BLUELINX HOLDINGS INC.
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 29, 2007
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission file
number: 1-32383
BLUELINX HOLDINGS
INC.
(Exact name of registrant as
specified in its charter)
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Delaware
(State or other jurisdiction
of
incorporation or organization)
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77-0627356
(I.R.S. Employer
Identification No.)
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4300 Wildwood Parkway, Atlanta, Georgia
(Address of principal
executive offices)
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30339
(Zip Code)
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Registrants telephone number, including area code:
770-953-7000
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common stock, par value $0.01 per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
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 registrants 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. þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated
filer o
(Do not check if a smaller reporting company)
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Smaller reporting
company o
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of the registrants common stock
held by non-affiliates of the registrant as of June 29,
2007 was $123,741,372, based on the closing price on the New
York Stock Exchange of $10.49 per share on June 29, 2007.
As of February 25, 2008, the registrant had
31,801,712 shares of common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of BlueLinx Holdings Inc.s definitive Proxy
Statement for use in connection with its 2008 Annual Meeting of
Stockholders, scheduled to be held on May 21, 2008, are
incorporated by reference into Part III of this Report.
BLUELINX
HOLDINGS INC.
ANNUAL
REPORT ON
FORM 10-K
For the
Fiscal Year Ended December 29, 2007
TABLE OF CONTENTS
2
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Annual Report on
Form 10-K
includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking statements include, without
limitation, any statement that may predict, forecast, indicate
or imply future results, performance or achievements, and may
contain the words believe, anticipate,
expect, estimate, intend,
project, plan, will be,
will likely continue, will likely result
or words or phrases of similar meaning. All of these
forward-looking statements are based on estimates and
assumptions made by us that, although believed by us to be
reasonable, are inherently uncertain. Forward-looking statements
involve risks and uncertainties, including, but not limited to,
economic, competitive, governmental and technological factors
outside of our control, that may cause our business, strategy or
actual results to differ materially from the forward-looking
statements. These risks and uncertainties may include those
discussed under the heading Risk Factors and other
factors, some of which may not be known to us. We operate in a
changing environment in which new risks can emerge from time to
time. It is not possible for us to predict all of these risks,
nor can we assess the extent to which any factor, or a
combination of factors, may cause our business, strategy or
actual results to differ materially from those contained in
forward-looking statements. Factors you should consider that
could cause these differences include, among other things:
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changes in the prices, supply
and/or
demand for products which we distribute;
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general economic and business conditions in the United States;
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the activities of competitors;
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changes in significant operating expenses;
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changes in the credit markets and to the availability of capital;
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our ability to identify acquisition opportunities and
effectively and cost-efficiently integrate acquisitions;
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adverse weather patterns or conditions;
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acts of war or terrorist activities;
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variations in the performance of the financial markets; and
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the other factors described herein under Risk
Factors.
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Given these risks and uncertainties, we caution you not to place
undue reliance on forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as required by law.
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PART I
As used herein, unless the context otherwise requires,
BlueLinx, the Company, we,
us and our refer to BlueLinx Holdings
Inc. and its subsidiaries. BlueLinx Corporation is the
wholly-owned operating subsidiary of BlueLinx Holdings Inc. and
is referred to herein as the operating company when
necessary. Reference to fiscal 2007 refers to the
52-week period ended December 29, 2007. Reference to
fiscal 2006 refers to the 52-week period ended
December 30, 2006. Reference to fiscal 2005
refers to the 52-week period ended December 31, 2005.
Company
Overview
BlueLinx Holdings Inc., operating through our wholly-owned
subsidiary, BlueLinx Corporation, is a leading distributor of
building products in the United States. We operate in all of the
major metropolitan areas in the United States and, as of
December 29, 2007, we distributed more than 10,000 products
to approximately 11,500 customers through our network of more
than 80 warehouses and third-party operated warehouses.
We distribute products in two principal categories: structural
products and specialty products. Structural products, which
represented approximately 54% and 56% of our fiscal 2007 and
fiscal 2006 gross sales, include plywood, oriented strand
board (OSB), rebar and remesh, lumber and other wood
products primarily used for structural support, walls and
flooring in construction projects. Specialty products, which
represented approximately 46% and 44% of our fiscal 2007 and
fiscal 2006 gross sales, include roofing, insulation,
specialty panels, moulding, engineered wood products, vinyl
products (used primarily in siding), composite decking and metal
products (excluding rebar and remesh).
Our customers include building materials dealers, industrial
users of building products, manufactured housing builders and
home improvement centers. We purchase products from over 750
vendors and serve as a national distributor for a number of our
suppliers. We distribute products through our owned fleet of
over 800 trucks and over 1,200 trailers, as well as by common
carrier.
Our principal executive offices are located at 4300 Wildwood
Parkway, Atlanta, Georgia 30339 and our telephone number is
(770) 953-7000.
Our filings with the U.S. Securities and Exchange
Commission, including annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
proxy statements and amendments to those reports, are accessible
free of charge at our official website, www.BlueLinxCo.com. We
have adopted a Code of Ethics within the meaning of
Item 406(b) of
Regulation S-K.
This Code of Ethics applies to our principal executive officer,
principal financial officer and principal accounting officer.
This Code of Ethics, our board committee charters and our
corporate governance guidelines are publicly available at
www.BlueLinxCo.com or upon request by writing to BlueLinx
Holdings Inc., Attn: Corporate Secretary, 4300 Wildwood Parkway,
Atlanta, Georgia 30339. If we make substantial amendments to our
Code of Ethics or grant any waiver, including any implicit
waiver, we are required to disclose the nature of such amendment
or waiver on our website or in a report on
Form 8-K
of such amendment or waiver. The reference to our website does
not constitute incorporation by reference of the information
contained at the site.
History
We were created on March 8, 2004 as a Georgia corporation
named ABP Distribution Holdings Inc. (ABP). ABP was
owned by Cerberus Capital Management, L.P. (Cerberus Capital
Management, L.P. and its subsidiaries are referred to herein as
Cerberus), a private, New York-based investment
firm, and members of our management team. Prior to May 7,
2004, our assets were owned by the distribution division (the
Division) of Georgia-Pacific Corporation
(Georgia-Pacific). The Division commenced operations
in 1954 with 13 warehouses primarily used as an outlet for
Georgia-Pacifics plywood. On May 7, 2004,
Georgia-Pacific
sold assets of the Division to ABP. ABP subsequently merged into
BlueLinx Holdings Inc. On December 17, 2004, we consummated
an initial public offering of our common stock.
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Products
and Services
As of December 29, 2007, we distributed more than 10,000
different structural and specialty products to approximately
11,500 customers nationwide. Our structural products are
primarily used for structural support, walls, flooring and
roofing in construction projects. Additional end-uses of our
structural products include outdoor decks, sheathing, crates and
boxes. Our specialty products include engineered lumber,
roofing, insulation, metal products (excluding rebar and
remesh), vinyl products (used primarily in siding), moulding,
composite decking and particleboard. In some cases, these
products are branded.
We also provide a wide range of value-added services and
solutions to our customers and vendors including:
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providing less-than-truckload delivery services;
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pre-negotiated program pricing plans;
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inventory stocking;
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automated order processing through an electronic data
interchange, or EDI, that provides a direct link between us and
our customers;
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inter-modal distribution services, including railcar unloading
and cargo reloading onto customers trucks; and
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back-haul services, when otherwise empty trucks are returning
from customer deliveries.
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Distribution
Channels
We sell products through three main distribution channels:
Warehouse
Sales
Warehouse sales are delivered from our warehouses to dealers,
home improvement centers and industrial users. We deliver
products primarily using our fleet of over 800 trucks and over
1,200 trailers, but also occasionally use common carriers for
peak load flexibility. We operate in all of the major
metropolitan areas in the United States through our network of
more than 80 warehouses and third-party operated warehouses. Our
warehouses have over eleven million square feet of space under
roof plus significant outdoor storage space. Warehouse sales
accounted for approximately 59% and 54% of our fiscal 2007 and
fiscal 2006 gross sales, respectively.
Reload
Sales
Reload sales are similar to warehouse sales but are shipped from
third-party warehouses where we store owned product in order to
expand our geographic reach. This channel is employed primarily
to service strategic customers that would be uneconomical to
service from our warehouses and to distribute large volumes of
imported products such as metal or hardwood plywood from port
facilities. Reload sales accounted for approximately 12% and 13%
of our gross sales in fiscal 2007 and fiscal 2006, respectively.
Direct
Sales
Direct sales are shipped from the manufacturer to the customer
without our taking physical inventory possession. This channel
requires the lowest amount of committed capital and fixed costs.
Direct sales accounted for approximately 29% and 33% of our
fiscal 2007 and fiscal 2006 gross sales, respectively.
Customers
As of December 29, 2007, our customer base included
approximately 11,500 customers across multiple market segments
and various end-use markets, including the following types of
customers:
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building materials dealers;
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industrial users of building products;
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manufactured housing builders; and
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home improvement centers.
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Sales and
Marketing
Our sales efforts primarily are directed through our sales force
of approximately 800 sales representatives. Approximately 500 of
our sales representatives are located at our two sales centers
in Denver and Atlanta. Within these sales centers, our sales
representatives primarily interact with our customers over the
telephone. The remaining 300 sales representatives are located
throughout the country and are responsible for maintaining a
local dialogue with our customers, including making frequent,
in-person visits.
Our sales force is separated between industrial/dealer sales and
home improvement center sales. Industrial/dealer sales are
managed by regional vice-presidents with sales teams organized
by customer regions. The majority of industrial/dealer orders
are processed by telephone and are facilitated by our
centralized database of customer preferences and purchasing
history. We also have dedicated cross-functional customer
support teams focused on strategic growth with the home
improvement centers.
Suppliers
As of December 29, 2007, our vendor base included over 750
suppliers of both structural and specialty building products. In
some cases, these products are branded. We have supply contracts
in place with many of our vendors. Terms for these agreements
frequently include prompt payment discounts and freight
allowances and occasionally include volume discounts, growth
incentives, marketing allowances, consigned inventory and
extended payment terms.
Purchases of products manufactured by Georgia-Pacific accounted
for approximately 25% and approximately 24% of total purchases
in fiscal 2007 and fiscal 2006, respectively, with no other
supplier accounting for more than 4% of our fiscal 2007
purchases. As part of the acquisition transactions, whereby we
acquired the assets of Georgia-Pacifics distribution
division, we entered into a Master Purchase, Supply &
Distribution Agreement with Georgia-Pacific, or the Supply
Agreement. The Supply Agreement details distribution rights by
product categories, including exclusivity rights and minimum
supply volume commitments from Georgia-Pacific with respect to
certain products. This agreement also details our purchase
obligations by product categories, including substantial minimum
purchase volume commitments with respect to most of the products
supplied to us. Based on 2007 average market prices, our
purchase obligation under this agreement is approximately
$0.5 billion for the next two years. If we fail or refuse
to purchase any products that we are obligated to purchase
pursuant to the Supply Agreement, Georgia-Pacific has the right
to sell products to third parties and for certain products
terminate our exclusivity, and we may be required to pay
monetary penalties. The agreement has a five-year initial term
expiring on May 7, 2009, and remains continuously in effect
thereafter unless it is terminated. Termination of the Supply
Agreement requires two years notice, exercisable beginning
May 7, 2008. The Supply Agreement may be terminated by
either party for material breach. However, if the material
breach only affects one or more, but not all, of the product
categories, the non- breaching party may only terminate the
Supply Agreement in respect of the affected product categories,
and the Supply Agreement will remain in full force with respect
to the remaining product categories. The Supply Agreement also
provides for certain advertising, marketing and promotion
arrangements between BlueLinx and Georgia-Pacific for certain
products. In addition, we have been granted a limited,
non-exclusive, royalty-free, fully paid license to use certain
proprietary information and intellectual property of
Georgia-Pacific.
Competition
The U.S. building products distribution market is a highly
fragmented market, served by a small number of multi-regional
distributors, several regionally focused distributors and a
large number of independent local distributors. Local and
regional distributors tend to be closely held and often
specialize in a limited number of segments, such as the roofing
segment, in which they offer a broader selection of products.
Some of our multi-
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regional competitors are part of larger companies and therefore
have access to greater financial and other resources than us. We
compete on the basis of breadth of product offering, consistent
availability of product, product price and quality, reputation,
service and distribution facility location.
Our two largest competitors are Weyerhaeuser Company, or
Weyerhaeuser, and Boise Cascade Company, or Boise Cascade.
Weyerhaeuser and Boise Cascade are integrated building products
manufacturers-distributors that offer products manufactured by
themselves as well as third-party manufactured products. Most
major markets are served by at least one of these distributors.
Seasonality
We are exposed to fluctuations in quarterly sales volumes and
expenses due to seasonal factors. These seasonal factors are
common in the building products distribution industry. The first
and fourth quarters are typically our slowest quarters due to
the impact of poor weather on the construction market. Our
second and third quarters are typically our strongest quarters,
reflecting a substantial increase in construction due to more
favorable weather conditions. Our working capital and accounts
receivable and payable generally peak in the third quarter,
while inventory generally peaks in the second quarter in
anticipation of the summer building season. We expect these
trends to continue for the foreseeable future.
Trademarks
As of January 31, 2008, we had 38 U.S. trademark
applications and registrations, one issued U.S. patent and
two Canadian trademark registrations. Depending on the
jurisdiction, trademarks are valid as long as they are in use
and/or their
registrations are properly maintained and they have not become
generic. Registrations of trademarks can generally be renewed
indefinitely as long as the trademarks are in use. Our patent
expires in September 2013. We do not believe our business is
dependent on any one of our trademarks or on our patent.
Employees
As of December 29, 2007 we employed approximately
2,800 persons on a full-time basis. Approximately 830 of
our employees are represented by labor unions. As of
December 29, 2007, we had approximately 53 collective
bargaining agreements, of which 12, representing
312 employees, are up for renewal in 2008. We consider our
relationship with our employees generally to be good.
Executive
Officers
The following table contains the name, age and position with our
company of each of our executive officers as of
February 25, 2008. There are no arrangements or
understandings between any of our executive officers and any
other person pursuant to which any executive officer was or is
to be selected as an officer.
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Name
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Age
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Position
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Stephen E. Macadam
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Chief Executive Officer and Director
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George R. Judd
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President and Chief Operating Officer
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Howard D. Goforth
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Senior Vice President, Chief Financial Officer and Treasurer
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David J. Dalton
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Senior Vice President, West
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Duane G. Goodwin
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Senior Vice President, Supply Chain
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Barbara V. Tinsley
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Senior Vice President, General Counsel and Secretary
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Dean A. Adelman
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Vice President, Human Resources
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Stephen E. Macadam has served as our Chief Executive
Officer since October 2005, and as a member of our Board since
June 2004. Prior to his joining our Company, Mr. Macadam
was the President and Chief Executive Officer of Consolidated
Container Company LLC since August 2001. He served previously
with Georgia-Pacific where he held the position of Executive
Vice President, Pulp & Paperboard from July 2000 until
August 2001, and the position of Senior Vice President,
Containerboard & Packaging from March 1998
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until July 2000. Mr. Macadam held positions of increasing
responsibility with McKinsey and Company, Inc. from 1988 until
1998, culminating in the role of Principal in charge of
McKinseys Charlotte, North Carolina operation.
Mr. Macadam is a member of the board of directors of Solo
Cup Company. Mr. Macadam received a B.S. in mechanical
engineering from the University of Kentucky, an M.S. in finance
from Boston College and a Masters of Business Administration
from Harvard Business School, where he was a Baker Scholar.
George R. Judd has served as our President and Chief
Operating Officer since May 2004. Prior to that time, he worked
for Georgia-Pacific Corporation in a variety of positions
managing both inside and outside sales, national accounts and
most recently as Vice President of Sales and Eastern Operations
since 2002. From 2000 until 2002, Mr. Judd worked as Vice
President of the North and Midwest regions of the Distribution
Division. He served as Vice President of the Southeast region
from 1999 to 2000. Mr. Judd serves on the boards of the
Building Products Institute and the Lumber and Building
Materials Institute, in Washington, D.C., and he is past
Chair of the National Lumber & Building Material
Dealers Association. He also serves on the board of the Girl
Scouts of Georgia. He graduated from Western Connecticut State
University in 1984 with a Bachelors degree in Marketing.
Howard D. Goforth has served as our Senior Vice
President, Chief Financial Officer and Treasurer since
February 18, 2008. Mr. Goforth has twenty years of
combined accounting, finance, treasury, acquisition and
management experience with leading distribution and
manufacturing companies including Mitsubishi Wireless
Communications, Inc., Yamaha Motor Manufacturing, Inc. and
Ingersoll-Rand. Most recently, Mr. Goforth was Vice
President and Corporate Controller, as well as a member of the
senior management team, of Armor Holdings Inc. from November
2006 until the company was acquired by BAE Systems, Inc. in
August 2007. Mr. Goforth remained with BAE Systems until
February 2008 to assist in the integration of the acquisition.
Prior to Armor Holdings, Mr. Goforth served as BlueLinx
Corporations Corporate Controller from May 2004 until
November 2006. Prior to that, he served as a Controller with the
building products distribution division of Georgia-Pacific
Corporation from 2002 until May 2004. Mr. Goforth earned a
Bachelor of Science in Accounting from Mars Hill College in
North Carolina. He is also a certified public accountant.
David J. Dalton has served as our Senior Vice President,
West since January 2006. Prior to that time, Mr. Dalton
served as Vice President of the Mid-Atlantic region since May
2004. Previously, he worked for Georgia-Pacific Corporation in a
variety of positions managing both inside and outside sales, and
most recently as Vice President/General Manager of the
Mid-Atlantic region of the Distribution Division since 1995. He
graduated from the University of Massachusetts in 1980 with a
Bachelor of Science degree in Wood Science and Technology.
Duane G. Goodwin has served as our Senior Vice President,
Supply Chain since December 2005. Prior to that time,
Mr. Goodwin was with The Home Depot since April 1994, where
he served in a variety of positions including Vice
President/Merchandising Hardware from July 2003 to
February 2005, Vice President Global Sourcing from July 2000 to
July 2003, and Divisional Merchandise Manager from April 1999 to
July 2000. Before this Mr. Goodwin was with Wal-Mart
Stores, Inc., where he served in a variety of roles from 1985
through April 1994. Prior to joining our Company,
Mr. Goodwin also served as an outside consultant to
Cerberus beginning in June 2005.
Barbara V. Tinsley has served as our Senior Vice
President, General Counsel and Secretary since May 2004. Prior
to that time, Ms. Tinsley served as Associate General
Counsel for Cendian Corporation since September 2002, and as
Assistant General Counsel for Mitsubishi Electric and
Electronics USA, Inc. from October 2000 until September 2002.
From August 1998 until August 2000, Ms. Tinsley served as
Corporate Compliance Officer for The Home Depot. She was Chief
Counsel to Georgia-Pacific Corporations Distribution
Division from 1992 to 1998 and represented a number of other
divisions of Georgia-Pacific from 1987 to 1992. Prior to that,
Ms. Tinsley was an Assistant United States Attorney with
the Department of Justice for five years. Ms. Tinsley
previously served as Chairman of the Antitrust Section of the
State Bar of Georgia. Ms. Tinsley received a Bachelor of
Arts degree, magna cum laude, in 1971 from Emory University and
a Juris Doctor degree, with distinction, from Emory in 1975.
Dean A. Adelman has served as our Vice President, Human
Resources since October 2005. Prior to that time, he served as
Vice President Human Resources, Staff Development &
Training for Corrections
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Corporation of America. Previously, Mr. Adelman served as
Vice President Human Resources for Arbys Inc. (formerly
RTM Restaurant Group) from 1998 to 2002. From 1991 to 1998,
Mr. Adelman served as senior counsel for Georgia-Pacific
Corporation. Mr. Adelman received a Bachelor of Arts degree
from the University of Georgia in 1987 and a Juris Doctor
degree, cum laude, from the University of Georgia in 1990.
Environmental
and Other Governmental Regulations
Environmental
Regulation and Compliance
Our operations are subject to various federal, state, provincial
and local laws, rules and regulations. We are subject to
environmental laws, rules and regulations that limit discharges
into the environment, establish standards for the handling,
generation, emission, release, discharge, treatment, storage and
disposal of hazardous materials, substances and wastes, and
require cleanup of contaminated soil and groundwater. These
laws, ordinances and regulations are complex, change frequently
and have tended to become more stringent over time. Many of them
provide for substantial fines and penalties, orders (including
orders to cease operations) and criminal sanctions for
violations. They may also impose liability for property damage
and personal injury stemming from the presence of, or exposure
to, hazardous substances. In addition, certain of our operations
require us to obtain, maintain compliance with, and periodically
renew permits.
Certain of these laws, including the Comprehensive Environmental
Response, Compensation, and Liability Act, may require the
investigation and cleanup of an entitys or its
predecessors current or former properties, even if the
associated contamination was caused by the operations of a third
party. These laws also may require the investigation and cleanup
of third-party sites at which an entity or its predecessor sent
hazardous wastes for disposal, notwithstanding that the original
disposal activity accorded with all applicable requirements.
Liability under such laws may be imposed jointly and severally,
and regardless of fault.
Georgia-Pacific Corporation has agreed to indemnify us against
any claim arising from environmental conditions that existed
prior to May 7, 2004. In addition, we carry environmental
insurance. While we do not expect to incur significant
independent costs arising from environmental conditions, there
can be no assurance that all such costs will be covered by
indemnification or insurance.
We are also subject to the requirements of the
U.S. Department of Labor Occupational Safety and Health
Administration, or OSHA. In order to maintain compliance with
applicable OSHA requirements, we have established uniform safety
and compliance procedures for our operations and implemented
measures to prevent workplace injuries.
The U.S. Department of Transportation, or DOT, regulates
our operations in domestic interstate commerce. We are subject
to safety requirements governing interstate operations
prescribed by the DOT. Vehicle dimensions and driver hours of
service also remain subject to both federal and state regulation.
We incur and will continue to incur costs to comply with the
requirements of environmental, health and safety and
transportation laws, ordinances and regulations. We anticipate
that these requirements could become more stringent in the
future, and we cannot assure you that compliance costs will not
be material.
In addition to the other information contained in this
Form 10-K,
the following risk factors should be considered carefully in
evaluating our business. Our business, financial condition, or
results of operations could be materially adversely affected by
any of these risks. Additional risks not presently known to us
or that we currently deem immaterial may also impair our
business and operations.
Our
industry is highly cyclical, and prolonged periods of weak
demand or excess supply may reduce our net sales and/or margins,
which may reduce our net income or cause us to incur
losses.
The building products distribution industry is subject to
cyclical market pressures. Prices of building products are
determined by overall supply and demand in the market for
building products. Market prices of building products
historically have been volatile and cyclical and we have limited
ability to control the timing
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and amount of pricing changes for building products. Demand for
building products is driven mainly by factors outside of our
control, such as general economic and political conditions,
interest rates, availability of mortgage financing, the
construction, repair and remodeling and industrial markets,
weather and population growth. The supply of building products
fluctuates based on available manufacturing capacity, and excess
capacity in the industry can result in significant declines in
market prices for those products. To the extent that prices and
volumes experience a sustained or sharp decline, our net sales
and margins would likely decline as well. Our results in some
periods have been affected by market volatility, including a
reduction in gross profits due to a decline in the resale value
of our structural products inventory. All of these factors make
it difficult to forecast our operating results.
Our
cash flows and capital resources may be insufficient to make
required payments on our substantial indebtedness and future
indebtedness.
We have a substantial amount of debt. As of December 29,
2007, advances outstanding under our revolving credit facility
were approximately $184 million, borrowing availability was
approximately $222 million and outstanding letters of
credit on the facility were approximately $10.4 million. We
also have a mortgage loan in the amount of $295 million.
Our substantial debt could have important consequences to you.
For example, it could:
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make it difficult for us to satisfy our debt obligations;
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make us more vulnerable to general adverse economic and industry
conditions;
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limit our ability to obtain additional financing for working
capital, capital expenditures, acquisitions and other general
corporate requirements;
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expose us to interest rate fluctuations because the interest
rate on the debt under our revolving credit facility is variable;
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require us to dedicate a substantial portion of our cash flow
from operations to payments on our debt, thereby reducing the
availability of our cash flow for operations and other purposes;
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limit our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate; and
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place us at a competitive disadvantage compared to competitors
that may have proportionately less debt.
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In addition, our ability to make scheduled payments or refinance
our obligations depends on our successful financial and
operating performance, cash flows and capital resources, which
in turn depend upon prevailing economic conditions and certain
financial, business and other factors, many of which are beyond
our control. These factors include, among others:
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economic and demand factors affecting the building products
distribution industry;
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pricing pressures;
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increased operating costs;
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competitive conditions; and
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other operating difficulties.
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If our cash flows and capital resources are insufficient to fund
our debt service obligations, we may be forced to reduce or
delay capital expenditures, sell material assets or operations,
obtain additional capital or restructure our debt. Obtaining
additional capital or restructuring our debt could be
accomplished in part, through new or additional borrowings or
placements of debt or equity securities. There is no assurance
that we could obtain additional capital or restructure our debt
on terms acceptable to us or at all. In the event that we are
required to dispose of material assets or operations to meet our
debt service and other obligations, the value realized on such
assets or operations will depend on market conditions and the
availability of buyers.
10
Accordingly, any such sale may not, among other things, be for a
sufficient dollar amount. Our obligations under the revolving
credit facility are secured by a first priority security
interest in all of our operating companys inventories,
receivables and proceeds from those items. In addition, our
mortgage loan is secured by the majority of our real property.
The foregoing encumbrances may limit our ability to dispose of
material assets or operations. We also may not be able to
restructure our indebtedness on favorable economic terms, if at
all. We may incur substantial additional indebtedness in the
future, including under the revolving credit facility. Our
incurrence of additional indebtedness would intensify the risks
described above.
The
instruments governing our indebtedness contain various covenants
limiting the discretion of our management in operating our
business.
Our revolving credit facility and mortgage loan contain various
restrictive covenants and restrictions, including financial
covenants customary for asset-based loans that limit our
managements discretion in operating our business. In
particular, these instruments limit our ability to, among other
things:
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incur additional debt;
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grant liens on assets;
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make investments, including capital expenditures;
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sell or acquire assets outside the ordinary course of business;
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engage in transactions with affiliates; and
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make fundamental business changes.
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If we fail to maintain minimum excess availability of
$40 million under the revolving credit facility, the
revolving credit facility requires us to (i) maintain
certain financial ratios and (ii) limit our capital
expenditures. If we fail to comply with the restrictions in the
revolving credit facility, the mortgage loan documents or any
other current or future financing agreements, a default may
allow the creditors under the relevant instruments to accelerate
the related debt and to exercise their remedies under these
agreements, which will typically include the right to declare
the principal amount of that debt, together with accrued and
unpaid interest and other related amounts, immediately due and
payable, to exercise any remedies the creditors may have to
foreclose on assets that are subject to liens securing that debt
and to terminate any commitments they had made to supply further
funds.
The
payment of dividends has been suspended, and resumption is
dependant on business conditions, among other factors; the
instruments governing our indebtedness contain various covenants
that may limit our ability to pay dividends.
In the past we have paid dividends on our common stock at the
quarterly rate of $0.125 per share. However, on December 5,
2007, we suspended the payment of dividends on our common stock
for an indefinite period of time. Resumption of the payment of
dividends will depend on, among other things, business
conditions in the housing industry, our results of operations,
cash requirements, financial condition, contractual
restrictions, provisions of applicable law and other factors
that our board of directors may deem relevant. Accordingly, we
may not be able to resume the payment of dividends at the same
quarterly rate in the future, if at all.
Our revolving credit facility limits distributions by our
operating company to us, which, in turn, may limit our ability
to pay dividends to holders of our common stock. See Notes
to Financial Statements Note 8. Revolving
Credit Facility for more information on limits on
our ability to pay dividends.
We
depend upon a single supplier, Georgia-Pacific, for a
significant percentage of our products and have significant
purchase commitments under our Supply Agreement with
Georgia-Pacific.
Georgia-Pacific is our largest supplier, accounting for
approximately 25% and approximately 24% of our purchases during
fiscal 2007 and fiscal 2006, respectively. Concurrent with the
acquisition, we entered into a
11
Supply Agreement with Georgia-Pacific. The Supply Agreement has
a five-year initial term expiring on May 7, 2009 and
remains continuously in effect thereafter unless it is
terminated. Termination of the Supply Agreement requires two
years notice, exercisable beginning on May 7, 2008.
Upon a material breach of the agreement by us, Georgia-Pacific
may terminate the agreement at anytime. If Georgia-Pacific does
not renew the Supply Agreement or if it discontinues sales of a
product, we would experience a product shortage unless and until
we obtain a replacement supplier. We may not be able to obtain
replacement products on favorable economic terms, if at all. An
inability to replace products on favorable economic terms would
adversely impact our net sales and our costs, which in turn
could impact our gross profit, net income and cash flows.
We believe that the economic terms of the Supply Agreement are
beneficial to us since they provide us with certain discounts
off standard industry pricing indices, certain cash discounts
and favorable payment terms. While we also believe these terms
benefit Georgia-Pacific, Georgia-Pacific could, if it chose,
terminate the Supply Agreement as early as May 7, 2010. If
it did so and we could not obtain comparable terms from
Georgia-Pacific or another vendor thereafter, our operating
performance could be impaired by an interruption in the delivery
of products
and/or an
increase in cost to us from sourcing comparable products from
other suppliers.
Under the Supply Agreement, we have substantial minimum purchase
volume commitments with respect to a number of products supplied
to us. Based on 2007 average market prices, our purchase
obligations under this agreement are $0.5 billion for the
next two years. These products account for a majority of our
purchases from Georgia-Pacific. If we fail or refuse to purchase
any products that we are obligated to purchase pursuant to the
Supply Agreement, Georgia-Pacific has the right to sell products
to third parties and, for certain products, terminate our
exclusivity, which could reduce our net sales due to the
unavailability of products or our gross profit if we are
required to pay higher product prices to other suppliers. A
reduction in our net sales or gross profit may also reduce our
net income and cash flows or increase our net loss.
Our
industry is highly fragmented and competitive. If we are unable
to compete effectively, our net sales and net income will be
reduced or we may incur additional losses.
The building products distribution industry is highly fragmented
and competitive and the barriers to entry for local competitors
are relatively low. Some of our competitors are part of larger
companies and therefore have access to greater financial and
other resources than us. In addition, certain product
manufacturers sell and distribute their products directly to
customers. Additional manufacturers of products distributed by
us may elect to sell and distribute directly to end-users in the
future or enter into exclusive supply arrangements with other
distributors. Finally, we may not be able to maintain our costs
at a level sufficiently low for us to compete effectively. If we
are unable to compete effectively, our net sales and net income
will be reduced or we may incur additional losses.
Integrating
acquisitions may be time-consuming and create costs that could
reduce our net income and cash flows or increase our net
loss.
Part of our growth strategy includes pursuing acquisitions. Any
integration process may be complex and time consuming, may be
disruptive to the business and may cause an interruption of, or
a distraction of managements attention from, the business
as a result of a number of obstacles, including but not limited
to:
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the loss of key customers of the acquired company;
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the incurrence of unexpected expenses and working capital
requirements;
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a failure of our due diligence process to identify significant
issues or contingencies;
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difficulties assimilating the operations and personnel of the
acquired company;
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difficulties effectively integrating the acquired technologies
with our current technologies;
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our inability to retain key personnel of acquired entities;
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failure to maintain the quality of customer service;
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12
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our inability to achieve the financial and strategic goals for
the acquired and combined businesses; and
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difficulty in maintaining internal controls, procedures and
policies.
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Any of the foregoing obstacles, or a combination of them, could
increase selling, general and administrative expenses in
absolute terms
and/or as a
percentage of net sales, which could in turn negatively impact
our net income and cash flows or increase our net loss.
We have completed two acquisitions, to date. On July 22,
2005 we completed the acquisition of the assets of
California-based hardwood lumber company Lane Stanton Vance
(LSV), and on August 7, 2006 we completed the
acquisition of the Texas-based hardwood lumber distribution
company, Austin Hardwoods, Ltd. We may not be able to consummate
acquisitions in the future on terms acceptable to us, or at all.
In addition, future acquisitions are accompanied by the risk
that the obligations and liabilities of an acquired company may
not be adequately reflected in the historical financial
statements of that company and the risk that those historical
financial statements may be based on assumptions which are
incorrect or inconsistent with our assumptions or approach to
accounting policies. Any of these material obligations,
liabilities or incorrect or inconsistent assumptions could
adversely impact our results of operations.
A
significant percentage of our employees are unionized. Wage
increases or work stoppages by our unionized employees may
reduce our results of operations.
As of December 29, 2007, approximately 30% of our employees
were represented by various labor unions. As of
December 29, 2007, we had approximately 53 collective
bargaining agreements, of which 12, covering 312 total
employees, are up for renewal in 2008. We may become subject to
material cost increases, or additional work rules imposed by
agreements with labor unions. The foregoing could increase our
selling, general and administrative expenses in absolute terms
and/or as a
percentage of net sales. In addition, work stoppages or other
labor disturbances may occur in the future, which could
adversely impact our net sales
and/or
selling, general and administrative expenses. All of these
factors could negatively impact our net income and cash flows or
increase our net loss.
Federal
and state transportation regulations could impose substantial
costs on us which would reduce our net income or increase our
net loss.
We use our own fleet of over 800 trucks and over 1,200 trailers
to service customers throughout the United States. The
U.S. Department of Transportation, or DOT, regulates our
operations in domestic interstate commerce. We are subject to
safety requirements governing interstate operations prescribed
by the DOT. Vehicle dimensions and driver hours of service also
remain subject to both federal and state regulation. More
restrictive limitations on vehicle weight and size, trailer
length and configuration, or driver hours of service would
increase our costs, which, if we are unable to pass these cost
increases on to our customers, would reduce our gross margins,
increase our selling, general and administrative expenses and
reduce our net income or increase our net loss.
Environmental
laws impose risks and costs on us.
Our operations are subject to federal, state, provincial and
local laws, rules and regulations governing the protection of
the environment, including, but not limited to, those regulating
discharges into the air and water, the use, handling and
disposal of hazardous or toxic substances, the management of
wastes, the cleanup of contamination and the control of noise
and odors. We have made, and will continue to make, expenditures
to comply with these requirements. While we believe, based upon
current information, that we are in substantial compliance with
all applicable environmental laws, rules and regulations, we
could be subject to potentially significant fines or penalties
for any failure to comply. Moreover, under certain environmental
laws, a current or previous owner or operator of real property,
and parties that generate or transport hazardous substances that
are disposed of at that real property, may be held liable for
the cost to investigate or clean up such real property and for
related damages to natural resources. We may be subject to
liability, including liability for investigation and cleanup
costs, if contamination is discovered at one of our current or
former warehouse facilities, or at a landfill or other location
where we have disposed of, or arranged for the disposal of,
wastes.
13
Georgia-Pacific has agreed to indemnify us against any claim
arising from environmental conditions that existed prior to
May 7, 2004. We also carry environmental insurance.
However, any remediation costs not related to conditions
existing prior to May 7, 2004 may not be covered by
indemnification. In addition, certain remediation costs may not
be covered by insurance. In addition, we could be subject to
claims brought pursuant to applicable laws, rules or regulations
for property damage or personal injury resulting from the
environmental impact of our operations. Increasingly stringent
environmental requirements, more aggressive enforcement actions,
the discovery of unknown conditions or the bringing of future
claims may cause our expenditures for environmental matters to
increase, and we may incur material costs associated with these
matters.
Anti-terrorism
measures may harm our business by impeding our ability to
deliver products on a timely and cost-effective
basis.
In the event of future terrorist attacks or threats on the
United States, federal, state and local authorities could
implement various security measures, including checkpoints and
travel restrictions on large trucks. Our customers typically
need quick delivery and rely on our on-time delivery
capabilities. If security measures disrupt or impede the timing
of our deliveries, we may fail to meet the needs of our
customers, or may incur increased expenses to do so.
We may
incur substantial costs relating to Georgia-Pacifics
product liability related claims.
Georgia-Pacific is a defendant in suits brought in various
courts around the nation by plaintiffs who allege that they have
suffered personal injury as a result of exposure to products
containing asbestos. These suits allege a variety of lung and
other diseases based on alleged exposure to products previously
manufactured by Georgia-Pacific. Although the terms of the asset
purchase agreement provide that Georgia-Pacific will indemnify
us against all obligations and liabilities arising out of,
relating to or otherwise in any way in respect of any product
liability claims (including, without limitation, claims,
obligations or liabilities relating to the presence or alleged
presence of asbestos-containing materials) with respect to
products purchased, sold, marketed, stored, delivered,
distributed or transported by Georgia-Pacific and its
affiliates, including the Division prior to the acquisition, it
could be possible that circumstances may arise under which
asbestos-related claims against Georgia-Pacific could cause us
to incur substantial costs.
For example, in the event that Georgia-Pacific is financially
unable to respond to an asbestos product liability claim,
plaintiffs lawyers may, in order to obtain recovery,
attempt to sue us, in our capacity as owner of assets sold by
Georgia-Pacific, despite the fact that the assets sold to us did
not contain asbestos. Asbestos litigation has, over the years,
proved unpredictable, as the aggressive and well-financed
asbestos plaintiffs bar has been creative, and often
successful, in bringing claims based on novel legal theories and
on expansive interpretations of existing legal theories. These
claims have included claims against companies that did not
manufacture asbestos products. As a result of these factors, a
number of companies have been held liable for amounts far in
excess of their perceived exposure. Although we believe, based
on our understanding of the law as currently interpreted, that
we should not be held liable for any of Georgia-Pacifics
asbestos-related claims, and, to the contrary, that we would
prevail on summary judgment on any such claims, there is
nevertheless a possibility that new theories could be developed,
or that the application of existing theories could be expanded,
in a manner that would result in liability for us. Any such
liability could ultimately be borne by us if Georgia-Pacific is
unable to fulfill its indemnity obligation under the asset
purchase agreement with us.
Affiliates
of Cerberus control us and may have conflicts of interest with
other stockholders in the future.
Funds and accounts managed by Cerberus or its affiliated
management companies, which are referred to collectively as the
controlling stockholder, collectively own approximately 58% of
our common stock. As a result, the controlling stockholder will
continue to be able to control the election of our directors,
determine our corporate and management policies and determine,
without the consent of our other stockholders, the outcome of
any corporate transaction or other matter submitted to our
stockholders for approval, including potential mergers or
acquisitions, asset sales and other significant corporate
transactions.
14
Four of our ten directors are employees of Cerberus. The
controlling stockholder also has sufficient voting power to
amend our organizational documents. The interests of the
controlling stockholder may not coincide with the interests of
other holders of our common stock. Additionally, the controlling
stockholder is in the business of making investments in
companies and may, from time to time, acquire and hold interests
in businesses that compete directly or indirectly with us. The
controlling stockholder may also pursue, for its own account,
acquisition opportunities that may be complementary to our
business, and as a result, those acquisition opportunities may
not be available to us. So long as the controlling stockholder
continues to own a significant amount of the outstanding shares
of our common stock, it will continue to be able to strongly
influence or effectively control our decisions, including
potential mergers or acquisitions, asset sales and other
significant corporate transactions. In addition, because we are
a controlled company within the meaning of the New York Stock
Exchange rules, we are exempt from the NYSE requirements that
our board be composed of a majority of independent directors,
and that our compensation and nominating/corporate governance
committees be composed entirely of independent directors.
Even
if Cerberus no longer controls us in the future, certain
provisions of our charter documents and agreements and Delaware
law could discourage, delay or prevent a merger or acquisition
at a premium price.
Our Amended and Restated Certificate of Incorporation and Bylaws
contain provisions that:
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permit us to issue, without any further vote or action by the
stockholders, up to 30 million shares of preferred stock in
one or more series and, with respect to each series, to fix the
number of shares constituting the series and the designation of
the series, the voting powers (if any) of the shares of such
series, and the preferences and other special rights, if any,
and any qualifications, limitations or restrictions, of the
shares of the series; and
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limit the stockholders ability to call special meetings.
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These provisions may discourage, delay or prevent a merger or
acquisition at a premium price.
In addition, we are subject to Section 203 of the General
Corporation Law of the State of Delaware, or the DGCL, which
also imposes certain restrictions on mergers and other business
combinations between us and any holder of 15% or more of our
common stock. Further, certain of our incentive plans provide
for vesting of stock options
and/or
payments to be made to our employees in connection with a change
of control, which could discourage, delay or prevent a merger or
acquisition at a premium price.
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ITEM 1B.
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UNRESOLVED
STAFF COMMENTS.
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None.
We lease approximately 250,000 square feet for our
corporate headquarters located at 4300 Wildwood Parkway,
Atlanta, Georgia 30339. As part of a restructuring effort, we
vacated approximately 100,000 square feet of our corporate
headquarters space which we are actively seeking to sublease. We
operate warehouse facilities in over 65 markets nationwide. We
own 64 warehouse facilities and lease 16 additional warehouse
facilities. The total square footage under roof at our owned and
leased warehouses is approximately 11 million square feet.
Our Denver sales center and 57 of our owned warehouse facilities
secure our mortgage loan.
The following table summarizes our real estate facilities
including their inside square footage:
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Owned
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Leased
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Facility Type
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Number
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Facilities
(ft2)
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Facilities
(ft2)
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Office Space(1)
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3
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68,700
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251,900
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Warehouses
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80
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10,300,000
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900,000
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TOTAL
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83
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10,368,700
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1,151,900
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15
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(1) |
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Includes corporate headquarters in Atlanta, the Denver Sales
Center and a call center in Vancouver. We are actively marketing
100,000 square feet at our Atlanta corporate headquarters
for sublease. |
We also store materials outdoors, such as lumber and rebar, at
all of our warehouse locations, which increases their
distribution and storage capacity. We believe that substantially
all of our property and equipment is in good condition, subject
to normal wear and tear. We believe that our facilities have
sufficient capacity to meet current and projected distribution
needs.
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ITEM 3.
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LEGAL
PROCEEDINGS.
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On November 19, 2004, we received a letter from Wickes
Lumber, or Wickes, asserting that approximately $16 million
in payments received by the Division during the
90-day
period prior to Wickes January 20, 2004
Chapter 11 filing were preferential payments under
section 547 of the United States Bankruptcy Code. On
October 14, 2005, Wickes Inc. filed a lawsuit in the United
States Bankruptcy Court for the Northern District of Illinois
titled Wickes Inc. v. Georgia Pacific Distribution
Division (BlueLinx), (Bankruptcy Adversary Proceeding
No. 05-2322)
asserting its claim. On November 14, 2005, we filed an
answer to the complaint denying liability. Although the ultimate
outcome of this matter cannot be determined with certainty, we
believe Wickes assertion to be without merit and, in any
event, subject to one or more complete defenses, including, but
not limited to, that the payments were made and received in the
ordinary course of business and were a substantially
contemporaneous exchange for new value given to Wickes.
We are, and from time to time may be, a party to routine legal
proceedings incidental to the operation of our business. The
outcome of any pending or threatened proceedings is not expected
to have a material adverse effect on our financial condition,
operating results or cash flows, based on our current
understanding of the relevant facts. Legal expenses incurred
related to these contingencies are generally expensed as
incurred. We establish reserves for pending or threatened
proceedings when the costs associated with such proceedings
become probable and can be reasonably estimated.
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ITEM 4.
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SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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No matters were submitted to a vote of security holders during
the fourth quarter of fiscal 2007.
PART II
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ITEM 5.
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MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
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Our equity securities consist of one class of common stock. The
common stock began trading on December 16, 2004. The common
stock is traded on the New York Stock Exchange under the symbol
BXC. The following table sets forth, for the periods
indicated, the range of the high and low sales prices for the
common stock as quoted on the New York Stock Exchange:
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High
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Low
|
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Fiscal Year Ended December 29, 2007
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First Quarter
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$
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12.39
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$
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10.18
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Second Quarter
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$
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11.96
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$
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10.47
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Third Quarter
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$
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10.61
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$
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6.93
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Fourth Quarter
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$
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7.50
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$
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3.16
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Fiscal Year Ended December 30, 2006
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First Quarter
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$
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16.95
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$
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11.16
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Second Quarter
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16.59
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|
|
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11.70
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Third Quarter
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13.50
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9.26
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Fourth Quarter
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11.20
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8.80
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16
As of February 25, 2008, there were 27 registered
stockholders, and, as of that date we estimate there were
approximately 3,200 beneficial owners holding our common stock
in nominee or street name.
We paid a cash dividend of $0.125 per share for each of our
fiscal quarters beginning in March 2005 and continuing through
the fourth quarter of 2007. However, on December 5, 2007,
we suspended the payment of dividends on our common stock for an
indefinite period of time. Resumption of the payment of
dividends will depend on, among other things, business
conditions in the housing industry, our results of operations,
cash requirements, financial condition, contractual
restrictions, provisions of applicable law and other factors
that our board of directors may deem relevant. See
Item 8. Financial Statements and Supplementary Data,
Note 8. Revolving Credit Facility for additional
information regarding limitations on the ability of BlueLinx
Corporation to transfer funds to its parent, BlueLinx Holdings
Inc., which could impact our ability to pay dividends to our
stockholders. Accordingly, we may not be able to resume the
payment of dividends at the same quarterly rate in the future,
if at all.
Equity
Compensation Plan Information
The following table provides information about the shares of our
common stock that may be issued upon the exercise of options and
other awards under our existing equity compensation plans as of
December 29, 2007. Our stockholder-approved equity
compensation plans are the 2004 Equity Incentive Plan and the
2006 Long-Term Equity Incentive Plan. We do not have any
non-stockholder approved equity compensation plans.
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(a)
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(b)
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(c)
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Number of Securities
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Weighted-Average
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Number of Securities Remaining
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to be Issued Upon
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Exercise Price of
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Available for Future Issuance Under
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Exercise of
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Outstanding
|
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Equity Compensation Plans
|
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Outstanding Options,
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Options, Warrants
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(Excluding Securities Reflected in
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Plan Category
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Warrants and Rights
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and Rights
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Column (a))
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Equity compensation plans approved by security holders
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1,544,370
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$
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11.99
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1,112,346
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Equity compensation plans not approved by security holders
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|
|
|
n/a
|
|
|
|
|
|
Total
|
|
|
1,544,370
|
|
|
$
|
11.99
|
|
|
|
1,112,346
|
|
17
Performance
Graph
The chart below compares the quarterly percentage change in the
cumulative total stockholder return on our common stock with the
cumulative total return on the Russell 2000 Index and a peer
group index for the period commencing December 16, 2004
(the first day of trading of our common stock after our initial
public offering) and ending December 31, 2007, assuming an
investment of $100 and the reinvestment of any dividends.
Our peer group index was selected by us and is comprised of
reporting companies with lines of business and product offerings
that are comparable to ours and which we believe most accurately
represent our business. Our peer group consists of the following
companies: Beacon Roofing Supply Inc., Builders Firstsource,
Building Materials Holding Corporation, Huttig Building Products
Inc., Interline Brands Inc., Universal Forest Products Inc. and
Watsco Inc.
Comparison
of Cumulative Total Return
Cumulative Total Return
Year Ending
(in dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company/Index Name
|
|
|
12/16/04
|
|
|
12/31/04
|
|
|
12/31/05
|
|
|
12/31/06
|
|
|
12/31/07
|
BlueLinx Holdings Inc.
|
|
|
|
100
|
|
|
|
|
107.19
|
|
|
|
|
86.84
|
|
|
|
|
83.75
|
|
|
|
|
34.03
|
|
Russell 2000 Index
|
|
|
|
100
|
|
|
|
|
101.55
|
|
|
|
|
106.17
|
|
|
|
|
125.67
|
|
|
|
|
123.70
|
|
Peer Group
|
|
|
|
100
|
|
|
|
|
101.82
|
|
|
|
|
149.98
|
|
|
|
|
126.66
|
|
|
|
|
77.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 6.
|
SELECTED
FINANCIAL DATA.
|
We were created on March 8, 2004 (date of inception) as a
Georgia corporation named ABP Distribution Holdings Inc. On
May 7, 2004, the Company and its operating company acquired
the assets of the distribution division of Georgia-Pacific, or
the Division, as described below. On August 30, 2004, ABP
Distribution Holdings Inc. merged into BlueLinx Holdings Inc., a
Delaware corporation. The Consolidated Financial Statements
include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
The financial statements of the Division reflect the accounts
and results of certain operations of the business conducted by
the Division. The accompanying financial statements of the
Division have been
18
prepared from Georgia-Pacifics historical accounting
records and are presented on a carve-out basis reflecting these
certain assets, liabilities, and operations. The Division was an
unincorporated business of Georgia-Pacific and, accordingly,
Georgia-Pacifics net investment in these operations
(parents net investment) is presented in lieu of
stockholders equity. All significant intradivision
transactions have been eliminated. The financial statements are
not necessarily indicative of the financial position, results of
operations and cash flows that might have occurred had the
Division been an independent entity not integrated into
Georgia-Pacifics other operations. Also, they may not be
indicative of the actual financial position that might have
otherwise resulted, or of the future results of operations or
financial position of the Division.
The following table sets forth certain historical financial data
of our company. The selected financial data for the fiscal year
ended December 29, 2007 (fiscal 2007), the
fiscal year ended December 30, 2006 (fiscal
2006), the fiscal year ended December 31, 2005
(fiscal 2005), the period from inception
(March 8, 2004) to January 1, 2005, the period
from January 4, 2004 to May 7, 2004 (the aggregate
period from January 4, 2004 through January 1, 2005
referred to herein as fiscal 2004) and the fiscal
year ended January 3, 2004 (fiscal 2003) have
been derived from the Companys audited financial
statements included elsewhere in this Annual Report on
Form 10-K
or from prior financial statements (fiscal 2003). The financial
statements prior to May 7, 2004 are referred to as
pre-acquisition period statements. The following
information should be read in conjunction with our financial
statements and Managements Discussion and Analysis
of Financial Condition and Results of Operations.
The acquisition of the assets of the Division was accounted for
using the purchase method of accounting, and the assets acquired
and liabilities assumed were accounted for at their fair market
values at the date of consummation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
Pre-acquisition Period
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inception
|
|
|
|
from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(March 8,
|
|
|
|
January 4,
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
2004)
|
|
|
|
2004
|
|
|
Year Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
to January 1,
|
|
|
|
to May 7,
|
|
|
January 3,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
|
2004
|
|
|
2004
|
|
|
|
(In thousands, except per share data)
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
3,833,910
|
|
|
$
|
4,899,383
|
|
|
$
|
5,622,071
|
|
|
$
|
3,672,820
|
|
|
|
$
|
1,885,334
|
|
|
$
|
4,271,842
|
|
Cost of sales
|
|
|
3,441,964
|
|
|
|
4,419,576
|
|
|
|
5,109,632
|
|
|
|
3,339,590
|
|
|
|
|
1,658,123
|
|
|
|
3,814,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
391,946
|
|
|
|
479,807
|
|
|
|
512,439
|
|
|
|
333,230
|
|
|
|
|
227,211
|
|
|
|
457,467
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
372,754
|
|
|
|
381,554
|
|
|
|
378,008
|
|
|
|
248,291
|
|
|
|
|
139,203
|
|
|
|
346,585
|
|
Depreciation and amortization
|
|
|
20,924
|
|
|
|
20,724
|
|
|
|
18,770
|
|
|
|
10,132
|
|
|
|
|
6,175
|
|
|
|
19,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
393,678
|
|
|
|
402,278
|
|
|
|
396,778
|
|
|
|
258,423
|
|
|
|
|
145,378
|
|
|
|
366,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,732
|
)
|
|
|
77,529
|
|
|
|
115,661
|
|
|
|
74,807
|
|
|
|
|
81,833
|
|
|
|
91,406
|
|
Non-operating expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
43,660
|
|
|
|
46,164
|
|
|
|
42,311
|
|
|
|
28,765
|
|
|
|
|
|
|
|
|
|
|
Charges associated with mortgage refinancing
|
|
|
|
|
|
|
4,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of debt issue costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,871
|
|
|
|
|
|
|
|
|
|
|
Other expense (income), net
|
|
|
(370
|
)
|
|
|
320
|
|
|
|
186
|
|
|
|
(516
|
)
|
|
|
|
614
|
|
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
|
(45,022
|
)
|
|
|
26,181
|
|
|
|
73,164
|
|
|
|
43,687
|
|
|
|
|
81,219
|
|
|
|
91,030
|
|
Provision for (benefit from) income taxes
|
|
|
(17,077
|
)
|
|
|
10,349
|
|
|
|
28,561
|
|
|
|
17,781
|
|
|
|
|
30,782
|
|
|
|
34,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
$
|
15,832
|
|
|
$
|
44,603
|
|
|
$
|
25,906
|
|
|
|
$
|
50,437
|
|
|
$
|
56,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: preferred stock dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
Pre-acquisition Period
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(March 8,
|
|
|
|
Period from
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
2004)
|
|
|
|
January 4,
|
|
|
Year Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
to January 1,
|
|
|
|
2004 to May 7,
|
|
|
January 3,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
|
2004
|
|
|
2004
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to common stockholders
|
|
$
|
(27,945
|
)
|
|
$
|
15,832
|
|
|
$
|
44,603
|
|
|
$
|
20,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
|
|
|
30,848
|
|
|
|
30,618
|
|
|
|
30,195
|
|
|
|
19,006
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share applicable to common stock
|
|
$
|
(0.91
|
)
|
|
$
|
0.52
|
|
|
$
|
1.48
|
|
|
$
|
1.09
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding
|
|
|
30,848
|
|
|
|
30,779
|
|
|
|
30,494
|
|
|
|
20,296
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share applicable to common stock
|
|
$
|
(0.91
|
)
|
|
$
|
0.51
|
|
|
$
|
1.46
|
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
13,141
|
|
|
$
|
9,601
|
|
|
$
|
12,744
|
|
|
$
|
9,759
|
|
|
|
$
|
1,378
|
|
|
$
|
5,404
|
|
EBITDA(1)
|
|
|
19,562
|
|
|
|
97,933
|
|
|
|
134,245
|
|
|
|
85,455
|
|
|
|
|
87,394
|
|
|
|
110,506
|
|
Net cash provided by (used in) operating activities
|
|
|
79,842
|
|
|
|
63,204
|
|
|
|
124,937
|
|
|
|
137,246
|
|
|
|
|
(113,982
|
)
|
|
|
59,575
|
|
Net cash provided by (used in) investing activities
|
|
|
(9,070
|
)
|
|
|
(18,170
|
)
|
|
|
(28,499
|
)
|
|
|
(832,992
|
)
|
|
|
|
(1,126
|
)
|
|
|
(4,062
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
(82,055
|
)
|
|
$
|
(42,312
|
)
|
|
$
|
(87,690
|
)
|
|
$
|
711,318
|
|
|
|
$
|
114,602
|
|
|
$
|
(55,162
|
)
|
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
15,759
|
|
|
$
|
27,042
|
|
|
$
|
24,320
|
|
|
$
|
15,572
|
|
|
|
|
|
|
|
$
|
506
|
|
Working capital
|
|
|
448,731
|
|
|
|
520,237
|
|
|
|
529,983
|
|
|
|
491,975
|
|
|
|
|
|
|
|
|
442,672
|
|
Total assets
|
|
|
883,436
|
|
|
|
1,004,362
|
|
|
|
1,157,640
|
|
|
|
1,137,062
|
|
|
|
|
|
|
|
|
816,644
|
|
Total debt(2)
|
|
|
478,535
|
|
|
|
532,462
|
|
|
|
540,850
|
|
|
|
652,103
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity/parents investment
|
|
$
|
154,823
|
|
|
$
|
189,399
|
|
|
$
|
183,852
|
|
|
$
|
141,492
|
|
|
|
|
|
|
|
$
|
637,073
|
|
|
|
|
(1) |
|
EBITDA is an amount equal to net income (loss) plus interest
expense, write-off of debt issue costs, charges associated with
mortgage refinancing, income taxes, depreciation and
amortization. EBITDA is presented herein because we believe it
is a useful supplement to cash flow from operations in
understanding cash flows generated from operations that are
available for debt service (interest and principal payments) and
further investment in acquisitions. However, EBITDA is not a
presentation made in accordance with generally accepted
accounting principles in the United States, or GAAP, and is not
intended to present a superior measure of the financial
condition from those determined under GAAP. EBITDA, as used
herein, is not necessarily comparable to other similarly titled
captions of other companies due to differences in methods of
calculations. |
|
(2) |
|
Total debt represents long-term debt, including current
maturities. |
20
A reconciliation of net cash provided by (used in) operating
activities, the most directly comparable GAAP measure, to EBITDA
for each of the respective periods indicated is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
Pre-acquisition Period
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
Period from
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Inception (March 8,
|
|
|
|
January 4,
|
|
|
Year Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
2004) to January 1,
|
|
|
|
2004 to May 7,
|
|
|
January 3,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
|
2004
|
|
|
2004
|
|
|
|
(In thousands)
|
|
Net cash provided by (used in) operating activities
|
|
$
|
79,842
|
|
|
$
|
63,204
|
|
|
$
|
124,937
|
|
|
$
|
137,246
|
|
|
|
$
|
(113,982
|
)
|
|
$
|
59,575
|
|
Amortization of debt issue costs
|
|
|
(2,431
|
)
|
|
|
(2,628
|
)
|
|
|
(3,629
|
)
|
|
|
(2,323
|
)
|
|
|
|
|
|
|
|
|
|
Non-cash vacant property charges
|
|
|
(11,037
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax (provision) benefit
|
|
|
9,526
|
|
|
|
3,700
|
|
|
|
368
|
|
|
|
4,469
|
|
|
|
|
(9,183
|
)
|
|
|
(4,598
|
)
|
Gain from insurance settlement
|
|
|
1,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
(3,500
|
)
|
|
|
(2,921
|
)
|
|
|
(2,170
|
)
|
|
|
(1,088
|
)
|
|
|
|
|
|
|
|
|
|
Excess tax benefits from share-based arrangements
|
|
|
20
|
|
|
|
891
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities
|
|
|
(81,139
|
)
|
|
|
(20,826
|
)
|
|
|
(56,204
|
)
|
|
|
(99,395
|
)
|
|
|
|
179,777
|
|
|
|
20,652
|
|
Interest expense
|
|
|
43,660
|
|
|
|
46,164
|
|
|
|
42,311
|
|
|
|
28,765
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
|
(17,077
|
)
|
|
|
10,349
|
|
|
|
28,561
|
|
|
|
17,781
|
|
|
|
|
30,782
|
|
|
|
34,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
19,562
|
|
|
$
|
97,933
|
|
|
$
|
134,245
|
|
|
$
|
85,455
|
|
|
|
$
|
87,394
|
|
|
$
|
110,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 7.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
Overview
Company
Background
BlueLinx is a leading distributor of building products in the
United States. We measure our market share based on data
published annually by Home Channel News, or HCN. We define
market share as our sales as a percentage of the reported sales
of the firms on HCNs list, as adjusted to eliminate firms
that do not compete with us and, for certain firms, the portion
of their sales attributable to businesses that do not compete
with us.
As of December 29, 2007, we distributed more than 10,000
products to approximately 11,500 customers through our network
of more than 80 warehouses and third-party operated warehouses
which serve all major metropolitan markets in the United States.
We distribute products in two principal categories: structural
products and specialty products. Structural products include
plywood, OSB, rebar and remesh, lumber and other wood products
primarily used for structural support, walls and flooring in
construction projects. Structural products represented
approximately 54% and 56% of our fiscal 2007 and fiscal
2006 gross sales, respectively. Specialty products include
roofing, insulation, moulding, engineered wood, vinyl products
(used primarily in siding) and metal products (excluding rebar
and remesh). Specialty products accounted for approximately 46%
and 44% of our fiscal 2007 and fiscal 2006 gross sales,
respectively.
21
Selected
Factors that Affect our Operating Results
Our operating results are affected by housing starts, mobile
home production, industrial production, repair and remodeling
spending and non-residential construction. The table below shows
changes with respect to each of these indicators for fiscal
2007, fiscal 2006 and fiscal 2005. Included are our estimates of
the relative weight of each of the foregoing end-use markets on
our sales, based on the estimated percentage each end market
contributed to our net sales over the applicable period. These
end-use market weights are estimates based on our current
methodology for evaluating such end-use markets and could change
in the future as our business continues to evolve in relation to
these markets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indicator
|
|
Weight
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Fiscal 2005
|
|
|
Actual Housing Starts (thousands)
|
|
|
50
|
%
|
|
|
1,354
|
|
|
|
1,801
|
|
|
|
2,065
|
|
Percentage change
|
|
|
|
|
|
|
(24.8
|
)%
|
|
|
(12.9
|
)%
|
|
|
5.6
|
%
|
Industrial Production (index)
|
|
|
22
|
%
|
|
|
1.13
|
|
|
|
1.12
|
|
|
|
1.08
|
|
Percentage change
|
|
|
|
|
|
|
0.9
|
%
|
|
|
4.0
|
%
|
|
|
3.2
|
%
|
Repair and Remodel ($ billions)*
|
|
|
15
|
%
|
|
|
153
|
|
|
|
166
|
|
|
|
165
|
|
Percentage change
|
|
|
|
|
|
|
(7.9
|
)%
|
|
|
0.9
|
%
|
|
|
(0.4
|
)%
|
Actual Mobile Homes (thousands)
|
|
|
8
|
%
|
|
|
97
|
|
|
|
119
|
|
|
|
150
|
|
Percentage change
|
|
|
|
|
|
|
(18.7
|
)%
|
|
|
(19.0
|
)%
|
|
|
14.6
|
%
|
Non-Residential Construction ($ billions)*
|
|
|
5
|
%
|
|
|
147
|
|
|
|
134
|
|
|
|
132
|
|
Percentage change
|
|
|
|
|
|
|
10.2
|
%
|
|
|
1.7
|
%
|
|
|
(3.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted End-Use Change
|
|
|
100
|
%
|
|
|
(14.4
|
)%
|
|
|
(6.9
|
)%
|
|
|
4.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) |
|
Constant fiscal 2000 dollar basis |
Source: Data from Resource Information Systems, Inc., or RISI,
updated as of January 30, 2008. Weighting reflects
management estimates. Data for Fiscal 2006 and Fiscal 2005 is
reported based on RISI data provided at the time of our original
disclosure for such periods and is not updated to reflect any
revisions made by RISI in subsequent periods.
We measure our growth in unit volume (on a constant dollar
basis) compared to the weighted average growth of the foregoing
end-use indicators. In addition, we measure our growth in
specialty product unit volume and structural product unit volume
compared to the weighted average growth rate of the foregoing
end-use indicators. The following table illustrates our unit
volume growth versus the end-use indicators discussed above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Fiscal 2005
|
|
|
BlueLinx Overall Unit Volume Growth
|
|
|
(18.0
|
)%
|
|
|
(7.0
|
)%
|
|
|
3.9
|
%
|
BlueLinx Specialty Product Unit Volume Growth
|
|
|
(16.4
|
)%
|
|
|
1.0
|
%
|
|
|
5.1
|
%
|
BlueLinx Structural Product Unit Volume Growth
|
|
|
(19.2
|
)%
|
|
|
(11.8
|
)%
|
|
|
3.2
|
%
|
Weighted End-Use Market Growth
|
|
|
(14.4
|
)%
|
|
|
(6.9
|
)%
|
|
|
4.4
|
%
|
BlueLinx Overall Unit Volume Growth versus Market Growth
|
|
|
(3.6
|
)%
|
|
|
(0.1
|
)%
|
|
|
(0.5
|
)%
|
BlueLinx Market Share(1)
|
|
|
NA
|
|
|
|
10.4
|
%
|
|
|
11.5
|
%
|
|
|
|
(1) |
|
As a percentage of the total sales of relevant building material
distributors. Market share for fiscal 2007 is not available.
Market share cannot be calculated until Home Channel News issues
updated market data for 2007. Home Channel News normally issues
its annual market data for any given year in July or August of
the following calendar year. |
Our operating results are also impacted by changes in product
prices. Structural products prices can vary significantly based
on short-term and long-term changes in supply and demand. The
prices of specialty
22
products also can vary from time to time, although they
generally are significantly less variable than structural
products.
The following table sets forth changes in net sales by product
category, sales variances due to changes in unit volume and
dollar and percentage changes in unit volume and price, in each
case for fiscal 2007, fiscal 2006 and fiscal 2005:
Sales
Revenue Variances by Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Fiscal 2005
|
|
|
|
(Dollars in millions)
|
|
|
Sales by Category
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products(1)
|
|
$
|
2,098
|
|
|
$
|
2,788
|
|
|
$
|
3,548
|
|
Specialty Products(1)
|
|
|
1,802
|
|
|
|
2,197
|
|
|
|
2,143
|
|
Unallocated Allowances and Adjustments
|
|
|
(66
|
)
|
|
|
(86
|
)
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sales
|
|
$
|
3,834
|
|
|
$
|
4,899
|
|
|
$
|
5,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Variances
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Volume $ Change
|
|
$
|
(896
|
)
|
|
$
|
(398
|
)
|
|
$
|
216
|
|
Price/Other(2)
|
|
|
(169
|
)
|
|
|
(325
|
)
|
|
|
(152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total $ Change
|
|
$
|
(1,065
|
)
|
|
$
|
(723
|
)
|
|
$
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Volume% Change
|
|
|
(18.0
|
)%
|
|
|
(7.0
|
)%
|
|
|
3.9
|
%
|
Price/Other(2)
|
|
|
(3.7
|
)%
|
|
|
(5.9
|
)%
|
|
|
(2.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total% Change
|
|
|
(21.7
|
)%
|
|
|
(12.9
|
)%
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For the quarter ended December 31, 2005, we began
classifying metal rebar and remesh as structural products
instead of specialty products. |
|
(2) |
|
Other includes unallocated allowances and discounts. |
The following table sets forth changes in gross margin dollars
and percentages by product category, and percentage changes in
unit volume growth by product, in each case for fiscal 2007,
fiscal 2006 and fiscal 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Fiscal 2005
|
|
|
|
(Dollars in millions)
|
|
|
Gross Margin $ by Category
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products(1)
|
|
$
|
173
|
|
|
$
|
194
|
|
|
$
|
246
|
|
Specialty Products(1)
|
|
|
238
|
|
|
|
308
|
|
|
|
284
|
|
Other(2)
|
|
|
(19
|
)
|
|
|
(22
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross Margin
|
|
$
|
392
|
|
|
$
|
480
|
|
|
$
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin% by Category
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products(1)
|
|
|
8.2
|
%
|
|
|
7.0
|
%
|
|
|
6.9
|
%
|
Specialty Products(1)
|
|
|
13.2
|
%
|
|
|
14.0
|
%
|
|
|
13.3
|
%
|
Total Gross Margin%
|
|
|
10.2
|
%
|
|
|
9.8
|
%
|
|
|
9.1
|
%
|
Unit Volume Growth by Product
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products(1)
|
|
|
(19.2
|
)%
|
|
|
(11.8
|
)%
|
|
|
3.2
|
%
|
Specialty Products(1)
|
|
|
(16.4
|
)%
|
|
|
1.0
|
%
|
|
|
5.1
|
%
|
Total Unit Volume Growth%
|
|
|
(18.0
|
)%
|
|
|
(7.0
|
)%
|
|
|
3.9
|
%
|
23
|
|
|
(1) |
|
For the quarter ended December 31, 2005, we began
classifying metal rebar and remesh as structural products
instead of specialty products. |
|
(2) |
|
Other includes unallocated allowances and discounts. |
The following table sets forth changes in net sales and gross
margin by channel and percentage changes in gross margin by
channel, in each case for fiscal 2007, fiscal 2006 and fiscal
2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Fiscal 2005
|
|
|
|
(Dollars in millions)
|
|
|
Sales by Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse/Reload
|
|
$
|
2,763
|
|
|
$
|
3,326
|
|
|
$
|
3,704
|
|
Direct
|
|
|
1,137
|
|
|
|
1,659
|
|
|
|
1,987
|
|
Unallocated Allowances and Adjustments
|
|
|
(66
|
)
|
|
|
(86
|
)
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,834
|
|
|
$
|
4,899
|
|
|
$
|
5,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin by Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse/Reload
|
|
$
|
344
|
|
|
$
|
407
|
|
|
$
|
429
|
|
Direct
|
|
|
67
|
|
|
|
95
|
|
|
|
101
|
|
Unallocated Allowances and Adjustments
|
|
|
(19
|
)
|
|
|
(22
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
392
|
|
|
$
|
480
|
|
|
$
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin% by Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse/Reload
|
|
|
12.5
|
%
|
|
|
12.2
|
%
|
|
|
11.6
|
%
|
Direct
|
|
|
5.9
|
%
|
|
|
5.7
|
%
|
|
|
5.1
|
%
|
Unallocated Allowances and Adjustments
|
|
|
(0.5
|
)%
|
|
|
(0.4
|
)%
|
|
|
(0.3
|
)%
|
Total
|
|
|
10.2
|
%
|
|
|
9.8
|
%
|
|
|
9.1
|
%
|
Fiscal
Year
Our fiscal year is a 52- or 53-week period ending on the
Saturday closest to the end of the calendar year. The fiscal
years 2007, 2006 and 2005 each contained 52 weeks.
24
Results
of Operations
Fiscal
2007 Compared to Fiscal 2006
The following table sets forth our results of operations for
fiscal 2007 and fiscal 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
% of
|
|
|
Year Ended
|
|
|
% of
|
|
|
|
December 29,
|
|
|
Net
|
|
|
December 30,
|
|
|
Net
|
|
|
|
2007
|
|
|
Sales
|
|
|
2006
|
|
|
Sales
|
|
|
|
(Dollars in thousands)
|
|
|
Net sales
|
|
$
|
3,833,910
|
|
|
|
100.0
|
%
|
|
$
|
4,899,383
|
|
|
|
100.0
|
%
|
Gross profit
|
|
|
391,946
|
|
|
|
10.2
|
%
|
|
|
479,807
|
|
|
|
9.8
|
%
|
Selling, general and administrative
|
|
|
372,754
|
|
|
|
9.7
|
%
|
|
|
381,554
|
|
|
|
7.8
|
%
|
Depreciation and amortization
|
|
|
20,924
|
|
|
|
0.5
|
%
|
|
|
20,724
|
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,732
|
)
|
|
|
0.0
|
%
|
|
|
77,529
|
|
|
|
1.6
|
%
|
Interest expense
|
|
|
43,660
|
|
|
|
1.1
|
%
|
|
|
46,164
|
|
|
|
0.9
|
%
|
Charges associated with mortgage refinancing
|
|
|
|
|
|
|
0.0
|
%
|
|
|
4,864
|
|
|
|
0.1
|
%
|
Other expense (income), net
|
|
|
(370
|
)
|
|
|
0.0
|
%
|
|
|
320
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
|
(45,022
|
)
|
|
|
(1.2
|
)%
|
|
|
26,181
|
|
|
|
0.5
|
%
|
Provision for (benefit from) income taxes
|
|
|
(17,077
|
)
|
|
|
(0.4
|
)%
|
|
|
10,349
|
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
|
(0.7
|
)%
|
|
$
|
15,832
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales. For the fiscal year ended
December 29, 2007, net sales decreased by 21.7%, or
$1.1 billion, to $3.8 billion. Sales during the fiscal
year were negatively impacted by a 24.8% decline in housing
starts and a 1.3% decline in prices for certain grades of
wood-based structural products. We estimate that new home
construction represents approximately 50% of our end-use
markets. Specialty sales, primarily consisting of roofing,
specialty panels, insulation, moulding, engineered wood
products, vinyl siding, composite decking and metal products
(excluding rebar and remesh) decreased by $395 million or
18.0% compared to fiscal 2006, primarily due to a 16.4% decrease
in unit volume as well as a decrease in price of 1.6%.
Structural sales, including plywood, OSB, lumber and metal
rebar, decreased by $690 million, or 24.7% from a year ago,
primarily as a result of a decrease in unit volume of 19.2% and
a decrease in price of 5.5%.
Gross Profit. Gross profit for fiscal 2007 was
$392 million, or 10.2% of sales, compared to
$480 million, or 9.8% of sales, in fiscal 2006. The
decrease in gross profit dollars compared to fiscal 2006 was
primarily driven by a decrease in specialty and structural
product volumes due to the continued decline in the housing
market. The increase in gross margin of 0.4% is primarily
attributable to a shift toward the warehouse channel, which
typically provides higher gross margins, and a slight shift in
product mix from structural to higher margin specialty products,
offset in part by a decline in underlying product prices
compared to the prior year as well as our stock keeping unit
(SKU) rationalization initiative during the fourth
quarter of 2007. We estimate that the SKU rationalization
program negatively impacted gross margin by approximately
30 basis points in fiscal 2007. During fiscal 2007, we
remained focused on maintaining gross margin through our ongoing
management of structural product pricing. Structural gross
margin increased to 8.2% in fiscal 2007 from 7.0% in fiscal
2006. Specialty gross margin of 13.2% compares with 14.0% a year
ago.
Selling, General and Administrative
Expenses. Selling, general and administrative
expenses for fiscal 2007 were $373 million, or 9.7% of net
sales, compared to $382 million, or 7.8% of net sales,
during fiscal 2006. The decline in operating expenses is due to
our continued efforts to reduce ongoing annual operating
expenses partially offset by restructuring charges during the
year including charges related to the headquarters
consolidation (see Note 2 Summary of Significant
Accounting Policies) and severance of $11.5 million
and $5.6 million, respectively.
Depreciation and Amortization. Depreciation
and amortization expense totaled $20.9 million for fiscal
2007, compared with $20.7 million for fiscal 2006. The
increase in depreciation and amortization is primarily
25
due to a slight increase in capital expenditures for mobile
equipment consisting of trucks, trailers, forklifts and
automobiles.
Operating Income (Loss). Operating loss for
fiscal 2007 was $1.7 million, or 0% of net sales, versus
operating income of $77.5 million, or 1.6% of net sales,
for fiscal 2006.
Interest Expense. Interest expense for fiscal
2007 totaled $43.7 million, down $2.5 million from
fiscal 2006, reflecting lower debt levels offset in part by
slightly higher interest rates. Interest expense related to our
revolving credit facility, mortgage, and debt issue cost
amortization was $22.3 million, $19.0 million and
$2.4 million, respectively, for fiscal 2007.
Interest expense totaled $46.2 million for fiscal 2006,
which includes interest expense related to our revolving credit
facility, new mortgage, old mortgage and related debt issue cost
amortization of $27.8 million, $10.7 million, $5.1 and
$2.6 million, respectively.
Provision for (Benefit from) Income Taxes. Our
effective tax rate was 37.9% and 39.5% for fiscal 2007 and
fiscal 2006, respectively. The decrease in the effective tax
rate resulted from the greater impact of various tax credits due
to a loss for fiscal 2007.
Net Income(Loss). Net loss for fiscal 2007 was
$27.9 million, compared to net income of $15.8 million
for fiscal 2006.
On a per-share basis, basic and diluted loss applicable to
common stockholders for fiscal 2007 were each $(0.91). Basic and
diluted income per share for fiscal 2006 were $0.52 and $0.51,
respectively.
Fiscal
2006 Compared to Fiscal 2005
The following table sets forth our results of operations for
fiscal 2006 and fiscal 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
% of
|
|
|
Year Ended
|
|
|
% of
|
|
|
|
December 30,
|
|
|
Net
|
|
|
December 31,
|
|
|
Net
|
|
|
|
2006
|
|
|
Sales
|
|
|
2005
|
|
|
Sales
|
|
|
|
(Dollars in thousands)
|
|
|
Net sales
|
|
$
|
4,899,383
|
|
|
|
100.0
|
%
|
|
$
|
5,622,071
|
|
|
|
100.0
|
%
|
Gross profit
|
|
|
479,807
|
|
|
|
9.8
|
%
|
|
|
512,439
|
|
|
|
9.1
|
%
|
Selling, general & administrative
|
|
|
381,554
|
|
|
|
7.8
|
%
|
|
|
378,008
|
|
|
|
6.7
|
%
|
Depreciation and amortization
|
|
|
20,724
|
|
|
|
0.4
|
%
|
|
|
18,770
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
77,529
|
|
|
|
1.6
|
%
|
|
|
115,661
|
|
|
|
2.1
|
%
|
Interest expense
|
|
|
46,164
|
|
|
|
0.9
|
%
|
|
|
42,311
|
|
|
|
0.8
|
%
|
Charges associated with mortgage refinancing
|
|
|
4,864
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
0.0
|
%
|
Other expense, net
|
|
|
320
|
|
|
|
0.0
|
%
|
|
|
186
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
|
26,181
|
|
|
|
0.5
|
%
|
|
|
73,164
|
|
|
|
1.3
|
%
|
Income tax provision
|
|
|
10,349
|
|
|
|
0.2
|
%
|
|
|
28,561
|
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
15,832
|
|
|
|
0.3
|
%
|
|
$
|
44,603
|
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales. For the fiscal year ended
December 30, 2006, net sales decreased by 12.9%, or
$723 million, to $4.9 billion. Sales during the fiscal
year were negatively impacted by a 12.9% decline in housing
starts and a 27% decline in prices for certain grades of
wood-based structural products. New home construction
represented approximately 50% of our end-use markets as
estimated by us under our current methodology; our other
estimated end-use markets grew slightly. Specialty sales,
primarily consisting of roofing, specialty panels, insulation,
moulding, engineered wood products, vinyl siding, composite
decking and metal products (excluding rebar and remesh)
increased by $54.0 million or 2.5% compared to fiscal 2005,
reflecting a 1.0% increase in unit volume and higher product
prices. Structural sales, including plywood, OSB, lumber and
metal rebar, decreased by $760 million, or 21.4% from the
prior year, primarily as a result of a decrease in unit volume
of 11.8%.
Gross Profit. Gross profit for fiscal 2006 was
$480 million, or 9.8% of sales, compared to
$512 million, or 9.1% of sales, in fiscal 2005. The
decrease in gross profit dollars compared to fiscal 2005 was
driven
26
primarily by decreases in structural product prices and a
reduction in structural product sales due to a slowdown in the
housing market. Gross margin increased by 0.7% to 9.8%,
reflecting growth in higher-margin specialty products and our
efforts to manage structural product inventory in a declining
price environment for wood-based structural products.
Selling, General and Administrative
Expenses. Selling, general and administrative
expenses for fiscal 2006 were $382 million, or 7.8% of net
sales, compared to $378 million, or 6.7% of net sales,
during fiscal 2005. Excluding expenses associated with acquired
operations, operating expenses for fiscal 2006 and fiscal 2005
were $365 million and $371 million, respectively.
Depreciation and Amortization. Depreciation
and amortization expense totaled $20.7 million for fiscal
2006, compared with $18.8 million for fiscal 2005. The
increase in depreciation and amortization was primarily due to
an increase in capital expenditures for mobile equipment
consisting of trucks, trailers, forklifts and automobiles.
Operating Income. Operating income for fiscal
2006 was $77.5 million, or 1.6% of net sales, versus
$116 million, or 2.1% of net sales, for fiscal 2005,
reflecting the decline in gross profit and higher variable
operating expenses.
Interest Expense. Interest expense for fiscal
2006 totaled $46.2 million, up $3.9 million from
fiscal 2005, reflecting higher interest rates partially offset
by lower debt levels. Interest expense related to our revolving
credit facility, new mortgage, old mortgage and debt issue cost
amortization was $27.8 million, $10.7 million,
$5.1 million and $2.6 million, respectively, for
fiscal 2006. Interest expense totaled $42.3 million for
fiscal 2005, which includes interest expense related to our
revolving credit facility, old mortgage and related debt issue
cost amortization of $29.4 million, $9.3 million and
$3.6 million, respectively.
Additionally, fiscal 2006 included charges of $4.9 million
associated with the mortgage refinancing, which included
unamortized debt financing costs of $3.2 million.
Provision for Income Taxes. Our effective tax
rate was 39.5% and 39.0% for fiscal 2006 and fiscal 2005,
respectively. The increase in the effective tax rate resulted
primarily from the greater impact of permanent differences, such
as meals and entertainment, on the lower fiscal 2006 earnings.
Net Income. Net income for fiscal 2006 was
$15.8 million, compared to $44.6 million for fiscal
2005.
On a per-share basis, basic and diluted income applicable to
common stockholders for fiscal 2006 were $0.52 and $0.51,
respectively. Basic and diluted earnings per share for fiscal
2005 were $1.48 and $1.46, respectively.
Seasonality
We are exposed to fluctuations in quarterly sales volumes and
expenses due to seasonal factors. These seasonal factors are
common in the building products distribution industry. The first
and fourth quarters are typically our slowest quarters due to
the impact of poor weather on the construction market. Our
second and third quarters are typically our strongest quarters,
reflecting a substantial increase in construction due to more
favorable weather conditions. Our working capital and accounts
receivable and payable generally peak in the third quarter,
while inventory generally peaks in the second quarter in
anticipation of the summer building season. We expect these
trends to continue for the foreseeable future.
Liquidity
and Capital Resources
We depend on cash flow from operations and funds available under
our revolving credit facility to finance working capital needs,
capital expenditures and acquisitions. We believe that the
amounts available from this and other sources will be sufficient
to fund our routine operations and capital requirements for the
foreseeable future.
Part of our growth strategy is to selectively pursue
acquisitions. Accordingly, depending on the nature of the
acquisition or currency, we may use cash or stock, or a
combination of both, as acquisition currency. Our
27
cash requirements may significantly increase and incremental
cash expenditures will be required in connection with the
integration of the acquired companys business and to pay
fees and expenses in connection with any acquisitions. To the
extent that significant amounts of cash are expended in
connection with acquisitions, our liquidity position may be
adversely impacted. In addition, there can be no assurance that
we will be successful in completing acquisitions in the future
or in implementing our acquisition strategy. For a discussion of
the risks associated with our acquisition strategy, see the risk
factor Integrating acquisitions may be time-consuming
and create costs that could reduce our net income and cash
flows set forth under Item 1A Risk
Factors.
The following tables indicate our working capital and cash flows
for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars in thousands)
|
|
|
Working capital
|
|
$
|
448,731
|
|
|
$
|
520,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Cash flows provided by operating activities
|
|
$
|
79,842
|
|
|
$
|
63,204
|
|
|
$
|
124,937
|
|
Cash flows used in investing activities
|
|
|
(9,070
|
)
|
|
|
(18,170
|
)
|
|
|
(28,499
|
)
|
Cash flows used in financing activities
|
|
$
|
(82,055
|
)
|
|
$
|
(42,312
|
)
|
|
$
|
(87,690
|
)
|
Working
Capital
Working capital decreased by $71.5 million, primarily as a
result of decreases in accounts receivable and inventories of
$44.4 million and $74.8 million, respectively. These
decreases were partially offset by decreases in accounts
payable, bank overdrafts and current maturities of long-term
debt of $31.1 million, $13.1 million and
$9.7 million, respectively. Additionally, cash decreased
from $27.0 million at December 31, 2006 to
$15.8 million at December 29, 2007. The
$15.8 million of cash on our balance sheet at
December 29, 2007 primarily reflects customer remittances
received in our lock-boxes on Friday and Saturday that are not
available until the next Monday, which is part of the following
fiscal period.
Operating
Activities
During fiscal 2007, cash flows provided by operating activities
totaled $79.8 million. The primary driver of cash flow from
operations was an increase in cash flow from operations related
to working capital of $81.8 million reflecting decreases in
accounts receivable and a reduction in inventory, partially
offset by a net loss, as adjusted for non-cash charges, of
$1.3 million.
During fiscal 2006, cash flows provided by operating activities
totaled $63.2 million. The primary drivers of cash flow
from operations were net income, as adjusted for non-cash
charges, of $43.3 million and an increase in cash flow from
operations related to working capital of $23.2 million
reflecting decreases in accounts receivable and a reduction in
structural product inventory, partially offset by decreases in
accounts payable and a slight increase in specialty products
inventory.
During fiscal 2005, cash flows provided by operating activities
totaled $125 million. The primary drivers of cash flow from
operations were net income, as adjusted for non-cash charges, of
$68.8 million and an increase in cash flow from operations
related to working capital of $50.1 million reflecting
improvements in working capital management.
Adjustments to net income included depreciation and
amortization, debt issue cost amortization, charges associated
with mortgage refinancing, non-cash vacant property charges,
deferred income tax benefit, gain from insurance settlement and
stock-based compensation.
28
Investing
Activities
During fiscal 2007 and fiscal 2006, cash flows used for
investing activities totaled $9.1 million and
$18.2 million, respectively.
During fiscal 2007 and fiscal 2006, our acquisition related
expenditures totaled $0 and $9.4 million, respectively.
During fiscal 2007 and fiscal 2006, our expenditures for
property and equipment were $13.1 million and
$9.6 million, respectively. These expenditures were
primarily for mobile equipment consisting of trucks, trailers,
forklifts and sales force automobiles. We estimate that capital
expenditures for 2008 will be approximately $9 million for
normal operating activities. Our 2008 capital expenditures are
anticipated to be paid from our current cash and cash provided
from operating activities.
Proceeds from the disposition of property and equipment totaled
$4.1 million and $0.8 million during fiscal 2007 and
fiscal 2006, respectively. The proceeds of $4.1 million
during fiscal 2007 include $2.6 million from an insurance
settlement related to property damage from Hurricane Katrina.
During fiscal 2005, cash flows used for investing activities
totaled $28.5 million. The primary driver of cash flows
from investing activities in fiscal 2005 were
acquisition-related expenditures and expenditures for property
and equipment of $16.9 million and $12.7 million,
respectively. The expenditures for property and equipment were
primarily for mobile equipment.
Proceeds from the sale of property and equipment totaled
$1.2 million in fiscal 2005.
Financing
Activities
Net cash used in financing activities was $82.1 million
during fiscal 2007 and $42.3 million during fiscal 2006.
The $39.7 million increase in cash flows used in financing
activities was primarily driven by proceeds from the new
mortgage received during fiscal 2006, in the amount of
$295 million. This increase in cash flows used in financing
activities was partially offset by the retirement of the old
mortgage of $165 million in fiscal 2006 and an increase in
the revolving credit facility of $84.5 million. In
addition, there were decreases in debt financing costs of
$6.7 million.
We paid dividends to our common stockholders in the aggregate
amount of $15.6 million and $15.4 million in fiscal
2007 and fiscal 2006, respectively.
Net cash used in financing activities was $87.7 million for
fiscal 2005, which primarily resulted from a net decrease in the
revolving credit facility of $111 million which was
partially offset by an increase in bank overdrafts of
$30.4 million.
Debt
and Credit Sources
As of December 29, 2007, advances outstanding under our
revolving credit facility were approximately $184 million.
Borrowing availability was approximately $222 million and
outstanding letters of credit on this facility were
approximately $10.4 million. As of December 29, 2007,
the interest rate on outstanding balances under the revolving
credit facility was 7.1%.
On June 9, 2006, certain special purpose entities that are
wholly-owned subsidiaries of ours entered into a
$295 million mortgage loan with the German American Capital
Corporation. The mortgage has a term of ten years and is secured
by 57 distribution facilities and 1 office building owned by the
special purpose entities. The stated interest rate on the
mortgage is fixed at 6.35%. The mortgage loan requires
interest-only payments for the first five years followed by
level monthly payments of principal and interest based on an
amortization period of thirty years. The balance of the loan
outstanding at the end of ten years will then become due and
payable. German American Capital Corporation assigned half of
its interest in the new mortgage loan to Wachovia Bank, National
Association. The new mortgage loan replaced our previously
existing $165 million floating rate mortgage, which had a
7.4% interest rate at the time it was terminated. We used the
net proceeds
29
we received from the mortgage refinancing to pay down
approximately $125 million of our outstanding revolving
line of credit.
On June 12, 2006, we entered into an interest rate swap
agreement with Goldman Sachs Capital Markets, to hedge against
interest rate risks related to our variable rate revolving
credit facility. The interest rate swap has a notional amount of
$150 million and the terms call for us to receive interest
monthly at a variable rate equal to the
30-day LIBOR
and to pay interest monthly at a fixed rate of 5.4%. This
interest rate swap is designated as a cash flow hedge.
We expect the hedge to be highly effective in offsetting changes
in expected cash flows, as, at inception, the critical terms of
the interest rate swap generally match the critical terms of the
variable rate revolving credit facility. Fluctuations in the
fair value of the ineffective portion, if any, of the cash flow
hedge are reflected in current period earnings. These amounts
were immaterial during fiscal 2007 and fiscal 2006.
At December 29, 2007 and December 30, 2006, the fair
value of the interest rate swap was a liability of
$7.1 million and $2.5 million, respectively. These
balances were included in Other current liabilities
and Other long-term liabilities on the Consolidated
Balance Sheet. Accumulated other comprehensive income at
December 29, 2007 and December 30, 2006 included the
net loss on the cash flow hedge (net of tax) of
$4.3 million and $1.5 million, respectively, which
reflects the cumulative amount of comprehensive loss in
connection with the change in fair value of the swap.
Additionally, interest was capped pursuant to a rate cap
agreement that caps
30-day LIBOR
exposure at 6.0% on $165 million of our variable rate
revolving credit facility. The interest rate cap agreement
expired in November 2007. Fluctuations in the fair value of the
interest rate cap agreement were recognized in current period
earnings. These amounts, as well as the fair value of the cap,
were immaterial during fiscal 2007.
Contractual Commitments. The following table
represents our contractual commitments, excluding interest,
associated with our debt and other obligations disclosed above
as of December 29, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
Thereafter
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
Revolving credit facility(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
177,535
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
177,535
|
|
Term loan facility(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
Mortgage indebtedness(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,511
|
|
|
|
3,172
|
|
|
|
290,317
|
|
|
|
295,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,046
|
|
|
|
3,172
|
|
|
|
290,317
|
|
|
|
478,535
|
|
Purchase obligations(4)
|
|
|
391,013
|
|
|
|
130,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
521,351
|
|
Operating leases
|
|
|
8,118
|
|
|
|
7,715
|
|
|
|
6,697
|
|
|
|
5,180
|
|
|
|
4,534
|
|
|
|
27,061
|
|
|
|
59,305
|
|
Letters of credit(5)
|
|
|
10,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
409,562
|
|
|
$
|
138,053
|
|
|
$
|
6,697
|
|
|
$
|
190,226
|
|
|
$
|
7,706
|
|
|
$
|
317,378
|
|
|
$
|
1,069,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Interest on the revolving credit facility is variable, based on
14-day,
one-month, two-month, three-month or six-month LIBOR. The
interest rate on the revolving credit facility was 7.1% at
December 29, 2007. On June 12, 2006, we entered into
an interest swap agreement with Goldman Sachs Capital Markets to
hedge against interest rate risks on $150 million of our
revolving credit facility. The terms call for us to pay interest
monthly at 5.4%. Annual interest at these rates totals
$10.5 million. At December 29, 2007, the outstanding
balance of our credit facility, including amounts outstanding
under the term loan, was approximately $184 million. The
final maturity date of the revolving credit facility is
May 7, 2011. |
|
(2) |
|
Term loan facility was used to refinance and consolidate certain
loans made by the revolving loan lenders to the Company. |
|
(3) |
|
The interest rate on the mortgage is fixed at 6.35%. Annual
interest at this rate is $18.7 million. |
|
(4) |
|
Our purchase obligations are related to our Supply Agreement
with Georgia-Pacific. |
|
(5) |
|
Letters of credit not included above under the credit facilities. |
30
Purchase orders entered into in the ordinary course of business
are excluded from the above table. Amounts for which we are
liable under purchase orders are reflected on our Consolidated
Balance Sheet (to the extent entered into prior to the end of
the applicable period) as accounts payable and accrued
liabilities.
Critical
Accounting Policies
Our significant accounting policies are more fully described in
the notes to the consolidated financial statements. Certain of
our accounting policies require the application of significant
judgment by management in selecting the appropriate assumptions
for calculating financial estimates. As with all judgments, they
are subject to an inherent degree of uncertainty. These
judgments are based on the Companys historical experience,
current economic trends in the industry, information provided by
customers, vendors and other outside sources and
managements estimates, as appropriate.
The following are accounting policies that management believes
are important to the portrayal of our financial condition and
results of operations and require managements most
difficult, subjective or complex judgment.
Revenue
Recognition
We recognize revenue when the following criteria are met:
persuasive evidence of an agreement exists, delivery has
occurred or services have been rendered, our price to the buyer
is fixed and determinable and collectibility is reasonably
assured. Delivery is not considered to have occurred until the
customer takes title and assumes the risks and rewards of
ownership. The timing of revenue recognition is largely
dependent on shipping terms. Revenue is recorded at the time of
shipment for terms designated as FOB (free on board) shipping
point. For sales transactions designated FOB destination,
revenue is recorded when the product is delivered to the
customers delivery site.
All product sales are recorded at gross in accordance with the
guidance outlined by
EITF 99-19
and in accordance with standard industry practice. The key
indicators used to determine this are as follows:
|
|
|
|
|
We are the primary obligor responsible for fulfillment;
|
|
|
|
We hold title to all reload inventory and are responsible for
all product returns;
|
|
|
|
We control the selling price for all channels;
|
|
|
|
We select the supplier; and
|
|
|
|
We bear all credit risk.
|
We also provide delivery and product management services for
which the associated revenues are recognized upon completion of
services. These revenues represent less than 1% of our net sales.
All revenues recognized are net of trade allowances, cash
discounts and sales returns. Cash discounts and sales returns
are estimated using historical experience. Trade allowances are
based on the estimated obligations and historical experience.
Adjustments to earnings resulting from revisions to estimates on
discounts and returns have been insignificant for fiscal 2007,
fiscal 2006 and fiscal 2005.
Allowance
for Doubtful Accounts and Related Reserves
We evaluate the collectibility of accounts receivable based on
numerous factors, including past transaction history with
customers and their creditworthiness. We maintain an allowance
for doubtful accounts for each aging category on our aged trial
balance based on our historical loss experience. This estimate
is periodically adjusted when we become aware of specific
customers inability to meet their financial obligations
(e.g., bankruptcy filing or other evidence of liquidity
problems). As we determine that specific balances will be
ultimately uncollectible, we remove them from our aged trial
balance. Additionally, we maintain reserves for cash discounts
that we expect customers to earn as well as expected returns. At
December 29, 2007 and December 30, 2006, these
reserves totaled $10.5 million and $7.7 million,
respectively. Adjustments to earnings resulting from revisions
to estimates on discounts and uncollectible accounts have been
insignificant for fiscal 2007, fiscal 2006 and fiscal 2005.
31
Inventories
Inventories are carried at the lower of cost or market. The cost
of all inventories is determined by the moving average cost
method. We evaluate our inventory value at the end of each
quarter to ensure that first quality, actively moving inventory,
when viewed by category, is carried at the lower of cost or
market. At December 29, 2007, the lower of cost or market
reserve totaled $0.02 million. The market value of our
inventory exceeded its cost at December 30, 2006.
Additionally, we maintain a reserve for the estimated value
impairment associated with damaged and inactive inventory. The
inactive reserve includes inventory that has had no sales in the
past six months or has turn days in excess of 365 days,
excluding some specific specialty product items, or is being
discontinued. At December 29, 2007 and December 30,
2006, our damaged and inactive inventory reserves totaled
$4.4 million and $5.1 million, respectively.
Adjustments to earnings resulting from revisions to inactive
estimates have been insignificant for fiscal 2007, fiscal 2006
and fiscal 2005.
Stock-Based
Compensation
On January 1, 2006, we adopted Statement of Financial
Accounting Standards (SFAS) 123R, Share-Based
Payment, using the modified prospective transition method.
Prior to 2006, we accounted for stock awards granted to
employees under SFAS No. 123, Accounting for
Stock-Based Compensation. Generally, the approach in
SFAS No. 123R is similar to the approach described in
SFAS No. 123. However, SFAS No. 123R
requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no
longer an alternative.
Under the modified prospective transition method, compensation
expense recognized in fiscal 2007 and fiscal 2006 included:
(a) compensation expense for all unvested share-based
awards granted prior to January 1, 2006, based on the grant
date fair value estimated in accordance with
SFAS No. 123 and (b) compensation expense for all
share-based awards granted subsequent to January 1, 2006,
based on the grant date fair value estimated in accordance with
SFAS No. 123R. Results of prior periods have not been
restated.
Through December 31, 2005, we accrued compensation expense
assuming that all stock options granted were expected to vest.
The effect of actual forfeitures was recognized as forfeitures
occurred. Under SFAS No. 123R, we are required to
estimate forfeitures in calculating the expense related to
stock-based compensation. The adoption of
SFAS No. 123R did not have a material impact on our
results of operations.
Compensation expense arising from stock-based awards granted to
employees and non-employee directors is recognized as expense
using the straight-line method over the vesting period. As of
December 29, 2007, there was $3.2 million,
$2.1 million $0.4 million and $0.4 million of
total unrecognized compensation expense related to stock
options, restricted stock, restricted stock units and
performance shares, respectively. The unrecognized compensation
expense for stock options, restricted stock, restricted stock
units and performance shares is expected to be recognized over a
period of 3.0 years, 2.7 years, 2.3 years and
2.0 years, respectively.
For fiscal 2007, fiscal 2006 and fiscal 2005 our total
stock-based compensation expense was $3.6 million,
$3.1 million, and $2.2 million, respectively. We also
recognized related income tax benefits of $1.4 million,
$1.2 million and $0.9 million, respectively.
Consideration
Received from Vendors and Paid to Customers
Each year, we enter into agreements with many of our vendors
providing for inventory purchase rebates, generally based on
achievement of specified volume purchasing levels and various
marketing allowances that are common industry practice. We
accrue for the receipt of vendor rebates based on purchases, and
also reduce inventory value to reflect the net acquisition cost
(purchase price less expected purchase rebates). At
December 29, 2007 and December 30, 2006, the vendor
rebate receivable totaled $7.5 million and
$10.1 million, respectively. Adjustments to earnings
resulting from revisions to rebate estimates have been
insignificant for fiscal 2007, fiscal 2006 and fiscal 2005.
32
In addition, we enter into agreements with many of our customers
to offer customer rebates, generally based on achievement of
specified volume sales levels and various marketing allowances
that are common industry practice. We accrue for the payment of
customer rebates based on sales to the customer, and also reduce
sales value to reflect the net sales (sales price less expected
customer rebates). At December 29, 2007 and
December 30, 2006, the customer rebate payable totaled
$11.1 million and $14.0 million, respectively.
Adjustments to earnings resulting from revisions to rebate
estimates have been insignificant for fiscal 2007, fiscal 2006
and fiscal 2005.
Impairment
of Long-Lived Assets
Long-lived assets, including property and equipment and
intangible assets with definite useful lives, are reviewed for
possible impairment whenever events or circumstances indicate
that the carrying amount of an asset may not be recoverable.
Determining whether an impairment has occurred typically
requires various estimates and assumptions, including
determining which cash flows are directly related to the
potentially impaired asset, the useful life over which cash
flows will occur, their amount and the assets residual
value, if any. In turn, measurement of an impairment loss
requires a determination of fair value, which is based on the
best information available. We use internal cash flow estimates,
quoted market prices when available and independent appraisals
as appropriate to determine fair value. We derive the required
cash flow estimates from our historical experience and our
internal business plans and apply an appropriate discount rate.
If these projected cash flows are less than the carrying amount,
an impairment loss is recognized based on the fair value of the
asset less any costs of disposition. Our judgment regarding the
existence of impairment indicators is based on market and
operational performance. There have been no adjustments to
earnings resulting from the impairment of long-lived assets for
fiscal 2007, fiscal 2006 or fiscal 2005.
Income
Taxes
Deferred income tax assets and income tax benefits are provided
for temporary differences between amounts recorded for financial
reporting and income tax purposes. If, for some reason, the
combination of future years income (or loss) combined with the
reversal of temporary differences results in a loss, such losses
can be carried back to prior years or carried forward to future
years to recover the deferred tax assets. In accordance with
SFAS No. 109, Accounting for Income Taxes
(SFAS No. 109), we evaluate our deferred tax
assets quarterly to determine if valuation allowances are
required. SFAS No. 109 requires that companies assess
whether valuation allowances should be established based on the
consideration of all available evidence using a more
likely than not standard.
In evaluating our ability to recover our deferred income tax
assets we consider all available positive and negative evidence,
including our past operating results, our ability to carryback
losses against prior taxable income, the existence of cumulative
losses in the most recent years and our forecast of future
taxable income. In estimating future taxable income, we develop
assumptions including the amount of future state and federal
pretax operating income, the reversal of temporary differences
and the implementation of feasible and prudent tax planning
strategies. These assumptions require significant judgment about
the forecasts of future taxable income.
The Company has recorded deferred income tax assets of
$22 million at December 29, 2007, reflecting the
benefit of $56 million of deductible temporary differences.
Realization is dependent on generating sufficient taxable
income. The Company believes the deferred income tax assets will
be realized through taxable income generated during available
loss carryback periods and future taxable income, including but
not limited to taxable income that would be generated by the
implementation of feasible and prudent tax planning strategies.
Although realization is not assured, management believes that it
is more likely than not that all of the deferred income tax
assets will be realized. The amount of the deferred income tax
assets considered realizable, however, could be reduced in the
near term if estimates of taxable income available via loss
carryback are reduced or if we are unable to implement existing
tax planning strategies. During 2008, we will continue to
closely monitor the current economic downturn in the housing and
construction sectors on a
33
quarterly basis. Should conditions reach a level during 2008
that necessitates the recording of a valuation allowance against
our deferred income tax assets based upon all of the evidence,
both positive and negative, it will be recorded in the period
that such changes in estimates are made. The recording of a
valuation allowance would result in additional income tax
expense in such period and could have a significant impact on
our future earnings.
In 2007, we adopted the provisions of FASB Interpretation
No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes, which prescribes a comprehensive model for how
a company should recognize, measure, present and disclose in its
financial statements uncertain tax positions that the company
has taken or expects to take on a tax return (including a
discussion of whether to file or not to file a return in a
particular jurisdiction). The cumulative effect of applying
FIN 48 is reported as an adjustment to the opening balance
of retained earnings. Adoption of FIN 48 on
December 31, 2006 did not have a material effect on our
consolidated financial position or results of operations.
Restructuring
Charges
During the fourth quarter of fiscal 2007, we recorded
restructuring charges totaling $17.1 million related to
certain cost reduction initiatives. In connection with those
cost reduction initiatives, we vacated leased office space. We
accounted for the transaction in accordance with
SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which requires that a liability
be recognized for the cost associated with an exit or disposal
activity at fair value in the period in which it is incurred or
when the entity ceases using the right conveyed by a contract
(i.e., the right to use a leased property). Our restructuring
charges include the estimated losses on the vacated facility
based on our contractual obligations net of estimated sublease
income based on current comparable market rates for leases. We
will reassess this liability periodically based on market
conditions. Revisions to our estimates of this liability could
materially impact our operating results and financial position
in future periods if anticipated events and key assumptions,
such as the timing and amounts of sublease rental income, either
do not materialize or change. These costs were included in
Selling, general and administrative expense in the
Consolidated Statement of Operations and in Other current
liabilities, and in Other long-term
liabilities on the Consolidated Balance Sheet at
December 29, 2007.
Recently
Issued Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements
(SFAS No. 160). SFAS No. 160 establishes
requirements for ownership interests in subsidiaries held by
parties other than the Company (sometimes called minority
interests) be clearly identified, presented, and disclosed
in the consolidated statement of financial position within
equity, but separate from the parents equity. All changes
in the parents ownership interests are required to be
accounted for consistently as equity transactions and any
noncontrolling equity investments in deconsolidated subsidiaries
must be measured initially at fair value. SFAS No. 160
is effective, on a prospective basis, for fiscal years beginning
after December 15, 2008. However, presentation and
disclosure requirements must be retrospectively applied to
comparative financial statements. We are currently assessing the
impact of SFAS No. 160 on our consolidated financial
position, results of operations and cash flows.
In December 2007, the FASB issued SFAS 141 (revised
2007) Business Combinations
(SFAS 141R). SFAS 141R establishes
principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R also
provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what
information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the
business combination. We are currently evaluating the potential
impact, if any, of the adoption of SFAS 141R on our
consolidated financial position, results of operations and cash
flows.
In February, 2007, the FASB issued SFAS No. 159 The
Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159). SFAS No. 159 permits
entities to choose to measure many financial assets and
financial liabilities at fair value. Unrealized gains and losses
on items for which the fair value
34
option has been elected are reported in earnings.
SFAS No. 159 is effective for fiscal years beginning
after November 15, 2007. We have not elected to adopt the
fair value option in measuring certain financial assets and
liabilities.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value under GAAP, and
expands disclosures about fair value measurements.
SFAS No. 157 applies to other accounting
pronouncements that require or permit fair value measurements.
The new guidance is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and for
interim periods within those fiscal years. We do not expect the
adoption of SFAS No. 157 to have a material impact on
our consolidated financial position, results of operations and
cash flows.
In July 2006, the FASB issued FASB Interpretation No. 48
(FIN 48), Accounting for Uncertainty in Income
Taxes, which prescribes a comprehensive model for how a
company should recognize, measure, present and disclose in its
financial statements uncertain tax positions that the company
has taken or expects to take on a tax return (including a
decision whether to file or not to file a return in a particular
jurisdiction). The accounting provisions of FIN 48 are
effective for fiscal years beginning after December 15,
2006. The cumulative effect of applying FIN 48 is reported
as an adjustment to the opening balance of retained earnings for
fiscal 2007. Adoption on December 31, 2006 did not have a
material effect on our consolidated financial position or
results of operations.
|
|
ITEM 7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
We are exposed to risks such as changes in interest rates,
commodity prices and foreign currency exchange rates. We employ
a variety of practices to manage these risks, including
operating and financing activities and, where deemed
appropriate, the use of derivative instruments. Derivative
instruments are used only for risk management purposes and not
for speculation or trading, and are not used to address risks
related to foreign currency exchange rates.
In accordance with SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended,
we record derivative instruments as assets or liabilities on the
balance sheet at fair value.
Less than 1.0% of our net sales are denominated in currencies
other than the U.S. dollar, and we do not believe our total
exposure to currency fluctuations to be significant.
We believe that general inflation did not significantly affect
our operating results or markets in fiscal 2007, fiscal 2006 or
fiscal 2005. As discussed above, our results of operations were
both favorably and unfavorably impacted by increases and
decreases in the pricing of certain commodity-based products.
Commodity price fluctuations have from time to time created
cyclicality in our financial performance and may do so in the
future.
On June 9, 2006, certain special purpose entities that are
wholly-owned subsidiaries of ours entered into a
$295 million mortgage loan with the German American Capital
Corporation. The new mortgage has a term of ten years and a
fixed interest rate of 6.35%. By entering into this mortgage, we
insulated ourselves from changes in market interest rates on a
portion of our indebtedness. This mortgage replaced our
previously existing $165 million floating rate mortgage,
which had a 7.4% interest rate when it was terminated and
replaced with the fixed rate mortgage loan.
On June 12, 2006, we entered into an interest rate swap
agreement with Goldman Sachs Capital Markets, to hedge against
interest rate risks related to our variable rate revolving
credit facility. The interest rate swap has a notional amount of
$150 million and the terms call for us to receive interest
monthly at a variable rate equal to the
30-day LIBOR
and to pay interest monthly at a fixed rate of 5.4%. This
interest rate swap is designated as a cash flow hedge.
We expect the hedge to be highly effective in offsetting changes
in expected cash flows, as, at inception, the critical terms of
the interest rate swap generally match the critical terms of the
variable rate revolving
35
credit facility. Fluctuations in the fair value of the
ineffective portion, if any, of the cash flow hedge are
reflected in current period earnings. These amounts were
immaterial during fiscal 2007 and fiscal 2006.
At December 29, 2007 and December 30, 2006, the fair
value of the interest rate swap was a liability of
$7.1 million and $2.5 million, respectively. These
balances were included in Other current liabilities
and Other long-term liabilities on the Consolidated
Balance Sheet. Accumulated other comprehensive income at
December 29, 2007 and December 30, 2006 included the
net loss on the cash flow hedge (net of tax) of
$4.3 million and $1.5 million, respectively, which
reflects the cumulative amount of comprehensive loss in
connection with the change in fair value of the swap.
Additionally, interest was capped pursuant to a rate cap
agreement that caps
30-day LIBOR
exposure at 6.0% on $165 million of our variable rate
revolving credit facility. The interest rate cap agreement
expired in November 2007. Fluctuations in the fair value of the
interest rate cap agreement were recognized in current period
earnings. These amounts, as well as the fair value of the cap,
were immaterial during fiscal 2007.
Our revolving credit facility accrues interest based on a
floating benchmark rate (the prime rate or LIBOR rate), plus an
applicable margin. A change in interest rates under the
revolving credit facility would have an impact on our results of
operations. A change of 100 basis points in the market rate
of interest would impact interest expense by approximately
$0.3 million based on borrowings outstanding at
December 29, 2007. Additionally, to the extent changes in
interest rates impact the housing market, we would be impacted
by such changes.
36
|
|
ITEM 8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
|
Index to
Financial Statements and Supplemental Data
|
|
|
|
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Page
|
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38
|
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39
|
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41
|
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42
|
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43
|
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44
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45
|
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37
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
To the Shareholders of BlueLinx Holdings Inc.:
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in
Rule 13a-15(f)
under the Securities Exchange Act of 1934. Our internal control
over financial reporting is designed to provide reasonable
assurance to our management and board of directors regarding the
preparation and fair presentation of published financial
statements.
Our management, including our chief executive officer and our
chief financial officer, does not expect that our internal
controls over financial reporting will prevent all error and all
fraud. Internal controls, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance
that the objectives of the internal controls are met. Given the
inherent limitations of internal controls, internal controls
over financial reporting may not prevent or detect all
misstatements or fraud. Therefore, no evaluation of internal
control can provide absolute assurance that all control issues
or instances of fraud will be prevented or detected.
Management assessed the effectiveness of our internal control
over financial reporting as of December 29, 2007. In making
this assessment, management used the criteria established by the
Committee of Sponsoring Organizations of the Treadway Commission
set forth in Internal Control Integrated
Framework. Based on our assessment, our management concluded
that, as of December 29, 2007, our internal control over
financial reporting was effective.
Ernst & Young LLP, our independent registered public
accounting firm, has audited our financial statements included
in this Form 10-K and has issued its report on the
effectiveness of internal control over financial reporting as of
December 29, 2007, which is included herein.
February 26, 2008
38
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of BlueLinx Holdings Inc.
We have audited BlueLinx Holdings Inc.s internal control
over financial reporting as of December 29, 2007, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). BlueLinx Holdings
Inc.s management is responsible for maintaining effective
internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying
Managements Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
companys internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, BlueLinx Holdings Inc. maintained, in all
material respects, effective internal control over financial
reporting as of December 29, 2007, based on the COSO
criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
2007 consolidated financial statements of BlueLinx Holdings Inc.
and subsidiaries and our report dated February 26, 2008
expressed an unqualified opinion thereon.
Atlanta, Georgia
February 26, 2008
39
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of BlueLinx Holdings
Inc.
We have audited the accompanying consolidated balance sheets of
BlueLinx Holdings Inc. and subsidiaries as of December 29,
2007 and December 30, 2006, and the related consolidated
statements of operations and comprehensive income (loss),
shareholders equity, and cash flows for the years ended
December 29, 2007, December 30, 2006 and
December 31, 2005. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of BlueLinx Holdings Inc. and subsidiaries as
of December 29, 2007 and December 30, 2006, and the
consolidated results of their operations and cash flows for the
years ended December 29, 2007, December 30, 2006 and
December 31, 2005, in conformity with U.S. generally
accepted accounting principles.
As discussed in Note 2, in 2006, BlueLinx Holdings Inc.
adopted the recognition provisions of Statement of Financial
Accounting Standards No. 158, Employers
Accounting for Defined Benefit Pension and other Postretirement
Plans and adopted Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment.
Also as discussed in Note 2, in 2007, BlueLinx Holdings
Inc. adopted the provisions of Financial Accounting Standards
Board Interpretation No. 48, Accounting for
Uncertainty in Income Taxes an interpretation of
FASB Statement No. 109.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
BlueLinx Holdings Inc.s internal control over financial
reporting as of December 29, 2007, based on criteria
established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 26, 2008 expressed
an unqualified opinion thereon.
Atlanta, Georgia
February 26, 2008
40
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
15,759
|
|
|
$
|
27,042
|
|
Receivables, less allowances of $10,536 in fiscal 2007 and
$7,736 in fiscal 2006
|
|
|
263,176
|
|
|
|
307,543
|
|
Inventories, net
|
|
|
335,887
|
|
|
|
410,686
|
|
Deferred income taxes
|
|
|
12,199
|
|
|
|
9,024
|
|
Other current assets
|
|
|
53,231
|
|
|
|
44,948
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
680,252
|
|
|
|
799,243
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment:
|
|
|
|
|
|
|
|
|
Land and improvements
|
|
|
57,295
|
|
|
|
56,985
|
|
Buildings
|
|
|
98,420
|
|
|
|
95,814
|
|
Machinery and equipment
|
|
|
67,217
|
|
|
|
61,955
|
|
Construction in progress
|
|
|
4,212
|
|
|
|
2,025
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, at cost
|
|
|
227,144
|
|
|
|
216,779
|
|
Accumulated depreciation
|
|
|
(54,702
|
)
|
|
|
(38,530
|
)
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
172,442
|
|
|
|
178,249
|
|
Non-current deferred income taxes
|
|
|
2,628
|
|
|
|
|
|
Other assets
|
|
|
28,114
|
|
|
|
26,870
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
883,436
|
|
|
$
|
1,004,362
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
164,717
|
|
|
$
|
195,815
|
|
Bank overdrafts
|
|
|
37,152
|
|
|
|
50,241
|
|
Accrued compensation
|
|
|
10,372
|
|
|
|
8,574
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
9,743
|
|
Other current liabilities
|
|
|
19,280
|
|
|
|
14,633
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
231,521
|
|
|
|
279,006
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
478,535
|
|
|
|
522,719
|
|
Deferred income taxes
|
|
|
|
|
|
|
1,101
|
|
Other non-current liabilities
|
|
|
18,557
|
|
|
|
12,137
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
728,613
|
|
|
|
814,963
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Common Stock, $0.01 par value, 100,000,000 shares
authorized; 31,224,959 and 30,909,630 shares issued and
outstanding at December 29, 2007 and December 30,
2006, respectively
|
|
|
312
|
|
|
|
309
|
|
Additional
paid-in-capital
|
|
|
142,081
|
|
|
|
138,066
|
|
Accumulated other comprehensive income
|
|
|
5,426
|
|
|
|
412
|
|
Retained earnings
|
|
|
7,004
|
|
|
|
50,612
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
154,823
|
|
|
|
189,399
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
883,436
|
|
|
$
|
1,004,362
|
|
|
|
|
|
|
|
|
|
|
41
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except share data)
|
|
|
Net sales
|
|
$
|
3,833,910
|
|
|
$
|
4,899,383
|
|
|
$
|
5,622,071
|
|
Cost of sales
|
|
|
3,441,964
|
|
|
|
4,419,576
|
|
|
|
5,109,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
391,946
|
|
|
|
479,807
|
|
|
|
512,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative
|
|
|
372,754
|
|
|
|
381,554
|
|
|
|
378,008
|
|
Depreciation and amortization
|
|
|
20,924
|
|
|
|
20,724
|
|
|
|
18,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
393,678
|
|
|
|
402,278
|
|
|
|
396,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,732
|
)
|
|
|
77,529
|
|
|
|
115,661
|
|
Non-operating expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
43,660
|
|
|
|
46,164
|
|
|
|
42,311
|
|
Charges associated with mortgage refinancing
|
|
|
|
|
|
|
4,864
|
|
|
|
|
|
Other expense (income), net
|
|
|
(370
|
)
|
|
|
320
|
|
|
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
|
(45,022
|
)
|
|
|
26,181
|
|
|
|
73,164
|
|
Provision for (benefit from) income taxes
|
|
|
(17,077
|
)
|
|
|
10,349
|
|
|
|
28,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
$
|
15,832
|
|
|
$
|
44,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
|
|
|
30,848
|
|
|
|
30,618
|
|
|
|
30,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share applicable to common shares
|
|
$
|
(0.91
|
)
|
|
$
|
0.52
|
|
|
$
|
1.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding
|
|
|
30,848
|
|
|
|
30,779
|
|
|
|
30,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share applicable to common shares
|
|
$
|
(0.91
|
)
|
|
$
|
0.51
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
$
|
15,832
|
|
|
$
|
44,603
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation, net of taxes
|
|
|
1,912
|
|
|
|
(58
|
)
|
|
|
276
|
|
Unrealized net gain from pension plan, net of taxes
|
|
|
5,856
|
|
|
|
983
|
|
|
|
|
|
Unrealized loss from cash flow hedge, net of taxes
|
|
|
(2,754
|
)
|
|
|
(1,536
|
)
|
|
|
|
|
Minimum pension liability, net of taxes
|
|
|
|
|
|
|
|
|
|
|
1,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(22,931
|
)
|
|
$
|
15,221
|
|
|
$
|
46,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
$
|
15,832
|
|
|
$
|
44,603
|
|
Adjustments to reconcile net income (loss) to cash provided by
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
20,924
|
|
|
|
20,724
|
|
|
|
18,770
|
|
Amortization of debt issue costs
|
|
|
2,431
|
|
|
|
2,628
|
|
|
|
3,629
|
|
Charges associated with mortgage refinancing
|
|
|
|
|
|
|
4,864
|
|
|
|
|
|
Non-cash vacant property charges
|
|
|
11,037
|
|
|
|
|
|
|
|
|
|
Deferred income tax benefit
|
|
|
(9,526
|
)
|
|
|
(3,700
|
)
|
|
|
(368
|
)
|
Gain from insurance settlement
|
|
|
(1,698
|
)
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
3,500
|
|
|
|
2,921
|
|
|
|
2,170
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
(20
|
)
|
|
|
(891
|
)
|
|
|
(71
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
44,367
|
|
|
|
94,113
|
|
|
|
(30,609
|
)
|
Inventories
|
|
|
74,799
|
|
|
|
66,504
|
|
|
|
36,889
|
|
Accounts payable
|
|
|
(31,098
|
)
|
|
|
(131,594
|
)
|
|
|
56,605
|
|
Changes in other working capital
|
|
|
(6,211
|
)
|
|
|
(4,889
|
)
|
|
|
(12,675
|
)
|
Other
|
|
|
(718
|
)
|
|
|
(3,308
|
)
|
|
|
5,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
79,842
|
|
|
|
63,204
|
|
|
|
124,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired
|
|
|
|
|
|
|
(9,391
|
)
|
|
|
(16,908
|
)
|
Property, plant and equipment investments
|
|
|
(13,141
|
)
|
|
|
(9,601
|
)
|
|
|
(12,744
|
)
|
Proceeds from disposition of assets
|
|
|
4,071
|
|
|
|
822
|
|
|
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities
|
|
|
(9,070
|
)
|
|
|
(18,170
|
)
|
|
|
(28,499
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, net
|
|
|
|
|
|
|
|
|
|
|
8,548
|
|
Proceeds from stock options exercised
|
|
|
496
|
|
|
|
1,913
|
|
|
|
258
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
20
|
|
|
|
891
|
|
|
|
71
|
|
Net decrease in revolving credit facility
|
|
|
(53,927
|
)
|
|
|
(138,388
|
)
|
|
|
(111,253
|
)
|
Proceeds from new mortgage
|
|
|
|
|
|
|
295,000
|
|
|
|
|
|
Debt financing costs
|
|
|
|
|
|
|
(6,703
|
)
|
|
|
(570
|
)
|
Retirement of old mortgage
|
|
|
|
|
|
|
(165,000
|
)
|
|
|
|
|
Prepayment fees associated with old mortgage
|
|
|
|
|
|
|
(2,475
|
)
|
|
|
|
|
Increase (decrease) in bank overdrafts
|
|
|
(13,089
|
)
|
|
|
(12,151
|
)
|
|
|
30,359
|
|
Common dividends paid
|
|
|
(15,591
|
)
|
|
|
(15,400
|
)
|
|
|
(15,103
|
)
|
Other
|
|
|
36
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(82,055
|
)
|
|
|
(42,312
|
)
|
|
|
(87,690
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
(11,283
|
)
|
|
|
2,722
|
|
|
|
8,748
|
|
Cash balance, beginning of period
|
|
|
27,042
|
|
|
|
24,320
|
|
|
|
15,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash balance, end of period
|
|
$
|
15,759
|
|
|
$
|
27,042
|
|
|
$
|
24,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid during the period
|
|
$
|
991
|
|
|
$
|
21,467
|
|
|
$
|
33,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid during the period
|
|
$
|
40,037
|
|
|
$
|
42,636
|
|
|
$
|
38,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In-
|
|
|
Comprehensive
|
|
|
Retained
|
|
|
|
|
BlueLinx Holdings Inc.
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income (Loss)
|
|
|
Earnings
|
|
|
Totals
|
|
|
|
(In thousands)
|
|
|
Balance, January 1, 2005
|
|
|
29,500
|
|
|
|
295
|
|
|
|
121,306
|
|
|
|
(789
|
)
|
|
|
20,680
|
|
|
|
141,492
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,603
|
|
|
|
44,603
|
|
Foreign currency translation adjustment, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276
|
|
|
|
|
|
|
|
276
|
|
Amount related to minimum pension liability, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,536
|
|
|
|
|
|
|
|
1,536
|
|
Issuance of common stock initial public offering, net
|
|
|
685
|
|
|
|
7
|
|
|
|
8,541
|
|
|
|
|
|
|
|
|
|
|
|
8,548
|
|
Proceeds from stock options exercised
|
|
|
66
|
|
|
|
1
|
|
|
|
258
|
|
|
|
|
|
|
|
|
|
|
|
259
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
|
|
|
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
71
|
|
Compensation related to share-based grants
|
|
|
|
|
|
|
|
|
|
|
2,170
|
|
|
|
|
|
|
|
|
|
|
|
2,170
|
|
Common dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,103
|
)
|
|
|
(15,103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2005
|
|
|
30,251
|
|
|
|
303
|
|
|
|
132,346
|
|
|
|
1,023
|
|
|
|
50,180
|
|
|
|
183,852
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,832
|
|
|
|
15,832
|
|
Foreign currency translation adjustment, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(58
|
)
|
|
|
|
|
|
|
(58
|
)
|
Unrealized net gain from pension plan, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
983
|
|
|
|
|
|
|
|
983
|
|
Unrealized loss from cash flow hedge, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,536
|
)
|
|
|
|
|
|
|
(1,536
|
)
|
Proceeds from stock options exercised
|
|
|
512
|
|
|
|
5
|
|
|
|
1,908
|
|
|
|
|
|
|
|
|
|
|
|
1,913
|
|
Issuance of restricted stock
|
|
|
147
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
|
|
|
|
|
|
|
891
|
|
|
|
|
|
|
|
|
|
|
|
891
|
|
Compensation related to share-based grants
|
|
|
|
|
|
|
|
|
|
|
2,921
|
|
|
|
|
|
|
|
|
|
|
|
2,921
|
|
Common dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,400
|
)
|
|
|
(15,400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 30, 2006
|
|
|
30,910
|
|
|
$
|
309
|
|
|
$
|
138,066
|
|
|
$
|
412
|
|
|
$
|
50,612
|
|
|
$
|
189,399
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,945
|
)
|
|
|
(27,945
|
)
|
Foreign currency translation adjustment, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,912
|
|
|
|
|
|
|
|
1,912
|
|
Unrealized net gain from pension plan, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,856
|
|
|
|
|
|
|
|
5,856
|
|
Unrealized loss from cash flow hedge, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,754
|
)
|
|
|
|
|
|
|
(2,754
|
)
|
Unrealized loss from adoption of FIN 48, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(72
|
)
|
|
|
(72
|
)
|
Proceeds from stock options exercised
|
|
|
132
|
|
|
|
1
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
496
|
|
Issuance of restricted stock
|
|
|
182
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
Compensation related to share-based grants
|
|
|
|
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
|
Common dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,591
|
)
|
|
|
(15,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 29, 2007
|
|
|
31,224
|
|
|
$
|
312
|
|
|
$
|
142,081
|
|
|
$
|
5,426
|
|
|
$
|
7,004
|
|
|
$
|
154,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
|
|
1.
|
Basis of
Presentation and Background
|
Basis
of Presentation
BlueLinx Holdings Inc., operating through our wholly-owned
subsidiary, BlueLinx Corporation (BlueLinx Holdings Inc. and its
subsidiaries are collectively referred to as the
Company), is a leading distributor of building
products in the United States. We operate in all of the major
metropolitan areas in the United States and, as of
December 29, 2007, we distributed more than 10,000 products
to approximately 11,500 customers through our network of more
than 80 warehouses and third-party operated warehouses. The
consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The
Companys fiscal year is a 52-week or
53-week
period ending on the Saturday closest to the end of the calendar
year. Fiscal 2007, fiscal 2006 and fiscal 2005 each contained
52 weeks. Certain 2006 and 2005 amounts have been
reclassified to conform with 2007 presentation.
Nature
of Operations
We are a wholesale supplier of building products in North
America. We distribute building products including lumber,
structural panels (including plywood and oriented strand board),
hardwood plywood, roofing, insulation, metal products, vinyl
siding and particleboard. These products are sold to a
diversified customer base, including independent building
materials dealers, industrial and manufactured housing builders
and home improvement centers. Net sales by product category are
summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars in millions)
|
|
|
Sales by category
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural products
|
|
$
|
2,098
|
|
|
$
|
2,788
|
|
|
$
|
3,548
|
|
Specialty products
|
|
|
1,802
|
|
|
|
2,197
|
|
|
|
2,143
|
|
Unallocated allowances and adjustments
|
|
|
(66
|
)
|
|
|
(86
|
)
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales
|
|
$
|
3,834
|
|
|
$
|
4,899
|
|
|
$
|
5,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suppliers
As of December 29, 2007, our vendor base included over 750
suppliers of both structural and specialty building products. In
some cases, these products are branded. We have supply contracts
in place with many of our vendors. Terms for these agreements
frequently include prompt payment discounts and freight
allowances and occasionally include volume discounts, growth
incentives, marketing allowances, consigned inventory and
extended payment terms.
Purchases of products manufactured by Georgia-Pacific
Corporation (Georgia-Pacific) accounted for
approximately 25% and approximately 24% of total purchases in
fiscal 2007 and fiscal 2006, respectively, with no other
supplier accounting for more than 4% of our fiscal 2007
purchases. We have entered into a Master Purchase,
Supply & Distribution Agreement with Georgia-Pacific,
or the Supply Agreement. The Supply Agreement details
distribution rights by product categories, including exclusivity
rights and minimum supply volume commitments from
Georgia-Pacific with respect to certain products. This agreement
also details our purchase obligations by product categories,
including substantial minimum purchase volume commitments with
respect to most of the products supplied to us. Based on 2007
average market prices, our purchase obligation under this
agreement is approximately $0.5 billion for the next two
years. If we fail or refuse to purchase any products that we are
obligated to purchase pursuant to the Supply Agreement,
Georgia-Pacific
45
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
has the right to sell products to third parties and for certain
products terminate our exclusivity, and we may be required to
pay monetary penalties. The agreement has a five-year initial
term expiring on May 7, 2009, and remains continuously in
effect thereafter unless it is terminated. Termination of the
Supply Agreement requires two years notice, exercisable
after year four of the agreement. The Supply Agreement may be
terminated by either party for material breach. However, if the
material breach only affects one or more, but not all, of the
product categories, the non-breaching party may only terminate
the Supply Agreement in respect of the affected product
categories, and the Supply Agreement will remain in full force
with respect to the remaining product categories. The Supply
Agreement also provides for certain advertising, marketing and
promotion arrangements between BlueLinx and Georgia-Pacific for
certain products. In addition, we have been granted a limited,
non-exclusive, royalty-free, fully paid license to use certain
proprietary information and intellectual property of
Georgia-Pacific.
Business
Combinations
We account for business combinations in accordance with the
provisions of Statement of Financial Accounting Standards
(SFAS) No. 141, Business Combinations,
which requires the valuation of assets and liabilities acquired
at fair value on the date of the purchase.
On August 4, 2006, we completed the acquisition of
Texas-based hardwood lumber distribution company, Austin
Hardwoods, Ltd. The acquisition of Austin Hardwoods was
accounted for using the purchase method of accounting, and the
assets acquired and liabilities assumed were accounted for based
on their fair market values at the date of consummation. Other
SFAS No. 141 disclosures are omitted as they are not
significant.
On July 22, 2005, we completed the acquisition of
California-based hardwood lumber company Lane Stanton Vance
(LSV), formerly a unit of privately-held Hampton
Distribution Companies. The acquisition of the assets of LSV was
accounted for using the purchase method of accounting, and the
assets acquired and liabilities assumed were accounted for based
on their fair market values at the date of consummation. Other
SFAS No. 141 disclosures are omitted as they are not
significant.
|
|
2.
|
Summary
of Significant Accounting Policies
|
Cash
and Equivalents
Cash equivalents include time deposits and other securities with
original maturities of three months or less.
Allowance
for Doubtful Accounts and Related Reserves
We evaluate the collectibility of accounts receivable based on
numerous factors, including past transaction history with
customers and their creditworthiness. We maintain an allowance
for doubtful accounts for each aging category on our aged trial
balance based on our historical loss experience. This estimate
is periodically adjusted when we become aware of specific
customers inability to meet their financial obligations
(e.g., bankruptcy filing or other evidence of liquidity
problems). As we determine that specific balances will be
ultimately uncollectible, we remove them from our aged trial
balance. Additionally, we maintain reserves for cash discounts
that we expect customers to earn as well as expected returns. At
December 29, 2007 and December 30, 2006, these
reserves totaled $10.5 million and $7.7 million,
respectively. Adjustments to earnings resulting from revisions
to estimates on discounts and uncollectible accounts have been
insignificant for fiscal 2007, fiscal 2006 and fiscal 2005.
Impairment
of Long-Lived Assets
Long-lived assets, including property and equipment and
intangible assets with definite useful lives, are reviewed for
possible impairment whenever events or circumstances indicate
that the carrying amount of an
46
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
asset may not be recoverable. Determining whether an impairment
has occurred typically requires various estimates and
assumptions, including determining which cash flows are directly
related to the potentially impaired asset, the useful life over
which cash flows will occur, their amount and the assets
residual value, if any. In turn, measurement of an impairment
loss requires a determination of fair value, which is based on
the best information available. We use internal cash flow
estimates, quoted market prices when available and independent
appraisals as appropriate to determine fair value. We derive the
required cash flow estimates from our historical experience and
our internal business plans and apply an appropriate discount
rate. If these projected cash flows are less than the carrying
amount, an impairment loss is recognized based on the fair value
of the asset less any costs of disposition. Our judgment
regarding the existence of impairment indicators is based on
market and operational performance. There have been no
adjustments to earnings resulting from the impairment of
long-lived assets for fiscal 2007, fiscal 2006 or fiscal 2005.
Revenue
Recognition
We recognize revenue when the following criteria are met:
persuasive evidence of an agreement exists, delivery has
occurred or services have been rendered, our price to the buyer
is fixed and determinable and collectibility is reasonably
assured. Delivery is not considered to have occurred until the
customer takes title and assumes the risks and rewards of
ownership. The timing of revenue recognition is largely
dependent on shipping terms. Revenue is recorded at the time of
shipment for terms designated as FOB (free on board) shipping
point. For sales transactions designated FOB destination,
revenue is recorded when the product is delivered to the
customers delivery site.
All product sales are recorded at gross in accordance with the
guidance outlined by
EITF 99-19
and in accordance with standard industry practice. The key
indicators used to determine this are as follows:
|
|
|
|
|
We are the primary obligor responsible for fulfillment;
|
|
|
|
We hold title to all reload inventory and are responsible for
all product returns;
|
|
|
|
We control the selling price for all channels;
|
|
|
|
We select the supplier; and
|
|
|
|
We bear all credit risk.
|
We also provide delivery and product management services for
which the associated revenues are recognized upon completion of
services. These revenues represent less than 1% of our net sales.
All revenues recognized are net of trade allowances, cash
discounts and sales returns. Cash discounts and sales returns
are estimated using historical experience. Trade allowances are
based on estimated obligations and our historical experience.
Shipping
and Handling
Amounts billed to customers in sales transactions related to
shipping and handling are classified as revenue. Shipping and
handling costs included in selling, general and administrative
expenses were $137 million, $143 million and
$144 million for fiscal 2007, fiscal 2006, and fiscal 2005,
respectively.
Advertising
Costs
Advertising costs are expensed as incurred. Advertising expenses
of $6.5 million, $10.7 million and $8.1 million
were included in selling, general and administrative expenses
for fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
47
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Earnings
per Common Share
Basic and diluted earnings per share are computed by dividing
net income by the weighted average number of common shares
outstanding for the period.
Except when the effect would be anti-dilutive, the diluted
earnings per share calculation includes the dilutive effect of
the assumed exercise of stock options and restricted stock using
the treasury stock method.
We have excluded stock options to purchase
1,490,295 shares, 1,374,942 shares and
774,000 shares for fiscal 2007, fiscal 2006 and fiscal
2005, respectively, because they were anti-dilutive. In
addition, we have excluded 555,559 and 147,412 restricted stock
and performance share awards for fiscal 2007 and
fiscal 2006, respectively, because they were anti-dilutive.
Common
Stock Dividends
On each of January 22, May 3, August 6 and
October 31, 2007, our Board of Directors declared a
quarterly dividend of $0.125 per share on the Companys
common stock. Our controlling shareholder, Cerberus ABP Investor
LLC (Cerberus), received total dividends of
approximately $9.1 million in fiscal 2007, fiscal 2006 and
fiscal 2005, respectively, as a result of its ownership of
18,100,000 shares of our common stock.
On December 5, 2007, we suspended the payment of dividends
on our common stock for an indefinite period of time. As
discussed in footnote 8, our revolving credit facility limits
distributions by our operating company to us, which, in turn,
may limit our ability to pay dividends to holders of our common
stock.
Inventory
Valuation
Inventories are carried at the lower of cost or market. The cost
of all inventories is determined by the moving average cost
method. We evaluate our inventory value at the end of each
quarter to ensure that first quality, actively moving inventory,
when viewed by category, is carried at the lower of cost or
market. At December 29, 2007, the lower of cost or market
reserve totaled $0.02 million. The market value of our
inventory exceeded its cost at December 30, 2006.
Additionally, we maintain a reserve for the estimated value
impairment associated with damaged and inactive inventory. The
inactive reserve includes inventory that has had no sales in the
past six months, has turn days in excess of 365 days,
excluding some specific specialty product items, or is being
discontinued. At December 29, 2007, December 30, 2006
and December 31, 2005, our damaged and inactive inventory
reserves totaled $4.4 million, $5.1 million and
$2.7 million, respectively. Adjustments to earnings
resulting from revisions to inactive estimates have been
insignificant for fiscal 2007, fiscal 2006 and fiscal 2005.
48
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Property,
Plant, and Equipment
Property, plant, and equipment are recorded at cost. Lease
obligations for which we assume or retain substantially all the
property rights and risks of ownership are capitalized.
Replacements of major units of property are capitalized and the
replaced properties are retired. Replacements of minor
components of property and repair and maintenance costs are
charged to expense as incurred.
During fiscal 2007, we capitalized $3.9 million of costs for
internally developed software in accordance with SOP 98-1,
Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use.
Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. Useful lives are 2
to 18 years for land improvements, 5 to 40 years for
buildings, and 3 to 7 years for machinery and equipment,
which includes mobile equipment. Upon retirement or disposition
of assets, cost and accumulated depreciation are removed from
the related accounts and any gain or loss is included in income.
Depreciation expense totaled $18.0 million,
$17.0 million and $15.2 million for fiscal 2007,
fiscal 2006 and fiscal 2005, respectively.
Intangible
Assets with Definite Useful Lives
Our intangible assets with definite useful lives are comprised
of customer relationships, internally developed software, supply
agreements, trade names and non-compete agreements. These assets
each totaled $8.5 million, $4.1 million,
$5.3 million, $0.3 million and $0.2 million,
respectively. These assets are being amortized over a period of
6.0 years, 3.0 years, 6.0 years, 1.0 year
and 3.3 years, respectively. Amortization expense for
intangible assets was $3.0 million, $3.7 million and
$3.5 million for fiscal 2007, fiscal 2006 and fiscal 2005,
respectively. Accumulated amortization totaled
$12.4 million at December 29, 2007, which included
accumulated amortization for customer relationships, internally
developed software, supply agreements, trade names, and
non-compete agreements of $4.7 million, $4.1 million,
$3.2 million, $0.3 million, and $0.1 million,
respectively. At December 2006, accumulated amortization totaled
$9.4 million, which included accumulated amortization for
customer relationships, internally developed software, supply
agreements, trade names and non-compete agreements of
$3.3 million, $3.6 million, $2.3 million,
$0.2 million and $0.03 million, respectively.
Estimated amortization expense for each of the five succeeding
years is as follows:
|
|
|
|
|
|
|
(In thousands)
|
|
|
For fiscal 2008
|
|
$
|
2,378
|
|
For fiscal 2009
|
|
$
|
2,351
|
|
For fiscal 2010
|
|
$
|
947
|
|
For fiscal 2011
|
|
$
|
234
|
|
For fiscal 2012
|
|
$
|
119
|
|
Intangible
Assets with Indefinite Useful Lives
The acquisition of Austin Hardwoods resulted in goodwill in the
amount of $0.7 million. SFAS No. 142, Goodwill
and Other Intangible Assets, requires that goodwill and
indefinite-lived intangible assets are tested for impairment at
the reporting unit level annually, or more often if an event or
circumstance indicates that an impairment loss may have been
incurred. To test for impairment, the two-step impairment test
shall be used to identify potential goodwill impairment and
measure the amount of a goodwill impairment loss to be
recognized, if any. The first step of the goodwill impairment
test, used to identify potential impairment, compares the fair
value of a reporting unit with its carrying amount, including
goodwill. If the fair value of a reporting unit exceeds its
carrying amount, goodwill of the reporting unit is considered
not impaired, thus the second step of the impairment test is
unnecessary. If the carrying amount of a reporting unit exceeds
its fair
49
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
value, the second step of the impairment test shall be performed
to measure the amount of impairment loss, if any. This second
test compares the implied fair value of reporting unit goodwill
with the carrying amount of that goodwill. The implied fair
value of goodwill shall be determined in the same manner as the
amount of goodwill recognized in a business combination is
determined. The excess of the fair value of a reporting unit
over the amounts assigned to its assets and liabilities is the
implied fair value of goodwill.
In accordance with SFAS No. 142, we conducted
impairment testing on our goodwill as of our November month-end
testing date. We used the discounted estimated future cash flows
methodology to determine the fair value of reporting units with
goodwill. Assumptions critical to our fair value estimates were:
(i) the present value factors used in determining the fair
value of the reporting unit (ii) projected sales growth
rates used in the reporting unit model; (iii) projected
EBITDA multiple used in the derivation of the terminal year
value. These and other assumptions are impacted by economic
conditions and expectations of management and will change in the
future based on period specific facts and circumstances. We
compared the fair value of the reporting unit to its carrying
amount. This process indicated that the fair value of the
reporting unit exceeded its carrying amount and, as a result,
the goodwill is not considered impaired.
Restructuring
Charges
During the fourth quarter of fiscal 2007, we vacated leased
office space. We accounted for the transaction in accordance
with SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which requires that a
liability be recognized for a cost associated with an exit or
disposal activity at fair value in the period in which it is
incurred or when the entity ceases using the right conveyed by a
contract (i.e., the right to use a leased property). Our
restructuring charges include the estimated losses on the
vacated facility based on our contractual obligations net of
estimated sublease income based on current comparable market
rates for leases. We will reassess this liability periodically
based on market conditions. Revisions to our estimates of this
liability could materially impact our operating results and
financial position in future periods if anticipated events and
key assumptions, such as the timing and amounts of sublease
rental income, either do not materialize or change. These costs
were included in Selling, general and administrative
expense in the Consolidated Statement of Operations and in
Other current liabilities, and in Other
non-current liabilities on the Consolidated Balance Sheet
at December 29, 2007.
Additionally, during the fourth quarter of fiscal 2007, we
recorded severance and outplacement costs totaling
$5.6 million based on the terms of our existing severance
plan. These charges were included in Selling, general and
administrative expense in the Consolidated Statement of
Operations and in Accrued compensation on the
Consolidated Balance Sheet at December 29, 2007.
The following table displays the restructuring activity and
liability balances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit
|
|
|
Severance
|
|
|
|
|
|
|
Costs
|
|
|
Costs
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Balance at December 30, 2006
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Charges
|
|
|
11,326
|
(1)
|
|
|
5,617
|
|
|
|
16,943
|
|
Payments
|
|
|
|
|
|
|
(4,209
|
)
|
|
|
(4,209
|
)
|
Accretion of liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 29, 2007
|
|
$
|
11,326
|
|
|
$
|
1,408
|
|
|
$
|
12,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amount excludes moving expenses requiring cash expenditures. |
50
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Compensated
Absences and Termination Costs
We accrue for the costs of compensated absences to the extent
that the employees right to receive payment relates to
service already rendered, the obligation vests or accumulates,
payment is probable and the amount can be reasonably estimated.
Stock-Based
Compensation
On January 1, 2006, we adopted Statement of Financial
Accounting Standards (SFAS) No. 123R,
Share-Based Payment, using the modified prospective
transition method. Prior to 2006, we accounted for stock awards
granted to employees under SFAS No. 123, Accounting
for Stock-Based Compensation. Generally, the approach in
SFAS No. 123R is similar to the approach described in
SFAS No. 123. However, SFAS No. 123R
requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no
longer an alternative.
Under the modified prospective transition method, compensation
expense recognized in fiscal 2007 and fiscal 2006 included:
(a) compensation expense for all unvested share-based
awards granted prior to January 1, 2006, based on the grant
date fair value estimated in accordance with
SFAS No. 123 and (b) compensation expense for all
share-based awards granted subsequent to January 1, 2006,
based on the grant date fair value estimated in accordance with
SFAS No. 123R. Results of prior periods have not been
restated.
Through December 31, 2005, we accrued compensation expense
assuming that all stock options granted were expected to vest.
The effect of actual forfeitures was recognized as forfeitures
occurred. Under SFAS No. 123R, we are required to
estimate forfeitures in calculating the expense related to
stock-based compensation. The adoption of
SFAS No. 123R did not have a material impact on our
results of operations.
Compensation expense arising from stock-based awards granted to
employees and non-employee directors is recognized as expense
using the straight-line method over the vesting period. As of
December 29, 2007, there was $3.2 million,
$2.1 million, $0.4 million and $0.4 million of
total unrecognized compensation expense related to stock
options, restricted stock, restricted stock units and
performance shares, respectively. The unrecognized compensation
expense for stock options, restricted stock, restricted stock
units and performance shares is expected to be recognized over a
period of 3.0 years, 2.7 years, 2.3 years and
2.0 years, respectively.
For fiscal 2007, fiscal 2006 and fiscal 2005 our total
stock-based compensation expense was $3.6 million
$3.1 million, and $2.2 million, respectively. We also
recognized related income tax benefits of $1.4 million,
$1.2 million and $0.9 million, respectively.
Income
Taxes
Deferred income taxes are provided using the asset and liability
method under the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes.
Accordingly, deferred income taxes are recognized for
differences between the income tax and financial reporting bases
of our assets and liabilities based on enacted tax laws and tax
rates applicable to the periods in which the differences are
expected to affect taxable income.
In evaluating our ability to recover our deferred income tax
assets we consider all available positive and negative evidence,
including our past operating results, our ability to carryback
losses against prior taxable income, the existence of cumulative
losses in the most recent years and our forecast of future
taxable income. In estimating future taxable income, we develop
assumptions including the amount of future state and federal
pretax operating income, the reversal of temporary differences
and the implementation of feasible and prudent tax planning
strategies. These assumptions require significant judgment about
the forecasts of future taxable income.
51
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In 2007, we adopted the provisions of FASB Interpretation
No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes, which prescribes a comprehensive model for how
a company should recognize, measure, present and disclose in its
financial statements uncertain tax positions that the company
has taken or expects to take on a tax return (including a
discussion of whether to file or not to file a return in a
particular jurisdiction). The cumulative effect of applying
FIN 48 is reported as an adjustment to the opening balance
of retained earnings for fiscal 2007. Adoption of FIN 48 on
December 31, 2006, the first day of our 2007 fiscal year,
did not have a material effect on our consolidated financial
position or results of operations.
Foreign
Currency Translation
The functional currency for our Canadian operations is the
Canadian dollar. The translation of the applicable currencies
into United States dollars is performed for balance sheet
accounts using current exchange rates in effect at the balance
sheet date and for revenue and expense accounts using a weighted
average exchange rate during the period. Any related translation
adjustments are recorded directly in shareholders equity.
Foreign currency transaction gains and losses are reflected in
the accompanying financial statements. Accumulated other
comprehensive at December 29, 2007 and December 30,
2006 included the gain from foreign currency translation (net of
tax) of $2.9 million and $1.0 million, respectively.
Derivatives
We are exposed to risks such as changes in interest rates,
commodity prices and foreign currency exchange rates. We employ
a variety of practices to manage these risks, including
operating and financing activities and, where deemed
appropriate, the use of derivative instruments. Derivative
instruments are used only for risk management purposes and not
for speculation or trading, and are not used to address risks
related to foreign currency exchange rates.
In accordance with SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended,
we record derivative instruments as assets or liabilities on the
balance sheet at fair value.
On June 12, 2006, we entered into an interest rate swap
agreement with Goldman Sachs Capital Markets, to hedge against
interest rate risks related to our variable rate revolving
credit facility. The interest rate swap has a notional amount of
$150 million and the terms call for us to receive interest
monthly at a variable rate equal to the
30-day LIBOR
and to pay interest monthly at a fixed rate of 5.4%. This
interest rate swap is designated as a cash flow hedge.
We expect the hedge to be highly effective in offsetting changes
in expected cash flows, as, at inception, the critical terms of
the interest rate swap generally match the critical terms of the
variable rate revolving credit facility. Fluctuations in the
fair value of the ineffective portion, if any, of the cash flow
hedge are reflected in current period earnings. These amounts
were immaterial during fiscal 2007 and fiscal 2006.
At December 29, 2007 and December 30, 2006, the fair
value of the interest rate swap was a liability of
$7.1 million and $2.5 million, respectively. These
balances were included in Other current liabilities
and Other long-term liabilities on the Consolidated
Balance Sheet. Accumulated other comprehensive income at
December 29, 2007 and December 30, 2006 included the
net loss on the cash flow hedge (net of tax) of
$4.3 million and $1.5 million, respectively, which
reflects the cumulative amount of comprehensive loss in
connection with the change in fair value of the swap.
Additionally, interest was capped pursuant to a rate cap
agreement that caps
30-day LIBOR
exposure at 6.0% on $165 million of our variable rate
revolving credit facility. The interest rate cap agreement
expired in November 2007. Fluctuations in the fair value of the
interest rate cap agreement were recognized in current period
earnings. These amounts, as well as the fair value of the cap,
were immaterial during fiscal 2007, fiscal 2006 and fiscal 2005.
52
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Restricted
Cash
We had restricted cash of $12.9 million and
$7.3 million at December 29, 2007 and
December 30, 2006, respectively. Restricted cash primarily
includes amounts held in escrow related to our interest rate
swap (see Note 8) and mortgage (see Note 9).
Restricted cash is included in Other Current Assets
and Other Assets on the accompanying balance sheet.
Financial
Instruments
Carrying amounts for our financial instruments are not
significantly different from their fair value, with the
exception of our mortgage. At December 29, 2007, the fair
value of our mortgage was $314 million compared to the
carrying value of $295 million.
BlueLinx
Holdings Inc.
In BlueLinx Holdings Inc.s financial statements in
Note 14, BlueLinx Holdings Inc.s investment in
subsidiaries is stated at cost plus equity in undistributed
earnings of subsidiaries since date of acquisition. BlueLinx
Holdings Inc.s share of net income of its unconsolidated
subsidiaries is included in consolidated income using the equity
method. BlueLinx Holdings Inc.s financial statements
should be read in conjunction with our consolidated financial
statements.
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make certain estimates and assumptions.
These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, as well as
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates and
such differences could be material.
New
Accounting Standards
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements
(SFAS No. 160). SFAS No. 160 establishes
requirements for ownership interests in subsidiaries held by
parties other than the Company (sometimes called minority
interests) be clearly identified, presented, and disclosed
in the consolidated statement of financial position within
equity, but separate from the parents equity. All changes
in the parents ownership interests are required to be
accounted for consistently as equity transactions and any
noncontrolling equity investments in deconsolidated subsidiaries
must be measured initially at fair value. SFAS No. 160
is effective, on a prospective basis, for fiscal years beginning
after December 15, 2008. However, presentation and
disclosure requirements must be retrospectively applied to
comparative financial statements. We are currently assessing the
impact of SFAS No. 160 on our consolidated financial
position, results of operations and cash flows.
In December 2007, the FASB issued SFAS 141 (revised
2007) Business Combinations
(SFAS 141R). SFAS 141R establishes
principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R also
provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what
information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the
business combination. We are currently evaluating the potential
impact, if any, of the adoption of SFAS 141R on our
consolidated financial position, results of operations and cash
flows.
In February, 2007, the FASB issued SFAS No. 159 The
Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159). SFAS No. 159 permits
entities to choose to measure many financial
53
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
assets and financial liabilities at fair value. Unrealized gains
and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is
effective for fiscal years beginning after November 15,
2007. We have not elected to adopt the fair value option in
measuring certain financial assets and liabilities.
As discussed in footnote 6, on December 30, 2006, we
adopted SFAS No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans,
except for the requirement to measure the funded status of
retirement benefit plans as of our fiscal year end, which is
effective for our year ended January 3, 2009. Adoption of
the measurement date provisions of SFAS No. 158 on
December 30, 2007, the first day of fiscal 2008, did
not have a material effect on our consolidated financial
position, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value under GAAP, and
expands disclosures about fair value measurements.
SFAS No. 157 applies to other accounting
pronouncements that require or permit fair value measurements.
The new guidance is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and for
interim periods within those fiscal years. We do not expect the
adoption of SFAS No. 157 to have a material impact on
our consolidated financial position, results of operations or
cash flows.
In July 2006, the FASB issued FASB Interpretation No. 48
(FIN 48), Accounting for Uncertainty in Income
Taxes, which prescribes a comprehensive model for how a
company should recognize, measure, present and disclose in its
financial statements uncertain tax positions that the company
has taken or expects to take on a tax return (including a
decision whether to file or not to file a return in a particular
jurisdiction). The accounting provisions of FIN 48 are
effective for fiscal years beginning after December 15,
2006. The cumulative effect of applying FIN 48 is reported
as an adjustment to the opening balance of retained earnings for
fiscal 2007. Adoption on December 31, 2006 did not have a
material effect on our consolidated financial position, results
of operations or cash flows.
Our provision for (benefit from) income taxes consists of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Federal income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
(7,420
|
)
|
|
$
|
11,902
|
|
|
$
|
23,625
|
|
Deferred
|
|
|
(7,627
|
)
|
|
|
(3,060
|
)
|
|
|
(143
|
)
|
State income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(1,106
|
)
|
|
|
1,814
|
|
|
|
4,877
|
|
Deferred
|
|
|
(2,012
|
)
|
|
|
(758
|
)
|
|
|
(262
|
)
|
Foreign income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
975
|
|
|
|
333
|
|
|
|
427
|
|
Deferred
|
|
|
113
|
|
|
|
118
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
$
|
(17,077
|
)
|
|
$
|
10,349
|
|
|
$
|
28,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The federal statutory income tax rate was 35%. Our provision for
income taxes is reconciled to the federal statutory amount as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Provision for (benefit from) income taxes computed at the
federal statutory tax rate
|
|
$
|
(15,758
|
)
|
|
$
|
9,163
|
|
|
$
|
25,607
|
|
State income taxes, net of federal benefit
|
|
|
(1,579
|
)
|
|
|
898
|
|
|
|
2,926
|
|
Other
|
|
|
260
|
|
|
|
288
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
$
|
(17,077
|
)
|
|
$
|
10,349
|
|
|
$
|
28,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our income before income taxes for our Canadian operations was
$2.5 million for fiscal 2007, $2.9 million for fiscal
2006 and $1.7 million for fiscal 2005.
Approximately $4.3 million and $6.8 million of tax
benefits were included in accumulated other comprehensive income
relating to our interest rate swap (see note 8) and
our pension plan (see note 6), respectively.
The components of our net deferred income tax assets
(liabilities) are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Deferred income tax assets:
|
|
|
|
|
|
|
|
|
Inventory
|
|
$
|
4,301
|
|
|
$
|
4,216
|
|
Compensation-related accruals
|
|
|
5,370
|
|
|
|
3,780
|
|
Accruals and reserves
|
|
|
443
|
|
|
|
1,747
|
|
Pension
|
|
|
|
|
|
|
2,515
|
|
Accounts receivable
|
|
|
3,489
|
|
|
|
2,274
|
|
Restructuring costs
|
|
|
4,417
|
|
|
|
|
|
Derivatives
|
|
|
2,743
|
|
|
|
982
|
|
Other
|
|
|
1,168
|
|
|
|
248
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,931
|
|
|
$
|
15,762
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
(1,852
|
)
|
|
|
(2,711
|
)
|
Property, plant and equipment
|
|
|
(3,594
|
)
|
|
|
(4,056
|
)
|
Pension
|
|
|
(721
|
)
|
|
|
|
|
Other
|
|
|
(937
|
)
|
|
|
(1,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,104
|
)
|
|
|
(7,839
|
)
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets, net
|
|
$
|
14,827
|
|
|
$
|
7,923
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets and income tax benefits are provided
for temporary differences between amounts recorded for financial
reporting and income tax purposes. If, for some reason, the
combination of future years income (or loss) combined with the
reversal of temporary differences results in a loss, such losses
can be carried back to prior years or carried forward to future
years to recover the deferred tax assets. In accordance with
SFAS No. 109, Accounting for Income Taxes
(SFAS 109), we evaluate our deferred tax
55
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
assets quarterly to determine if valuation allowances are
required. SFAS 109 requires that companies assess whether
valuation allowances should be established based on the
consideration of all available evidence using a more
likely than not standard.
In evaluating our ability to recover our deferred income tax
assets we consider all available positive and negative evidence,
including our past operating results, our ability to carryback
losses against prior taxable income, the existence of cumulative
losses in the most recent years and our forecast of future
taxable income. In estimating future taxable income, we develop
assumptions including the amount of future state and federal
pretax operating income, the reversal of temporary differences
and the implementation of feasible and prudent tax planning
strategies. These assumptions require significant judgment about
the forecasts of future taxable income.
The Company has recorded deferred income tax assets of
$22 million at December 29, 2007 reflecting the
benefit of $56 million of deductible temporary differences.
Realization is dependent on generating sufficient taxable
income. The Company believes the deferred income tax assets will
be realized through taxable income generated during available
loss carryback periods and future taxable income, including but
not limited to taxable income that would be generated by the
implementation of feasible and prudent tax planning strategies.
Although realization is not assured, management believes that it
is more likely than not that all of the deferred income tax
assets will be realized. The amount of the deferred income tax
assets considered realizable, however, could be reduced in the
near term if estimates of taxable income available via loss
carryback are reduced or if we are unable to implement existing
tax planning strategies. During 2008, we will continue to
closely monitor the current economic downturn in the housing and
construction sectors on a quarterly basis. Should conditions
reach a level during 2008 that necessitates the recording of a
valuation allowance based upon all of the evidence, both
positive and negative, it will be recorded in the period that
such changes in estimates are made. The recording of a valuation
allowance would result in additional income tax expense in such
period and could have a significant impact on our future
earnings.
On December 31, 2006, we adopted the provisions of
FIN 48. As a result of applying the provisions of
FIN 48, we recognized an increase of $0.1 million in
the liability for unrecognized tax benefits, which was accounted
for as a reduction to the December 31, 2006 balance of
retained earnings.
The following table summarizes the activity related to our
unrecognized tax benefits:
|
|
|
|
|
|
|
(In thousands)
|
|
|
Balance at December 31, 2006
|
|
$
|
111
|
|
Increases related to current year tax positions
|
|
|
57
|
|
Additions for tax positions in prior years
|
|
|
|
|
Reductions for tax positions in prior years
|
|
|
|
|
Settlements
|
|
|
(18
|
)
|
|
|
|
|
|
Balance at December 29, 2007
|
|
$
|
150
|
|
|
|
|
|
|
Included in the unrecognized tax benefits of $0.1 million
at December 29, 2007 was $0.1 million of tax benefits
that, if recognized, would reduce our annual effective tax rate.
We also accrued a nominal amount of interest related to these
unrecognized tax benefits during 2007, and this amount is
reported in the interest expense line of the financial
statements. We do not expect our unrecognized tax benefits to
change significantly over the next 12 months.
We file U.S., state, and foreign income tax returns in
jurisdictions with varying statutes of limitations. The 2004
through 2007 tax years generally remain subject to examination
by federal and most state and foreign tax authorities.
56
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
We have a diversified customer base concentrated in the building
products business. Credit risk is monitored and provisions for
expected losses are provided as determined necessary by
management. We generally do not require collateral.
The following reflects our activity in receivables related
reserve accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
|
|
|
Expense/
|
|
|
Write offs and
|
|
|
Ending
|
|
|
|
Balance
|
|
|
Acquisitions
|
|
|
(Income)
|
|
|
Other, Net
|
|
|
Balance
|
|
|
|
(In thousands)
|
|
|
Fiscal 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts and related reserves
|
|
$
|
13,407
|
|
|
$
|
75
|
|
|
$
|
678
|
|
|
$
|
(3,215
|
)
|
|
$
|
10,945
|
|
Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts and related reserves
|
|
$
|
10,945
|
|
|
$
|
45
|
|
|
$
|
556
|
|
|
$
|
(3,810
|
)
|
|
$
|
7,736
|
|
Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts and related reserves
|
|
$
|
7,736
|
|
|
$
|
|
|
|
$
|
6,975
|
|
|
$
|
(4,175
|
)
|
|
$
|
10,536
|
|
|
|
5.
|
Stock-Based
Compensation
|
We have two stock-based compensation plans covering officers,
directors and certain employees and consultants; the 2004 Long
Term Equity Incentive Plan (the 2004 Plan) and the
2006 Long Term Equity Incentive Plan (the 2006
Plan). The plans are designed to motivate and retain
individuals who are responsible for the attainment of our
primary long-term performance goals. The plans provide a means
whereby our employees and directors develop a sense of
proprietorship and personal involvement in our development and
financial success and encourage them to devote their best
efforts to our business. Although we do not have a formal policy
on the matter, we issue new shares of our common stock to
participants, upon the exercise of options, out of the total
amount of common shares authorized for issuance under the 2004
Plan and the 2006 Plan.
The 2004 Plan provides for the grant of nonqualified stock
options, incentive stock options and restricted shares of our
common stock to participants of the plan selected by our Board
of Directors or a committee of the Board who administer the 2004
Plan. We reserved 2,222,222 shares of our common stock for
issuance under the 2004 Plan. The terms and conditions of awards
under the 2004 Plan are determined by the administrator for each
grant.
Unless otherwise determined by the administrator or as set forth
in an award agreement, upon a Liquidity Event, all
unvested awards will become immediately exercisable and the
administrator may determine the treatment of all vested awards
at the time of the Liquidity Event. A Liquidity
Event is defined as (1) an event in which any person
who is not an affiliate of us becomes the beneficial owner,
directly or indirectly, of fifty percent or more of the combined
voting power of our then outstanding securities or (2) the
sale, transfer or other disposition of all or substantially all
of our business, whether by sale of assets, merger or otherwise,
to a person other than Cerberus.
On May 12, 2006, our shareholders approved the 2006 Plan.
The 2006 Plan permits the grant of nonqualified stock options,
incentive stock options, stock appreciation rights, restricted
stock, restricted stock units, performance shares, performance
units, cash-based awards, and other stock-based awards. We
reserved 1,700,000 shares of our common stock for issuance
under the 2006 Plan. The terms and conditions of awards under
the 2006 Plan are determined by the administrator for each
grant. Awards issued under the 2006 Plan are subject to
accelerated vesting in the event of a change in control as such
event is defined in the 2006 Plan.
57
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On March 29, 2007, the Board of Directors
Compensation Committee granted certain of our executive officers
awards in the form of restricted shares of our common stock.
Additionally, the Board granted certain other key employees
restricted stock units equivalent in cash value to restricted
shares with respect to our common stock. The restricted stock
awards were granted pursuant to and are subject to the terms of
the 2006 Plan. The restricted stock unit awards were granted
pursuant to the terms of the 2006 Long-Term Incentive Plan for
Key Senior Managers which does not provide for the issuance of
equity or any other awards convertible to or exchangeable for
equity.
The restricted stock and restricted stock unit awards vest on
March 29, 2012, five years after the grant date. However,
the awards may vest earlier in their entirety (or portion, as
appropriate) upon the attainment of certain minimum performance
goals. Upon vesting of all or any portion of the restricted
stock units, we will pay a cash amount equivalent to the fair
market value of the shares of our common stock on the date when
the award vests. The restricted stock units are not convertible
to or exchangeable for equity.
On January 8, 2008, the Compensation Committee granted
529,609 restricted shares of our common stock and 587,067
performance shares to certain of our executive officers.
On January 1, 2006, we adopted Statement of Financial
Accounting Standards (SFAS) 123R, Share-Based
Payment, using the modified prospective transition method.
Prior to 2006, we accounted for stock awards granted to
employees under SFAS No. 123, Accounting for
Stock-Based Compensation. Generally, the approach in
SFAS No. 123R is similar to the approach described in
SFAS No. 123. However, SFAS No. 123R
requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure will
no longer be an alternative.
Under the modified prospective transition method, compensation
expense recognized in fiscal 2007 included:
(a) compensation expense for all unvested share-based
awards granted prior to January 1, 2006, based on the grant
date fair value estimated in accordance with
SFAS No. 123, and (b) compensation expense for
all share-based awards granted subsequent to January 1,
2006, based on the grant date fair value estimated in accordance
with SFAS No. 123R. Results of prior periods have not
been restated.
Through December 31, 2005, we accrued compensation expense
assuming that all stock options granted were expected to vest.
The effect of actual forfeitures was recognized as forfeitures
occurred. Under SFAS No. 123R, we are required to
estimate forfeitures in calculating the expense related to
stock-based compensation. The adoption of
SFAS No. 123R did not have a material impact on our
results of operations.
Compensation expense arising from stock-based awards granted to
employees and non-employee directors is recognized as expense
using the straight-line method over the vesting period. As of
December 29, 2007, there was $3.2 million,
$2.1 million $0.4 million and $0.4 million of
total unrecognized compensation expense related to stock
options, restricted stock, restricted stock units and
performance shares, respectively. The unrecognized compensation
expense for stock options, restricted stock, restricted stock
units and performance shares is expected to be recognized over a
period of 3.0 years, 2.7 years, 2.3 years and
2.0 years, respectively.
For fiscal 2007, fiscal 2006 and fiscal 2005, our total
recognized stock-based compensation expense was
$3.6 million, $3.1 million and $2.2 million,
respectively. Stock-based compensation expense is recognized in
selling, general and administrative expense in our statement of
operations. We also recognized related income tax benefits of
$1.4 million, $1.2 million and $0.9 million for
fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
The total fair value of the options vested for fiscal 2007,
fiscal 2006 and fiscal 2005 was $2.3 million,
$2.0 million and $2.7 million, respectively.
Cash proceeds from the exercise of stock options totaled
$0.5 million for fiscal 2007. In addition,
SFAS No. 123R requires us to reflect the benefits of
tax deductions in excess of recognized compensation
58
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
expense as both a financing cash inflow and an operating cash
outflow upon adoption. We included $0.02 million of excess
tax benefits in cash flows from financing activities for fiscal
2007.
For fiscal 2006, cash proceeds from the exercise of stock
options totaled $1.9 million. In addition, we included
$0.9 million of excess tax benefits in cash flows from
financing activities for fiscal 2006.
The following table depicts the weighted average assumptions
used in connection with the Black-Scholes option pricing model
to estimate the fair value of time-based options and
performance-based options granted during fiscal 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
Performance-Based
|
|
|
Performance-Based
|
|
|
|
Options*
|
|
|
Options**
|
|
|
Options***
|
|
|
Risk free interest rate
|
|
|
4.78
|
%
|
|
|
4.81
|
%
|
|
|
5.09
|
%
|
Expected dividend yield
|
|
|
4.46
|
%
|
|
|
4.52
|
%
|
|
|
4.52
|
%
|
Expected life
|
|
|
7 years
|
|
|
|
5 years
|
|
|
|
1 year
|
|
Expected volatility
|
|
|
45
|
%
|
|
|
45
|
%
|
|
|
45
|
%
|
Weighted average fair value
|
|
$
|
3.77
|
|
|
$
|
2.83
|
|
|
$
|
6.97
|
|
|
|
|
* |
|
Exercise price equaled the market price at date of grant. |
|
** |
|
Exercise price exceeded the market price at date of grant. |
|
*** |
|
Exercise price was less than the market price at date of grant. |
Performance-based options include options for which the
financial target has been set by the board of directors, or a
committee thereof. On February 14, 2007, the compensation
committee set the financial target for 60,375 options subject to
vesting criteria in 2007.
The following table depicts the weighted average assumptions
used in connection with the Black-Scholes option pricing model
to estimate the fair value of time-based options and
performance-based options granted during fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
|
|
|
Time-Based
|
|
|
Performance-Based
|
|
|
|
Options*
|
|
|
Options**
|
|
|
Options***
|
|
|
Risk free interest rate
|
|
|
4.36
|
%
|
|
|
4.73
|
%
|
|
|
4.60
|
%
|
Expected dividend yield
|
|
|
4.43
|
%
|
|
|
3.85
|
%
|
|
|
3.19
|
%
|
Expected life
|
|
|
7 years
|
|
|
|
7 years
|
|
|
|
1 year
|
|
Expected volatility
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
Weighted average fair value
|
|
$
|
3.69
|
|
|
$
|
5.12
|
|
|
$
|
11.48
|
|
|
|
|
* |
|
Exercise price exceeded market price at date of grant. |
|
** |
|
Exercise price equaled market price at date of grant. |
|
*** |
|
Exercise price was less than the market price at date of grant. |
Performance-based options include options for which the
financial target has been set by the board of directors, or a
committee thereof. On February 1, 2006, the compensation
committee set the financial target for 69,300 options subject to
vesting criteria in 2006.
59
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table depicts the weighted average assumptions
used in connection with the Black-Scholes option pricing model
to estimate the fair value of options granted during fiscal 2005:
|
|
|
|
|
|
|
|
|
|
|
Chief
|
|
|
Time-
|
|
|
|
Executive Officer
|
|
|
Based
|
|
|
|
Options*
|
|
|
Options**
|
|
|
Risk free interest rate
|
|
|
4.40
|
%
|
|
|
4.39
|
%
|
Expected dividend yield
|
|
|
3.90
|
%
|
|
|
4.45
|
%
|
Expected life
|
|
|
7 years
|
|
|
|
7 years
|
|
Expected volatility
|
|
|
50
|
%
|
|
|
48
|
%
|
Weighted average fair value
|
|
$
|
4.76
|
|
|
$
|
3.90
|
|
|
|
|
* |
|
Exercise price exceeded market price at date of grant. |
|
** |
|
Exercise price equaled market price at date of grant. |
In determining the expected life, we did not rely on our
historical exercise data as it does not provide a reasonable
basis upon which to estimate future expected lives due to
limited experience of employee exercises. Instead, we followed a
simplified method based on the vesting term and contractual term
as permitted under SEC Staff Accounting
Bulletin No. 107.
The range of risk-free rates for fiscal 2007, fiscal 2006 and
fiscal 2005 was from 4.78% to 5.10%, 4.34% to 5.05% and 3.93% to
4.60%, respectively.
The expected volatility is based on the historical volatility of
our common stock.
The table below includes certain additional information related
to our outstanding employee stock options for the three years
ended December 29, 2007 excluding 54,075 performance-based
options for which the financial targets had not been set as of
such time.
60
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
|
Shares
|
|
|
Price
|
|
|
Options outstanding at Jan. 1, 2005
|
|
|
1,013,137
|
|
|
$
|
3.75
|
|
Options exercisable at Jan. 1, 2005
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
788,900
|
|
|
$
|
13.38
|
|
Options exercised
|
|
|
(68,872
|
)
|
|
$
|
3.75
|
|
Options forfeited
|
|
|
(37,483
|
)
|
|
$
|
3.75
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at Dec. 31, 2005
|
|
|
1,695,682
|
|
|
$
|
8.23
|
|
Options exercisable at Dec. 31, 2005
|
|
|
395,525
|
|
|
$
|
3.75
|
|
Options granted
|
|
|
672,242
|
|
|
$
|
12.19
|
|
Options exercised
|
|
|
(508,845
|
)
|
|
$
|
3.75
|
|
Options forfeited
|
|
|
(141,548
|
)
|
|
$
|
3.90
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at Dec. 30, 2006
|
|
|
1,717,531
|
|
|
$
|
11.47
|
|
Options exercisable at Dec. 30, 2006
|
|
|
262,492
|
|
|
$
|
10.09
|
|
Options granted
|
|
|
160,375
|
|
|
$
|
8.58
|
|
Options exercised
|
|
|
(132,230
|
)
|
|
$
|
3.75
|
|
Options forfeited
|
|
|
(184,053
|
)
|
|
$
|
11.16
|
|
Options expired
|
|
|
(71,328
|
)
|
|
$
|
3.75
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at Dec. 29, 2007
|
|
|
1,490,295
|
|
|
$
|
12.24
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at Dec. 29, 2007
|
|
|
648,233
|
|
|
$
|
11.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Contractual Life
|
|
|
Number of
|
|
|
Exercise
|
|
Price Range
|
|
Options
|
|
|
Price
|
|
|
(in Years)
|
|
|
Options
|
|
|
Price
|
|
|
$3.75
|
|
|
170,004
|
|
|
$
|
3.75
|
|
|
|
0.48
|
|
|
|
123,354
|
|
|
$
|
3.75
|
|
$10.29-$15.10
|
|
|
1,320,291
|
|
|
$
|
13.33
|
|
|
|
8.06
|
|
|
|
524,879
|
|
|
$
|
13.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,490,295
|
|
|
|
|
|
|
|
|
|
|
|
648,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables summarize the activity for our performance
shares, restricted stock awards and restricted stock unit awards
during fiscal 2007 and fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
Restricted Stock
|
|
|
Restricted Stock Units
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
Number of
|
|
|
Average Fair
|
|
|
Number of
|
|
|
Average Fair
|
|
|
Number of
|
|
|
Average Fair
|
|
|
|
Awards
|
|
|
Value
|
|
|
Awards
|
|
|
Value
|
|
|
Awards
|
|
|
Value
|
|
|
Outstanding at December 31, 2005
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Granted
|
|
|
|
|
|
$
|
|
|
|
|
148,912
|
|
|
$
|
13.99
|
|
|
|
124,200
|
|
|
$
|
13.95
|
|
Vested
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Forfeited
|
|
|
|
|
|
$
|
|
|
|
|
(1,500
|
)
|
|
$
|
14.01
|
|
|
|
(4,950
|
)
|
|
$
|
14.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 30, 2006
|
|
|
|
|
|
$
|
|
|
|
|
147,412
|
|
|
$
|
13.99
|
|
|
|
119,250
|
|
|
$
|
13.95
|
|
Granted
|
|
|
245,025
|
|
|
$
|
10.46
|
|
|
|
218,063
|
|
|
$
|
10.50
|
|
|
|
99,325
|
|
|
$
|
11.02
|
|
Vested
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Forfeited
|
|
|
(20,306
|
)
|
|
$
|
10.46
|
|
|
|
(34,635
|
)
|
|
$
|
12.18
|
|
|
|
(30,450
|
)
|
|
$
|
13.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 29, 2007
|
|
|
224,719
|
|
|
$
|
10.46
|
|
|
|
330,840
|
|
|
$
|
11.89
|
|
|
|
188,125
|
|
|
$
|
12.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of the restricted stock units will be
marked-to-market each reporting period through the date of
settlement. On December 29, 2007, the fair value of these
awards was based on the closing price of our common stock of
$4.05.
At December 29, 2007, the aggregate intrinsic value of
stock-based awards outstanding and options exercisable was
$3.1 million and $0.04 million, respectively (the
intrinsic value of a stock-based award is the amount by which
the market value of the underlying award exceeds the exercise
price of the award). The intrinsic value of stock options
exercised during fiscal 2007, fiscal 2006 and fiscal 2005 was
$0.8 million, $5.2 million and $0.6 million,
respectively.
Defined
Benefit Pension Plans
Most of our hourly employees participate in noncontributory
defined benefit pension plans. These include a plan that is
administered solely by us (the hourly pension plan)
and union-administered multiemployer plans. Our funding policy
for the hourly pension plan is based on actuarial calculations
and the applicable requirements of federal law. We do not expect
to make any contributions to the hourly pension plan in fiscal
2008. Contributions to multiemployer plans are generally based
on negotiated labor contracts. We contributed $1.4 million,
$1.6 million and $1.5 million to union administered
multiemployer pension plans for fiscal 2007, fiscal 2006 and
fiscal 2005, respectively. Benefits under the majority of plans
for hourly employees (including multiemployer plans) are
primarily related to years of service.
62
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables set forth the change in projected benefit
obligation and the change in plan assets for the hourly pension
plan:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of period
|
|
$
|
71,875
|
|
|
$
|
70,073
|
|
Service cost
|
|
|
2,506
|
|
|
|
2,689
|
|
Interest cost
|
|
|
4,216
|
|
|
|
4,045
|
|
Actuarial (gain) loss
|
|
|
(5,203
|
)
|
|
|
(2,151
|
)
|
Benefits paid
|
|
|
(2,923
|
)
|
|
|
(2,781
|
)
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at end of period
|
|
|
70,471
|
|
|
|
71,875
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of assets at beginning of period
|
|
$
|
65,426
|
|
|
$
|
62,695
|
|
Actual return on plan assets
|
|
|
9,815
|
|
|
|
5,512
|
|
Benefits paid
|
|
|
(2,923
|
)
|
|
|
(2,781
|
)
|
|
|
|
|
|
|
|
|
|
Fair value of assets at end of period
|
|
|
72,318
|
|
|
|
65,426
|
|
|
|
|
|
|
|
|
|
|
Funded (Unfunded) Status of Plan
|
|
$
|
1,847
|
|
|
$
|
(6,449
|
)
|
|
|
|
|
|
|
|
|
|
On December 30, 2006, we adopted the recognition and
disclosure provisions of SFAS No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement
Plans, except for the requirement to measure the funded
status of retirement benefit plans as of our fiscal year end,
which is effective for our year ended January 3, 2009. We used
September 30, 2007 as the measurement date for the hourly
pension plan. SFAS No. 158 requires us to recognize the
funded status (i.e., the difference between the fair value of
plan assets and the projected benefit obligations) of our
pension plan in our Consolidated Balance Sheets, with a
corresponding adjustment to accumulated other comprehensive
income, net of tax. As of December 29, 2007, the net funded
status of our benefit plan was $1.8 million and was
included in Other assets on our Consolidated Balance
Sheet. As of December 30, 2006, the net unfunded status of
our benefit plan was $6.4 million and was included in
Other non-current liabilities on our Consolidated
Balance Sheet. The net adjustment to other comprehensive income
for fiscal 2007 and fiscal 2006 was $9.6 million
($5.9 million net of tax) and $1.6 million
($1.0 million net of tax), respectively, which represents
the net unrecognized actuarial gain and unrecognized prior
service
63
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
cost. The effects of adopting the provisions of SFAS
No. 158 on our Consolidated Balance Sheet at
December 29, 2007 and December 30, 2006, are presented
in the following table.
The funded status and the amounts recognized on the accompanying
balance sheets for the hourly pension plan are set forth in the
following table:
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Funded status
|
|
$
|
1,847
|
|
|
$
|
(6,449
|
)
|
Unrecognized prior service cost
|
|
|
21
|
|
|
|
23
|
|
Unrecognized actuarial gain
|
|
|
(11,228
|
)
|
|
|
(1,634
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(9,360
|
)
|
|
$
|
(8,060
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized on the balance sheet consist of:
|
|
|
|
|
|
|
|
|
Accrued pension asset (liability)
|
|
|
1,847
|
|
|
|
(6,449
|
)
|
Accumulated other comprehensive income (pre-tax)
|
|
|
(11,207
|
)
|
|
|
(1,611
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(9,360
|
)
|
|
$
|
(8,060
|
)
|
|
|
|
|
|
|
|
|
|
The portions of the prior service cost and estimated net gain
for the hourly pension plan that are expected to be amortized
from Accumulated Other Comprehensive Income into net periodic
cost over the next fiscal year are $0 and $0.4 million,
respectively.
The accumulated benefit obligation for the hourly pension plan
was $68.9 million and $70.3 million at
December 29, 2007 and December 30, 2006, respectively.
Net periodic pension cost for our pension plans included the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
2,506
|
|
|
$
|
2,689
|
|
|
$
|
2,600
|
|
Interest cost on projected benefit obligation
|
|
|
4,216
|
|
|
|
4,045
|
|
|
|
3,879
|
|
Expected return on plan assets
|
|
|
(5,424
|
)
|
|
|
(5,200
|
)
|
|
|
(4,836
|
)
|
Amortization of unrecognized prior service cost
|
|
|
1
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
1,299
|
|
|
$
|
1,536
|
|
|
$
|
1,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following assumptions were used to determine the projected
benefit obligation at the measurement date and the net periodic
pension cost:
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
Projected benefit obligation:
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
6.45
|
%
|
|
|
6.00
|
%
|
Average rate of increase in future compensation levels
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
Expected long-term rate of return on plan assets
|
|
|
8.50
|
%
|
|
|
8.50
|
%
|
Net periodic pension cost
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
6.00
|
%
|
|
|
5.90
|
%
|
Average rate of increase in future compensation levels
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
Expected long-term rate of return on plan assets
|
|
|
8.50
|
%
|
|
|
8.50
|
%
|
Our percentage of fair value of total assets by asset category
as of our measurement date, which falls on the last day of our
third fiscal quarter, are as follows:
|
|
|
|
|
|
|
|
|
|
|
September 29,
|
|
|
September 30,
|
|
Asset Category
|
|
2007
|
|
|
2006
|
|
|
Equity securities domestic
|
|
|
61
|
%
|
|
|
61
|
%
|
Equity securities international
|
|
|
16
|
%
|
|
|
15
|
%
|
Fixed income
|
|
|
23
|
%
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
Investment
policy and strategy
Plan assets are managed as a balanced portfolio comprised of two
major components: an equity portion and a fixed income portion.
The expected role of plan equity investments will be to maximize
the long-term real growth of fund assets, while the role of
fixed income investments will be to generate current income,
provide for more stable periodic returns, and provide some
downside protection against the possibility of a prolonged
decline in the market value of equity investments. We will
review this investment policy statement at least once per year.
In addition, the portfolio will be reviewed quarterly to
determine the deviation from target weightings and will be
rebalanced as necessary. Target allocations for 2008 are 60%
domestic and 15% international equity investments, and 25% fixed
income investments.
The expected long-term rate of return for the plans total
assets is based on the expected return of each of the above
categories, weighted based on the target allocation for each
class. Equity securities are expected to return 9% to 10% over
the long-term, while debt securities are expected to return
between 5% and 6%.
Our estimated future benefit payments reflecting expected future
service are as follows:
|
|
|
|
|
Fiscal Year Ending
|
|
(In thousands)
|
|
|
January 3, 2009
|
|
$
|
3,427
|
|
January 2, 2010
|
|
|
3,623
|
|
January 1, 2011
|
|
|
3,843
|
|
December 31, 2011
|
|
|
4,093
|
|
December 29, 2012
|
|
|
4,285
|
|
December 28, 2013 December 30, 2017
|
|
|
26,272
|
|
65
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Defined
Contribution Plans
Our employees also participate in several defined contribution
plans. Contributions to the plans are based on employee
contributions and compensation. Contributions to these plans
totaled $5.1 million, $6.3 million and
$12.2 million for fiscal 2007, fiscal 2006 and fiscal 2005,
respectively.
|
|
7.
|
Inventory
Reserve Accounts
|
The following reflects our activity for inventory reserve
accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
|
|
|
|
|
|
Write-offs and
|
|
|
Ending
|
|
|
|
Balance
|
|
|
Acquisitions
|
|
|
Expense
|
|
|
Other, net
|
|
|
Balance
|
|
|
|
(In thousands)
|
|
|
Fiscal 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obsolescence/damaged inventory reserve
|
|
$
|
2,965
|
|
|
$
|
204
|
|
|
$
|
1,376
|
|
|
$
|
(1,820
|
)
|
|
$
|
2,725
|
|
Lower of cost or market reserve
|
|
$
|
1,041
|
|
|
$
|
|
|
|
$
|
134
|
|
|
$
|
(1,175
|
)
|
|
$
|
|
|
Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obsolescence/damaged inventory reserve
|
|
$
|
2,725
|
|
|
$
|
24
|
|
|
$
|
2,827
|
|
|
$
|
(514
|
)
|
|
$
|
5,062
|
|
Lower of cost or market reserve
|
|
$
|
|
|
|
$
|
|
|
|
$
|
117
|
|
|
$
|
(117
|
)
|
|
$
|
|
|
Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obsolescence/damaged inventory reserve
|
|
$
|
5,062
|
|
|
$
|
|
|
|
$
|
1,570
|
|
|
$
|
(2,268
|
)
|
|
$
|
4,364
|
|
Lower of cost or market reserve
|
|
$
|
|
|
|
$
|
|
|
|
$
|
125
|
|
|
$
|
(104
|
)
|
|
$
|
21
|
|
|
|
8.
|
Revolving
Credit Facility
|
On May 7, 2004, we entered into a revolving credit
facility. The revolving credit facility, as amended, has a
revolving loan limit of $800 million and matures on
May 7, 2011. Advances under the revolving credit facility
are made as prime rate loans or LIBOR loans at our election. The
revolving credit facility loans are secured by a first priority
security interest in all inventory and receivables and all other
personal property. Our revolving loan limit of $800 million
includes a term loan for $6 million used to refinance and
consolidate certain loans made by the revolving loan lenders to
us. Borrowing availability under the revolving credit facility
is based on eligible accounts receivable and inventory. As of
December 29, 2007, we had outstanding borrowings of
$184 million and availability of $222 million under
the terms of the revolving credit facility. We classify the
lowest projected balance of the credit facility over the next
twelve months of $184 million as long term debt.
Interest rates payable upon such advances are based upon the
prime rate or LIBOR rate, depending on the type of loan we
choose, plus an applicable margin. The applicable interest rates
for prime rate and Eurodollar loans are subject to adjustments
based on our EBITDA amount as defined in the revolving credit
facility. At December 29, 2007, the interest rate
prevailing on the revolving credit facility was 7.1%. Under the
revolving credit facility, as of December 29, 2007, we paid
an unused line fee of 0.25% on the unused portion of the
commitment. In fiscal 2006 we incurred $0.4 million of debt
financing costs related to the revolving credit facility, which
are being amortized over the term of the facility.
The revolving credit facility contains customary negative
covenants and restrictions for asset based loans, with which we
are in compliance. In addition, the revolving credit facility
requires, during a period commencing on the date on which the
amount of excess availability under the revolving credit
facility has been less than $40 million for the third
consecutive business day and ending on a subsequent date on
which the amount of modified adjusted excess availability has
been equal to or greater than $40 million for the
66
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
sixtieth consecutive day, that (i) we meet a monthly fixed
charge coverage test, as defined in the revolving credit
agreement and (ii) we not incur capital expenditures of
more than $20 million in any fiscal year. When measured, we
are required to maintain a fixed charge coverage ratio of 1.1 to
1.0.
The revolving credit facility limits distributions by BlueLinx
Corporation, the operating company, to its parent, BlueLinx
Holdings Inc., which, in turn, may limit BlueLinx Holding
Inc.s ability to pay dividends to holders of common stock.
The revolving credit facility currently permits BlueLinx
Corporation to pay dividends to BlueLinx Holdings Inc.
(i) in an amount equal to the sum of our federal, state and
local income tax liability that is attributable to our operating
company and its subsidiaries and (ii) for our general
administrative expenses
and/or
operating expenses incurred by us on behalf of our operating
company or its subsidiaries in an amount not to exceed
$2.5 million in any fiscal year. In addition, the revolving
credit facility permits the operating company to pay dividends
to us in an aggregate amount not to exceed the sum of 50% of the
operating companys cumulative net income earned since
May 7, 2004, plus 50% of the first $100 million
of capital contributions made by us to the operating company
after October 26, 2004, plus 100% of each capital
contribution made by us to the operating company after such
first $100 million of capital contributions, so long as:
(i) the operating company does not pay dividends to us in
excess of $25 million in the aggregate in any fiscal year;
(ii) no default or event of default exists under the
revolving credit facility, and no default or event of default
will occur as a result of the dividend payment;
(iii) both immediately before giving effect to the dividend
and immediately following the dividend payment, the amount of
modified adjusted excess availability under the
revolving credit facility is at least $70 million; and
(iv) agents under the revolving credit facility have
received the operating companys unaudited internally
prepared financial statements for the fiscal quarter immediately
preceding the date of such dividend, together with a compliance
certificate and any supporting documentation the agent may
request.
On August 4, 2006, we reached an agreement with Wachovia
Bank, National Association and the other signatories thereto to
amend the terms of our existing revolving credit agreement. The
Amended and Restated Loan and Security Agreement dated
August 4, 2006, added certain of our operating
companys subsidiaries and affiliates to the credit
agreement as borrowers
and/or
guarantors and also allows us to form future subsidiaries, if
necessary, for structuring potential future acquisitions.
On June 12, 2006, we entered into an interest rate swap
agreement with Goldman Sachs Capital Markets, to hedge against
interest rate risks related to our variable rate revolving
credit facility. The interest rate swap has a notional amount of
$150 million and the terms call for us to receive interest
monthly at a variable rate equal to the
30-day LIBOR
and to pay interest monthly at a fixed rate of 5.4%. This
interest rate swap is designated as a cash flow hedge.
We expect the hedge to be highly effective in offsetting changes
in expected cash flows, as, at inception, the critical terms of
the interest rate swap generally match the critical terms of the
variable rate revolving credit facility. Fluctuations in the
fair value of the ineffective portion, if any, of the cash flow
hedge are reflected in current period earnings. These amounts
were immaterial during fiscal 2007 and fiscal 2006.
At December 29, 2007 and December 30, 2006, the fair
value of the interest rate swap was a liability of
$7.1 million and $2.5 million, respectively. These
balances were included in Other current liabilities
and Other long- term liabilities on the Consolidated
Balance Sheet. Accumulated other comprehensive income at
December 29, 2007 and December 30, 2006 included the
net loss on the cash flow hedge (net of tax) of
$4.3 million and $1.5 million, respectively, which
reflects the cumulative amount of comprehensive loss in
connection with the change in fair value of the swap.
67
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Additionally, interest was capped pursuant to a rate cap
agreement that caps
30-day LIBOR
exposure at 6.0% on $165 million of our variable rate
revolving credit facility. The interest rate cap agreement
expired in November 2007. Fluctuations in the fair value of the
interest rate cap agreement were recognized in current period
earnings. These amounts, as well as the fair value of the cap,
were immaterial during fiscal 2007.
At December 29, 2007, we had outstanding letters of credit
totaling $10.4 million, primarily for the purposes of
securing collateral requirements under our casualty insurance
programs and for guaranteeing payment of international purchases
based on fulfillment of certain conditions.
On June 9, 2006, certain special purpose entities that are
wholly-owned subsidiaries of ours entered into a
$295 million mortgage loan with the German American Capital
Corporation. The mortgage has a term of ten years and is secured
by 57 distribution facilities and 1 office building owned by the
special purpose entities. The stated interest rate on the
mortgage is fixed at 6.35%. German American Capital Corporation
assigned half of its interest in the mortgage loan to Wachovia
Bank, National Association.
Simultaneously with the execution of the mortgage loan, we paid
off in full our then-existing $165 million mortgage loan
agreement with Column Financial, Inc. dated as of
October 26, 2004. In connection with the termination of the
existing mortgage loan, we incurred charges of $4.9 million
during the second quarter of fiscal 2006, which includes
unamortized debt financing costs of $3.2 million.
The mortgage loan requires interest-only payments for the first
five years followed by level monthly payments of principal and
interest based on an amortization period of thirty years. The
balance of the loan outstanding at the end of ten years will
then become due and payable. The principal will be paid in the
following increments (in thousands):
|
|
|
|
|
2011
|
|
$
|
1,511
|
|
2012
|
|
|
3,172
|
|
2013
|
|
|
3,437
|
|
2014
|
|
|
3,665
|
|
2015
|
|
|
3,908
|
|
Thereafter
|
|
$
|
279,307
|
|
|
|
10.
|
Related
Party Transactions
|
Cerberus Capital Management, L.P., our equity sponsor, retains
consultants that specialize in operations management and support
and who provide Cerberus with consulting advice concerning
portfolio companies in which funds and accounts managed by
Cerberus or its affiliates have invested. From time to time,
Cerberus makes the services of these consultants available to
Cerberus portfolio companies. We believe that the terms of these
consulting arrangements are favorable to us, or, alternatively,
are materially consistent with those terms that would have been
obtained by us in an arrangement with an unaffiliated third
party. We have normal service, purchase and sales arrangements
with other entities that are owned or controlled by Cerberus. We
believe that these transactions are not material to our results
of operations or financial position.
|
|
11.
|
Commitments
and Contingencies
|
Operating
Leases
Total rental expense was approximately $7.8 million,
$6.8 million and $6.5 million for fiscal 2007, fiscal
2006 and fiscal 2005, respectively.
68
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 29, 2007, our total commitments under
long-term, non-cancelable operating leases were as follows (in
thousands):
|
|
|
|
|
2008
|
|
$
|
8,118
|
|
2009
|
|
|
7,715
|
|
2010
|
|
|
6,697
|
|
2011
|
|
|
5,180
|
|
2012
|
|
|
4,534
|
|
Thereafter
|
|
|
27,061
|
|
|
|
|
|
|
Total
|
|
$
|
59,305
|
|
|
|
|
|
|
Certain of our operating leases have extension options.
Environmental
and Legal Matters
We are involved in various proceedings incidental to our
businesses and are subject to a variety of environmental and
pollution control laws and regulations in all jurisdictions in
which we operate. Although the ultimate outcome of these
proceedings cannot be determined with certainty, based on
presently available information management believes that
adequate reserves have been established for probable losses with
respect thereto. Management further believes that the ultimate
outcome of these matters could be material to operating results
in any given quarter but will not have a materially adverse
effect on our long-term financial condition, our results of
operations, or our cash flows.
Collective
Bargaining Agreements
Approximately 30% of our total work force is covered by
collective bargaining agreements. Collective bargaining
agreements representing approximately 11% of our work force will
expire within one year.
Preference
Claim
On November 19, 2004, we received a letter from Wickes
Lumber, or Wickes, asserting that approximately $16 million
in payments received by the Distribution Division of
Georgia-Pacific Corporation during the
90-day
period prior to Wickes January 20, 2004
Chapter 11 filing were preferential payments under
section 547 of the United States Bankruptcy Code. BlueLinx
Holdings Inc. and its operating subsidiary acquired the assets
of the Distribution Division of GeorgiaPacific Corporation
on May 7, 2004. On October 14, 2005, Wickes filed a
lawsuit in the United States Bankruptcy Court for the Northern
District of Illinois titled Wickes Inc. v. Georgia
Pacific Distribution Division (BlueLinx), (Bankruptcy
Adversary Proceeding
No. 05-2322)
asserting its claim. On November 14, 2005, we filed our
answer to the complaint denying liability. Although the ultimate
outcome of this matter cannot be determined with certainty, we
believe Wickes assertion to be without merit and, in any
event, subject to one or more complete defenses, including, but
not limited to, that the payments were made and received in the
ordinary course of business and were a substantially
contemporaneous exchange for new value given to Wickes.
|
|
12.
|
Comprehensive
Income (Loss)
|
Comprehensive income (loss) is a measure of income (loss) which
includes both net income (loss) and other comprehensive income
or loss. Other comprehensive income or loss results from items
deferred from recognition into our income statement. Accumulated
other comprehensive loss is separately presented on our balance
sheet as part of shareholders equity. Other comprehensive
income (loss) was $5.0 million,
69
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
$(0.6) million and $1.8 million for fiscal 2007,
fiscal 2006, and fiscal 2005, respectively. The accumulated
balances for each component of other comprehensive income (loss)
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 29,
|
|
|
December 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Foreign currency translation adjustment, net of tax
|
|
$
|
2,877
|
|
|
$
|
965
|
|
|
$
|
1,023
|
|
Unrealized net gain from pension plan, net of tax
|
|
|
6,839
|
|
|
|
983
|
|
|
|
|
|
Unrealized loss from cash flow hedge, net of tax
|
|
|
(4,290
|
)
|
|
|
(1,536
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
$
|
5,426
|
|
|
$
|
412
|
|
|
$
|
1,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13.
|
Unaudited
Selected Quarterly Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
Second Quarter
|
|
|
Third Quarter
|
|
|
Fourth Quarter
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
April 1,
|
|
|
June 30,
|
|
|
July 1,
|
|
|
September 29,
|
|
|
September 30,
|
|
|
December 29,
|
|
|
December 30,
|
|
|
|
2007(a)
|
|
|
2006(b)
|
|
|
2007(c)
|
|
|
2006(d)
|
|
|
2007(e)
|
|
|
2006(f)
|
|
|
2007(g)
|
|
|
2006(h)
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Net sales
|
|
$
|
957,114
|
|
|
$
|
1,376,606
|
|
|
$
|
1,081,990
|
|
|
$
|
1,378,950
|
|
|
$
|
1,015,888
|
|
|
$
|
1,203,578
|
|
|
$
|
778,918
|
|
|
$
|
940,249
|
|
Gross profit
|
|
|
103,755
|
|
|
|
129,952
|
|
|
|
119,238
|
|
|
|
136,443
|
|
|
|
102,810
|
|
|
|
120,906
|
|
|
|
66,143
|
|
|
|
92,506
|
|
Net income(loss)
|
|
$
|
(189
|
)
|
|
$
|
9,795
|
|
|
$
|
5,434
|
|
|
$
|
9,611
|
|
|
$
|
890
|
|
|
$
|
2,292
|
|
|
$
|
(34,080
|
)
|
|
$
|
(5,866
|
)
|
Basic net income (loss) per share applicable to common shares
|
|
$
|
(0.01
|
)
|
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.31
|
|
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
(1.10
|
)
|
|
$
|
(0.19
|
)
|
Diluted net income (loss) per share applicable to common shares
|
|
$
|
(0.01
|
)
|
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.31
|
|
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
(1.10
|
)
|
|
$
|
(0.19
|
)
|
|
|
|
(a) |
|
During the three months ended March 31, 2007, basic and
diluted weighted average shares were 30,800,483. Total
share-based awards of 1,938,930 were excluded from our diluted
earnings per share calculation because they were anti-dilutive. |
|
(b) |
|
During the three months ended April 1, 2006, basic and
diluted weighted average shares were 30,417,488, and 30,712,709,
respectively. Stock options to purchase 760,500 shares were
excluded from our diluted earnings per share calculation because
they were anti-dilutive. |
|
(c) |
|
During the three months ended June 30, 2007, basic and
diluted weighted average shares were 30,848,349 and 30,994,917,
respectively. Total share-based awards of 1,489,842 were
excluded from our diluted earnings per share calculation because
they were anti-dilutive. |
|
(d) |
|
During the three months ended July 1, 2006, basic and
diluted weighted average shares were 30,649,044 and 30,788,936,
respectively. Total stock-based awards of 1,503,754 were
excluded from our diluted earnings per share calculation because
they were anti-dilutive. |
|
(e) |
|
During the three months ended September 29, 2007, basic and
diluted weighted average shares were 30,852,572 and 30,951,401,
respectively. Total share-based awards of 1,759,161 were
excluded from our diluted earnings per share calculation because
they were anti-dilutive. |
|
(f) |
|
During the three months ended September 30, 2006, basic and
diluted weighted average shares were 30,662,219 and 30,782,273,
respectively. Total share-based awards of 1,537,254 were
excluded from our diluted earnings per share calculation because
they were anti-dilutive. |
|
(g) |
|
During the three months ended December 29, 2007, basic and
diluted weighted average shares were 30,889,802. Total
share-based awards of 1,831,522 were excluded from our diluted
earnings per share calculation because they were anti-dilutive. |
70
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
(h) |
|
During the three months ended December 30, 2006, basic and
diluted weighted average shares were 30,745,010. Total
share-based awards of 1,537,254 were excluded from our diluted
earnings per share calculation because they were anti-dilutive. |
|
|
14.
|
Supplemental
Condensed Consolidating/Combined Financial Statements
|
The condensed consolidating financial information as of
December 29, 2007 and December 30, 2006 and for fiscal
2007, fiscal 2006 and fiscal 2005 is provided due to
restrictions in our revolving credit facility that limit
distributions by BlueLinx Corporation, our operating company and
our wholly-owned subsidiary, to us, which, in turn, may limit
our ability to pay dividends to holders of our common stock (see
Note 8, Revolving Credit Facility, for a more
detailed discussion of these restrictions and the terms of the
facility). Also included in the supplemental condensed
consolidated/combining financial statements are sixty-one single
member limited liability companies, which are wholly owned by us
(the LLC subsidiaries). The LLC subsidiaries own
certain warehouse properties that are occupied by BlueLinx
Corporation, each under the terms of a master lease agreement.
The warehouse properties collateralize a mortgage loan and are
not available to satisfy the debts and other obligations of
either us or BlueLinx Corporation.
The condensed consolidating statement of operations for BlueLinx
Holdings Inc. for the fiscal year ended December 29, 2007
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Net sales
|
|
$
|
|
|
|
$
|
3,833,910
|
|
|
$
|
30,470
|
|
|
$
|
(30,470
|
)
|
|
$
|
3,833,910
|
|
Cost of sales
|
|
|
|
|
|
|
3,441,964
|
|
|
|
|
|
|
|
|
|
|
|
3,441,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
391,946
|
|
|
|
30,470
|
|
|
|
(30,470
|
)
|
|
|
391,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
1,198
|
|
|
|
401,528
|
|
|
|
498
|
|
|
|
(30,470
|
)
|
|
|
372,754
|
|
Depreciation and amortization
|
|
|
|
|
|
|
16,680
|
|
|
|
4,244
|
|
|
|
|
|
|
|
20,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,198
|
|
|
|
418,208
|
|
|
|
4,742
|
|
|
|
(30,470
|
)
|
|
|
393,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,198
|
)
|
|
|
(26,262
|
)
|
|
|
25,728
|
|
|
|
|
|
|
|
(1,732
|
)
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
24,091
|
|
|
|
19,569
|
|
|
|
|
|
|
|
43,660
|
|
Other income, net
|
|
|
|
|
|
|
(111
|
)
|
|
|
(259
|
)
|
|
|
|
|
|
|
(370
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
|
(1,198
|
)
|
|
|
(50,242
|
)
|
|
|
6,418
|
|
|
|
|
|
|
|
(45,022
|
)
|
Provision for (benefit from) income taxes
|
|
|
(471
|
)
|
|
|
(19,128
|
)
|
|
|
2,522
|
|
|
|
|
|
|
|
(17,077
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of subsidiaries
|
|
|
(27,218
|
)
|
|
|
|
|
|
|
|
|
|
|
27,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
$
|
(31,114
|
)
|
|
$
|
3,896
|
|
|
$
|
27,218
|
|
|
$
|
(27,945
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating statement of operations for BlueLinx
Holdings Inc. for the fiscal year ended December 30, 2006
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Net sales
|
|
$
|
|
|
|
$
|
4,899,383
|
|
|
$
|
25,570
|
|
|
$
|
(25,570
|
)
|
|
$
|
4,899,383
|
|
Cost of sales
|
|
|
|
|
|
|
4,419,576
|
|
|
|
|
|
|
|
|
|
|
|
4,419,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
479,807
|
|
|
|
25,570
|
|
|
|
(25,570
|
)
|
|
|
479,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
1,511
|
|
|
|
404,723
|
|
|
|
890
|
|
|
|
(25,570
|
)
|
|
|
381,554
|
|
Depreciation and amortization
|
|
|
|
|
|
|
16,492
|
|
|
|
4,232
|
|
|
|
|
|
|
|
20,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,511
|
|
|
|
421,215
|
|
|
|
5,122
|
|
|
|
(25,570
|
)
|
|
|
402,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,511
|
)
|
|
|
58,592
|
|
|
|
20,448
|
|
|
|
|
|
|
|
77,529
|
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
29,479
|
|
|
|
16,685
|
|
|
|
|
|
|
|
46,164
|
|
Charges associated with mortgage refinancing
|
|
|
|
|
|
|
|
|
|
|
4,864
|
|
|
|
|
|
|
|
4,864
|
|
Other expense (income), net
|
|
|
|
|
|
|
413
|
|
|
|
(93
|
)
|
|
|
|
|
|
|
320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
|
(1,511
|
)
|
|
|
28,700
|
|
|
|
(1,008
|
)
|
|
|
|
|
|
|
26,181
|
|
Provision for (benefit from) income taxes
|
|
|
(604
|
)
|
|
|
11,356
|
|
|
|
(403
|
)
|
|
|
|
|
|
|
10,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of subsidiaries
|
|
|
16,739
|
|
|
|
|
|
|
|
|
|
|
|
(16,739
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
15,832
|
|
|
$
|
17,344
|
|
|
$
|
(605
|
)
|
|
$
|
(16,739
|
)
|
|
$
|
15,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating statement of operations for BlueLinx
Holdings Inc. for the fiscal year ended December 31, 2005
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Net sales
|
|
$
|
|
|
|
$
|
5,622,071
|
|
|
$
|
19,600
|
|
|
$
|
(19,600
|
)
|
|
$
|
5,622,071
|
|
Cost of sales
|
|
|
|
|
|
|
5,109,632
|
|
|
|
|
|
|
|
|
|
|
|
5,109,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
512,439
|
|
|
|
19,600
|
|
|
|
(19,600
|
)
|
|
|
512,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
1,779
|
|
|
|
395,368
|
|
|
|
461
|
|
|
|
(19,600
|
)
|
|
|
378,008
|
|
Depreciation and amortization
|
|
|
|
|
|
|
14,486
|
|
|
|
4,284
|
|
|
|
|
|
|
|
18,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,779
|
|
|
|
409,854
|
|
|
|
4,745
|
|
|
|
(19,600
|
)
|
|
|
396,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,779
|
)
|
|
|
102,585
|
|
|
|
14,855
|
|
|
|
|
|
|
|
115,661
|
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
31,624
|
|
|
|
10,687
|
|
|
|
|
|
|
|
42,311
|
|
Other expense (income), net
|
|
|
|
|
|
|
296
|
|
|
|
(110
|
)
|
|
|
|
|
|
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
|
(1,779
|
)
|
|
|
70,665
|
|
|
|
4,278
|
|
|
|
|
|
|
|
73,164
|
|
Provision for (benefit from) income taxes
|
|
|
(683
|
)
|
|
|
27,601
|
|
|
|
1,643
|
|
|
|
|
|
|
|
28,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of subsidiaries
|
|
|
45,699
|
|
|
|
|
|
|
|
|
|
|
|
(45,699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
44,603
|
|
|
$
|
43,064
|
|
|
$
|
2,635
|
|
|
$
|
(45,699
|
)
|
|
$
|
44,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating balance sheet for BlueLinx Holdings
Inc. as of December 29, 2007 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
3
|
|
|
$
|
15,699
|
|
|
$
|
57
|
|
|
$
|
|
|
|
$
|
15,759
|
|
Receivables
|
|
|
|
|
|
|
263,176
|
|
|
|
|
|
|
|
|
|
|
|
263,176
|
|
Inventories
|
|
|
|
|
|
|
335,887
|
|
|
|
|
|
|
|
|
|
|
|
335,887
|
|
Deferred income taxes
|
|
|
|
|
|
|
12,277
|
|
|
|
|
|
|
|
(78
|
)
|
|
|
12,199
|
|
Other current assets
|
|
|
271
|
|
|
|
52,960
|
|
|
|
|
|
|
|
|
|
|
|
53,231
|
|
Intercompany receivable
|
|
|
18,103
|
|
|
|
611
|
|
|
|
|
|
|
|
(18,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
18,377
|
|
|
|
680,610
|
|
|
|
57
|
|
|
|
(18,792
|
)
|
|
|
680,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and land improvements
|
|
|
|
|
|
|
3,000
|
|
|
|
54,295
|
|
|
|
|
|
|
|
57,295
|
|
Buildings
|
|
|
|
|
|
|
7,390
|
|
|
|
91,030
|
|
|
|
|
|
|
|
98,420
|
|
Machinery and equipment
|
|
|
|
|
|
|
67,217
|
|
|
|
|
|
|
|
|
|
|
|
67,217
|
|
Construction in progress
|
|
|
|
|
|
|
4,212
|
|
|
|
|
|
|
|
|
|
|
|
4,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
|
|
|
|
|
81,819
|
|
|
|
145,325
|
|
|
|
|
|
|
|
227,144
|
|
Accumulated depreciation
|
|
|
|
|
|
|
(39,228
|
)
|
|
|
(15,474
|
)
|
|
|
|
|
|
|
(54,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
42,591
|
|
|
|
129,851
|
|
|
|
|
|
|
|
172,442
|
|
Investment in subsidiaries
|
|
|
137,155
|
|
|
|
|
|
|
|
|
|
|
|
(137,155
|
)
|
|
|
|
|
Non-current deferred income taxes
|
|
|
|
|
|
|
4,327
|
|
|
|
|
|
|
|
(1,699
|
)
|
|
|
2,628
|
|
Other non-current assets
|
|
|
|
|
|
|
22,822
|
|
|
|
5,292
|
|
|
|
|
|
|
|
28,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
155,532
|
|
|
$
|
750,350
|
|
|
$
|
135,200
|
|
|
$
|
(157,646
|
)
|
|
$
|
883,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
20
|
|
|
$
|
164,697
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
164,717
|
|
Bank overdrafts
|
|
|
|
|
|
|
37,152
|
|
|
|
|
|
|
|
|
|
|
|
37,152
|
|
Accrued compensation
|
|
|
|
|
|
|
10,372
|
|
|
|
|
|
|
|
|
|
|
|
10,372
|
|
Deferred income taxes
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
(78
|
)
|
|
|
|
|
Other current liabilities
|
|
|
|
|
|
|
15,145
|
|
|
|
4,135
|
|
|
|
|
|
|
|
19,280
|
|
Intercompany payable
|
|
|
611
|
|
|
|
17,632
|
|
|
|
471
|
|
|
|
(18,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
709
|
|
|
|
244,998
|
|
|
|
4,606
|
|
|
|
(18,792
|
)
|
|
|
231,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
183,535
|
|
|
|
295,000
|
|
|
|
|
|
|
|
478,535
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
1,699
|
|
|
|
(1,699
|
)
|
|
|
|
|
Other non-current liabilities
|
|
|
|
|
|
|
18,557
|
|
|
|
|
|
|
|
|
|
|
|
18,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
709
|
|
|
|
447,090
|
|
|
|
301,305
|
|
|
|
(20,491
|
)
|
|
|
728,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity/Parents Investment
|
|
|
154,823
|
|
|
|
303,260
|
|
|
|
(166,105
|
)
|
|
|
(137,155
|
)
|
|
|
154,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
155,532
|
|
|
$
|
750,350
|
|
|
$
|
135,200
|
|
|
$
|
(157,646
|
)
|
|
$
|
883,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating balance sheet for BlueLinx Holdings
Inc. as of December 30, 2006 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2
|
|
|
$
|
27,017
|
|
|
$
|
23
|
|
|
$
|
|
|
|
$
|
27,042
|
|
Receivables
|
|
|
|
|
|
|
307,543
|
|
|
|
|
|
|
|
|
|
|
|
307,543
|
|
Inventories
|
|
|
|
|
|
|
410,686
|
|
|
|
|
|
|
|
|
|
|
|
410,686
|
|
Deferred income taxes
|
|
|
|
|
|
|
9,175
|
|
|
|
|
|
|
|
(151
|
)
|
|
|
9,024
|
|
Other current assets
|
|
|
497
|
|
|
|
46,957
|
|
|
|
|
|
|
|
(2,506
|
)
|
|
|
44,948
|
|
Intercompany receivable
|
|
|
764
|
|
|
|
|
|
|
|
|
|
|
|
(764
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,263
|
|
|
|
801,378
|
|
|
|
23
|
|
|
|
(3,421
|
)
|
|
|
799,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and land improvements
|
|
|
|
|
|
|
2,760
|
|
|
|
54,225
|
|
|
|
|
|
|
|
56,985
|
|
Buildings
|
|
|
|
|
|
|
6,467
|
|
|
|
89,347
|
|
|
|
|
|
|
|
95,814
|
|
Machinery and equipment
|
|
|
|
|
|
|
61,955
|
|
|
|
|
|
|
|
|
|
|
|
61,955
|
|
Construction in progress
|
|
|
|
|
|
|
2,025
|
|
|
|
|
|
|
|
|
|
|
|
2,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
|
|
|
|
|
73,207
|
|
|
|
143,572
|
|
|
|
|
|
|
|
216,779
|
|
Accumulated depreciation
|
|
|
|
|
|
|
(27,300
|
)
|
|
|
(11,230
|
)
|
|
|
|
|
|
|
(38,530
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
45,907
|
|
|
|
132,342
|
|
|
|
|
|
|
|
178,249
|
|
Investment in subsidiaries
|
|
|
188,307
|
|
|
|
|
|
|
|
|
|
|
|
(188,307
|
)
|
|
|
|
|
Non-current deferred income taxes
|
|
|
|
|
|
|
1,430
|
|
|
|
|
|
|
|
(1,430
|
)
|
|
|
|
|
Other non-current assets
|
|
|
|
|
|
|
20,916
|
|
|
|
5,954
|
|
|
|
|
|
|
|
26,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
189,570
|
|
|
$
|
869,631
|
|
|
$
|
138,319
|
|
|
$
|
(193,158
|
)
|
|
$
|
1,004,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
20
|
|
|
$
|
195,795
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
195,815
|
|
Bank overdrafts
|
|
|
|
|
|
|
50,241
|
|
|
|
|
|
|
|
|
|
|
|
50,241
|
|
Accrued compensation
|
|
|
|
|
|
|
8,574
|
|
|
|
|
|
|
|
|
|
|
|
8,574
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
9,743
|
|
|
|
|
|
|
|
|
|
|
|
9,743
|
|
Deferred income taxes
|
|
|
151
|
|
|
|
|
|
|
|
|
|
|
|
(151
|
)
|
|
|
|
|
Other current liabilities
|
|
|
|
|
|
|
14,848
|
|
|
|
(215
|
)
|
|
|
|
|
|
|
14,633
|
|
Intercompany payable
|
|
|
|
|
|
|
160
|
|
|
|
3,110
|
|
|
|
(3,270
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
171
|
|
|
|
279,361
|
|
|
|
2,895
|
|
|
|
(3,421
|
)
|
|
|
279,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
227,719
|
|
|
|
295,000
|
|
|
|
|
|
|
|
522,719
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
2,531
|
|
|
|
(1,430
|
)
|
|
|
1,101
|
|
Other non-current liabilities
|
|
|
|
|
|
|
12,137
|
|
|
|
|
|
|
|
|
|
|
|
12,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
171
|
|
|
|
519,217
|
|
|
|
300,426
|
|
|
|
(4,851
|
)
|
|
|
814,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity/Parents Investment
|
|
|
189,399
|
|
|
|
350,414
|
|
|
|
(162,107
|
)
|
|
|
(188,307
|
)
|
|
|
189,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
189,570
|
|
|
$
|
869,631
|
|
|
$
|
138,319
|
|
|
$
|
(193,158
|
)
|
|
$
|
1,004,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating statement of cash flows for BlueLinx
Holdings Inc. for the fiscal year ended December 29, 2007
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(27,945
|
)
|
|
$
|
(31,114
|
)
|
|
$
|
3,896
|
|
|
$
|
27,218
|
|
|
$
|
(27,945
|
)
|
Adjustments to reconcile net income (loss) to cash provided by
(used in) operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
16,680
|
|
|
|
4,244
|
|
|
|
|
|
|
|
20,924
|
|
Amortization of debt issue costs
|
|
|
|
|
|
|
1,806
|
|
|
|
625
|
|
|
|
|
|
|
|
2,431
|
|
Non-cash vacant property charges
|
|
|
|
|
|
|
11,037
|
|
|
|
|
|
|
|
|
|
|
|
11,037
|
|
Deferred income tax benefit
|
|
|
(73
|
)
|
|
|
(8,621
|
)
|
|
|
(832
|
)
|
|
|
|
|
|
|
(9,526
|
)
|
Gain from insurance settlement
|
|
|
|
|
|
|
(1,698
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,698
|
)
|
Share-based compensation
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
Equity in earnings of subsidiaries
|
|
|
27,218
|
|
|
|
|
|
|
|
|
|
|
|
(27,218
|
)
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
44,367
|
|
|
|
|
|
|
|
|
|
|
|
44,367
|
|
Inventories
|
|
|
|
|
|
|
74,799
|
|
|
|
|
|
|
|
|
|
|
|
74,799
|
|
Accounts payable
|
|
|
|
|
|
|
(31,098
|
)
|
|
|
|
|
|
|
|
|
|
|
(31,098
|
)
|
Changes in other working capital
|
|
|
226
|
|
|
|
(8,281
|
)
|
|
|
4,350
|
|
|
|
(2,506
|
)
|
|
|
(6,211
|
)
|
Intercompany receivable
|
|
|
(17,339
|
)
|
|
|
(611
|
)
|
|
|
|
|
|
|
17,950
|
|
|
|
|
|
Intercompany payable
|
|
|
611
|
|
|
|
17,472
|
|
|
|
(2,639
|
)
|
|
|
(15,444
|
)
|
|
|
|
|
Other
|
|
|
|
|
|
|
(685
|
)
|
|
|
(33
|
)
|
|
|
|
|
|
|
(718
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(17,302
|
)
|
|
|
87,533
|
|
|
|
9,611
|
|
|
|
|
|
|
|
79,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
32,376
|
|
|
|
|
|
|
|
|
|
|
|
(32,376
|
)
|
|
|
|
|
Property, plant and equipment investments
|
|
|
|
|
|
|
(11,424
|
)
|
|
|
(1,717
|
)
|
|
|
|
|
|
|
(13,141
|
)
|
Proceeds from disposition of assets
|
|
|
|
|
|
|
4,071
|
|
|
|
|
|
|
|
|
|
|
|
4,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
32,376
|
|
|
|
(7,353
|
)
|
|
|
(1,717
|
)
|
|
|
(32,376
|
)
|
|
|
(9,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transactions with Parent
|
|
|
|
|
|
|
(24,482
|
)
|
|
|
(7,894
|
)
|
|
|
32,376
|
|
|
|
|
|
Proceeds from stock options exercised
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
496
|
|
Excess tax benefits from stock-based compensation arrangements
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
Net decrease in revolving credit facility
|
|
|
|
|
|
|
(53,927
|
)
|
|
|
|
|
|
|
|
|
|
|
(53,927
|
)
|
Decrease in bank overdrafts
|
|
|
|
|
|
|
(13,089
|
)
|
|
|
|
|
|
|
|
|
|
|
(13,089
|
)
|
Common dividends paid
|
|
|
(15,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,591
|
)
|
Other
|
|
|
2
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(15,073
|
)
|
|
|
(91,498
|
)
|
|
|
(7,860
|
)
|
|
|
32,376
|
|
|
|
(82,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash
|
|
|
1
|
|
|
|
(11,318
|
)
|
|
|
34
|
|
|
|
|
|
|
|
(11,283
|
)
|
Balance, beginning of period
|
|
|
2
|
|
|
|
27,017
|
|
|
|
23
|
|
|
|
|
|
|
|
27,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
3
|
|
|
$
|
15,699
|
|
|
$
|
57
|
|
|
$
|
|
|
|
$
|
15,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid during the period
|
|
$
|
|
|
|
$
|
777
|
|
|
$
|
214
|
|
|
$
|
|
|
|
$
|
991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid during the period
|
|
$
|
|
|
|
$
|
22,658
|
|
|
$
|
17,379
|
|
|
$
|
|
|
|
$
|
40,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating statement of cash flows for BlueLinx
Holdings Inc. for the fiscal year ended December 30, 2006
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
15,832
|
|
|
$
|
17,344
|
|
|
$
|
(605
|
)
|
|
$
|
(16,739
|
)
|
|
$
|
15,832
|
|
Adjustments to reconcile net income (loss) to cash provided by
(used in) operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
16,492
|
|
|
|
4,232
|
|
|
|
|
|
|
|
20,724
|
|
Amortization of debt issue costs
|
|
|
|
|
|
|
1,892
|
|
|
|
736
|
|
|
|
|
|
|
|
2,628
|
|
Charges associated with mortgage refinancing
|
|
|
|
|
|
|
|
|
|
|
4,864
|
|
|
|
|
|
|
|
4,864
|
|
Deferred income tax benefit
|
|
|
(240
|
)
|
|
|
(2,769
|
)
|
|
|
(691
|
)
|
|
|
|
|
|
|
(3,700
|
)
|
Share-based compensation
|
|
|
57
|
|
|
|
2,864
|
|
|
|
|
|
|
|
|
|
|
|
2,921
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
|
|
|
(891
|
)
|
|
|
|
|
|
|
|
|
|
|
(891
|
)
|
Equity in earnings of subsidiaries
|
|
|
(16,739
|
)
|
|
|
|
|
|
|
|
|
|
|
16,739
|
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
94,113
|
|
|
|
|
|
|
|
|
|
|
|
94,113
|
|
Inventories
|
|
|
|
|
|
|
66,504
|
|
|
|
|
|
|
|
|
|
|
|
66,504
|
|
Accounts payable
|
|
|
(35
|
)
|
|
|
(131,559
|
)
|
|
|
|
|
|
|
|
|
|
|
(131,594
|
)
|
Changes in other working capital
|
|
|
506
|
|
|
|
(5,326
|
)
|
|
|
(2,575
|
)
|
|
|
2,506
|
|
|
|
(4,889
|
)
|
Intercompany receivable
|
|
|
(81
|
)
|
|
|
1,578
|
|
|
|
|
|
|
|
(1,497
|
)
|
|
|
|
|
Intercompany payable
|
|
|
(1,578
|
)
|
|
|
160
|
|
|
|
2,427
|
|
|
|
(1,009
|
)
|
|
|
|
|
Other
|
|
|
|
|
|
|
(3,634
|
)
|
|
|
326
|
|
|
|
|
|
|
|
(3,308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(2,278
|
)
|
|
|
56,768
|
|
|
|
8,714
|
|
|
|
|
|
|
|
63,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
14,862
|
|
|
|
|
|
|
|
|
|
|
|
(14,862
|
)
|
|
|
|
|
Acquisitions, net of cash acquired
|
|
|
|
|
|
|
(9,391
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,391
|
)
|
Property, plant and equipment investments
|
|
|
|
|
|
|
(9,601
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,601
|
)
|
Proceeds from sale of assets
|
|
|
|
|
|
|
822
|
|
|
|
|
|
|
|
|
|
|
|
822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
14,862
|
|
|
|
(18,170
|
)
|
|
|
|
|
|
|
(14,862
|
)
|
|
|
(18,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transactions with Parent
|
|
|
|
|
|
|
115,051
|
|
|
|
(129,913
|
)
|
|
|
14,862
|
|
|
|
|
|
Proceeds from stock options exercised
|
|
|
1,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,913
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
891
|
|
Net decrease in revolving credit facility
|
|
|
|
|
|
|
(138,388
|
)
|
|
|
|
|
|
|
|
|
|
|
(138,388
|
)
|
Proceeds from new mortgage
|
|
|
|
|
|
|
|
|
|
|
295,000
|
|
|
|
|
|
|
|
295,000
|
|
Debt financing costs
|
|
|
|
|
|
|
(400
|
)
|
|
|
(6,303
|
)
|
|
|
|
|
|
|
(6,703
|
)
|
Retirement of old mortgage
|
|
|
|
|
|
|
|
|
|
|
(165,000
|
)
|
|
|
|
|
|
|
(165,000
|
)
|
Prepayment fees associated with old mortgage
|
|
|
|
|
|
|
|
|
|
|
(2,475
|
)
|
|
|
|
|
|
|
(2,475
|
)
|
Decrease in bank overdrafts
|
|
|
|
|
|
|
(12,151
|
)
|
|
|
|
|
|
|
|
|
|
|
(12,151
|
)
|
Common dividends paid
|
|
|
(15,400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,400
|
)
|
Other
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(12,595
|
)
|
|
|
(35,888
|
)
|
|
|
(8,691
|
)
|
|
|
14,862
|
|
|
|
(42,312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
(11
|
)
|
|
|
2,710
|
|
|
|
23
|
|
|
|
|
|
|
|
2,722
|
|
Balance, beginning of period
|
|
|
13
|
|
|
|
24,307
|
|
|
|
|
|
|
|
|
|
|
|
24,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
2
|
|
|
$
|
27,017
|
|
|
$
|
23
|
|
|
$
|
|
|
|
$
|
27,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid during the period
|
|
$
|
|
|
|
$
|
21,278
|
|
|
$
|
189
|
|
|
$
|
|
|
|
$
|
21,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid during the period
|
|
$
|
|
|
|
$
|
26,127
|
|
|
$
|
16,509
|
|
|
$
|
|
|
|
$
|
42,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating statement of cash flows for BlueLinx
Holdings Inc. for the fiscal year ended December 31, 2005
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
44,603
|
|
|
$
|
43,064
|
|
|
$
|
2,635
|
|
|
$
|
(45,699
|
)
|
|
$
|
44,603
|
|
Adjustments to reconcile net income to cash provided by (used
in) operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
14,486
|
|
|
|
4,284
|
|
|
|
|
|
|
|
18,770
|
|
Amortization of debt issue costs
|
|
|
|
|
|
|
2,718
|
|
|
|
911
|
|
|
|
|
|
|
|
3,629
|
|
Deferred income tax provision (benefit)
|
|
|
391
|
|
|
|
103
|
|
|
|
(862
|
)
|
|
|
|
|
|
|
(368
|
)
|
Share-based compensation
|
|
|
|
|
|
|
2,170
|
|
|
|
|
|
|
|
|
|
|
|
2,170
|
|
Excess tax benefits from share-based compensation
|
|
|
|
|
|
|
(71
|
)
|
|
|
|
|
|
|
|
|
|
|
(71
|
)
|
Equity in earnings of subsidiaries
|
|
|
(45,699
|
)
|
|
|
|
|
|
|
|
|
|
|
45,699
|
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
(30,609
|
)
|
|
|
|
|
|
|
|
|
|
|
(30,609
|
)
|
Inventories
|
|
|
|
|
|
|
36,889
|
|
|
|
|
|
|
|
|
|
|
|
36,889
|
|
Accounts payable
|
|
|
(1,015
|
)
|
|
|
57,620
|
|
|
|
|
|
|
|
|
|
|
|
56,605
|
|
Changes in other working capital
|
|
|
255
|
|
|
|
(13,933
|
)
|
|
|
1,003
|
|
|
|
|
|
|
|
(12,675
|
)
|
Intercompany receivable
|
|
|
(516
|
)
|
|
|
2,434
|
|
|
|
2,251
|
|
|
|
(4,169
|
)
|
|
|
|
|
Intercompany payable
|
|
|
(2,434
|
)
|
|
|
(2,251
|
)
|
|
|
516
|
|
|
|
4,169
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
4,921
|
|
|
|
1,073
|
|
|
|
|
|
|
|
5,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(4,415
|
)
|
|
|
117,541
|
|
|
|
11,811
|
|
|
|
|
|
|
|
124,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
10,651
|
|
|
|
|
|
|
|
|
|
|
|
(10,651
|
)
|
|
|
|
|
Acquisitions, net of cash acquired
|
|
|
|
|
|
|
(16,908
|
)
|
|
|
|
|
|
|
|
|
|
|
(16,908
|
)
|
Property, plant and equipment investments
|
|
|
|
|
|
|
(12,744
|
)
|
|
|
|
|
|
|
|
|
|
|
(12,744
|
)
|
Proceeds from sale of assets
|
|
|
|
|
|
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
10,651
|
|
|
|
(28,499
|
)
|
|
|
|
|
|
|
(10,651
|
)
|
|
|
(28,499
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transactions with Parent
|
|
|
|
|
|
|
1,160
|
|
|
|
(11,811
|
)
|
|
|
10,651
|
|
|
|
|
|
Issuance of common stock, net
|
|
|
8,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,548
|
|
Proceeds from stock options exercised
|
|
|
258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258
|
|
Excess tax benefits from share-based compensation
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71
|
|
Net decrease in revolving credit facility
|
|
|
|
|
|
|
(111,253
|
)
|
|
|
|
|
|
|
|
|
|
|
(111,253
|
)
|
Debt financing costs
|
|
|
|
|
|
|
(570
|
)
|
|
|
|
|
|
|
|
|
|
|
(570
|
)
|
Increase in bank overdrafts
|
|
|
|
|
|
|
30,359
|
|
|
|
|
|
|
|
|
|
|
|
30,359
|
|
Common dividends paid
|
|
|
(15,103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(6,226
|
)
|
|
|
(80,304
|
)
|
|
|
(11,811
|
)
|
|
|
10,651
|
|
|
|
(87,690
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
10
|
|
|
|
8,738
|
|
|
|
|
|
|
|
|
|
|
|
8,748
|
|
Balance, beginning of period
|
|
|
3
|
|
|
|
15,569
|
|
|
|
|
|
|
|
|
|
|
|
15,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
13
|
|
|
$
|
24,307
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid during the period
|
|
$
|
|
|
|
$
|
32,677
|
|
|
$
|
390
|
|
|
$
|
|
|
|
$
|
33,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid during the period
|
|
$
|
|
|
|
$
|
29,376
|
|
|
$
|
9,126
|
|
|
$
|
|
|
|
$
|
38,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78
BLUELINX
HOLDINGS INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The condensed consolidating statement of shareholders
equity for BlueLinx Holdings Inc. for fiscal 2005, fiscal 2006
and fiscal 2007 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Balance, January 1, 2005
|
|
$
|
141,492
|
|
|
$
|
167,559
|
|
|
$
|
(22,413
|
)
|
|
$
|
(145,146
|
)
|
|
$
|
141,492
|
|
Net income
|
|
|
44,603
|
|
|
|
43,064
|
|
|
|
2,635
|
|
|
|
(45,699
|
)
|
|
|
44,603
|
|
Foreign currency translation adjustment
|
|
|
276
|
|
|
|
276
|
|
|
|
|
|
|
|
(276
|
)
|
|
|
276
|
|
Amount related to minimum pension liability
|
|
|
1,536
|
|
|
|
1,536
|
|
|
|
|
|
|
|
(1,536
|
)
|
|
|
1,536
|
|
Issuance of common stock-initial public offering, net
|
|
|
8,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,548
|
|
Proceeds from stock options exercised
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
259
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71
|
|
Compensation related to share-based grants
|
|
|
2,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,170
|
|
Common stock dividends
|
|
|
(15,103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,103
|
)
|
Net transactions with the parent
|
|
|
|
|
|
|
3,331
|
|
|
|
(11,811
|
)
|
|
|
8,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2005
|
|
$
|
183,852
|
|
|
$
|
215,766
|
|
|
$
|
(31,589
|
)
|
|
$
|
(184,177
|
)
|
|
$
|
183,852
|
|
Net income (loss)
|
|
|
15,832
|
|
|
|
17,344
|
|
|
|
(605
|
)
|
|
|
(16,739
|
)
|
|
|
15,832
|
|
Foreign currency translation adjustment
|
|
|
(58
|
)
|
|
|
(58
|
)
|
|
|
|
|
|
|
58
|
|
|
|
(58
|
)
|
Unrealized net gain from pension plan, net of tax
|
|
|
983
|
|
|
|
983
|
|
|
|
|
|
|
|
(983
|
)
|
|
|
983
|
|
Unrealized loss from cash flow hedge, net of tax
|
|
|
(1,536
|
)
|
|
|
(1,536
|
)
|
|
|
|
|
|
|
1,536
|
|
|
|
(1,536
|
)
|
Proceeds from stock options exercised
|
|
|
1,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,913
|
|
Issuance of restricted stock
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
891
|
|
Compensation related to share-based grants
|
|
|
2,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,921
|
|
Common stock dividends
|
|
|
(15,400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,400
|
)
|
Net transactions with the parent
|
|
|
|
|
|
|
117,915
|
|
|
|
(129,913
|
)
|
|
|
11,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 30, 2006
|
|
$
|
189,399
|
|
|
$
|
350,414
|
|
|
$
|
(162,107
|
)
|
|
$
|
(188,307
|
)
|
|
$
|
189,399
|
|
Net income (loss)
|
|
|
(27,945
|
)
|
|
|
(31,114
|
)
|
|
|
3,896
|
|
|
|
27,218
|
|
|
|
(27,945
|
)
|
Foreign currency translation adjustment
|
|
|
1,912
|
|
|
|
1,912
|
|
|
|
|
|
|
|
(1,912
|
)
|
|
|
1,912
|
|
Unrealized net gain from pension plan, net of tax
|
|
|
5,856
|
|
|
|
5,856
|
|
|
|
|
|
|
|
(5,856
|
)
|
|
|
5,856
|
|
Unrealized loss from cash flow hedge, net of tax
|
|
|
(2,754
|
)
|
|
|
(2,754
|
)
|
|
|
|
|
|
|
2,754
|
|
|
|
(2,754
|
)
|
Unrealized loss from adoption of FIN 48, net of tax
|
|
|
(72
|
)
|
|
|
(72
|
)
|
|
|
|
|
|
|
72
|
|
|
|
(72
|
)
|
Proceeds from stock options exercised
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
496
|
|
Issuance of restricted stock
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
Compensation related to share-based grants
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
|
Common stock dividends
|
|
|
(15,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,591
|
)
|
Net transactions with the parent
|
|
|
|
|
|
|
(20,982
|
)
|
|
|
(7,894
|
)
|
|
|
28,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 29, 2007
|
|
$
|
154,823
|
|
|
$
|
303,260
|
|
|
$
|
(166,105
|
)
|
|
$
|
(137,155
|
)
|
|
$
|
154,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79
|
|
ITEM 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
|
None.
|
|
ITEM 9A.
|
CONTROLS
AND PROCEDURES.
|
Conclusion
Regarding the Effectiveness of Disclosure Controls and
Procedures
We maintain disclosure controls and procedures designed to
ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and
forms, and that such information is accumulated and communicated
to our management, including our chief executive officer and
chief financial officer, as appropriate, to allow timely
decisions regarding required disclosure. Management necessarily
applied its judgment in assessing the costs and benefits of such
controls and procedures that, by their nature, can provide only
reasonable assurance regarding managements control
objectives.
Our management performed an evaluation, as of the end of the
period covered by this report on
Form 10-K,
under the supervision of our chief executive officer and chief
financial officer of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined
in
rule 13a-15(e)
and
15d-15(e) of
the Exchange Act). Based on that evaluation, our chief executive
officer and chief financial officer have concluded that our
disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we
file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
SECs rules and forms, and is accumulated and communicated
to our management including our chief executive officer and
chief financial officer, to allow timely decisions regarding
required disclosure.
Managements
Report on Internal Control over Financial Reporting
Managements Report on Internal Control Over Financial
Reporting and the Report of Independent Registered Public
Accounting Firm thereon are set out in Item 8 of this
Annual Report on
Form 10-K.
Changes
in Internal Control over Financial Reporting
No change in our internal control over financial reporting
occurred during the fiscal quarter ended December 29, 2007
that materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
The certifications of our Chief Executive Officer and Chief
Financial Officer required by Section 302 of the
Sarbanes-Oxley Act of 2002 are filed as Exhibits 31.1 and
31.2 to this Annual Report on
Form 10-K.
Additionally, as required by Section 303A.12(a) of the NYSE
Listed Company Manual, our Chief Executive Officer filed a
certification with the NYSE on May 24, 2007 reporting that
he was not aware of any violation by us of the NYSEs
Corporate Governance listing standards.
|
|
ITEM 9B.
|
OTHER
INFORMATION.
|
None.
PART III
|
|
ITEM 10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
Certain information required by this Item is set forth in our
definitive proxy statement for the 2008 Annual Meeting of
Stockholders of BlueLinx Holdings Inc. to be held on
May 21, 2008, and is incorporated herein by reference.
Information regarding executive officers is included under
Item 1 of this report and is incorporated herein by
reference.
80
|
|
ITEM 11.
|
EXECUTIVE
COMPENSATION.
|
The information required by this Item is set forth in our
definitive proxy statement for the 2008 Annual Meeting of
Stockholders of BlueLinx Holdings Inc. to be held on
May 21, 2008, and is incorporated herein by reference.
|
|
ITEM 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
|
The information required by this Item is set forth in our
definitive proxy statement for the 2008 Annual Meeting of
Stockholders of BlueLinx Holdings Inc. to be held on
May 21, 2008, and is incorporated herein by reference.
|
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.
|
The information required by this Item is set forth in our
definitive proxy statement for the 2008 Annual Meeting of
Stockholders of BlueLinx Holdings Inc. to be held on
May 21, 2008, and is incorporated herein by reference.
|
|
ITEM 14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
|
The information required by this Item is set forth in our
definitive proxy statement for the 2008 Annual Meeting of
Stockholders of BlueLinx Holdings Inc. to be held on
May 21, 2008, and is incorporated herein by reference.
PART IV
|
|
ITEM 15.
|
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES.
|
|
|
(a)
|
Financial
Statements, Schedules and Exhibits
|
1. Financial Statements. The Financial
Statements of BlueLinx Holdings Inc. and the Reports of
Independent Registered Public Accounting Firm are presented
under Item 8 of this
Form 10-K.
2. Financial Statement Schedules. Not
applicable.
3. Exhibits.
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|
|
|
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Exhibit
|
|
|
Number
|
|
Item
|
|
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3
|
.1
|
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Amended and Restated Certificate of Incorporation of BlueLinx(A)
|
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3
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.2
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Amended and Restated By-Laws of BlueLinx(A)
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4
|
.1
|
|
Registration Rights Agreement, dated as of May 7, 2004, by
and among BlueLinx and the initial holders specified on the
signature pages thereto(C)
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4
|
.2
|
|
Letter Agreement, dated as of August 30, 2004, by and among
BlueLinx, Cerberus ABP Investor LLC, Charles H. McElrea, George
R. Judd, David J. Morris, James C. Herbig, Wayne E. Wiggleton
and Steven C. Hardin(C)
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4
|
.3
|
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Investment Letter, dated March 10, 2004, between BlueLinx
and Cerberus ABP Investor LLC, as Purchaser of Common Stock(B)
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4
|
.4
|
|
Investment Letter, dated May 7, 2004, between BlueLinx and
Cerberus ABP Investor LLC, as Purchaser of Common Stock(B)
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4
|
.5
|
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Executive Purchase Agreement dated May 7, 2004 by and among
BlueLinx, Cerberus ABP Investor LLC and Charles H. McElrea(B)
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4
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.6
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Executive Purchase Agreement dated May 7, 2004 by and among
BlueLinx, Cerberus ABP Investor LLC and George R. Judd(B)
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81
|
|
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|
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Exhibit
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|
Number
|
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Item
|
|
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10
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.1
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Asset Purchase Agreement, dated as of March 12, 2004, by
and among Georgia-Pacific Corporation, Georgia-Pacific Building
Materials Sales, Ltd. and BlueLinx Corporation(C)
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10
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.2
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First Amendment to Asset Purchase Agreement, dated as of
May 6, 2004, by and among Georgia-Pacific Corporation,
Georgia-Pacific Building Materials Sales, Ltd. and BlueLinx
Corporation(C)
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10
|
.3
|
|
Master Purchase, Supply and Distribution Agreement, dated
May 7, 2004 by and between BlueLinx Corporation and
Georgia-Pacific(A)
|
|
10
|
.4
|
|
Severance Agreement between BlueLinx Corporation and Charles H.
McElrea, dated May 7, 2004(C)
|
|
10
|
.5
|
|
Severance Agreement between BlueLinx Corporation and David J.
Morris, dated May 7, 2004(C)
|
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10
|
.6
|
|
Severance Agreement between BlueLinx Corporation and George R.
Judd, dated May 7, 2004(C)
|
|
10
|
.7
|
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Severance Agreement between BlueLinx Corporation and Steven C.
Hardin, dated May 7, 2004(C)
|
|
10
|
.8
|
|
Severance Agreement between BlueLinx Corporation and Barbara V.
Tinsley, dated May 7, 2004(C)
|
|
10
|
.9
|
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BlueLinx Holdings Inc. 2004 Long Term Equity Incentive Plan(C)
|
|
10
|
.10
|
|
Form of Director and Officer Indemnification Agreement(A)
|
|
10
|
.11
|
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Employment Agreement between BlueLinx Corporation and Stephen E.
Macadam, dated October 20, 2005 (incorporated by reference
to
Form 8-K
filed with the Securities and Exchange Commission on
October 24, 2005)
|
|
10
|
.12
|
|
Retirement and Consulting Agreement between BlueLinx Corporation
and Charles H. McElrea, dated October 20, 2005
(incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
October 24, 2005)
|
|
10
|
.13
|
|
BlueLinx Holdings Inc. Short-Term Incentive Plan (incorporated
by reference to
Form 8-K
filed with the Securities and Exchange Commission on
February 7, 2006)
|
|
10
|
.14
|
|
BlueLinx Holdings Inc. 2006 Long-Term Equity Incentive Plan
Restricted Stock Award Agreement (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
June 9, 2006)
|
|
10
|
.15
|
|
BlueLinx Holdings Inc. 2006 Long-Term Equity Incentive Plan
Nonqualified Stock Option Award Agreement (incorporated by
reference to
Form 8-K
filed with the Securities and Exchange Commission on
June 9, 2006)
|
|
10
|
.16
|
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Amended and Restated Master Lease Agreement, dated as of
June 9, 2006, by and between ABP AL (Midfield) LLC and the
other parties identified as landlords therein and BlueLinx
Corporation as tenant (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
June 15, 2006)
|
|
10
|
.17
|
|
Loan and Security Agreement, dated as of June 9, 2006,
between the entities set forth therein collectively as borrower
and German American Capital Corporation as Lender (incorporated
by reference to
Form 8-K
filed with the Securities and Exchange Commission on
June 15, 2006)
|
|
10
|
.18
|
|
Guaranty of Recourse Obligations, dated as of June 9, 2006,
by BlueLinx Holdings Inc. for the benefit of German American
Capital Corporation (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
June 15, 2006)
|
|
10
|
.19
|
|
Environmental Indemnity Agreement, dated as of June 9,
2006, by BlueLinx Holdings Inc. in favor of German American
Capital Corporation (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
June 15, 2006)
|
|
10
|
.20
|
|
Amended and Restated Loan and Security Agreement, dated
August 4, 2006, by and between BlueLinx Corporation,
Wachovia and the other signatories listed therein (incorporated
by reference to
Form 8-K
filed with the Securities and Exchange Commission on
August 9, 2006)
|
|
10
|
.21
|
|
Consulting Agreement between BlueLinx Corporation and David J.
Morris, dated November 17, 2006 (incorporated by reference
to
Form 8-K
filed with the Securities and Exchange Commission on
November 21, 2006)
|
|
10
|
.22
|
|
Letter Agreement, dated December 18, 2006, relating to and
amending the Master Purchase, Supply and Distribution Agreement
between Georgia-Pacific Corporation and BlueLinx Corporation
dated May 7, 2004 (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
December 22, 2006)
|
82
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Item
|
|
|
10
|
.23
|
|
Employment Agreement between BlueLinx Corporation and Lynn A.
Wentworth, dated January 12, 2007, effective
January 22, 2007 (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
January 17, 2007)
|
|
10
|
.24
|
|
BlueLinx Holdings Inc. 2006 Long-Term Equity Incentive Plan Form
of Performance Share Award Agreement (incorporated by reference
to
Form 8-K
filed with the Securities and Exchange Commission on
April 4, 2007)
|
|
10
|
.25
|
|
BlueLinx Holdings Inc. 2004 Long-Term Equity Incentive Plan Form
of Restricted Stock Award Agreement (incorporated by reference
to
Form 8-K
filed with the Securities and Exchange Commission on
January 11, 2008)
|
|
10
|
.26
|
|
First Amendment to Employment Agreement with Stephen E. Macadam,
dated as of January 8, 2008 (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
January 11, 2008)
|
|
10
|
.27
|
|
Employment Agreement between BlueLinx Corporation and Howard D.
Goforth, dated February 11, 2008, effective
February 18, 2008 (incorporated by reference to
Form 8-K
filed with the Securities and Exchange Commission on
February 15, 2008)
|
|
14
|
.1
|
|
BlueLinx Code of Ethical Conduct (incorporated by reference to
Exhibit 14 to Annual Report on
Form 10-K
for the year ended January 1, 2005, filed with the
Securities and Exchange Commission on March 22, 2005)
|
|
21
|
.1
|
|
List of subsidiaries of the Company*
|
|
23
|
.1
|
|
Consent of Independent Registered Public Accounting Firm*
|
|
31
|
.1
|
|
Certification of Stephen E. Macadam, Chief Executive Officer,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
31
|
.2
|
|
Certification of Howard D. Goforth, Chief Financial Officer and
Treasurer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002*
|
|
32
|
.1
|
|
Certification of Stephen E. Macadam, Chief Executive Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
|
32
|
.2
|
|
Certification of Howard D. Goforth, Chief Financial Officer and
Treasurer, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002*
|
|
|
|
* |
|
Filed herewith. |
|
|
|
Portions of this document were omitted and filed separately with
the SEC pursuant to a request for confidential treatment in
accordance with Rule 24b-2 of the Exchange Act. |
|
(A) |
|
Previously filed as an exhibit to Amendment No. 3 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118750)
filed with the Securities and Exchange Commission on
November 26, 2004. |
|
(B) |
|
Previously filed as an exhibit to Amendment No. 2 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118750)
filed with the Securities and Exchange Commission on
October 8, 2004. |
|
(C) |
|
Previously filed as an exhibit to Amendment No. 1 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118750)
filed with the Securities and Exchange Commission on
October 1, 2004. |
83
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 to be signed on its behalf by the undersigned,
thereunto duly authorized.
BLUELINX HOLDINGS INC.
(Registrant)
|
|
|
|
By:
|
/s/ Stephen
E. Macadam
|
Stephen E. Macadam
Chief Executive Officer
Date: February 29, 2008
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
|
|
Signature Name
|
|
Capacity
|
|
Date
|
|
|
|
|
|
|
/s/ Stephen
E. Macadam
Stephen
E. Macadam
|
|
Chief Executive Officer and Director (Principal Executive
Officer)
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Howard
D. Goforth
Howard
D. Goforth
|
|
Senior Vice President,Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Jeffrey
J. Fenton
Jeffrey
J. Fenton
|
|
Chairman
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Howard
S. Cohen
Howard
S. Cohen
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Richard
S. Grant
Richard
S. Grant
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Steven
F. Mayer
Steven
F. Mayer
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Richard
B. Marchese
Richard
B. Marchese
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Charles
H. McElrea
Charles
H. McElrea
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Alan
H. Schumacher
Alan
H. Schumacher
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Mark
A. Suwyn
Mark
A. Suwyn
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Robert
G. Warden
Robert
G. Warden
|
|
Director
|
|
February 29, 2008
|
84