8,184 2)
Net income . . . . . . . . . . . . . . . . . . . . . . . 987 2,390 4,166 4,281
Net income per share . . . . . . . . . . . . . . . . . . 0.11 0.26 0.45 0.46

Gross profit as a percentage of revenue . . . . . . . . . 19.3% 19.7% 19.6% 20.0%
Operating expenses as a percentage of revenue . . . . . . 17.4% 16.0% 14.8% 15.6%
Income from operations as a percentage of revenue . . . . 1.9% 3.7% 4.9% 4.4%
</TABLE>

2) Includes the effect of charges of $0.6 million taken in fourth quarter of
fiscal 1996 as discussed previously.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not have any material exposure to market risk associated
with activities in derivative financial instruments, other financial instruments
and derivative commodity instruments.

-17-

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements of Registrant:

CAMERON ASHLEY BUILDING PRODUCTS, INC.

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 19
Consolidated Balance Sheets, October 31, 1997 and 1996. . . . . . . . . . . 20
Consolidated Statements of Income for the Years Ended October 31, 1997,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated Statements of Stockholders' Equity for the Years Ended
October 31, 1997, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . 22
Consolidated Statements of Cash Flows for the Years Ended October 31,
1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 24

-18-

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Cameron Ashley Building Products, Inc.:

We have audited the accompanying consolidated balance sheets of Cameron
Ashley Building Products, Inc. and subsidiaries as of October 31, 1997 and 1996
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended October 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits, such consolidated financial statements
present fairly, in all material respects, the financial position of Cameron
Ashley Building Products, Inc. and subsidiaries at October 31, 1997 and 1996 and
the results of their operations and their cash flows for each of the three years
in the period ended October 31, 1997 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP
Dallas, Texas
December 16, 1997
(except the last paragraph of Note 7 which is as of January 22, 1998)

-19-

<PAGE>

CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------
1997 1996
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 899 $ 5,078
Accounts receivable, less allowances of $3,495 in 1997 and $2,719 in 1996 . . . . . . . . . 115,687 92,932
Notes receivable held for sale, less allowance of $184 . . . . . . . . . . . . . . . . . . . 16,462
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,298 64,644
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,257 1,223
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,527 1,141
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,130 165,018

PROPERTY, PLANT AND EQUIPMENT, NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,683 31,219

INTANGIBLE ASSETS, NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,732 22,538

OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,706 895
---------- ----------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 293,251 $ 219,670
---------- ----------
---------- ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,792 $ 54,839
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,628 14,956
Warehouse line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,189
Current maturities of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 973 790
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,582 70,585

LONG-TERM DEBT, LESS CURRENT MATURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,480 52,078

DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,262 1,398
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,324 124,061
---------- ----------

COMMITMENTS AND CONTINGENCIES (Notes 3 and 10)

STOCKHOLDERS' EQUITY:
Preferred stock; authorized 100,000 shares; no shares issued and outstanding
Common stock, no par value; authorized 20,000,000 shares;
9,744,717 and 9,477,480 shares issued in 1997 and 1996, respectively . . . . . . . . . . . 62,947 60,641
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,462 39,143
Treasury stock, at cost, 440,521 and 431,974 shares in 1997 and 1996, respectively . . . . . (4,296) (4,175)
Cumulative foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . (186)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,927 95,609
---------- ----------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 293,251 $ 219,670
---------- ----------
---------- ----------
</TABLE>

See notes to consolidated financial statements

-20-
<PAGE>

CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED OCTOBER 31,
------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>

REVENUE . . . . . . . . . . . . . . . . . . . . . . $761,590 $ 604,710 $503,691

COST OF SALES . . . . . . . . . . . . . . . . . . . 611,753 485,595 408,528
--------- --------- --------

GROSS PROFIT . . . . . . . . . . . . . . . . . . 149,837 119,115 95,163

OPERATING EXPENSES . . . . . . . . . . . . . . . . 125,684 95,689 75,927
--------- --------- --------

INCOME FROM OPERATIONS . . . . . . . . . . . . . . 24,153 23,426 19,236

INTEREST EXPENSE . . . . . . . . . . . . . . . . . 5,750 3,910 3,376
--------- --------- --------

INCOME BEFORE INCOME TAXES . . . . . . . . . . . . 18,403 19,516 15,860

PROVISION FOR INCOME TAXES . . . . . . . . . . . . 7,084 7,447 5,985
--------- --------- --------

INCOME BEFORE EXTRAORDINARY CHARGE . . . . . . . . 11,319 12,069 9,875
--------- --------- --------

EXTRAORDINARY CHARGE-EARLY EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX OF $132 . . . . . . . . 245
--------- --------- --------

NET INCOME . . . . . . . . . . . . . . . . . . . . $ 11,319 $ 11,824 $ 9,875
--------- --------- --------
--------- --------- --------

INCOME PER SHARE BEFORE EXTRAORDINARY CHARGE. . . . $ 1.20 $ 1.31 $ 1.15
--------- --------- --------
--------- --------- --------

NET INCOME PER SHARE . . . . . . . . . . . . . . . $ 1.20 $ 1.28 $ 1.15
--------- --------- --------
--------- --------- --------

WEIGHTED AVERAGE SHARES OUTSTANDING . . . . . . . . 9,443 9,196 8,580
--------- --------- --------
--------- --------- --------

</TABLE>

See notes to consolidated financial statements.

-21-
<PAGE>

CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
COMMON STOCK CURRENCY
------------------- RETAINED TREASURY TRANSLATION
SHARES VALUE EARNINGS STOCK ADJUSTMENT TOTAL
------ ----- -------- --------- ------------ -------
(DOLLARS IN THOUSANDS)

BALANCE AS OF NOVEMBER 1, 1994 . . . . . . . . . 6,462 $ 26,062 $ 17,444 $ - $ - $ 43,506

Proceeds from public offering of
2,450,000 shares at $14.00 per share,
net of expenses of $2,379 . . . . . . . . . . . 2,450 31,921 31,921
Proceeds from exercise of stock options
including tax benefits of $406. . . . . . . . . 105 526 526
Purchase of treasury stock (297,200 shares) . . . (2,883) (2,883)
Proceeds from employee stock purchase plan. . . . 4 41 41
Net income. . . . . . . . . . . . . . . . . . . . 9,875 9,875
-------- ---------- --------- --------- ---------- ---------

BALANCE AS OF OCTOBER 31, 1995. . . . . . . . . . 9,021 58,550 27,319 (2,883) - 82,986

Proceeds from exercise of stock options
including tax benefits of $1,491 . . . . . . . . 443 1,970 1,970
Proceeds from employee stock purchase plan. . . . 13 121 121
Purchase of treasury stock (134,774 shares) . . . (1,292) (1,292)
Net income . . . . . . . . . . . . . . . . . . . 11,824 11,824
-------- ---------- --------- --------- ---------- ---------
BALANCE AS OF OCTOBER 31, 1996 . . . . . . . . . 9,477 60,641 39,143 (4,175) - 95,609

Proceeds from exercise of stock options
including tax benefits of $1,059 . . . . . . . 255 2,198 2,198
Proceeds from employee stock purchase plan. . . . 13 108 108
Purchase of treasury stock (8,547 shares) . . . . (121) (121)
Net income . . . . . . . . . . . . . . . . . . . 11,319 11,319
Foreign currency translation adjustment . . . . . (186) (186)
-------- ---------- --------- --------- ---------- ---------

BALANCE AS OF OCTOBER 31, 1997 . . . . . . . . . 9,745 $62,947 $50,462 $(4,296) $ (186) $108,927
-------- ---------- --------- --------- ---------- ---------
-------- ---------- --------- --------- ---------- ---------

</TABLE>

See notes to consolidated financial statements.

-22-

<PAGE>

CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED OCTOBER 31,
----------------------
1997 1996 1995
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>

OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,319 $ 11,824 $ 9,875
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . 9,287 6,118 4,641
(Gain) loss on sale of property and equipment . . . . . . . . . 2 12 (143)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . (1,522) 61 (193)
Foreign currency translation adjustment. . . . . . . . . . . . (186)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . (3,689) (6,666) (6,400)
Notes receivable held for sale . . . . . . . . . . . . . . . (16,462)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . (642) (2,506) 4,248
Prepaid expenses and other assets . . . . . . . . . . . . . . 957 782 (731)
Accounts payable and accrued expenses . . . . . . . . . . . . 5,403 13,936 (781)
Warehouse line of credit . . . . . . . . . . . . . . . . . . 12,189
Other current liabilities . . . . . . . . . . . . . . . . . . 29 (1,104) 167
--------- --------- ----------
Net cash provided by operating activities. . . . . . . . . 16,685 22,457 10,683
--------- --------- ----------
INVESTING ACTIVITIES:
Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . (33,034) (24,762) (34,783)
Seller financings of acquired businesses and deferred payments. 700 2,288
--------- --------- ----------
Cash paid for acquisitions . . . . . . . . . . . . . . . . (33,034) (24,062) (32,495)
Purchases of property, plant and equipment. . . . . . . . . . . (11,236) (8,933) (4,505)
Investment in affiliate . . . . . . . . . . . . . . . . . . . . (2,640)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16) (3) (43)
--------- --------- ----------
Net cash used in investing activities. . . . . . . . . . . (46,926) (32,998) (37,043)
--------- --------- ----------

FINANCING ACTIVITIES:
Proceeds from borrowings under long-term debt . . . . . . . . . 50,000
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . (183) (762)
Net borrowings (repayment) under revolving lines of credit . . 24,980 (25,000) 720
Repayment of long-term debt . . . . . . . . . . . . . . . . . . (10,133)
Repayments of seller financing of acquired businesses . . . . . (566) (2,457) (669)
Proceeds from sales of common stock . . . . . . . . . . . . . . 31,921
Proceeds from employee stock purchase plan. . . . . . . . . . . 108 121 41
Exercise of stock options . . . . . . . . . . . . . . . . . . . 2,198 1,970 526
Purchase of treasury stock. . . . . . . . . . . . . . . . . . . (121) (1,292) (2,883)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (354) (322) (159)
--------- --------- ----------
Net cash provided by financing activities. . . . . . . . 26,062 12,125 29,497
--------- --------- ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . . . . . . (4,179) 1,584 3,137

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR. . . . . . . . . . . 5,078 3,494 357
--------- --------- ----------

CASH AND CASH EQUIVALENTS, END OF YEAR. . . . . . . . . . . . . . $ 899 $ 5,078 $ 3,494
--------- --------- ----------
--------- --------- ----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest. . . . . . . . . . . . . . . . . . . . . $ 5,913 $ 3,628 $ 3,055
--------- --------- ----------
--------- --------- ----------
Cash paid for income taxes. . . . . . . . . . . . . . . . . . . $ 7,046 $ 7,034 $ 5,620
--------- --------- ----------
--------- --------- ----------
Debt assumed of acquired business . . . . . . . . . . . . . . . $ 8,877 $ - $ -
--------- --------- ----------
--------- --------- ----------

</TABLE>

See notes to consolidated financial statements.

-23-

<PAGE>

CAMERON ASHLEY BUILDING PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Cameron Ashley Building Products, Inc., and its wholly owned subsidiaries (the
"Company").

The Company distributes building products to independent dealers
(lumberyards and hardware stores), professional builders, contractors and mass
merchandisers throughout the United States and in Mexico and Canada. Products
distributed by the Company are used primarily in new residential construction
and home improvement, remodeling and repair work, as well as in commercial and
industrial applications. The Company also provides financing for home
improvement projects through Cameron Ashley Financial Services, Inc. ("CAFS").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH EQUIVALENTS. All highly liquid debt instruments with a maturity of
three months or less when purchased are classified as cash equivalents.

NOTES RECEIVABLE HELD FOR SALE. Notes receivable held for sale represent
loans to consumers to finance home improvement projects. Notes receivable are
carried at the lower of cost or market. Market is determined based on prices in
the secondary market for similar loans. Origination fees, net of direct loan
origination costs, are deferred and recognized when the loan is sold. The
Company provides for estimated loan losses by establishing an allowance for loan
losses through a provision for bad debts for losses expected to be incurred.
Management's periodic evaluation for estimated losses is based upon an analysis
of the portfolio, historical loss experience, economic conditions and trends,
collateral values and other relevant factors.

INVENTORIES. Inventories are stated at the lower of last-in, first-out
("LIFO") cost or market. Included in inventory cost are costs directly
associated with the fabrication of the Company's products. Substantially all of
the Company's inventory is finished goods.

PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is
recorded at cost. Costs associated with major additions are capitalized and
depreciated. Upon disposal, the cost of properties and related accumulated
depreciation are removed from the accounts, with gains and losses reflected
in earnings. Depreciation is provided over the estimated useful lives of the
depreciable assets. Assets are generally depreciated on the straight-line
method over the estimated service lives of the related assets, which range
from 3 to 40 years. Leasehold improvements are depreciated over the shorter
of their estimated useful lives or the term of the related lease.

INTANGIBLE ASSETS. Intangible assets consist primarily of noncompete
agreements, which are recorded at cost and are amortized over periods of three
to five years, the contractual term of the agreements, and goodwill, which is
primarily amortized over 25 years.

CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENT. Cumulative
translation adjustment in stockholders' equity reflects the unrealized
adjustments resulting from translating the financial statements of its foreign
subsidiary. The functional currency of the Company's foreign subsidiary is the
local currency of the country. Accordingly, assets and liabilities of the
foreign subsidiary are translated to U.S. dollars at year-end exchange rates.
Income and expense items are translated at the average rates prevailing during
the year.

REVENUE RECOGNITION. Sales are recorded at the time merchandise is
shipped and are reported net of estimated payment discounts and returns and
allowances.

INCOME TAXES. Income taxes are provided for using the asset and
liability method under which deferred income taxes are recognized for the tax
consequences of temporary differences between the financial statement carrying
amounts and the tax basis of existing assets and liabilities by applying enacted
statutory tax rates. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date. The
Company periodically evaluates the collectibility of deferred tax assets and
provides a valuation allowance for the portion of such assets not considered
realizable.

-24-
<PAGE>

CONCENTRATION OF CREDIT RISK. The Company is primarily engaged in the
distribution of building products throughout the United States. The Company
grants credit to customers, substantially all of whom are dependent upon the
construction economic sector. The Company continuously evaluates its customers'
financial condition but does not generally require collateral. The Company also
extends unsecured credit to finance home improvement projects. The
concentration of credit risk with respect to trade accounts receivable and notes
receivable held for sale is limited due to the Company's large customer base
located throughout the United States. The Company maintains an allowance for
doubtful accounts based upon the expected collectibility of its accounts
receivable, and credit losses have been within management's expectations.

USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimated.

INCOME PER SHARE. Income per share is computed by dividing net income by
the weighted average shares outstanding. Weighted average shares used in the
primary calculation include the actual shares outstanding and the net additional
shares which would be issuable upon the exercise of stock options, assuming that
the Company used the proceeds (including related tax benefits) to purchase
additional shares at estimated fair value during the year. Fully diluted income
per share is not presented, because such amount differs by less than 3% from the
primary calculation.

NEW ACCOUNTING STANDARDS. On November 1, 1996, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
which did not have a significant impact on the financial position or results of
operations of the Company.

On November 1, 1996, the Company also adopted SFAS No. 123 "Accounting for
Stock-Based Compensation." Management elected to continue to measure
compensation costs using APB Opinion No. 25 "Accounting for Stock Issued to
Employees" and will therefore include certain disclosures in the notes to the
financial statements for all awards granted after November 1, 1995. The
adoption of this statement did not have a significant effect on the financial
position or results of operations of the Company.

In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128 "Earnings per Share" which establishes new standards for computing
and presenting earnings per share and is effective for financial statements
issued for periods ending after December 15, 1997 including interim periods;
earlier application is not permitted. The Company does not expect the adoption
of SFAS No. 128 to have a significant impact upon the Company's reported income
per share.

The FASB issued in February 1997 SFAS No. 129 "Disclosure of Information
About Capital Structure" which establishes standards for disclosing
information about an entity's capital structure, and is effective for
financial statements for periods ending after December 15, 1997. In June
1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income" which
establishes standards for reporting and display of comprehensive income and
its components in the financial statements. SFAS No. 130 is effective for
fiscal years beginning after December 15, 1997. The FASB also issued in June
1997 SFAS No. 131 "Disclosures About Segments of an Enterprise and Related
Information" which establishes standards for the way public companies
disclose information about operating segments, products and services,
geographic areas and major customers. SFAS No. 131 is effective for financial
statements for periods beginning after December 15, 1997. The Company does
not expect the adoption of these standards to have any impact on the
Company's financial position or results of operations.

RECLASSIFICATIONS. Certain prior year amounts have been reclassified
to conform to current-year presentation.

3. ACQUISITIONS

Over the past three years, the Company has acquired certain net assets
and operations of various building materials distributors. All of these
transactions were accounted for as purchases; therefore, results of
operations of the Company include the operations of the businesses subsequent
to their acquisitions.

In fiscal 1995, seven businesses were acquired at a total cost of $34.8
million. During fiscal 1996, five businesses were acquired at a total cost
of $24.8 million. During fiscal 1997, eight businesses were acquired at a
total cost of $41.9 million. Pro forma revenue as if the 1997 acquisitions
occurred at the beginning of the year would have been $807 million and $761
million for 1997 and 1996, respectively. Pro forma results of operations and
income per share for these acquisitions are not presented due to the
immaterial effect on historical results.

-25-

<PAGE>

On October 31, 1997, the Company acquired a one-third interest in Field
Marketing & Management, Inc. for $2.6 million. The seller may put its remaining
stock and the Company may call such stock under certain conditions at prices
based upon future performance. The investment is included in other assets. The
affiliate will provide certain marketing services to the Company.

4. INVENTORIES

The Company values its inventories using the LIFO method. Had the Company
used the first-in, first-out ("FIFO") method, inventories would have been
approximately $2,627,000 and $2,227,000 higher at October 31, 1997 and 1996,
respectively. Under FIFO, income from operations for the year ended October 31,
1997 would have been higher by approximately $400,000, for the year ended
October 31, 1996 would have been lower by approximately $1,281,000, and for the
year ended October 31, 1995 would have been higher by approximately $1,299,000.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following at October 31:

1997 1996
---- ----
(IN THOUSANDS)

Land . . . . . . . . . . . . . . $ 3,381 $ 3,006
Buildings and improvements . . 19,277 12,504
Machinery and equipment . . . . 11,370 8,195
Furniture and fixtures . . . . . 9,786 8,077
Vehicles . . . . . . . . . . . . 14,958 10,657
Other . . . . . . . . . . . . . 707 716
-------- ---------
59,479 43,155
Accumulated depreciation . . . . (20,796) (11,936)
-------- ---------
Property, plant and equipment,
net . . . . . . . . . . . . . $ 38,683 $ 31,219
-------- ---------
-------- ---------

Included in property and equipment at October 31, 1997 and 1996, is
$921,000 and $888,000, respectively, of equipment under capital leases. In
fiscal 1997, the Company reduced the carrying value of certain of its data
processing system by approximately $1,500,000 with an additional charge to
depreciation expense. The Company has contracted to replace a substantial part
of its existing system and, therefore, reduced the carrying value to reflect its
diminished value.

6. INTANGIBLE ASSETS

Intangible assets consist of the following at October 31:

1997 1996
----- ----
(IN THOUSANDS)

Noncompete agreements . . . $ 3,178 $ 3,128
Goodwill . . . . . . . . . 31,154 23,502
Other . . . . . . . . . . . 1,393 1,367
-------- ----------
35,725 27,997
Accumulated amortization . ( 6,993) (5,459)
-------- ----------
Intangible assets, net . $28,732 $ 22,538
-------- ----------
-------- ----------

-26-

<PAGE>

7. LONG-TERM DEBT

Long-term debt consists of the following at October 31:

1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>

Senior Debt:
Unsecured Senior Notes with maturities and interest rates
as follows:
$10,000,000 due April 15, 2001 bearing interest at 6.79%
$15,000,000 due April 15, 2002 bearing interest at 6.79%
$10,000,000 due April 15, 2003 bearing interest at 7.21%
$15,000,000 due April 15, 2006 bearing interest at 7.61%
Interest is due semi-annually, with an average interest rate
of 7 1/8% . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000 $50,000

NationsBank of Texas, N.A. (as lead agent):
Revolving credit note due January 15, 2002; unsecured;
interest is due quarterly at the LIBOR rate or Banker's
acceptance rate plus 0.50% to 1.0%, or at a base rate
(defined in the agreement as prime). At October 31,
1997, the interest rate was 6.02%. . . . . . . . . . . . . . . . 28,152

Seller financing of acquired business:
Various terms, interest rates ranging from 8% to 9%,
collateralized by certain land and buildings. . . . . . . . 1,705 2,271

Other, including capital leases (see Note 10) . . . . . . . . . . . . 596 597
-------- ---------
80,453 52,868
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . ( 973) (790)
-------- ---------
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . $79,480 $52,078
-------- ---------
-------- ---------
</TABLE>

The seller notes payable are subordinated to the obligations under the
NationsBank agreement.

In January 1997, the Company amended the credit facility with NationsBank
and other banks (collectively referred to as "NationsBank"). The financing
agreement with NationsBank covers a revolving line of credit up to $80 million
U.S. dollars and $25 million Canadian dollars. The financing agreement
restricts distributions to stockholders to 50% of net income, issuance of stock
by the Company's subsidiaries, the assumption of debt and liens by the Company's
subsidiaries, and requires compliance with certain financial ratios and
covenants. The obligations of the Company to NationsBank are unsecured. The
NationsBank revolving credit note also requires the Company to pay a quarterly
commitment fee on the unused balance ranging from 0.2% to 0.3% on the difference
between the revolving commitment and revolving advances outstanding. At October
31, 1997, the Company had $708,000 of letters of credit issued under this credit
facility.

Aggregate maturities of long-term debt during the fiscal years subsequent
to October 31, 1997 are as follows:

(IN THOUSANDS)
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 973
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 827
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,395
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,097
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,161
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $80,453
--------
--------

At October 31, 1997, the Company was not in compliance with certain
covenants of the NationsBank credit facility. On January 22, 1998, the Company
received a waiver and amended the facility to modify these covenants.

-27-

<PAGE>

8. WAREHOUSE LINE OF CREDIT

In December 1996, CAFS entered into a one year $20 million warehouse line
of credit agreement with BankOne Texas for the purpose of funding notes
receivable held for sale. The line of credit is secured by the notes receivable
held for sale and a $5 million guarantee from the Company. The agreement
requires compliance with certain financial ratios and covenants. Interest under
the agreement is payable monthly at LIBOR or at prime less 1.375% (7.06% at
October 31, 1997).

9. INCOME TAXES

The provision for income taxes computed by applying the federal statutory
tax rate to income before income taxes differs from the actual provision for
income taxes as set forth below for the years ended October 31:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>

Income taxes at statutory rates. . . . . . . . . . . $6,441 35.0% $ 6,699 35.0% $ 5,551 35.0%
State taxes based on income net of
federal income tax benefit . . . . . . . . . . . . 424 2.3 450 2.4 546 3.4
Foreign taxes in excess of
federal statutory rates. . . . . . . . . . . . . . 190 1.0
Other. . . . . . . . . . . . . . . . . . . . . . . . 29 0.2 166 0.8 (112) (0.7)
-------- ------ ------- ----- ------- -----

Total income tax expense . . . . . . . . . $7,084 38.5% $ 7,315 38.2% $ 5,985 37.7%
-------- ------ ------- ----- ------- -----
-------- ------ ------- ----- ------- -----

The provision for income taxes consists of the following:
Current year income taxes:
United States . . . . . . . . . . . . . . . . $8,459 $ 7,254 $ 6,178
Foreign . . . . . . . . . . . . . . . . . . . 147
Deferred income taxes:
United States . . . . . . . . . . . . . . . . (2,144) 61 (193)
Foreign . . . . . . . . . . . . . . . . . . . 622
-------- ------- --------
Total income tax expense . . . . . . . . . . . . $7,084 $ 7,315 $ 5,985
-------- ------- --------
-------- ------- --------
</TABLE>

The components of the deferred tax assets (liabilities) consist of the following
at October 31:

1997 1996
---- ----
(IN THOUSANDS)
Allowance for doubtful accounts . . . $ 1,396 $ 1,041
Inventory . . . . . . . . . . . . . . (45) (802)
Accrued liabilities . . . . . . . . . 3,025 761
Sales returns and allowances . . . . 102 105
Other . . . . . . . . . . . . . . . . 49 36
------- ------
Current . . . . . . . . . . . . 4,527 1,141
------- ------

Property, plant and equipment . . . . (2,453) (1,398)
Deferred charges . . . . . . . . . . (809)
------- ------
Noncurrent . . . . . . . . . . . (3,262) (1,398)
------- ------
Total . . . . . . . . . . . . . $ 1,265 $ (257)
------- ------
------- ------

Management believes that no valuation allowance against net deferred tax
benefits is necessary. Deferred U.S. federal income taxes are not provided on
certain undistributed earnings of foreign subsidiaries as management plans to
continue reinvesting these earnings outside the United States. Determination of
such tax amounts is not practical because potential offset by U.S. foreign tax
credits would be available under various assumptions involving the tax
calculation.

-28-

<PAGE>

10. COMMITMENTS AND CONTINGENCIES

Future minimum lease payments under noncancelable lease agreements during
the years subsequent to October 31, 1997 are as follows:

CAPITAL LEASES OPERATING LEASES
-------------- ----------------
(IN THOUSANDS)

1998 . . . . . . . . . . . . . . . . . . $ 408 $ 7,470
1999 . . . . . . . . . . . . . . . . . . 143 5,770
2000 . . . . . . . . . . . . . . . . . . 25 3,899
2001 . . . . . . . . . . . . . . . . . . 11 2,676
2002 . . . . . . . . . . . . . . . . . . 9 1,764
Thereafter . . . . . . . . . . . . . . . 2,340
------ -------
Total minimum lease payments . . . . . . 596 $23,919
-------
-------
Amount representing interest . . . . . . (46)
------
Present value of net minimum lease
payments (including current portion
of $370,000). . . . . . . . . . . . . . $ 550
-------
-------

During the year ended October 31, 1997, the Company incurred rent expense
of approximately $8,468,000, excluding $1,542,000 of accrued rent for closed
branches. During the years ended October 31, 1996 and 1995, the Company
incurred rent expense of approximately $6,744,000 and $5,551,000, respectively.

The Company entered into a letter of intent dated October 2, 1997, to
acquire Bradco Supply Corporation subject to due diligence and negotiation of a
definitive agreement. Prior to the completion of the Company's due diligence
procedures, negotiations were discontinued by Bradco. On November 3, 1997,
Bradco filed suit claiming a breach of the letter of intent and claimed
liquidated damages of $3 million. Management believes the case is without merit
and intends to vigorously defend the Company against such claim; however, an
adverse resolution would result in an after-tax charge to income of
approximately $2 million. From time to time, the Company is also involved in
litigation and proceedings in the ordinary course of its business. Management
believes that pending litigation matters, except for the Bradco claim, would
not, if decided adversely to the Company, have a material adverse effect on the
Company's financial condition, results of operations or cash flows.

11. CAPITAL STOCK

The Company's Stock Incentive Plan and 1996 Stock Incentive Plan
(collectively referred to as the "Incentive Plans") provide for the possible
issuance of options, phantom shares, stock awards, stock appreciation rights,
performance unit awards or dividend equivalent rights. Options, which
constitute the only issuances under the Incentive Plans, have generally been
granted at fair market value of the Company's common stock on the date of grant.

The weighted average fair value of the stock options granted during 1997
and 1996 was $5.82 and $7.38, respectively. The fair value of options granted
under the Company's stock option plans during 1997 and 1996 were estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions used: no dividend yield, expected
volatility of approximately 43%, risk-free interest rate of 6.4% and expected
life of 5.2 years. The following table summarizes the Company's Incentive Plans
stock option activity:

-29-

<PAGE>

WEIGHTED
AVERAGE
EXERCISE OPTION
PRICE SHARES PRICE
-------- ------ -----
<S> <C> <C> <C>

Outstanding at November 1, 1994 . . . . . . . 1,128,647 $0.95- $17.50

Granted . . . . . . . . . . . . . . . . . . . 188,412 9.50- 16.25

Exercised . . . . . . . . . . . . . . . . . . (99,552) 0.95- 4.03

Canceled . . . . . . . . . . . . . . . . . . . (33,250) 3.08- 16.00
---------

Outstanding at October 31, 1995 . . . . . . . $ 3.95 1,184,257 0.95- 17.50

Granted . . . . . . . . . . . . . . . . . . . 11.92 371,594 10.00- 12.25

Exercised . . . . . . . . . . . . . . . . . . 1.08 (447,963) 0.95- 7.11

Canceled . . . . . . . . . . . . . . . . . . . 13.69 (31,100) 1.42- 16.25
------- ---------

Outstanding at October 31, 1996 . . . . . . . 7.59 1,076,788 0.95- 17.50

Granted . . . . . . . . . . . . . . . . . . . 14.91 312,260 5.38- 17.88

Exercised . . . . . . . . . . . . . . . . . . 3.83 (254,302) 0.95- 16.25

Canceled . . . . . . . . . . . . . . . . . . . 14.40 ( 21,208) 9.50- 16.25
------- ---------

Outstanding at October 31, 1997 . . . . . . . $ 10.38 1,113,538 $0.95- $17.88
------- ---------
------- ---------
Exercisable at October 31, 1997 . . . . . . . $ 6.24 472,237 $0.95- $17.88
------- ---------
------- ---------

</TABLE>

Summary of stock options outstanding at October 31, 1997:

WEIGHTED
AVERAGE WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE
EXERCISE OF CONTRACTUAL EXERCISE
PRICES OPTIONS OUTSTANDING LIFE (YEARS) PRICE
------- ------------------- ------------- --------

$ 0.95-$ 1.42 202,596 4.0 $ 0.98
$ 3.08-$ 7.11 95,979 5.8 4.16
$ 9.50-$14.00 511,436 8.6 12.20
$ 14.13-$17.88 303,527 9.0 15.54
--------- ------

1,113,538 $10.38
--------- ------
--------- ------

A Non-Management Directors Plan (the "Directors Plan") provides for the
issuance of up to 25,000 options to purchase shares at an exercise price equal
to fair market value of the Company's common stock on date of grant. At October
31, 1997, options to purchase 15,000 shares were outstanding, and 13,002 options
were exercisable. During 1997, 9,000 options were granted to non-management
directors at less than fair market value of the Company's common stock and
$63,000 in compensation expense has been recorded. The options generally vest
over three- to five-year periods and expire within ten years of grant date.

At October 31, 1997, 1,122,186 and 10,000 additional options were available
for future grant under the Incentive and Directors' Plans, respectively, and
2,260,734 shares of common stock were reserved for issuance upon the exercise of
outstanding options or future option grants under all plans.

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", and related Interpretations in accounting for
its stock option plans. Accordingly, no compensation expense has been
recognized for the Company's stock option plans, except as noted above, since
the exercise price of the Company's stock option grants was the fair market
value of the underlying stock on the date of grant.

-30-
<PAGE>

The Company has adopted the pro forma disclosure features of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). As required by SFAS No. 123, pro forma
information regarding net income and earnings per share has been determined as
if the Company had accounted for its employee stock options granted subsequent
to November 1, 1995, using the fair value method prescribed by SFAS No. 123.
Pro forma disclosures for 1997 and 1996 are presented below. Because the SFAS
No. 123 method of accounting has not been applied to options granted prior to
November 1, 1995, the pro forma effect will not be fully reflected until 2000.

YEAR ENDED OCTOBER 31,
----------------------
1997 1996
---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net income:
As reported $11,319 $11,824
Pro forma $10,585 $11,478

Earnings per share:
As reported $ 1.20 $ 1.28
Pro forma $ 1.13 $ 1.25

During fiscal 1995, the Company's board of directors authorized the
repurchase of up to 750,000 shares of the Company's common stock. Through
October 31, 1997, the Company had repurchased 440,521 shares of the Company's
common stock at an average price per share of $9.75.

During fiscal 1995, the Company adopted an Employee Stock Purchase Plan
under which employees are granted a right to purchase shares of the Company's
common stock. The purchase price is 85% of the fair market value of the stock
at the end of the quarter. Shares were purchased at prices ranging from $11.58
to $15.51 during fiscal 1997 and $7.44 to $10.73 during fiscal 1996. At October
31, 1997 and 1996, there were 169,111 and 182,152 shares of common stock
reserved for purchase under the plan, respectively.

On August 19, 1997, the Board of Directors of the Company adopted a
shareholders rights plan and declared a dividend distribution of one Right for
each outstanding share of the Company's common stock to stockholders of record
at the close of business on September 10, 1997. Each Right entitles the
registered holder to purchase from the Company 1/10,000 of a share of Series A
Preferred Stock (the "Preferred Stock") at a purchase price of $72 per 1/10,000
of a share, subject to adjustment. Initially, the Rights will be attached to
all Common Stock certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights will separate from
the Common Stock upon the earlier of (i) ten business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired or obtained the right to acquire beneficial
ownership of 15% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date") or (ii) ten business days (or such later date as the Board of
Directors determines) following the commencement of a tender or exchange offer
that would result in a person or group beneficially owning 15% or more of such
outstanding shares of Common Stock. The date the Rights separate is referred to
as the "Distribution Date".

In the event that any person or group becomes an Acquiring Person, each
holder of a Right (other than the Acquiring Person and certain related parties)
will thereafter have the right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a value equal to two times the Purchase Price of the Right. At any time after
any person or group becomes an Acquiring Person and prior to the acquisition by
such person or group of 50% or more of the outstanding shares of Common Stock,
the Board of Directors of the Company may, without payment of the Purchase Price
by the holder, exchange the rights (other than Rights owned by such person or
group, which will become void), in whole or in part, for shares of Common Stock
at an exchange ratio of one-half the number of shares of Common Stock (or in
certain circumstances, Preferred Stock) for which a Right is exercisable
immediately prior to the time of the Company's decision to exchange the Rights
(subject to adjustment). At any time until ten business days following the
Stock Acquisition Date, the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (payable in cash, shares of Common Stock or
other considerations deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price. The rights expire on September 10, 2007.

-31-

<PAGE>

12. EMPLOYEE BENEFITS

The Company has 401(k) plans that cover substantially all employees.
The Company's funding policy is to match the employee's contributions up to
4% of the employee's base salary, not to exceed certain allowable limits.
Employees vest in Company contributions evenly over four years. The
Company's contributions for the years ended October 31, 1997, 1996 and 1995
were $916,000, $907,000 and $586,000, respectively.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial
instruments is made in accordance with Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments."
The estimated fair value amounts have been determined by the Company, using
available market information and appropriate valuation methodologies.
However, considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The effect of using different market
assumptions and/or estimation methodologies may be material to the estimated
fair value amounts.

The carrying amount and fair value of certain financial instruments consist
of the following at October 31:

<TABLE>
<CAPTION>
1997 1996
------------------------ ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------ ----- ------ -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents. . . . . . . $ 899 $ 899 $ 5,078 $ 5,078
Accounts receivable, net . . . . . . . 115,687 115,687 92,932 92,932
Notes receivable held for sale, net. . 16,462 16,825 - -

Liabilities:
Accounts payable . . . . . . . . . . . 66,792 66,792 54,839 54,839
Current maturities of debt . . . . . . 973 973 790 790
Long-term debt . . . . . . . . . . . . 79,480 79,997 52,078 52,078
Warehouse line of credit . . . . . . . 12,189 12,189 - -
</TABLE>

CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND
CURRENT MATURITIES OF DEBT - The carrying amounts of these items approximate
their fair value due to their short-term nature or are the amounts payable on
demand.

WAREHOUSE LINE OF CREDIT AND LONG-TERM DEBT - Interest rates that are
currently available to the Company for issuance of debt with similar terms
and remaining maturities are used to estimate fair value of debt.

14. CONSULTING AGREEMENTS

The Company has an agreement expiring in December 1998 with an affiliate
of a major shareholder for financial and management consulting services to be
provided to the Company. This agreement, executed in November 1996, amended
and superseded prior consulting agreements with the Company's operating
subsidiaries. Fees under these agreements with the Company and its operating
subsidiaries for the years ended October 31, 1997, 1996 and 1995, totaled
$280,000, $426,000 and $338,000, respectively.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

-32-
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The sections entitled "Director and Nominee Information", "Executive
Officers of the Company" and "Section 16(a) Beneficial Owner Reporting
Compliance" appearing in the Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held on March 3, 1998 sets forth certain
information with respect to the directors and executive officers of the
Company and is incorporated herein by reference. Certain information with
respect to the executive officers of the Registrant is included elsewhere in
Part I hereof under the caption "Executive Officers of the Registrant".

ITEM 11. EXECUTIVE COMPENSATION

The section entitled "Executive Compensation" appearing in the
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be
held on March 3, 1998, sets forth certain information with respect to the
compensation of management of the Registrant and is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The sections entitled "Principal Shareholders of the Company" and
"Election of Directors" appearing in the Registrant's Proxy Statement for the
Annual Meeting of Shareholders to be held on March 3, 1998, set forth
certain information with respect to the ownership of the Registrant's Common
Stock and are incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The section entitled "Compensation Committee Interlocks and Insider
Participation" appearing in the Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held on March 3, 1998 sets forth certain
information with respect to these matters and is incorporated herein by
reference.

-33-
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) DOCUMENTS INCORPORATED BY REFERENCE OR FILED WITH THIS REPORT;

(1.) FINANCIAL STATEMENTS

The Financial Statements of the Company are listed in Item 8 of
Part II.

(2.) FINANCIAL STATEMENT SCHEDULE

Independent Auditors' Report on Financial Statement Schedule.

Schedule II -- Valuations and Qualifying Accounts

The other schedules have been omitted because they are inapplicable.

(3.) EXHIBITS INCORPORATED BY REFERENCE OR FILED WITH THIS REPORT

The exhibits listed below are filed with or incorporated by reference
into this Annual Report on Form 10-K. The exhibits which are denominated
with an asterisk (*) were previously filed as part of, and are hereby
incorporated by reference from, the Company's Registration Statement on Form
S-1 (No. 33-75054) filed with the Commission on February 8, 1994 and
effective on March 24, 1994. Other exhibits denominated with numbered
footnotes are incorporated by reference to the other filings with the
Commission set forth below. Unless otherwise indicated, the exhibit number
corresponds to the exhibit number incorporated by reference. ITEMS LISTED IN
BOLDFACE CONSTITUTE MANAGEMENT CONTRACTS OR COMPENSATORY PLANS OR ARRANGEMENTS.

2.1 -- Exchange Agreement dated as of February 16, 1994 among
Cameron Ashley Inc., Cameron, Ashley, the
shareholders and option holders of Cameron and Ashley
and William A. Davies.*

3.1 -- Amended and Restated Articles of Incorporation.*

3.2 -- Amended and Restated Bylaws.*

4.1 -- See Articles II, III, IV of the Amended and Restated
Articles of Incorporation filed as Exhibit 3.1 and
Articles 2, 7, 8 and 9 of the Amended and Restated
Bylaws filed as Exhibit 3.2.

10.1 -- Intentionally omitted.

10.2 -- Intentionally omitted.

10.3 -- Intentionally omitted.

10.4 -- CAMERON ASHLEY INC. STOCK INCENTIVE PLAN.*

10.5 -- FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT.*

10.6 -- CAMERON ASHLEY INC. NON-MANAGEMENT DIRECTORS' STOCK
OPTION PLAN.*

10.6.1 -- TECHNICAL AMENDMENT TO CAMERON ASHLEY INC. NON-
MANAGEMENT DIRECTORS' STOCK OPTION PLAN.(2)

10.7 -- Intentionally omitted.

10.7.1 -- EMPLOYMENT AGREEMENT DATED SEPTEMBER 1, 1996 BETWEEN
WM. CAMERON & CO. AND RONALD R. ROSS.(6)

10.8 -- Intentionally omitted.

-34-
<PAGE>

10.8.1 -- EMPLOYMENT AGREEMENT DATED SEPTEMBER 1, 1996 BETWEEN
ASHLEY ALUMINUM, INC. AND WALTER J. MURATORI.(6)

10.9 -- EMPLOYMENT AGREEMENT DATED DECEMBER 1, 1997 BETWEEN WM.
CAMERON & CO. AND JOHN H. BRADBERRY.

10.10 -- EMPLOYMENT AGREEMENT DATED DECEMBER 1, 1997 BETWEEN
ASHLEY ALUMINUM, INC. AND C. STEVEN GAFFNEY.

10.11 -- FORM OF INDEMNIFICATION AGREEMENT BETWEEN THE COMPANY
AND EACH OF ITS DIRECTORS.*

10.11.1 -- FORM OF INDEMNIFICATION AGREEMENT BETWEEN THE COMPANY
AND EACH OF ITS EXECUTIVE OFFICERS WHO ARE NOT
DIRECTORS OF THE COMPANY.(1)

10.12 -- Intentionally omitted.

10.13 -- Intentionally omitted.

10.14 -- Amended and Restated Agreement for Consulting Services
dated November 1, 1996 among the Company, Cameron,
Ashley and CGW Southeast Management Company.(6)

10.15 -- Intentionally omitted.

10.16 -- Intentionally omitted.

10.17 -- CAMERON ASHLEY INC. 1995 QUALIFIED EMPLOYEE STOCK
PURCHASE PLAN.(4)

10.18 -- Intentionally omitted.

10.18.1 -- Intentionally omitted.

10.18.2 -- Second restated Credit Agreement dated January 29, 1997
among the Company, CABP Canada, Inc., NationsBank of
Texas, National Association, as Agent and Issuing
Bank, ABN AMRO Bank, N.V., as Co-Agent, Canadian
Imperial Bank of Commerce, as Canadian Issuing Bank
and Canadian Agent, and other Lenders.(7)

10.18.3 -- First Amendment to Second Restated Credit Agreement
dated May 23, 1997 among the Company, CABP Canada,
Inc., NationsBank of Texas, National Association, as
Agent and Issuing Bank, ABN AMRO Bank, N.V., as
Co-Agent, Canadian Imperial Bank of Commerce, as
Canadian Issuing Bank and Canadian Agent, and other
Lenders.(7)

10.18.4 -- Second Amendment to Second Restated Credit Agreement
dated January 22, 1998 among the Company, ABP Canada,
Inc., NationsBank of Texas, National C Association,
as Agent and Issuing Bank, ABN AMRO Bank, N.V.,
as Co-Agent, Canadian Imperial Bank of Commerce, as
Canadian Issuing Bank and Canadian Agent, and other
Lenders.(7)

10.19 -- Form of Note Purchase Agreement between the Company and
various Purchasers dated as of April 1, 1996.(5)

10.19.1 -- First Amendment to Note Purchase Agreements dated as of
January 15, 1997 between the Company and various
Purchasers.

10.20 -- CHANGE IN CONTROL EMPLOYMENT AGREEMENT BETWEEN THE
COMPANY AND RONALD R. ROSS DATED AS OF JUNE 1,
1996.(5)

10.21 -- CHANGE IN CONTROL EMPLOYMENT AGREEMENT BETWEEN THE
COMPANY AND WALTER J. MURATORI DATED AS OF JUNE 1,
1996.(5)

-35-

<PAGE>

10.22 -- Credit Agreement dated December 3, 1996 between Cameron
Ashley Financial Services, Inc., as Borrower, and
Bank One, Texas, N.A., as Lender.(6)

10.22.1 -- First Amendment to Credit Agreement dated as of
December 3, 1997 between Cameron Ashley Financial
Services, Inc. and Bank One, Texas, N.A.

10.23 -- CAMERON ASHLEY BUILDING PRODUCTS, INC. 1996 STOCK
INCENTIVE PLAN.(6)

10.23.1 -- FIRST AMENDMENT TO THE CAMERON ASHLEY BUILDING
PRODUCTS, INC. 1996 STOCK INCENTIVE PLAN, DATED
DECEMBER 11, 1996.(6)

10.24 -- EMPLOYMENT AGREEMENT DATED OCTOBER 13, 1997 BETWEEN WM.
CAMERON & CO. AND JOHN S. DAVIS.

11.1 -- Statement regarding computation of per share earnings.

21.1 -- List of Subsidiaries of the Registrant.

23.1 -- Consent of Deloitte & Touche LLP.
__________________

(1) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-1, (No. 33-88778) filed with the
Commission on January 26, 1995 and effective on March 2, 1995.

(2) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended January 31, 1995, filed
with the Commission on March 17, 1995.

(3) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1995, filed
with the Commission on January 26, 1996.

(4) Incorporated by reference to Exhibit 4.2 filed with the Company's
Registration Statement on Form S-8 (No. 33-90782) filed with the
Commission on March 30, 1995.

(5) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended April 30, 1996. filed
with the Commission on June 7, 1996.

(6) Incorporated by reference to the exhibited filed with the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1996 filed with
the Commission on January 29, 1997.

(7) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended April 30, 1997, as
filed with the Commission on June 16, 1997.

(B) CURRENT REPORTS ON FORM 8-K:

No Current Reports on Form 8-K were filed by the Registrant during the
fourth quarter of the fiscal year ended October 31, 1997.

The Index to Exhibits filed or incorporated by reference pursuant Item 601
of Regulation S-K and the Exhibits being filed with this Report are
included following the signature pages to this Form 10-K.

(D) FINANCIAL STATEMENTS OF SUBSIDIARIES OR AFFILIATES:

Not applicable.

-36-

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized, on
January 29, 1998.

CAMERON ASHLEY BUILDING PRODUCTS, INC.

By: /s/ F. Dixon McElwee
-----------------------------------------
F. Dixon McElwee
Vice President - Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints F. Dixon McElwee and John S. Davis, jointly
and severally, his attorneys-in-fact, each with full power of substitution,
for him in any and all capacities, to sign any amendments to this Annual
Report on Form 10-K and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report on Form 10-K has been signed by the following persons on behalf
of the Registrant and in the capacities indicated on January 29, 1998.

SIGNATURE TITLE

/s/ Ronald R. Ross Chairman of the Board and Chief Executive
----------------------------- Officer (Principal Executive Officer)
Ronald R. Ross

/s/ Walter J. Muratori President and Director
-----------------------------
Walter J. Muratori

/s/ F. Dixon McElwee Vice President - Chief Financial Officer
----------------------------- (Principal Financial Officer)
F. Dixon McElwee

/s/ John H. Bradberry Vice President - Chief Accounting Officer
----------------------------- (Principal Accounting Officer)
John H. Bradberry

/s/ J. Veronica Biggins Director
-----------------------------
J. Veronica Biggins

Director
-----------------------------
Richard L. Cravey

/s/ Harry K. Hornish Director
-----------------------------
Harry K. Hornish

-37-

<PAGE>

/s/ Allen J. Keesler, Jr. Director
-----------------------------
Allen J. Keesler, Jr.

Director
-----------------------------
Donald S. Huml

/s/ Charles C. Schoen, III Director
-----------------------------
Charles C. Schoen, III

/s/ Alan K. Swift Director
-----------------------------
Alan K. Swift

Director
-----------------------------
Edwin A. Wahlen, Jr.

-38-

<PAGE>

INDEX TO FINANCIAL STATEMENT SCHEDULE

Page
----

Independent Auditors' Report on Financial Statement Schedule S-2

Schedule II -- Valuation and Qualifying Accounts S-3

S-1

<PAGE>

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Shareholders of Cameron Ashley Building
Products, Inc.:

We have audited the consolidated financial statements of Cameron Ashley
Building Products, Inc. and subsidiaries as of October 31, 1997 and 1996 and
for each of the three years in the period ended October 31, 1997 and have
issued our report thereon dated December 16, 1997 (except the last paragraph
of Note 7, which is as of January 22, 1998). Our audits also included the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. This
financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

DELOITTE & TOUCHE LLP
Dallas, Texas
December 16, 1997

S-2

<PAGE>

SCHEDULE II

CAMERON ASHLEY BUILDING PRODUCTS, INC.

VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

<TABLE>
<CAPTION>
Balance at Charges in Balance at
Beginning Costs and Other End of
Description of Period Expenses Additions Deductions Period
----------- --------- -------- --------- ---------- ------
<S> <C> <C> <C> <C> <C>

Allowance for doubtful accounts:
Year Ended October 31, 1995 $2,052 2,203 333(1) 2,007 $2,581

Year Ended October 31, 1996 $2,581 2,257 0 2,119 $2,719

Year Ended October 31, 1997 $2,719 3,128 146(1) 2,498 $3,495

</TABLE>

(1) Amount represents the allowance for doubtful accounts of acquired
businesses as of the date of acquisition.

<TABLE>

<S> <C> <C> <C> <C> <C>
Allowance for loan losses:
Year Ended October 31, 1997 $ 0 341 0 157 $ 184

</TABLE>

S-3

<PAGE>

INDEX TO EXHIBITS

(includes only exhibits not incorporated by reference - see item 14 for
incorporated exhibits)

ITEMS LISTED IN BOLDFACE CONSTITUTE MANAGEMENT CONTRACTS OR COMPENSATORY PLANS
OR ARRANGEMENTS.

EXHIBIT NUMBER DESCRIPTION

10.9 -- EMPLOYMENT AGREEMENT DATED DECEMBER 1, 1997 BETWEEN WM.
CAMERON & CO. AND JOHN H. BRADBERRY.

10.10 -- EMPLOYMENT AGREEMENT DATED DECEMBER 1, 1997 BETWEEN
ASHLEY ALUMINUM, INC. AND C. STEVEN GAFFNEY.

10.18.4 -- Second Amendment to Second Restated Credit Agreement
dated January 22, 1998 among the Company, CABP
Canada, Inc., NationsBank of Texas, National
Association, as Agent and Issuing Bank, ABN AMRO
Bank, N.V., as Co-Agent, Canadian Imperial Bank
of Commerce, as Canadian Issuing Bank and Canadian
Agent, and other Lenders.

10.19.1 -- First Amendment to Note Purchase Agreements dated as of
January 15, 1997 between the Company and various
Purchasers.

10.22.1 -- First Amendment to Credit Agreement dated as of
December 3, 1997 between Cameron Ashley Financial
Services, Inc. and Bank One, Texas, N.A.

10.24 -- EMPLOYMENT AGREEMENT DATED OCTOBER 13, 1997 BETWEEN WM.
CAMERON & CO. AND JOHN S. DAVIS.

11.1 -- Statement regarding computation of per share earnings.

21.1 -- List of Subsidiaries of the Registrant.

23.1 -- Consent of Deloitte & Touche LLP.

<PAGE>

EXHIBIT 10.9

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made this 1st day of December, 1997, between WM.
CAMERON & CO., a Georgia corporation dba Cameron Ashley Building Products
(the "Company"), and JOHN H. BRADBERRY, a resident of the State of Texas
("Employee").

BACKGROUND

The Company desires to employ Employee on the terms and conditions set forth
below. Employee desires to accept employment on the terms and conditions set
forth below.

AGREEMENT

In consideration of the employment and continued employment of Employee
by the Company, the premises, and the mutual agreements hereinafter set
forth, the parties agree:

1. DEFINITIONS. The following terms used herein shall have the
definitions set forth below:

(a) "Business" or "Business of the Company" means the business of the
wholesale distribution, sale and marketing of building materials, building
supplies and mill work.

(b) "Cause" means conduct amounting to fraud or dishonesty against
the Company; Employee's violation of Sections 2(a) or (b) hereof, or any of
the Company's work rules or policies, or absences from work without a
reasonable excuse, if the Chairman and Chief Executive Officer notifies
Employee of such violation or absence in writing and Employee fails to cure
such violation or absenteeism within five (5) days after written notice has
been given, provided that written notice relating to such violation or
absenteeism shall only be given once as it relates to a particular manner of
conduct; intoxication with alcohol or drugs while on Company business during
regular business hours; a conviction or plea of guilty or NOLO CONTENDERE to
a felony or a crime involving dishonesty against the Company; or Employee's
failure to observe the requirements of Sections 2(c), 5 and 6 hereof.

(c) "Disability" means (i) the inability of Employee to perform
the duties of Employee's employment due to physical or emotional incapacity
or illness, where such inability is expected to be of long-continued and
indefinite duration or (ii) Employee shall be entitled to (x) disability
retirement benefits under the federal Social Security Act or (y) recover
benefits under any long-term disability plan or policy maintained by the
Company. In the event of a dispute, the determination of Disability shall be
made reasonably by the Board of Directors of the Company and shall be
supported by advice of a physician competent in the area to which such
Disability relates.

(d) "Effective Date" means the date hereof.

<PAGE>

2. TERMS OF ENGAGEMENT; DUTIES

(a) The Company hereby employs Employee, commencing on the
Effective Date, and Employee hereby accepts employment by the Company subject
to the terms and conditions hereof. Employee is engaged with the title and
functions of Executive Vice President and Chief Accounting Officer of the
Company and of Cameron Ashley Building Products, Inc. (the "Parent").
Employee shall report to, shall have the title assigned by, and shall perform
the duties assigned by the Chairman of the Board and Chief Executive Officer
in connection with the conduct of the Business of the Company. Nothing
herein shall preclude the Chairman and Chief Executive Officer of the Company
from changing the Employee's title and duties if the Chairman and Chief
Executive Officer in his reasonable judgment that such change is in the
Company's best interests.

(b) Throughout the term of this Agreement, Employee shall:

(i) devote all of Employee's business effort, time, energy and
skill (reasonable vacations and reasonable absences due to illness
excepted) to the duties of Employee's employment hereunder assigned by the
Chairman and Chief Executive Officer of the Company;

(ii) faithfully, loyally, and industriously perform such duties,
subject to the control and supervision of the Chairman and Chief Executive
Officer of the Company; and

(iii) diligently follow and implement all lawful management
policies and decisions of the Company that are communicated to Employee.

(c) During the term of this Agreement, Employee shall not be
engaged (whether or not during normal business hours) in any other business
or professional activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage; but this shall not be construed as
preventing Employee from (i) investing his personal assets in businesses
which do not compete with the Company in such form or manner as will not
require any services on the part of Employee in the operation or the affairs
of the companies in which such investments are made and in which his
participation is solely that of an investor, (ii) purchasing securities in
any corporation whose securities are regularly traded provided that such
purchase shall not result in his collectively owning beneficially at any time
five percent (5%) or more of the equity securities of any corporation engaged
in a business competitive to that of the Company, or (iii) participating in
conferences, preparing or publishing papers or books or teaching so long as
the Employee's supervisor approves of such activities prior to Employee's
engaging in them.

3. COMPENSATION.

(a) In consideration of the services rendered by Employee pursuant to
this Agreement, the Company shall provide the following:

<PAGE>

(i) A base salary of One Hundred Sixty Thousand Dollars
($160,000) per annum (the "Base Salary") which Base Salary will be reviewed
periodically and may be increased by the Company from time to time. The
Base Salary shall be paid in accordance with the Company's standard payroll
practices in effect from time to time, and shall be subject to such
deductions and withholdings as are required by law or by policies of the
Company.

(ii) Reimbursement for all reasonable business expenses
(including a $600.00 per month car allowance) incurred by Employee in
connection with the Business of the Company subject to compliance with the
expense reimbursement policies established by the Company and in sufficient
detail to comply with Internal Revenue Service Regulations.

(b) Employee shall be eligible to be considered for an annual cash
performance bonus, which may consist of an amount of up to one hundred
percent (100%) of the Base Salary in the applicable year based on the
attainment of performance objectives established by the Board of Directors of
the Company and the Parent in good faith and Employee's contributions to the
attainment of those objectives, and shall be in such amount and payable in
such manner and on such terms as are determined by the Board of Directors of
the Company and the Parent. Nothing contained in this subsection (b) shall
obligate the Company to pay a bonus to Employee, unless the Board of
Directors of the Company and the Parent determines to award such a bonus to
Employee.

(c) Employee shall have the right to participate in (i) any
insurance plans maintained by the Company from time to time to the extent
that Employee's position, tenure, salary, age, health and other
qualifications make him eligible to participate, and (ii) such other fringe
benefit plans or programs as are provided to the other officers of the
Company, provided that the Company shall not be required to adopt or continue
any insurance plans or fringe benefit plans or programs.

(d) Employee shall receive options to purchase 30,000 shares of
common stock of the Parent pursuant to the terms of a Non-Qualified Stock
Option Agreement, subject to and effective as of the date of approval
thereof by the Compensation Committee of the Parent. Such options will have
a term of ten years and will vest in one-third increments over three years
from the date of grant and the exercise price of such options shall be the
fair market value of the Parent's Common Stock as of the date of grant.

(e) The remuneration and benefits set forth in this Section 3
shall be the only compensation payable to Employee with respect to his
employment hereunder, and Employee shall not be entitled to receive any
compensation in addition to that set forth in this Section 3 for any services
rendered by him in any capacity to the Company or any affiliated corporation
unless agreed to in writing by the Company or such affiliated corporation.

4. TERM AND TERMINATION OF THIS AGREEMENT. The term of employment of
Employee pursuant to this Agreement shall commence on the Effective Date and
shall continue for a term of three (3) years, or until sooner terminated as
provided herein.

<PAGE>

(a) Employee's employment hereunder may be terminated:

(i) By the Company, upon the death or Disability of
Employee;

(ii) By the Company, immediately for Cause;

(iii) By Employee upon ninety (90) days prior written notice
to the Company;

(iv) By mutual agreement between Employee and the Company;
and

(v) By the Company, without Cause.

(b) In the event the Company terminates the employment of the
Employee without Cause, then, during the twelve (12) month period immediately
following the effective date of the termination of his employment, the
Employee shall continue to receive his base salary under this Agreement as in
effect on the date that his employment terminates. The payments described in
this Section 4(b) are hereinafter referred to as "Severance Pay," and shall
be made to the Employee without any obligation on his part to render services
hereunder after the effective date of the termination of Employee's
employment, in full settlement of all of the obligations of the Company
hereunder. No Severance Pay shall be paid to the estate or personal
representative of the Employee in the event of his death during the term of
this Agreement.

(c) Except as set forth above, upon termination of Employee's
employment hereunder pursuant to this Section 4, the Company shall have no
further obligation to Employee or his personal representative with respect to
remuneration due under this Agreement, except for Base Salary earned but
unpaid at date of termination; provided however, Employee's covenants in
Sections 5 and 6 of this Agreement shall survive the termination of
Employee's employment hereunder. If Employee fails to observe the
requirements of Sections 5 or 6 hereof, then the Company shall have no
obligation to pay any portion of the Base Salary remaining unpaid to Employee
and the Company shall have no obligation to pay any portion of the Severance
Pay. It is understood that Employee's coverage under the Company's
disability, accidental death or dismemberment and group life insurance plans
shall cease as of the date of termination.

5. OWNERSHIP, NON-DISCLOSURE, AND NON-USE OF TRADE SECRETS.

(a) The following terms used in this Section 5 shall have the
definitions set forth below:

(i) "Excluded Information" means any data or information that is
a Trade Secret hereunder (1) that has been voluntarily disclosed to the
public by the Company or has become generally known to the public (except
where such public disclosure has been made by or through the Employee or by
a third person or entity with the knowledge of the Employee without
authorization by the Company); (2) that has been independently developed
and disclosed by parties other than the Employee or the Company to the
Employee or to the public generally without a breach of any obligation of
confidentiality by

<PAGE>

any such person running directly or indirectly to the Company; or (3)
that otherwise enters the public domain through lawful means.

(ii) "Trade Secrets" means information which derives economic
value, actual or potential, from not being generally known and not being
readily ascertainable to other persons who can obtain economic value from
its disclosure or use and which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy or
confidentiality. Trade Secrets may include either technical or
non-technical data, including without limitation, (1) any useful process,
machine, chemical formula, composition of matter, or other device which
(A) is new or which Employee has a reasonable basis to believe may be new,
(B) is being used or studied by the Company and is not described in a
printed patent or in any literature already published and distributed
externally by the Company, and (C) is not readily ascertainable from
inspection of a product of the Company; (2) any engineering, technical, or
product specifications including those of features used in any current
product of the Company or to be used, or the use of which is contemplated,
in a future product of the Company; (3) any application, operating system,
communication system, or other computer software (whether in source or
object code) and all flow charts, algorithms, coding sheets, routines,
subroutines, compilers, assemblers, design concepts, test data,
documentation, or manuals related thereto, whether or not copyrighted,
patented or patentable, related to or used in the Business of the Company;
or (4) information concerning the customers, suppliers, products, pricing
strategies of the Company, personnel assignments and policies of the
Company, or matters concerning the financial affairs and management of the
Company or any parent, subsidiary, or affiliate of the Company; provided
however, that Trade Secrets shall not include any Excluded Information.

(b) Employee acknowledges and agrees that all Trade Secrets, and
all physical embodiments thereof, are confidential to and shall be and remain
the sole and exclusive property of the Company and that any Trade Secrets
produced by the Employee during the period of Employee's employment by the
Company shall be considered "work for hire" as such term is defined in 17
U.S.C. Section 101, the ownership and copyright of which shall be vested
solely in the Company. Employee agrees (i) immediately to disclose to the
Company all Trade Secrets developed in whole or part by Employee during the
term of Employee's employment by the Company, and (ii) at the request and
expense of the Company, to do all things and sign all documents or
instruments reasonably necessary in the opinion of the Company to eliminate
any ambiguity as to the rights of the Company in such Trade Secrets
including, without limitation, providing to the Company Employee's full
cooperation in any litigation or other proceeding to establish, protect, or
obtain such rights. Upon request by the Company, and in any event upon
termination of Employee's employment by the Company for any reason, Employee
shall promptly deliver to the Company all property belonging to the Company
including, without limitation, all Trade Secrets (and all embodiments
thereof) then in Employee's custody, control, or possession.

<PAGE>

confidentiality contained in this Agreement shall apply during Employee's
employment by the Company and (i) with respect to all Trade Secrets
consisting of scientific or technical data, at any and all times after
expiration or termination (for whatever reason) of such employment; and (ii)
with respect to all other Trade Secrets, for a period of two (2) years after
such expiration or termination, unless a longer period of protection is
provided by law.

6. NONCOMPETE; NONSOLICITATION COVENANTS.

(a) The following terms used in this Section 6 shall have the
definitions set forth below:

(i) "Affiliate" means any person or entity directly or
indirectly controlling, controlled by, or under common control with
Employee. As used herein, the word "control" means the power to direct the
management and affairs of a person.

(ii) "Area" means the United States of America and all provinces
of Canada.

(iii) "Competing Enterprise" means any person or any business
organization of whatever form, engaged directly within the Area in the
Business of the Company.

(b) Employee covenants that Employee shall, during the term of
this Agreement, and for a period of twelve (12) months following termination
for any reason of Employee's employment by the Company, observe the following
separate and independent covenants:

(i) Neither Employee nor any Affiliate will, without the
prior written consent of the Company, within the Area, either directly or
indirectly, (A) become financially interested in a Competing Enterprise
(other than as a holder of less than five percent of the outstanding voting
securities of any entity whose voting securities are listed on a national
securities exchange or quoted by the National Association of Securities
Dealers, Inc. automated quotation system), or, (B) engage in or be employed
by any Competing Enterprise as a consultant, officer, director, or
executive or managerial employee.

(ii) Neither Employee nor any Affiliate will, without the
prior written consent of the Company, either directly or indirectly, on
Employee's own behalf or in the service or on behalf of others, solicit,
divert, or appropriate, or attempt to solicit, divert, or appropriate, to
any Competing Enterprise within the Area, any person or entity whose
account with the Company was serviced by or under Employee's direction or
supervision during the term of his employment with the Company.

(iii) Neither Employee nor any Affiliate will, without the
Company's prior written consent, either directly or indirectly, on
Employee's own behalf or in the service or on behalf of others, solicit,
divert, or hire away, or attempt to solicit, divert, or hire away, to any
Competing Enterprise, any person employed by the Company, whether or not
such Employee is a full-time or a temporary Employee of the Company and
whether or not such

<PAGE>

employment is pursuant to written agreement and whether or not such
employment is at will.

7. REMEDIES. Employee acknowledges and agrees that the Company is
engaged in the Business of the Company in and throughout the Area, and that
by virtue of the training, duties, and responsibilities attendant with
Employee's employment by the Company and the special knowledge of the
business and operations of the Company that Employee will have as a
consequence of Employee's employment by the Company, great loss and
irreparable damage would be suffered by the Company if the Employee should
breach or violate any of the terms or provisions of the covenants and
agreements set forth herein. Employee further acknowledges and agrees that
each such covenant and agreement is reasonably necessary to protect and
preserve the interest of the Company. Therefore, in addition to all the
remedies provided at law or in equity, Employee agrees and consents that the
Company shall be entitled to a temporary restraining order and a permanent
injunction to prevent a breach of any of the covenants or agreements of
Employee contained herein and to collect from Employee reasonable attorney's
fees incurred by the Company in the enforcement hereof. The existence of any
claim, demand, action or cause of action of Employee against the Company
shall not constitute a defense to the enforcement by the Company of any of
the covenants or agreements herein whether predicated upon this Agreement or
otherwise, and shall not constitute a defense to the enforcement by the
Company of any of its rights hereunder.

8. GENERAL PROVISIONS.

(a) In the event that any one or more of the provisions, or parts
of any provisions, contained in the Agreement shall for any reason be held to
be invalid, illegal, or unenforceable in any respect by a court of competent
jurisdiction, the same shall not invalidate or otherwise affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed
and shall be construed as a separate and independent covenant and should any
part or provision of any of such covenants be held or declared invalid by any
court of competent jurisdiction, such invalidity shall in no way render
invalid or unenforceable any other part or provision thereof or any other
covenant of the parties not held or declared invalid.

(b) This Agreement and the rights and obligations of the Company
hereunder may be assigned by the Company to any subsidiary of or successor to
the Company, and shall inure to the benefit of, shall be binding upon, and
shall be enforceable by any such assignee, provided that any such assignee
shall agree to assume and be bound by this Agreement. This Agreement and the
rights and obligations of Employee hereunder may not be assigned by Employee.

(c) The waiver by the Company of any breach of this Agreement by
Employee shall not be effective unless in writing, and no such waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.

(d) This Agreement and the rights of the parties hereunder shall
be governed by and construed in accordance with the laws of the State of
Texas.

<PAGE>

(e) This Agreement embodies the entire agreement of the parties
relating to the employment of Employee by the Company. No amendment,
modification extension or renewal of this Agreement shall be valid or binding
upon the Company or Employee unless made in writing and signed by the
parties. All prior understandings and agreements relating to the employment
of Employee by the Company are hereby expressly terminated.

(f) Employee acknowledges and affirms that the employment
agreement between Employee and the Predecessor has been terminated and that
(i) he is not a party to any other employment agreement, (ii) he is not
entitled to any severance benefits arising out of or in connection with his
employment by the Predecessor which may cause the Company to incur any
obligations either to Employee or the Predecessor, and (iii) the only
severance benefits to which he will be entitled are those contained herein.

(g) Any notice, request, demand, or other communication required
to be given hereunder shall be made in writing and shall be deemed to have
been fully given if personally delivered or if mailed by overnight delivery
(the date on which such notice, request, demand, or other communication is
received shall be the date of delivery) to the parties at the following
addresses (or at such other addresses as shall be given in writing by any
party to the other party hereto):

If to Employee:

John Bradberry
5910 Mapleshade
Dallas, Texas 75252

If to Company:

Wm. Cameron & Co. dba Cameron Ashley Building Products
11651 Plano Road
Dallas, Texas 75243
Attention: Ronald R. Ross, Chairman and Chief Executive Officer
Telecopy: (214) 860-5148

(h) This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, and it shall not be
necessary for the same counterpart of this agreement to be signed by all of
the undersigned in order for the agreements set forth herein to be binding
upon all of the undersigned in accordance with the terms hereof.

<PAGE>

IN WITNESS WHEREOF, the Company and Employee have each executed and
delivered this Agreement as of the date first above written.

COMPANY:

WM. CAMERON & CO. dba Cameron Ashley Building Products

By: /s/ Ronald R. Ross
---------------------------------
Name: Ronald R. Ross
Title: Chairman & Chief Executive Officer

EMPLOYEE:

/s/ John H. Bradberry
------------------------------------
John H. Bradberry

<PAGE>

EXHIBIT 10.10

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made effective as of the 1st day of December, 1997,
between ASHLEY ALUMINUM, INC., a Georgia corporation dba CAMERON ASHLEY BUILDING
PRODUCTS (the "Company") and C. STEVEN GAFFNEY, a resident of the State of
Florida ("Employee").

BACKGROUND

The Company desires to employ Employee on the terms and conditions set
forth below. Employee desires to accept employment on the terms and conditions
set forth below.

AGREEMENT

In consideration of the continued employment of Employee by the Company,
the premises, and the mutual agreements hereinafter set forth, the parties
agree:

1. DEFINITIONS. The following terms used herein shall have the
definitions set forth below:

(a) "Business" or "Business of the Company" means the business of
distributing patio and screen enclosure products, vinyl and aluminum building
products, windows, fascia, soffit, fasteners, and other exterior building
products and roll forming aluminum building products.

(b) "Cause" means conduct amounting to fraud or dishonesty against
the Company; Employee's willful violation of Sections 2(a) or (b) hereof, or any
of the Company's work rules or policies or repeated absences from work without a
reasonable excuse, if the Board of Directors of the Parent notifies Employee of
such violation or absence in writing and Employee fails to cure such violation
or absenteeism within five (5) days after written notice has been given,
provided that written notice relating to such violation or absenteeism shall
only be given once as it relates to a particular manner of conduct; intoxication
with alcohol or drugs while on Company business during regular business hours; a
conviction or plea of guilty or NOLO CONTENDERE to a felony or a crime involving
dishonesty against the Company; or Employee's failure to observe the
requirements of Sections 2(c), 5 or 6 hereof.

(c) "Disability" means (i) the inability of Employee to perform the
duties of Employee's employment due to physical or emotional incapacity or
illness, where such inability is expected to be a long-continued and indefinite
duration or (ii) Employee shall be entitled to (x) disability retirement
benefits under the federal Social Security Act or (y) recover benefits under any
long-term disability plan or policy maintained by the Company. In the event of
a dispute, the determination of Disability shall be made by the Board of
Directors of the Company and shall be supported by advice of a physician
competent in the area to which such Disability relates.

(d) "Effective Date" means the date set forth above.

<PAGE>

2. TERMS OF ENGAGEMENT; DUTIES

(a) The Company hereby employs Employee, commencing on the Effective
Date, and Employee hereby accepts employment by the Company subject to the terms
and conditions hereof. Employee is engaged initially with the title and
functions of President and Chief Executive Officer of the Company and Executive
Vice President of the parent company, Cameron Ashley Building Products, Inc.
("Parent"). Employee shall report to and shall perform the duties assigned by
the Board of Directors of the Company and the Parent from time to time, and as
are provided in the Bylaws of the Company and the Parent. Nothing herein shall
preclude the Chairman of the Company from changing the Employee's title and
duties if such officer has concluded in his reasonable judgment that such change
is in the Company's best interests.

(b) Throughout the term of this Agreement, Employee shall:

(i) devote all of Employee's business effort, time,
energy, and skill (reasonable vacations and reasonable absences due to
illness excepted) to the duties assigned by the Board of Directors of the
Company and the Parent;

(ii) faithfully, loyally, and industriously perform such
duties, subject to the control and supervision of the Board of Directors
of the Company and the Parent; and

(iii) diligently follow and implement all lawful management
policies and decisions of the Company and the Parent that are communicated
to Employee.

(c) During the term of this Agreement, Employee shall not be engaged
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage that is contrary to the provisions of Section
2(b)(i) above; provided, however, that this restriction shall not be construed
as preventing Employee from (i) investing his personal assets in businesses
which do not compete with the Company in such form or manner as will not require
any services on the part of Employee in the operation or the affairs of the
companies in which such investments are made and in which his participation is
solely that of an investor or (ii) purchasing securities in any corporation
whose securities are regularly traded provided that such purchase shall not
result in his collectively owning beneficially at any time five (5%) percent or
more of the equity securities of any corporation engaged in a business
competitive to that of the Company.

3. COMPENSATION.

(a) In consideration of the services rendered by Employee pursuant to
this Agreement, the Company shall provide the following:

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<PAGE>

(b) Employee shall be eligible to be considered for an annual cash
performance bonus, which may consist of an amount of up to one hundred percent
(100%) of the Base Salary in the applicable year based on the attainment of
performance objectives established by the Board of Directors of the Company and
the Parent in good faith and Employee's contributions to the attainment of those
objectives, and shall be in such amount and payable in such manner and on such
terms as are determined by the Board of Directors of the Company and the Parent.
Nothing contained in this subsection (b) shall obligate the Company to pay a
bonus to Employee, unless the Board of Directors of the Company and the Parent
determines to award such a bonus to Employee.

(c) The right to participate in any insurance plans maintained by the
Company from time to time to the extent that Employee's position, tenure,
salary, age, health and other qualifications make him eligible to participate,
and such other fringe benefits as are provided to the other senior management
employees of the Company, provided that the Company shall not be required to
adopt or continue any insurance plans or fringe benefits.

(d) Employee shall receive options to purchase 50,000 shares of
common stock of the Parent pursuant to the terms of a Non-Qualified Stock Option
Agreement, subject to and effective as of the date of approval thereof by the
Compensation Committee of the Parent. Such options will have a term of ten
years and will vest in one-fifth increments over five years from the date of
grant and the exercise price of such options shall be the fair market value of
the Parent's Common Stock as of the date of grant.

(e) Employee shall be eligible for an additional grant of options to
purchase Common Stock of the Parent as of the end of the term hereof in such
amount as shall be determined by the Board of Directors of the Parent.

(f) The remuneration and benefits set forth in this Section 3 shall
be the only compensation payable to Employee with respect to his employment
hereunder, and Employee shall not be entitled to receive any compensation in
addition to that set forth in this Section 3 for any services rendered by him in
any capacity to the Company or any affiliated corporation unless agreed to in
writing by the Company or such affiliated corporation.

(a) Employee's employment hereunder may be terminated:

(i) Upon the death or Disability of Employee;

(ii) By the Company, immediately for Cause;

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<PAGE>

(iii) By Employee upon ninety (90) days prior written
notice to the Company;

(iv) By Company immediately upon written notice to Employee;
or

(v) By mutual agreement between Employee and the Company.

(b) Except as set forth below, upon termination of Employee's
employment hereunder pursuant to this Section 4, the Company shall have no
further obligation to Employee or his personal representative with respect to
remuneration due under this Agreement, except for Base Salary earned but unpaid
at date of termination, provided however, Employee's covenants in Sections 5 and
6 of this Agreement shall survive the termination of Employee's employment
hereunder. Upon termination of Employee's employment hereunder pursuant to
Section 4(a)(iv) above, Employee shall be entitled to receive severance pay (the
"Severance Amount") consisting of an amount equal to Employee's then current
annualized Base Salary paid over a twelve (12) month period in accordance with
the Company's standard payroll practices in effect at the time of termination.
If Employee elects to continue coverage on the Company's health plan upon
termination of employment pursuant to Section 4(a)(iv) above, the Company will
pay the monthly premiums for the first twelve months of the eligible
continuation period or until Employee obtains employment and has satisfied any
necessary waiting periods under the new employer's health plan, whichever is
sooner. It is understood that Employee's coverage under the Company's
disability, accidental death or dismemberment and group life insurance plans
cease as of the date of termination. If Employee fails to observe the
requirements of Sections 5 or 6 hereof, then the Company shall have no
obligation to pay any portion of the Severance Amount remaining unpaid to
Employee.

5. OWNERSHIP, NON-DISCLOSURE, AND NON-USE OF TRADE SECRETS.

(a) The following terms used in this Section 5 shall have the
definitions set forth below:

(i) "Excluded Information" means any data or information
that is a Trade Secret hereunder (1) that has been voluntarily
disclosed to the public by the Company or has become generally known
to the public (except where such public disclosure has been made by
or through the Employee or by a third person or entity with the
knowledge of the Employee without authorization by the Company); (2)
that has been independently developed and disclosed by parties other
than the Employee or the Company to the Employee or to the public
generally without a breach of any obligation of confidentiality by
any such person running directly or indirectly to the Company; or (3)
that otherwise enters the public domain through lawful means.

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<PAGE>

printed patent or in any literature already published and distributed
externally by the Company, and (C) is not readily ascertainable from
inspection of a product of the Company; (2) any engineering,
technical, or product specifications including those of features used
in any current product of the Company or to be used, or the use of
which is contemplated, in a future product of the Company; (3) any
application, operating system, communication system, or other computer
software (whether in source or object code) and all flow charts,
algorithms, coding sheets, routines, subroutines, compilers,
assemblers, design concepts, test data, documentation, or manuals
related thereto, whether or not copyrighted, patented or patentable,
related to or used in the Business of the Company; or (4) information
concerning the customers, suppliers, products, pricing strategies of
the Company, personnel assignments and policies of the Company, or
matters concerning the financial affairs and management of the Company
or any parent, subsidiary, or affiliate of the Company; provided
however, that Trade Secrets shall not include any Excluded
Information.

(b) Employee acknowledges and agrees that all Trade Secrets,
and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of the Company and that any Trade
Secrets produced by the Employee during the period of Employee's employment
by the Company shall be considered "work for hire" as such term is defined in
17 U.S.C. Section 101, the ownership and copyright of which shall be vested
solely in the Company. Employee agrees (i) immediately to disclose to the
Company all Trade Secrets developed in whole or part by Employee during the
term of Employee's employment by the Company, and (ii) at the request and
expense of the Company, to do all things and sign all documents or
instruments reasonably necessary in the opinion of the Company to eliminate
any ambiguity as to the rights of the Company in such Trade Secrets
including, without limitation, providing to the Company Employee's full
cooperation in any litigation or other proceeding to establish, protect, or
obtain such rights. Upon request by the Company, and in any event upon
termination of Employee's employment by the Company for any reason, Executive
shall promptly deliver to the Company all property belonging to the Company
including, without limitation, all Trade Secrets (and all embodiments
thereof) then in Employee's custody, control or possession.

(c) Employee agrees that all Trade Secrets of the Company
received or developed by Employee as a result of Employee's employment with
the Company will be held in trust and strictest confidence, that Employee
will protect such Trade Secrets from disclosure, and that Employee will make
no use of such Trade Secrets, except in connection with Employee's employment
hereunder, without the Company's prior written consent. The obligations of
confidentiality contained in this Agreement will apply during Employee's
employment by the Company and (i) with respect to all Trade Secrets
consisting of scientific or technical data, at any and all times after
expiration or termination (for whatever reason) of such employment; and (ii)
with respect to all other Trade Secrets, for a period of two (2) years after
such expiration or termination, unless a longer period of protection is
provided by law.

6. NONCOMPETE; NONSOLICITATION COVENANTS.

(a) The following terms used in this Section 6 shall have the
definitions set forth

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<PAGE>

below:

(ii) "Area" means all of North America.

(iii) "Competing Enterprise" means any person or any
business organization of whatever form, engaged directly or indirectly
within the Area in the Business of the Company.

(b) Employee covenants that Employee shall, during the term of
this Agreement and for a period of one (1) year following the termination, for
whatever reason, of Employee's employment by the Company, observe the following
separate and independent covenants:

(i) Neither Employee nor any Affiliate will, without the
prior written consent of the Company, within the Area, either directly
or indirectly, (A) become financially interested in a Competing
Enterprise (other than as a holder of less than five percent of the
outstanding voting securities of any entity whose voting securities
are listed on a national securities exchange or quoted by the National
Association of Securities Dealers, Inc. automated quotation system),
or (B) engage in or be employed by any Competing Enterprise as a
consultant, officer, director, or executive or managerial employee.

(ii) Neither Employee nor any Affiliate will, without the
prior written consent of the Company, either directly or indirectly,
on Employee's own behalf or in the service or on behalf of others,
solicit, divert, or appropriate, or attempt to solicit, divert, or
appropriate, to any Competing Enterprise within the Area, any person
or entity whose account with the Company was serviced by or under
Employee's direction or supervision during the term of this Agreement.

(iii) Neither Employee nor any Affiliate will, without
the Company's prior written consent, either directly or indirectly, on
Employee's own behalf or in the service or on behalf of others,
solicit, divert, or hire away, or attempt to solicit, divert, or hire
away, to any Competing Enterprise, any person employed by the Company,
whether or not such employee is a full-time or a temporary employee of
the Company and whether or not such employment is pursuant to written
agreement and whether or not such employment is at will.

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<PAGE>

injunction to prevent a breach or contemplated breach of any of the covenants
or agreements of Employee contained herein. The existence of any claim,
demand, action or cause of action of Employee against the Company shall not
constitute a defense to the enforcement by the Company of any of the
covenants or agreements herein whether predicated upon this Agreement or
otherwise, and shall not constitute a defense to the enforcement by the
Company of any of its rights hereunder.

8. GENERAL PROVISIONS.

(a) In the event that any one or more of the provisions, or parts of
any provisions, contained in the Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect by a court of competent
jurisdiction, the same shall not invalidate or otherwise affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part or
provision of any of such covenants be held or declared invalid by any court of
competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.

(b) This Agreement and the rights and obligations of the Company
hereunder may be assigned by the Company to any subsidiary of or successor to
the Company, and shall inure to the benefit of, shall be binding upon, and shall
be enforceable by any such assignee, provided that any such assignee shall agree
to assume and be bound by this Agreement. This Agreement and the rights and
obligations of Employee hereunder may not be assigned by Employee.

(d) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of Florida.
The parties agree that any appropriate state court located in Hillsborough
County, Florida or any Federal Court located in Tampa, Florida shall have
exclusive jurisdiction of any case or controversy arising under or in connection
with this Agreement and shall be a proper forum in which to adjudicate such case
or controversy. The parties consent to the jurisdiction of such courts.

(e) This Agreement embodies the entire agreement of the parties
relating to the employment of Employee by the Company. No amendment or
modification of this Agreement shall be valid or binding upon the Company or
Employee unless made in writing and signed by the parties. All prior
understandings and agreements relating to the employment of Employee by the
Company (including the Prior Agreement) are hereby expressly terminated and
superseded.

(f) Any notice, request, demand, or other communication required to
be given hereunder shall be made in writing and shall be deemed to have been
fully given if personally delivered or if mailed by United States Mail,
certified or registered, postage prepaid, to the parties at the following
addresses (or at such other addresses as shall be given in writing by any party
to the other party hereto):

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<PAGE>

If to Employee:

C. Stephen Gaffney
3206 Chapin Avenue
Tampa, Florida 33611

If to Company:

Ashley Aluminum, Inc. dba Cameron Ashley Building Products
5120 W. Clifton
Tampa, FL 33634

(g) This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, and it shall not be necessary for
the same counterpart of this agreement be signed by all of the undersigned in
order for the agreements set forth herein to be binding upon all of the
undersigned in accordance with the terms hereof.

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<PAGE>

IN WITNESS WHEREOF, the Company and Employee have each executed and
delivered this Agreement as of the date first above written.

COMPANY:

ASHLEY ALUMINUM, INC. dba
Cameron Ashley Building Products

By: /s/ Ronald R. Ross
----------------------------------------------
Ronald R. Ross, Director

Employee:

/s/ C. Steven Gaffney
-------------------------------------------------
C. Steven Gaffney

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<PAGE>

EXHIBIT 10.18.4

SECOND AMENDMENT
TO SECOND RESTATED CREDIT AGREEMENT

This Second Amendment to Second Restated Credit Agreement (this "SECOND
AMENDMENT"), dated as of January 22, 1998, is entered into among Cameron Ashley
Building Products, Inc., a Georgia corporation, Wm. Cameron & Co., a Georgia
corporation, Ashley Aluminum, Inc., a Georgia corporation, CABP, Inc., an
Arizona corporation, Cameron Ashley Canada, Inc., a Canadian corporation,
NationsBank of Texas, National Association, as Issuing Bank and Agent, ABN AMRO
Bank, N.V., as Co-Agent, Canadian Imperial Bank of Commerce, as Canadian Issuing
Bank and Canadian Agent, and each Lender.

BACKGROUND

Borrowers, Agent, Co-Agent, Issuing Bank, Canadian Agent, Canadian Issuing
Bank and Lenders have entered into the Second Restated Credit Agreement dated as
of January 29, 1997 (such agreement, together with all amendments and
restatements thereof, the "CREDIT AGREEMENT"). Borrower has requested that
Lenders, Agent, Issuing Bank, Co-Agent, Canadian Agent and Canadian Issuing Bank
amend the Credit Agreement to, among other things, modify the types of and the
aggregate amount of Investments which can be made and to waive certain existing
Events of Default.

AGREEMENT

NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, Borrowers, Agent,
Co-Agent, Issuing Bank, Canadian Agent, Canadian Issuing Bank, Lenders and
Guarantors covenant and agree as follows:

1. DEFINED TERMS. Capitalized terms used herein and not otherwise defined
herein have the meaning given to them in the Credit Agreement.

2. AMENDMENTS. The Credit Agreement is amended as follows:

(a) SECTION 1.01 is amended by adding the following in alphabetical order:

"CAFS SUBSIDIARY" means any Person 100% of all of the equity
interests (except directors qualifying shares) and voting interests of
which are owned by CAFS.

"FIELD" means Field Marketing, Inc., an Illinois corporation.

"GUARANTEE" means, with respect to any Person which is neither an
Eighty Percent-Owned Subsidiary nor a Wholly-Owned Subsidiary, all
agreements to

<PAGE>

acquire any debt, equity or asset of such Person, guarantee any
obligation of such Person, or maintain the liquidity or net worth of
such Person, and all liabilities resulting from substantive
consolidation, membership in any corporate group or similar equitable
remedy, claims with respect to the breach of any agreement, all damages
and penalties, and any indemnity of any Person.

(b) The definition of "CAFS Liability" is deleted in its entirety and the
following is substituted IN LIEU thereof:

"CAFS LIABILITY" means all obligations and liabilities, whether
now or hereafter existing or acquired, and contingent or matured,
including but not limited to all Debt and Contingent Liabilities, and
all other liabilities, of (a) CAFS and each CAFS Subsidiary, and (b)
Parent related to all obligations and liabilities described in CLAUSE
(a), including but not limited to all agreements to acquire any debt,
equity or asset of CAFS and each CAFS Subsidiary, guarantee any
obligation of CAFS and each CAFS Subsidiary, and maintain the
liquidity or net worth of CAFS and each CAFS Subsidiary, all
liabilities resulting from substantive consolidation, membership in
any corporate group or similar equitable remedy, claims with respect
to the breach of any agreement, all damages and penalties, and any
indemnity of any Person.

For purposes of SECTIONS 4.02, 4.03, 4.05, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 5.05, 5.07, 5.08, 5.09, 5.10, 5.12(a), 5.14, 5.15,
5.16, 5.18, 5.21, 5.23, 6.10(p), 6.12, 7.01(f), 7.01(o), 7.08, and
9.01, each reference to CAFS shall be deemed to include and apply to
each CAFS Subsidiary. Each reference in the Separateness Agreement to
CAFS shall be deemed to include and apply to each CAFS Subsidiary.

(d) SECTION 2.14(c) is deleted in its entirety and the following is
substituted IN LIEU thereof:

(c) No Letter of Credit or Canadian Letter of Credit shall be
issued for the account of or otherwise used for the benefit of CAFS or
any CAFS Subsidiary and no proceeds of any Advance shall be advanced
to CAFS or any CAFS Subsidiary; PROVIDED, Parent may use proceeds of
Domestic Advances to make loans to CAFS for the purposes permitted by
and subject to the limits of SECTION 5.20(b).

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<PAGE>

(e) SECTION 5.09 is amended by deleting CLAUSES (f), (g) and (h) and
substituting the following IN LIEU thereof:

(f) Investments by any of Parent, CA Canada or any Guarantor in
and Guarantees by any of Parent, CA Canada or any Guarantor in respect
of the obligations of any Person which is (both before and after giving
effect to such Investment or Guarantee, as applicable) neither an Eighty
Percent-Owned Subsidiary of nor a Wholly-Owned Subsidiary (including
Field so long as it is neither an Eighty Percent-Owned Subsidiary nor a
Wholly-Owned Subsidiary); PROVIDED, the aggregate amount of all such
Investments and Guarantees by Parent, CA Canada and each Guarantor shall
not exceed at any time $6,000,000; PROVIDED, further, for purposes of
determining compliance with this CLAUSE (f), no revaluation of any
Investment resulting in reduction or increase in value of such
Investment will be given effect, (g) Investments in and transactions
related to CAFS and any CAFS Subsidiary permitted by SECTION 5.20, (h)
the merger or consolidation of Wholly-Owned Subsidiaries of Parent and
CA Canada between themselves or into Parent and CA Canada so long as
Parent and CA Canada is the surviving entity; PROVIDED, CAFS shall not
merge or consolidate with or into any Person and shall not make any
Investment other than (y) making direct and indirect loans to or
acquiring existing loans made to residential consumers to acquire
building materials sold by Parent or CA Canada or a Guarantor for use in
the construction or improvement of personal residences and (z)
Investments described in CLAUSES (a), (b), and (e) through (k) of the
definition of "Restricted Investments", (i) the merger or consolidation
of any other Person with or into Parent or CA Canada so long as Parent
or CA Canada is the surviving entity and no Default or Event of Default
exists prior to or as a result of such merger or consolidation, (j)
Investments in accounts receivable arising in the ordinary course of
business, and (k) CAFS may organize new CAFS Subsidiaries if no Default
or Event of Default exists or results from the creation of any such CAFS
Subsidiary.

(f) SECTION 5.12(c) is deleted in its entirety and the following is
substituted IN LIEU thereof:

(c) CAFS. Parent shall not permit CAFS or any CAFS Subsidiary
to issue, sell or otherwise dispose of any capital stock, or any
options or rights to acquire such capital stock, except for full and
fair consideration. Parent shall not sell, transfer, encumber or
otherwise dispose of any equity interest or ownership interest in CAFS
if after giving effect to any sale of any equity interest in CAFS
Parent owns less than 50% of the voting securities of CAFS or does not
possess the power to direct or cause the direction of management of
policies of CAFS; PROVIDED, Parent may not sell any equity interest in
CAFS unless contemporaneously with such sale Parent and each other
Subsidiary of Parent

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<PAGE>

(other than CAFS and each CAFS Subsidiary) is released of all
liability with respect to CAFS and each CAFS Subsidiary, including
all CAFS Liability.

(g) SECTIONS 5.20(a) and (b) are deleted in their entirety and the
following is substituted IN LIEU thereof:

5.20. CAFS.

(a) No Subsidiary of Parent (other than CAFS or CAFS
Subsidiary), whether now or hereafter existing or acquired, shall
be liable at any time in any manner for any obligation, now or
hereafter existing, of CAFS or any CAFS Subsidiary, including,
but not limited to, by way of any guarantee of obligations of
CAFS or any CAFS Subsidiary, any agreement to acquire any debt or
equity of CAFS or any CAFS Subsidiary, assume any liability or
acquire any asset of CAFS or any CAFS Subsidiary, or maintain the
liquidity or net worth of CAFS or any CAFS Subsidiary, or
substantive consolidation or similar equitable remedy.

(b) Parent shall not be liable at any time for any CAFS
Liability or extend credit to or for the benefit of CAFS or any
CAFS Subsidiary; PROVIDED, Parent may (i) acquire for cash equity
of CAFS (in addition to all equity of CAFS owned by Parent on
December 3, 1996), and (ii) execute and perform under the CAFS
Guaranty, and (iii) make loans to CAFS, or (iv) do any
combination of activities described in CLAUSES (i), (ii) and
(iii); provided, that, the sum of (A) the aggregate gross cash
purchase price of equity acquired on and prior to December 3,
1996 and pursuant to CLAUSE (i), plus (B) the aggregate amount
for which Parent may be liable under the CAFS Guaranty, plus (C)
the aggregate amount paid by Parent and the fair market value of
property of Parent transferred with respect to all other CAFS
Liabilities, plus (D) the aggregate amount of all other
liabilities of Parent in respect of CAFS Liabilities (valued
based on the reasonable determination of Parent (including in
such valuation the probability of any claim maturing) or, if
Agent disagrees with any such determination, based on the
reasonable determination of Agent), plus (E) the aggregate amount
of loans made by Parent to CAFS, shall not exceed at any time
$18,500,000; PROVIDED, THAT, Parent may not make or have
outstanding any loan to or other extension of credit to or for
the benefit of CAFS if at any time (y) Parent is not the sole
owner of all equity and rights to acquire any equity of CAFS and
(z) Parent does not have a perfected, first priority security
interest in all Consumer Notes (as defined in the CAFS Credit
Agreement) which do not qualify as Eligible Consumer Notes (as
defined in the CAFS Credit Agreement) solely due to their non-

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<PAGE>

conformity with the then-applicable requirements related to
Warehousing Period (as defined in the CAFS Credit Agreement).

(h) SCHEDULE 4.12 is deleted and a new SCHEDULE 4.12, in the form of
SCHEDULE 4.12 to this Second Amendment is substituted IN LIEU thereof.

(i) EXHIBIT C is deleted and a new EXHIBIT C, in the form of EXHIBIT A to
this Second Amendment, is added.

3. REPRESENTATIONS AND WARRANTIES. Borrowers and Guarantors, jointly and
severally, represent and warrant to Agent, Issuing Bank, Co-Agent, Canadian
Agent, Canadian Issuing Bank and each Lender that, as of the date hereof and
after giving effect to the amendments in SECTION 2, the following are true and
correct:

(a) The representations and warranties contained in the Credit Agreement
and each of the other Loan Papers are true and correct in all material respects
on and as of the date hereof as though made on and as of such date (except as to
representations and warranties which (i) refer to a specific date, (ii) have
been modified by transactions permitted pursuant to the Credit Agreement or any
other Loan Paper, or (iii) have been specifically waived in writing by Agent).

(b) Each Borrower and each Guarantor has full power and authority to
execute, deliver and perform this Second Amendment, and this Second Amendment,
the Credit Agreement and each other Loan Paper, constitute the legal, valid and
binding obligation of such Borrower and such Guarantor (with respect to Loan
Papers to which it is a party), enforceable in accordance with their terms
(subject as to enforcement of remedies to any applicable Debtor Relief Laws).

(c) No authorization, approval, consent or other action by, notice to, or
filing with, any Tribunal or other Person, is required for the execution,
delivery or performance by either Borrower or any Guarantor of this Second
Amendment.

(d) No Obligor has made a material misstatement of fact, or failed to
disclose any fact necessary to make the facts disclosed not misleading, to
Agent, Issuing Bank, Co-Agent, Canadian Agent, Canadian Issuing Bank or any
Lender during the course of negotiation of this Second Amendment.

(e) Attached as EXHIBIT B is a complete and correct copy of the Stock
Purchase and Option Agreement dated as of October 31, 1997, among Field, Parent
and certain shareholders of Field, to which no amendment or restatement has been
made and which, together with the documents expressly referred to therein,
represents the complete agreement of the parties thereto with respect to the
subject matter thereof.

(f) (i) CAFS Financial Services, Inc. ("CAFS CANADA") is a corporation
duly organized, validly existing, and in good standing under the Laws of Canada.
CAFS Canada is

-5-

<PAGE>

qualified to do business in all jurisdictions where the nature of its
business or Properties require such qualification, except where the failure
to so qualify would not result in a Material Adverse Change. Set forth on
SCHEDULE 1 is a complete and accurate listing of CAFS Canada, showing (a) its
street and mailing address, which is its principal place of business and
executive office, (b) the classes of equity interests in capital stock
authorized and outstanding, and (c) all outstanding options, rights, rights
of conversion or purchase, rights of first refusal, and similar rights
relating to the equity interests of CAFS Canada. CAFS Canada has all
requisite corporate power and authority to own, operate and encumber its
Property and assets and to conduct its business as presently conducted and as
proposed to be conducted. All of the outstanding common stock of CAFS Canada
is validly issued, fully paid, and nonassessable. No equity interest of CAFS
Canada is subject to any Lien, including any restriction on hypothecation or
transfer. CAFS Canada has not engaged in any operations other than related
to its organization. CAFS Canada will not engage in any business other than
making direct and indirect loans to or acquiring existing loans made to
residential consumers to acquire building materials sold by Parent or a
Guarantor for use in the construction or improvement of personal residences
and the securitization of such loans.

(ii) The Board of Directors of CAFS Canada has duly authorized the
execution, delivery, and performance of the Loan Papers to be executed by CAFS
Canada. No consent of the stockholders of CAFS Canada (except any consent
already obtained) is required as a prerequisite to the validity and
enforceability of any Loan Papers or any other document contemplated hereby.
CAFS Canada has full legal right, power, and authority to execute, deliver, and
perform under the Loan Papers to be executed and delivered by it. The Loan
Papers constitute the legal, valid, and binding obligations of CAFS Canada (as
to each Loan Paper to which it is a party) enforceable in accordance with their
terms (subject as to enforcement of remedies to any applicable Debtor Relief
Laws).

(iii) The execution or delivery of any Loan Paper, and performance
thereunder, does not conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any Lien upon any Properties of CAFS
Canada under, or require any consent (other than consents already obtained),
approval, or other action by, notice to, or filing with any Tribunal or Person
pursuant to, the corporate governance documents of CAFS Canada, any award of any
arbitrator, or any agreement, instrument, or Law to which CAFS Canada or any of
its Properties is subject.

(iv) There is no pending or, to Parent's best knowledge, threatened
Litigation against CAFS Canada.

(v) CAFS Canada possesses all material Licenses and is not in violation
thereof in any material respect. CAFS Canada has good and indefeasible title
(fee or leasehold, as applicable) to its Properties, subject to no Lien of any
kind, except as permitted in the Credit Agreement. CAFS Canada is not in
violation of its corporate governance documents, or any Law, or material
agreement or instrument binding on or affecting it or any of its Properties. No
business or

-6-

<PAGE>

Properties of CAFS Canada is affected by any strike, lock-out, or
other labor dispute, drought, storm, earthquake, embargo, act of God or public
enemy, or other casualty that could constitute a Material Adverse Change. CAFS
Canada has no interest in any real property.

(vi) CAFS Canada has no Investments except as permitted by SECTION 5.09 of
the Credit Agreement.

4. CONDITIONS OF EFFECTIVENESS. This Second Amendment shall be effective
on the date Agent delivers to Borrower written notice that each of the following
has occurred or exists ("AMENDMENT DATE"):

(a) The effectiveness of this Second Amendment shall not contravene any
Law applicable to Agent, Issuing Bank, Co-Agent, Canadian Agent, Canadian
Issuing Bank or any Lender.

(b) No Material Adverse Change, as determined by Agent, shall have
occurred and be continuing since October 31, 1997.

(d) Agent, Issuing Bank, Co-Agent, Canadian Agent, Canadian Issuing Bank,
each Lender and each Obligor shall have executed and received counterparts of
this Second Amendment.

(e) Agent shall have received a complete and correct copy of the Field
Stock Agreement.

(f) Agent shall have received, contemporaneously with Borrower's execution
of this Second Amendment, payment of all fees (including attorneys' fees
incurred by Agent prior to execution of this Second Amendment in the
preparation, negotiation and execution of this Second Amendment).

(g) Agent shall have received, in form and substance satisfactory to Agent
and its counsel, (i) releases of each security interest and other Lien granted
by CAFS to secure performance under the CAFS Credit Agreement and any related
agreement (together with appropriate UCC partial releases and similar
instruments), to the extent such security interests and Liens (A) grant or
perfect a security interest or Lien in Consumer Notes (as defined in the CAFS
Credit Agreement) which do not qualify as Eligible Consumer Notes (as defined in
the CAFS Credit Agreement) solely due to their non-conformity with the then-
applicable requirements related to Warehousing Period (as defined in the CAFS
Credit Agreement), and (B) the perfection of and priority of such security
interests and Liens are determined by a means other than possession by the
secured party, and (ii) evidence of the grant by CAFS to Parent and perfection
of a first priority security interest in the Consumer Notes described in CLAUSE
(i).

-7-

<PAGE>

(h) Agent shall have received, in form and substance satisfactory to
Agent, a guaranty of Bois Daigle, Ltee.

(i) Agent shall have received, in form and substance satisfactory to Agent
and its counsel, such other approvals, documents, certificates, and instruments
as Agent shall require.

Agent, Issuing Bank, Co-Agent, Canadian Agent, Canadian Issuing Bank and each
Lender may conclusively rely on the certificates delivered pursuant to SECTION
3.01 of the Credit Agreement until Agent receives notice in writing to the
contrary.

5. EXISTING DEFAULTS.

(a) SECTION 5.09 prohibits Investments by Parent, CA Canada and their
respective Subsidiaries, except as permitted by SECTION 5.09. Parent has
entered into the Field Stock Agreement and has acquired capital stock of Field.

(b) SECTION 5.09 prohibits Investments by Parent, CA Canada and their
respective Subsidiaries, except as permitted by SECTION 5.09. Parent has made
loans to CAFS not permitted by SECTION 5.09.

(c) SECTION 5.09 prohibits Investments by Parent, CA Canada and their
respective Subsidiaries, except as permitted by SECTION 5.09. CAFS had
organized and owns stock of CAFS Canada.

(The Events of Default described in SECTIONS 5(a), (b) and (c) are the
"EXISTING DEFAULTS".)

(d) Each Borrower and each Guarantor acknowledges and agrees that the
Existing Defaults have occurred and are continuing.

(e) Subject to the occurrence of each condition specified in SECTION 4 and
performance of each provision of this Second Amendment, Agent, Co-Agent, Issuing
Bank, Canadian Agent, Canadian Issuing Bank and each Lender waive each Existing
Default.

(f) Each Borrower and each Guarantor acknowledges and agrees that (a)
except as expressly provided herein, none of Agent, Co-Agent, Issuing Bank,
Canadian Agent, Canadian Issuing Bank or any Lender waives any Default or Event
of Default, and (b) neither the waiver provided in SECTION 5(e), nor the
deferral of enforcement actions or any other action taken by Agent, Co-Agent,
Issuing Bank, Canadian Agent, Canadian Issuing Bank or any Lender prior to or on
the date hereof, shall (i) create any obligation to defer enforcement of any
remedies upon the occurrence of any Default or Event of Default (other than with
respect to the Existing Defaults waived in SECTION 5(e)), (ii) constitute a
waiver or modification of any term or condition of the Loan Papers, or (iii)
constitute a waiver of any Default or Event of Default (other than with respect
to the Existing Defaults waived in SECTION 5(e)) or otherwise impair any rights
or remedies

-8-

<PAGE>

which Agent, Co-Agent, Issuing Bank, Canadian Agent, Canadian
Issuing Bank or any Lender now has or may have in the future, all of which
rights and remedies are expressly reserved by Agent, Co-Agent, Issuing Bank,
Canadian Agent, Canadian Issuing Bank and Lenders.

6. RATIFICATION. Each Borrower and each Guarantor each (a) represents and
warrants that it has received and reviewed this Second Amendment and (b)
ratifies and affirms its obligations under the Loan Papers, as amended by this
Second Amendment.

7. REFERENCE TO THE CREDIT AGREEMENT.

(a) On the Amendment Date, each reference in the Credit Agreement to "this
Agreement", "hereunder", or words of like import shall mean and be a reference
to the Credit Agreement, as affected and amended hereby.

(b) The Credit Agreement, as affected by the amendments referred to above,
shall remain in full force and effect and is hereby ratified and confirmed.

(c) THE CREDIT AGREEMENT, AS AFFECTED BY THE AMENDMENTS CONTAINED IN THIS
SECOND AMENDMENT, TOGETHER WITH EACH OTHER LOAN PAPER, REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

8. EXECUTION IN COUNTERPARTS. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.

9. GOVERNING LAW; BINDING EFFECT. This Second Amendment shall be governed by
and construed in accordance with the laws of the State of Texas and be binding
upon the parties hereto and their respective permitted successors and assigns.

10. HEADINGS. Section headings in this Second Amendment are included herein
for convenience of reference only and shall not constitute part of this Second
Amendment for any other purpose.

- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------

-9-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of January 22, 1998.

PARENT:
CAMERON ASHLEY BUILDING PRODUCTS, INC.

By: /s/ F. Dixon McElwee
--------------------------------------------

F. Dixon McElwee, V.P., CFO & Treasurer
-------------------- ----------------------
(Print Name) (Print Title)

CA CANADA:
CAMERON ASHLEY CANADA, INC.

By: /s/ F. Dixon McElwee
-------------------------------------------------

F. Dixon McElwee, Exec. V.P.
-------------------- ---------------------------
(Print Name) (Print Title)

GUARANTORS:
ASHLEY ALUMINUM, INC.

By: /s/ F. Dixon McElwee
-------------------------------------------------

F. Dixon McElwee, Vice President
-------------------- ---------------------------
(Print Name) (Print Title)

WM. CAMERON & CO.

By: /s/ F. Dixon McElwee
-------------------------------------------------

F. Dixon McElwee, Exec. V.P., CFO & Treasurer
-------------------- ---------------------------
(Print Name) (Print Title)

-10-

<PAGE>

CABP, INC.

By: /s/ Ross Goolsby
-------------------------------------------

Ross Goolsby , Vice President
-------------------- ---------------------
(Print Name) (Print Title)

AGENT:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION

By: /s/ Daniel M. Killian
-------------------------------------------
Daniel M. Killian, Vice President

CANADIAN AGENT:
CANADIAN IMPERIAL BANK OF COMMERCE

By: /s/ Terry F. Fraser
-------------------------------------------

Terry F. Fraser , Credit Designer
-------------------- ---------------------
(Print Name) (Print Title)

CO-AGENT:
ABN AMRO BANK, N.V., Atlanta Agency

By: /s/ Larry K. Kelley
-------------------------------------------

Larry K. Kelley , Group Vice President
-------------------- ---------------------
(Print Name) (Print Title)

By: /s/ Robert Budnek
-------------------------------------------

Robert Budnek , Vice President
-------------------- ---------------------
(Print Name) (Print Title)

-11-

<PAGE>

ISSUING BANK:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION

By: /s/ Daniel M. Killian
-------------------------------------------
Daniel M. Killian, Vice President

CANADIAN ISSUING BANK:
CANADIAN IMPERIAL BANK OF COMMERCE

By: /s/ Terry F. Fraser
-------------------------------------------

Terry F. Fraser , Credit Designer
-------------------- ---------------------
(Print Name) (Print Title)

LENDERS:
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION

By: /s/ Daniel M. Killian
-------------------------------------------
Daniel M. Killian, Vice President

CANADIAN IMPERIAL BANK OF COMMERCE

By: /s/ Terry F. Fraser
-------------------------------------------

Terry F. Fraser , Credit Designer
-------------------- ---------------------
(Print Name) (Print Title)

-12-

<PAGE>

ABN AMRO BANK, N.V., Atlanta Agency

By: /s/ Larry K. Kelley
-------------------------------------------

Larry K. Kelley , Group Vice President
-------------------- ---------------------
(Print Name) (Print Title)

By: /s/ Robert Budnek
-------------------------------------------

Robert Budnek , Vice President
-------------------- ---------------------
(Print Name) (Print Title)

WELLS FARGO BANK (TEXAS), N.A.

By: /s/ Ken Taylor
-------------------------------------------

Ken Taylor , Asst. Vice-President
-------------------- ---------------------
(Print Name) (Print Title)

SUNTRUST BANK, ATLANTA

By: /s/ John A. Fields, Jr.
-------------------------------------------

John A. Fields, Jr. , Vice President
-------------------- ---------------------
(Print Name) (Print Title)

By: /s/ Steven J. Newby
-------------------------------------------

Corporate Banking
Steven J. Newby , Officer
-------------------- ---------------------
(Print Name) (Print Title)

-13-

<PAGE>
EXHIBIT 10.19.1

- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------

CAMERON ASHLEY BUILDING PRODUCTS, INC.

FIRST AMENDMENT

Dated as of January 15, 1997

Re:

NOTE PURCHASE AGREEMENTS DATED AS OF APRIL 1, 1996

$50,000,000 Senior Notes

$10,000,000 6.79% Senior Notes due April 15, 2001
$15,000,000 6.79% Senior Notes due April 15, 2002
$10,000,000 7.21% Senior Notes due April 15, 2003
$15,000,000 7.61% Senior Notes due April 15, 2006

- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------

<PAGE>

CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 PLANO ROAD
DALLAS, TEXAS 75243

FIRST AMENDMENT
Dated as of
January 15, 1997

Re: NOTE PURCHASE AGREEMENTS DATED AS OF APRIL 1, 1996

To each Holder named in Schedule I
hereto which is a signatory of this
First Amendment

Ladies and Gentlemen:

The undersigned, CAMERON ASHLEY BUILDING PRODUCTS, INC., a Georgia
corporation (the "COMPANY"), hereby agrees with you as follows:

SECTION 1. INTRODUCTION.

Reference is made to the separate Note Purchase Agreements, each dated as
of April 1, 1996 (the "ORIGINAL NOTE AGREEMENTS"), between the Company and each
of the respective Purchasers named in Schedule A thereto. Unless otherwise
herein defined or the context hereof otherwise requires, the capitalized terms
in this First Amendment shall have the respective meanings specified in the
Original Note Agreements. The Original Note Agreements, as amended by this
First Amendment, are herein referred to as the "NOTE AGREEMENTS."

The Company intends to increase its available bank financing by entering
into that certain Credit Agreement dated as of January 29, 1997 (the "BANK
CREDIT AGREEMENT") with, among others, Nationsbank of Texas, National
Association, as Agent, in order to, among other things, provide financing for
the acquisition (the "CANADIAN ACQUISITION") of the assets of a Canadian
corporation through a newly formed Canadian Subsidiary, Cameron Ashley Canada,
Inc. ("CA CANADA"). Due to the effect of the additional Indebtedness of the
Company and its Subsidiaries to be incurred in connection with the Bank Credit
Agreement and the Canadian Acquisition on certain financial covenants in the
Original Note Agreements, the Company has requested that the Original Note
Agreements be amended in the respects, but only in the respects, hereinafter set
forth, and, by your execution hereof, you hereby agree that the Original Note
Agreements be amended by this First

-2-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

Amendment. Pursuant to Section 17.1 of the Original Note Agreements, the
Required Holders (as defined in the Original Note Agreements) must consent to
such amendments. Since you are the holders of the outstanding Notes of the
Series and in the principal amounts set forth on Schedule I hereto, the
Company hereby requests that you accept the amendments set forth below.

SECTION 2. REPRESENTATIONS OF THE COMPANY.

The Company hereby represents and warrants that, after giving effect to
this First Amendment and the transactions contemplated hereby, no Default or
Event of Default has occurred and is continuing.

SECTION 3. AMENDMENTS.

SECTION 3.1. AMENDMENTS TO SECTION 10.3. (a) Section 10.3(b) of the
Original Note Agreements is hereby amended by deleting the word "and" at the end
of clause (vii) thereof, renumbering clause (viii) as clause (ix), inserting the
phrase "and clause (viii)," immediately prior to the word "provided" in the
third line of new clause (ix) and inserting a new clause (viii) immediately
after clause (vii) to read in its entirety as follows:

"(viii) Debt of CA Canada in an aggregate principal amount of up to
$25,000,000 owing under the Bank Credit Agreement, and"

(b) The proviso at the end of Section 10.3(b) of the Original Note
Agreements is hereby amended by replacing the reference therein to "15%" with
the phrase "(i) during the period from January 1, 1997 to and including June 30,
1998, 22% and (ii) at all times after June 30, 1998, 15%,".

Section 3.2. Amendments to Schedule B;. (a) Schedule B to the
Original Note Agreements is hereby amended by adding the following
definitions in alphabetical order:

"BANK CREDIT AGREEMENT" shall mean that certain Credit Agreement dated
as of January 29, 1997 among the Company, CA Canada, Nationsbank of Texas,
National Association, as Agent, ABN AMRO Bank, N.V., as Co-Agent,
Nationsbank of Texas, National Association, as Issuing Bank, CIBC, Inc., as
Canadian Agent, CIBC, as Canadian Issuing Bank, and each Lender defined
therein, as in effect on January 29, 1997.

"CA CANADA" shall mean Cameron Ashley Canada, Inc., a Canadian
corporation and Wholly-owned Subsidiary of the Company.

(b) Schedule B to the Original Note Agreements is hereby amended by
restating the definition of "Credit Agreement Guaranties" to read in its
entirety as follows:

"CREDIT AGREEMENT GUARANTIES" shall mean the Guaranties by the
Guarantors of the obligations of the Company under the Bank Credit
Agreement.

-3-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

SECTION 4. DESIGNATION OF RESTRICTED SUBSIDIARY.

Immediately upon CA Canada becoming a Subsidiary, the Company hereby
designates it a Restricted Subsidiary under the Note Agreements and each of you,
by your signature below, hereby agrees that this Section 4 shall constitute
written notice of such designation pursuant to Section 18 of the Note
Agreements.

SECTION 5. CONDITIONS PRECEDENT.

The effectiveness of this First Amendment shall be subject to the
fulfillment by the Company of the following conditions precedent:

SECTION 5.1. CONSENT. The Company shall have obtained the written
consent of the Requisite Holders, as evidenced by their signatures at the foot
of this First Amendment.

SECTION 5.2. CERTIFIED COPY OF BANK CREDIT AGREEMENT. The Company shall
have delivered to Chapman and Cutler, your special counsel, a photocopy of the
fully executed Bank Credit Agreement certified as authentic by an officer of the
Company.

SECTION 5.3. AMENDMENT FEE. Each of the holders of the Notes shall have
received the fee set forth opposite its name below (an "AMENDMENT FEE"), which
fee shall be paid by bank wire transfer pursuant to the wiring instructions in
Schedule I of the Note Agreements:

NOTEHOLDER AMENDMENT
FEE

Principal Mutual Life Insurance Company $10,000
The Canada Life Insurance Company 1,200
Canada Life Insurance Company of America 800
Northwestern National Life Insurance Company 1,200
Northern Life Insurance Company 1,200
United Services Life Insurance Company 1,600
Nationwide Life Insurance Company 3,200
Nationwide Life and Annuity Insurance Company 800
-------
TOTAL $20,000

SECTION 6. MISCELLANEOUS.

Section 6.1. NOTICES. Any and all notices, requests, certificates and
other instruments executed and delivered after the effective date of this First
Amendment may refer to the "Note Purchase Agreements dated as of April 1, 1996"
without making specific reference to this First Amendment, but nevertheless all
such references shall be deemed to include this First Amendment unless the
context shall otherwise require.

-4-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

Section 6.2. EXPENSES. The Company will pay all expenses relating to this
First Amendment in accordance with Section 15.1 of the Original Note
Agreements.

Section 6.3. CONSTRUCTION. This First Amendment shall be construed in
connection with and as part of the Original Note Agreements, and all terms,
conditions and covenants contained in the Original Note Agreements, except as
herein modified, shall be and remain in full force and effect.

Section 6.4. COUNTERPARTS. This First Amendment may be executed in any
number of counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.

Section 6.5. GOVERNING LAW. This First Amendment shall be governed by and
construed in accordance with the laws of the State of New York, including all
matters of construction, validity and performance.

Upon the acceptance of this First Amendment by the Required Holders, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of January 29,
1997 (the "EFFECTIVE DATE").

CAMERON ASHLEY BUILDING PRODUCTS, INC.

By /s/ F. Dixon McElwee
Its Vice President

-5-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

The foregoing First Amendment to Note Agreements is hereby accepted as of
the Effective Date.

Principal Mutual Life Insurance Company

By: /s/ Sarah J. Pits
Its Counsel

By: /s/ Austin Ramzy
Its Asst. Director
Investment Securities

-6-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

The foregoing First Amendment to Note Agreements is hereby accepted as of
the Effective Date.

THE CANADA LIFE ASSURANCE COMPANY

By:
Its

CANADA LIFE INSURANCE COMPANY OF AMERICA

By:
Its

-7-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

The foregoing First Amendment to Note Agreements is hereby accepted as of
the Effective Date.

RELIASTAR LIFE INSURANCE COMPANY
(f/k/a Northwestern National Life
Insurance Company)

By: /s/ James S. Tobin
Its Authorized Representative

NORTHERN LIFE INSURANCE COMPANY

By: /s/ James S. Tobin
Its Assistant Treasurer

RELIASTAR UNITED SERVICES LIFE INSURANCE
COMPANY (f/k/a United Services Life
Insurance Company)

By: /s/ James S. Tobin
Its Assistant Treasurer

-8-
<PAGE>

Cameron Ashley Building Products, Inc. First Amendment

The foregoing First Amendment to Note Agreements is hereby accepted as of
the Effective Date.

NATIONWIDE LIFE INSURANCE COMPANY

By: /s/ Michael D. Groseclose
Its Associate Vice President

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY

By: /s/ Michael D. Groseclose
Its Associate Vice President

-9-
<PAGE>

SCHEDULE I

HOLDERS PRINCIPAL AMOUNT
SERIES OF NOTES OF NOTES HELD

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY 2002 Notes $15,000,000
2006 Notes $10,000,000
THE CANADA LIFE INSURANCE COMPANY 2001 Notes $3,000,000

CANADA LIFE INSURANCE COMPANY OF AMERICA 2001 Notes $2,000,000

NORTHWESTERN NATIONAL LIFE INSURANCE 2001 Notes $1,000,000
COMPANY 2006 Notes $2,000,000

NORTHERN LIFE INSURANCE COMPANY 2006 Notes $3,000,000

UNITED SERVICES LIFE INSURANCE COMPANY 2001 Notes $4,000,000

NATIONWIDE LIFE INSURANCE COMPANY 2003 Notes $8,000,000

NATIONWIDE LIFE AND ANNUITY INSURANCE 2003 Notes $2,000,000
COMPANY

SCHEDULE I
(to First Amendment)

<PAGE>

EXHIBIT 10.22.1

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment") made as of December 29, 1997 to be effective as of December 3,
1997, by and between CAMERON ASHLEY FINANCIAL SERVICES, INC., a Texas
corporation ("BORROWER"), and BANK ONE, TEXAS, N.A. ("BANK ONE").

W I T N E S S E T H:

WHEREAS, Borrower and Bank One have entered into that certain Credit
Agreement dated as of December 3, 1996 as amended by a Letter Agreement dated
as of December 9, 1996 (as so amended, the "Original Agreement"), for the
purposes and consideration therein expressed, pursuant to which Bank One became
obligated to make loans to Borrower as therein provided; and

WHEREAS, Borrower and Bank One desire to amend the Original Agreement to
extend the current maturity date, amend certain other terms and provisions
thereof, and waive certain defaults;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Bank One to Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I.

DEFINITIONS AND REFERENCES

Section 1.1 TERMS DEFINED IN THE ORIGINAL AGREEMENT. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.

Section 1.2. OTHER DEFINED TERMS. Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this Section 1.2.

"AMENDMENT" means this First Amendment to Credit Agreement.

"AMENDMENT DOCUMENTS" means this Amendment and the Renewal Note.

<PAGE>

"CREDIT AGREEMENT" means the Original Agreement as amended hereby.

"ORIGINAL NOTE" means the "Note" referred to and defined as such in
the Original Agreement.

ARTICLE II.

AMENDMENTS TO ORIGINAL AGREEMENT

Section 2.1. The definition of "TERMINATION DATE" in Section 1.1. of the
Original Agreement is hereby amended in its entirety to read as follows:

"`TERMINATION DATE' shall mean the earlier of (i) the Maturity Date
or (ii) the day on which the Note first becomes due and payable in full."

Section 2.2. The definition of "COMMITMENT" in Section 1.1 of the
Original Agreement is hereby amended in its entirety to read as follows:

"`COMMITMENT' shall mean the obligation of Bank One to make Advances
to Borrower pursuant to SECTION 2.1 hereof in an aggregate amount not to
exceed at any one time $10,000,000."

Section 2.3. The definition of "WAREHOUSING PERIOD" in Section 1.1 of the
Original Agreement is hereby amended in its entirety to read as follows:

"`WAREHOUSING PERIOD' shall mean with respect to any Consumer Note, a
period of 270 days following the date of the first funding thereunder."

Section 2.4. The definition of "COLLATERAL VALUE" in Section 1.1 of the
Original Agreement is hereby amended in its entirety to read as follows:

"`COLLATERAL VALUE' shall mean, with respect to each Eligible Consumer
Note, an amount equal to seventy-five percent (75%) of the lesser of (i) if
Borrower funded the loan made pursuant to the Consumer Note, the original
principal amount of such Consumer Note or (ii) if Borrower acquired such
Consumer Note after the initial funding, the purchase price for such
Consumer Note (less expenses) MINUS, in each case, the amount of principal
paid under such Consumer Note and delivered to Bank One for application to
the payment of the Consumer Note."

Section 2.5. The following definition of "MATURITY DATE" is hereby added
to Section 1.1 of the Original Agreement immediately following the definition of
"Material Adverse Effect":

"`MATURITY DATE' means March 1, 1998."

2
<PAGE>

Section 2.6. TANGIBLE NET WORTH. Section 7.7 of the Original Agreement
is hereby amended in its entirety to read as follows:

"Section 7.7. TANGIBLE NET WORTH. As of the date hereof,
Borrower's Consolidated Tangible Net Worth shall not be less than $1,000,000;
as of February 15, 1997, Borrower's Consolidated Tangible Net Worth shall not
be less than $1,500,000; and as of May 15, 1997 and as of the last day of
each Fiscal Quarter thereafter, Borrower's Consolidated Tangible Net Worth
shall not be less than $2,500,000."

Section 2.7. COMPLIANCE CERTIFICATE. Exhibit C-1 to the Original
Agreement is hereby amended in its entirety to read as set forth in Exhibit C-1
attached hereto.

Section 2.8. BORROWING BASE CERTIFICATE. Exhibit F to the Original
Agreement is hereby amended in its entirety to read as set forth in Exhibit F
attached hereto.

Section 2.9. LIMITED WAIVER OF REPORTING REQUIREMENTS. Bank One hereby
waives Borrower's noncompliance with Section 6.13 for the periods ending on or
prior to September 30, 1997.

Section 2.10. LIMITED WAIVER OF MINIMUM TANGIBLE NET WORTH COVENANT. Bank
One hereby waives Borrower's noncompliance with Section 7.7 of the Credit
Agreement for the periods ending February 15, 1997 and May 15, 1997.

Section 2.11. LIMITED WAIVER OF MINIMUM LIQUIDITY COVENANT. Bank One
hereby waives Borrower's noncompliance with Section 7.8 of the Credit Agreement
for the periods ending prior to November 1, 1997.

ARTICLE III.

CONDITIONS OF EFFECTIVENESS

Section 3.1. EFFECTIVE DATE. This Amendment shall become effective as of
the date first above written when and only when Bank One shall have received, at
Bank One's office, and executed by, if applicable, Borrower or Guarantor:

a. this Amendment;

b. a promissory note with appropriate insertions in the form attached
hereto as Exhibit A (such note being herein called the "Renewal
Note");

c. a written opinion of Borrower's general counsel, dated as of the date
of this Amendment, addressed to Bank One, to the effect that this
Amendment and the Renewal Note have been duly authorized, executed and
delivered by Borrower and that the Amendment and the Renewal Note
constitute the legal, valid and binding obligations of Borrower to the
extent each is a party hereto, enforceable in

<PAGE>

accordance with their terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency and similar laws
and to general principles of equity);

d. a certificate of the Secretary of Borrower dated the date of this
Amendment certifying that attached thereto is a true and complete copy
of resolutions adopted by the Board of Directors of Borrower
authorizing the execution, delivery and performance of this Amendment
and the Renewal Note, certifying the names and true signatures of the
officers of Borrower authorized to sign this Amendment and the Renewal
Note, and certifying that all of the representations and warranties
set forth in Article IV hereof are true and correct at and as of the
time of such effectiveness;

e. such supporting documents as Bank One may reasonably request.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

Section 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce Bank One to enter into this Amendment, Borrower represents and warrants
as to itself and each Related Person, to Bank One that:

(a) The representations and warranties contained in Section 5.1 of
the Original Agreement, are true and correct at and as of the time of the
effectiveness hereof except to the extent that the facts upon which such
representations are based have been changed by transactions and events
expressly permitted by the Credit Agreement.

(b) Each Related Person is duly authorized to execute and deliver
this Amendment and the Renewal Note to the extent it is a party thereto and
Borrower is and will continue to be duly authorized to borrow and to
perform its obligations under the Credit Agreement. Each Related Person
has duly taken all corporate action necessary to authorize the execution
and delivery of this Amendment and the Renewal Note to the extent it is a
party thereto and to authorize the performance of its obligations hereunder
and thereunder.

(c) The execution and delivery by each Related Person of this
Amendment and the Renewal Note to the extent it is a party thereto, the
performance of such Person of its obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and thereby do not
and will not conflict with any provision of law, statute, rule or any of
its organizational documents, or of any material agreement, judgment,
license, order or permit applicable to or binding upon it, or result in the
creation of any lien, charge or encumbrance upon any assets or properties
or any of its assets. Except for those which have been duly obtained, no
consent, approval,

4
<PAGE>

authorization or order of any court or governmental authority or third
party is required in connection with the execution and delivery by any
Related Person of this Amendment and the Renewal Note or to consummate the
transactions contemplated hereby and thereby.

(d) When duly executed and delivered, each of this Amendment, the
Credit Agreement and the Renewal Note will be a legal and binding
obligation of Borrower and each other Related Person which is a party
thereto, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency and similar laws applying to creditors' rights
generally and by principles of equity applying to creditors' rights
generally.

(e) The audited annual Consolidated financial statements of Borrower
dated as of October 31, 1997 fairly present the Consolidated financial
position at such dates and the Consolidated statement of operations and the
changes in Consolidated financial position for the periods ending on such
dates for Borrower. Copies of such financial statements have heretofore
been delivered to Bank One. Since October 31, 1997, no material adverse
change has occurred in the financial condition or businesses or in the
Consolidated financial condition or businesses of Borrower.

ARTICLE V.

MISCELLANEOUS

Section 5.1. RATIFICATION OF AGREEMENTS. The Original Agreement as
hereby amended is hereby ratified and confirmed in all respects. The Loan
Documents, as they may be amended or affected by the various Amendment
Documents, are hereby ratified and confirmed in all respects. Any reference to
the Credit Agreement in any Loan Document shall be deemed to refer to this
Amendment also. Any reference to the Note in any other Loan Document shall be
deemed to be a reference to the Renewal Note issued and delivered pursuant to
this Amendment. The execution, delivery and effectiveness of this Amendment and
the Renewal Note shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of Bank One under the Credit Agreement or
any other Loan Document nor constitute a waiver of any provision of the Credit
Agreement or any other Loan Document.

Section 5.2. SURVIVAL OF AGREEMENTS. All representations, warranties,
covenants and agreements of any Related Person herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of the Loan and the issuance and
delivery of the Renewal Note, and shall further survive until all of the
Obligations are paid in full. All statements and agreements contained in any
certificate or instrument delivered by Guarantor or any Related Person hereunder
or under the Credit Agreement to Bank One shall be deemed to constitute
representations and warranties by, or agreements and covenants of, such Person
under this Amendment and under the Credit Agreement.

5
<PAGE>

Section 5.3. MARKING OF ORIGINAL NOTE. Bank One shall promptly mark the
Original Note either "renewed and extended" or "ineffective" and shall deliver a
photocopy thereof to Borrower.

Section 5.4. LOAN DOCUMENTS. This Amendment and the Renewal Note are
each a Loan Document, and all provisions in the Credit Agreement pertaining to
Loan Documents apply hereto and thereto.

Section 5.5. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.

Section 5.6. COUNTERPARTS. This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.

THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

6
<PAGE>

IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

BORROWER: CAMERON ASHLEY FINANCIAL
- - -------- SERVICES, INC.

By: /s/ Ronald R. Ross
----------------------------------
Name: Ronald R. Ross
Title: President

BANK ONE: BANK ONE, TEXAS, N.A.
- - --------

By: /s/ Carlos Munguia
----------------------------------
Name: Carlos Munguia
Title: Vice President

<PAGE>
EXHIBIT 10.24

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made, effective as of the 13th day of October, 1997,
between WM. CAMERON & CO., a Georgia corporation dba CAMERON ASHLEY BUILDING
PRODUCTS (the "Company") and JOHN S. DAVIS, a resident of the State of Texas
("Executive").

BACKGROUND

Executive has been employed by the Company as an executive employee since
August 16, 1994. In recognition of Executive's prior service to the Company and
the Company's desire to retain the future services of Executive, the Company
desires to enter into a written agreement for the employment relationship with
Executive, and Executive desires to continue employment on the terms and
conditions set forth. This agreement is intended to amend and supersede the
Employment Agreement dated August 1, 1997 between the Company and Executive.

AGREEMENT

In consideration of the continued employment of Executive by the Company,
the premises, and the mutual agreements hereinafter set forth, the parties
agree:

1. DEFINITIONS. The following terms used herein shall have the
definitions set forth below:

(a) "Business" or "Business of the Company" means the business of
distribution of building materials.

(b) "Cause" means conduct amounting to fraud or dishonesty against
the Company; Executive's willful violation of Sections 2(a) or (b) hereof, or
any of the Company's work rules or policies or repeated absences from work
without a reasonable excuse, if the Board of Directors of the Parent notifies
Executive of such violation or absence in writing and Executive fails to cure
such violation or absenteeism within five (5) days after written notice has been
given, provided that written notice relating to such violation or absenteeism
shall only be given once as it relates to a particular manner of conduct;
intoxication with alcohol or drugs while on Company business during regular
business hours; a conviction or plea of guilty or NOLO CONTENDERE to a felony or
a crime involving dishonesty against the Company; or Executive's failure to
observe the requirements of Sections 2(c), 5 or 6 hereof.

(c) "Disability" means (i) the inability of Executive to perform the
duties of Executive's employment due to physical or emotional incapacity or
illness, where such inability is expected to be a long-continued and indefinite
duration or (ii) Executive shall be entitled to (x) disability retirement
benefits under the federal Social Security Act or (y) recover benefits under any
long-term disability plan or policy maintained by the Company. In the event of
a dispute, the determination of Disability shall be made by the Board of
Directors of the Company and shall be supported by advice of a physician
competent in the area to which such Disability relates.

<PAGE>

(d) "Effective Date" means the date set forth above.

2. TERMS OF ENGAGEMENT; DUTIES

(a) The Company hereby employs Executive, commencing on the Effective
Date, and Executive hereby accepts employment by the Company subject to the
terms and conditions hereof. Executive is engaged initially with the title and
functions of Vice President and General Counsel of the Company and of the
Company's parent company, Cameron Ashley Building Products, Inc. ("Parent").
Executive shall perform the duties assigned by the Board of Directors of the
Company and the Parent from time to time, and as are provided in the Bylaws of
the Company and the Parent. Nothing herein shall preclude the Chairman and
Chief Executive Officer of the Company from changing the Employee's title and
duties if such officer has concluded in his reasonable judgment that such change
is in the Company's best interests.

(b) Throughout the term of this Agreement, Executive shall:

(i) devote all of Executive's business effort, time,
energy, and skill (reasonable vacations and reasonable absences due to
illness excepted) to the duties assigned by the Board of Directors of the
Company and the Parent;

(ii) faithfully, loyally, and industriously perform such
duties, subject to the control and supervision of the Board of Directors
of the Company and the Parent; and

(iii) diligently follow and implement all lawful management
policies and decisions of the Company and the Parent that are communicated
to Executive.

(c) During the term of this Agreement, Executive shall not be engaged
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage that is contrary to the provisions of Section
2(b)(i) above; provided, however, that this restriction shall not be construed
as preventing Executive from (i) investing his personal assets in businesses
which do not compete with the Company in such form or manner as will not require
any services on the part of Executive in the operation or the affairs of the
companies in which such investments are made and in which his participation is
solely that of an investor or (ii) purchasing securities in any corporation
whose securities are regularly traded provided that such purchase shall not
result in his collectively owning beneficially at any time five (5%) percent or
more of the equity securities of any corporation engaged in a business
competitive to that of the Company.

3. COMPENSATION. In consideration of the services rendered by Executive
pursuant to this Agreement, the Company shall provide the following:

(a) A base salary of One Hundred Sixty Thousand Dollars ($160,000)
per annum (the "Base Salary") which Base Salary will be reviewed periodically
and may be increased by the Company from time to time; provided, however, that
the Base Salary will automatically be increased to One Hundred and Eighty-five
Thousand Dollars ($185,000) effective upon the closing of the

-2-

<PAGE>

acquisition of Bradco Supply Corp. (the "Bradco Acquisition") by the Company
or an affiliate. The Base Salary shall be paid in accordance with the
Company's standard payroll practices in effect from time to time, and shall
be subject to such deductions and withholdings as are required by law or by
policies of the Company.

(b) Executive shall be eligible to be considered for an annual cash
performance bonus, which may consist of an amount of up to sixty percent (60%)
of the Base Salary in the applicable year based on the attainment of performance
objectives established by the Board of Directors of the Company and the Parent
in good faith and Executive's contributions to the attainment of those
objectives, and shall be in such amount and payable in such manner and on such
terms as are determined by the Board of Directors of the Company and the Parent
in good faith. Nothing contained in this subsection (b) shall obligate the
Company to pay a bonus to Executive, unless the Board of Directors of the
Company and the Parent determines to award such a bonus to Executive.
Notwithstanding the foregoing, Executive will be entitled to receive (i) a
minimum bonus of Fifty Thousand Dollars ($50,000) under the 1997 fiscal year
bonus program, payable in December 1997 and (ii) a one-time bonus of Twenty-
five Thousand Dollars ($25,000), payable upon the closing of the Bradco
Acquisition.

(c) The right to participate in any insurance plans maintained by the
Company from time to time to the extent that Executive's position, tenure,
salary, age, health and other qualifications make him eligible to participate,
and such other fringe benefits as are provided to the other senior management
employees of the Company, provided that the Company shall not be required to
adopt or continue any insurance plans or fringe benefits.

(d) Reimbursement for all reasonable business expenses incurred by
Executive in connection with the Business of the Company (including car
allowance) subject to compliance with the expense reimbursement policies
established by the Company and in sufficient detail to comply with Internal
Revenue Service Regulations.

(e) Employee shall receive options to purchase Thirty Thousand
(30,000) shares of common stock of the Parent pursuant to the terms of a Non-
Qualified Stock Option Agreement, effective as of October 10, 1997, subject to
approval thereof by the Compensation Committee of the Parent. The exercise
price of such options shall be the fair market value of the Parent's Common
Stock as of the date prior to the date of grant.

4. TERM AND TERMINATION OF THIS AGREEMENT. The term of employment of
Executive pursuant to this Agreement shall commence on the Effective Date and
shall continue for a term of three (3) years, or until sooner terminated as
provided herein.

-3-

<PAGE>

(a) Executive's employment hereunder may be terminated:

(i) Upon the death or Disability of Executive;

(ii) By the Company, immediately for Cause;

(iii) By Executive upon ninety (90) days prior written
notice to the Company;

(iv) By Company immediately upon written notice to
Executive; or

(v) By mutual agreement between Executive and the Company.

(b) Except as set forth below, upon termination of Executive's
employment hereunder pursuant to this Section 4, the Company shall have no
further obligation to Executive or his personal representative with respect to
remuneration due under this Agreement, except for Base Salary earned but unpaid
at date of termination, provided however, Executive's covenants in Sections 5
and 6 of this Agreement shall survive the termination of Executive's employment
hereunder. Upon termination of Executive's employment hereunder pursuant to
Section 4(a)(iv) above, Executive shall be entitled to receive severance pay
(the "Severance Amount") consisting of an amount equal to Executive's then
current annualized Base Salary paid over a twelve (12) month period in
accordance with the Company's standard payroll practices in effect at the time
of termination. If Executive elects to continue coverage on the Company's
health plan upon termination of employment pursuant to Section 4(a)(iv) above,
the Company will pay the monthly premiums for the first twelve months of the
eligible continuation period or until Executive obtains employment and has
satisfied any necessary waiting periods under the new employer's health plan,
whichever is sooner. It is understood that Executive's coverage under the
Company's disability, accidental death or dismemberment and group life insurance
plans cease as of the date of termination. If Executive fails to observe the
requirements of Sections 5 or 6 hereof, then the Company shall have no
obligation to pay any portion of the Severance Amount remaining unpaid to
Executive.

5. OWNERSHIP, NON-DISCLOSURE, AND NON-USE OF TRADE SECRETS.

(a) The following terms used in this Section 5 shall have the
definitions set forth below:

(i) "Excluded Information" means any data or information
that is a Trade Secret hereunder (1) that has been voluntarily disclosed
to the public by the Company or has become generally known to the public
(except where such public disclosure has been made by or through the
Executive or by a third person or entity with the knowledge of the
Executive without authorization by the Company); (2) that has been
independently developed and disclosed by parties other than the
Executive or the Company to the Executive or to the public generally
without a breach of any obligation of confidentiality by any

-4-

<PAGE>

such person running directly or indirectly to the Company; or (3) that
otherwise enters the public domain through lawful means.

(ii) "Trade Secrets" means information which derives
economic value, actual or potential, from not being generally known and
not being readily ascertainable to other persons who can obtain economic
value from its disclosure or use and which is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy or
confidentiality. Trade Secrets may include either technical or
non-technical data, including without limitation, (1) any useful
process, machine, chemical formula, composition of matter, or other
device which (A) is new or which Executive has a reasonable basis to
believe may be new, (B) is being used or studied by the Company and is
not described in a printed patent or in any literature already published
and distributed externally by the Company, and (C) is not readily
ascertainable from inspection of a product of the Company; (2) any
engineering, technical, or product specifications including those of
features used in any current product of the Company or to be used, or
the use of which is contemplated, in a future product of the Company;
(3) any application, operating system, communication system, or other
computer software (whether in source or object code) and all flow
charts, algorithms, coding sheets, routines, subroutines, compilers,
assemblers, design concepts, test data, documentation, or manuals
related thereto, whether or not copyrighted, patented or patentable,
related to or used in the Business of the Company; or (4) information
concerning the customers, suppliers, products, pricing strategies of the
Company, personnel assignments and policies of the Company, or matters
concerning the financial affairs and management of the Company or any
parent, subsidiary, or affiliate of the Company; provided however, that
Trade Secrets shall not include any Excluded Information.

(b) Executive acknowledges and agrees that all Trade Secrets, and all
physical embodiments thereof, are confidential to and shall be and remain the
sole and exclusive property of the Company and that any Trade Secrets produced
by the Executive during the period of Executive's employment by the Company
shall be considered "work for hire" as such term is defined in 17 U.S.C. Section
101, the ownership and copyright of which shall be vested solely in the Company.
Executive agrees (i) immediately to disclose to the Company all Trade Secrets
developed in whole or part by Executive during the term of Executive's's
employment by the Company, and (ii) at the request and expense of the Company,
to do all things and sign all documents or instruments reasonably necessary in
the opinion of the Company to eliminate any ambiguity as to the rights of the
Company in such Trade Secrets including, without limitation, providing to the
Company Executive's full cooperation in any litigation or other proceeding to
establish, protect, or obtain such rights. Upon request by the Company, and in
any event upon termination of Executive's employment by the Company for any
reason, Executive shall promptly deliver to the Company all property belonging
to the Company including, without limitation, all Trade Secrets (and all
embodiments thereof) then in Executive's custody, control or possession.

(c) Executive agrees that all Trade Secrets of the Company received
or developed by Executive as a result of Executive's employment with the Company
will be held in trust and strictest confidence, that Executive will protect such
Trade Secrets from disclosure, and that Executive will make no use of such Trade
Secrets, except in connection with Executive's employment hereunder, without the
Company's prior written consent. The obligations of

-5-

<PAGE>

confidentiality contained in this Agreement will apply during Executive's
employment by the Company and (i) with respect to all Trade Secrets
consisting of scientific or technical data, at any and all times after
expiration or termination (for whatever reason) of such employment; and (ii)
with respect to all other Trade Secrets, for a period of two (2) years after
such expiration or termination, unless a longer period of protection is
provided by law.

6. NONCOMPETE; NONSOLICITATION COVENANTS.

(a) The following terms used in this Section 6 shall have the
definitions set forth below:

(i) "Affiliate" means any person or entity directly or
indirectly controlling, controlled by, or under common control with
Executive. As used herein, the word "control" means the power to direct
the management and affairs of a person.

(ii) "Area" means all of North America.

(iii) "Competing Enterprise" means any person or any
business organization of whatever form, engaged directly or indirectly
within the Area in the Business of the Company.

(b) Executive covenants that Executive shall, during the term of this
Agreement and for a period of one (1) year following the termination, for
whatever reason, of Executive's employment by the Company, observe the following
separate and independent covenants:

(i) Neither Executive nor any Affiliate will, without the
prior written consent of the Company, within the Area, either directly or
indirectly, (A) become financially interested in a Competing Enterprise
(other than as a holder of less than five percent of the outstanding voting
securities of any entity whose voting securities are listed on a national
securities exchange or quoted by the National Association of Securities
Dealers, Inc. automated quotation system), or (B) engage in or be employed
by any Competing Enterprise as a consultant, officer, director, or
executive or managerial employee.

(ii) Neither Executive nor any Affiliate will, without the
prior written consent of the Company, either directly or indirectly, on
Executive's own behalf or in the service or on behalf of others, solicit,
divert, or appropriate, or attempt to solicit, divert, or appropriate, to
any Competing Enterprise within the Area, any person or entity whose
account with the Company was serviced by or under Executive's direction or
supervision during the term of this Agreement.

(iii) Neither Executive nor any Affiliate will, without
the Company's prior written consent, either directly or indirectly, on
Executive's own behalf or in the service or on behalf of others, solicit,
divert, or hire away, or attempt to solicit, divert, or hire away, to any
Competing Enterprise, any person employed by the Company, whether or not
such employee is a full-time or a temporary employee of the Company and
whether

-6-

<PAGE>

or not such employment is pursuant to written agreement and whether or not
such employment is at will.

7. REMEDIES. Executive acknowledges and agrees that the Company is
engaged in the Business of the Company in and throughout the Area, and that by
virtue of the training, duties, and responsibilities attendant with Executive's
employment by the Company and the special knowledge of the business and
operations of the Company that Executive will have as a consequence of
Executive's employment by the Company, great loss and irreparable damage would
be suffered by the Company if the Executive should breach or violate any of the
terms or provisions of the covenants and agreements set forth herein. Executive
further acknowledges and agrees that each such covenant and agreement is
reasonably necessary to protect and preserve the interest of the Company.
Therefore, in addition to all the remedies provided at law or in equity,
Executive agrees and consents that the Company shall be entitled to a temporary
restraining order and a permanent injunction to prevent a breach or contemplated
breach of any of the covenants or agreements of Executive contained herein. The
existence of any claim, demand, action or cause of action of Executive against
the Company shall not constitute a defense to the enforcement by the Company of
any of the covenants or agreements herein whether predicated upon this Agreement
or otherwise, and shall not constitute a defense to the enforcement by the
Company of any of its rights hereunder.

8. GENERAL PROVISIONS.

(a) In the event that any one or more of the provisions, or parts of
any provisions, contained in the Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect by a court of competent
jurisdiction, the same shall not invalidate or otherwise affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part or
provision of any of such covenants be held or declared invalid by any court of
competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.

(b) This Agreement and the rights and obligations of the Company
hereunder may be assigned by the Company to any subsidiary of or successor to
the Company, and shall inure to the benefit of, shall be binding upon, and shall
be enforceable by any such assignee, provided that any such assignee shall agree
to assume and be bound by this Agreement. This Agreement and the rights and
obligations of Executive hereunder may not be assigned by Executive.

(c) The waiver by the Company of any breach of this Agreement by
Executive shall not be effective unless in writing, and no such waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.

(d) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of Texas.
The parties agree that any appropriate state court located in Dallas County,
Texas or any Federal Court located in Dallas, Texas shall have exclusive
jurisdiction of any case or controversy arising under or in connection with this

-7-

<PAGE>

Agreement and shall be a proper forum in which to adjudicate such case or
controversy. The parties consent to the jurisdiction of such courts.

(e) This Agreement embodies the entire agreement of the parties
relating to the employment of Executive by the Company. No amendment or
modification of this Agreement shall be valid or binding upon the Company or
Executive unless made in writing and signed by the parties. All prior
understandings and agreements relating to the employment of Executive by the
Company (including the Prior Agreement) are hereby expressly terminated and
superseded.

If to Executive:

John S. Davis
5917 Fairmount
Plano, Texas 75093

If to the Company:

Wm. Cameron & Co. dba Cameron Ashley Building Products
11651 Plano Road
Dallas, TX 75243

-8-

<PAGE>

IN WITNESS WHEREOF, the Company and Executive have each executed and
delivered this Agreement as of the date first above written.

COMPANY:

WM. CAMERON & CO. dba
Cameron Ashley Building Products

By: /s/ Ronald R. Ross
------------------------------------
Ronald R. Ross, Chairman & CEO

EXECUTIVE:

/s/ John S. Davis
---------------------------------------
John S. Davis

-9-

<PAGE>
EXHIBIT 11.1

CAMERON ASHLEY BUILDING PRODUCTS, INC.
COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
1997(1) 1996(1) 1995(1)
------------ ------------ -------------

<S> <C> <C> <C>
Average common stock outstanding . . . . . . . . . . . . . . . . . 9,209,000 8,903,000 8,057,000
Average options outstanding . . . . . . . . . . . . . . . . . . . . 1,079,000 990,000 1,184,000
Effects of treasury stock method (based on exercise
proceeds and tax benefit) . . . . . . . . . . . . . . . . . . (845,000) (697,000) (661,000)
------------ ------------ -------------

Weighted average common shares outstanding . . . . . . . . . . 9,443,000 9,196,000 8,580,000
------------ ------------ -------------
------------ ------------ -------------

Income before extraordinary charge . . . . . . . . . . . . . . . . $11,319,000 $12,069,000 $9,875,000
------------ ------------ -------------
------------ ------------ -------------

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,319,000 $11,824,000 $9,875,000
------------ ------------ -------------
------------ ------------ -------------

Income per share before extraordinary charge . . . . . . . . . . . $ 1.20 $ 1.31 $ 1.15
------------ ------------ -------------
------------ ------------ -------------

Net income per share . . . . . . . . . . . . . . . . . . . . . . . $ 1.20 $ 1.28 $ 1.15
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
______________________
(1) Only the primary diluted computation of earnings per share is presented
since fully diluted earnings per share and primary earnings per share do
not differ by more than 3%.

<PAGE>

EXHIBIT 21.1

LIST OF SUBSIDIARIES AND
STATE OR JURISDICTION OF INCORPORATION

Wm. Cameron & Co. (Georgia)
Ashley Aluminum, Inc. (Georgia)
Cameron Ashley Financial Services, Inc. (Texas)
CABP, Inc. (Arizona)
Cameron Ashley Canada, Inc. (Canada)
CAFS Financial Services Inc. (Canada)

NAMES UNDER WHICH EACH SUBSIDIARY DOES BUSINESS

WM. CAMERON ASHLEY ALUMINUM
- - ----------- ---------------
Cameron Ashley Building Products Cameron Ashley Building Products
CABP CABP
Southwest Express Bright Aluminum
Southwest Roofing Supply Zaglin Wholesale
United Wholesale Distribution, Inc. Glaco
Mid America Siding Supply Greater Louisville Aluminum
Metro Roofing Supply Southland
Midwest Insulation & Roofing Southland Building Products
California Roofers Supply Vinyl Wholesale
Jett Supply Co. DMG Supply
Mile High Roofing & Exterior Supply
Atlantic Building Products CAMERON ASHLEY FINANCIAL SERVICES, INC.
C. A. Company ---------------------------------------
WhiteWater Building Products CAFS
Chesapeake Building Supply
Contractors Supply CAMERON ASHLEY CANADA, INC.
Albuquerque Door Company ---------------------------
Thunderbird Steel Cameron Ashley Building Products
Wholesale Building Supply CABP
New York Building Products Boyd Division
NC Enterprises Daigle Lumber Ltd.
States Dealer Supply Bois Daigle Ltee.
Westar Building Materials
PK Supply Company

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No.
33-80326 and Registration Statement No. 33-90782 of Cameron Ashley Building
Products, Inc. on Forms S-8 of our reports dated December 16, 1997 (except the
last paragraph of Note 7, which is as of January 22, 1998) appearing in this
Annual Report on Form 10-K of Cameron Ashley Building Products, Inc. for the
year ended October 31, 1997.

DELOITTE & TOUCHE, LLP
Dallas, Texas
January 28, 1998

<PAGE>
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