##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 28, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 1-32383
 BlueLinx Holdings Inc.
  Delaware
    
    77-0627356(State of Incorporation)
    
    (I.R.S. Employer Identification No.)4300 Wildwood Parkway, Atlanta, Georgia
    
    30339(Address of principal executive offices)
    
    (Zip Code)
 (770) 953-7000
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



BLUELINX HOLDINGS INC.
 Form 10-Q
 For the Quarterly Period Ended June 28, 2008
 INDEX
 PAGEPART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements  BlueLinx Holdings Inc. (Unaudited)
    
    
    3Condensed Consolidated Statements of Operations
    
    
    3Condensed Consolidated Balance Sheets
    
    
    5Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II. OTHER INFORMATION
    
    
    33Item 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 6. Exhibits
    
    
    35Signatures
    
    
    36Exhibit Index
    
    
    37Exhibit 10.1Exhibit 10.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 BLUELINX HOLDINGS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
 Second QuarterPeriod from
    
    
    Period fromMarch 30, 2008
    
    
    April 1, 2007to
    
    
    toJune 28, 2008
    
    
    June 30, 2007Net sales
    
    $
    834,669
    
    
    $
    1,081,990Cost of sales
    
    
    727,234
    
    
    
    962,752Gross profit
    
    
    107,435
    
    
    
    119,238Operating expenses:Selling, general, and administrative
    
    
    81,227
    
    
    
    93,346Depreciation and amortization
    
    
    5,103
    
    
    
    5,335Total operating expenses
    
    
    86,330
    
    
    
    98,681Operating income
    
    
    21,105
    
    
    
    20,557Non-operating expenses:Interest expense
    
    
    9,385
    
    
    
    11,798Other expense (income), net
    
    
    190
    
    
    
    (225
    )Income before provision for income taxes
    
    
    11,530
    
    
    
    8,984Provision for income taxes
    
    
    4,931
    
    
    
    3,550Net income
    
    $
    6,599
    
    
    $
    5,434Basic weighted average number of common shares outstanding
    
    
    31,079
    
    
    
    30,848Basic net income per share applicable to common stock
    
    $
    0.21
    
    
    $
    0.18Diluted weighted average number of common shares outstanding
    
    
    31,312
    
    
    
    30,995Diluted net income per share applicable to common stock
    
    $
    0.21
    
    
    $
    0.18Dividends declared per share of common stock
    
    $
    
    
    
    $
    0.125
   3




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BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
 Six Months EndedPeriod from
    
    
    Period fromDecember 29, 2007
    
    
    December 31, 2006to
    
    
    toJune 28, 2008
    
    
    June 30, 2007Net sales
    
    $
    1,551,429
    
    
    $
    2,039,104Cost of sales
    
    
    1,366,191
    
    
    
    1,816,111Gross profit
    
    
    185,238
    
    
    
    222,993Operating expenses:Selling, general, and administrative
    
    
    161,862
    
    
    
    181,814Depreciation and amortization
    
    
    10,071
    
    
    
    10,734Total operating expenses
    
    
    171,933
    
    
    
    192,548Operating income
    
    
    13,305
    
    
    
    30,445Non-operating expenses:Interest expense
    
    
    18,739
    
    
    
    22,404Other expense (income), net
    
    
    320
    
    
    
    (608
    )(Loss) income before (benefit from) provision for income taxes
    
    
    (5,754
    )
    
    
    8,649(Benefit from) provision for income taxes
    
    
    (1,762
    )
    
    
    3,404Net (loss) income
    
    $
    (3,992
    )
    
    $
    5,245Basic weighted average number of common shares outstanding
    
    
    31,003
    
    
    
    30,824Basic net (loss) income per share applicable to common stock
    
    $
    (0.13
    )
    
    $
    0.17Diluted weighted average number of common shares outstanding
    
    
    31,003
    
    
    
    30,945Diluted net (loss) income per share applicable to common stock
    
    $
    (0.13
    )
    
    $
    0.17Dividends declared per share of common stock
    
    $
    
    
    
    $
    0.25
   4




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BLUELINX HOLDINGS INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 June 28, 2008
    
    
    December 29, 2007(unaudited)Assets:Current assets:Cash
    
    $
    29,791
    
    
    $
    15,759Receivables, net
    
    
    295,081
    
    
    
    263,176Inventories, net
    
    
    315,368
    
    
    
    335,887Deferred income taxes
    
    
    14,605
    
    
    
    12,199Other current assets
    
    
    38,657
    
    
    
    53,231Total current assets
    
    
    693,502
    
    
    
    680,252Property, plant, and equipment:Land and land improvements
    
    
    57,362
    
    
    
    57,295Buildings
    
    
    98,550
    
    
    
    98,420Machinery and equipment
    
    
    67,922
    
    
    
    67,217Construction in progress
    
    
    1,360
    
    
    
    4,212Property, plant, and equipment, at cost
    
    
    225,194
    
    
    
    227,144Accumulated depreciation
    
    
    (60,954
    )
    
    
    (54,702
    )Property, plant, and equipment, net
    
    
    164,240
    
    
    
    172,442Non-current deferred income taxes
    
    
    2,218
    
    
    
    2,628Other assets
    
    
    19,842
    
    
    
    28,114Total assets
    
    $
    879,802
    
    
    $
    883,436Liabilities:Current liabilities:Accounts payable
    
    $
    176,600
    
    
    $
    164,717Bank overdrafts
    
    
    38,055
    
    
    
    37,152Accrued compensation
    
    
    11,503
    
    
    
    10,372Current maturities of long-term debt
    
    
    10,048
    
    
    
    Other current liabilities
    
    
    28,336
    
    
    
    19,280Total current liabilities
    
    
    264,542
    
    
    
    231,521Non-current liabilities:Long-term debt
    
    
    451,000
    
    
    
    478,535Other long-term liabilities
    
    
    13,016
    
    
    
    18,557Total liabilities
    
    
    728,558
    
    
    
    728,613Shareholders Equity:Common Stock, $0.01 par value,
100,000,000 shares authorized;
32,378,860 and 31,224,959 shares
issued and outstanding at June 28,
2008 and December 29, 2007,
respectively
    
    
    324
    
    
    
    312Additional paid-in-capital
    
    
    142,701
    
    
    
    142,081Accumulated other comprehensive income
    
    
    5,207
    
    
    
    5,426Retained earnings
    
    
    3,012
    
    
    
    7,004Total shareholders equity
    
    
    151,244
    
    
    
    154,823Total liabilities and shareholders equity
    
    $
    879,802
    
    
    $
    883,436
   5




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BLUELINX HOLDINGS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Six Months EndedPeriod from
    
    
    Period fromDecember 29, 2007
    
    
    December 31, 2006to
    
    
    toJune 28, 2008
    
    
    June 30, 2007Cash flows from operating activities:Net (loss) income
    
    $
    (3,992
    )
    
    $
    5,245Adjustments to reconcile net (loss) income to cash provided by (used in) operations:Depreciation and amortization
    
    
    10,071
    
    
    
    10,734Amortization of debt issue costs
    
    
    1,215
    
    
    
    1,215Deferred income tax benefit
    
    
    (2,931
    )
    
    
    (1,563
    )Share-based compensation expense
    
    
    1,119
    
    
    
    2,227Excess tax benefits from share-based compensation arrangements
    
    
    (76
    )
    
    
    (60
    )Changes in assets and liabilities:Receivables
    
    
    (31,905
    )
    
    
    (98,255
    )Inventories
    
    
    20,519
    
    
    
    (59,536
    )Accounts payable
    
    
    11,883
    
    
    
    64,503Changes in other working capital
    
    
    22,283
    
    
    
    8,840Other
    
    
    2,589
    
    
    
    2,278Net cash provided by (used in) operating activities
    
    
    30,775
    
    
    
    (64,372
    )Cash flows from investing activities:Property, plant and equipment investments
    
    
    (1,502
    )
    
    
    (10,027
    )Proceeds from disposition of assets
    
    
    827
    
    
    
    1,086Net cash used in investing activities
    
    
    (675
    )
    
    
    (8,941
    )Cash flows from financing activities:Proceeds from stock options exercised
    
    
    434
    
    
    
    323Excess tax benefits from share-based compensation arrangements
    
    
    76
    
    
    
    60Net (decrease) increase in revolving credit facility
    
    
    (17,487
    )
    
    
    94,073Increase (decrease) in bank overdrafts
    
    
    903
    
    
    
    (15,678
    )Common stock dividends paid
    
    
    
    
    
    
    (7,784
    )Other
    
    
    6
    
    
    
    33Net cash (used in) provided by financing activities
    
    
    (16,068
    )
    
    
    71,027Increase (decrease) in cash
    
    
    14,032
    
    
    
    (2,286
    )Balance, beginning of period
    
    
    15,759
    
    
    
    27,042Balance, end of period
    
    $
    29,791
    
    
    $
    24,756
   6




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BLUELINX HOLDINGS INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 2008
 1. Basis of Presentation and Background
 Basis of Presentation
    2. Summary of Significant Accounting Policies
 Earnings per Common Share
   Common Stock Dividends
   7




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Income Taxes
 Accounting for Income Taxes.
  Accounting for Uncertainty in Income Taxes
  Stock-Based Compensation
       8




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Period from December 29, 2007 to June 28, 2008Time-Based
    
    
    Performance-Based
    
    
    Performance-BasedOptions**
    
    
    Options**
    
    
    Options***Risk free interest rate
    
    
    2.70
    %
    
    
    2.62
    %
    
    
    2.11
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life
    
    6 years
    
    
    4 years
    
    
    1 yearExpected volatility
    
    
    48
    %
    
    
    48
    %
    
    
    48
    %Weighted average fair value
    
    $
    2.27
    
    
    $
    0.67
    
    
    $
    1.31
 
 **
    
    Exercise price exceeded the market price at date of grant.***
    
    Exercise price was less than the market price at date of grant (the date the performance
criteria were established is considered the grant date for accounting purposes).   Period from December 31, 2006 to June 30, 2007Time-Based
    
    
    Performance-Based
    
    
    Performance-BasedOptions*
    
    
    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 yearExpected 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 (the date the performance
criteria were established is considered the grant date for accounting purposes).  9




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Impairment of Long-Lived Assets
   3. Exit Costs
 Accounting for Costs Associated with Exit or Disposal Activities,
  Exit CostsBalance at December 29, 2007
    
    $
    11,326Charges
    
    
    347Payments
    
    
    (1,074
    )Accretion of liability
    
    
    409Balance at June 28, 2008
    
    $
    11,008
   10




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4. Comprehensive Income (Loss)
  Second QuarterPeriod from
    
    
    Period fromMarch 30, 2008
    
    
    April 1, 2007to
    
    
    toJune 28, 2008
    
    
    June 30, 2007Net income
    
    $
    6,599
    
    
    $
    5,434Other comprehensive income:Foreign currency translation, net of taxes
    
    
    151
    
    
    
    921Unrealized gain from cash flow hedge, net of taxes
    
    
    3,009
    
    
    
    1,557Comprehensive income
    
    $
    9,759
    
    
    $
    7,912
 Six Months EndedPeriod from
    
    
    Period fromDecember 29, 2007
    
    
    December 31, 2006to
    
    
    toJune 28, 2008
    
    
    June 30, 2007Net (loss) income
    
    $
    (3,992
    )
    
    $
    5,245Other comprehensive (loss) income:Foreign currency translation, net of taxes
    
    
    (396
    )
    
    
    913Unrealized gain from cash flow hedge, net of taxes
    
    
    178
    
    
    
    1,284Comprehensive (loss) income
    
    $
    (4,210
    )
    
    $
    7,442
 5. Employee Benefits
 Defined Benefit Pension Plans
   Second QuarterPeriod from
    
    
    Period fromMarch 30, 2008
    
    
    April 1, 2007to
    
    
    toJune 28, 2008
    
    
    June 30, 2007(In thousands)Service cost
    
    $
    561
    
    
    $
    626Interest cost on projected benefit obligation
    
    
    1,109
    
    
    
    1,054Expected return on plan assets
    
    
    (1,501
    )
    
    
    (1,356
    )Amortization of unrecognized gain
    
    
    (91
    )
    
    
    Amortization of unrecognized prior service cost
    
    
    
    
    
    
    1Net periodic pension cost
    
    $
    78
    
    
    $
    325
  11




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Six Months EndedPeriod from
    
    
    Period fromDecember 29, 2007
    
    
    December 31, 2006to
    
    
    toJune 28, 2008
    
    
    June 30, 2007(In thousands)Service cost
    
    $
    1,122
    
    
    $
    1,252Interest cost on projected benefit obligation
    
    
    2,218
    
    
    
    2,108Expected return on plan assets
    
    
    (3,002
    )
    
    
    (2,712
    )Amortization of unrecognized gain
    
    
    (182
    )
    
    
    Amortization of unrecognized prior service cost
    
    
    1
    
    
    
    2Net periodic pension cost
    
    $
    157
    
    
    $
    650
 6. Revolving Credit Facility
      7. Mortgage
   2011
    
    $
    1,5112012
    
    
    3,1722013
    
    
    3,4372014
    
    
    3,6652015
    
    
    3,908Thereafter
    
    $
    279,307
  12




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8. Fair Value Measurements
 Fair Value Measurements Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 Partial Deferral of the Effective Date of
Statement 157
  Level 1
    
    Unadjusted quoted prices in active markets for identical assets or
liabilities.Level 2
    
    Unadjusted quoted prices in active markets for similar assets or
liabilities, or Unadjusted quoted prices for identical or similar assets or
liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the asset
or liability.Level 3
    
    Unobservable inputs for the asset or liability.
    9. Related Party Transactions
   13




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10. Commitments and Contingencies
 Environmental and Legal Matters
  Collective Bargaining Agreements
  Preference Claim
  Supply Agreement with Georgia-Pacific
   11. Recently Issued Accounting Pronouncements
    Noncontrolling Interests in Consolidated
Financial Statements
 Business Combinations
 12. Subsequent Event
  13. Unaudited Supplemental Condensed Consolidating Financial Statements
 ,
  14




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BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    834,669
    
    
    $
    7,618
    
    
    $
    (7,618
    )
    
    $
    834,669Cost of sales
    
    
    
    
    
    
    727,234
    
    
    
    
    
    
    
    
    
    
    
    727,234Gross profit
    
    
    
    
    
    
    107,435
    
    
    
    7,618
    
    
    
    (7,618
    )
    
    
    107,435Operating expenses:Selling, general and administrative
    
    
    332
    
    
    
    88,393
    
    
    
    120
    
    
    
    (7,618
    )
    
    
    81,227Depreciation and amortization
    
    
    
    
    
    
    4,033
    
    
    
    1,070
    
    
    
    
    
    
    
    5,103Total operating expenses
    
    
    332
    
    
    
    92,426
    
    
    
    1,190
    
    
    
    (7,618
    )
    
    
    86,330Operating income (loss)
    
    
    (332
    )
    
    
    15,009
    
    
    
    6,428
    
    
    
    
    
    
    
    21,105Non-operating expenses:Interest expense
    
    
    
    
    
    
    4,493
    
    
    
    4,892
    
    
    
    
    
    
    
    9,385Other expense (income), net
    
    
    
    
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    190Income before provision for (benefit from) income taxes
    
    
    (332
    )
    
    
    10,326
    
    
    
    1,536
    
    
    
    
    
    
    
    11,530Provision for (benefit from) income taxes
    
    
    (129
    )
    
    
    4,461
    
    
    
    599
    
    
    
    
    
    
    
    4,931Equity in income (loss) of subsidiaries
    
    
    6,802
    
    
    
    
    
    
    
    
    
    
    
    (6,802
    )
    
    
    Net income (loss)
    
    $
    6,599
    
    
    $
    5,865
    
    
    $
    937
    
    
    $
    (6,802
    )
    
    $
    6,599
  BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,081,990
    
    
    $
    7,518
    
    
    $
    (7,518
    )
    
    $
    1,081,990Cost of sales
    
    
    
    
    
    
    962,752
    
    
    
    
    
    
    
    
    
    
    
    962,752Gross profit
    
    
    
    
    
    
    119,238
    
    
    
    7,518
    
    
    
    (7,518
    )
    
    
    119,238Operating expenses:Selling, general and administrative
    
    
    279
    
    
    
    100,459
    
    
    
    126
    
    
    
    (7,518
    )
    
    
    93,346Depreciation and amortization
    
    
    
    
    
    
    4,276
    
    
    
    1,059
    
    
    
    
    
    
    
    5,335Total operating expenses
    
    
    279
    
    
    
    104,735
    
    
    
    1,185
    
    
    
    (7,518
    )
    
    
    98,681Operating income (loss)
    
    
    (279
    )
    
    
    14,503
    
    
    
    6,333
    
    
    
    
    
    
    
    20,557Non-operating expenses:Interest expense
    
    
    
    
    
    
    6,905
    
    
    
    4,893
    
    
    
    
    
    
    
    11,798Other expense (income), net
    
    
    
    
    
    
    (219
    )
    
    
    (6
    )
    
    
    
    
    
    
    (225
    )Income before provision for (benefit from) income taxes
    
    
    (279
    )
    
    
    7,817
    
    
    
    1,446
    
    
    
    
    
    
    
    8,984Provision for (benefit from) income taxes
    
    
    (109
    )
    
    
    3,095
    
    
    
    564
    
    
    
    
    
    
    
    3,550Equity in income (loss) of subsidiaries
    
    
    5,604
    
    
    
    
    
    
    
    
    
    
    
    (5,604
    )
    
    
    Net income (loss)
    
    $
    5,434
    
    
    $
    4,722
    
    
    $
    882
    
    
    $
    (5,604
    )
    
    $
    5,434
  15




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##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,551,429
    
    
    $
    15,235
    
    
    $
    (15,235
    )
    
    $
    1,551,429Cost of sales
    
    
    
    
    
    
    1,366,191
    
    
    
    
    
    
    
    
    
    
    
    1,366,191Gross profit
    
    
    
    
    
    
    185,238
    
    
    
    15,235
    
    
    
    (15,235
    )
    
    
    185,238Operating expenses:Selling, general and administrative
    
    
    646
    
    
    
    176,211
    
    
    
    240
    
    
    
    (15,235
    )
    
    
    161,862Depreciation and amortization
    
    
    
    
    
    
    7,931
    
    
    
    2,140
    
    
    
    
    
    
    
    10,071Total operating expenses
    
    
    646
    
    
    
    184,142
    
    
    
    2,380
    
    
    
    (15,235
    )
    
    
    171,933Operating income (loss)
    
    
    (646
    )
    
    
    1,096
    
    
    
    12,855
    
    
    
    
    
    
    
    13,305Non-operating expenses:Interest expense
    
    
    
    
    
    
    8,955
    
    
    
    9,784
    
    
    
    
    
    
    
    18,739Other expense (income), net
    
    
    
    
    
    
    333
    
    
    
    (13
    )
    
    
    
    
    
    
    320Income before provision for (benefit from) income taxes
    
    
    (646
    )
    
    
    (8,192
    )
    
    
    3,084
    
    
    
    
    
    
    
    (5,754
    )Provision for (benefit from) income taxes
    
    
    (252
    )
    
    
    (2,713
    )
    
    
    1,203
    
    
    
    
    
    
    
    (1,762
    )Equity in income (loss) of subsidiaries
    
    
    (3,598
    )
    
    
    
    
    
    
    
    
    
    
    3,598
    
    
    
    Net income (loss)
    
    $
    (3,992
    )
    
    $
    (5,479
    )
    
    $
    1,881
    
    
    $
    3,598
    
    
    $
    (3,992
    )
  BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    2,039,104
    
    
    $
    15,036
    
    
    $
    (15,036
    )
    
    $
    2,039,104Cost of sales
    
    
    
    
    
    
    1,816,111
    
    
    
    
    
    
    
    
    
    
    
    1,816,111Gross profit
    
    
    
    
    
    
    222,993
    
    
    
    15,036
    
    
    
    (15,036
    )
    
    
    222,993Operating expenses:Selling, general and administrative
    
    
    716
    
    
    
    195,891
    
    
    
    243
    
    
    
    (15,036
    )
    
    
    181,814Depreciation and amortization
    
    
    
    
    
    
    8,618
    
    
    
    2,116
    
    
    
    
    
    
    
    10,734Total operating expenses
    
    
    716
    
    
    
    204,509
    
    
    
    2,359
    
    
    
    (15,036
    )
    
    
    192,548Operating income (loss)
    
    
    (716
    )
    
    
    18,484
    
    
    
    12,677
    
    
    
    
    
    
    
    30,445Non-operating expenses:Interest expense
    
    
    
    
    
    
    12,620
    
    
    
    9,784
    
    
    
    
    
    
    
    22,404Other expense (income), net
    
    
    
    
    
    
    (367
    )
    
    
    (241
    )
    
    
    
    
    
    
    (608
    )Income before provision for (benefit from) income taxes
    
    
    (716
    )
    
    
    6,231
    
    
    
    3,134
    
    
    
    
    
    
    
    8,649Provision for (benefit from) income taxes
    
    
    (279
    )
    
    
    2,461
    
    
    
    1,222
    
    
    
    
    
    
    
    3,404Equity in income (loss) of subsidiaries
    
    
    5,682
    
    
    
    
    
    
    
    
    
    
    
    (5,682
    )
    
    
    Net income (loss)
    
    $
    5,245
    
    
    $
    3,770
    
    
    $
    1,912
    
    
    $
    (5,682
    )
    
    $
    5,245
  16




---



##### Table of Contents



BlueLinxBlueLinx
    
    
    CorporationHoldings
    
    
    and
    
    
    LLCInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssets:Current assets:Cash
    
    $
    4
    
    
    $
    29,724
    
    
    $
    63
    
    
    $
    
    
    
    $
    29,791Receivables
    
    
    
    
    
    
    295,081
    
    
    
    
    
    
    
    
    
    
    
    295,081Inventories
    
    
    
    
    
    
    315,368
    
    
    
    
    
    
    
    
    
    
    
    315,368Deferred income taxes
    
    
    
    
    
    
    14,633
    
    
    
    
    
    
    
    (28
    )
    
    
    14,605Other current assets
    
    
    100
    
    
    
    38,557
    
    
    
    
    
    
    
    
    
    
    
    38,657Intercompany receivable
    
    
    22,044
    
    
    
    
    
    
    
    
    
    
    
    (22,044
    )
    
    
    Total current assets
    
    
    22,148
    
    
    
    693,363
    
    
    
    63
    
    
    
    (22,072
    )
    
    
    693,502Property, plant and equipment:Land and land improvements
    
    
    
    
    
    
    3,067
    
    
    
    54,295
    
    
    
    
    
    
    
    57,362Buildings
    
    
    
    
    
    
    7,520
    
    
    
    91,030
    
    
    
    
    
    
    
    98,550Machinery and equipment
    
    
    
    
    
    
    67,922
    
    
    
    
    
    
    
    
    
    
    
    67,922Construction in progress
    
    
    
    
    
    
    1,360
    
    
    
    
    
    
    
    
    
    
    
    1,360Property, plant and equipment, at cost
    
    
    
    
    
    
    79,869
    
    
    
    145,325
    
    
    
    
    
    
    
    225,194Accumulated depreciation
    
    
    
    
    
    
    (43,340
    )
    
    
    (17,614
    )
    
    
    
    
    
    
    (60,954
    )Property, plant and equipment, net
    
    
    
    
    
    
    36,529
    
    
    
    127,711
    
    
    
    
    
    
    
    164,240Investment in subsidiaries
    
    
    129,242
    
    
    
    
    
    
    
    
    
    
    
    (129,242
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    3,496
    
    
    
    
    
    
    
    (1,278
    )
    
    
    2,218Other non-current assets
    
    
    
    
    
    
    14,864
    
    
    
    4,978
    
    
    
    
    
    
    
    19,842Total assets
    
    $
    151,390
    
    
    $
    748,252
    
    
    $
    132,752
    
    
    $
    (152,592
    )
    
    $
    879,802Liabilities :Current liabilities:Accounts payable
    
    $
    118
    
    
    $
    176,482
    
    
    $
    
    
    
    $
    
    
    
    $
    176,600Bank overdrafts
    
    
    
    
    
    
    38,055
    
    
    
    
    
    
    
    
    
    
    
    38,055Accrued compensation
    
    
    
    
    
    
    11,503
    
    
    
    
    
    
    
    
    
    
    
    11,503Deferred income taxes
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    (28
    )
    
    
    Current maturities of long-term debt
    
    
    
    
    
    
    10,048
    
    
    
    
    
    
    
    
    
    
    
    10,048Other current liabilities
    
    
    
    
    
    
    23,164
    
    
    
    5,172
    
    
    
    
    
    
    
    28,336Intercompany payable
    
    
    
    
    
    
    21,792
    
    
    
    252
    
    
    
    (22,044
    )
    
    
    Total current liabilities
    
    
    146
    
    
    
    281,044
    
    
    
    5,424
    
    
    
    (22,072
    )
    
    
    264,542Non-current liabilities:Long-term debt
    
    
    
    
    
    
    156,000
    
    
    
    295,000
    
    
    
    
    
    
    
    451,000Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    1,278
    
    
    
    (1,278
    )
    
    
    Other long-term liabilities
    
    
    
    
    
    
    13,016
    
    
    
    
    
    
    
    
    
    
    
    13,016Total liabilities
    
    
    146
    
    
    
    450,060
    
    
    
    301,702
    
    
    
    (23,350
    )
    
    
    728,558Shareholders Equity/Parents Investment
    
    
    151,244
    
    
    
    298,192
    
    
    
    (168,950
    )
    
    
    (129,242
    )
    
    
    151,244Total liabilities and equity
    
    $
    151,390
    
    
    $
    748,252
    
    
    $
    132,752
    
    
    $
    (152,592
    )
    
    $
    879,802
  17




---



##### Table of Contents



BlueLinxBlueLinx
    
    
    Corporation
    
    
    LLCHoldings Inc.
    
    
    and Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssets:Current assets:Cash
    
    $
    3
    
    
    $
    15,699
    
    
    $
    57
    
    
    $
    
    
    
    $
    15,759Receivables
    
    
    
    
    
    
    263,176
    
    
    
    
    
    
    
    
    
    
    
    263,176Inventories
    
    
    
    
    
    
    335,887
    
    
    
    
    
    
    
    
    
    
    
    335,887Deferred income taxes
    
    
    
    
    
    
    12,277
    
    
    
    
    
    
    
    (78
    )
    
    
    12,199Other current assets
    
    
    271
    
    
    
    52,960
    
    
    
    
    
    
    
    
    
    
    
    53,231Intercompany receivable
    
    
    18,103
    
    
    
    611
    
    
    
    
    
    
    
    (18,714
    )
    
    
    Total current assets
    
    
    18,377
    
    
    
    680,610
    
    
    
    57
    
    
    
    (18,792
    )
    
    
    680,252Property, plant and equipment:Land and land improvements
    
    
    
    
    
    
    3,000
    
    
    
    54,295
    
    
    
    
    
    
    
    57,295Buildings
    
    
    
    
    
    
    7,390
    
    
    
    91,030
    
    
    
    
    
    
    
    98,420Machinery and equipment
    
    
    
    
    
    
    67,217
    
    
    
    
    
    
    
    
    
    
    
    67,217Construction in progress
    
    
    
    
    
    
    4,212
    
    
    
    
    
    
    
    
    
    
    
    4,212Property, plant and equipment, at cost
    
    
    
    
    
    
    81,819
    
    
    
    145,325
    
    
    
    
    
    
    
    227,144Accumulated depreciation
    
    
    
    
    
    
    (39,228
    )
    
    
    (15,474
    )
    
    
    
    
    
    
    (54,702
    )Property, plant and equipment, net
    
    
    
    
    
    
    42,591
    
    
    
    129,851
    
    
    
    
    
    
    
    172,442Investment in subsidiaries
    
    
    137,155
    
    
    
    
    
    
    
    
    
    
    
    (137,155
    )
    
    
    Non-current deferred income taxes
    
    
    
    
    
    
    4,327
    
    
    
    
    
    
    
    (1,699
    )
    
    
    2,628Other non-current assets
    
    
    
    
    
    
    22,822
    
    
    
    5,292
    
    
    
    
    
    
    
    28,114Total assets
    
    $
    155,532
    
    
    $
    750,350
    
    
    $
    135,200
    
    
    $
    (157,646
    )
    
    $
    883,436Liabilities:Current liabilities:Accounts payable
    
    $
    20
    
    
    $
    164,697
    
    
    $
    
    
    
    $
    
    
    
    $
    164,717Bank overdrafts
    
    
    
    
    
    
    37,152
    
    
    
    
    
    
    
    
    
    
    
    37,152Accrued compensation
    
    
    
    
    
    
    10,372
    
    
    
    
    
    
    
    
    
    
    
    10,372Deferred income taxes
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    (78
    )
    
    
    Other current liabilities
    
    
    
    
    
    
    15,145
    
    
    
    4,135
    
    
    
    
    
    
    
    19,280Intercompany payable
    
    
    611
    
    
    
    17,632
    
    
    
    471
    
    
    
    (18,714
    )
    
    
    Total current liabilities
    
    
    709
    
    
    
    244,998
    
    
    
    4,606
    
    
    
    (18,792
    )
    
    
    231,521Non-current liabilities:Long-term debt
    
    
    
    
    
    
    183,535
    
    
    
    295,000
    
    
    
    
    
    
    
    478,535Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    1,699
    
    
    
    (1,699
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    18,557
    
    
    
    
    
    
    
    
    
    
    
    18,557Total liabilities
    
    
    709
    
    
    
    447,090
    
    
    
    301,305
    
    
    
    (20,491
    )
    
    
    728,613Shareholders Equity/Parents Investment
    
    
    154,823
    
    
    
    303,260
    
    
    
    (166,105
    )
    
    
    (137,155
    )
    
    
    154,823Total liabilities and equity
    
    $
    155,532
    
    
    $
    750,350
    
    
    $
    135,200
    
    
    $
    (157,646
    )
    
    $
    883,436
  18




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (3,992
    )
    
    $
    (5,479
    )
    
    $
    1,881
    
    
    $
    3,598
    
    
    $
    (3,992
    )Adjustments to reconcile net income to cash (used
in) provided by operations:Depreciation and amortization
    
    
    
    
    
    
    7,931
    
    
    
    2,140
    
    
    
    
    
    
    
    10,071Amortization of debt issue costs
    
    
    
    
    
    
    901
    
    
    
    314
    
    
    
    
    
    
    
    1,215Deferred income tax benefit
    
    
    (50
    )
    
    
    (2,460
    )
    
    
    (421
    )
    
    
    
    
    
    
    (2,931
    )Share-based compensation expense
    
    
    
    
    
    
    1,119
    
    
    
    
    
    
    
    
    
    
    
    1,119Excess tax benefits from share-based
compensation arrangements
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    (76
    )Equity in earnings of subsidiaries
    
    
    3,598
    
    
    
    
    
    
    
    
    
    
    
    (3,598
    )
    
    
    Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    (31,905
    )
    
    
    
    
    
    
    
    
    
    
    (31,905
    )Inventories
    
    
    
    
    
    
    20,519
    
    
    
    
    
    
    
    
    
    
    
    20,519Accounts payable
    
    
    98
    
    
    
    11,785
    
    
    
    
    
    
    
    
    
    
    
    11,883Changes in other working capital
    
    
    171
    
    
    
    21,075
    
    
    
    1,037
    
    
    
    
    
    
    
    22,283Intercompany receivable
    
    
    (3,941
    )
    
    
    611
    
    
    
    
    
    
    
    3,330
    
    
    
    Intercompany payable
    
    
    (611
    )
    
    
    4,160
    
    
    
    (219
    )
    
    
    (3,330
    )
    
    
    Other
    
    
    
    
    
    
    2,589
    
    
    
    
    
    
    
    
    
    
    
    2,589Net cash (used in) provided by operating activities
    
    
    (4,727
    )
    
    
    30,770
    
    
    
    4,732
    
    
    
    
    
    
    
    30,775Cash flows from investing activities:Investment in subsidiaries
    
    
    4,212
    
    
    
    
    
    
    
    
    
    
    
    (4,212
    )
    
    
    Property, plant and equipment investments
    
    
    
    
    
    
    (1,502
    )
    
    
    
    
    
    
    
    
    
    
    (1,502
    )Proceeds from sale of assets
    
    
    
    
    
    
    827
    
    
    
    
    
    
    
    
    
    
    
    827Net cash provided by (used in) investing activities
    
    
    4,212
    
    
    
    (675
    )
    
    
    
    
    
    
    (4,212
    )
    
    
    (675
    )Cash flows from financing activities:Net transactions with Parent
    
    
    
    
    
    
    514
    
    
    
    (4,726
    )
    
    
    4,212
    
    
    
    Proceeds from stock options exercised
    
    
    434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434Excess tax benefits from share-based compensation
arrangements
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76Net decrease in revolving credit facility
    
    
    
    
    
    
    (17,487
    )
    
    
    
    
    
    
    
    
    
    
    (17,487
    )Increase in bank overdrafts
    
    
    
    
    
    
    903
    
    
    
    
    
    
    
    
    
    
    
    903Common dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Net cash (used in) provided by financing activities
    
    
    516
    
    
    
    (16,070
    )
    
    
    (4,726
    )
    
    
    4,212
    
    
    
    (16,068
    )Increase in cash
    
    
    1
    
    
    
    14,025
    
    
    
    6
    
    
    
    
    
    
    
    14,032Balance, beginning of period
    
    
    3
    
    
    
    15,699
    
    
    
    57
    
    
    
    
    
    
    
    15,759Balance, end of period
    
    $
    4
    
    
    $
    29,724
    
    
    $
    63
    
    
    $
    
    
    
    $
    29,791
  19




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    5,245
    
    
    $
    3,770
    
    
    $
    1,912
    
    
    $
    (5,682
    )
    
    $
    5,245Adjustments to reconcile net income to cash (used
in) provided by operations:Depreciation and amortization
    
    
    
    
    
    
    8,618
    
    
    
    2,116
    
    
    
    
    
    
    
    10,734Amortization of debt issue costs
    
    
    
    
    
    
    903
    
    
    
    312
    
    
    
    
    
    
    
    1,215Deferred income tax benefit
    
    
    (86
    )
    
    
    (1,061
    )
    
    
    (416
    )
    
    
    
    
    
    
    (1,563
    )Share-based compensation expense
    
    
    
    
    
    
    2,227
    
    
    
    
    
    
    
    
    
    
    
    2,227Excess tax benefits from share-based
compensation arrangements
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    (60
    )Equity in earnings of subsidiaries
    
    
    (5,682
    )
    
    
    
    
    
    
    
    
    
    
    5,682
    
    
    
    Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    (98,255
    )
    
    
    
    
    
    
    
    
    
    
    (98,255
    )Inventories
    
    
    
    
    
    
    (59,536
    )
    
    
    
    
    
    
    
    
    
    
    (59,536
    )Accounts payable
    
    
    
    
    
    
    64,503
    
    
    
    
    
    
    
    
    
    
    
    64,503Changes in other working capital
    
    
    508
    
    
    
    6,924
    
    
    
    1,408
    
    
    
    
    
    
    
    8,840Intercompany receivable
    
    
    (207
    )
    
    
    
    
    
    
    
    
    
    
    207
    
    
    
    Intercompany payable
    
    
    
    
    
    
    532
    
    
    
    (325
    )
    
    
    (207
    )
    
    
    Other
    
    
    
    
    
    
    2,308
    
    
    
    (30
    )
    
    
    
    
    
    
    2,278Net cash (used in) provided by operating activities
    
    
    (222
    )
    
    
    (69,127
    )
    
    
    4,977
    
    
    
    
    
    
    
    (64,372
    )Cash flows from investing activities:Investment in subsidiaries
    
    
    7,624
    
    
    
    
    
    
    
    
    
    
    
    (7,624
    )
    
    
    Property, plant and equipment investments
    
    
    
    
    
    
    (9,578
    )
    
    
    (449
    )
    
    
    
    
    
    
    (10,027
    )Proceeds from sale of assets
    
    
    
    
    
    
    1,086
    
    
    
    
    
    
    
    
    
    
    
    1,086Net cash provided by (used in) investing activities
    
    
    7,624
    
    
    
    (8,492
    )
    
    
    (449
    )
    
    
    (7,624
    )
    
    
    (8,941
    )Cash flows from financing activities:Net transactions with Parent
    
    
    
    
    
    
    (3,078
    )
    
    
    (4,546
    )
    
    
    7,624
    
    
    
    Proceeds from stock options exercised
    
    
    323
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323Excess tax benefits from share-based compensation
arrangements
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Net increase in revolving credit facility
    
    
    
    
    
    
    94,073
    
    
    
    
    
    
    
    
    
    
    
    94,073Decrease in bank overdrafts
    
    
    
    
    
    
    (15,678
    )
    
    
    
    
    
    
    
    
    
    
    (15,678
    )Common dividends paid
    
    
    (7,784
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,784
    )Other
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33Net cash (used in) provided by financing activities
    
    
    (7,401
    )
    
    
    75,317
    
    
    
    (4,513
    )
    
    
    7,624
    
    
    
    71,027Increase (decrease) in cash
    
    
    1
    
    
    
    (2,302
    )
    
    
    15
    
    
    
    
    
    
    
    (2,286
    )Balance, beginning of period
    
    
    2
    
    
    
    27,017
    
    
    
    23
    
    
    
    
    
    
    
    27,042Balance, end of period
    
    $
    3
    
    
    $
    24,715
    
    
    $
    38
    
    
    $
    
    
    
    $
    24,756
  20




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
    
    changes in the prices, supply and/or demand for products which we distribute, especially
as a result of conditions in the residential housing market;
    
    inventory levels of new and existing homes for sale;
    
    general economic and business conditions in the United States;
    
    the financial condition and credit worthiness of our customers;
    
    the activities of competitors;
    
    changes in significant operating expenses;
    
    fuel costs;
    
    risk of losses associated with accidents;
    
    exposure to product liability claims;
    
    changes in the availability of capital and interest rates;
    
    immigration patterns and job and household formation;
    
    our ability to identify acquisition opportunities and effectively and cost-efficiently
integrate acquisitions;
    
    adverse weather patterns or conditions;
    
    our ability to agree to a new supply agreement with Georgia-Pacific after May 7, 2010, or
otherwise obtain replacement products on favorable economic terms;
  21




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##### Table of Contents




    
    acts of war or terrorist activities;
    
    variations in the performance of the financial markets, including the credit markets; and
    
    the other factors described herein under Factors Affecting Future Results in our Annual
Report on Form 10-K for the year ended December 29, 2007 as filed with the SEC.
  Overview
 Background
  Industry Conditions
  Supply Agreement with Georgia-Pacific
   Subsequent Event
   22




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##### Table of Contents



Selected Factors Affecting Our Operating Results
   Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2008
    
    
    Q2 2007
    
    
    2008 YTD
    
    
    2007 YTD
    
    
    2007
    
    
    2006(Dollars in millions)(Unaudited)Sales by CategoryStructural Products
    
    $
    443
    
    
    $
    598
    
    
    $
    815
    
    
    $
    1,117
    
    
    $
    2,098
    
    
    $
    2,788Specialty Products
    
    
    403
    
    
    
    501
    
    
    
    757
    
    
    
    957
    
    
    
    1,802
    
    
    
    2,197Other(1)
    
    
    (11
    )
    
    
    (17
    )
    
    
    (21
    )
    
    
    (35
    )
    
    
    (66
    )
    
    
    (86
    )Total Sales
    
    $
    835
    
    
    $
    1,082
    
    
    $
    1,551
    
    
    $
    2,039
    
    
    $
    3,834
    
    
    $
    4,899Sales VariancesUnit Volume $ Change
    
    $
    (286
    )
    
    $
    (229
    )
    
    $
    (532
    )
    
    $
    (534
    )
    
    $
    (896
    )
    
    $
    (398
    )Price/Other(1)
    
    
    39
    
    
    
    (68
    )
    
    
    44
    
    
    
    (183
    )
    
    
    (169
    )
    
    
    (325
    )Total $ Change
    
    $
    (247
    )
    
    $
    (297
    )
    
    $
    (488
    )
    
    $
    (717
    )
    
    $
    (1,065
    )
    
    $
    (723
    )Unit Volume % Change
    
    
    (26.0
    )%
    
    
    (16.3
    )%
    
    
    (25.6
    )%
    
    
    (19.1
    )%
    
    
    (18.0
    )%
    
    
    (7.0
    )%Price/Other(1)
    
    
    3.1
    %
    
    
    (5.2
    )%
    
    
    1.7
    %
    
    
    (6.9
    )%
    
    
    (3.7
    )%
    
    
    (5.9
    )%Total % Change
    
    
    (22.9
    )%
    
    
    (21.5
    )%
    
    
    (23.9
    )%
    
    
    (26.0
    )%
    
    
    (21.7
    )%
    
    
    (12.9
    )%
 
 (1)
    
    Other includes unallocated allowances and discounts.  Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2008
    
    
    Q2 2007
    
    
    2008 YTD
    
    
    2007 YTD
    
    
    2007
    
    
    2006(Dollars in millions)(Unaudited)Gross Margin $s by CategoryStructural Products
    
    $
    53
    
    
    $
    56
    
    
    $
    85
    
    
    $
    101
    
    
    $
    173
    
    
    $
    194Specialty Products
    
    
    58
    
    
    
    70
    
    
    
    108
    
    
    
    134
    
    
    
    238
    
    
    
    308Other (1)
    
    
    (4
    )
    
    
    (7
    )
    
    
    (8
    )
    
    
    (12
    )
    
    
    (19
    )
    
    
    (22
    )Total Gross Margin $s
    
    $
    107
    
    
    $
    119
    
    
    $
    185
    
    
    $
    223
    
    
    $
    392
    
    
    $
    480Gross Margin %s by CategoryStructural Products
    
    
    12.0
    %
    
    
    9.3
    %
    
    
    10.4
    %
    
    
    9.0
    %
    
    
    8.2
    %
    
    
    7.0
    %Specialty Products
    
    
    14.4
    %
    
    
    14.0
    %
    
    
    14.3
    %
    
    
    14.0
    %
    
    
    13.2
    %
    
    
    14.0
    %Other (1)
    
    NA
    
    
    NA
    
    
    NA
    
    
    NA
    
    
    NA
    
    
    NATotal Gross Margin %s
    
    

    12.9
    %
    
    
    11.0

    %
    
    
    11.9
    %
    
    
    10.9
    %
    
    
    10.2
    %
    
    
    9.8
    %Change in Unit Volume by ProductStructural Products
    
    
    (30.3
    )%
    
    
    (17.1
    )%
    
    
    (29.2
    )%
    
    
    (19.9
    )%
    
    
    (19.2
    )%
    
    
    (11.8
    )%Specialty Products
    
    
    (20.8
    )%
    
    
    (15.3
    )%
    
    
    (21.5
    )%
    
    
    (18.0
    )%
    
    
    (16.4
    )%
    
    
    1.0
    %Total Change in Unit Volume %s
    
    
    (26.0
    )%
    
    
    (16.3
    )%
    
    
    (25.6
    )%
    
    
    (19.1
    )%
    
    
    (18.0
    )%
    
    
    (7.0
    )%
 
 (1)
    
    Other includes unallocated allowances and discounts.  23




---



##### Table of Contents



Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2008
    
    
    Q2 2007
    
    
    2008 YTD
    
    
    2007 YTD
    
    
    2007
    
    
    2006(Dollars in millions)(Unaudited)Sales by ChannelWarehouse/Reload
    
    $
    622
    
    
    $
    783
    
    
    $
    1,133
    
    
    $
    1,464
    
    
    $
    2,763
    
    
    $
    3,326Direct
    
    
    224
    
    
    
    316
    
    
    
    439
    
    
    
    610
    
    
    
    1,137
    
    
    
    1,659Other(1)
    
    
    (11
    )
    
    
    (17
    )
    
    
    (21
    )
    
    
    (35
    )
    
    
    (66
    )
    
    
    (86
    )Total
    
    $
    835
    
    
    $
    1,082
    
    
    $
    1,551
    
    
    $
    2,039
    
    
    $
    3,834
    
    
    $
    4,899Gross Margin by ChannelWarehouse/Reload
    
    $
    97
    
    
    $
    106
    
    
    $
    166
    
    
    $
    198
    
    
    $
    344
    
    
    $
    407Direct
    
    
    14
    
    
    
    20
    
    
    
    27
    
    
    
    37
    
    
    
    67
    
    
    
    95Other(1)
    
    
    (4
    )
    
    
    (7
    )
    
    
    (8
    )
    
    
    (12
    )
    
    
    (19
    )
    
    
    (22
    )Total
    
    $
    107
    
    
    $
    119
    
    
    $
    185
    
    
    $
    223
    
    
    $
    392
    
    
    $
    480Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2008
    
    
    Q2 2007
    
    
    2008 YTD
    
    
    2007 YTD
    
    
    2007
    
    
    2006(Dollars in millions)(Unaudited)Gross Margin % by ChannelWarehouse/Reload
    
    
    15.6
    %
    
    
    13.5
    %
    
    
    14.7
    %
    
    
    13.5
    %
    
    
    12.5
    %
    
    
    12.2
    %Direct
    
    
    6.3
    %
    
    
    6.3
    %
    
    
    6.2
    %
    
    
    6.1
    %
    
    
    5.9
    %
    
    
    5.7
    %Unallocated Allowances and Adjustments
    
    
    (0.5
    )%
    
    
    (0.6
    )%
    
    
    (0.5
    )%
    
    
    (0.6
    )%
    
    
    (0.5
    )%
    
    
    (0.4
    )%Total
    
    
    12.9
    %
    
    
    11.0
    %
    
    
    11.9
    %
    
    
    10.9
    %
    
    
    10.2
    %
    
    
    9.8
    %
 
 (1)
    
    Other includes unallocated allowances and adjustments. Fiscal Year
  Results of Operations
 Second Quarter of Fiscal 2008 Compared to Second Quarter of Fiscal 2007
  Period from
    
    
    
    
    
    
    Period fromMarch 30, 2008
    
    
    % of
    
    
    April 1, 2007
    
    
    % ofto
    
    
    Net
    
    
    to
    
    
    NetJune 28, 2008
    
    
    Sales
    
    
    June 30, 2007
    
    
    Sales(Unaudited)
    
    
    
    
    
    (Unaudited)(Dollars in thousands)Net sales
    
    $
    834,669
    
    
    
    100.0
    %
    
    $
    1,081,990
    
    
    
    100.0
    %Gross profit
    
    
    107,435
    
    
    
    12.9
    %
    
    
    119,238
    
    
    
    11.0
    %Selling, general & administrative
    
    
    81,227
    
    
    
    9.7
    %
    
    
    93,346
    
    
    
    8.6
    %Depreciation and amortization
    
    
    5,103
    
    
    
    0.6
    %
    
    
    5,335
    
    
    
    0.5
    %Operating income
    
    
    21,105
    
    
    
    2.5
    %
    
    
    20,557
    
    
    
    1.9
    %Interest expense
    
    
    9,385
    
    
    
    1.1
    %
    
    
    11,798
    
    
    
    1.1
    %Other expense (income), net
    
    
    190
    
    
    
    0.0
    %
    
    
    (225
    )
    
    
    0.0
    %Income before benefit from income taxes
    
    
    11,530
    
    
    
    1.4
    %
    
    
    8,984
    
    
    
    0.8
    %Provision for income taxes
    
    
    4,931
    
    
    
    0.6
    %
    
    
    3,550
    
    
    
    0.3
    %Net income
    
    $
    6,599
    
    
    
    0.8
    %
    
    $
    5,434
    
    
    
    0.5
    %
  24




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##### Table of Contents



Net Sales.
 Gross Profit.
 Selling, General, and Administrative Expenses.
 Depreciation and Amortization.
 Operating Income.
 Interest Expense, net.
 Provision for Income Taxes.
 Net Income.
  Year-to-Date Fiscal 2008 Compared to Year-to-Date Fiscal 2007
  Period from
    
    
    
    
    
    
    Period fromDecember 29, 2007
    
    
    % of
    
    
    December 31, 2006
    
    
    % ofto
    
    
    Net
    
    
    to
    
    
    NetJune 28, 2008
    
    
    Sales
    
    
    June 30, 2007
    
    
    Sales(Unaudited)
    
    
    
    
    
    (Unaudited)(Dollars in thousands)Net sales
    
    $
    1,551,429
    
    
    
    100.0
    %
    
    $
    2,039,104
    
    
    
    100.0
    %Gross profit
    
    
    185,238
    
    
    
    11.9
    %
    
    
    222,993
    
    
    
    10.9
    %Selling, general & administrative
    
    
    161,862
    
    
    
    10.4
    %
    
    
    181,814
    
    
    
    8.9
    %Depreciation and amortization
    
    
    10,071
    
    
    
    0.6
    %
    
    
    10,734
    
    
    
    0.5
    %Operating income
    
    
    13,305
    
    
    
    0.9
    %
    
    
    30,445
    
    
    
    1.5
    %Interest expense
    
    
    18,739
    
    
    
    1.2
    %
    
    
    22,404
    
    
    
    1.1
    %Other expense (income), net
    
    
    320
    
    
    
    0.0
    %
    
    
    (608
    )
    
    
    0.0
    %(Loss) income before (benefit from) provision for income taxes
    
    
    (5,754
    )
    
    
    (0.4
    )%
    
    
    8,649
    
    
    
    0.4
    %(Benefit from) provision for income taxes
    
    
    (1,762
    )
    
    
    (0.1
    )%
    
    
    3,404
    
    
    
    0.2
    %Net (loss) income
    
    $
    (3,992
    )
    
    
    (0.3
    )%
    
    $
    5,245
    
    
    
    0.3
    %
  25




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##### Table of Contents



Net Sales.
 Gross Profit.
 Selling, General, and Administrative Expenses.
 Depreciation and Amortization.
 Operating Income.
 Interest Expense, net.
 (Benefit from) Provision for Income Taxes.
 Net (loss) income
  Seasonality
   26




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##### Table of Contents



Liquidity and Capital Resources
  
  June 28, 2008
    
    
    December 29, 2007(Dollars in thousands)(Unaudited)Working capital
    
    $
    428,960
    
    
    $
    448,731
 Period from
    
    
    Period fromDecember 29, 2007
    
    
    December 31, 2006to
    
    
    toJune 28, 2008
    
    
    June 30, 2007(Dollars in thousands)(Unaudited)Cash flows provided by (used in) operating activities
    
    $
    30,775
    
    
    $
    (64,372
    )Cash flows used in investing activities
    
    
    (675
    )
    
    
    (8,941
    )Cash flows (used in) provided by financing activities
    
    $
    (16,068
    )
    
    $
    71,027
 Working Capital
  Operating Activities
  Investing Activities
     27




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##### Table of Contents



Financing Activities
  Debt and Credit Sources
      Contractual Obligations
   28




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##### Table of Contents



Critical Accounting Policies
   Revenue Recognition
   
    
    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.
  Allowance for Doubtful Accounts and Related Reserves
 e.g.
 Stock-Based Compensation
    29




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##### Table of Contents



Inventories
   Consideration Received from Vendors and Paid to Customers
  Impairment of Long-Lived Assets
   Income Taxes
    30




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes
 Exit Costs
 Accounting for Costs Associated with Exit or Disposal Activities,
 Recently Issued Accounting Pronouncements
     31




---



##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements
 Business Combinations
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Fair Value Measurements Application of FASB Statement No. 157 to FASB Statement No. 13 and
Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13 Partial Deferral of the Effective Date of Statement 157
  Level 1
    
    Unadjusted quoted prices in active markets for identical assets or
liabilities.Level 2
    
    Unadjusted quoted prices in active markets for similar assets or
liabilities, or Unadjusted quoted prices for identical or similar assets or
liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the asset
or liability.Level 3
    
    Unobservable inputs for the asset or liability.
  32




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   33




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##### Table of Contents



ITEM 1A. RISK FACTORS
  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.
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of directors to serve on our board of directors:
 Name
    
    Votes For
    
    
    Votes WithheldHoward S. Cohen
    
    
    24,056,046
    
    
    
    1,043,304Richard S. Grant
    
    
    24,867,732
    
    
    
    231,618Richard B. Marchese
    
    
    24,866,832
    
    
    
    232,518Steven F. Mayer
    
    
    24,045,694
    
    
    
    1,053,656Charles H. McElrea
    
    
    24,036,550
    
    
    
    1,062,800Alan H. Schumacher
    
    
    24,863,032
    
    
    
    236,318Mark A. Suwyn
    
    
    23,935,759
    
    
    
    1,163,591Robert G. Warden
    
    
    24,042,992
    
    
    
    1,056,358M. Richard Warner
    
    
    24,060,426
    
    
    
    1,038,924
 2.
    
    Approval of an amendment to the BlueLinx Holdings Inc. 2006 Long-Term Equity
Incentive Plan:
 Votes For
    
    Votes Against
    
    Abstain20,061,908
    
    1,099,509
    
    9,912
 3.
    
    Ratification of appointment of Ernst & Young LLP as our independent registered
public accounting firm:
 Votes For
    
    Votes Against
    
    Abstain25,039,637
    
    46,675
    
    13,038
  34




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##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    
    Settlement Agreement and General Release between BlueLinx Corporation and Barbara V. Tinsley dated April 7, 2008.10.2
    
    
    Retention Incentive Agreement between BlueLinx Corporation and Duane G. Goodwin dated April 1, 2008.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  35




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##### Table of Contents



SIGNATURES
  BlueLinx Holdings Inc.(Registrant)Date: August 5, 2008
    /s/ Howard D. GoforthHoward D. GoforthChief Financial Officer and Treasurer  36




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    
    Settlement Agreement and General Release between BlueLinx Corporation and Barbara V. Tinsley dated April 7, 2008.10.2
    
    
    Retention Incentive Agreement between BlueLinx Corporation and Duane G. Goodwin dated April 1, 2008.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  37