##### 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 September 30, 2006
 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
  o þ o
 o þ




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##### 



BLUELINX HOLDINGS INC.
 Form 10-Q
 For the Quarterly Period Ended September 30, 2006
 INDEX
  
 PAGEPART I. FINANCIAL INFORMATIONItem 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
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    34Item 6. Exhibits
    
    
    34Signatures
    
    
    35Exhibit IndexEX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF CFO
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
 BLUELINX HOLDINGS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (unaudited)
 Third QuarterPeriod from
    
    
    Period fromJuly 2, 2006
    
    
    July 3, 2005to
    
    
    toSeptember 30, 2006
    
    
    October 1, 2005Net sales
    
    $
    1,203,578
    
    
    $
    1,454,217Cost of sales
    
    
    1,082,672
    
    
    
    1,317,180Gross profit
    
    
    120,906
    
    
    
    137,037Operating expenses:Selling, general, and administrative
    
    
    99,615
    
    
    
    97,926Depreciation and amortization
    
    
    5,217
    
    
    
    4,993Total operating expenses
    
    
    104,832
    
    
    
    102,919Operating income
    
    
    16,074
    
    
    
    34,118Non-operating expenses:Interest expense
    
    
    12,046
    
    
    
    11,216Other income, net
    
    
    (29
    )
    
    
    (295
    )Income before provision for income taxes
    
    
    4,057
    
    
    
    23,197Provision for income taxes
    
    
    1,765
    
    
    
    9,301Net income
    
    $
    2,292
    
    
    $
    13,896Basic weighted average number of common shares outstanding
    
    
    30,662
    
    
    
    30,199Basic net income per share applicable to common stock
    
    $
    0.07
    
    
    $
    0.46Diluted weighted average number of common shares outstanding
    
    
    30,782
    
    
    
    30,493Diluted net income per share applicable to common stock
    
    $
    0.07
    
    
    $
    0.46Dividends declared per share of common stock
    
    $
    0.125
    
    
    $
    0.125
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BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
 Nine Months EndedPeriod from
    
    
    Period fromJanuary 1, 2006
    
    
    January 2, 2005to
    
    
    toSeptember 30, 2006
    
    
    October 1, 2005Net sales
    
    $
    3,959,134
    
    
    $
    4,292,812Cost of sales
    
    
    3,571,833
    
    
    
    3,920,766Gross profit
    
    
    387,301
    
    
    
    372,046Operating expenses:Selling, general, and administrative
    
    
    295,004
    
    
    
    277,309Depreciation and amortization
    
    
    15,323
    
    
    
    13,793Total operating expenses
    
    
    310,327
    
    
    
    291,102Operating income
    
    
    76,974
    
    
    
    80,944Non-operating expenses:Interest expense
    
    
    35,505
    
    
    
    31,206Charges associated with mortgage refinancing
    
    
    4,864
    
    
    
    Other (income) expense, net
    
    
    (17
    )
    
    
    58Income before provision for income taxes
    
    
    36,622
    
    
    
    49,680Provision for income taxes
    
    
    14,925
    
    
    
    19,615Net income
    
    $
    21,697
    
    
    $
    30,065Basic weighted average number of common shares outstanding
    
    
    30,576
    
    
    
    30,180Basic net income per share applicable to common stock
    
    $
    0.71
    
    
    $
    1.00Diluted weighted average number of common shares outstanding
    
    
    30,762
    
    
    
    30,459Diluted net income per share applicable to common stock
    
    $
    0.71
    
    
    $
    0.99Dividends declared per share of common stock
    
    $
    0.375
    
    
    $
    0.375
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BLUELINX HOLDINGS INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share data)
 September 30, 2006
    
    
    December 31, 2005(unaudited)Assets:Current assets:Cash
    
    $
    24,182
    
    
    $
    24,320Receivables, net
    
    
    435,052
    
    
    
    399,093Inventories, net
    
    
    471,229
    
    
    
    473,068Deferred income taxes
    
    
    8,204
    
    
    
    6,678Other current assets
    
    
    46,904
    
    
    
    44,909Total current assets
    
    
    985,571
    
    
    
    948,068Property, plant, and equipment:Land and land improvements
    
    
    56,979
    
    
    
    56,521Buildings
    
    
    95,291
    
    
    
    93,381Machinery and equipment
    
    
    61,362
    
    
    
    54,200Construction in progress
    
    
    1,506
    
    
    
    2,350Property, plant, and equipment, at cost
    
    
    215,138
    
    
    
    206,452Accumulated depreciation
    
    
    (34,605
    )
    
    
    (22,403
    )Property, plant, and equipment, net
    
    
    180,533
    
    
    
    184,049Other non-current assets
    
    
    28,412
    
    
    
    25,523Total assets
    
    $
    1,194,516
    
    
    $
    1,157,640Liabilities:Current liabilities:Accounts payable
    
    $
    252,451
    
    
    $
    327,004Bank overdrafts
    
    
    68,569
    
    
    
    62,392Accrued compensation
    
    
    12,679
    
    
    
    13,494Current maturities of long-term debt
    
    
    71,008
    
    
    
    Other current liabilities
    
    
    14,897
    
    
    
    15,195Total current liabilities
    
    
    419,604
    
    
    
    418,085Non-current liabilities:Long-term debt
    
    
    561,500
    
    
    
    540,850Deferred income taxes
    
    
    1,241
    
    
    
    1,911Other long-term liabilities
    
    
    14,815
    
    
    
    12,942Total liabilities
    
    
    997,160
    
    
    
    973,788Shareholders Equity:Common Stock, $0.01 par value, 100,000,000
shares authorized; 30,866,544 and
30,251,019 shares issued and outstanding at
September 30, 2006 and December 31, 2005,
respectively
    
    
    311
    
    
    
    303Additional paid-in-capital
    
    
    137,066
    
    
    
    132,346Accumulated other comprehensive income (loss)
    
    
    (361
    )
    
    
    1,023Retained earnings
    
    
    60,340
    
    
    
    50,180Total shareholders equity
    
    
    197,356
    
    
    
    183,852Total liabilities and shareholders equity
    
    $
    1,194,516
    
    
    $
    1,157,640
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BLUELINX HOLDINGS INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (unaudited)
 Nine Months EndedPeriod
    
    
    Period fromfrom January 1,
    
    
    January 2, 20052006 to
    
    
    toSeptember 30, 2006
    
    
    October 1, 2005Cash flows from operating activities:Net income
    
    $
    21,697
    
    
    $
    30,065Adjustments to reconcile net income to cash provided by (used in) operations:Depreciation and amortization
    
    
    15,323
    
    
    
    13,793Amortization of debt issue costs
    
    
    2,018
    
    
    
    2,704Write-off of unamortized debt financing costs
    
    
    4,864
    
    
    
    Deferred income tax benefit
    
    
    (1,876
    )
    
    
    (1,027
    )Stock-based compensation
    
    
    2,209
    
    
    
    1,701Changes in assets and liabilities:Receivables
    
    
    (33,396
    )
    
    
    (158,401
    )Inventories
    
    
    5,961
    
    
    
    91,976Accounts payable
    
    
    (74,959
    )
    
    
    54,485Changes in other working capital
    
    
    (3,368
    )
    
    
    (10,911
    )Other
    
    
    (2,237
    )
    
    
    3,998Net cash provided by (used in) operating activities
    
    
    (63,764
    )
    
    
    28,383Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (9,353
    )
    
    
    (17,021
    )Property, plant and equipment investments
    
    
    (7,267
    )
    
    
    (10,034
    )Proceeds from sale of assets
    
    
    465
    
    
    
    814Net cash used in investing activities
    
    
    (16,155
    )
    
    
    (26,241
    )Cash flows from financing activities:Issuance of common stock, net
    
    
    
    
    
    
    8,541Proceeds from stock options exercised
    
    
    1,744
    
    
    
    151Excess tax benefits from stock-based compensation
    
    
    882
    
    
    
    49Net increase (decrease) in revolving credit facility
    
    
    (38,342
    )
    
    
    1,834Proceeds from new mortgage
    
    
    295,000
    
    
    
    Debt financing costs
    
    
    (6,668
    )
    
    
    (570
    )Retirement of old mortgage
    
    
    (165,000
    )
    
    
    Prepayment fees associated with old mortgage
    
    
    (2,475
    )
    
    
    Increase in bank overdrafts
    
    
    6,177
    
    
    
    11,920Common stock dividends paid
    
    
    (11,537
    )
    
    
    (11,319
    )Net cash provided by financing activities
    
    
    79,781
    
    
    
    10,606Increase (decrease) in cash
    
    
    (138
    )
    
    
    12,748Balance, beginning of period
    
    
    24,320
    
    
    
    15,572Balance, end of period
    
    $
    24,182
    
    
    $
    28,320
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BLUELINX HOLDINGS INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER 30, 2006
 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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Stock-Based Compensation
      rd
  Share-Based Payment Accounting for Stock-Based Compensation
  8




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Period fromJuly 2, 2006 toSeptember 30, 2006Time BasedOptions*Risk free interest rate
    
    
    5.05
    %Expected dividend yield
    
    
    4.20
    %Expected life
    
    7 yearsExpected volatility
    
    
    50
    %Weighted average fair value
    
    $
    4.14
 
 *
    
    Exercise price exceeded market price at date of grant   Nine Months Ended September 30, 2006Time Based
    
    Time Based
    
    Performance-BasedOptions*
    
    Options**
    
    Options***Risk free interest rate
    
    
    4.36
    %
    
    
    4.72
    %
    
    
    4.60
    %Expected dividend yield
    
    
    4.43
    %
    
    
    3.85
    %
    
    
    3.19
    %Expected life
    
    7 years
    

    
    7 years
    

    
    1 yearExpected volatility
    
    
    50
    %
    
    
    50
    %
    
    
    50
    %Weighted average fair value
    
    $
    3.69
    
    
    $
    5.11
    
    
    $
    11.47
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*
    
    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.  Nine Months EndedOctober 1, 2005Time BasedOptions*Risk free interest rate
    
    
    4.12
    %Expected dividend yield
    
    
    4.26
    %Expected life
    
    7 yearsExpected volatility
    
    
    45
    %Weighted average fair value
    
    $
    4.00
 
 *
    
    Exercise price equaled market price at date of grant       WeightedAverageExerciseShares
    
    PriceOptions outstanding at December 31, 2005
    
    
    1,695,682
    
    
    $
    8.23Options granted
    
    
    667,705
    
    
    
    12.25Options exercised
    
    
    (465,181
    )
    
    
    3.75Options forfeited
    
    
    (57,902
    )
    
    
    3.75Options outstanding at September 30, 2006
    
    
    1,840,304
    
    
    
    10.95Options exercisable at September 30, 2006
    
    
    144,629
    
    
    $
    4.57
 Outstanding
    
    ExercisableWeighted
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    Remaining
    
    
    
    
    
    AverageNumber of
    
    Exercise
    
    Contractual Life
    
    Number of
    
    ExercisePrice Range
    
    Options
    
    Price
    
    (in Years)
    
    Options
    
    Price$ 3.75
    
    
    448,437
    
    
    $
    3.75
    
    
    
    1.31
    
    
    
    129,729
    
    
    $
    3.75$10.29 - $15.10
    
    
    1,391,867
    
    
    
    13.27
    
    
    
    9.23
    
    
    
    14,900
    
    
    
    11.731,840,304
    
    
    
    
    
    
    
    
    
    
    
    144,629
 10




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Weighted AverageRestricted Stock
    
    Grant DateAwards
    
    Fair ValueRestricted stock awards at December 31, 2005
    
    
    
    
    
    $
    Granted
    
    
    148,912
    
    
    
    13.99Vested
    
    
    
    
    
    
    Forfeited
    
    
    (1,500
    )
    
    
    14.01Restricted stock awards outstanding at September 30, 2006
    
    
    147,412
    
    
    $
    13.99
 Weighted AverageRestricted Stock
    
    Grant DateUnit Awards
    
    Fair ValueRestricted stock unit awards at December 31, 2005
    
    
    
    
    
    $
    Granted
    
    
    122,600
    
    
    
    14.01Vested
    
    
    
    
    
    
    Forfeited
    
    
    (400
    )
    
    
    14.01Restricted stock unit awards outstanding at September 30, 2006
    
    
    122,200
    
    
    $
    14.01
   3. Comprehensive Income
  Third QuarterPeriod from
    
    
    Period fromJuly 2, 2006
    
    
    July 3, 2005to
    
    
    toSeptember 30, 2006
    
    
    October 1, 2005Net income
    
    $
    2,292
    
    
    $
    13,896Other comprehensive income:Foreign currency translation, net of taxes
    
    
    (6
    )
    
    
    473Unrealized loss from cash flow hedge, net of taxes
    
    
    (2,112
    )
    
    
    Comprehensive income
    
    $
    174
    
    
    $
    14,369
 Nine Months EndedPeriod from
    
    
    Period fromJanuary 1, 2006
    
    
    January 2, 2005to
    
    
    toSeptember 30, 2006
    
    
    October 1, 2005Net income
    
    $
    21,697
    
    
    $
    30,065Other comprehensive income:Foreign currency translation, net of taxes
    
    
    331
    
    
    
    281Unrealized loss from cash flow hedge, net of taxes
    
    
    (1,715
    )
    
    
    Comprehensive income
    
    $
    20,313
    
    
    $
    30,346
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4. Employee Benefits
 Defined Benefit Pension Plans
   Third QuarterPeriod from July 2,
    
    
    Period from July 3,2006 to September 30, 2006
    
    
    2005 to October 1, 2005(In thousands)Service cost
    
    $
    672
    
    
    $
    650Interest cost on projected benefit obligation
    
    
    1,011
    
    
    
    970Expected return on plan assets
    
    
    (1,300
    )
    
    
    (1,208
    )Amortization of unrecognized prior service cost
    
    
    1
    
    
    
    Net periodic pension cost
    
    $
    384
    
    
    $
    412Nine Months EndedPeriod from January 1,
    
    
    Period from January 2,2006 to September 30, 2006
    
    
    2005 to October 1, 2005(In thousands)Service cost
    
    $
    2,016
    
    
    $
    1,950Interest cost on projected benefit obligation
    
    
    3,033
    
    
    
    2,910Expected return on plan assets
    
    
    (3,900
    )
    
    
    (3,624
    )Amortization of unrecognized prior service cost
    
    
    3
    
    
    
    Net periodic pension cost
    
    $
    1,152
    
    
    $
    1,236
 5. Revolving Credit Facility
    Accounting for Derivative Instruments and Hedging Activities
 12




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6. Mortgage
    2011
    
    $
    1,5112012
    
    
    3,1722013
    
    
    3,4372014
    
    
    3,6652015
    
    
    3,908Thereafter
    
    $
    279,307
 7. Related Party Transactions
 Temporary Staffing Provider
    Consulting
    13




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Overhead Expense Reimbursement
    Other SG&A
   Rental Car
    8. Commitments and Contingencies
 Environmental and Legal Matters
  Collective Bargaining Agreements
  Preference Claim
  14




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Hurricane Katrina
  9. Subsequent Events
   10. Unaudited Supplemental Condensed Consolidating Financial Statements
 ,
 15




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##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,203,578
    
    
    $
    7,598
    
    
    $
    (7,598
    )
    
    $
    1,203,578Cost of sales
    
    
    
    
    
    
    1,082,672
    
    
    
    
    
    
    
    
    
    
    
    1,082,672Gross profit
    
    
    
    
    
    
    120,906
    
    
    
    7,598
    
    
    
    (7,598
    )
    
    
    120,906Operating expenses:Selling, general and administrative
    
    
    332
    
    
    
    106,679
    
    
    
    202
    
    
    
    (7,598
    )
    
    
    99,615Depreciation and amortization
    
    
    
    
    
    
    4,159
    
    
    
    1,058
    
    
    
    
    
    
    
    5,217Total operating expenses
    
    
    332
    
    
    
    110,838
    
    
    
    1,260
    
    
    
    (7,598
    )
    
    
    104,832Operating income (loss)
    
    
    (332
    )
    
    
    10,068
    
    
    
    6,338
    
    
    
    
    
    
    
    16,074Non-operating expenses:Interest expense
    
    
    
    
    
    
    7,064
    
    
    
    4,982
    
    
    
    
    
    
    
    12,046Charges associated with mortgage refinancing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other expense (income), net
    
    
    
    
    
    
    (12
    )
    
    
    (17
    )
    
    
    
    
    
    
    (29
    )Income before provision for (benefit from) income taxes
    
    
    (332
    )
    
    
    3,016
    
    
    
    1,373
    
    
    
    
    
    
    
    4,057Provision for (benefit from) income taxes
    
    
    (129
    )
    
    
    1,359
    
    
    
    535
    
    
    
    
    
    
    
    1,765Equity in income (loss) of subsidiaries
    
    
    2,495
    
    
    
    
    
    
    
    
    
    
    
    (2,495
    )
    
    
    Net income (loss)
    
    $
    2,292
    
    
    $
    1,657
    
    
    $
    838
    
    
    $
    (2,495
    )
    
    $
    2,292The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from July 3, 2005 to October 1, 2005 follows (in thousands):BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,454,217
    
    
    $
    4,900
    
    
    $
    (4,900
    )
    
    $
    1,454,217Cost of sales
    
    
    
    
    
    
    1,317,180
    
    
    
    
    
    
    
    
    
    
    
    1,317,180Gross profit
    
    
    
    
    
    
    137,037
    
    
    
    4,900
    
    
    
    (4,900
    )
    
    
    137,037Operating expenses:Selling, general and administrative
    
    
    416
    
    
    
    102,307
    
    
    
    103
    
    
    
    (4,900
    )
    
    
    97,926Depreciation and amortization
    
    
    
    
    
    
    3,918
    
    
    
    1,075
    
    
    
    
    
    
    
    4,993Total operating expenses
    
    
    416
    
    
    
    106,225
    
    
    
    1,178
    
    
    
    (4,900
    )
    
    
    102,919Operating income (loss)
    
    
    (416
    )
    
    
    30,812
    
    
    
    3,722
    
    
    
    
    
    
    
    34,118Non-operating expenses:Interest expense
    
    
    
    
    
    
    8,557
    
    
    
    2,659
    
    
    
    
    
    
    
    11,216Other expense, net
    
    
    
    
    
    
    (185
    )
    
    
    (110
    )
    
    
    
    
    
    
    (295
    )Income before provision for (benefit from) income taxes
    
    
    (416
    )
    
    
    22,440
    
    
    
    1,173
    
    
    
    
    
    
    
    23,197Provision for (benefit from) income taxes
    
    
    (163
    )
    
    
    9,005
    
    
    
    459
    
    
    
    
    
    
    
    9,301Equity in income (loss) of subsidiaries
    
    
    14,149
    
    
    
    
    
    
    
    
    
    
    
    (14,149
    )
    
    
    Net income (loss)
    
    $
    13,896
    
    
    $
    13,435
    
    
    $
    714
    
    
    $
    (14,149
    )
    
    $
    13,896The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from January 1, 2006 to September 30, 2006 follows (in thousands):BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    3,959,134
    
    
    $
    18,053
    
    
    $
    (18,053
    )
    
    $
    3,959,134Cost of sales
    
    
    
    
    
    
    3,571,833
    
    
    
    
    
    
    
    
    
    
    
    3,571,833Gross profit
    
    
    
    
    
    
    387,301
    
    
    
    18,053
    
    
    
    (18,053
    )
    
    
    387,301Operating expenses:Selling, general and administrative
    
    
    1,139
    
    
    
    311,197
    
    
    
    721
    
    
    
    (18,053
    )
    
    
    295,004Depreciation and amortization
    
    
    
    
    
    
    12,149
    
    
    
    3,174
    
    
    
    
    
    
    
    15,323
 16




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedTotal operating expenses
    
    
    1,139
    
    
    
    323,346
    
    
    
    3,895
    
    
    
    (18,053
    )
    
    
    310,327Operating income (loss)
    
    
    (1,139
    )
    
    
    63,955
    
    
    
    14,158
    
    
    
    
    
    
    
    76,974Non-operating expenses:Interest expense
    
    
    
    
    
    
    23,730
    
    
    
    11,775
    
    
    
    
    
    
    
    35,505Charges associated with new mortgage
    
    
    
    
    
    
    
    
    
    
    4,864
    
    
    
    
    
    
    
    4,864Other expense (income), net
    
    
    
    
    
    
    68
    
    
    
    (85
    )
    
    
    
    
    
    
    (17
    )Income before provision for (benefit from) income taxes
    
    
    (1,139
    )
    
    
    40,157
    
    
    
    (2,396
    )
    
    
    
    
    
    
    36,622Provision for (benefit from) income taxes
    
    
    (444
    )
    
    
    16,303
    
    
    
    (934
    )
    
    
    
    
    
    
    14,925Equity in income (loss) of subsidiaries
    
    
    22,392
    
    
    
    
    
    
    
    
    
    
    
    (22,392
    )
    
    
    Net income (loss)
    
    $
    21,697
    
    
    $
    23,854
    
    
    $
    (1,462
    )
    
    $
    (22,392
    )
    
    $
    21,697The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from January 2, 2005 to October 1, 2005 follows (in thousands):BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    4,292,812
    
    
    $
    14,700
    
    
    $
    (14,700
    )
    
    $
    4,292,812Cost of sales
    
    
    
    
    
    
    3,920,766
    
    
    
    
    
    
    
    
    
    
    
    3,920,766Gross profit
    
    
    
    
    
    
    372,046
    
    
    
    14,700
    
    
    
    (14,700
    )
    
    
    372,046Operating expenses:Selling, general and administrative
    
    
    1,299
    
    
    
    290,400
    
    
    
    310
    
    
    
    (14,700
    )
    
    
    277,309Depreciation and amortization
    
    
    
    
    
    
    10,567
    
    
    
    3,226
    
    
    
    
    
    
    
    13,793Total operating expenses
    
    
    1,299
    
    
    
    300,967
    
    
    
    3,536
    
    
    
    (14,700
    )
    
    
    291,102Operating income (loss)
    
    
    (1,299
    )
    
    
    71,079
    
    
    
    11,164
    
    
    
    
    
    
    
    80,944Non-operating expenses:Interest expense
    
    
    
    
    
    
    23,511
    
    
    
    7,695
    
    
    
    
    
    
    
    31,206Other expense, net
    
    
    
    
    
    
    168
    
    
    
    (110
    )
    
    
    
    
    
    
    58Income before provision for (benefit from) income taxes
    
    
    (1,299
    )
    
    
    47,400
    
    
    
    3,579
    
    
    
    
    
    
    
    49,680Provision for (benefit from) income taxes
    
    
    (507
    )
    
    
    18,725
    
    
    
    1,397
    
    
    
    
    
    
    
    19,615Equity in income (loss) of subsidiaries
    
    
    30,857
    
    
    
    
    
    
    
    
    
    
    
    (30,857
    )
    
    
    Net income (loss)
    
    $
    30,065
    
    
    $
    28,675
    
    
    $
    2,182
    
    
    $
    (30,857
    )
    
    $
    30,065
 17




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssets:Current assets:Cash
    
    $
    
    
    
    $
    24,166
    
    
    $
    16
    
    
    $
    
    
    
    $
    24,182Receivables
    
    
    
    
    
    
    435,052
    
    
    
    
    
    
    
    
    
    
    
    435,052Inventories
    
    
    
    
    
    
    471,229
    
    
    
    
    
    
    
    
    
    
    
    471,229Deferred income taxes
    
    
    
    
    
    
    8,283
    
    
    
    
    
    
    
    (79
    )
    
    
    8,204Other current assets
    
    
    221
    
    
    
    49,189
    
    
    
    
    
    
    
    (2,506
    )
    
    
    46,904Intercompany receivable
    
    
    444
    
    
    
    
    
    
    
    2,510
    
    
    
    (2,954
    )
    
    
    Total current assets
    
    
    665
    
    
    
    987,919
    
    
    
    2,526
    
    
    
    (5,539
    )
    
    
    985,571Property, plant and equipment:Land and land improvements
    
    
    
    
    
    
    2,760
    
    
    
    54,219
    
    
    
    
    
    
    
    56,979Buildings
    
    
    
    
    
    
    5,944
    
    
    
    89,347
    
    
    
    
    
    
    
    95,291Machinery and equipment
    
    
    
    
    
    
    61,362
    
    
    
    
    
    
    
    
    
    
    
    61,362Construction in progress
    
    
    
    
    
    
    1,506
    
    
    
    
    
    
    
    
    
    
    
    1,506Property, plant and equipment, at cost
    
    
    
    
    
    
    71,572
    
    
    
    143,566
    
    
    
    
    
    
    
    215,138Accumulated depreciation
    
    
    
    
    
    
    (24,434
    )
    
    
    (10,171
    )
    
    
    
    
    
    
    (34,605
    )Property, plant and equipment, net
    
    
    
    
    
    
    47,138
    
    
    
    133,395
    
    
    
    
    
    
    
    180,533Investment in subsidiaries
    
    
    196,820
    
    
    
    
    
    
    
    
    
    
    
    (196,820
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    1,485
    
    
    
    
    
    
    
    (1,485
    )
    
    
    Other non-current assets
    
    
    
    
    
    
    22,316
    
    
    
    6,096
    
    
    
    
    
    
    
    28,412Total assets
    
    $
    197,485
    
    
    $
    1,058,858
    
    
    $
    142,017
    
    
    $
    (203,844
    )
    
    $
    1,194,516Liabilities :Current liabilities:Accounts payable
    
    $
    50
    
    
    $
    252,312
    
    
    $
    2,595
    
    
    $
    (2,506
    )
    
    $
    252,451Bank overdrafts
    
    
    
    
    
    
    68,569
    
    
    
    
    
    
    
    
    
    
    
    68,569Accrued compensation
    
    
    
    
    
    
    12,679
    
    
    
    
    
    
    
    
    
    
    
    12,679Current maturities of long-term debt
    
    
    
    
    
    
    71,008
    
    
    
    
    
    
    
    
    
    
    
    71,008Deferred income taxes
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    Other current liabilities
    
    
    
    
    
    
    13,939
    
    
    
    958
    
    
    
    
    
    
    
    14,897Intercompany payable
    
    
    
    
    
    
    2,510
    
    
    
    444
    
    
    
    (2,954
    )
    
    
    Total current liabilities
    
    
    129
    
    
    
    421,017
    
    
    
    3,997
    
    
    
    (5,539
    )
    
    
    419,604Non-current liabilities :Long-term debt
    
    
    
    
    
    
    266,500
    
    
    
    295,000
    
    
    
    
    
    
    
    561,500Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    2,726
    
    
    
    (1,485
    )
    
    
    1,241Other long-term liabilities
    
    
    
    
    
    
    14,815
    
    
    
    
    
    
    
    
    
    
    
    14,815Total liabilities
    
    
    129
    
    
    
    702,332
    
    
    
    301,723
    
    
    
    (7,024
    )
    
    
    997,160Shareholders Equity/Parents Investment
    
    
    197,356
    
    
    
    356,526
    
    
    
    (159,706
    )
    
    
    (196,820
    )
    
    
    197,356Total liabilities and equity
    
    $
    197,485
    
    
    $
    1,058,858
    
    
    $
    142,017
    
    
    $
    (203,844
    )
    
    $
    1,194,516
 18




---



##### Table of Contents



BlueLinx
    
    
    BlueLinx
    
    
    LLCHoldings Inc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssets:Current assets:Cash
    
    $
    13
    
    
    $
    24,307
    
    
    $
    
    
    
    $
    
    
    
    $
    24,320Receivables
    
    
    
    
    
    
    399,093
    
    
    
    
    
    
    
    
    
    
    
    399,093Inventories
    
    
    
    
    
    
    473,068
    
    
    
    
    
    
    
    
    
    
    
    473,068Deferred income taxes
    
    
    
    
    
    
    7,069
    
    
    
    
    
    
    
    (391
    )
    
    
    6,678Other current assets
    
    
    1,003
    
    
    
    43,906
    
    
    
    
    
    
    
    
    
    
    
    44,909Intercompany receivable
    
    
    683
    
    
    
    1,578
    
    
    
    
    
    
    
    (2,261
    )
    
    
    Total current assets
    
    
    1,699
    
    
    
    949,021
    
    
    
    
    
    
    
    (2,652
    )
    
    
    948,068Property, plant and equipment:Land and land improvements
    
    
    
    
    
    
    2,360
    
    
    
    54,161
    
    
    
    
    
    
    
    56,521Buildings
    
    
    
    
    
    
    4,034
    
    
    
    89,347
    
    
    
    
    
    
    
    93,381Machinery and equipment
    
    
    
    
    
    
    54,200
    
    
    
    
    
    
    
    
    
    
    
    54,200Construction in progress
    
    
    
    
    
    
    2,350
    
    
    
    
    
    
    
    
    
    
    
    2,350Property, plant and equipment, at cost
    
    
    
    
    
    
    62,944
    
    
    
    143,508
    
    
    
    
    
    
    
    206,452Accumulated depreciation
    
    
    
    
    
    
    (15,405
    )
    
    
    (6,998
    )
    
    
    
    
    
    
    (22,403
    )Property, plant and equipment, net
    
    
    
    
    
    
    47,539
    
    
    
    136,510
    
    
    
    
    
    
    
    184,049Investment in subsidiaries
    
    
    184,177
    
    
    
    
    
    
    
    
    
    
    
    (184,177
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    1,311
    
    
    
    
    
    
    
    (1,311
    )
    
    
    Other non-current assets
    
    
    
    
    
    
    21,532
    
    
    
    3,991
    
    
    
    
    
    
    
    25,523Total assets
    
    $
    185,876
    
    
    $
    1,019,403
    
    
    $
    140,501
    
    
    $
    (188,140
    )
    
    $
    1,157,640Liabilities:Current liabilities:Accounts payable
    
    $
    55
    
    
    $
    326,949
    
    
    $
    
    
    
    $
    
    
    
    $
    327,004Bank overdrafts
    
    
    
    
    
    
    62,392
    
    
    
    
    
    
    
    
    
    
    
    62,392Accrued compensation
    
    
    
    
    
    
    13,494
    
    
    
    
    
    
    
    
    
    
    
    13,494Current maturities of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    391
    
    
    
    
    
    
    
    
    
    
    
    (391
    )
    
    
    Other current liabilities
    
    
    
    
    
    
    12,835
    
    
    
    2,360
    
    
    
    
    
    
    
    15,195Intercompany payable
    
    
    1,578
    
    
    
    
    
    
    
    683
    
    
    
    (2,261
    )
    
    
    Total current liabilities
    
    
    2,024
    
    
    
    415,670
    
    
    
    3,043
    
    
    
    (2,652
    )
    
    
    418,085Non-current liabilities:Long-term debt
    
    
    
    
    
    
    375,850
    
    
    
    165,000
    
    
    
    
    
    
    
    540,850Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    3,222
    
    
    
    (1,311
    )
    
    
    1,911Other long-term liabilities
    
    
    
    
    
    
    12,117
    
    
    
    825
    
    
    
    
    
    
    
    12,942Total liabilities
    
    
    2,024
    
    
    
    803,637
    
    
    
    172,090
    
    
    
    (3,963
    )
    
    
    973,788Shareholders Equity/Parents Investment
    
    
    183,852
    
    
    
    215,766
    
    
    
    (31,589
    )
    
    
    (184,177
    )
    
    
    183,852Total liabilities and equity
    
    $
    185,876
    
    
    $
    1,019,403
    
    
    $
    140,501
    
    
    $
    (188,140
    )
    
    $
    1,157,640
 19




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    21,697
    
    
    $
    23,854
    
    
    $
    (1,462
    )
    
    $
    (22,392
    )
    
    $
    21,697Adjustments to reconcile net income (loss) to cash
provided by (used in) operations:Depreciation and amortization
    
    
    
    
    
    
    12,150
    
    
    
    3,173
    
    
    
    
    
    
    
    15,323Amortization of debt issue costs
    
    
    
    
    
    
    1,441
    
    
    
    577
    
    
    
    
    
    
    
    2,018Write-off of unamortized debt financing costs
    
    
    
    
    
    
    
    
    
    
    4,864
    
    
    
    
    
    
    
    4,864Deferred income tax benefit
    
    
    (312
    )
    
    
    (1,068
    )
    
    
    (496
    )
    
    
    
    
    
    
    (1,876
    )Stock-based compensation
    
    
    48
    
    
    
    2,161
    
    
    
    
    
    
    
    
    
    
    
    2,209Equity in earnings of subsidiaries
    
    
    (22,392
    )
    
    
    
    
    
    
    
    
    
    
    22,392
    
    
    
    Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    (33,396
    )
    
    
    
    
    
    
    
    
    
    
    (33,396
    )Inventories
    
    
    
    
    
    
    5,961
    
    
    
    
    
    
    
    
    
    
    
    5,961Accounts payable
    
    
    (5
    )
    
    
    (75,043
    )
    
    
    2,595
    
    
    
    (2,506
    )
    
    
    (74,959
    )Changes in other working capital
    
    
    782
    
    
    
    (5,254
    )
    
    
    (1,402
    )
    
    
    2,506
    
    
    
    (3,368
    )Intercompany receivable
    
    
    239
    
    
    
    1,578
    
    
    
    (2,510
    )
    
    
    693
    
    
    
    Intercompany payable
    
    
    (1,578
    )
    
    
    2,510
    
    
    
    (239
    )
    
    
    (693
    )
    
    
    Other
    
    
    
    
    
    
    (2,551
    )
    
    
    314
    
    
    
    
    
    
    
    (2,237
    )Net cash provided by (used in) operating activities
    
    
    (1,521
    )
    
    
    (67,657
    )
    
    
    5,414
    
    
    
    
    
    
    
    (63,764
    )Cash flows from investing activities:Investment in subsidiaries
    
    
    10,419
    
    
    
    
    
    
    
    
    
    
    
    (10,419
    )
    
    
    Acquisitions, net of cash acquired
    
    
    
    
    
    
    (9,353
    )
    
    
    
    
    
    
    
    
    
    
    (9,353
    )Property, plant and equipment investments
    
    
    
    
    
    
    (7,267
    )
    
    
    
    
    
    
    
    
    
    
    (7,267
    )Proceeds from sale of assets
    
    
    
    
    
    
    465
    
    
    
    
    
    
    
    
    
    
    
    465Net cash provided by (used in) investing activities
    
    
    10,419
    
    
    
    (16,155
    )
    
    
    
    
    
    
    (10,419
    )
    
    
    (16,155
    )Cash flows from financing activities:Net transactions with Parent
    
    
    
    
    
    
    116,236
    
    
    
    (126,655
    )
    
    
    10,419
    
    
    
    Proceeds from stock options exercised
    
    
    1,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,744Excess tax benefits from stock-based compensation
    
    
    882
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    882Net decrease in revolving credit facility
    
    
    
    
    
    
    (38,342
    )
    
    
    
    
    
    
    
    
    
    
    (38,342
    )Proceeds from new mortgage
    
    
    
    
    
    
    
    
    
    
    295,000
    
    
    
    
    
    
    
    295,000Debt financing costs
    
    
    
    
    
    
    (400
    )
    
    
    (6,268
    )
    
    
    
    
    
    
    (6,668
    )Retirement of old mortgage
    
    
    
    
    
    
    
    
    
    
    (165,000
    )
    
    
    
    
    
    
    (165,000
    )Prepayment fees associated with new mortgage
    
    
    
    
    
    
    
    
    
    
    (2,475
    )
    
    
    
    
    
    
    (2,475
    )Increase in bank overdrafts
    
    
    
    
    
    
    6,177
    
    
    
    
    
    
    
    
    
    
    
    6,177Common dividends paid
    
    
    (11,537
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,537
    )Net cash provided by (used in) financing activities
    
    
    (8,911
    )
    
    
    83,671
    
    
    
    (5,398
    )
    
    
    10,419
    
    
    
    79,781Increase (decrease) in cash
    
    
    (13
    )
    
    
    (141
    )
    
    
    16
    
    
    
    
    
    
    
    (138
    )Balance, beginning of period
    
    
    13
    
    
    
    24,307
    
    
    
    
    
    
    
    
    
    
    
    24,320Balance, end of period
    
    $
    
    
    
    $
    24,166
    
    
    $
    16
    
    
    $
    
    
    
    $
    24,182
 20




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    30,065
    
    
    $
    28,675
    
    
    $
    2,182
    
    
    $
    (30,857
    )
    
    $
    30,065Adjustments to reconcile net income (loss) to cash
provided by (used in) operations:Depreciation and amortization
    
    
    
    
    
    
    10,567
    
    
    
    3,226
    
    
    
    
    
    
    
    13,793Amortization of debt issue costs
    
    
    
    
    
    
    2,021
    
    
    
    683
    
    
    
    
    
    
    
    2,704Deferred income tax benefit
    
    
    
    
    
    
    (292
    )
    
    
    (735
    )
    
    
    
    
    
    
    (1,027
    )Stock-based compensation
    
    
    
    
    
    
    1,701
    
    
    
    
    
    
    
    
    
    
    
    1,701Equity in earnings of subsidiaries
    
    
    (30,857
    )
    
    
    
    
    
    
    
    
    
    
    30,857
    
    
    
    Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    (158,401
    )
    
    
    
    
    
    
    
    
    
    
    (158,401
    )Inventories
    
    
    
    
    
    
    91,976
    
    
    
    
    
    
    
    
    
    
    
    91,976Accounts payable
    
    
    (1,070
    )
    
    
    55,555
    
    
    
    
    
    
    
    
    
    
    
    54,485Changes in other working capital
    
    
    990
    
    
    
    (13,372
    )
    
    
    1,471
    
    
    
    
    
    
    
    (10,911
    )Intercompany receivable
    
    
    (340
    )
    
    
    4,012
    
    
    
    1,653
    
    
    
    (5,325
    )
    
    
    Intercompany payable
    
    
    (4,012
    )
    
    
    (1,653
    )
    
    
    340
    
    
    
    5,325
    
    
    
    Other
    
    
    4
    
    
    
    3,007
    
    
    
    987
    
    
    
    
    
    
    
    3,998Net cash provided by (used in) operating activities
    
    
    (5,220
    )
    
    
    23,796
    
    
    
    9,807
    
    
    
    
    
    
    
    28,383Cash flows from investing activities:Investment in subsidiaries
    
    
    7,795
    
    
    
    
    
    
    
    
    
    
    
    (7,795
    )
    
    
    Acquisitions, net of cash acquired
    
    
    
    
    
    
    (17,021
    )
    
    
    
    
    
    
    
    
    
    
    (17,021
    )Property, plant and equipment investments
    
    
    
    
    
    
    (10,034
    )
    
    
    
    
    
    
    
    
    
    
    (10,034
    )Proceeds from sale of assets
    
    
    
    
    
    
    814
    
    
    
    
    
    
    
    
    
    
    
    814Net cash used in investing activities
    
    
    7,795
    
    
    
    (26,241
    )
    
    
    
    
    
    
    (7,795
    )
    
    
    (26,241
    )Cash flows from financing activities:Net transactions with Parent
    
    
    
    
    
    
    2,012
    
    
    
    (9,807
    )
    
    
    7,795
    
    
    
    Issuance of common stock, net
    
    
    8,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,541Proceeds from stock option exercises
    
    
    151
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151Excess tax benefits from stock option exercises
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49Net increase in revolving credit facility
    
    
    
    
    
    
    1,834
    
    
    
    
    
    
    
    
    
    
    
    1,834Debt financing costs
    
    
    
    
    
    
    (570
    )
    
    
    
    
    
    
    
    
    
    
    (570
    )Increase in bank overdrafts
    
    
    
    
    
    
    11,920
    
    
    
    
    
    
    
    
    
    
    
    11,920Common dividends paid
    
    
    (11,319
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,319
    )Net cash provided by (used in) financing activities
    
    
    (2,578
    )
    
    
    15,196
    
    
    
    (9,807
    )
    
    
    7,795
    
    
    
    10,606Increase (decrease) in cash
    
    
    (3
    )
    
    
    12,751
    
    
    
    
    
    
    
    
    
    
    
    12,748Balance, beginning of period
    
    
    3
    
    
    
    15,569
    
    
    
    
    
    
    
    
    
    
    
    15,572Balance, end of period
    
    $
    
    
    
    $
    28,320
    
    
    $
    
    
    
    $
    
    
    
    $
    28,320
 21




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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;
    
    the activities of competitors;
    
    changes in significant operating expenses;
    
    changes in the availability of capital;
    
    our ability to identify acquisition opportunities and effectively and cost-efficiently integrate acquisitions;
    
    general economic and business conditions in the United States;
    
    adverse weather patterns or conditions;
    
    acts of war or terrorist activities;
    
    variations in the performance of the financial 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 31, 2005 as filed with the SEC.
  Overview
 Background
  22




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##### Table of Contents



Recent Developments
   Supply Agreement with Georgia-Pacific
  Selected Factors Affecting Our Operating Results
   Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ3 2006
    
    
    Q3 2005
    
    
    2006 YTD
    
    
    2005 YTD
    
    
    2005
    
    
    2004(Dollars in millions)(Unaudited)Sales by CategoryStructural Products(1)
    
    $
    667
    
    
    $
    910
    
    
    $
    2,279
    
    
    $
    2,733
    
    
    $
    3,548
    
    
    $
    3,656Specialty Products(1)
    
    
    554
    
    
    
    560
    
    
    
    1,737
    
    
    
    1,603
    
    
    
    2,143
    
    
    
    1,960Unallocated Allowances and Adjustments
    
    
    (17
    )
    
    
    (16
    )
    
    
    (57
    )
    
    
    (43
    )
    
    
    (69
    )
    
    
    (58
    )Total Sales
    
    $
    1,204
    
    
    $
    1,454
    
    
    $
    3,959
    
    
    $
    4,293
    
    
    $
    5,622
    
    
    $
    5,558Sales VariancesUnit Volume $ Change
    
    $
    (176
    )
    
    $
    39
    
    
    $
    (166
    )
    
    $
    154
    
    
    $
    216
    
    
    $
    351Price/Other(2)
    
    
    (74
    )
    
    
    (95
    )
    
    
    (168
    )
    
    
    (212
    )
    
    
    (152
    )
    
    
    935Total $ Change
    
    $
    (250
    )
    
    $
    (56
    )
    
    $
    (334
    )
    
    $
    (58
    )
    
    $
    64
    
    
    $
    1,286Unit Volume % Change
    
    
    (12.0
    )%
    
    
    2.6
    %
    
    
    (3.8
    )%
    
    
    3.5
    %
    
    
    3.9
    %
    
    
    8.2
    %Price/Other(2)
    
    
    (5.2
    )%
    
    
    (6.3
    )%
    
    
    (4.0
    )%
    
    
    (4.8
    )%
    
    
    (2.8
    )%
    
    
    21.9
    %Total % Change
    
    
    (17.2
    )%
    
    
    (3.7
    )%
    
    
    (7.8
    )%
    
    
    (1.3
    )%
    
    
    1.1
    %
    
    
    30.1
    %
 
 (1)
    
    For the quarter ended December 31, 2005, we began classifying metal rebar and remesh as
structural product instead of specialty product. Fiscal 2005 and 2004 Sales by Category have
been adjusted to reclassify sales of rebar/remesh from Specialty Products sales to Structural
Products sales. This reclassification has no impact on Total Sales.(2)
    
    Other includes unallocated allowances and discounts. 23




---



##### Table of Contents



Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ3 2006
    
    
    Q3 2005
    
    
    2006 YTD
    
    
    2005 YTD
    
    
    2005
    
    
    2004(Dollars in millions)(Unaudited)Gross
Margin $s by CategoryStructural Products(1)
    
    $
    47
    
    
    $
    67
    
    
    $
    158
    
    
    $
    178
    
    
    $
    246
    
    
    $
    310Specialty Products(1)
    
    
    77
    
    
    
    74
    
    
    
    245
    
    
    
    207
    
    
    
    284
    
    
    
    280Other (2)
    
    
    (3
    )
    
    
    (4
    )
    
    
    (16
    )
    
    
    (13
    )
    
    
    (18
    )
    
    
    (29
    )Total Gross Margin $s
    
    $
    121
    
    
    $
    137
    
    
    $
    387
    
    
    $
    372
    
    
    $
    512
    
    
    $
    561Gross Margin %s by CategoryStructural Products
    
    
    7.0
    %
    
    
    7.3
    %
    
    
    6.9
    %
    
    
    6.5
    %
    
    
    6.9
    %
    
    
    8.5
    %Specialty Products
    
    
    14.0
    %
    
    
    13.3
    %
    
    
    14.1
    %
    
    
    12.9
    %
    
    
    13.3
    %
    
    
    14.3
    %Other (2)
    
    NA
        
    NA
        
    NA
        
    NA
        
    NA
        
    NATotal Gross Margin %s
    
    
    10.0
    %
    
    
    9.4
    %
    
    
    9.8
    %
    
    
    8.7
    %
    
    
    9.1
    %
    
    
    10.1
    %Unit Volume Growth by ProductStructural Products
    
    
    (17.0
    )%
    
    
    0.9
    %
    
    
    (9.9
    )%
    
    
    5.1
    %
    
    
    3.2
    %
    
    
    8.6
    %Specialty Products
    
    
    (3.9
    )%
    
    
    5.8
    %
    
    
    6.5
    %
    
    
    1.2
    %
    
    
    5.1
    %
    
    
    7.6
    %Total Unit Volume Growth %s
    
    
    (12.0
    )%
    
    
    2.6
    %
    
    
    (3.8
    )%
    
    
    3.5
    %
    
    
    3.9
    %
    
    
    8.2
    %
 
 (1)
    
    For the quarter ended December 31, 2005, we began classifying metal rebar and remesh as
structural product instead of specialty product. Fiscal 2005 and 2004 Sales by Category have
been adjusted to reclassify sales of rebar/remesh from Specialty Products sales to Structural
Products sales. This reclassification has no impact on Total Sales.(2)
    
    Other includes unallocated allowances and discounts.  Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ3 2006
    
    
    Q3 2005
    
    
    2006 YTD
    
    
    2005 YTD
    
    
    2005
    
    
    2004(Dollars in millions)(Unaudited)Sales by ChannelWarehouse/Reload
    
    $
    841
    
    
    $
    981
    
    
    $
    2,641
    
    
    $
    2,838
    
    
    $
    3,704
    
    
    $
    3,819Direct
    
    
    380
    
    
    
    489
    
    
    
    1,375
    
    
    
    1,498
    
    
    
    1,987
    
    
    
    1,797Unallocated Allowances and Adjustments
    
    
    (17
    )
    
    
    (16
    )
    
    
    (57
    )
    
    
    (43
    )
    
    
    (69
    )
    
    
    (58
    )Total
    
    $
    1,204
    
    
    $
    1,454
    
    
    $
    3,959
    
    
    $
    4,293
    
    
    $
    5,622
    
    
    $
    5,558Gross Margin by ChannelWarehouse/Reload
    
    $
    100
    
    
    $
    116
    
    
    $
    326
    
    
    $
    314
    
    
    $
    429
    
    
    $
    489Direct
    
    
    24
    
    
    
    25
    
    
    
    77
    
    
    
    71
    
    
    
    101
    
    
    
    101Unallocated Allowances and Adjustments
    
    
    (3
    )
    
    
    (4
    )
    
    
    (16
    )
    
    
    (13
    )
    
    
    (18
    )
    
    
    (29
    )Total
    
    $
    121
    
    
    $
    137
    
    
    $
    387
    
    
    $
    372
    
    
    $
    512
    
    
    $
    561
 Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2006
    
    
    Q2 2005
    
    
    2006 YTD
    
    
    2005 YTD
    
    
    2005
    
    
    2004(Dollars in millions)(Unaudited)Gross Margin % by ChannelWarehouse/Reload
    
    
    11.9
    %
    
    
    11.8
    %
    
    
    12.3
    %
    
    
    11.1
    %
    
    
    11.6
    %
    
    
    12.8
    %Direct
    
    
    6.3
    %
    
    
    5.1
    %
    
    
    5.6
    %
    
    
    4.7
    %
    
    
    5.1
    %
    
    
    5.6
    %Unallocated Allowances and Adjustments
    
    
    (0.2
    )%
    
    
    (0.3
    )%
    
    
    (0.4
    )%
    
    
    (0.3
    )%
    
    
    (0.3
    )%
    
    
    (0.5
    )%Total
    
    
    10.0
    %
    
    
    9.4
    %
    
    
    9.8
    %
    
    
    8.7
    %
    
    
    9.1
    %
    
    
    10.1
    %
 24




---



##### Table of Contents



Fiscal Year
  Results of Operations
 Third Quarter of Fiscal 2006 Compared to Third Quarter of Fiscal 2005
  Period
    
    
    
    
    
    
    Periodfrom
    
    
    
    
    
    
    fromJuly 2, 2006
    
    
    % of
    
    
    July 3, 2005
    
    
    % ofto
    
    
    Net
    
    
    to
    
    
    NetSeptember 30, 2006
    
    
    Sales
    
    
    October 1, 2005
    
    
    Sales(Unaudited)
    
    
    
    
    
    
    (Unaudited)(Dollars in thousands)Net sales
    
    $
    1,203,578
    
    
    
    100.0
    %
    
    $
    1,454,217
    
    
    
    100.0
    %Gross profit
    
    
    120,906
    
    
    
    10.0
    %
    
    
    137,037
    
    
    
    9.4
    %Selling, general & administrative
    
    
    99,615
    
    
    
    8.3
    %
    
    
    97,926
    
    
    
    6.7
    %Depreciation and amortization
    
    
    5,217
    
    
    
    0.4
    %
    
    
    4,993
    
    
    
    0.3
    %Operating income
    
    
    16,074
    
    
    
    1.3
    %
    
    
    34,118
    
    
    
    2.3
    %Interest expense
    
    
    12,046
    
    
    
    1.0
    %
    
    
    11,216
    
    
    
    0.8
    %Other expense, net
    
    
    (29
    )
    
    
    0.0
    %
    
    
    (295
    )
    
    
    0.0
    %Income before provision for income taxes
    
    
    4,057
    
    
    
    0.3
    %
    
    
    23,197
    
    
    
    1.6
    %Income tax provision
    
    
    1,765
    
    
    
    0.1
    %
    
    
    9,301
    
    
    
    0.6
    %Net income
    
    $
    2,292
    
    
    
    0.2
    %
    
    $
    13,896
    
    
    
    1.0
    %
 Net Sales.
 Gross Profit.
 Selling, general, and administrative.
 Depreciation and Amortization.
 Operating Income.
 Interest Expense, net.
 25




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##### Table of Contents



Provision for Income Taxes.
 Net Income.
  Year to Date Fiscal 2006 Compared to Year to Date Fiscal 2005
  Period
    
    
    
    
    
    
    Periodfrom
    
    
    
    
    
    
    fromJanuary 1, 2006
    
    
    % of
    
    
    January 2, 2005
    
    
    % ofto
    
    
    Net
    
    
    to
    
    
    NetSeptember 30, 2006
    
    
    Sales
    
    
    October 1, 2005
    
    
    Sales(Unaudited)
    
    
    
    
    
    
    (Unaudited)(Dollars in thousands)Net sales
    
    $
    3,959,134
    
    
    
    100.0
    %
    
    $
    4,292,812
    
    
    
    100.0
    %Gross profit
    
    
    387,301
    
    
    
    9.8
    %
    
    
    372,046
    
    
    
    8.7
    %Selling, general & administrative
    
    
    295,004
    
    
    
    7.5
    %
    
    
    277,309
    
    
    
    6.5
    %Depreciation and amortization
    
    
    15,323
    
    
    
    0.4
    %
    
    
    13,793
    
    
    
    0.3
    %Operating income
    
    
    76,974
    
    
    
    1.9
    %
    
    
    80,944
    
    
    
    1.9
    %Interest expense
    
    
    35,505
    
    
    
    0.9
    %
    
    
    31,206
    
    
    
    0.7
    %Charges associated with mortgage refinancing
    
    
    4,864
    
    
    
    0.1
    %
    
    
    
    
    
    
    0.0
    %Other expense, net
    
    
    (17
    )
    
    
    0.0
    %
    
    
    58
    
    
    
    0.0
    %Income before provision for income taxes
    
    
    36,622
    
    
    
    0.9
    %
    
    
    49,680
    
    
    
    1.2
    %Income tax provision
    
    
    14,925
    
    
    
    0.4
    %
    
    
    19,615
    
    
    
    0.5
    %Net income
    
    $
    21,697
    
    
    
    0.5
    %
    
    $
    30,065
    
    
    
    0.7
    %
 Net Sales.
 Gross Profit.
 Selling, general, and administrative.
 Depreciation and Amortization.
 26




---



##### Table of Contents



Operating Income.
 Interest Expense.
  Provision for Income Taxes.
 Net Income.
  Seasonality
  Liquidity and Capital Resources
  
 27




---



##### Table of Contents



September 30,
    
    December 31,2006
    
    2005(Dollars in thousands)(Unaudited)Working capital
    
    $
    565,967
    
    
    $
    529,983
 Period from
    
    Period fromJanuary 1,
    
    January 2,2006 to
    
    2005 toSeptember 30,
    
    October 1,2006
    
    2005(Dollars in thousands)(Unaudited)Cash flows used for operating activities
    
    $
    (63,764
    )
    
    $
    28,383Cash flows used for investing activities
    
    
    (16,155
    )
    
    
    (26,241
    )Cash flows provided by financing activities
    
    $
    79,781
    
    
    $
    10,606
 Working Capital
  Operating Activities
  Investing Activities
      28




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##### Table of Contents



Financing Activities
   Debt and Credit Sources
     Accounting for Derivative Instruments and Hedging Activities
  Contractual Obligations
  29




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##### Table of Contents



2011
    
    $
    1,5112012
    
    
    3,1722013
    
    
    3,4372014
    
    
    3,6652015
    
    
    3,908Thereafter
    
    $
    279,307
  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
  30




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##### Table of Contents



e.g.
 Inventories
   Consideration Received from Vendors
  Impairment of Long-Lived Assets
  Recently Issued Accounting Pronouncements
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
 Fair Value Measurements
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##### Table of Contents



Accounting
Changes and Error Corrections  a replacement of APB No. 20 and FASB Statement No. 3
 Share-Based Payment Statement of Cash Flows.
       Inventory Costs  an Amendment of ARB No. 43,
Chapter 4
 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
  
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description31.1
    
    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.
 34




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##### Table of Contents



SIGNATURES
  BlueLinx Holdings Inc.(Registrant)Date: November 1, 2006
    
    /s/ David J. MorrisDavid J. MorrisChief Financial Officer and Treasurer(Principal Accounting and Financial Officer)
 35




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    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.
 36