##### 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 July 3, 2010
 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 o
  Large accelerated filer oAccelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



BLUELINX HOLDINGS INC.
 Form 10-Q
 For the Quarterly Period Ended July 3, 2010
 INDEX
 PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial Statements  BlueLinx Holdings Inc. (Unaudited)
    
    
    3Consolidated Statements of Operations
    
    
    3Consolidated Balance Sheets
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Uses of Proceeds
    
    
    35Item 6. Exhibits
    
    
    35Signatures
    
    
    36Exhibit Index
    
    
    37Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 BLUELINX HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
 Second QuarterPeriod from
    
    
    Period fromApril 4, 2010
    
    
    April 5, 2009to
    
    
    toJuly 3, 2010
    
    
    July 4, 2009Net sales
    
    $
    540,781
    
    
    $
    423,526Cost of sales
    
    
    476,662
    
    
    
    375,226Gross profit
    
    
    64,119
    
    
    
    48,300Operating expenses:Selling, general, and administrative
    
    
    57,089
    
    
    
    50,852Net gain from terminating the Georgia-Pacific supply agreement
    
    
    
    
    
    
    (17,351
    )Depreciation and amortization
    
    
    3,434
    
    
    
    4,241Total operating expenses
    
    
    60,523
    
    
    
    37,742Operating income
    
    
    3,596
    
    
    
    10,558Non-operating expenses:Interest expense
    
    
    8,205
    
    
    
    8,506Changes associated with the ineffective interest rate swap
    
    
    (1,256
    )
    
    
    1,078Other expense, net
    
    
    18
    
    
    
    315(Loss) income before provision for income taxes
    
    
    (3,371
    )
    
    
    659Provision for income taxes
    
    
    36
    
    
    
    31Net (loss) income
    
    $
    (3,407
    )
    
    $
    628Basic weighted average number of common shares outstanding
    
    
    30,699
    
    
    
    32,566Basic net (loss) income per share applicable to common stock
    
    $
    (0.11
    )
    
    $
    0.02Diluted weighted average number of common shares outstanding
    
    
    30,699
    
    
    
    32,664Diluted net (loss) income per share applicable to common stock
    
    $
    (0.11
    )
    
    $
    0.02
   3




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BLUELINX HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
 Six Months EndedPeriod from
    
    
    Period fromJanuary 3, 2010
    
    
    January 4, 2009to
    
    
    toJuly 3, 2010
    
    
    July 4, 2009Net sales
    
    $
    971,831
    
    
    $
    830,637Cost of sales
    
    
    855,434
    
    
    
    738,061Gross profit
    
    
    116,397
    
    
    
    92,576Operating expenses:Selling, general, and administrative
    
    
    113,603
    
    
    
    108,517Net gain from terminating the Georgia-Pacific supply agreement
    
    
    
    
    
    
    (17,351
    )Depreciation and amortization
    
    
    7,178
    
    
    
    9,271Total operating expenses
    
    
    120,781
    
    
    
    100,437Operating loss
    
    
    (4,384
    )
    
    
    (7,861
    )Non-operating expenses:Interest expense
    
    
    15,520
    
    
    
    16,623Changes associated with the ineffective interest rate swap
    
    
    (2,061
    )
    
    
    5,910Write-off of debt issuance costs
    
    
    
    
    
    
    1,407Other expense, net
    
    
    251
    
    
    
    158Loss before provision for income taxes
    
    
    (18,094
    )
    
    
    (31,959
    )Provision for income taxes
    
    
    52
    
    
    
    28,066Net loss
    
    $
    (18,146
    )
    
    $
    (60,025
    )Basic and diluted weighted average number of common shares outstanding
    
    
    30,643
    
    
    
    31,054Basic and diluted net loss per share applicable to common stock
    
    $
    (0.59
    )
    
    $
    (1.93
    )
   4




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BLUELINX HOLDINGS INC.
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 July 3, 2010
    
    
    January 2, 2010(unaudited)Assets:Current assets:Cash and cash equivalents
    
    $
    18,821
    
    
    $
    29,457Receivables, net
    
    
    201,569
    
    
    
    119,347Inventories, net
    
    
    226,158
    
    
    
    173,185Other current assets
    
    
    22,442
    
    
    
    44,970Total current assets
    
    
    468,990
    
    
    
    366,959Property, plant, and equipment:Land and land improvements
    
    
    52,515
    
    
    
    52,621Buildings
    
    
    96,056
    
    
    
    96,145Machinery and equipment
    
    
    71,357
    
    
    
    69,767Construction in progress
    
    
    1,137
    
    
    
    791Property, plant, and equipment, at cost
    
    
    221,065
    
    
    
    219,324Accumulated depreciation
    
    
    (88,175
    )
    
    
    (82,141
    )Property, plant, and equipment, net
    
    
    132,890
    
    
    
    137,183Other non-current assets
    
    
    42,167
    
    
    
    42,704Total assets
    
    $
    644,047
    
    
    $
    546,846Liabilities:Current liabilities:Accounts payable
    
    $
    103,478
    
    
    $
    64,618Bank overdrafts
    
    
    37,112
    
    
    
    27,232Accrued compensation
    
    
    6,228
    
    
    
    4,879Current maturities of long-term debt
    
    
    37,023
    
    
    
    Other current liabilities
    
    
    19,625
    
    
    
    22,508Total current liabilities
    
    
    203,466
    
    
    
    119,237Non-current liabilities:Long-term debt
    
    
    373,333
    
    
    
    341,669Other non-current liabilities
    
    
    32,880
    
    
    
    35,120Total liabilities
    
    
    609,679
    
    
    
    496,026Shareholders Equity:Common Stock, $0.01 par value,
100,000,000 shares authorized;
32,701,062 and 32,179,253 shares
issued at July 3, 2010 and January
2, 2010, respectively
    
    
    327
    
    
    
    322Additional paid-in capital
    
    
    146,416
    
    
    
    145,035Accumulated other comprehensive loss
    
    
    (8,067
    )
    
    
    (8,375
    )Accumulated deficit
    
    
    (104,308
    )
    
    
    (86,162
    )Total shareholders equity
    
    
    34,368
    
    
    
    50,820Total liabilities and shareholders equity
    
    $
    644,047
    
    
    $
    546,846
   5




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BLUELINX HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Six Months EndedPeriod from
    
    
    Period fromJanuary 3, 2010
    
    
    January 4, 2009to
    
    
    toJuly 3, 2010
    
    
    July 4, 2009Cash flows from operating activities:Net loss
    
    $
    (18,146
    )
    
    $
    (60,025
    )Adjustments to reconcile net loss to net cash used in operations:Depreciation and amortization
    
    
    7,178
    
    
    
    9,271Amortization of debt issue costs
    
    
    379
    
    
    
    1,229Net gain from terminating the Georgia-Pacific supply agreement
    
    
    
    
    
    
    (17,351
    )Payment from terminating the Georgia-Pacific supply agreement
    
    
    4,706
    
    
    
    4,706Gain from sale of properties
    
    
    
    
    
    
    (4,237
    )Prepayment fees associated with sale of facility
    
    
    
    
    
    
    616Changes associated with the ineffective interest rate swap
    
    
    (2,061
    )
    
    
    5,910Write-off of debt issue costs
    
    
    
    
    
    
    1,407Deferred income tax (benefit) provision
    
    
    (414
    )
    
    
    27,228Share-based compensation expense
    
    
    1,969
    
    
    
    1,431Decrease in restricted cash related to the ineffective interest rate swap, insurance, and
other
    
    
    5,607
    
    
    
    2,189Changes in assets and liabilities:Receivables
    
    
    (82,222
    )
    
    
    (30,132
    )Inventories
    
    
    (52,973
    )
    
    
    26,903Accounts payable
    
    
    38,860
    
    
    
    26,631Changes in other working capital
    
    
    18,538
    
    
    
    (3,629
    )Other
    
    
    (2,295
    )
    
    
    691Net cash used in operating activities
    
    
    (80,874
    )
    
    
    (7,162
    )Cash flows from investing activities:Property, plant and equipment investments
    
    
    (1,263
    )
    
    
    (688
    )Proceeds from disposition of assets
    
    
    656
    
    
    
    6,995Net cash (used in) provided by investing activities
    
    
    (607
    )
    
    
    6,307Cash flows from financing activities:Repurchase of common stock
    
    
    (583
    )
    
    
    (1,624
    )Increase (decrease) in revolving credit facility
    
    
    68,687
    
    
    
    (75,000
    )Payment on capital lease obligations
    
    
    (473
    )
    
    
    Payment of principal on mortgage
    
    
    
    
    
    
    (3,201
    )Prepayment fees associated with sale of facility
    
    
    
    
    
    
    (616
    )Increase (decrease) in bank overdrafts
    
    
    9,880
    
    
    
    (10,328
    )Increase in restricted cash related to the mortgage
    
    
    (6,581
    )
    
    
    (5,677
    )Debt financing costs
    
    
    (91
    )
    
    
    Other
    
    
    6
    
    
    
    (41
    )Net cash provided by (used in) financing activities
    
    
    70,845
    
    
    
    (96,487
    )Decrease in cash
    
    
    (10,636
    )
    
    
    (97,342
    )Balance, beginning of period
    
    
    29,457
    
    
    
    150,353Balance, end of period
    
    $
    18,821
    
    
    $
    53,011
   6




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BLUELINX HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 3, 2010
 1. Basis of Presentation and Background
 Basis of Presentation
    2. Summary of Significant Accounting Policies
 Revenue Recognition
   
    
    We are the primary obligor responsible for fulfillment and all other aspects
of the customer relationship.
    
    Title passes to BlueLinx and we carry all risk of loss related to warehouse
and third-party (reload) inventory and inventory shipped directly from
vendors to our customers.
    
    We are responsible for all product returns.
    
    We control the selling price for all channels.
    
    We select the supplier.
    
    We bear all credit risk.
  7




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Cash and Cash Equivalents
  Restricted Cash
   July 3,
    
    
    January 2,2010
    
    
    2010Cash in escrow:Mortgage
    
    $
    25,996
    
    
    $
    19,415Insurance
    
    
    9,422
    
    
    
    9,411Interest rate swap
    
    
    
    
    
    
    6,690Other
    
    
    3,080
    
    
    
    2,008Total
    
    $
    38,498
    
    
    $
    37,524
  Allowance for Doubtful Accounts and Related Reserves
  Inventory Valuation
   8




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Consignment Inventory
  Consideration Received from Vendors and Paid to Customers
   Earnings per Common Share
    9




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Stock-Based Compensation
   Income Taxes
     10




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Impairment of Long-Lived Assets
      Self-Insurance
   11




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3. Restructuring Charges
   2007 Facility Consolidation and Severance Costs
   Balance at April 3, 2010
    
    $
    11,421Payments
    
    
    (533
    )Accretion of discount used to calculate liability
    
    
    184Balance at July 3, 2010
    
    $
    11,072
  Balance at January 2, 2010
    
    $
    11,755Payments
    
    
    (1,069
    )Accretion of discount used to calculate liability
    
    
    386Balance at July 3, 2010
    
    $
    11,072
 2008 Facility Consolidation and Severance Costs
   12




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Balance at April 3, 2010
    
    $
    371Payments
    
    
    (230
    )Sublease income
    
    
    70Other changes
    
    
    (13
    )Balance at July 3, 2010
    
    $
    198
  Balance at January 2, 2010
    
    $
    645Payments
    
    
    (523
    )Sublease income
    
    
    140Other changes
    
    
    (64
    )Balance at July 3, 2010
    
    $
    198
 2009 Facility Consolidations and Severance Costs
   Facility
    
    
    SeveranceConsolidation
    
    
    Costs
    
    
    TotalBalance at April 3, 2010
    
    $
    535
    
    
    $
    47
    
    
    $
    582Payments
    
    
    (44
    )
    
    
    (10
    )
    
    
    (54
    )Other changes
    
    
    7
    
    
    
    
    
    
    
    7Balance at July 3, 2010
    
    $
    498
    
    
    $
    37
    
    
    $
    535
  Facility
    
    
    SeveranceConsolidation
    
    
    Costs
    
    
    TotalBalance at January 2, 2010
    
    $
    571
    
    
    $
    151
    
    
    $
    722Payments
    
    
    (91
    )
    
    
    (114
    )
    
    
    (205
    )Other changes
    
    
    18
    
    
    
    
    
    
    
    18Balance at July 3, 2010
    
    $
    498
    
    
    $
    37
    
    
    $
    535
 4. Assets Held for Sale and Net Gain on Disposition
   13




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5. Comprehensive (Loss) Income
  Second QuarterPeriod from
    
    
    Period fromApril 4, 2010
    
    
    April 5, 2009to
    
    
    toJuly 3, 2010
    
    
    July 4, 2009Net (loss) income
    
    $
    (3,407
    )
    
    $
    628Other comprehensive (loss) income:Foreign currency translation
    
    
    (742
    )
    
    
    734Unrealized gain from cash flow hedge, net of taxes
    
    
    324
    
    
    
    2,182Comprehensive (loss) income
    
    $
    (3,825
    )
    
    $
    3,544
 Six Months EndedPeriod from
    
    
    Period fromJanuary 3, 2010
    
    
    January 4, 2009to
    
    
    toJuly 3, 2010
    
    
    July 4, 2009Net loss
    
    $
    (18,146
    )
    
    $
    (60,025
    )Other comprehensive income:Foreign currency translation
    
    
    345
    
    
    
    593Unrealized gain from cash flow hedge, net of taxes
    
    
    649
    
    
    
    5,476Comprehensive loss
    
    $
    (17,152
    )
    
    $
    (53,956
    )
  6. Employee Benefits
 Defined Benefit Pension Plans
   Second QuarterPeriod from April 4,
    
    
    Period from April 5,2010 to July 3, 2010
    
    
    2009 to July 4, 2009Service cost
    
    $
    498
    
    
    $
    452Interest cost on projected benefit obligation
    
    
    1,186
    
    
    
    1,125Expected return on plan assets
    
    
    (1,232
    )
    
    
    (1,132
    )Amortization of unrecognized loss
    
    
    123
    
    
    
    180Net periodic pension cost
    
    $
    575
    
    
    $
    625
  14




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Six Months EndedPeriod from January 3,
    
    
    Period from January 4,2010 to July 3, 2010
    
    
    2009 to July 4, 2009Service cost
    
    $
    996
    
    
    $
    904Interest cost on projected benefit obligation
    
    
    2,372
    
    
    
    2,250Expected return on plan assets
    
    
    (2,464
    )
    
    
    (2,264
    )Amortization of unrecognized loss
    
    
    246
    
    
    
    360Net periodic pension cost
    
    $
    1,150
    
    
    $
    1,250
 7. Revolving Credit Facility
     8. Mortgage
   15




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2011
    
    $
    1,1902012
    
    
    3,0542013
    
    
    3,3092014
    
    
    3,5292015
    
    
    3,763Thereafter
    
    
    270,824
 9. Derivatives
     Period from April 4, 2010
    
    
    Period from April 5,to July 3, 2010
    
    
    2009 to July 4, 2009Charges associated with reducing our borrowings
outstanding
    
    $
    
    
    
    $
    1,304Amortization of accumulated other comprehensive loss
    
    
    532
    
    
    
    883Gain related to fair value changes
    
    
    (1,788
    )
    
    
    (1,109
    )Changes associated with the ineffective interest rate swap
    
    $
    (1,256
    )
    
    $
    1,078
  Period from January 3, 2010
    
    
    Period from January 4,to July 3, 2010
    
    
    2009 to July 4, 2009Charges associated with reducing our borrowings
outstanding
    
    $
    
    
    
    $
    7,167Amortization of accumulated other comprehensive loss
    
    
    1,062
    
    
    
    1,847Gain related to fair value changes
    
    
    (3,123
    )
    
    
    (3,104
    )Changes associated with the ineffective interest rate swap
    
    $
    (2,061
    )
    
    $
    5,910
  16




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Balance at January 2, 2010
    
    $
    2,675Amortization of accumulated other comprehensive loss recorded to interest expense
    
    
    (1,062
    )Balance at July 3, 2010
    
    $
    1,613
   10. Fair Value Measurements
     Fair value at January 2, 2010
    
    $
    (8,924
    )Unrealized gains included in earnings, net
    
    
    3,123Fair value at July 3, 2010
    
    $
    (5,801
    )
   17




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##### Table of Contents



11. Termination and Modification Agreement with G-P
   12. Related Party Transactions
  13. Commitments and Contingencies
 Environmental and Legal Matters
  Collective Bargaining Agreements
   18




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14. Subsequent Events
  Habiniak, et al. v. Cohen, et al. Hindermann, et al. v. BlueLinx Holdings Inc., et al. Jerszynski v. BlueLinx Holdings, Inc., et al. Winter v. Cerberus ABP Investor LLC Habiniak Winter
  15. Unaudited Supplemental Consolidating Financial Statements
 ,
  BlueLinxBlueLinx
    
    
    CorporationHoldings
    
    
    and
    
    
    LLCInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    540,781
    
    
    $
    7,456
    
    
    $
    (7,456
    )
    
    $
    540,781Cost of sales
    
    
    
    
    
    
    476,662
    
    
    
    
    
    
    
    
    
    
    
    476,662Gross profit
    
    
    
    
    
    
    64,119
    
    
    
    7,456
    
    
    
    (7,456
    )
    
    
    64,119Operating expenses:Selling, general and administrative
    
    
    1,561
    
    
    
    62,939
    
    
    
    45
    
    
    
    (7,456
    )
    
    
    57,089Depreciation and amortization
    
    
    
    
    
    
    2,473
    
    
    
    961
    
    
    
    
    
    
    
    3,434Total operating expenses
    
    
    1,561
    
    
    
    65,412
    
    
    
    1,006
    
    
    
    (7,456
    )
    
    
    60,523Operating (loss) income
    
    
    (1,561
    )
    
    
    (1,293
    )
    
    
    6,450
    
    
    
    
    
    
    
    3,596Non-operating expenses:Interest expense
    
    
    
    
    
    
    3,447
    
    
    
    4,758
    
    
    
    
    
    
    
    8,205Changes associated with ineffective interest rate swap
    
    
    
    
    
    
    (1,256
    )
    
    
    
    
    
    
    
    
    
    
    (1,256
    )Other (income) expense, net
    
    
    
    
    
    
    (48
    )
    
    
    66
    
    
    
    
    
    
    
    18(Loss) income before (benefit from) provision for income
taxes
    
    
    (1,561
    )
    
    
    (3,436
    )
    
    
    1,626
    
    
    
    
    
    
    
    (3,371
    )(Benefit from) provision for income taxes
    
    
    (630
    )
    
    
    32
    
    
    
    634
    
    
    
    
    
    
    
    36Equity in loss of subsidiaries
    
    
    (2,476
    )
    
    
    
    
    
    
    
    
    
    
    2,476
    
    
    
    Net (loss) income
    
    $
    (3,407
    )
    
    $
    (3,468
    )
    
    $
    992
    
    
    $
    2,476
    
    
    $
    (3,407
    )
  19




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BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    423,526
    
    
    $
    7,481
    
    
    $
    (7,481
    )
    
    $
    423,526Cost of sales
    
    
    
    
    
    
    375,226
    
    
    
    
    
    
    
    
    
    
    
    375,226Gross profit
    
    
    
    
    
    
    48,300
    
    
    
    7,481
    
    
    
    (7,481
    )
    
    
    48,300Operating expenses (income):Selling, general and administrative
    
    
    1,453
    
    
    
    61,087
    
    
    
    (4,207
    )
    
    
    (7,481
    )
    
    
    50,852Net gain from terminating the Georgia-Pacific supply
agreement
    
    
    
    
    
    
    (17,351
    )
    
    
    
    
    
    
    
    
    
    
    (17,351
    )Depreciation and amortization
    
    
    
    
    
    
    3,258
    
    
    
    983
    
    
    
    
    
    
    
    4,241Total operating expenses
    
    
    1,453
    
    
    
    46,994
    
    
    
    (3,224
    )
    
    
    (7,481
    )
    
    
    37,742Operating (loss) income
    
    
    (1,453
    )
    
    
    1,306
    
    
    
    10,705
    
    
    
    
    
    
    
    10,558Non-operating expenses:Interest expense
    
    
    
    
    
    
    3,235
    
    
    
    5,271
    
    
    
    
    
    
    
    8,506Charges associated with ineffective interest rate swap
    
    
    
    
    
    
    1,078
    
    
    
    
    
    
    
    
    
    
    
    1,078Other expense (income), net
    
    
    
    
    
    
    368
    
    
    
    (53
    )
    
    
    
    
    
    
    315(Loss) income before (benefit from) provision for income
taxes
    
    
    (1,453
    )
    
    
    (3,375
    )
    
    
    5,487
    
    
    
    
    
    
    
    659(Benefit from) provision for income taxes
    
    
    (2,018
    )
    
    
    (91
    )
    
    
    2,140
    
    
    
    
    
    
    
    31Equity in income (loss) of subsidiaries
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    Net income (loss)
    
    $
    628
    
    
    $
    (3,284
    )
    
    $
    3,347
    
    
    $
    (63
    )
    
    $
    628
  BlueLinx
    
    
    BlueLinxHoldings
    
    
    Corporation and
    
    
    LLCInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    971,831
    
    
    $
    14,912
    
    
    $
    (14,912
    )
    
    $
    971,831Cost of sales
    
    
    
    
    
    
    855,434
    
    
    
    
    
    
    
    
    
    
    
    855,434Gross profit
    
    
    
    
    
    
    116,397
    
    
    
    14,912
    
    
    
    (14,912
    )
    
    
    116,397Operating expenses:Selling, general and administrative
    
    
    3,456
    
    
    
    124,969
    
    
    
    90
    
    
    
    (14,912
    )
    
    
    113,603Depreciation and amortization
    
    
    
    
    
    
    5,257
    
    
    
    1,921
    
    
    
    
    
    
    
    7,178Total operating expenses
    
    
    3,456
    
    
    
    130,226
    
    
    
    2,011
    
    
    
    (14,912
    )
    
    
    120,781Operating (loss) income
    
    
    (3,456
    )
    
    
    (13,829
    )
    
    
    12,901
    
    
    
    
    
    
    
    (4,384
    )Non-operating expenses:Interest expense
    
    
    
    
    
    
    6,013
    
    
    
    9,507
    
    
    
    
    
    
    
    15,520Changes associated with the ineffective interest rate swap
    
    
    
    
    
    
    (2,061
    )
    
    
    
    
    
    
    
    
    
    
    (2,061
    )Other expense, net
    
    
    
    
    
    
    214
    
    
    
    37
    
    
    
    
    
    
    
    251(Loss) income before (benefit from) provision for income
taxes
    
    
    (3,456
    )
    
    
    (17,995
    )
    
    
    3,357
    
    
    
    
    
    
    
    (18,094
    )(Benefit from) provision for income taxes
    
    
    (1,318
    )
    
    
    61
    
    
    
    1,309
    
    
    
    
    
    
    
    52Equity in loss of subsidiaries
    
    
    (16,008
    )
    
    
    
    
    
    
    
    
    
    
    16,008
    
    
    
    Net (loss) income
    
    $
    (18,146
    )
    
    $
    (18,056
    )
    
    $
    2,048
    
    
    $
    16,008
    
    
    $
    (18,146
    )
  BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    830,637
    
    
    $
    15,003
    
    
    $
    (15,003
    )
    
    $
    830,637Cost of sales
    
    
    
    
    
    
    738,061
    
    
    
    
    
    
    
    
    
    
    
    738,061Gross profit
    
    
    
    
    
    
    92,576
    
    
    
    15,003
    
    
    
    (15,003
    )
    
    
    92,576Operating expenses (income):Selling, general and administrative
    
    
    3,067
    
    
    
    124,613
    
    
    
    (4,160
    )
    
    
    (15,003
    )
    
    
    108,517Net gain from terminating the Georgia-Pacific supply
agreement
    
    
    
    
    
    
    (17,351
    )
    
    
    
    
    
    
    
    
    
    
    (17,351
    )Depreciation and amortization
    
    
    
    
    
    
    7,267
    
    
    
    2,004
    
    
    
    
    
    
    
    9,271Total operating expenses (income)
    
    
    3,067
    
    
    
    114,529
    
    
    
    (2,156
    )
    
    
    (15,003
    )
    
    
    100,437Operating (loss) income
    
    
    (3,067
    )
    
    
    (21,953
    )
    
    
    17,159
    
    
    
    
    
    
    
    (7,861
    )Non-operating expenses:Interest expense
    
    
    
    
    
    
    6,678
    
    
    
    9,945
    
    
    
    
    
    
    
    16,623Charges associated with the ineffective interest rate swap
    
    
    
    
    
    
    5,910
    
    
    
    
    
    
    
    
    
    
    
    5,910Write-off of debt issue costs
    
    
    
    
    
    
    1,407
    
    
    
    
    
    
    
    
    
    
    
    1,407Other expense (income), net
    
    
    
    
    
    
    230
    
    
    
    (72
    )
    
    
    
    
    
    
    158(Loss) income before (benefit from) provision for income
taxes
    
    
    (3,067
    )
    
    
    (36,178
    )
    
    
    7,286
    
    
    
    
    
    
    
    (31,959
    )(Benefit from) provision for income taxes
    
    
    (2,959
    )
    
    
    28,183
    
    
    
    2,842
    
    
    
    
    
    
    
    28,066Equity in (loss) income of subsidiaries
    
    
    (59,917
    )
    
    
    
    
    
    
    
    
    
    
    59,917
    
    
    
    Net (loss) income
    
    $
    (60,025
    )
    
    $
    (64,361
    )
    
    $
    4,444
    
    
    $
    59,917
    
    
    $
    (60,025
    )
  20




---



##### Table of Contents



BlueLinxBlueLinx
    
    
    Corporation
    
    
    LLCHoldings Inc.
    
    
    and Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssets:Current assets:Cash
    
    $
    63
    
    
    $
    18,434
    
    
    $
    324
    
    
    $
    
    
    
    $
    18,821Receivables
    
    
    
    
    
    
    201,569
    
    
    
    
    
    
    
    
    
    
    
    201,569Inventories
    
    
    
    
    
    
    226,158
    
    
    
    
    
    
    
    
    
    
    
    226,158Deferred income tax assets
    
    
    275
    
    
    
    (910
    )
    
    
    
    
    
    
    635
    
    
    
    Other current assets
    
    
    708
    
    
    
    20,135
    
    
    
    1,599
    
    
    
    
    
    
    
    22,442Intercompany receivable
    
    
    58,245
    
    
    
    6,264
    
    
    
    
    
    
    
    (64,509
    )
    
    
    Total current assets
    
    
    59,291
    
    
    
    471,650
    
    
    
    1,923
    
    
    
    (63,874
    )
    
    
    468,990Property and equipment:Land and land improvements
    
    
    
    
    
    
    3,002
    
    
    
    49,513
    
    
    
    
    
    
    
    52,515Buildings
    
    
    
    
    
    
    7,405
    
    
    
    88,651
    
    
    
    
    
    
    
    96,056Machinery and equipment
    
    
    
    
    
    
    71,357
    
    
    
    
    
    
    
    
    
    
    
    71,357Construction in progress
    
    
    
    
    
    
    1,137
    
    
    
    
    
    
    
    
    
    
    
    1,137Property and equipment, at cost
    
    
    
    
    
    
    82,901
    
    
    
    138,164
    
    
    
    
    
    
    
    221,065Accumulated depreciation
    
    
    
    
    
    
    (63,143
    )
    
    
    (25,032
    )
    
    
    
    
    
    
    (88,175
    )Property and equipment, net
    
    
    
    
    
    
    19,758
    
    
    
    113,132
    
    
    
    
    
    
    
    132,890Investment in subsidiaries
    
    
    (24,265
    )
    
    
    
    
    
    
    
    
    
    
    24,265
    
    
    
    Non-current deferred income tax assets
    
    
    
    
    
    
    5,075
    
    
    
    2,227
    
    
    
    (7,302
    )
    
    
    Other non-current assets
    
    
    
    
    
    
    12,187
    
    
    
    29,980
    
    
    
    
    
    
    
    42,167Total assets
    
    $
    35,026
    
    
    $
    508,670
    
    
    $
    147,262
    
    
    $
    (46,911
    )
    
    $
    644,047Liabilities:Current liabilities:Accounts payable
    
    $
    42
    
    
    $
    103,436
    
    
    $
    
    
    
    $
    
    
    
    
    103,478Bank overdrafts
    
    
    
    
    
    
    37,112
    
    
    
    
    
    
    
    
    
    
    
    37,112Accrued compensation
    
    
    45
    
    
    
    6,183
    
    
    
    
    
    
    
    
    
    
    
    6,228Deferred income tax liabilities
    
    
    (635
    )
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    Current maturities of long-term debt
    
    
    
    
    
    
    37,023
    
    
    
    
    
    
    
    
    
    
    
    37,023Other current liabilities
    
    
    
    
    
    
    19,239
    
    
    
    386
    
    
    
    
    
    
    
    19,625Intercompany payable
    
    
    1,206
    
    
    
    56,927
    
    
    
    6,376
    
    
    
    (64,509
    )
    
    
    Total current liabilities
    
    
    658
    
    
    
    259,920
    
    
    
    6,762
    
    
    
    (63,874
    )
    
    
    203,466Non-current liabilities:Long-term debt
    
    
    
    
    
    
    87,664
    
    
    
    285,669
    
    
    
    
    
    
    
    373,333Non-current deferred income tax
liabilities
    
    
    
    
    
    
    2,524
    
    
    
    4,778
    
    
    
    (7,302
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    32,880
    
    
    
    
    
    
    
    
    
    
    
    32,880Total liabilities
    
    
    658
    
    
    
    382,988
    
    
    
    297,209
    
    
    
    (71,176
    )
    
    
    609,679Shareholders Equity/Parents Investment
    
    
    34,368
    
    
    
    125,682
    
    
    
    (149,947
    )
    
    
    24,265
    
    
    
    34,368Total liabilities and equity
    
    $
    35,026
    
    
    $
    508,670
    
    
    $
    147,262
    
    
    $
    (46,911
    )
    
    $
    644,047
  21




---



##### Table of Contents



BlueLinxBlueLinx
    
    
    Corporation
    
    
    LLCHoldings Inc.
    
    
    and Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssets:Current assets:Cash
    
    $
    32
    
    
    $
    29,129
    
    
    $
    296
    
    
    $
    
    
    
    $
    29,457Receivables
    
    
    
    
    
    
    119,347
    
    
    
    
    
    
    
    
    
    
    
    119,347Inventories
    
    
    
    
    
    
    173,185
    
    
    
    
    
    
    
    
    
    
    
    173,185Deferred income tax assets
    
    
    275
    
    
    
    (910
    )
    
    
    
    
    
    
    635
    
    
    
    Other current assets
    
    
    925
    
    
    
    42,172
    
    
    
    1,873
    
    
    
    
    
    
    
    44,970Intercompany receivable
    
    
    63,905
    
    
    
    5,793
    
    
    
    
    
    
    
    (69,698
    )
    
    
    Total current assets
    
    
    65,137
    
    
    
    368,716
    
    
    
    2,169
    
    
    
    (69,063
    )
    
    
    366,959Property and equipment:Land and land improvements
    
    
    
    
    
    
    3,134
    
    
    
    49,487
    
    
    
    
    
    
    
    52,621Buildings
    
    
    
    
    
    
    7,494
    
    
    
    88,651
    
    
    
    
    
    
    
    96,145Machinery and equipment
    
    
    
    
    
    
    69,767
    
    
    
    
    
    
    
    
    
    
    
    69,767Construction in progress
    
    
    
    
    
    
    791
    
    
    
    
    
    
    
    
    
    
    
    791Property and equipment, at cost
    
    
    
    
    
    
    81,186
    
    
    
    138,138
    
    
    
    
    
    
    
    219,324Accumulated depreciation
    
    
    
    
    
    
    (59,030
    )
    
    
    (23,111
    )
    
    
    
    
    
    
    (82,141
    )Property and equipment, net
    
    
    
    
    
    
    22,156
    
    
    
    115,027
    
    
    
    
    
    
    
    137,183Investment in subsidiaries
    
    
    (11,755
    )
    
    
    
    
    
    
    
    
    
    
    11,755
    
    
    
    Non-current deferred income tax assets
    
    
    
    
    
    
    5,075
    
    
    
    2,227
    
    
    
    (7,302
    )
    
    
    Other non-current assets
    
    
    
    
    
    
    19,016
    
    
    
    23,688
    
    
    
    
    
    
    
    42,704Total assets
    
    $
    53,382
    
    
    $
    414,963
    
    
    $
    143,111
    
    
    $
    (64,610
    )
    
    $
    546,846Liabilities:Current liabilities:Accounts payable
    
    $
    38
    
    
    $
    64,580
    
    
    $
    
    
    
    $
    
    
    
    
    64,618Bank overdrafts
    
    
    
    
    
    
    27,232
    
    
    
    
    
    
    
    
    
    
    
    27,232Accrued compensation
    
    
    16
    
    
    
    4,863
    
    
    
    
    
    
    
    
    
    
    
    4,879Deferred income tax liabilities
    
    
    (635
    )
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    Other current liabilities
    
    
    
    
    
    
    20,637
    
    
    
    1,871
    
    
    
    
    
    
    
    22,508Intercompany payable
    
    
    3,143
    
    
    
    61,644
    
    
    
    4,911
    
    
    
    (69,698
    )
    
    
    Total current liabilities
    
    
    2,562
    
    
    
    178,956
    
    
    
    6,782
    
    
    
    (69,063
    )
    
    
    119,237Non-current liabilities:Long-term debt
    
    
    
    
    
    
    56,000
    
    
    
    285,669
    
    
    
    
    
    
    
    341,669Non-current deferred income tax
liabilities
    
    
    
    
    
    
    2,524
    
    
    
    4,778
    
    
    
    (7,302
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    35,120
    
    
    
    
    
    
    
    
    
    
    
    35,120Total liabilities
    
    
    2,562
    
    
    
    272,600
    
    
    
    297,229
    
    
    
    (76,365
    )
    
    
    496,026Shareholders Equity/Parents Investment
    
    
    50,820
    
    
    
    142,363
    
    
    
    (154,118
    )
    
    
    11,755
    
    
    
    50,820Total liabilities and equity
    
    $
    53,382
    
    
    $
    414,963
    
    
    $
    143,111
    
    
    $
    (64,610
    )
    
    $
    546,846
  22




---



##### Table of Contents



BlueLinxBlueLinx
    
    
    CorporationHoldings
    
    
    and
    
    
    LLCInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (18,146
    )
    
    $
    (18,056
    )
    
    $
    2,048
    
    
    $
    16,008
    
    
    $
    (18,146
    )Adjustments to reconcile net (loss) income to cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    5,254
    
    
    
    1,924
    
    
    
    
    
    
    
    7,178Amortization of debt issuance costs
    
    
    
    
    
    
    43
    
    
    
    336
    
    
    
    
    
    
    
    379Payments from terminating the Georgia-Pacific
supply agreement
    
    
    
    
    
    
    4,706
    
    
    
    
    
    
    
    
    
    
    
    4,706Changes associated with the ineffective
interest rate swap
    
    
    
    
    
    
    (2,061
    )
    
    
    
    
    
    
    
    
    
    
    (2,061
    )Deferred income tax benefit
    
    
    
    
    
    
    (414
    )
    
    
    
    
    
    
    
    
    
    
    (414
    )Share-based compensation expense
    
    
    910
    
    
    
    1,059
    
    
    
    
    
    
    
    
    
    
    
    1,969Decrease in restricted cash related to the
ineffective interest rate swap, insurance,
and other
    
    
    
    
    
    
    5,607
    
    
    
    
    
    
    
    
    
    
    
    5,607Equity in earnings of subsidiaries
    
    
    16,008
    
    
    
    
    
    
    
    
    
    
    
    (16,008
    )
    
    
    Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    (82,222
    )
    
    
    
    
    
    
    
    
    
    
    (82,222
    )Inventories
    
    
    
    
    
    
    (52,973
    )
    
    
    
    
    
    
    
    
    
    
    (52,973
    )Accounts payable
    
    
    4
    
    
    
    38,856
    
    
    
    
    
    
    
    
    
    
    
    38,860Changes in other working capital
    
    
    246
    
    
    
    19,503
    
    
    
    (1,211
    )
    
    
    
    
    
    
    18,538Intercompany receivable
    
    
    10,376
    
    
    
    (471
    )
    
    
    
    
    
    
    (9,905
    )
    
    
    Intercompany payable
    
    
    (1,937
    )
    
    
    (9,433
    )
    
    
    1,465
    
    
    
    9,905
    
    
    
    Other
    
    
    (14
    )
    
    
    (2,253
    )
    
    
    (28
    )
    
    
    
    
    
    
    (2,295
    )Net cash provided by (used in) operating activities
    
    
    7,447
    
    
    
    (92,855
    )
    
    
    4,534
    
    
    
    
    
    
    
    (80,874
    )Cash flows from investing activities:Investment in subsidiaries
    
    
    (2,123
    )
    
    
    
    
    
    
    
    
    
    
    2,123
    
    
    
    Property, plant and equipment investments
    
    
    
    
    
    
    (1,263
    )
    
    
    
    
    
    
    
    
    
    
    (1,263
    )Proceeds from disposition of assets
    
    
    
    
    
    
    656
    
    
    
    
    
    
    
    
    
    
    
    656Net cash (used in) provided by investing activities
    
    
    (2,123
    )
    
    
    (607
    )
    
    
    
    
    
    
    2,123
    
    
    
    (607
    )Cash flows from financing activities:Net transactions with Parent
    
    
    
    
    
    
    
    
    
    
    2,123
    
    
    
    (2,123
    )
    
    
    Repurchase of common stock
    
    
    (583
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (583
    )Increase in revolving credit facility
    
    
    
    
    
    
    68,687
    
    
    
    
    
    
    
    
    
    
    
    68,687Payments on capital lease obligations
    
    
    
    
    
    
    (473
    )
    
    
    
    
    
    
    
    
    
    
    (473
    )Increase in bank overdrafts
    
    
    
    
    
    
    9,880
    
    
    
    
    
    
    
    
    
    
    
    9,880Increase in restricted cash related to the mortgage
    
    
    
    
    
    
    
    
    
    
    (6,581
    )
    
    
    
    
    
    
    (6,581
    )Debt financing costs
    
    
    
    
    
    
    (43
    )
    
    
    (48
    )
    
    
    
    
    
    
    (91
    )Intercompany receivable
    
    
    (4,716
    )
    
    
    
    
    
    
    
    
    
    
    4,716
    
    
    
    Intercompany payable
    
    
    
    
    
    
    4,716
    
    
    
    
    
    
    
    (4,716
    )
    
    
    Other
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Net cash (used in) provided by financing activities
    
    
    (5,293
    )
    
    
    82,767
    
    
    
    (4,506
    )
    
    
    (2,123
    )
    
    
    70,845Increase (decrease) in cash
    
    
    31
    
    
    
    (10,695
    )
    
    
    28
    
    
    
    
    
    
    
    (10,636
    )Balance, beginning of period
    
    
    32
    
    
    
    29,129
    
    
    
    296
    
    
    
    
    
    
    
    29,457Balance, end of period
    
    $
    63
    
    
    $
    18,434
    
    
    $
    324
    
    
    $
    
    
    
    $
    18,821
  23




---



##### Table of Contents



BlueLinxHoldings
    
    
    BlueLinx
    
    
    LLCInc.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (60,025
    )
    
    $
    (64,361
    )
    
    $
    4,444
    
    
    $
    59,917
    
    
    $
    (60,025
    )Adjustments to reconcile net (loss) income to cash
(used in) provided by operations:Depreciation and amortization
    
    
    
    
    
    
    7,267
    
    
    
    2,004
    
    
    
    
    
    
    
    9,271Amortization of debt issue costs
    
    
    
    
    
    
    902
    
    
    
    327
    
    
    
    
    
    
    
    1,229Net gain from terminating the Georgia-Pacific
supply agreement
    
    
    
    
    
    
    (17,351
    )
    
    
    
    
    
    
    
    
    
    
    (17,351
    )Payment (first installment) from terminating the
Georgia-Pacific supply agreement
    
    
    
    
    
    
    4,706
    
    
    
    
    
    
    
    
    
    
    
    4,706Gain from sale properties
    
    
    
    
    
    
    
    
    
    
    (4,237
    )
    
    
    
    
    
    
    (4,237
    )Prepayment penalty associated with sale of facility
    
    
    
    
    
    
    
    
    
    
    616
    
    
    
    
    
    
    
    616Changes associated with the ineffective interest
rate swap
    
    
    
    
    
    
    5,910
    
    
    
    
    
    
    
    
    
    
    
    5,910Write-off of debt issue costs
    
    
    
    
    
    
    1,407
    
    
    
    
    
    
    
    
    
    
    
    1,407Deferred income tax (benefit) provision
    
    
    (13
    )
    
    
    27,389
    
    
    
    (148
    )
    
    
    
    
    
    
    27,228Share-based compensation expense
    
    
    911
    
    
    
    520
    
    
    
    
    
    
    
    
    
    
    
    1,431Decrease in restricted cash related to the
interest rate swap, insurance, other, etc.
    
    
    
    
    
    
    2,189
    
    
    
    
    
    
    
    
    
    
    
    2,189Equity in earnings of subsidiaries
    
    
    59,917
    
    
    
    
    
    
    
    
    
    
    
    (59,917
    )
    
    
    Changes in assets and liabilities:Receivables
    
    
    
    
    
    
    (30,132
    )
    
    
    
    
    
    
    
    
    
    
    (30,132
    )Inventories
    
    
    
    
    
    
    26,903
    
    
    
    
    
    
    
    
    
    
    
    26,903Accounts payable
    
    
    138
    
    
    
    26,493
    
    
    
    
    
    
    
    
    
    
    
    26,631Changes in other working capital
    
    
    (821
    )
    
    
    (2,718
    )
    
    
    (90
    )
    
    
    
    
    
    
    (3,629
    )Intercompany receivable
    
    
    281
    
    
    
    (359
    )
    
    
    
    
    
    
    78
    
    
    
    Intercompany payable
    
    
    359
    
    
    
    
    
    
    
    (281
    )
    
    
    (78
    )
    
    
    Other
    
    
    13
    
    
    
    667
    
    
    
    11
    
    
    
    
    
    
    
    691Net cash provided by (used in) operating activities
    
    
    760
    
    
    
    ( (10,568
    )
    
    
    2,646
    
    
    
    
    
    
    
    (7,162
    )Cash flows from investing activities:Investment in subsidiaries
    
    
    24,449
    
    
    
    
    
    
    
    
    
    
    
    (24,449
    )
    
    
    Property, plant and equipment investments
    
    
    
    
    
    
    (688
    )
    
    
    
    
    
    
    
    
    
    
    (688
    )Proceeds from sale of assets
    
    
    
    
    
    
    560
    
    
    
    6,435
    
    
    
    
    
    
    
    6,995Net cash provided by (used in) investing activities
    
    
    24,449
    
    
    
    (128
    )
    
    
    6,435
    
    
    
    (24,449
    )
    
    
    6,307Cash flows from financing activities:Net transactions with Parent
    
    
    
    
    
    
    (24,971
    )
    
    
    522
    
    
    
    24,449
    
    
    
    Repurchase of common stock
    
    
    (1,624
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,624
    )Net decrease in revolving credit facility
    
    
    
    
    
    
    (75,000
    )
    
    
    
    
    
    
    
    
    
    
    (75,000
    )Payment of principal on mortgage
    
    
    
    
    
    
    
    
    
    
    (3,201
    )
    
    
    
    
    
    
    (3,201
    )Prepayment fees associated with sale of facility
    
    
    
    
    
    
    
    
    
    
    (616
    )
    
    
    
    
    
    
    (616
    )Decrease in bank overdrafts
    
    
    
    
    
    
    (10,328
    )
    
    
    
    
    
    
    
    
    
    
    (10,328
    )Increase in restricted cash related to the mortgage
    
    
    
    
    
    
    
    
    
    
    (5,677
    )
    
    
    
    
    
    
    (5,677
    )Intercompany receivable
    
    
    (23,619
    )
    
    
    
    
    
    
    
    
    
    
    23,619
    
    
    
    Intercompany payable
    
    
    
    
    
    
    23,619
    
    
    
    
    
    
    
    (23,619
    )
    
    
    Other
    
    
    6
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (41
    )Net cash (used in) provided by financing activities
    
    
    (25,237
    )
    
    
    (86,680
    )
    
    
    (9,019
    )
    
    
    24,449
    
    
    
    (96,487
    )(Decrease) increase in cash
    
    
    (28
    )
    
    
    (97,376
    )
    
    
    62
    
    
    
    
    
    
    
    (97,342
    )Balance, beginning of period
    
    
    32
    
    
    
    150,259
    
    
    
    62
    
    
    
    
    
    
    
    150,353Balance, end of period
    
    $
    4
    
    
    $
    52,883
    
    
    $
    124
    
    
    $
    
    
    
    $
    53,011
  24




---



##### 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;
    
    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 January 2, 2010 as filed with the SEC.
  25




---



##### Table of Contents



Overview
 Background
  Industry Conditions
  Tender Offer
  Shareholder Litigation
 Habiniak, et al. v. Cohen, et al. Hindermann, et al. v. BlueLinx Holdings Inc., et al. Jerszynski v. BlueLinx Holdings, Inc., et al. Winter v. Cerberus ABP Investor LLC Habiniak Winter
  Supply Agreement with G-P
   26




---



##### Table of Contents



Selected Factors Affecting Our Operating Results
   Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2010
    
    
    Q2 2009
    
    
    2010 YTD
    
    
    2009 YTD
    
    
    2009
    
    
    2008(Dollars in millions)(Unaudited)Sales by CategoryStructural Products
    
    $
    265
    
    
    $
    183
    
    
    $
    469
    
    
    $
    365
    
    
    $
    738
    
    
    $
    1,422Specialty Products
    
    
    286
    
    
    
    250
    
    
    
    519
    
    
    
    484
    
    
    
    948
    
    
    
    1,412Other(1)
    
    
    (10
    )
    
    
    (9
    )
    
    
    (16
    )
    
    
    (18
    )
    
    
    (40
    )
    
    
    (54
    )Total Sales
    
    $
    541
    
    
    $
    424
    
    
    $
    972
    
    
    $
    831
    
    
    $
    1,646
    
    
    $
    2,780Sales VariancesUnit Volume $ Change
    
    $
    51
    
    
    $
    (378
    )
    
    $
    57
    
    
    $
    (682
    )
    
    $
    (1,036
    )
    
    $
    (1,161
    )Price/Other(1)
    
    
    66
    
    
    
    (33
    )
    
    
    84
    
    
    
    (38
    )
    
    
    (98
    )
    
    
    107Total $ Change
    
    $
    117
    
    
    $
    (411
    )
    
    $
    141
    
    
    $
    (720
    )
    
    $
    (1,134
    )
    
    $
    (1,054
    )Unit Volume % Change
    
    
    11.9
    %
    
    
    (44.7
    )%
    
    
    6.7
    %
    
    
    (43.4
    )%
    
    
    (36.6
    )%
    
    
    (29.7
    )%Price/Other(1)
    
    
    15.8
    %
    
    
    (4.5
    )%
    
    
    10.3
    %
    
    
    (3.0
    )%
    
    
    (4.2
    )%
    
    
    2.2
    %Total % Change
    
    
    27.7
    %
    
    
    (49.2
    )%
    
    
    17.0
    %
    
    
    (46.4
    )%
    
    
    (40.8
    )%
    
    
    (27.5
    )%
 
 (1)
    
    Other includes unallocated allowances and discounts.  Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2010
    
    
    Q2 2009
    
    
    2010 YTD
    
    
    2009 YTD
    
    
    2009
    
    
    2008(Dollars in millions)(Unaudited)Gross Margin $s by CategoryStructural Products
    
    $
    24
    
    
    $
    19
    
    
    $
    46
    
    
    $
    37
    
    
    $
    73
    
    
    $
    134Specialty Products
    
    
    44
    
    
    
    32
    
    
    
    77
    
    
    
    63
    
    
    
    132
    
    
    
    200Other (1)
    
    
    (4
    )
    
    
    (3
    )
    
    
    (7
    )
    
    
    (7
    )
    
    
    (12
    )
    
    
    (19
    )Total Gross Margin $s
    
    $
    64
    
    
    $
    48
    
    
    $
    116
    
    
    $
    93
    
    
    $
    193
    
    
    $
    315Gross Margin %s by CategoryStructural Products
    
    
    9.1
    %
    
    
    10.4
    %
    
    
    9.8
    %
    
    
    9.9
    %
    
    
    9.9
    %
    
    
    9.4
    %Specialty Products
    
    
    15.4
    %
    
    
    12.8
    %
    
    
    14.8
    %
    
    
    13.0
    %
    
    
    13.9
    %
    
    
    14.2
    %Total Gross Margin %s
    
    
    11.9
    %
    
    
    11.4
    %
    
    
    12.0
    %
    
    
    11.1
    %
    
    
    11.7
    %
    
    
    11.3
    %Unit Volume Change by ProductStructural Products
    
    
    9.7
    %
    
    
    (50.1
    )%
    
    
    5.0
    %
    
    
    (48.5
    )%
    
    
    (40.3
    )%
    
    
    (34.6
    )%Specialty Products
    
    
    13.5
    %
    
    
    (38.9
    )%
    
    
    8.0
    %
    
    
    (37.9
    )%
    
    
    (32.8
    )%
    
    
    (24.0
    )%Total Change in Unit Volume %s
    
    
    11.9
    %
    
    
    (44.7
    )%
    
    
    6.7
    %
    
    
    (43.4
    )%
    
    
    (36.6
    )%
    
    
    (29.7
    )%
 
 (1)
    
    Other includes unallocated allowances and discounts.  27




---



##### Table of Contents



Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2010
    
    
    Q2 2009
    
    
    2010 YTD
    
    
    2009 YTD
    
    
    2009
    
    
    2008(Dollars in millions)(Unaudited)Sales by ChannelWarehouse/Reload
    
    $
    423
    
    
    $
    319
    
    
    $
    758
    
    
    $
    614
    
    
    $
    1,251
    
    
    $
    2,044Direct
    
    
    128
    
    
    
    114
    
    
    
    230
    
    
    
    235
    
    
    
    435
    
    
    
    790Other(1)
    
    
    (10
    )
    
    
    (9
    )
    
    
    (16
    )
    
    
    (18
    )
    
    
    (40
    )
    
    
    (54
    )Total
    
    $
    541
    
    
    $
    424
    
    
    $
    972
    
    
    $
    831
    
    
    $
    1,646
    
    
    $
    2,780Gross Margin by ChannelWarehouse/Reload
    
    $
    60
    
    
    $
    43
    
    
    $
    111
    
    
    $
    84
    
    
    $
    177
    
    
    $
    284Direct
    
    
    8
    
    
    
    8
    
    
    
    12
    
    
    
    16
    
    
    
    28
    
    
    
    50Other(1)
    
    
    (4
    )
    
    
    (3
    )
    
    
    (7
    )
    
    
    (7
    )
    
    
    (12
    )
    
    
    (19
    )Total
    
    $
    64
    
    
    $
    48
    
    
    $
    116
    
    
    $
    93
    
    
    $
    193
    
    
    $
    315
 Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalQ2 2010
    
    
    Q2 2009
    
    
    2010 YTD
    
    
    2009 YTD
    
    
    2009
    
    
    2008(Dollars in millions)(Unaudited)Gross Margin % by ChannelWarehouse/Reload
    
    
    14.2
    %
    
    
    13.5
    %
    
    
    14.6
    %
    
    
    13.5
    %
    
    
    14.1
    %
    
    
    13.9
    %Direct
    
    
    6.3
    %
    
    
    7.0
    %
    
    
    5.2
    %
    
    
    6.8
    %
    
    
    6.4
    %
    
    
    6.3
    %Total
    
    
    11.9
    %
    
    
    11.4
    %
    
    
    12.0
    %
    
    
    11.1
    %
    
    
    11.7
    %
    
    
    11.3
    %
 
 (1)
    
    Other includes unallocated allowances and adjustments. Fiscal Year
  Results of Operations
 Second Quarter of Fiscal 2010 Compared to Second Quarter of Fiscal 2009
  % of
    
    
    
    
    
    
    % ofSecond Quarter of
    
    
    Net
    
    
    Second Quarter of
    
    
    NetFiscal 2010
    
    
    Sales
    
    
    Fiscal 2009
    
    
    Sales(Unaudited)
    
    
    
    
    
    
    (Unaudited)(Dollars in thousands)Net sales
    
    $
    540,781
    
    
    
    100.0
    %
    
    $
    423,526
    
    
    
    100.0
    %Gross profit
    
    
    64,119
    
    
    
    11.9
    %
    
    
    48,300
    
    
    
    11.4
    %Selling, general & administrative
    
    
    57,089
    
    
    
    10.6
    %
    
    
    50,852
    
    
    
    12.0
    %Net gain from terminating the Georgia-Pacific supply agreement
    
    
    
    
    
    
    0.0
    %
    
    
    (17,351
    )
    
    
    (4.1
    )%Depreciation and amortization
    
    
    3,434
    
    
    
    0.6
    %
    
    
    4,241
    
    
    
    1.0
    %Operating income
    
    
    3,596
    
    
    
    0.7
    %
    
    
    10,558
    
    
    
    2.5
    %Interest expense
    
    
    8,205
    
    
    
    1.5
    %
    
    
    8,506
    
    
    
    2.0
    %Changes associated with the ineffective interest rate swap
    
    
    (1,256
    )
    
    
    (0.2
    )%
    
    
    1,078
    
    
    
    0.3
    %Other expense, net
    
    
    18
    
    
    
    0.0
    %
    
    
    315
    
    
    
    0.1
    %(Loss) income before provision for income taxes
    
    
    (3,371
    )
    
    
    (0.6
    )%
    
    
    659
    
    
    
    0.2
    %Provision for income taxes
    
    
    36
    
    
    
    0.0
    %
    
    
    31
    
    
    
    0.0
    %Net (loss) income
    
    $
    (3,407
    )
    
    
    (0.6
    )%
    
    $
    628
    
    
    
    0.1
    %
  28




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##### Table of Contents



Net sales.
 Gross profit.
 Selling, general, and administrative expenses.
 Net gain from terminating the Georgia-Pacific supply agreement.
 Depreciation and amortization.
 Operating income.
 Interest expense.
 Changes associated with ineffective interest rate swap
 Provision for income taxes.
  29




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##### Table of Contents



Net (loss) income.
  First Six Months of Fiscal 2010 Compared to First Six Months of Fiscal 2009
  % of
    
    
    
    
    
    
    % ofFirst Six Months of
    
    
    Net
    
    
    First Six Months of
    
    
    NetFiscal 2010
    
    
    Sales
    
    
    Fiscal 2009
    
    
    Sales(Unaudited)
    
    
    
    
    
    (Unaudited)(Dollars in thousands)Net sales
    
    $
    971,831
    
    
    
    100.0
    %
    
    $
    830,637
    
    
    
    100.0
    %Gross profit
    
    
    116,397
    
    
    
    12.0
    %
    
    
    92,576
    
    
    
    11.1
    %Selling, general & administrative
    
    
    113,603
    
    
    
    11.7
    %
    
    
    108,517
    
    
    
    13.1
    %Net gain from terminating the Georgia-Pacific supply agreement
    
    
    
    
    
    
    0.0
    %
    
    
    (17,351
    )
    
    
    2.1
    %Depreciation and amortization
    
    
    7,178
    
    
    
    0.7
    %
    
    
    9,271
    
    
    
    1.1
    %Operating loss
    
    
    (4,384
    )
    
    
    (0.5
    )%
    
    
    (7,861
    )
    
    
    (0.9
    )%Interest expense
    
    
    15,520
    
    
    
    1.6
    %
    
    
    16,623
    
    
    
    2.0
    %Changes associated with the ineffective interest rate swap
    
    
    (2,061
    )
    
    
    (0.2
    )%
    
    
    5,910
    
    
    
    0.7
    %Write-off of debt issuance costs
    
    
    
    
    
    
    0.0
    %
    
    
    1,407
    
    
    
    0.2
    %Other expense, net
    
    
    251
    
    
    
    0.0
    %
    
    
    158
    
    
    
    0.0
    %Loss before provision for income taxes
    
    
    (18,094
    )
    
    
    (1.9
    )%
    
    
    (31,959
    )
    
    
    (3.8
    )%Provision for income taxes
    
    
    52
    
    
    
    0.0
    %
    
    
    28,066
    
    
    
    3.4
    %Net loss
    
    $
    (18,146
    )
    
    
    (1.9
    )%
    
    $
    (60,025
    )
    
    
    (7.2
    )%
 Net sales.
 Gross profit.
 Selling, general, and administrative.
 Net gain from terminating the Georgia-Pacific supply agreement.
  30




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##### Table of Contents



Depreciation and amortization.
 Operating loss.
 Interest expense.
 Changes associated with ineffective interest rate swap.
 Write-off of debt issuance costs
 Provision for income taxes.
 Net loss
  Seasonality
  Liquidity and Capital Resources
   31




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##### Table of Contents



July 3, 2010
    
    
    January 2, 2010(Dollars in thousands)(Unaudited)Working capital
    
    $
    265,524
    
    
    $
    247,722
 First Six Months of
    
    
    First Six Months ofFiscal 2010
    
    
    Fiscal 2009(Dollars in thousands)(Unaudited)Cash flows used in operating activities
    
    $
    (80,874
    )
    
    $
    (7,162
    )Cash flows (used in) provided by investing activities
    
    
    (607
    )
    
    
    6,307Cash flows provided by (used in) financing activities
    
    
    70,845
    
    
    
    (96,487
    )
 Working Capital
  Operating Activities
    32




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##### Table of Contents



Investing Activities
    Financing Activities
  Debt and Credit Sources
     33




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##### Table of Contents



Contractual Obligations
  Critical Accounting Policies
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
   
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  Shareholder Litigation
 Habiniak, et al. v. Cohen, et al. Hindermann, et al. v. BlueLinx Holdings Inc., et al. Jerszynski v. BlueLinx Holdings, Inc., et al. Winter v. Cerberus ABP Investor LLC Habiniak Winter
  34




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##### Table of Contents



ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 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.
  35




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##### Table of Contents



SIGNATURES
  BlueLinx Holdings Inc.(Registrant)Date: August 6, 2010
    /s/ H. Douglas GoforthH. Douglas GoforthChief Financial Officer and Treasurer  36




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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.
  37