þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State of Incorporation) |
77-0627356 (I.R.S. Employer Identification No.) |
|
4300 Wildwood Parkway, Atlanta, Georgia (Address of principal executive offices) |
30339 (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) |
Smaller reporting company o |
2
ITEM 1. | FINANCIAL STATEMENTS |
Third Quarter | ||||||||
Period from | Period from | |||||||
July 3, 2011 | July 4, 2010 | |||||||
to | to | |||||||
October 1, 2011 | October 2, 2010 | |||||||
Net sales |
$ | 472,898 | $ | 464,690 | ||||
Cost of sales |
414,620 | 414,748 | ||||||
Gross profit |
58,278 | 49,942 | ||||||
Operating expenses: |
||||||||
Selling, general, and administrative |
54,537 | 54,121 | ||||||
Depreciation and amortization |
2,559 | 3,111 | ||||||
Total operating expenses |
57,096 | 57,232 | ||||||
Operating income (loss) |
1,182 | (7,290 | ) | |||||
Non-operating expenses: |
||||||||
Interest expense |
6,963 | 9,121 | ||||||
Changes associated with the ineffective interest rate swap |
| (1,156 | ) | |||||
Write off of debt issuance costs |
| 183 | ||||||
Other expense, net |
333 | 192 | ||||||
Loss before provision for (benefit from) income taxes |
(6,114 | ) | (15,630 | ) | ||||
Provision for (benefit from) income taxes |
94 | (778 | ) | |||||
Net loss |
$ | (6,208 | ) | $ | (14,852 | ) | ||
Basic and diluted weighted average number of common shares outstanding |
51,183 | 30,714 | ||||||
Basic and diluted net loss per share applicable to common stock |
$ | (0.12 | ) | $ | (0.48 | ) | ||
3
Nine Months Ended | ||||||||
Period from | Period from | |||||||
January 2, 2011 | January 3, 2010 | |||||||
to | to | |||||||
October 1, 2011 | October 2, 2010 | |||||||
Net sales |
$ | 1,364,313 | $ | 1,436,521 | ||||
Cost of sales |
1,202,121 | 1,270,182 | ||||||
Gross profit |
162,192 | 166,339 | ||||||
Operating expenses: |
||||||||
Selling, general, and administrative |
159,760 | 167,724 | ||||||
Depreciation and amortization |
8,120 | 10,289 | ||||||
Total operating expenses |
167,880 | 178,013 | ||||||
Operating loss |
(5,688 | ) | (11,674 | ) | ||||
Non-operating expenses: |
||||||||
Interest expense |
23,754 | 24,641 | ||||||
Changes associated with the ineffective interest rate swap |
(1,751 | ) | (3,217 | ) | ||||
Write off of debt issuance costs |
| 183 | ||||||
Other expense, net |
485 | 443 | ||||||
Loss before provision for (benefit from) income taxes |
(28,176 | ) | (33,724 | ) | ||||
Provision for (benefit from) income taxes |
139 | (726 | ) | |||||
Net loss |
$ | (28,315 | ) | $ | (32,998 | ) | ||
Basic and diluted weighted average number of common shares outstanding |
37,696 | 30,667 | ||||||
Basic and diluted net loss per share applicable to common stock |
$ | (0.75 | ) | $ | (1.08 | ) | ||
4
October 1, 2011 | January 1, 2011 | |||||||
(unaudited) | ||||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 5,890 | $ | 14,297 | ||||
Receivables, net |
184,737 | 119,202 | ||||||
Inventories, net |
203,777 | 188,250 | ||||||
Deferred income tax assets, net |
59 | 143 | ||||||
Other current assets |
24,699 | 22,768 | ||||||
Total current assets |
419,162 | 344,660 | ||||||
Property, plant, and equipment: |
||||||||
Land and land improvements |
51,930 | 52,540 | ||||||
Buildings |
97,825 | 96,720 | ||||||
Machinery and equipment |
75,928 | 70,860 | ||||||
Construction in progress |
282 | 2,028 | ||||||
Property, plant, and equipment, at cost |
225,965 | 222,148 | ||||||
Accumulated depreciation |
(98,214 | ) | (92,517 | ) | ||||
Property, plant, and equipment, net |
127,751 | 129,631 | ||||||
Other non-current assets |
24,390 | 50,728 | ||||||
Total assets |
$ | 571,303 | $ | 525,019 | ||||
Liabilities: |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 89,468 | $ | 62,827 | ||||
Bank overdrafts |
30,322 | 23,089 | ||||||
Accrued compensation |
4,373 | 4,594 | ||||||
Current maturities of long-term debt |
36,029 | 1,190 | ||||||
Other current liabilities |
21,115 | 16,792 | ||||||
Total current liabilities |
181,307 | 108,492 | ||||||
Non-current liabilities: |
||||||||
Long-term debt |
329,351 | 381,679 | ||||||
Deferred income taxes, net |
40 | 192 | ||||||
Other non-current liabilities |
27,845 | 33,665 | ||||||
Total liabilities |
538,543 | 524,028 | ||||||
Stockholders Equity: |
||||||||
Common Stock, $0.01 par value,
100,000,000 shares authorized;
61,811,862 and 32,667,504 shares
issued at October 1, 2011 and
January 1, 2011, respectively |
618 | 327 | ||||||
Additional paid-in capital |
207,238 | 147,427 | ||||||
Accumulated other comprehensive loss |
(7,376 | ) | (7,358 | ) | ||||
Accumulated deficit |
(167,720 | ) | (139,405 | ) | ||||
Total stockholders equity |
32,760 | 991 | ||||||
Total liabilities and stockholders equity |
$ | 571,303 | $ | 525,019 | ||||
5
Nine Months Ended | ||||||||
Period | Period from | |||||||
from January 2, 2011 | January 3, 2010 | |||||||
to | to | |||||||
October 1, 2011 | October 2, 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (28,315 | ) | $ | (32,998 | ) | ||
Adjustments to reconcile net loss to net cash used in operations: |
||||||||
Depreciation and amortization |
8,120 | 10,289 | ||||||
Amortization of debt issue costs |
2,029 | 1,026 | ||||||
Payment from terminating the Georgia-Pacific supply agreement |
| 4,706 | ||||||
Gain from sale of properties |
(6,939 | ) | | |||||
Gain from property insurance settlements |
(1,230 | ) | | |||||
Changes associated with the ineffective interest rate swap |
(1,751 | ) | (3,217 | ) | ||||
Write-off debt issuance costs |
| 183 | ||||||
Gain on modification of lease agreement |
(1,971 | ) | | |||||
Deferred income tax benefit |
(282 | ) | (621 | ) | ||||
Share-based compensation expense |
1,578 | 2,880 | ||||||
Decrease in restricted cash related to the ineffective interest rate swap, insurance, and
other |
443 | 6,009 | ||||||
Changes in assets and liabilities: |
||||||||
Receivables |
(65,535 | ) | (47,294 | ) | ||||
Inventories |
(15,527 | ) | (22,384 | ) | ||||
Accounts payable |
26,641 | 16,071 | ||||||
Changes in other working capital |
1,365 | 21,285 | ||||||
Other |
(2,174 | ) | (3,849 | ) | ||||
Net cash used in operating activities |
(83,548 | ) | (47,914 | ) | ||||
Cash flows from investing activities: |
||||||||
Property, plant and equipment investments |
(6,032 | ) | (2,689 | ) | ||||
Proceeds from disposition of assets |
8,994 | 689 | ||||||
Net cash provided by (used in) investing activities |
2,962 | (2,000 | ) | |||||
Cash flows from financing activities: |
||||||||
Repurchase of common stock |
| (583 | ) | |||||
Increase in borrowings from revolving credit facility |
21,235 | 45,996 | ||||||
Payment of principal on mortgage |
(38,724 | ) | | |||||
Payment on capital lease obligations |
(1,224 | ) | (564 | ) | ||||
Increase in bank overdrafts |
7,233 | 3,441 | ||||||
Decrease (increase) in restricted cash related to the mortgage |
27,724 | (8,397 | ) | |||||
Debt financing costs |
(2,647 | ) | (6,521 | ) | ||||
Proceeds from stock offering less expenses paid |
58,582 | | ||||||
Other |
| 6 | ||||||
Net cash provided by financing activities |
72,179 | 33,378 | ||||||
Decrease in cash |
(8,407 | ) | (16,536 | ) | ||||
Balance, beginning of period |
14,297 | 29,457 | ||||||
Balance, end of period |
$ | 5,890 | $ | 12,921 | ||||
Noncash transactions: |
||||||||
Capital leases |
$ | 3,147 | $ | 1,889 | ||||
6
| 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
October 1, | January 1, | |||||||
2011 | 2011 | |||||||
Cash in escrow: |
||||||||
Mortgage* |
$ | 2,892 | $ | 30,616 | ||||
Insurance |
8,784 | 9,430 | ||||||
Other |
2,326 | 2,124 | ||||||
Total |
$ | 14,002 | $ | 42,170 | ||||
* | As a condition of the amendment to the mortgage, entered into on July 14, 2011, a payment of $38.3 million was made from cash held in escrow and applied to the mortgage principal in July 2011. See Note 8 below for more detail. |
8
9
10
11
Balance at July 3, 2011 |
$ | 9,416 | ||
Payments |
(530 | ) | ||
Amendment to lease and other assumption changes |
(2,036 | ) | ||
Accretion of liability |
92 | |||
Balance at October 1, 2011 |
$ | 6,942 | ||
Balance at January 1, 2011 |
$ | 10,227 | ||
Payments |
(1,604 | ) | ||
Amendment to lease and other assumption changes |
(2,036 | ) | ||
Accretion of liability |
355 | |||
Balance at October 1, 2011 |
$ | 6,942 | ||
Balance at July 3, 2011 |
$ | 192 | ||
Assumption Changes |
(25 | ) | ||
Payments |
(49 | ) | ||
Balance at October 1, 2011 |
$ | 118 | ||
12
Balance at January 1, 2011 |
$ | 777 | ||
Assumption Changes |
(278 | ) | ||
Payments |
(381 | ) | ||
Balance at October 1, 2011 |
$ | 118 | ||
Balance at July 3, 2011 |
$ | 108 | ||
Charges |
1,167 | |||
Payments |
(206 | ) | ||
Balance at October 1, 2011 |
$ | 1,069 | ||
Balance at January 1, 2011 |
$ | | ||
Charges |
1,628 | |||
Payments |
(559 | ) | ||
Balance at October 1, 2011 |
$ | 1,069 | ||
Third Quarter | ||||||||
Period from | Period from | |||||||
July 3, 2011 | July 4, 2010 | |||||||
to | to | |||||||
October 1, 2011 | October 2, 2010 | |||||||
Net loss |
$ | (6,208 | ) | $ | (14,852 | ) | ||
Other comprehensive (loss) income: |
||||||||
Foreign currency translation |
(602 | ) | 627 | |||||
*Unrealized gain from cash flow hedge, net of taxes |
| 324 | ||||||
Comprehensive loss |
$ | (6,810 | ) | $ | (13,901 | ) | ||
13
Nine Months Ended | ||||||||
Period from | Period from | |||||||
January 2, 2011 | January 3, 2010 | |||||||
to | to | |||||||
October 1, 2011 | October 2, 2010 | |||||||
Net loss |
$ | (28,315 | ) | $ | (32,998 | ) | ||
Other comprehensive income: |
||||||||
Foreign currency translation |
(252 | ) | 286 | |||||
*Unrealized gain from cash flow hedge, net of taxes |
234 | 973 | ||||||
Comprehensive loss |
$ | (28,333 | ) | $ | (31,739 | ) | ||
* | For the third quarter of fiscal 2011 and for the first nine months of fiscal 2011, the income tax expense related to our interest rate swap was $0.0 million and $0.2 million, respectively. For the third quarter of fiscal 2010 and the first nine months of fiscal 2010, the income tax expense related to our interest rate swap was $0.2 million and $0.6 million, respectively. |
Third Quarter | ||||||||
Period from July 3, | Period from July 4, | |||||||
2011 to October 1, 2011 | 2010 to October 2, 2010 | |||||||
Service cost |
$ | 523 | $ | 498 | ||||
Interest cost on projected benefit obligation |
1,152 | 1,186 | ||||||
Expected return on plan assets |
(1,376 | ) | (1,232 | ) | ||||
Amortization of unrecognized loss |
145 | 123 | ||||||
Net periodic pension cost |
$ | 444 | $ | 575 | ||||
Nine Months Ended | ||||||||
Period from January 2, | Period from January 3, | |||||||
2011 to October 1, 2011 | 2010 to October 2, 2010 | |||||||
Service cost |
$ | 1,569 | $ | 1,494 | ||||
Interest cost on projected benefit obligation |
3,456 | 3,558 | ||||||
Expected return on plan assets |
(4,128 | ) | (3,696 | ) | ||||
Amortization of unrecognized loss |
435 | 369 | ||||||
Net periodic pension cost |
$ | 1,332 | $ | 1,725 | ||||
14
15
2011 |
$ | 3,692 | ||
2012 |
2,618 | |||
2013 |
2,837 | |||
2014 |
3,025 | |||
2015 |
3,225 | |||
Thereafter |
231,548 |
16
Balance at January 1, 2011 |
$ | 444 | ||
Amortization of accumulated other comprehensive loss recorded to interest expense |
(444 | ) | ||
Balance at October 1, 2011 |
$ | | ||
Fair value at January 1, 2011 |
$ | (2,195 | ) | |
Realized gains included in earnings, net |
2,195 | |||
Fair value at October 1, 2011 |
$ | | ||
17
18
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | |||||||||||||||||||
Holdings | and | LLC | ||||||||||||||||||
Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales |
$ | | $ | 472,898 | $ | 7,429 | $ | (7,429 | ) | $ | 472,898 | |||||||||
Cost of sales |
| 414,620 | | | 414,620 | |||||||||||||||
Gross profit |
| 58,278 | 7,429 | (7,429 | ) | 58,278 | ||||||||||||||
Operating expenses: |
||||||||||||||||||||
Selling, general and administrative |
1,029 | 61,884 | (947 | ) | (7,429 | ) | 54,537 | |||||||||||||
Depreciation and amortization |
| 1,616 | 943 | | 2,559 | |||||||||||||||
Total operating expenses |
1,029 | 63,500 | (4 | ) | (7,429 | ) | 57,096 | |||||||||||||
Operating (loss) income |
(1,029 | ) | (5,222 | ) | 7,433 | | 1,182 | |||||||||||||
Non-operating expenses: |
||||||||||||||||||||
Interest expense |
| 2,700 | 4,263 | | 6,963 | |||||||||||||||
Changes associated with ineffective interest rate swap |
| | | | | |||||||||||||||
Other (income) expense, net |
(7 | ) | 340 | | | 333 | ||||||||||||||
(Loss) income before (benefit from) provision for income
taxes |
(1,022 | ) | (8,262 | ) | 3,170 | | (6,114 | ) | ||||||||||||
(Benefit from) provision for income taxes |
(1,631 | ) | 489 | 1,236 | | 94 | ||||||||||||||
Equity in loss of subsidiaries |
(6,816 | ) | | | 6,816 | | ||||||||||||||
Net (loss) income |
$ | (6,207 | ) | $ | (8,751 | ) | $ | 1,934 | $ | 6,816 | $ | (6,208 | ) | |||||||
19
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | |||||||||||||||||||
Holdings | and | LLC | ||||||||||||||||||
Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales |
$ | | $ | 464,690 | $ | 7,457 | $ | (7,457 | ) | $ | 464,690 | |||||||||
Cost of sales |
| 414,748 | | | 414,748 | |||||||||||||||
Gross profit |
| 49,942 | 7,457 | (7,457 | ) | 49,942 | ||||||||||||||
Operating expenses: |
||||||||||||||||||||
Selling, general and administrative |
4,643 | 56,893 | 42 | (7,457 | ) | 54,121 | ||||||||||||||
Depreciation and amortization |
| 2,151 | 960 | | 3,111 | |||||||||||||||
Total operating expenses |
4,643 | 59,044 | 1,002 | (7,457 | ) | 57,232 | ||||||||||||||
Operating (loss) income |
(4,643 | ) | (9,102 | ) | 6,455 | | (7,290 | ) | ||||||||||||
Non-operating expenses: |
||||||||||||||||||||
Interest expense |
| 4,371 | 4,750 | | 9,121 | |||||||||||||||
Changes associated with ineffective interest rate swap |
| (1,156 | ) | | | (1,156 | ) | |||||||||||||
Write-off of debt issuance costs |
| 183 | | | 183 | |||||||||||||||
Other (income) expense, net |
| 214 | (22 | ) | | 192 | ||||||||||||||
(Loss) income before (benefit from) provision for income
taxes |
(4,643 | ) | (12,714 | ) | 1,727 | | (15,630 | ) | ||||||||||||
(Benefit from) provision for income taxes |
(916 | ) | (536 | ) | 674 | | (778 | ) | ||||||||||||
Equity in loss of subsidiaries |
(11,125 | ) | | | 11,125 | | ||||||||||||||
Net (loss) income |
$ | (14,852 | ) | $ | (12,178 | ) | $ | 1,053 | $ | 11,125 | $ | (14,852 | ) | |||||||
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | |||||||||||||||||||
Holdings | and | LLC | ||||||||||||||||||
Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales |
$ | | $ | 1,364,313 | $ | 22,286 | $ | (22,286 | ) | $ | 1,364,313 | |||||||||
Cost of sales |
| 1,202,121 | | | 1,202,121 | |||||||||||||||
Gross profit |
| 162,192 | 22,286 | (22,286 | ) | 162,192 | ||||||||||||||
Operating expenses: |
||||||||||||||||||||
Selling, general and administrative |
4,030 | 186,185 | (8,169 | ) | (22,286 | ) | 159,760 | |||||||||||||
Depreciation and amortization |
| 5,263 | 2,857 | | 8,120 | |||||||||||||||
Total operating expenses |
4,030 | 191,448 | (5,312 | ) | (22,286 | ) | 167,880 | |||||||||||||
Operating (loss) income |
(4,030 | ) | (29,256 | ) | 27,598 | | (5,688 | ) | ||||||||||||
Non-operating expenses: |
||||||||||||||||||||
Interest expense |
| 9,992 | 13,762 | | 23,754 | |||||||||||||||
Changes associated with the ineffective interest rate swap |
| (1,751 | ) | | | (1,751 | ) | |||||||||||||
Other expense, net |
| 495 | (10 | ) | | 485 | ||||||||||||||
(Loss) income before (benefit from) provision for income
taxes |
(4,030 | ) | (37,992 | ) | 13,846 | | (28,176 | ) | ||||||||||||
(Benefit from) provision for income taxes |
(6,972 | ) | 1,711 | 5,400 | | 139 | ||||||||||||||
Equity in loss of subsidiaries |
(31,257 | ) | | | 31,257 | | ||||||||||||||
Net (loss) income |
$ | (28,315 | ) | $ | (39,703 | ) | $ | 8,446 | $ | 31,257 | $ | (28,315 | ) | |||||||
20
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | |||||||||||||||||||
Holdings | and | LLC | ||||||||||||||||||
Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales |
$ | | $ | 1,436,521 | $ | 22,369 | $ | (22,369 | ) | $ | 1,436,521 | |||||||||
Cost of sales |
| 1,270,182 | | | 1,270,182 | |||||||||||||||
Gross profit |
| 166,339 | 22,369 | (22,369 | ) | 166,339 | ||||||||||||||
Operating expenses: |
||||||||||||||||||||
Selling, general and administrative |
8,099 | 181,862 | 132 | (22,369 | ) | 167,724 | ||||||||||||||
Depreciation and amortization |
| 7,408 | 2,881 | | 10,289 | |||||||||||||||
Total operating expenses |
8,099 | 189,270 | 3,013 | (22,369 | ) | 178,013 | ||||||||||||||
Operating (loss) income |
(8,099 | ) | (22,931 | ) | 19,356 | | (11,674 | ) | ||||||||||||
Non-operating expenses: |
||||||||||||||||||||
Interest expense |
| 10,384 | 14,257 | | 24,641 | |||||||||||||||
Changes associated with the ineffective interest rate swap |
| (3,217 | ) | | | (3,217 | ) | |||||||||||||
Write-off of debt issuance costs |
| 183 | | | 183 | |||||||||||||||
Other expense, net |
| 428 | 15 | | 443 | |||||||||||||||
(Loss) income before (benefit from) provision for income
taxes |
(8,099 | ) | (30,709 | ) | 5,084 | | (33,724 | ) | ||||||||||||
(Benefit from) provision for income taxes |
(2,234 | ) | (475 | ) | 1,983 | | (726 | ) | ||||||||||||
Equity in loss of subsidiaries |
(27,133 | ) | | | 27,133 | | ||||||||||||||
Net (loss) income |
$ | (32,998 | ) | $ | (30,234 | ) | $ | 3,101 | $ | 27,133 | $ | (32,998 | ) | |||||||
21
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | LLC | ||||||||||||||||||
Holdings Inc. | and Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets: |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash |
$ | 787 | $ | 5,103 | $ | | $ | | $ | 5,890 | ||||||||||
Receivables |
| 184,737 | | | 184,737 | |||||||||||||||
Inventories |
| 203,777 | | | 203,777 | |||||||||||||||
Deferred income tax assets |
| 59 | | | 59 | |||||||||||||||
Other current assets |
636 | 19,696 | 4,367 | | 24,699 | |||||||||||||||
Intercompany receivable |
115,967 | 11,665 | 2,636 | (130,268 | ) | | ||||||||||||||
Total current assets |
117,390 | 425,037 | 7,003 | (130,268 | ) | 419,162 | ||||||||||||||
Property and equipment: |
||||||||||||||||||||
Land and land improvements |
| 2,983 | 48,947 | | 51,930 | |||||||||||||||
Buildings |
| 9,871 | 87,954 | | 97,825 | |||||||||||||||
Machinery and equipment |
| 75,928 | | | 75,928 | |||||||||||||||
Construction in progress |
| 282 | | | 282 | |||||||||||||||
Property and equipment, at cost |
| 89,064 | 136,901 | | 225,965 | |||||||||||||||
Accumulated depreciation |
| (69,558 | ) | (28,656 | ) | | (98,214 | ) | ||||||||||||
Property and equipment, net |
| 19,506 | 108,245 | | 127,751 | |||||||||||||||
Investment in subsidiaries |
(69,657 | ) | | | 69,657 | | ||||||||||||||
Non-current deferred income tax assets |
| | | | | |||||||||||||||
Other non-current assets |
| 18,873 | 5,517 | | 24,390 | |||||||||||||||
Total assets |
$ | 47,733 | $ | 463,416 | $ | 120,765 | $ | (60,611 | ) | $ | 571,303 | |||||||||
Liabilities: |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Accounts payable |
$ | 1525 | $ | 87,943 | $ | | $ | | 89,468 | |||||||||||
Bank overdrafts |
| 30,322 | | | 30,322 | |||||||||||||||
Accrued compensation |
20 | 4,353 | | | 4,373 | |||||||||||||||
Current maturities of long-term debt |
| 33,427 | 2,602 | | 36,029 | |||||||||||||||
Other current liabilities |
239 | 19,633 | 1,244 | (1 | ) | 21,115 | ||||||||||||||
Intercompany payable |
13,185 | 117,086 | | (130,271 | ) | | ||||||||||||||
Total current liabilities |
14,969 | 292,764 | 3,846 | (130,272 | ) | 181,307 | ||||||||||||||
Non-current liabilities: |
||||||||||||||||||||
Long-term debt |
| 85,007 | 244,344 | | 329,351 | |||||||||||||||
Non-current deferred income tax
liabilities |
| 40 | | | 40 | |||||||||||||||
Other non-current liabilities |
3 | 27,842 | | | 27,845 | |||||||||||||||
Total liabilities |
14,972 | 405,653 | 248,190 | (130,272 | ) | 538,543 | ||||||||||||||
Stockholders (Deficit)
Equity/Parents Investment |
32,761 | 57,763 | (127,425 | ) | 69,661 | 32,760 | ||||||||||||||
Total liabilities and equity |
$ | 47,733 | $ | 463,416 | $ | 120,765 | $ | (60,611 | ) | $ | 571,303 | |||||||||
22
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | LLC | ||||||||||||||||||
Holdings Inc. | and Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets: |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash |
$ | 384 | $ | 13,913 | $ | | $ | | $ | 14,297 | ||||||||||
Receivables |
| 119,202 | | | 119,202 | |||||||||||||||
Inventories |
| 188,250 | | | 188,250 | |||||||||||||||
Deferred income tax assets, current |
| 143 | | | 143 | |||||||||||||||
Other current assets |
669 | 20,500 | 1,599 | | 22,768 | |||||||||||||||
Intercompany receivable |
57,208 | 8,759 | | (65,967 | ) | | ||||||||||||||
Total current assets |
58,261 | 350,767 | 1,599 | (65,967 | ) | 344,660 | ||||||||||||||
Property and equipment: |
||||||||||||||||||||
Land and land improvements |
| 3,027 | 49,513 | | 52,540 | |||||||||||||||
Buildings |
| 8,069 | 88,651 | | 96,720 | |||||||||||||||
Machinery and equipment |
| 70,860 | | | 70,860 | |||||||||||||||
Construction in progress |
| 2,028 | | | 2,028 | |||||||||||||||
Property and equipment, at cost |
| 83,984 | 138,164 | | 222,148 | |||||||||||||||
Accumulated depreciation |
| (65,564 | ) | (26,953 | ) | | (92,517 | ) | ||||||||||||
Property and equipment, net |
| 18,420 | 111,211 | | 129,631 | |||||||||||||||
Investment in subsidiaries |
(47,943 | ) | | | 47,943 | | ||||||||||||||
Other non-current assets |
| 19,602 | 31,126 | | 50,728 | |||||||||||||||
Total assets |
$ | 10,318 | $ | 388,789 | $ | 143,936 | $ | (18,024 | ) | $ | 525,019 | |||||||||
Liabilities: |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Accounts payable |
$ | 59 | $ | 62,768 | $ | | $ | | 62,827 | |||||||||||
Bank overdrafts |
| 23,089 | | | 23,089 | |||||||||||||||
Accrued compensation |
| 4,594 | | | 4,594 | |||||||||||||||
Current maturities of long-term debt |
| | 1,190 | | 1,190 | |||||||||||||||
Other current liabilities |
| 15,065 | 483 | 1,244 | 16,792 | |||||||||||||||
Intercompany payable |
9,264 | 57,947 | | (67,211 | ) | | ||||||||||||||
Total current liabilities |
9,323 | 163,463 | 1,673 | (65,967 | ) | 108,492 | ||||||||||||||
Non-current liabilities: |
||||||||||||||||||||
Long-term debt |
| 97,200 | 284,479 | | 381,679 | |||||||||||||||
Non-current deferred income tax
liabilities |
| 192 | | | 192 | |||||||||||||||
Other non-current liabilities |
4 | 33,661 | | | 33,665 | |||||||||||||||
Total liabilities |
9,327 | 294,516 | 286,152 | (65,967 | ) | 524,028 | ||||||||||||||
Stockholders Equity
(Deficit)/Parents Investment |
991 | 94,273 | (142,216 | ) | 47,943 | 991 | ||||||||||||||
Total liabilities and equity |
$ | 10,318 | $ | 388,789 | $ | 143,936 | $ | (18,024 | ) | $ | 525,019 | |||||||||
23
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | |||||||||||||||||||
Holdings | and | LLC | ||||||||||||||||||
Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net (loss) income |
$ | (28,315 | ) | $ | (39,703 | ) | $ | 8,446 | $ | 31,257 | $ | (28,315 | ) | |||||||
Adjustments to reconcile net (loss) income to cash (used in)
provided by operating activities: |
||||||||||||||||||||
Depreciation and amortization |
| 5,413 | 2,707 | | 8,120 | |||||||||||||||
Amortization of debt issuance costs |
| 2,029 | | | 2,029 | |||||||||||||||
Gain from the sale of properties |
| | (6,939 | ) | | (6,939 | ) | |||||||||||||
Gain from property insurance settlement |
| (1,230 | ) | | | (1,230 | ) | |||||||||||||
Changes associated with the ineffective interest rate swap |
| (1,751 | ) | | | (1,751 | ) | |||||||||||||
Gain on modification of lease agreement |
| (1,971 | ) | | | (1,971 | ) | |||||||||||||
Deferred income tax benefit |
| (282 | ) | | | (282 | ) | |||||||||||||
Share-based compensation expense |
| 1,578 | | | 1,578 | |||||||||||||||
Decrease (increase) in restricted cash |
| 443 | | | 443 | |||||||||||||||
Equity in earnings of subsidiaries |
31,257 | | | (31,257 | ) | | ||||||||||||||
Changes in assets and liabilities: |
||||||||||||||||||||
Receivables |
| (65,535 | ) | | | (65,535 | ) | |||||||||||||
Inventories |
| (15,527 | ) | | | (15,527 | ) | |||||||||||||
Accounts payable |
1,466 | 25,175 | | | 26,641 | |||||||||||||||
Changes in other working capital |
271 | 5,227 | (4,133 | ) | | 1,365 | ||||||||||||||
Intercompany receivable |
(58,759 | ) | (2,906 | ) | (1,392 | ) | 63,057 | | ||||||||||||
Intercompany payable |
3,921 | 59,139 | | (63,060 | ) | | ||||||||||||||
Other |
17 | 80 | (2,271 | ) | | (2,174 | ) | |||||||||||||
Net cash provided by (used in) operating activities |
(50,142 | ) | (29,821 | ) | (3,582 | ) | (3 | ) | (83,548 | ) | ||||||||||
Cash flows from investing activities: |
||||||||||||||||||||
Investment in subsidiaries |
(8,038 | ) | | 8,035 | 3 | | ||||||||||||||
Property, plant and equipment investments |
| (6,032 | ) | | | (6,032 | ) | |||||||||||||
Proceeds from disposition of assets |
| 8,994 | | 8,994 | ||||||||||||||||
Net cash (used in) provided by investing activities |
(8,038 | ) | (6,032 | ) | 17,029 | 3 | 2,962 | |||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||
Net transactions with Parent |
| | | | | |||||||||||||||
Repurchase of common stock |
| | | | | |||||||||||||||
Increase in revolving credit facility |
| 21,235 | | | 21,235 | |||||||||||||||
Debt financing costs |
| (200 | ) | (2,447 | ) | | (2,647 | ) | ||||||||||||
Payment of principal on mortgage |
| | (38,724 | ) | | (38,724 | ) | |||||||||||||
Payments on capital lease obligations |
| (1,224 | ) | | | (1,224 | ) | |||||||||||||
Increase in bank overdrafts |
| 7,233 | | | 7,233 | |||||||||||||||
Increase in restricted cash related to the mortgage |
| | 27,724 | | 27,724 | |||||||||||||||
Proceeds from stock rights offering less expenses paid |
58,582 | | | | 58,582 | |||||||||||||||
Intercompany receivable |
| | | | | |||||||||||||||
Intercompany payable |
| | | | | |||||||||||||||
Other |
| | | | | |||||||||||||||
Net cash provided by (used in) financing activities |
58,582 | 27,044 | (13,447 | ) | | 72,179 | ||||||||||||||
Decrease in cash |
402 | (8,809 | ) | | | (8,407 | ) | |||||||||||||
Balance, beginning of period |
384 | 13,913 | | | 14,297 | |||||||||||||||
Balance, end of period |
$ | 786 | $ | 5,104 | $ | | $ | | $ | 5,890 | ||||||||||
Noncash transactions |
||||||||||||||||||||
Capital leases |
$ | | $ | 3,147 | $ | | $ | | $ | 3,147 | ||||||||||
24
BlueLinx | ||||||||||||||||||||
BlueLinx | Corporation | |||||||||||||||||||
Holdings | and | LLC | ||||||||||||||||||
Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net (loss) income |
$ | (32,998 | ) | $ | (30,234 | ) | $ | 3,101 | $ | 27,133 | $ | (32,998 | ) | |||||||
Adjustments to reconcile net (loss) income to cash (used in)
provided by operating activities: |
||||||||||||||||||||
Depreciation and amortization |
| 7,408 | 2,881 | | 10,289 | |||||||||||||||
Amortization of debt issuance costs |
| 525 | 501 | | 1,026 | |||||||||||||||
Payments from terminating the Georgia-Pacific supply
agreement |
| 4,706 | | | 4,706 | |||||||||||||||
Changes associated with the ineffective interest rate swap |
| (3,217 | ) | | | (3,217 | ) | |||||||||||||
Write-off of debt issuance costs |
| 183 | | | 183 | |||||||||||||||
Deferred income tax benefit |
| (621 | ) | | | (621 | ) | |||||||||||||
Share-based compensation expense |
1,361 | 1,519 | | | 2,880 | |||||||||||||||
Decrease in restricted cash related to the ineffective
interest rate swap, insurance, and other |
| 6,009 | | | 6,009 | |||||||||||||||
Equity in earnings of subsidiaries |
27,133 | | | (27,133 | ) | | ||||||||||||||
Changes in assets and liabilities: |
||||||||||||||||||||
Receivables |
| (47,294 | ) | | | (47,294 | ) | |||||||||||||
Inventories |
| (22,384 | ) | | | (22,384 | ) | |||||||||||||
Accounts payable |
2,794 | 13,277 | | | 16,071 | |||||||||||||||
Changes in other working capital |
212 | 20,758 | 315 | | 21,285 | |||||||||||||||
Intercompany receivable |
9,460 | 903 | | (10,363 | ) | | ||||||||||||||
Intercompany payable |
(903 | ) | (9,433 | ) | (27 | ) | 10,363 | | ||||||||||||
Other |
(3 | ) | (3,820 | ) | (26 | ) | | (3,849 | ) | |||||||||||
Net cash provided by (used in) operating activities |
7,056 | (61,715 | ) | 6,745 | | (47,914 | ) | |||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||
Investment in subsidiaries |
(1,767 | ) | | | 1,767 | | ||||||||||||||
Property, plant and equipment investments |
| (2,689 | ) | | | (2,689 | ) | |||||||||||||
Proceeds from disposition of assets |
| 689 | | | 689 | |||||||||||||||
Net cash (used in) provided by investing activities |
(1,767 | ) | (2,000 | ) | | 1,767 | (2,000 | ) | ||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||
Net transactions with Parent |
| | 1,767 | (1,767 | ) | | ||||||||||||||
Repurchase of common stock |
(583 | ) | | | | (583 | ) | |||||||||||||
Increase in revolving credit facility |
| 45,996 | | | 45,996 | |||||||||||||||
Payments on capital lease obligations |
| (564 | ) | | | (564 | ) | |||||||||||||
Increase in bank overdrafts |
| 3,441 | | | 3,441 | |||||||||||||||
Increase in restricted cash related to the mortgage |
| | (8,397 | ) | | (8,397 | ) | |||||||||||||
Debt financing costs |
| (6,473 | ) | (48 | ) | | (6,521 | ) | ||||||||||||
Intercompany receivable |
(4,716 | ) | | | 4,716 | | ||||||||||||||
Intercompany payable |
| 4,716 | | (4,716 | ) | | ||||||||||||||
Other |
6 | | | | 6 | |||||||||||||||
Net cash (used in) provided by financing activities |
(5,293 | ) | 47,116 | (6,678 | ) | (1,767 | ) | 33,378 | ||||||||||||
Increase (decrease) in cash |
(4 | ) | (16,599 | ) | 67 | | (16,536 | ) | ||||||||||||
Balance, beginning of period |
32 | 29,129 | 296 | | 29,457 | |||||||||||||||
Balance, end of period |
$ | 28 | $ | 12,530 | $ | 363 | $ | | $ | 12,921 | ||||||||||
Noncash transactions |
||||||||||||||||||||
Capital leases |
$ | | $ | 1,889 | $ | | $ | | $ | 1,889 | ||||||||||
25
ITEM 2. | MANAGEMENTS 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; |
| our ability to finalize all necessary agreements for the launch of our privately branded engineered lumber line; |
| customer acceptance of our privately branded engineered lumber line; |
| adverse weather patterns or conditions; |
| acts of war or terrorist activities; |
| variations in the performance of the financial markets, including the credit markets; | ||
| the other factors described herein under and in our Annual Report on Form 10-K for the year ended January 1, 2011 as filed with the SEC. |
26
Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | |||||||||||||||||||
Q3 2011 | Q3 2010 | 2011 YTD | 2010 YTD | 2010 | 2009 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Sales by Category |
||||||||||||||||||||||||
Structural Products |
$ | 187 | $ | 214 | $ | 542 | $ | 683 | $ | 838 | $ | 738 | ||||||||||||
Specialty Products |
297 | 264 | 849 | 783 | 1,005 | 948 | ||||||||||||||||||
Other(1) |
(11 | ) | (13 | ) | (27 | ) | (29 | ) | (39 | ) | (40 | ) | ||||||||||||
Total Sales |
$ | 473 | $ | 465 | $ | 1,364 | $ | 1,437 | $ | 1,804 | $ | 1,646 | ||||||||||||
Sales Variances |
||||||||||||||||||||||||
Unit Volume $ Change |
$ | | $ | (6 | ) | $ | (71 | ) | $ | 52 | $ | 36 | $ | (1,036 | ) | |||||||||
Price/Other(1) |
8 | 22 | (2 | ) | 105 | 122 | (98 | ) | ||||||||||||||||
Total $ Change |
$ | 8 | $ | 16 | $ | (73 | ) | $ | 157 | $ | 158 | $ | (1,134 | ) | ||||||||||
Unit Volume % Change |
0.1 | % | (1.2 | )% | (4.9 | )% | 3.9 | % | 2.2 | % | (36.6 | )% | ||||||||||||
Price/Other(1) |
1.7 | % | 4.8 | % | (0.1 | )% | 8.4 | % | 7.4 | % | (4.2 | )% | ||||||||||||
Total % Change |
1.8 | % | 3.6 | % | (5.0 | )% | 12.3 | % | 9.6 | % | (40.8 | )% | ||||||||||||
(1) | Other includes unallocated allowances and discounts. |
27
Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | |||||||||||||||||||
Q3 2011 | Q3 2010 | 2011 YTD | 2010 YTD | 2010 | 2009 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Gross Margin $s by Category |
||||||||||||||||||||||||
Structural Products |
$ | 19 | $ | 16 | $ | 53 | $ | 62 | $ | 77 | $ | 73 | ||||||||||||
Specialty Products |
45 | 38 | 123 | 115 | 148 | 132 | ||||||||||||||||||
Other (1) |
(6 | ) | (4 | ) | (14 | ) | (11 | ) | (14 | ) | (12 | ) | ||||||||||||
Total Gross Margin $s |
$ | 58 | $ | 50 | $ | 162 | $ | 166 | $ | 211 | $ | 193 | ||||||||||||
Gross Margin %s by Category |
||||||||||||||||||||||||
Structural Products |
10.0 | % | 7.4 | % | 9.8 | % | 9.1 | % | 9.1 | % | 9.9 | % | ||||||||||||
Specialty Products |
15.1 | % | 14.4 | % | 14.5 | % | 14.7 | % | 14.7 | % | 13.9 | % | ||||||||||||
Total Gross Margin %s |
12.3 | % | 10.7 | % | 11.9 | % | 11.6 | % | 11.7 | % | 11.7 | % | ||||||||||||
Unit Volume Change by Product |
||||||||||||||||||||||||
Structural Products |
(14.0 | )% | (4.3 | )% | (19.2 | )% | 1.7 | % | (2.5 | )% | (40.3 | )% | ||||||||||||
Specialty Products |
11.4 | % | 1.3 | % | 7.7 | % | 5.7 | % | 5.7 | % | (32.8 | )% | ||||||||||||
Total Change in Unit Volume %s |
0.1 | % | (1.2 | )% | (4.8 | )% | 3.9 | % | 2.2 | % | (36.6 | )% |
(1) | Other includes unallocated allowances and discounts. |
Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | |||||||||||||||||||
Q3 2011 | Q3 2010 | 2011 YTD | 2010 YTD | 2010 | 2009 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Sales by Channel |
||||||||||||||||||||||||
Warehouse/Reload |
$ | 384 | $ | 371 | $ | 1,091 | $ | 1,130 | $ | 1,429 | $ | 1,251 | ||||||||||||
Direct |
100 | 107 | 300 | 336 | 414 | 435 | ||||||||||||||||||
Other(1) |
(11 | ) | (13 | ) | (27 | ) | (29 | ) | (39 | ) | (40 | ) | ||||||||||||
Total |
$ | 473 | $ | 465 | $ | 1,364 | $ | 1,437 | $ | 1,804 | $ | 1,646 | ||||||||||||
Gross Margin by Channel |
||||||||||||||||||||||||
Warehouse/Reload |
$ | 57 | $ | 48 | $ | 156 | $ | 159 | $ | 201 | $ | 177 | ||||||||||||
Direct |
7 | 6 | 20 | 18 | 24 | 28 | ||||||||||||||||||
Other(1) |
(6 | ) | (4 | ) | (14 | ) | (11 | ) | (14 | ) | (12 | ) | ||||||||||||
Total |
$ | 58 | $ | 50 | $ | 162 | $ | 166 | $ | 211 | $ | 193 | ||||||||||||
Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | Fiscal | |||||||||||||||||||
Q3 2011 | Q3 2010 | 2011 YTD | 2010 YTD | 2010 | 2009 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Gross Margin % by Channel |
||||||||||||||||||||||||
Warehouse/Reload |
14.8 | % | 12.9 | % | 14.3 | % | 14.1 | % | 14.1 | % | 14.1 | % | ||||||||||||
Direct |
7.0 | % | 5.6 | % | 6.7 | % | 5.4 | % | 5.8 | % | 6.4 | % | ||||||||||||
Total |
12.3 | % | 10.7 | % | 11.9 | % | 11.6 | % | 11.7 | % | 11.7 | % |
(1) | Other includes unallocated allowances and adjustments. |
28
% of | % of | |||||||||||||||
Third quarter of | Net | Third quarter of | Net | |||||||||||||
Fiscal 2011 | Sales | Fiscal 2010 | Sales | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net sales |
$ | 472,898 | 100.0 | % | $ | 464,690 | 100.0 | % | ||||||||
Gross profit |
58,278 | 12.3 | % | 49,942 | 10.7 | % | ||||||||||
Selling, general and administrative |
54,537 | 11.5 | % | 54,121 | 11.6 | % | ||||||||||
Depreciation and amortization |
2,559 | 0.5 | % | 3,111 | 0.7 | % | ||||||||||
Operating income (loss) |
1,182 | 0.2 | % | (7,290 | ) | (1.6 | )% | |||||||||
Interest expense |
6,963 | 1.5 | % | 9,121 | 2.0 | % | ||||||||||
Changes associated with the ineffective interest rate swap |
| 0.0 | % | (1,156 | ) | (0.2 | )% | |||||||||
Write-off of debt issuance costs |
| 0.0 | % | 183 | 0.0 | % | ||||||||||
Other expense, net |
333 | 0.1 | % | 192 | 0.0 | % | ||||||||||
Loss before provision for income taxes |
(6,114 | ) | (1.3 | )% | (15,630 | ) | (3.4 | )% | ||||||||
Provision for (benefit from) income taxes |
94 | 0.0 | % | (778 | ) | (0.2 | )% | |||||||||
Net loss |
$ | (6,208 | ) | (1.3 | )% | $ | (14,852 | ) | (3.2 | )% | ||||||
29
First nine months | % of | First nine months | % of | |||||||||||||
of | Net | of | Net | |||||||||||||
Fiscal 2011 | Sales | Fiscal 2010 | Sales | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net sales |
$ | 1,364,313 | 100.0 | % | $ | 1,436,521 | 100.0 | % | ||||||||
Gross profit |
162,192 | 11.9 | % | 166,339 | 11.6 | % | ||||||||||
Selling, general and administrative |
159,760 | 11.7 | % | 167,724 | 11.7 | % | ||||||||||
Depreciation and amortization |
8,120 | 0.6 | % | 10,289 | 0.7 | % | ||||||||||
Operating loss |
(5,688 | ) | (0.4 | )% | (11,674 | ) | (0.8 | )% | ||||||||
Interest expense |
23,754 | 1.7 | % | 24,641 | 1.7 | % | ||||||||||
Changes associated with the ineffective interest rate swap |
(1,751 | ) | (0.1 | )% | (3,217 | ) | (0.2 | )% | ||||||||
Write-off of debt issuance costs |
| 0.0 | % | 183 | 0.0 | % | ||||||||||
Other expense, net |
485 | 0.0 | % | 443 | 0.0 | % | ||||||||||
Loss before provision for income taxes |
(28,176 | ) | (2.1 | )% | (33,724 | ) | (2.3 | )% | ||||||||
Provision for (benefit from) income taxes |
139 | 0.0 | % | (726 | ) | (0.1 | )% | |||||||||
Net loss |
$ | (28,315 | ) | (2.1 | )% | $ | (32,998 | ) | (2.3 | )% | ||||||
30
31
32
October 1, 2011 | January 1, 2011 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Working capital |
$ | 237,855 | $ | 236,168 |
First nine months of | First nine months of | |||||||
Fiscal 2011 | Fiscal 2010 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Cash flows used in operating activities |
$ | (83,548 | ) | $ | (47,914 | ) | ||
Cash flows provided by (used in) investing activities |
2,962 | (2,000 | ) | |||||
Cash flows provided by financing activities |
72,179 | 33,378 |
33
34
35
Balance at January 1, 2011 |
$ | 444 | ||
Amortization of accumulated other comprehensive loss recorded to interest expense |
(444 | ) | ||
Balance at October 1, 2011 |
$ | | ||
36
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
37
ITEM 6. | EXHIBITS |
Exhibit | ||||
Number | Description | |||
10.1 | Canadian Credit Agreement, dated August 12, 2011, by and among BlueLinx Canada, CIBC Asset-Based
Lending Inc. and the lenders from time to time parties thereto (Incorporated by reference to
Exhibit 10.1 to the current report on Form 8-K filed by the
Company on August 16, 2011). |
|||
10.2 |
The Third Amendment, dated May 10, 2011, to the Amended and Restated Loan and Security Agreement, dated August 4, 2006,
as amended, by and between the Operating Company, Wells Fargo and the other signatories listed therein (Incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on May 12, 2011).
|
|||
10.3 | The Fourth Amendment, dated August 11,2011, to the Amended and Restated Loan and Security
Agreement, dated August 4, 2006, as amended, by and between the Operating Company, Wells Fargo and
the other signatories listed therein (Incorporated by reference to Exhibit 10.2 to the Current
Report on Form 8-K filed by the Company on August 16, 2011). |
|||
10.4 |
The Fifth Amendment to Loan and Security Agreement, dated July 14, 2011, to the Loan and Security Agreement,
dated June 9, 2006, as amended, by and among the Company and certain of its subsidiaries and U.S. Bank National
Association in its capacity as trustee for the registered holders of Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass Through Certificates, Series 2006-C 27, as successor in interest to German American Capital
Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on July 14, 2011) |
|||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
101 | The following financial information from the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended October 1, 2011, formatted in Extensible Business Reporting Language
(XBRL): (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii)
Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.* |
* | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under these sections. |
38
BlueLinx Holdings Inc. (Registrant) |
||||
Date: November 4, 2011 | /s/ H. Douglas Goforth | |||
H. Douglas Goforth | ||||
Chief Financial Officer and Treasurer |
39
Exhibit | ||||
Number | Description | |||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
40
(1) | I have reviewed this quarterly report on Form 10-Q of BlueLinx Holdings Inc; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
(4) | The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f))for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and |
(5) | The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants auditors
and the audit committee of the registrants board of directors (or persons performing the
equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and |
(b) | Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting. |
/s/ George R. Judd | ||||
George R. Judd | ||||
BlueLinx Holdings Inc. Chief Executive Officer |
(1) | I have reviewed this quarterly report on Form 10-Q of BlueLinx Holdings Inc; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
(4) | The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f))for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and |
(5) | The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants auditors
and the audit committee of the registrants board of directors (or persons performing the
equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and |
(b) | Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting. |
/s/ H. Douglas Goforth | ||||
H. Douglas Goforth | ||||
BlueLinx Holdings Inc. Chief Financial Officer and Treasurer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. |
November 4, 2011 | By: | /s/ George R. Judd | ||
George R. Judd | ||||
Chief Executive Officer | ||||
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. |
November 4, 2011 | By: | /s/ H. Douglas Goforth | ||
H. Douglas Goforth | ||||
Chief Financial Officer and Treasurer | ||||
Consolidated Balance Sheets (Parenthetical) (USD $) | Oct. 01, 2011 | Jan. 01, 2011 |
---|---|---|
Stockholders' Equity: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 61,811,862 | 32,667,504 |
Document and Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Oct. 01, 2011 | Nov. 04, 2011 | Jul. 03, 2010 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | BlueLinx Holdings Inc. | ||
Entity Central Index Key | 0001301787 | ||
Document Type | 10-Q | ||
Document Period End Date | Oct. 01, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Current Fiscal Year End Date | --01-02 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 27,993,142 | ||
Entity Common Stock, Shares Outstanding | 61,811,862 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Revolving Credit Facilities | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Revolving Credit Facilities [Abstract] | |
Revolving Credit Facilities |
7. Revolving Credit Facilities
As of October 1, 2011, we had outstanding borrowings of $115.6 million and excess availability
of $148.9 million under the terms of our U.S. revolving credit facility (the “U.S. revolving credit
facility”). The interest rate on the U.S. revolving credit facility was 4.2% at October 1, 2011.
As of October 1, 2011 and January 1, 2011, we had outstanding letters of credit totaling $2.6
million and $5.9 million, respectively, primarily for the purposes of securing collateral
requirements under the interest rate swap (which was terminated in March of 2011), casualty
insurance programs and for guaranteeing lease and certain other obligations.
On July 7, 2010, we reached an agreement with Wells Fargo Bank, National Association,
successor by merger to Wachovia Bank, National Association, and the other signatories to our
existing U.S. revolving credit facility, dated August 4, 2006, as amended, to amend the terms
thereof. This amendment extended the date of final maturity of the facility to January 7, 2014 and
decreased the maximum availability under the agreement from $500 million to $400 million. This
amendment also includes an additional $100 million uncommitted accordion credit facility, which
will permit us to increase the maximum borrowing capacity up to $500 million. As a result of
reducing our maximum borrowing capacity from $500 million to $400 million, we recorded expense of
$0.2 million in fiscal 2010 for the write-off of debt issuance costs associated with the reduction
in borrowing capacity. We also incurred $6.5 million in new debt issuance costs, which we
capitalized and will continue to amortize to interest expense over the renewed debt term.
On May 10, 2011, we entered into an amendment to our U.S. revolving credit facility, which
became effective on July 29, 2011, following the successful completion of the rights offering
described below. Certain components of the borrowing base calculation and excess liquidity
calculation were adjusted as part of this amendment. The most significant of the changes included
in the amendment are described in the discussion of the terms and covenants of the U.S. revolving
credit facility below.
As of October 1, 2011, under the amended agreement, our U.S. revolving credit facility
contains customary negative covenants and restrictions for asset based loans. Our most significant
covenant is a requirement that we maintain a fixed charge coverage ratio of 1.1 to 1.0 in the event
our excess availability falls below the greater of $30 million or the amount equal to 15% of the
lesser of the borrowing base or $400 million (the “Excess Availability Threshold”). We are
required to maintain the Excess Availability Threshold in order to avoid being required to meet
certain financial ratios and triggering additional limits on capital expenditures. The amount of
our eligible accounts receivable included in the calculation of the borrowing base is 87.5%. Under
the amended U.S. revolving credit facility agreement, the applicable percentage of the net
liquidation value of our eligible inventory included in the calculation of the borrowing base is
90% for the periods January to March 2012 and January to March 2013, subject to specified EBITDA
targets. The percentage of the net liquidation value of our eligible inventory included in the
borrowing remains the same as under the original agreement outside of the time period just
specified. Also included in the calculation of our excess availability is certain cash on the
balance sheet, which is subject to a deposit account control agreement. The fixed charge coverage
ratio is calculated as EBITDA divided by the sum of cash payments for income taxes, interest
expense, cash dividends, principal payments on debt, and capital expenditures. EBITDA is defined
as BlueLinx Corporation’s net income before interest and tax expense, depreciation and amortization
expense, and other non-cash charges. The fixed charge coverage ratio requirement only applies to
us when excess availability under our amended U.S. revolving credit facility is less than the
Excess Availability Threshold on any date. As of October 1, 2011 and through the time of the filing
of this Form 10-Q, we were in compliance with all covenants. We had
$148.9 million and $103.4 million of
availability as of October 1, 2011 and January 1, 2011, respectively. Our lowest level of fiscal
month end availability in the last three years as of October 1, 2011 was $94.0 million. We do not
anticipate our excess availability in fiscal 2011 will drop below the Excess Availability
Threshold. Should our excess availability fall below the Excess Availability Threshold on any
date, however, we would not meet the required fixed charge coverage ratio with our current
operating results. In addition, we must maintain a springing lock-box arrangement where customer
remittances go directly to a lock-box maintained by our lenders and then are forwarded to our
general bank accounts. Our outstanding borrowings are not reduced by these payments unless our
excess availability falls below the greater of $35 million or the amount equal to 15% of the lesser
of the borrowing base or $400 million on any date or in the event of default. Our amended U.S.
revolving credit facility does not contain a subjective acceleration clause which would allow our
lenders to accelerate the scheduled maturities of our debt or to cancel our agreement.
On July 22, 2011, we concluded an offering of our common stock to our stockholders, pursuant
to which we distributed to our common stockholders transferable rights to subscribe for and
purchase up to $60 million of our common stock. In conjunction with the rights offering, we
entered into an investment agreement with Cerberus ABP Investor LLC, which beneficially owned
approximately 55% of our common stock before giving effect to the rights offering, to backstop the
rights offering, subject to certain conditions, by purchasing shares of common stock that related to any rights that remained
unexercised at the expiration of the rights offering. The rights offering was fully subscribed and
as a result the backstop provisions with Cerberus were not utilized. The rights offering resulted
in gross proceeds of approximately $60 million. The majority of the gross proceeds from the rights
offering of approximately $56 million were used to pay down the U.S. revolving credit facility. A
payment on the U.S. revolving credit facility of $50.0 million was made on July 29, 2011 and an
additional payment of $6.0 million was made on August 1, 2011. We accounted for the rights issued
as a component of additional paid in capital as they were indexed to the Company’s equity and there
were no net cash settlement provisions. The amendment to our U.S. revolving credit
facility, which was a condition to the rights offering, became effective upon the successful
completion of the rights offering. In addition, as a condition to the rights offering, we entered
into an amendment to our mortgage. The amendment to the mortgage is described further in Note 8.
On August 12, 2011, our subsidiary BlueLinx Building Products Canada Ltd.(“BlueLinx Canada”) entered into a
revolving credit agreement (the “Canadian revolving credit facility”) with CIBC Asset-Based Lending
Inc., as lender, administrative agent and collateral agent (the “Agent”). The maturity date of
this agreement is August 12, 2014. The Canadian revolving credit facility provides for an
asset-based revolving credit facility with an aggregate lender commitment of up to $10 million at
any time outstanding, subject to borrowing base availability. In addition, the Canadian revolving
credit facility provides for an additional $5 million uncommitted accordion credit facility.
Revolving loan (and letter of credit) availability under the facility is subject to a borrowing
base. The amount of our eligible Canadian accounts receivable included in the calculation of the
borrowing base is 85%. The amount of our eligible inventory included in the calculation of the
borrowing base is 65%. The sum of items included in the borrowing base is reduced by $0.5 million
(the “availability block”) and other availability reserves. In addition to paying interest on
outstanding principal under the facility, we are required to pay a fee in respect of committed but
unutilized commitments equal to 0.25% per annum. As of October 1, 2011, we had outstanding
borrowings of $2.8 million and excess availability of $1.8 million under the terms of our Canadian
revolving credit facility. The interest rate on the Canadian revolving credit facility was 4.0% at
October 1, 2011. The Canadian revolving credit facility contains customary covenants and events of
default for asset-based credit agreements of this type, including the requirement for BlueLinx
Canada to maintain a minimum adjusted tangible net worth of $3.9 million and
for that entity’s capital expenditures not to exceed 120% of the amount budgeted in a given year.
As of October 1, 2011 and through the time of the filing of this Form 10-Q, we were in compliance
with all covenants.
We believe that the amounts available from our revolving credit facilities and other sources
are sufficient to fund our routine operations and capital requirements for the next 12 months. If
economic conditions, especially those related to the housing market, do not improve, we may need to
seek additional sources of capital to support our operations.
|
Commitments and Contingencies | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies |
12. Commitments and Contingencies
Legal Proceedings
During the first nine months of fiscal 2011, there were no material changes to our previously
disclosed legal proceedings. Additionally, we are, and from time to time may be, a party to routine
legal proceedings incidental to the operation of our business. The outcome of any pending or
threatened proceedings is not expected to have a material adverse effect on our financial
condition, operating results or cash flows, based on our current understanding of the relevant
facts. Legal expenses incurred related to these contingencies are generally expensed as incurred.
Environmental Matters
From time to time, we are involved in various proceedings incidental to our businesses and we
are subject to a variety of environmental and pollution control laws and regulations in all
jurisdictions in which we operate. Although the ultimate outcome of these proceedings cannot be
determined with certainty, based on presently available information management believes that
adequate reserves have been established for probable losses with respect thereto. Management
further believes that the ultimate outcome of these matters could be material to operating results
in any given quarter but will not have a materially adverse effect on our long-term financial
condition, our results of operations, or our cash flows.
Collective Bargaining Agreements
As of October 1, 2011, approximately 30% of our employees were represented by various labor
unions. As of October 1, 2011, we had 46 collective bargaining agreements, of which 4, covering
approximately 40 total employees, are up for renewal in 2011, and one collective bargaining
agreement expired in March 2010. We are in active negotiations with the subject union, and, in the
interim, are operating under the terms and conditions of the expired agreement.
|
Restructuring Charges | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges |
3. Restructuring Charges
We account for exit and disposal costs by recognizing a liability for costs associated with an
exit or disposal activity at fair value in the period in which it is incurred or when the entity
ceases using the right conveyed by a contract (i.e., the right to use a leased property). Our
restructuring charges included accruals for estimated losses on facility costs based on our
contractual obligations net of estimated sublease income based on current comparable market rates
for leases. We reassess this liability periodically based on current market conditions. Revisions
to our estimates of this liability could materially impact our operating results and financial
position in future periods if anticipated events and key assumptions, such as the timing and
amounts of sublease rental income, either do not materialize or change. These costs are included in
“Selling, general, and administrative” expenses in the Consolidated Statements of Operations for
the first nine months of fiscal 2011 and the first nine months of fiscal 2010, and “Other current
liabilities” and “Other non-current liabilities” on the Consolidated Balance Sheets at October 1,
2011 and January 1, 2011.
We account for severance and outplacement costs by recognizing a liability for employees’
rights to post-employment benefits at the time in which such costs become probable and estimable.
These costs are included in “Selling, general, and administrative” expenses in the Consolidated
Statements of Operations for the first nine months of fiscal 2011 and the first nine months of
fiscal 2010, and in “Accrued compensation” on the Consolidated Balance Sheets for the periods ended
October 1, 2011 and January 1, 2011.
2007 Facility Consolidation and Severance Costs
During fiscal 2007, we announced a plan to adjust our cost structure in order to manage our
costs more effectively. The plan included the consolidation of our corporate headquarters and sales
center to one building from two buildings and reduction in force initiatives which resulted in
charges of $17.1 million during the fourth quarter of fiscal 2007. As of October 1, 2011 and
January 1, 2011, there was no remaining accrued severance related to reduction in force initiatives
completed in fiscal 2007.
During the third quarter of fiscal 2011, we entered into an amendment to our corporate
headquarters lease in Atlanta, GA related to the unoccupied 4100 building. This amendment released
us from our obligations with respect to this unoccupied space as of January 31, 2012, in exchange
for a $5.0 million space remittance fee, due on or before that date. In addition, we are obligated
to pay $1.2 million on or before December 31, 2013 to be used for tenant improvements. The
provisions relating to the occupied 4300 building remain unchanged. Under the existing provisions,
the current term of the lease ends on January 31, 2019. The amendment resulted in a reduction of
our restructuring reserve of approximately $2.0 million, with the credit recorded in “Selling,
general, and administrative” expenses in the Consolidated Statements of Operations.
The table below summarizes the balance of accrued facility consolidation reserve
and changes in the accrual for the third quarter of fiscal 2011 (in thousands):
The table below summarizes the balance of accrued facility consolidation reserve
and changes in the accrual for the first nine months of fiscal 2011 (in thousands):
2010 Severance Costs
During fiscal 2010, we had certain reduction in force activities, which resulted in severance
charges of $1.1 million.
The table below summarizes the balances of the accrued severance reserves and the changes in
the accruals for the third quarter of fiscal 2011 (in thousands):
The table below summarizes the balances of the accrued severance reserves and the changes in
the accruals for the first nine months of fiscal 2011 (in thousands):
2011 Severance Costs
During fiscal 2011, we had certain reduction in force activities, which resulted in severance
charges of $1.6 million.
The table below summarizes the balances of the accrued severance reserves and the changes in
the accruals for the third quarter of fiscal 2011 (in thousands):
The table below summarizes the balances of the accrued severance reserves and the changes in
the accruals for the first nine months of fiscal 2011 (in thousands):
|
Derivatives | 9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||
Derivatives [Abstract] | |||||||||||||||||||||||||||||||
Derivatives |
9. Derivatives
On June 12, 2006, we entered into an interest rate swap agreement with Goldman Sachs Capital
Markets, to hedge against interest rate risks related to our variable rate U.S. revolving credit
facility. The interest rate swap was terminated in March of 2011. This interest rate swap was
designated as a cash flow hedge. During fiscal 2009, our debt levels decreased below the interest
rate swap notional, at which point the hedge became ineffective in offsetting future changes in
expected cash flows during the remaining term of the interest rate swap.
Changes associated with the ineffective interest rate swap recognized in the Consolidated
Statements of Operations for the period from January 1, 2011 to October 1, 2011 was approximately
$1.8 million of income and are comprised of amortization of the remaining accumulated other
comprehensive loss of the ineffective swap of $0.4 million offset by income of $2.2 million related
to reducing the fair value of the ineffective interest rate swap liability to zero. Due to the
termination of the swap in the first quarter of 2011, there was no activity for the quarter ended
October 1, 2011. Changes associated with the ineffective interest rate swap recognized in the
Consolidated Statements of Operations for the period from January 3, 2010 to October 2, 2010 were
approximately $3.2 million of income and are comprised of amortization of the remaining accumulated
other comprehensive loss over the life of the ineffective swap of $1.6 million offset by income of
$4.8 million related to current year changes in the fair value of the ineffective interest rate
swap liability. Changes associated with the ineffective interest rate swap recognized in the
Consolidated Statements of Operations for the period July 4, 2010 to October 2, 2010 were
approximately $1.2 million of income and are comprised of amortization of the remaining accumulated
other comprehensive loss over the life of the ineffective swap of $0.5 million offset by income of
$1.7 million related to current year changes in the fair value of the ineffective interest rate
swap liability. The fair value of our swap liability at January 1, 2011 was $2.2 million.
The following table presents a reconciliation of the unrealized losses related to our interest
rate swap measured at fair value in accumulated other comprehensive loss as of October 1, 2011 (in
thousands):
|
Unaudited Supplemental Consolidating Financial Statements | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Supplemental Consolidating Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Supplemental Consolidating Financial Statements |
14. Unaudited Supplemental Consolidating Financial Statements
The condensed consolidating financial information as of October 1, 2011 and January 1, 2011
and for the third quarters and first nine months of fiscal 2011 and fiscal 2010 is provided due to
restrictions in our U.S. revolving credit facility that limit distributions by BlueLinx
Corporation, our operating company and our wholly-owned subsidiary, to us, which, in turn, may
limit our ability to pay dividends to holders of our common stock (see our Annual Report on Form
10-K for the year ended January 1, 2011, for a more detailed discussion of these restrictions and
the terms of the facility). Also included in the supplemental condensed consolidated financial
statements are sixty single member limited liability companies, which are wholly owned by us (the
“LLC subsidiaries”). The LLC subsidiaries own certain warehouse properties that are occupied by
BlueLinx Corporation, each under the terms of a master lease agreement. The warehouse properties
collateralize a mortgage loan and are not available to satisfy the debts and other obligations of
either us or BlueLinx Corporation.
The consolidating statement of operations for BlueLinx Holdings Inc. for the period from July
3, 2011 to October 1, 2011 follows (in thousands):
The consolidating statement of operations for BlueLinx Holdings Inc. for the period from
July 4, 2010 to October 2, 2010 follows (in thousands):
The consolidating statement of operations for BlueLinx Holdings Inc. for the period from
January 2, 2011 to October 1, 2011 follows (in thousands):
The consolidating statement of operations for BlueLinx Holdings Inc. for the period from
January 3, 2010 to October 2, 2010 follows (in thousands):
The consolidating balance sheet for BlueLinx Holdings Inc. as of October 1, 2011 follows
(in thousands):
The consolidating balance sheet for BlueLinx Holdings Inc. as of January 1, 2011 follows
(in thousands):
The consolidating statement of cash flows for BlueLinx Holdings Inc. for the period from
January 2, 2011 to October 1, 2011 follows (in thousands):
The consolidating statement of cash flows for BlueLinx Holdings Inc. for the period from
January 3, 2010 to October 2, 2010 follows (in thousands):
|
Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||
Fair Value Measurements |
10. Fair Value Measurements
We determine a fair value measurement based on the assumptions a market participant would use
in pricing an asset or liability. The fair value measurement guidance established a three level
hierarchy making a distinction between market participant assumptions based on (i) unadjusted
quoted prices for identical assets or liabilities in an active market (Level 1), (ii) quoted prices
in markets that are not active or inputs that are observable either directly or indirectly for
substantially the full term of the asset or liability (Level 2), and (iii) prices or valuation
techniques that require inputs that are both unobservable and significant to the overall fair value
measurement (Level 3).
We had an ineffective interest rate swap that terminated in March of fiscal 2011. The swap is
valued using a valuation model that has inputs other than quoted market prices that are both
observable and unobservable.
The following table presents a reconciliation of the level 3 interest rate swap liability
measured at fair value on a recurring basis as of October 1, 2011 (in thousands):
The $2.2 million realized gain is included in “Changes associated with ineffective interest
rate swap” in the Consolidated Statements of Operations for the nine month period ended October 1,
2011.
Carrying amounts for our financial instruments are not significantly different from their fair
value, with the exception of our mortgage. To determine the fair value of our mortgage, we used a
discounted cash flow model. Assumptions critical to our fair value in the period were present value
factors used in determining fair value and an interest rate. At October 1, 2011, the carrying
value and fair value of our mortgage was $235.3 million and $235.1 million, respectively.
|
Mortgage | 9 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | ||||||||||||||||||||||||||||||||||||
Mortgage [Abstract] | ||||||||||||||||||||||||||||||||||||
Mortgage |
8. Mortgage
On June 9, 2006, certain special purpose entities that are wholly-owned subsidiaries of ours
entered into a $295 million mortgage loan with the German American Capital Corporation. The
mortgage has a term of ten years and is secured by 55 distribution facilities and 1 office building
owned by the special purpose entities. The stated interest rate on the mortgage is fixed at 6.35%.
German American Capital Corporation assigned half of its interest in the mortgage loan to Wachovia
Bank, National Association and both lenders securitized their Notes in separate commercial mortgage
backed securities pools in 2006.
On July 14, 2011, we entered into an amendment to the mortgage which (i) eliminated the
requirement to obtain lender approval for any transfer of equity interests that would reduce
Cerberus ABP Investor LLC’s ownership in the Company and certain of our subsidiaries, directly or
indirectly, to less than 51%, (ii) provided for the immediate prepayment of $38.3 million of the
indebtedness under the mortgage without incurring a prepayment premium from funds currently held as
collateral under the mortgage and, if certain conditions are met, will allow for an additional
prepayment on or after July 30, 2014 from funds held as collateral without incurrence of a
prepayment premium, (iii) allow us, at the lenders’ reasonable discretion, to use a portion of the
cash held as collateral under the mortgage for specified alterations, repairs, replacements and
other improvements to the mortgaged properties, and (iv) in the event certain financial conditions
are met and the Company extends the Amended and Restated Master Lease by and among certain of our
subsidiaries with respect to properties covered by the mortgage for an additional five years, we
may request the lenders to disburse to the Company a portion of the cash held as collateral under
the mortgage. In conjunction with the modification of our mortgage agreement we incurred approximately $2.9 million
in debt fees that were capitalized and are being amortized over the remaining term of the mortgage.
The mortgage loan required interest-only payments through June 2011, at which time we began
making payments on the outstanding principal balance. The balance of the loan outstanding at the
end of ten years will then become due and payable. The principal will be paid in the following
increments (in thousands):
|
Basis of Presentation and Background | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Basis of Presentation and Background [Abstract] | |
Basis of Presentation and Background |
1. Basis of Presentation and Background
Basis of Presentation
BlueLinx Holdings Inc. has prepared the accompanying Unaudited Consolidated Financial
Statements, including its accounts and the accounts of its wholly-owned subsidiaries, in accordance
with the instructions to Form 10-Q and therefore they do not include all of the information and
notes required by United States generally accepted accounting principles (“GAAP”). These interim
financial statements should be read in conjunction with the financial statements and accompanying
notes included in our Annual Report on Form 10-K for the year ended January 1, 2011, as filed with
the Securities and Exchange Commission (“SEC”). Our fiscal year is a 52- or 53-week period ending
on the Saturday closest to the end of the calendar year. Fiscal year 2011 and fiscal year 2010 each
contain 52 weeks. BlueLinx Corporation is the wholly-owned operating subsidiary of BlueLinx
Holdings Inc. and is referred to herein as the “operating subsidiary” when necessary.
We believe the accompanying Unaudited Consolidated Financial Statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of
our financial position, results of operations and cash flows for the periods presented. The
preparation of the consolidated financial statements in conformity with GAAP requires us to make
estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements
and accompanying notes. Actual results could differ from those estimates and such differences could
be material. In addition, the operating results for interim periods may not be indicative of the
results of operations for a full year. We are exposed to fluctuations in quarterly sales volumes
and expenses due to seasonal factors, with the second and third quarters typically accounting for
the highest sales volumes. These seasonal factors are common in the building products distribution
industry.
We are a leading distributor of building products in North America with approximately 1,900
employees. We offer approximately 10,000 products from over 750 suppliers to service more than
11,500 customers nationwide, including dealers, industrial manufacturers, manufactured housing
producers and home improvement retailers. We operate our distribution business from sales centers
in Atlanta and Denver, and our network of more than 55 distribution centers.
|
Assets Held for Sale and Net Gain on Disposition | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Assets Held for Sale and Net Gain on Disposition [Abstract] | |
Assets Held for Sale and Net Gain on Disposition |
4. Assets Held for Sale and Net Gain on Disposition
As part of our restructuring efforts to improve our cost structure and cash flow, we closed
certain facilities and designated them as assets held for sale. At the time of designation, we
ceased recognizing depreciation expense on these assets. As of October 1, 2011 and January 1, 2011,
total assets held for sale were $2.2 million and $1.6 million respectively, and were included in
“Other current assets” in our Consolidated Balance Sheets. During the first nine months of fiscal
2011, we sold certain real properties held for sale that resulted in a $6.9 million gain recorded
in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations.
All of this activity occurred during the first quarter of 2011. We continue to actively market the
remaining properties that are held for sale. Due to the fact that, as of October 1, 2011 the
remaining properties are all primarily land, depreciation expense is not materially impacted.
|
Comprehensive Loss | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Loss |
5. Comprehensive Loss
The calculation of comprehensive loss is as follows (in thousands):
|
`T/5N*#W`LK
M00C=M\C$8CY:R+6[X9-8PX1>IG@6/(ZECH%N$+FQB>.K*Z#%@-D0:I.)RY^#
MU;R*%3=(&5!'V`9!/[;** *-;I0`M%P?GVB-85,-,I,C"7<* FVKM**#=<<@9N\0 J$T2HI*.]#43T0<*47'%MG<
M9*841;NP-^!])(MX*C6[@?&+):C1U(,_I1KV##4Z7`#FF",WF6(=!&%-I@!S
MJLF!/%66SB0HL"I#MA)8?.&1FL_12L9GN/<>I&4>JK5`O?!?\(F"K'PPJO+_
MVOD$"^\K$UV+6/S@BPIE*?9J4#XABL2(6$8'SPQ(>H2?;Y6+9#*@-0;9MF-+G.,M,"*KE1NLJ]6U@
MBSAX3)SS)&^+L ^')N9>7'ZX#SK]!;\?>>S3ZOEDOJC.H%.2Y\1S(\ X>V9VQ%EJ`,W+LD1[%RYUN@V`:;47I0S=T:R["7@/',$VY:P)W:/ D7EWXSG:X6JP`J>EDSMHS9U,<"9H8?U!ALU*^Z@G4U=ZD)'7=@CZOZN; HX]`L%D^P@GZA*Y;F))
M0+_Q&"1]`=V(I^C$C;"_<7N0WY]@2($WJ&6`'TXB3]R-(#I=28RFG_UP(/^#
M]P/(6C!"L"N#/2,36=H
M&G,84A]59$GBDYU8G4LU8)Q,@:'
MM%%Q9L"&L/65AJ#HX-N0>-Q)H>M4&+[L"(,L@2`8S;B+L1K%Z4.0C#X9A+B,
M;PDVE]0#*1R+OY&61\-G[G_#45D)@/1Z>1X)O3T*M/XAV5G4/#5-ZP-7FL
MJ`XDD"G`E5;V%;1%&MW4+
M*&!)9AR!VVD,2QE@9`(*68HJ>NQ1($WT"+$YX&0'Q_;,3Y1H'S+.2='2@BA3
MLI=M'T7>4N'IG5GHI;+N?3@F<&"B-S3VP=![#?Z,`@SXVPE4?E&C/_+)(B7M
M"JU=Y=/>Y)$`0)Y,E`84'E]TG$H]C6^2G\@(I-P_S5-+0`,0^L/K7L'O3HT'MX$,CJ.8#`M(U8*B/1+QMH0'-!A&(LN8
M`G_-B+R,'4MECT@0XLQSDBOC][:P>&",!4XL7K6RC5*$<>$JW7P.T#?!21Z<
M`4SQ2`II2WDQQ5,#NH&7]_J2W;$@;8\,-#EW*5]405&@@KN$5T^--%%N<18<
M05$F]!SRRT<\`^&BALIR0]5VJ4)@!3QE/@.D1^5=77,QI)B44-KBE)PCY'6!
MFR\E#2)>#Z+!8NIDDFU;)/_*<%.`S:/6UYX0_GC!C?HI&TRG*.+A-@Z[,$YR
M<6@0AJQ="D<_B?9HF9N=TO"R,+4&Y>8_U8CYO`>R\![+5L()AHR&&(L'H3,8
M2BHZ;./6*V63E?LBXZ"$C!2!M).L$E'X6D0W\-\C[R`S5.J+/J9H8E-4TX+(
M6M1%(/N5BP&J7(I&2%5V0^.FP$9MJYN!`_T3X4X)I[%4MF?4BI,X*&:L]E_8
MJ_RJNE>Y\,#A8KFO/XS@5@
BKNB4EYY,H2M>503*
MJ>Y_*:!U!Y\TS##>?5L2B<0L7<5861OM&E03N0X64E,,DV-WAX>V]6L3-FZW
MF7HV-=#4S2**4_\_67G752B+C',ZJRD2X8`[W:N(JFT1Z]G_\=Q""+K'$FRY
M@:T("3H7/%KY9FTU*+=.XNWU&@R;/%`X'^[-!L^4OQSK;II8I7V)Z.C=3XT_
MZ"Q\*.>$R^[,L^T6;5-UH(9-K7*J9$GJAV_8:3$XAF/KG([<>(:,9T@3(=F,
MTT1I;K5GR+'[^W>>;1[8WOC8=4Z-=VC[?G?M7G]OITNS@/;[Y]6F_6R\0SW;
M<5O8Y6!/;+KV8'RHK^MDC$@O[U"OJX5WJ&L:M^]V`UOA53D7/%KY9NGC'7+L
M;I63OVU2[]`U'J+BN&/=3^,AVI>(+KN>=EEN[[[)I)^85NY9_80Q0\^.'=
M;HOS05[>E06E":C;=*5M#,O.G8`V>@`Z#C7E<'
M,#4[?M?N]_>6;+=P`V.[-#8F@X?!H[VVRX9=L5^P.F.T8=ULE=RBCXVC:_<[
M#<:1U647J##3&`M'O1:.H=T9[RWT&JG'O$X-'B_#83>JI@1?E'MO74*[]
M30ZB'T*U]28XU)$>L6?D'\V>Y+[MNJY&3S(7(;K&OE.'5.^,*NA`0V7J]RB\
MVE2E3*"(&6?&M5:&J'+MO)=]K,5=;I551#-V[]K#)DTC^P/:L]V!>>]K,([9
MX_WW]63O?15[N!6-[;PDB:;4$AC;RO@A=52"GA:^9"'0$,M*'KVE82(&7`-N
M.\`]F63Q!U;`?DVF",4V(00-VPI9':EQM9G9=U\2AIQ4G^_VM!!#+N\R-DH$
M^YMTMO`,XV0QQG"#A\&CO4Z6AJVAKS^`V\4B$<>:L#DTCGD]85PY@EX\<;1X
M0_U\L'L,]-`00W'1U/M63_FS>TS7LUZL)F9+L#G7PT7=L9&JFN:2H9V(YS
M:*A0K1I8)7MZ^SPGTH\)#;J.1M>V-](BK,^QW:X6B0B:*6'CO=-!6RGPO/MK
M13V"+0@XP!@\VFL..D&Y_/9$_+^L6GK7M!#4
M7=OIZ-,4H&'!IXUD?J;R4,6FMZ,CN4'&(&.0.5Q0*G8G*NL\]`-V;B]^M-[[
M'6;YA8MV45EKHQ]*ORF=X^/-K^_>?GIW\\_UT0IG1)XZ]Q9^\/2C];
3ESG!&=WJ3$PT;:82
M(R&9E\S@8?!H$1Z[24@-&WK@9Z5NZ[D?>N'4N*W-.#.NCG&[<8,:;CSH2VGL
MA0G+!1N$=B<1'6!VR!V>%P-#ZD`^+H,8$$(Y$S;&R)]
M`V.VX]@1H:K4X0&J/J."SYLR/EH&E`Q[1-HS58"=^Y@:\:=(@-:'59#[N9H%
M,V&PD0856_?&\(:R9`9GR`VR7>O#([3370'DES(@)3OV]G[W4\6.,5,0.#P&
M!?45&-Z68:A:LS<2'R!FZMJD&S'"%]JS@WHNF%A$#X^.Y4%EG(Z/RCA)0:`D
M@<'&1^0?M1']%K)D_9E!PF&05<'=TH]-^BFRC^U9%?`J4X=,%BAA8+#T,2.`
M!=[\GJR<>JK?JYTAXCY+J%7P)*,"^^,J0%;F`SEQ-:XRV?N(R=>4H[]3H?QR
MY?[J5J6>8D)5?D8%JLJP?R<#"H;M#<_VYAQUE%^]_O(.,GWKCJ`AJU;`>'?]
MCAN&>ZH^/-![&E)AHS(SV"H&>
61I%O'DNQ=GK]Z\("P)>!@ER^]>;+-3F@51
M].)/W__KO_SQ=Z>GY*\7=]?D!Y:PE.8L)$]1OI*_^T#33^22;Y[3:+G*R