UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 4, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

BlueLinx Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware		77-0627356
(State of Incorporation)		(I.R.S. Employer Identification No.)
4300 Wildwood Parkway, Atlanta, Georgia		30339
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of May 8, 2009 there were 32,573,858 shares of BlueLinx Holdings Inc. common stock, par value $0.01, outstanding.

 

 

BLUELINX HOLDINGS INC.

Form 10-Q

For the Quarterly Period Ended April 4, 2009

INDEX

		PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements — BlueLinx Holdings Inc. (Unaudited)			3
Condensed Consolidated Statements of Operations			3
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			32
Item 4. Controls and Procedures			33
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			33
Item 1A. Risk Factors			33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 6. Exhibits			35
Signatures			36
Exhibit Index			37
Exhibit 10.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

BLUELINX HOLDINGS INC.

		Period from				Period from
		January 4, 2009				December 30, 2007
		to				to
		April 4, 2009				March 29, 2008
Net sales		$	407,111			$	716,760
Cost of sales			362,835				638,957
Gross profit			44,276				77,803
Operating expenses:
Selling, general, and administrative			57,665				80,635
Depreciation and amortization			5,030				4,968
Total operating expenses			62,695				85,603
Operating loss			(18,419	)			(7,800	)
Non-operating expenses:
Interest expense, net			8,117				9,354
Charges associated with ineffective interest rate swap			4,832				—
Write-off of debt issue costs			1,407				—
Other (income) expense, net			(157	)			130
Loss before provision for (benefit from) income taxes			(32,618	)			(17,284	)
Provision for (benefit from) income taxes			28,035				(6,693	)
Net loss		$	(60,653	)		$	(10,591	)
Basic weighted average number of common shares outstanding			31,083				30,928
Basic net loss per share applicable to common stock		$	(1.95	)		$	(0.34	)
Diluted weighted average number of common shares outstanding			31,083				30,928
Diluted net loss per share applicable to common stock		$	(1.95	)		$	(0.34	)

See accompanying notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

		April 4, 2009				January 3, 2009
		(unaudited)
Assets:
Current assets:
Cash and cash equivalents		$	60,030			$	150,353
Receivables, net			156,790				130,653
Inventories, net			178,097				189,482
Deferred income tax assets			578				11,868
Other current assets			35,509				37,351
Total current assets			431,004				519,707
Property, plant, and equipment:
Land and land improvements			53,438				53,426
Buildings			96,392				96,159
Machinery and equipment			70,264				70,491
Construction in progress			1,660				2,035
Property, plant, and equipment, at cost			221,754				222,111
Accumulated depreciation			(73,505	)			(69,336	)
Property, plant, and equipment, net			148,249				152,775
Non-current deferred income tax assets			—				17,468
Other non-current assets			42,357				42,457
Total assets		$	621,610			$	732,407
Liabilities:
Current liabilities:
Accounts payable		$	100,275			$	78,367
Bank overdrafts			16,184				24,715
Accrued compensation			4,031				11,552
Current maturities of long-term debt			15,000				60,000
Other current liabilities			25,617				24,546
Total current liabilities			161,107				199,180
Non-current liabilities:
Long-term debt			369,870				384,870
Non-current deferred income tax liabilities			578				—
Other non-current liabilities			44,955				45,505
Total liabilities			576,510				629,555
Shareholders’ Equity:
Common Stock, $0.01 par value, 100,000,000 shares authorized; 32,952,876 and 32,362,330 shares issued at April 4, 2009 and January 3, 2009, respectively; 32,589,852 and 32,362,330 shares outstanding at April 4, 2009 and January 3, 2009, respectively			326				323
Additional paid-in-capital			143,893				144,148
Accumulated other comprehensive loss			(13,767	)			(16,920	)
Accumulated deficit			(85,352	)			(24,699	)
Total shareholders’ equity			45,100				102,852
Total liabilities and shareholders’ equity		$	621,610			$	732,407

See accompanying notes.

BLUELINX HOLDINGS INC.

		Period from				Period from
		January 4, 2009				December 30, 2007
		to				to
		April 4, 2009				March 29, 2008
Cash flows from operating activities:
Net loss		$	(60,653	)		$	(10,591	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization			5,030				4,968
Amortization of debt issue costs			614				608
Charges associated with ineffective interest rate swap			4,832				—
Write-off of debt issue costs			1,407				—
Non-cash vacant property charges			—				208
Deferred income tax provision (benefit)			27,230				(2,887	)
Share-based compensation expense (income)			537				(114	)
Excess tax deficiencies from share-based compensation arrangements			—				218
Changes in assets and liabilities:
Receivables			(26,137	)			(17,772	)
Inventories			11,385				(15,325	)
Accounts payable			21,908				9,201
Changes in other working capital			(4,608	)			16,388
Other			(2,806	)			(5,991	)
Net cash used in operating activities			(21,261	)			(21,089	)
Cash flows from investing activities:
Property, plant and equipment investments			(166	)			(957	)
Proceeds from disposition of assets			421				607
Net cash provided by (used in) investing activities			255				(350	)
Cash flows from financing activities:
Repurchase of common stock			(792	)			—
Proceeds from stock options exercised			—				434
Excess tax deficiencies from share-based compensation arrangements			—				(218	)
Net (decrease) increase in revolving credit facility			(60,000	)			25,807
Decrease in bank overdrafts			(8,531	)			(3,393	)
Other			6				6
Net cash (used in) provided by financing activities			(69,317	)			22,636
(Decrease) increase in cash			(90,323	)			1,197
Balance, beginning of period			150,353				15,759
Balance, end of period		$	60,030			$	16,956

See accompanying notes.

BLUELINX HOLDINGS INC.

1. Basis of Presentation and Background

Basis of Presentation

BlueLinx Holdings Inc. has prepared the accompanying Unaudited Condensed 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 3, 2009, 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 2009 and fiscal year 2008 contain 52 weeks and 53 weeks, respectively. 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 Condensed 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 2,000 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 70 warehouses and third-party operated warehouses.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with maturity dates of less than three months when purchased.

Restricted Cash

We had restricted cash of $28.6 million and $25.5 million at April 4, 2009 and January 3, 2009 respectively. Restricted cash primarily includes amounts held in escrow related to our interest rate swap and mortgage. Restricted cash is included in “Other current assets” and “Other non-current assets” on the accompanying Consolidated Balance Sheets.

Allowance for Doubtful Accounts and Related Reserves

We evaluate the collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their creditworthiness. We maintain an allowance for doubtful accounts for each aging category on our aged trial balance based on our historical loss experience. This estimate is periodically adjusted when we become aware of specific customers’ inability to meet their financial obligations (e.g., bankruptcy filing or other evidence of liquidity problems). As we determine that specific balances will be ultimately uncollectible, we remove them from our aged trial balance. Additionally, we maintain reserves for cash discounts that we expect customers to earn as well as expected returns. At April 4, 2009 and January 3, 2009, these reserves totaled $11.0 million and $10.1 million, respectively. Adjustments to earnings resulting from revisions to estimates on discounts and uncollectible accounts have been insignificant.

Inventory Valuation

Inventories are carried at the lower of cost or market. The cost of all inventories is determined by the moving average cost method. We evaluate our inventory value at the end of each quarter to ensure that first quality, actively moving inventory, when viewed by category, is carried at the lower of cost or market. At April 4, 2009 and January 3, 2009, the lower of cost or market reserve totaled $0.6 million and $3.4 million, respectively. Adjustments to earnings resulting from revisions to lower of cost or market estimates have been insignificant.

Additionally, we maintain a reserve for the estimated value impairment associated with damaged, excess and obsolete inventory. The damaged, excess and obsolete reserve generally includes discontinued items or inventory that has turn days in excess of 270 days, excluding new items during their product launch. At April 4, 2009 and January 3, 2009, our damaged, excess and obsolete inventory reserves totaled $3.7 million and $4.0 million, respectively. Adjustments to earnings resulting from revisions to damaged, excess and obsolete estimates have been insignificant.

Earnings per Common Share

Basic and diluted earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period.

Except when the effect would be anti-dilutive, the diluted earnings per share calculation includes the dilutive effect of the assumed exercise of stock options and restricted stock using the treasury stock method. For the first quarter of fiscal 2009 and for the first quarter of fiscal 2008, we excluded 2.7 million and 2.6 million unvested share-based awards, respectively, from the diluted earnings per share calculation because they were antidilutive.

Common Stock Dividends

In the past we have paid dividends on our common stock at the quarterly rate of $0.125 per share. However, on December 5, 2007, our Board of Directors suspended the payment of dividends on our common stock for an indefinite period of time. Resumption of the payment of dividends will depend on, among other things, business conditions in the housing industry, our results of operations, cash requirements, financial condition, contractual restrictions, provisions of applicable law and other factors that our board of directors may deem relevant. Accordingly, we may not be able to resume the payment of dividends at the same quarterly rate in the future, if at all.

Stock-Based Compensation

We have two stock-based compensation plans covering officers, directors and certain employees and consultants; the 2004 Long Term Equity Incentive Plan (the “2004 Plan”) and the 2006 Long Term Equity Incentive Plan (the “2006 Plan”). The plans are designed to motivate and retain individuals who are responsible for the attainment of our primary long-term performance goals. The plans provide a means whereby our employees and directors develop a sense of proprietorship and personal involvement in our development and financial success and encourage them to devote their best efforts to our business. Although we do not have a formal policy on the matter, we issue new shares of our common stock to participants, upon the exercise of options, out of the total amount of common shares authorized for issuance under the 2004 Plan and the 2006 Plan.

The 2004 Plan provides for the grant of nonqualified stock options, incentive stock options and restricted shares of our common stock to participants of the plan selected by our Board of Directors or a committee of the Board who administer the 2004 Plan. We reserved 2,222,222 shares of our common stock for issuance under the 2004 Plan. The terms and conditions of awards under the 2004 Plan are determined by the administrator for each grant.

Unless otherwise determined by the administrator or as set forth in an award agreement, upon a “Liquidity Event,” all unvested awards will become immediately exercisable and the administrator may determine the treatment of all vested awards at the time of the Liquidity Event. A “Liquidity Event” is defined as (1) an event in which any person who is not an affiliate of the Company becomes the beneficial owner, directly or indirectly, of fifty percent or more of the combined voting power of our then outstanding securities or (2) the sale, transfer or other disposition of all or substantially all of our business, whether by sale of assets, merger or otherwise, to a person other than Cerberus.

On May 12, 2006 our shareholders approved the 2006 Plan. The 2006 Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards. We reserved 3,200,000 shares of our common stock for issuance under the 2006 Plan. The terms and conditions of awards under the 2006 Plan are determined by the administrator for each grant. Awards issued under the 2006 Plan are subject to accelerated vesting in the event of a change in control as such event is defined in the 2006 Plan. On January 13, 2009, the Compensation Committee granted 651,150 restricted shares of our common stock to certain of our officers.

Under Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (“SFAS 123R”), we recognize compensation expense equal to the grant-date fair value for all share-based payment awards that are expected to vest. This expense is recorded on a straight-line basis over the requisite service period of the entire award, unless the awards are subject to market or performance conditions, in which case we recognize compensation expense over the requisite service period of each separate vesting tranche. All compensation expense related to our share-based payment awards is recorded in “Selling, general and administrative” expense in the Consolidated Statement of Operations.

Compensation expense arising from stock-based awards granted to employees and non-employee directors is recognized as expense using the straight-line method over the vesting period. As of April 4, 2009, there was $1.4 million, $4.6 million, $0.1 million and $0.5 million of total unrecognized compensation expense related to stock options, restricted stock, restricted stock units and performance shares, respectively. The unrecognized compensation expense for stock options, restricted stock, restricted stock units and performance shares is expected to be recognized over a period of 1.9 years, 2.0 years, 1.0 years and 1.7 years, respectively. As of January 3, 2009, there was $1.7 million, $3.7 million, $0.1 million and $0.7 million of total unrecognized compensation expense related to stock options, restricted stock, restricted stock units and performance shares, respectively. The unrecognized compensation expense for stock options, restricted stock, restricted stock units and performance shares is expected to be recognized over a period of 2.1 years, 2.0 years, 1.0 years and 2.0 years, respectively. For the first quarter of fiscal 2009 and for the first quarter of fiscal 2008, our total stock-based compensation expense was $0.6 million ($0.5 million non-cash) and $0.1 million ($(0.1) million non-cash), respectively. We also recognized related income tax benefits of $0.2 million and $0.02 million, respectively. There were no options exercised during the first quarter of fiscal 2009. For the first quarter of fiscal 2008, approximately 100,000 stock options were exercised.

The following table depicts the weighted average assumptions used in connection with the Black-Scholes-Merton option pricing model to estimate the fair value of stock options granted during the first quarter of fiscal 2008 (there were no options granted during the first quarter of fiscal 2009):

		Period from December 30, 2007 to March 29, 2008
		Time-Based				Performance-Based				Performance-Based
		Options*				Options**				Options***
Risk free interest rate			2.70	%			2.62	%			2.11	%
Expected dividend yield			0.0	%			0.0	%			0.0	%
Expected life		6 years				4 years				1 year
Expected volatility			48	%			48	%			48	%
Weighted average fair value		$	2.27			$	0.67			$	1.31

In determining the expected life, we did not rely on our historical exercise data as it does not provide a reasonable basis upon which to estimate future expected lives due to limited experience of employee exercises. Instead, we followed a simplified method based on the vesting term and contractual term as permitted under SEC Staff Accounting Bulletin No. 107. The expected volatility is based on the historical volatility of our common stock. The risk-free rates used for the first quarter of fiscal 2008 were based on the U.S. Treasury yield with a term that is consistent with the expected life of the stock options.

Income Taxes

Our financial statements contain certain deferred tax assets which have arisen primarily as a result of tax benefits associated with the loss before income tax incurred during fiscal 2008 and the first quarter of fiscal 2009, as well as deferred income tax assets resulting from temporary differences in prior tax years. SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”), requires the consideration of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against net deferred tax assets. In evaluating our ability to recover our deferred income tax assets, we considered available positive and negative evidence, including our past operating results, our ability to carryback losses against prior taxable income, the existence of cumulative losses in the most recent years, our forecast of future taxable income and an excess of appreciated assets over the tax basis of our net assets. In estimating future taxable income, we developed assumptions including the amount of future state and federal pretax operating and non-operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions required significant judgment about the forecasts of future taxable income. We considered all of the available positive and negative evidence. Based on the weight of available evidence, we recorded a full valuation allowance of $40.2 million against deferred tax assets during the first quarter of fiscal 2009. The establishment of this valuation allowance during the first quarter of fiscal 2009 was primarily offset by the tax benefit realized as a result of the first quarter of fiscal 2009 pre-tax loss incurred by us and resulted in an income tax expense of $28.0 million for the quarter.

If the realization of deferred tax assets in the future is considered more likely than not, a reduction to the valuation allowance related to the deferred tax assets would increase net income in the period such determination is made. The amount of the deferred tax asset considered realizable is based on significant estimates, and it is possible that changes in these estimates could materially affect the financial condition and results of operations. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss; changes to the valuation allowance; changes to federal or state tax laws; and as a result of acquisitions.

3. Restructuring Charges

During fiscal 2008 and fiscal 2007, we vacated leased office space. We accounted for these transactions in accordance with Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”), which requires that a liability be recognized for a cost associated with an exit or disposal activity at fair value in the period in which it is incurred or when the entity ceases using the right conveyed by a contract (i.e., the right to use a leased property). Our restructuring charges 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 will reassess this liability periodically based on market conditions. Revisions to our estimates of this liability could materially impact our operating results and financial position in future periods if anticipated events and key assumptions, such as the timing and amounts of sublease rental income, either do not materialize or change. These costs were included in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations and “Other current liabilities” and “Other non-current liabilities” on the Consolidated Balance Sheets at April 4, 2009 and January 3, 2009.

Additionally, during the first quarter of fiscal 2009 and the first quarter of fiscal 2008, we recorded severance and outplacement costs totaling $1.1 million ($0.7 million, net of tax) and $2.0 million ($1.2 million, net of tax), respectively, based on the terms of our existing severance plan. We accounted for these costs in accordance with Statement of Financial Accounting Standards No. 112, “Employers’ Accounting for Postemployment Benefits-an amendment to FASB Statements No. 5 and 43” (“SFAS 112”). These charges were included in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations and in “Accrued Compensation” on the Consolidated Balance Sheets at April 4, 2009 and March 29, 2008.

The following table displays the restructuring activity and liability balances (in thousands):

		Exit				Severance
		Costs				Costs				Total
Balance at January 3, 2009		$	14,133			$	512			$	14,645
Charges			—				1,079				1,079
Payments			(821	)			(837	)			(1,658	)
Accretion of liability			257				—				257
Balance at April 4, 2009		$	13,569			$	754			$	14,323

4. Comprehensive Loss

The calculation of comprehensive loss is as follows:

		Period from				Period from
		January 4, 2009				December 30, 2007
		to				to
		April 4, 2009				March 29, 2008
Net loss		$	(60,653	)		$	(10,591	)
Other comprehensive loss:
Foreign currency translation, net of taxes			(141	)			(548	)
Unrealized gain (loss) from cash flow hedge, net of taxes			3,231				(2,831	)
Comprehensive loss		$	(57,563	)		$	(13,970	)

For the first quarter of fiscal 2009, the income tax effects related to foreign currency translation and our interest rate swap were $0.1 million and $(2.1) million, respectively. For the first quarter of fiscal 2008, the income tax effects related to foreign currency translation and our interest rate swap were $0.4 million and $1.8 million, respectively.

5. Employee Benefits

Defined Benefit Pension Plans

Most of our hourly employees participate in noncontributory defined benefit pension plans. These include a plan that is administered solely by us (the “hourly pension plan”) and union-administered multiemployer plans. Our funding policy for the hourly pension plan is based on actuarial calculations and the applicable requirements of federal law. We are not required to make a contribution to the hourly pension plan in fiscal 2009. Benefits under the majority of plans for hourly employees (including multiemployer plans) are primarily related to years of service.

Net periodic pension cost for our pension plans included the following:

		Period from January 4, 2009				Period from December 30, 2007
		to April 4, 2009				to March 29, 2008
		(In thousands)
Service cost		$	452			$	561
Interest cost on projected benefit obligation			1,125				1,109
Expected return on plan assets			(1,132	)			(1,501	)
Amortization of unrecognized loss (gain)			180				(91	)
Amortization of unrecognized prior service cost			—				1
Net periodic pension cost		$	625			$	79

6. Revolving Credit Facility

As of April 4 2009, we had outstanding borrowings of $96.0 million and excess availability of $180 million under the terms of our revolving credit facility. Based on borrowing base limitations, we classify the lowest projected balance of the credit facility over the next twelve months of $81.0 million as long-term debt. The revolving credit facility contains customary negative covenants and restrictions for asset based loans, with which we are in compliance. As of April 4, 2009 and January 3, 2009, we had outstanding letters of credit totaling $12.9 million, primarily for the purposes of securing collateral requirements under the casualty insurance programs for us and for guaranteeing payment of international purchases based on the fulfillment of certain conditions.

During the first quarter of fiscal 2009, we elected to permanently reduce our revolving loan threshold limit from $800 million to $500 million effective March 30, 2009. The reduction in the revolving loan threshold limit does not impact our available borrowing capacity under our revolving credit facility as our current eligible accounts receivable and inventory (our “borrowing base”) do not support up to $800 million in borrowings. We do not anticipate our borrowing base will support borrowings in excess of $500 million at any point during the remaining life of the credit facility. This cost-saving initiative will allow us to reduce our interest expense $0.8 million per year by lowering our unused line fees. As a result of this action, we recorded expense of $1.4 million ($0.9 million, net of tax) for the write-off of deferred financing costs that had been capitalized associated with the portion of the revolver that was reduced in the first quarter of fiscal 2009.

7. Derivatives

We are exposed to risks such as changes in interest rates, commodity prices and foreign currency exchange rates. We employ a variety of practices to manage these risks, including operating and financing activities and, where deemed appropriate, the use of derivative instruments. Derivative instruments are used only for risk management purposes and not for speculation or trading, and are not used to address risks related to foreign currency rates. In accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, we record derivative instruments as assets or liabilities on the balance sheet at fair value.

On June 12, 2006, we entered into an interest rate swap agreement with Goldman Sachs Capital Markets, to hedge against interest rate risks related to our variable rate revolving credit facility. The interest rate swap has a notional amount of $150 million and the terms call for us to receive interest monthly at a variable rate equal to the 30-day LIBOR and to pay interest monthly at a fixed rate of 5.4%. This interest rate swap was designated as a cash flow hedge.

Through January 3, 2009, the hedge was highly effective in offsetting changes in expected cash flows. Fluctuations in the fair value of the ineffective portion, if any, of the cash flow hedge are reflected in current period earnings. For the first quarter of fiscal 2008, we recognized immaterial amounts of expense related to the ineffective portion of the hedge.

During the first quarter of fiscal 2009, we reduced our borrowings under the revolving credit facility by $60.0 million, which reduced outstanding debt below the interest rate swap’s notional amount of $150 million, at which point the hedge became ineffective in offsetting future changes in expected cash flows during the remaining term of the interest rate swap. We used cash on hand to pay down this portion of our revolving credit debt. Charges associated with the ineffective interest rate swap recognized in the Consolidated Statement of Operations were approximately $4.8 million ($2.9 million, net of tax) and are comprised of a $5.9 million ($3.6 million, net of tax) charge on the date we reduced our borrowings outstanding under the revolving credit facility below the interest rate swap’s notional amount, $1.0 million ($0.6 million, net of tax) of amortization of accumulated other comprehensive loss and $(2.1) million ($(1.3) million, net of tax) related to fair value changes since the date of the reduction.

On May 1, 2009, we used cash on hand to reduce our borrowings under the revolving credit facility by an additional $15.0 million. This repayment will result in a second quarter non-cash charge of approximately $1.3 million recorded in interest expense at the payment date. The remaining $6.2 million of accumulated other comprehensive loss will be amortized over the remaining 25 month term of the interest rate swap and recorded as interest expense. Approximately $3.4 million will be amortized over the next 12 months and recorded as interest expense. All future changes in the fair value of the interest rate swap during the remaining term of the interest rate swap will be recorded as interest expense. Any further reductions in borrowings under our revolving credit facility will result in a pro-rata reduction in accumulated other comprehensive loss at the payment date with a corresponding charge recorded to interest expense.

The following table presents a reconciliation of our interest rate swap measured at fair value in accumulated other comprehensive loss as of April 4, 2009 (in thousands, net of tax):

Balance at January 3, 2009		$	8,038
Increase in fair value included in accumulated other comprehensive loss			937
Charges associated with ineffective interest rate swap			(4,168	)
Balance at April 4, 2009		$	4,807

8. Mortgage

On June 9, 2006, certain special purpose entities that are wholly-owned subsidiaries of ours entered into a $295 million mortgage loan. The mortgage has a term of ten years and is now secured by 56 distribution facilities and 1 office building owned by the special purpose entities. The stated interest rate on the mortgage is fixed at 6.35%.

During fiscal 2008, we sold certain real properties that ceased operations and were closed during the second quarter of fiscal 2008. As a result of the sale of one of these properties during the fourth quarter of fiscal 2008, we reduced our mortgage loan by $6.1 million and incurred a mortgage prepayment penalty of $1.9 million recorded in “Interest expense” on the Consolidated Statements of Operations.

The mortgage loan requires interest-only payments through June 2011. The balance of the loan outstanding at the end of ten years will then become due and payable. The principal will be paid in the following increments (in thousands):

2011		$	1,712
2012			3,593
2013			3,885
2014			4,142
2015			4,417
Thereafter		$	271,121

9. Fair Value Measurements

We apply Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements to all applicable financial and non-financial assets. SFAS 157, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). SFAS 157 classifies inputs used to measure fair value into the following hierarchy:

Level 1		Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2		Unadjusted quoted prices in active markets for similar assets or liabilities, or
		Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
		Inputs other than quoted prices that are observable for the asset or liability.
Level 3		Unobservable inputs for the asset or liability.

We are exposed to market risks from changes in interest rates, which may affect our operating results and financial position. When deemed appropriate, we minimize our risks from interest rate fluctuations through the use of an interest rate swap. This derivative financial instrument is used to manage risk and is not used for trading or speculative purposes. The swap is valued using a valuation model that has inputs other than quoted market prices that are both observable and unobservable.

We endeavor to utilize the best available information in measuring the fair value of the interest rate swap. The interest rate swap is classified in its entirety based on the lowest level of input that is significant to the fair value measurement. To determine fair value of the interest rate swap we used the discounted estimated future cash flows methodology. Assumptions critical to our fair value in the period were: (i.) the present value factors used in determining fair value (ii.) projected LIBOR, and (iii.) the risk of counterparty non-performance risk. These and other assumptions are impacted by economic conditions and expectations of management. We have determined that the fair value of our interest rate swap is a level 3 measurement in the fair value hierarchy. The level 3 measurement is the risk of counterparty non-performance on the interest rate swap liability that is not secured by cash collateral. The risk of counterparty non-performance did not affect the fair value at April 4, 2009 and at January 3, 2009 due to the fact that the interest rate swap was supported by cash collateral. The fair value of the interest rate swap was a liability of $12.7 million and $13.2 million at April 4, 2009 and January 3, 2009, respectively. These balances were included in “Other current liabilities” and “Other non-current liabilities” on the Consolidated Balance Sheets.

The following table presents a reconciliation of the level 3 interest rate swap measured at fair value on a recurring basis as of April 4, 2009:

Fair value at January 3, 2009		$	(13,229	)
Unrealized gains included in earnings			2,100
Accumulated other comprehensive loss			(1,533	)
Fair value at April 4, 2009		$	(12,662	)

The $2.1 million unrealized gain was included in “Interest expense” in the Consolidated Statements of Operations.

Carrying amounts for our financial instruments are not significantly different from their fair value, with the exception of our mortgage. At April 4, 2009, the carrying value and fair value of our mortgage was $289 million and $260 million, respectively.

10. Related Party Transactions

Cerberus Capital Management, L.P., our equity sponsor, retains consultants that specialize in operations management and support and who provide Cerberus with consulting advice concerning portfolio companies in which funds and accounts managed by Cerberus or its affiliates have invested. From time to time, Cerberus makes the services of these consultants available to Cerberus portfolio companies. We believe that the terms of these consulting arrangements are favorable to us, or, alternatively, are materially consistent with those terms that would have been obtained by us in an arrangement with an unaffiliated third party. We have normal service, purchase and sales arrangements with other entities that are owned or controlled by Cerberus. We believe that these transactions are at arms’ length terms and are not material to our results of operations or financial position.

11. Commitments and Contingencies

Environmental and Legal 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 April 4, 2009, approximately 29% of our total work force is covered by collective bargaining agreements. Collective bargaining agreements representing approximately 1% of our work force will expire within one year.

12. Subsequent Events

On April 27, 2009, we entered into a Termination and Modification Agreement (“Modification Agreement”) related to our Master Purchase, Supply and Distribution Agreement with Georgia-Pacific. The Modification Agreement effectively terminates the existing Supply Agreement with respect to the distribution of Georgia-Pacific plywood, oriented strand board and lumber by us. We will continue to distribute a variety of Georgia-Pacific building products, including Engineered Lumber, which is covered under a three-year purchase agreement dated February 12, 2009. As a result of terminating this agreement, we are no longer contractually obligated to make minimum purchases of products from Georgia-Pacific. As of January 3, 2009, our minimum purchases requirement had totaled $31.9 million.

As previously announced on June 6, 2008, Georgia-Pacific provided us with notice of its intent to terminate the Supply Agreement, effective May 7, 2010. Georgia-Pacific agreed to pay us $18.8 million in exchange for our agreement to enter into the Modification Agreement one-year earlier than the originally agreed upon termination date of the Supply Agreement. We will receive four quarterly cash payments of $4.7 million beginning on May 1, 2009. We expect to record a net gain of approximately $17.3 million related to this transaction in the second quarter of fiscal 2009 as a reduction to operating expense. The early termination of the Supply Agreement also provides us the opportunity to pursue strategic relationships with other suppliers and customers which were previously prohibited by the terms of the Supply Agreement.

13. Recently Issued Accounting Pronouncements

In April 2009, the FASB issued FASB Staff Position No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”, (“FSP 107-1”), which will require that the fair value disclosures required for all financial instruments within the scope of Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments”, (“SFAS 107”) be included in interim financial statements. This FSP also requires entities to disclose the method and significant assumptions used to estimate the fair value of financial instruments on an interim and annual basis and to highlight any changes from prior periods. FSP 107-1 will be effective for interim periods ending after June 15, 2009. The adoption of FSP 107-1 is not expected to have a material impact on our Consolidated Financial Statements.

In December 2008, the FASB issued FASB Staff Position No. 132(R)-1, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (“FSP 132R-1”). FSP 132R-1 requires enhanced disclosures about the plan assets of our defined benefit pension and other postretirement plans. The enhanced disclosures required by this FSP are intended to provide users of financial statements with a greater understanding of: (1) how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies; (2) the major categories of plan assets; (3) the inputs and valuation techniques used to measure the fair value of plan assets; (4) the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period; and (5) significant concentrations of risk within plan assets. FSP 132R-1 is effective for us for the year ending January 2, 2010.

In June 2008, the FASB issued FSP No. Emerging Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP 03-6-1”). FSP 03-6-1 clarifies that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share under the two-class method described in Statement of Financial Accounting Standards No. 128, “Earnings Per Share.” This FSP was effective for us on January 4, 2009 and requires all presented prior-period earnings per share data to be adjusted retrospectively. The adoption of FSP 03-6-1 did not have an impact on our Consolidated Financial Statements. For additional information about our share-based payment awards, refer to Note 5 of the Notes to Consolidated Financial Statements in our 2008 Form 10-K.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the United States. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” We do not expect SFAS 162 to have a material impact on our Consolidated Financial Statements.

In April 2008, the FASB issued FASB Staff Position No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors to be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Its intent is to improve the consistency between the useful life of an intangible asset and the period of expected cash flows used to measure its fair value. FSP 142-3 was effective for us on January 4, 2009. The adoption of FSP 142-3 did not have an impact on our Consolidated Financial Statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — An Amendment of SFAS 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. To achieve this increased transparency, SFAS 161 requires (1) the disclosure of the fair value of derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative features that are credit risk-related; and (3) cross-referencing within the footnotes. SFAS 161 was effective for us, on a prospective basis, on January 4, 2009. The adoption of SFAS 161 did not have a material impact on our Consolidated Financial Statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007) Business Combinations (“SFAS 141R”). SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R was effective for us, on a prospective basis, on January 4, 2009. We expect SFAS 141R will have an impact on our accounting for business combinations, but the effect is dependent upon the acquisitions that are made in the future.

14. Unaudited Supplemental Condensed Consolidating Financial Statements

The condensed consolidating financial information as of April 4, 2009 and January 3, 2009 and for the first quarters of fiscal 2009 and fiscal 2008 is provided due to restrictions in our revolving credit facility that limit distributions by BlueLinx Corporation, our operating company and our wholly-owned subsidiary, to us, which, in turn, may limit our ability to pay dividends to holders of our common stock (see our Annual Report on Form 10-K for the year ended January 3, 2009, 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-three single member limited liability companies, which are wholly owned by us (the “LLC subsidiaries”). The LLC subsidiaries own certain warehouse properties that are occupied by BlueLinx Corporation, each under the terms of a master lease agreement. The warehouse properties collateralize a mortgage loan and are not available to satisfy the debts and other obligations of either us or BlueLinx Corporation.

The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period from January 4, 2009 to April 4, 2009 follows (in thousands):

		BlueLinx				BlueLinx
		Holdings				Corporation and				LLC
		Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Net sales		$	—			$	407,111			$	7,522			$	(7,522	)		$	407,111
Cost of sales			—				362,835				—				—				362,835
Gross profit			—				44,276				7,522				(7,522	)			44,276
Operating expenses:
Selling, general and administrative			1,614				63,526				47				(7,522	)			57,665
Depreciation and amortization			—				4,009				1,021				—				5,030
Total operating expenses			1,614				67,535				1,068				(7,522	)			62,695
Operating (loss) income			(1,614	)			(23,259	)			6,454				—				(18,419	)
Non-operating expenses:
Interest expense			—				3,443				4,674				—				8,117
Charges associated with ineffective interest rate swap			—				4,832				—				—				4,832
Write-off of debt issue costs			—				1,407				—				—				1,407
Other income, net			—				(138	)			(19	)			—				(157	)
(Loss) income before (benefit from) provision for income taxes			(1,614	)			(32,803	)			1,799				—				(32,618	)
(Benefit from) provision for income taxes			(941	)			28,274				702				—				28,035
Equity in loss of subsidiaries			(59,980	)			—				—				59,980				—
Net (loss) income		$	(60,653	)		$	(61,077	)		$	1,097			$	59,980			$	(60,653	)

The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period from December 30, 2007 to March 29, 2008 follows (in thousands):

		BlueLinx				BlueLinx
		Holdings				Corporation and				LLC
		Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Net sales		$	—			$	716,760			$	7,617			$	(7,617	)		$	716,760
Cost of sales			—				638,957				—				—				638,957
Gross profit			—				77,803				7,617				(7,617	)			77,803
Operating expenses:
Selling, general and administrative			314				87,818				120				(7,617	)			80,635
Depreciation and amortization			—				3,898				1,070				—				4,968
Total operating expenses			314				91,716				1,190				(7,617	)			85,603
Operating (loss) income			(314	)			(13,913	)			6,427				—				(7,800	)
Non-operating expenses:
Interest expense			—				4,462				4,892				—				9,354
Other income, net			—				143				(13	)			—				130
(Loss) income before (benefit from) provision for income taxes			(314	)			(18,518	)			1,548				—				(17,284	)
(Benefit from) provision for income taxes			(122	)			(7,174	)			603				—				(6,693	)
Equity in loss of subsidiaries			(10,399	)			—				—				10,399				—
Net (loss) income		$	(10,591	)		$	(11,344	)		$	945			$	10,399			$	(10,591	)

The condensed consolidating balance sheet for BlueLinx Holdings Inc. as of April 4, 2009 follows (in thousands):

		BlueLinx				BlueLinx
		Holdings				Corporation and				LLC
		Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Assets:
Current assets:
Cash and cash equivalents		$	99			$	59,754			$	177			$	—			$	60,030
Receivables			—				156,790				—				—				156,790
Inventories			—				178,097				—				—				178,097
Deferred income tax assets			602				275				—				(299	)			578
Other current assets			539				31,668				3,302				—				35,509
Intercompany receivable			63,840				7,920				—				(71,760	)			—
Total current assets			65,080				434,504				3,479				(72,059	)			431,004
Property and equipment:
Land and land improvements			—				3,103				50,335				—				53,438
Buildings			—				7,741				88,651				—				96,392
Machinery and equipment			—				70,264				—				—				70,264
Construction in progress			—				1,660				—				—				1,660
Property and equipment, at cost			—				82,768				138,986				—				221,754
Accumulated depreciation			—				(53,298	)			(20,207	)			—				(73,505	)
Property and equipment, net			—				29,470				118,779				—				148,249
Investment in subsidiaries			(11,617	)			—				—				11,617				—
Other non-current assets			—				19,354				23,003				—				42,357
Total assets		$	53,463			$	483,328			$	145,261			$	(60,442	)		$	621,610
Liabilities:
Current liabilities:
Accounts payable		$	138			$	100,137			$	—			$	—				100,275
Bank overdrafts			—				16,184				—				—				16,184
Accrued compensation			6				4,025				—				—				4,031
Deferred income tax liabilities			299				—				—				(299	)			—
Current maturities of long-term debt			—				15,000				—				—				15,000
Other current liabilities			—				22,123				3,494				—				25,617
Intercompany payable			7,920				62,899				941				(71,760	)			—
Total current liabilities			8,363				220,368				4,435				(72,059	)			161,107
Non-current liabilities:
Long-term debt			—				81,000				288,870				—				369,870
Non-current deferred income tax liabilities			—				149				429				—				578
Other non-current liabilities			—				38,655				6,300				—				44,955
Total liabilities			8,363				340,172				300,034				(72,059	)			576,510
Shareholders’ Equity/Parent’s Investment			45,100				143,156				(154,773	)			11,617				45,100
Total liabilities and equity		$	53,463			$	483,328			$	145,261			$	(60,442	)		$	621,610

The condensed consolidating balance sheet for BlueLinx Holdings Inc. as of January 3, 2009 follows (in thousands):

		BlueLinx				BlueLinx
		Holdings				Corporation and				LLC
		Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Assets:
Current assets:
Cash and cash equivalents		$	32			$	150,259			$	62			$	—			$	150,353
Receivables			—				130,653				—				—				130,653
Inventories			—				189,482				—				—				189,482
Deferred income tax assets			290				11,578				—								11,868
Other current assets			371				33,678				3,302				—				37,351
Intercompany receivable			40,146				6,041				—				(46,187	)			—
Total current assets			40,839				521,691				3,364				(46,187	)			519,707
Property and equipment:
Land and land improvements			—				3,103				50,323				—				53,426
Buildings			—				7,497				88,662				—				96,159
Machinery and equipment			—				70,491				—				—				70,491
Construction in progress			—				2,035				—				—				2,035
Property and equipment, at cost			—				83,126				138,985				—				222,111
Accumulated depreciation			—				(50,150	)			(19,186	)			—				(69,336	)
Property and equipment, net			—				32,976				119,799				—				152,775
Investment in subsidiaries			68,858				—				—				(68,858	)			—
Non-current deferred income tax assets			—				18,045				—				(577	)			17,468
Other non-current assets			—				22,168				20,289				—				42,457
Total assets		$	109,697			$	594,880			$	143,452			$	(112,320	)		$	732,407
Liabilities:
Current liabilities:
Accounts payable		$	117			$	78,250			$	—			$	—				78,367
Bank overdrafts			—				24,715				—				—				24,715
Accrued compensation			687				10,865				—				—				11,552
Current maturities of long-term debt							60,000				—				—				60,000
Other current liabilities			—				20,934				3,612				—				24,546
Intercompany payable			6,041				38,924				1,222				(46,187	)			—
Total current liabilities			6,845				233,688				4,834				(46,187	)			199,180
Non-current liabilities:
Long-term debt			—				96,000				288,870				—				384,870
Non-current deferred income tax liabilities			—				—				577				(577	)			—
Other non-current liabilities			—				39,205				6,300				—				45,505
Total liabilities			6,845				368,893				300,581				(46,764	)			629,555
Shareholders’ Equity/Parent’s Investment			102,852				225,987				(157,129	)			(68,858	)			102,852
Total liabilities and equity		$	109,697			$	594,880			$	143,452			$	(115,622	)		$	732,407

The condensed consolidating statement of cash flows for BlueLinx Holdings Inc. for the period from January 4, 2009 to April 4, 2009 follows (in thousands):

		BlueLinx				BlueLinx
		Holdings				Corporation and				LLC
		Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Cash flows from operating activities:
Net (loss) income		$	(60,653	)		$	(61,077	)		$	1,097			$	59,980			$	(60,653	)
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:
Depreciation and amortization			—				4,009				1,021				—				5,030
Amortization of debt issue costs			—				451				163				—				614
Charges associated with ineffective interest rate swap			—				4,832				—				—				4,832
Write-off of debt issue costs			—				1,407				—				—				1,407
Deferred income provision (benefit)			(13	)			27,391				(148	)			—				27,230
Share-based compensation expense			445				92				—				—				537
Equity in earnings of subsidiaries			59,980				—				—				(59,980	)			—
Changes in assets and liabilities:
Receivables			—				(26,137	)			—				—				(26,137	)
Inventories			—				11,385				—				—				11,385
Accounts payable			21				21,887				—				—				21,908
Changes in other working capital			(849	)			(3,641	)			(118	)			—				(4,608	)
Intercompany receivable			(23,694	)			(1,879	)			—				25,573				—
Intercompany payable			1,879				23,975				(281	)			(25,573	)			—
Other			—				72				(2,878	)			—				(2,806	)
Net cash (used in) provided by operating activities			(22,884	)			2,767				(1,144	)			—				(21,261	)
Cash flows from investing activities:
Investment in subsidiaries			23,737				—				—				(23,737	)			—
Property, plant and equipment investments			—				(166	)			—				—				(166	)
Proceeds from disposition of assets			—				421				—				—				421
Net cash provided by (used in) investing activities			23,737				255				—				(23,737	)			255
Cash flows from financing activities:
Net transactions with Parent			—				(24,996	)			1,259				23,737				—
Repurchase of common stock			(792	)			—				—				—				(792	)
Net decrease in revolving credit facility			—				(60,000	)			—				—				(60,000	)
Decrease in bank overdrafts			—				(8,531	)			—				—				(8,531	)
Other			6				—				—				—				6
Net cash (used in) provided by financing activities			(786	)			(93,527	)			1,259				23,737				(69,317	)
Increase (decrease) in cash			67				(90,505	)			115				—				(90,323	)
Balance, beginning of period			32				150,259				62				—				150,353
Balance, end of period		$	99			$	59,754			$	177			$	—			$	60,030

The condensed consolidating statement of cash flows for BlueLinx Holdings Inc. for the period from December 30, 2007 to March 29, 2008 follows (in thousands):

		BlueLinx				BlueLinx
		Holdings				Corporation and				LLC
		Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Cash flows from operating activities:
Net income (loss)		$	(10,591	)		$	(11,344	)		$	945			$	10,399			$	(10,591	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization			—				3,898				1,070				—				4,968
Amortization of debt issue costs			—				452				156				—				608
Non-cash vacant property charges			—				208				—				—				208
Deferred income benefit			(25	)			(2,651	)			(211	)			—				(2,887	)
Share-based compensation credit			—				(114	)			—				—				(114	)
Excess tax deficiencies from share-based compensation arrangements			—				218				—				—				218
Equity in earnings of subsidiaries			10,399				—				—				(10,399	)			—
Changes in assets and liabilities:
Receivables			—				(17,772	)			—				—				(17,772	)
Inventories			—				(15,325	)			—				—				(15,325	)
Accounts payable			2				9,199				—				—				9,201
Changes in other working capital			134				15,744				571				(61	)			16,388
Intercompany receivable			(1,486	)			611				—				875				—
Intercompany payable			(611	)			1,774				(349	)			(814	)			—
Other			—				(5,991	)			—				—				(5,991	)
Net cash provided by (used in) operating activities			(2,178	)			(21,093	)			2,182				—				(21,089	)
Cash flows from investing activities:
Investment in subsidiaries			1,957				—				—				(1,957	)			—
Property, plant and equipment investments			—				(957	)			—				—				(957	)
Proceeds from disposition of assets			—				607				—				—				607
Net cash provided by (used in) investing activities			1,957				(350	)			—				(1,957	)			(350	)
Cash flows from financing activities:
Net transactions with Parent			—				220				(2,177	)			1,957				—
Proceeds from stock options exercised			434				—				—				—				434
Excess tax deficiencies from share-based compensation arrangements			(218	)			—				—				—				(218	)
Net increase in revolving credit facility			—				25,807				—				—				25,807
Decrease in bank overdrafts			—				(3,393	)			—				—				(3,393	)
Other			6				—				—				—				6
Net cash provided by (used in) financing activities			222				22,634				(2,177	)			1,957				22,636
Increase in cash			1				1,191				5				—				1,197
Balance, beginning of period			3				15,699				57				—				15,759
Balance, end of period		$	4			$	16,890			$	62			$	—			$	16,956