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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
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(Mark one)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended January 1, 2005 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
BLUELINX HOLDINGS INC.
(Exact name of registrant as specified in its charter)
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Delaware
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77-0627356 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
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4300 Wildwood Parkway, Atlanta, Georgia |
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30339 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code
770-953-7000
Securities registered pursuant to Section 12(b) of the
Act:
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Name of exchange on which registered |
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Common stock, par value $0.01 per share
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the
Act: None
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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K. þ
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the
Act). Yes o
No þ
As of March 15, 2005, the registrant had
30,185,000 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of BlueLinx Holdings Inc.s definitive Proxy
Statement for use in connection with its Annual Meeting of
Stockholders, scheduled to be held on May 11, 2005, have
been incorporated by reference into Part III of this Report.
BLUELINX HOLDINGS INC.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended January 1, 2005
TABLE OF CONTENTS
1
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes
forward-looking statements. Forward-looking
statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance
or achievements, and may contain the words believe,
anticipate, expect,
estimate, intend, project,
plan, will be, will likely
continue, will likely result or words or
phrases of similar meaning. All of these forward-looking
statements are based on estimates and assumptions made by our
management that, although believed by us to be reasonable, are
inherently uncertain. Forward-looking statements involve risks
and uncertainties, including, but not limited to, economic,
competitive, governmental and technological factors outside of
our control, that may cause our business, strategy or actual
results to differ materially from the forward-looking
statements. These risks and uncertainties may include those
discussed under the heading Factors Affecting Future
Results and other factors, some of which may not be known
to us. We operate in a changing environment in which new risks
can emerge from time to time. It is not possible for management
to predict all of these risks, nor can it assess the extent to
which any factor, or a combination of factors, may cause our
business, strategy or actual results to differ materially from
those contained in forward-looking statements. Factors you
should consider that could cause these differences include,
among other things:
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changes in the prices, supply and/or demand for products which
we distribute; |
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the activities of competitors; |
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changes in significant operating expenses; |
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changes in the availability of capital; |
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our ability to identify acquisition opportunities and
effectively and cost-efficiently integrate acquisitions; |
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general economic and business conditions in the United States; |
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acts of war or terrorist activities; |
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variations in the performance of the financial markets; and |
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the other factors described herein under Factors Affecting
Future Results. |
Given these risks and uncertainties, we caution you not to place
undue reliance on forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as required by law.
2
PART I
As used herein, unless the context otherwise requires,
BlueLinx, and the Company, refer to
BlueLinx Holdings Inc. and its subsidiaries. Reference to
fiscal 2004 refers to the 52-week period ended
January 1, 2005 (fiscal 2004 is comprised of the period
from inception (March 8, 2004) to January 1, 2005 and
the period from January 4, 2004 to May 7, 2004).
Reference to fiscal 2003 refers to the 53-week
period ended January 3, 2004. Reference to fiscal
2002 refers to the 52-week period ended December 28,
2002.
Company Overview
BlueLinx Holdings Inc., operating through its wholly-owned
subsidiary, BlueLinx Corporation, is a leading distributor of
building products in the United States. The Company operates in
all of the major metropolitan areas in the United States and, as
of January 1, 2005, distributed over 10,000 products to
more than 11,700 customers through the Companys network of
more than 60 warehouses and third-party operated warehouses.
The Company distributes products in two principal categories:
structural products and specialty products. Structural products,
which represented approximately 57% of the Companys fiscal
2004 gross sales, include plywood, oriented strand board, or
OSB, lumber and other wood products primarily used for
structural support, walls and flooring in residential
construction projects. Specialty products, which represented
approximately 43% of the Companys fiscal 2004 gross sales,
include roofing, insulation, moulding, engineered wood products,
vinyl products (used primarily in siding) and metal products.
BlueLinxs customers include building materials dealers,
industrial users of building products, manufactured housing
builders and home improvement centers. The Company purchases
products from over 750 vendors and serves as a national
distributor for a number of the Companys suppliers.
BlueLinx distributes products through its owned fleet of over
900 trucks and over 1,200 trailers, as well as by common carrier.
The Companys net income was $56.2 million in fiscal
2003, and increased to $76.3 million in fiscal 2004. During
fiscal 2004, net sales increased by 30% and unit sales by 8.2%,
compared to fiscal 2003.
The Company was created on March 8, 2004 as a Georgia
corporation named ABP Distribution Holdings Inc., or ABP. ABP
was owned by Cerberus Capital Management, L.P.
(Cerberus), a private, New York-based investment
firm, and members of our management team. Prior to May 7,
2004, the Companys assets were owned by the distribution
division (the Division) of Georgia-Pacific
Corporation. The Division commenced operations in 1954 with 13
warehouses primarily used as an outlet for
Georgia-Pacifics plywood. On May 7, 2004,
Georgia-Pacific sold the Division to ABP. ABP subsequently
merged into BlueLinx Holdings Inc. The total purchase price for
the acquisition of the assets, including fees and expenses was
approximately $823 million. The acquisition was funded with
net proceeds of $526 million from drawings under the
Companys revolving credit facility, net proceeds of
$97 million from the Companys former term loan, 94%
of which was held by Cerberus and its affiliate, proceeds of
$100 million from a mortgage loan payable to ABPMC LLC, or
ABPMC, an affiliate of Cerberus, proceeds of $95 million
from the issuance of preferred stock, 100% of which was held by
an affiliate of Cerberus, and proceeds of $5 million from
the issuance of common stock. In addition, the Company paid debt
issue costs of $12.1 million and $3.2 million for its
revolving credit facility and its former term loan facility,
respectively.
On October 27, 2004, the Company obtained from Column
Financial, Inc., a wholly-owned subsidiary of Credit Suisse
First Boston LLC, a new mortgage loan in the principal amount of
$165 million. Proceeds from the new mortgage loan were used
to (i) repay the Companys then existing
$100 million principal amount of mortgage debt including
the unpaid interest thereon, and (ii) redeem a portion of
the then outstanding shares of the Companys series A
preferred stock at an aggregate redemption price of
approximately $59.2 million (including accrued and unpaid
dividends thereon).
3
On December 17, 2004, the Company consummated an initial
public offering of 9,500,000 shares of its common stock,
par value $.01 per share, at the initial public offering
price of $13.50 per share (the Equity
Offering). On January 5, 2005, the underwriters for
the Equity Offering exercised an option to purchase 685,000
additional shares of common stock to cover the over-allotment of
shares in connection with the Equity Offering. BlueLinx received
net proceeds from the Equity Offering of $124.1 million
(including net proceeds of $8.6 million from the exercise
of the over-allotment option). Net proceeds from the offering
and funds from the Companys revolving credit facility were
used (i) to repay the Companys $100 million term
loan plus accrued and unpaid interest thereon, and (ii) to
redeem the remainder of the Companys outstanding
series A preferred stock, of which approximately
$38.5 million was outstanding, and pay all accrued and
unpaid dividends thereon. Unamortized debt issue costs of
approximately $3 million were written off upon retirement
of the term loan.
The Companys principal executive offices are located at
4300 Wildwood Parkway, Atlanta, Georgia 30339 and its
telephone number is (770) 953-7000. BlueLinxs
official website address is www.BlueLinxCo.com. The
Companys board committee charters, code of conduct and
ethics, and filings with the U.S. Securities and Exchange
Commission, including annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports, are accessible
free of charge at www.BlueLinxCo.com. Any waiver of the terms of
the Companys code of conduct and ethics for the chief
executive officer, the chief financial officer, any accounting
officer and all other officers will be disclosed on its website.
The reference to the Companys website does not constitute
incorporation by reference of the information contained at the
site.
Products and Services
As of January 1, 2005, the Company distributed over 10,000
different products to more than 11,700 customers nationwide. The
Company distributes these products in two principal categories:
structural products and specialty products. Structural products
include plywood panels, OSB and lumber. These products are
primarily used for structural support, walls, flooring and
roofing in construction projects. Additional end-uses of the
Companys structural products include outdoor decks,
sheathing, crates and boxes. Approximately 57% of the
Companys fiscal 2004 gross sales consisted of structural
products. Specialty products include engineered lumber, roofing,
insulation, metal products, vinyl products (used primarily in
siding), moulding and particleboard. Specialty products
generated 43% of the Companys gross sales during fiscal
2004. In some cases, these products are branded.
The Company also provides a wide range of value-added services
and solutions to the Companys customers and vendors
including:
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providing less-than-truckload delivery services; |
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pre-negotiated program pricing plans; |
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inventory stocking; |
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automated order processing through an electronic data
interchange, or EDI, that provides a direct link between the
Companys customers and the Company; |
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inter-modal distribution services, including railcar unloading
and cargo reloading onto customers trucks; and |
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back-haul services, when otherwise empty trucks are returning
from customer deliveries. |
4
Distribution Channels
The Company sells products through three main distribution
channels:
Warehouse sales are delivered from the Companys warehouses
to dealers, home improvement centers and industrial users. The
Company delivers products primarily using its fleet of over
900 trucks and over 1,200 trailers, but also
occasionally uses common carriers for peak load flexibility. The
Company operates in all of the major metropolitan areas in the
United States through its network of more than
60 warehouses and third-party operated warehouses. The
Companys warehouses have over ten million square feet of
space under roof plus significant outdoor storage space.
Warehouse sales accounted for approximately 56% of the
Companys fiscal 2004 gross sales.
Reload sales are similar to warehouse sales but are shipped from
third-party warehouses where the Company stores owned product in
order to expand the Companys geographic reach. This
channel is employed primarily to service strategic customers
that would be uneconomical to service from the Companys
warehouses and to distribute large volumes of imported products
such as metal or hardwood plywood from port facilities. A large
portion of the Companys Canadian sales are reload sales.
The Company leases space at some third-party warehouse
facilities in Canada. Reload sales accounted for approximately
12% of the Companys fiscal 2004 gross sales.
Direct sales are shipped from the manufacturer to the customer
without the Companys taking physical inventory possession.
This channel requires the lowest amount of committed capital and
fixed costs. Direct sales accounted for approximately 32% of the
Companys fiscal 2004 gross sales.
Customers
As of January 1, 2005, the Companys customer base
included over 11,700 customers across multiple market segments
and various end-use markets, including the following types of
customers:
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building materials dealers; |
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industrial users of building products; |
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manufactured housing builders; and |
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home improvement centers. |
Sales and Marketing
The Companys sales efforts primarily are directed through
its sales force of over 950 sales representatives.
Approximately 600 of the Companys sales
representatives are located at its two sales centers in Denver
and Atlanta. Within these sales centers, the Companys
sales representatives primarily interact with the Companys
customers over the telephone. The remaining 350 sales
representatives are located throughout the country and are
responsible for maintaining a local dialogue with the
Companys customers, including making frequent, in-person
visits.
The Companys sales force is separated between
industrial/dealer sales and home improvement center sales.
Industrial/dealer sales are managed by regional vice-presidents
with sales teams organized by customer regions. The majority of
industrial/dealer orders are processed by telephone and are
facilitated by the Companys centralized database of
customer preferences and purchasing history.
5
Suppliers
The Companys vendor base includes over 750 suppliers of
both structural and specialty building products. In some cases,
these products are branded. The Company has supply contracts in
place with many of its vendors. Terms for these agreements
frequently include prompt payment discounts and freight
allowances and occasionally include volume discounts, growth
incentives, marketing allowances, consigned inventory and
extended payment terms.
Purchases of products manufactured by Georgia-Pacific accounted
for approximately 27% of total purchases in fiscal 2004, with no
other supplier accounting for more than 3.1% of fiscal 2004
purchases. As part of the acquisition transactions, whereby the
Company acquired the assets of Georgia-Pacifics
distribution division, the Company entered into a Master
Purchase, Supply & Distribution Agreement with
Georgia-Pacific, or the Supply Agreement. The Supply Agreement
details distribution rights by product categories, including
exclusivity rights and minimum supply volume commitments from
Georgia-Pacific with respect to certain products. This agreement
also details the Companys purchase obligations by product
categories, including substantial minimum purchase volume
commitments with respect to most of the products supplied to the
Company. Based on 2004 average market prices, the Companys
purchase obligation under this agreement is approximately
$1.2 billion for each of the next four years. If the
Company fails or refuses to purchase any products that the
Company is obligated to purchase pursuant to the Supply
Agreement, Georgia-Pacific has the right to sell products to
third parties and for certain products terminate the
Companys exclusivity, and the Company may be required to
pay monetary penalties. The agreement has a five-year initial
term and remains continuously in effect thereafter unless it is
terminated. Termination of the Supply Agreement requires two
years notice, exercisable after year four. The Supply
Agreement may be terminated by either party for material breach.
However, if the material breach only affects one or more, but
not all, of the product categories, the non-breaching party may
only terminate the Supply Agreement in respect of the affected
product categories, and the Supply Agreement will remain in full
force with respect to the remaining product categories. The
Supply Agreement also provides for certain advertising,
marketing and promotion arrangements between the Company and
Georgia-Pacific for certain products. In addition, the Company
was granted a limited, non-exclusive, royalty-free, fully paid
license to use certain proprietary information and intellectual
property of Georgia-Pacific.
Competition
The U.S. building products distribution market is a highly
fragmented market, served by a small number of multi-regional
distributors, several regionally focused distributors and a
large number of independent local distributors. Local and
regional distributors tend to be closely held and often
specialize in a limited number of segments, such as the roofing
segment, in which they offer a broader selection of products.
Some of the Companys multi-regional competitors are part
of larger companies and therefore have access to greater
financial and other resources than the Company. The Company
competes on the basis of breadth of product offering, consistent
availability of product, product price and quality, reputation,
service and distribution facility location.
The Companys two largest competitors are Weyerhaeuser
Company, or Weyerhaeuser, and Boise Cascade Holdings, LLC, or
Boise Cascade. Weyerhaeuser and Boise Cascade are integrated
building products manufacturers-distributors that offer products
manufactured by them as well as third-party manufactured
products. Most major markets are served by at least one of these
distributors.
Trademarks
The Company has 35 U.S. trademark applications and
registrations, one issued U.S. patent and one Canadian
trademark registration. Depending on the jurisdiction,
trademarks are valid as long as they are in use and/or their
registrations are properly maintained and they have not become
generic. Registrations of trademarks can generally be renewed
indefinitely as long as the trademarks are in use. The
Companys
6
patent expires in September 2013. The Company does not believe
its business is dependent on any one of the Companys
trademarks or on its patent.
Employees
As of March 1, 2005 the Company employed approximately
3,400 persons on a full-time basis. Approximately 1,200 of
the Companys employees are represented by labor unions. As
of March 1, 2005, the Company had approximately
50 collective bargaining agreements, of which five are up
for renewal in 2005. As of March 1, 2005,
124 employees were represented by the collective bargaining
agreements which are up for renewal in 2005. The Company
considers its relationship with its employees generally to be
good.
Environmental and Other Governmental Regulations
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Environmental Regulation and Compliance |
The Companys operations are subject to various federal,
state, provincial and local laws, rules and regulations.
The Company is subject to environmental laws, rules and
regulations that limit discharges into the environment,
establish standards for the handling, generation, emission,
release, discharge, treatment, storage and disposal of hazardous
materials, substances and wastes, and require cleanup of
contaminated soil and groundwater. These laws, ordinances and
regulations are complex, change frequently and have tended to
become more stringent over time. Many of them provide for
substantial fines and penalties, orders (including orders to
cease operations) and criminal sanctions for violations. They
may also impose liability for property damage and personal
injury stemming from the presence of, or exposure to, hazardous
substances. In addition, certain of the Companys
operations require the Company to obtain, maintain compliance
with, and periodically renew permits.
Certain of these laws, including the Comprehensive Environmental
Response, Compensation, and Liability Act, may require the
investigation and cleanup of an entitys or its
predecessors current or former properties, even if the
associated contamination was caused by the operations of a third
party. These laws also may require the investigation and cleanup
of third-party sites at which an entity or its predecessor sent
hazardous wastes for disposal, notwithstanding that the original
disposal activity accorded with all applicable requirements.
Liability under such laws may be imposed jointly and severally,
and regardless of fault.
Georgia-Pacific Corporation has agreed to indemnify the Company
against any claim arising from environmental conditions that
existed prior to May 7, 2004. In addition, the Company
carries environmental insurance. While the Company does not
expect to incur significant independent costs arising from
environmental conditions, there can be no assurance that all
such costs will be covered by indemnification or insurance.
The Company also is subject to the requirements of the
U.S. Department of Labor Occupational Safety and Health
Administration, or OSHA. In order to maintain compliance with
applicable OSHA requirements, the Company has established
uniform safety and compliance procedures for its operations and
implemented measures to prevent workplace injuries.
The U.S. Department of Transportation, or DOT, regulates
the Companys operations in domestic interstate commerce.
The Company is subject to safety requirements governing
interstate operations prescribed by the DOT. Vehicle dimensions
and driver hours of service also remain subject to both federal
and state regulation.
The Company has incurred and will continue to incur costs to
comply with the requirements of environmental, health and safety
and transportation laws, ordinances and regulations. The Company
anticipates that these requirements will become more stringent
in the future, and the Company cannot assure you that compliance
costs will not be material.
7
The Company operates warehouse facilities in 64 markets.
The Company owns warehouse facilities in 61 of these cities and
leases the remainder. The total square footage under roof at the
Companys warehouses is approximately 10.8 million
square feet. These warehouse facilities secure the
Companys new mortgage loan. In addition, the
Companys headquarters is located in Atlanta, Georgia,
where it leases from a third party approximately
250,000 square feet of space.
The following table lists each of the Companys warehouse
facilities, including their inside square footage. At all of the
Companys warehouse locations, the Company also stores
materials outdoors, such as lumber, which increases its
distribution and storage capacity. The Company believes that
substantially all of its property and equipment is in good
condition, subject to normal wear and tear, and that its
facilities have sufficient capacity to meet its current and
projected distribution needs.
Warehouse & Shed Under Roof Square Footage
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Size (Sq. Feet) | |
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Lawrenceville, GA
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710,625 |
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Frederick, MD
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684,000 |
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University Park, IL
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670,000 |
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Yulee, FL
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571,700 |
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Butner, NC
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514,300 |
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Bellingham, MA
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453,425 |
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Fort Worth, TX
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277,875 |
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Elkhart, IN(1)
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273,540 |
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Independence, KY
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266,135 |
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Bridgeton, MO
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236,253 |
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Newark, CA
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234,090 |
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North Kansas City, MO
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230,600 |
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Charlotte, NC
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202,120 |
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Ypsilanti, MI
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188,109 |
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Blasdell, NY
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181,600 |
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Erwin, TN
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169,800 |
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City of Industry, CA
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163,800 |
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Nashville, TN
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160,904 |
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Houston, TX
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157,825 |
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Richmond, VA
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152,474 |
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Maple Grove, MN
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148,000 |
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Albuquerque, NM
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147,000 |
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Midfield, AL
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147,600 |
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New Orleans, LA
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145,596 |
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Tampa, FL
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145,300 |
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Denver, CO
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144,040 |
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Tulsa, OK
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143,500 |
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Denville, NJ
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142,959 |
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Riverside, CA
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136,000 |
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Grand Rapids, MI
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133,600 |
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Beaverton, OR
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129,389 |
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Size (Sq. Feet) | |
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Baton Rouge, LA
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124,300 |
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Lake City, FL
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110,800 |
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Memphis, TN
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108,640 |
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Newtown, CT
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108,000 |
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Miami, FL
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106,113 |
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Pensacola, FL
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101,800 |
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Pearl, MS
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99,800 |
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San Antonio, TX
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99,220 |
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Talmadge, OH
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99,190 |
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Allentown, PA
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99,000 |
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Virginia Beach, VA
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93,640 |
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National City, CA
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95,000 |
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Little Rock, AR
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92,300 |
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Springfield, MO
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91,000 |
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Shreveport, LA
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87,042 |
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Des Moines, IA
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81,510 |
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Charleston, SC
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81,375 |
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Shelburne, VT
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81,200 |
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Portland, ME
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80,656 |
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New Stanton, PA
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80,100 |
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Whiteville, NC(2)
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79,200 |
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Yaphank, NY
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78,123 |
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Woodinville, WA
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77,925 |
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Sioux Falls, SD
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76,194 |
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Lubbock, TX
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71,721 |
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Wausau, WI
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72,850 |
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Harlingen, TX
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70,404 |
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El Paso, TX
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65,500 |
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St. Paul, MN
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64,080 |
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North Highlands, CA
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52,888 |
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Fargo, ND
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36,593 |
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Phoenix, AZ(2)
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26,884 |
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Boise, ID(2)
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17,650 |
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Includes approximately 142,100 square feet of leased space. |
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Leased warehouses. |
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| ITEM 3. |
LEGAL PROCEEDINGS. |
On November 19, 2004, the Company received a letter from
Wickes Lumber, or Wickes, asserting that approximately
$16 million in payments received by the Division during the
90-day period prior to Wickes January 20, 2004
Chapter 11 filing were preferential payments under
section 547 of the United States Bankruptcy Code. Although
the ultimate outcome of this matter cannot be determined with
certainty, the Company believes Wickes assertion to be
without merit and, in any event, subject to one or more complete
defenses, including, but not limited to, that the payments were
made and received in the
9
ordinary course of business and were in substantially
contemporaneous exchange for new value given to Wickes.
Accordingly, the Company has no plans to establish a reserve
with respect to the asserted claim.
The Company is, and from time to time may be, a party to routine
legal proceedings incidental to the operation of its business.
The outcome of any pending or threatened proceedings is not
expected to have a material adverse effect on the financial
condition, operating results or cash flows of the Company, based
on its current understanding of the relevant facts. Legal
expenses incurred related to these contingencies are generally
expensed as incurred.
ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.
On November 18, 2004, a majority of our stockholders took
action by written consent to amend our articles of incorporation
and bylaws. The articles of incorporation were amended as
follows:
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increase the number of authorized $0.01 par value shares of
the common stock from 25,000,000 to 100,000,000; and |
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increase the number of authorized $0.01 par value shares of
the preferred stock from 1,000,000 to 30,000,000. |
The articles of amendment to our articles of incorporation were
filed with the Secretary of State of Delaware on
December 7, 2004.
PART II
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| ITEM 5. |
MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS. |
The Companys equity securities consist of one class of
common stock. The common stock began trading on
December 14, 2004, the initial public offering date. The
common stock is traded on the New York Stock Exchange under the
symbol BXC. The high and low sales prices quoted on the New York
Stock Exchange for the fourth quarter ended January 1, 2005
were $14.70 and $13.00, respectively.
As of March 1, 2005, there were approximately
3,900 stockholders of record.
On March 10, 2005, the Company declared a dividend at the
rate of $0.125 per share. The Company intends to continue
to pay dividends on its common stock at the quarterly rate of
$0.125 per share. The Companys board of directors
may, in its discretion, modify or repeal the Companys
dividend policy. Future dividends, if any, with respect to the
Companys shares of common stock will depend on, among
other things, its results of operations, cash requirements,
financial condition, contractual restrictions, provisions of
applicable law and other factors that its board of directors may
deem relevant. See Item 8. Financial Statements and
Supplementary Data, Note 8. Revolving Credit Facility
for additional information regarding limitations on the
ability of BlueLinx Corporation to transfer funds to its parent,
BlueLinx Holdings, which could impact the Companys ability
to pay dividends to its stockholders. Accordingly, the Company
may not be able to continue to pay dividends at the same
quarterly rate in the future, if at all.
Recent Sales of Unregistered Securities
In March 2004, the Company issued 100 shares of its common
stock to Cerberus ABP Investor LLC, or Cerberus ABP, for an
aggregate purchase price of $1,000. The shares were issued in
reliance on Section 4(2) of the Securities Act as the sale
of the securities did not involve a public offering. The offer
and sale did not involve a public offering because the shares
were issued to Cerberus ABP in connection with the
Companys formation. The Company was formed by affiliates
of Cerberus ABP to serve as the acquisition vehicle for the
purchase of assets of the building products distribution
division of Georgia-Pacific. In addition, in the purchase
agreement, Cerberus ABP represented to the Company that it was
an accredited investor and was acquiring shares for investment
and not distribution. Appropriate legends were affixed to the
share certificate issued in such transaction.
10
In May 2004, the Company issued 18,099,900 shares of its
common stock to Cerberus ABP for an aggregate purchase price of
$4,524,975. The shares were issued in reliance on
Section 4(2) of the Securities Act as the sale of the
securities did not involve a public offering. As indicated
above, the Company was formed by affiliates of Cerberus ABP to
serve as the acquisition vehicle for the purchase of assets of
the building products distribution division of Georgia-Pacific.
The issuance to Cerberus ABP was used in part to fund the price
of the Companys acquisition by Cerberus and its affiliate.
In addition, Cerberus ABP represented to the Company, in the
purchase agreement, that it was an accredited investor and was
acquiring the shares for investment and not distribution.
Appropriate legends were affixed to the share certificate issued
in such transaction.
In May 2004, the Company issued 95,000 shares of its
series A preferred stock to Cerberus ABP LLC for an
aggregate purchase price of $95,000,000. The shares were issued
in reliance on Section 4(2) of the Securities Act as the
sale of the securities did not involve a public offering. As
indicated in above, the Company was formed by affiliates of
Cerberus ABP to serve as the acquisition vehicle for the
purchase of assets of the building products distribution
division of Georgia-Pacific. The issuance to Cerberus ABP was
used in part to fund the purchase price of our acquisition by
Cerberus and its affiliate. In addition, Cerberus ABP
represented to the Company that it was an accredited investor
and was acquiring shares for investment and not distribution.
Appropriate legends were affixed to the share certificate issued
in such transaction. All of the Companys issued and
outstanding shares of Series A preferred stock were
redeemed in fiscal 2004.
In May 2004, the Company issued shares of its common stock in
private placements to certain of its executives as follows:
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700,000 shares to Charles H. McElrea for an aggregate
purchase price of $175,000; |
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500,000 shares to George R. Judd for an aggregate purchase
price of $125,000; |
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300,000 shares to Steven C. Hardin for an aggregate
purchase price of $75,000; |
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200,000 shares to David J. Morris for an aggregate purchase
price of $50,000; |
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100,000 shares to James C. Herbig for an aggregate purchase
price of $25,000; and |
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100,000 shares to Wayne E. Wiggleton for an aggregate
purchase price of $25,000. |
All of the foregoing shares were issued in reliance on
Section 4(2) of the Securities Act as none of the sales of
the securities involved a public offering. Each of the
purchasers represented to the Company that he was an accredited
investor and was acquiring the shares for investment and not
distribution, and appropriate legends were affixed to the share
certificates issued in each transaction.
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| ITEM 6. |
SELECTED FINANCIAL DATA. |
The Company was created on March 8, 2004 (date of
inception) as a Georgia corporation named ABP Distribution
Holdings Inc. On May 7, 2004, the Company and its
subsidiary acquired the assets of the distribution division of
Georgia Pacific, or the Division, as described below. On
August 30, 2004, ABP Distribution Holdings Inc. merged into
BlueLinx Holdings Inc., a Delaware corporation. The Consolidated
Financial Statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
The financial statements of the Division reflect the accounts
and results of certain operations of the business conducted by
the Division. The accompanying financial statements of the
Division have been prepared from Georgia-Pacifics
historical accounting records and are presented on a carve-out
basis reflecting these certain assets, liabilities, and
operations. The Division was an unincorporated business of
Georgia-Pacific and, accordingly, Georgia-Pacifics net
investment in these operations (parents net investment) is
presented in lieu of stockholders equity. All significant
intradivision transactions have been eliminated. The financial
statements are not necessarily indicative of the financial
position, results of operations and cash flows that might have
occurred had the Division been an independent entity not
11
integrated into Georgia-Pacifics other operations. Also,
they may not be indicative of the actual financial position that
might have otherwise resulted, or of future results of
operations or financial position of the Division.
The following table sets forth certain historical financial data
of the Company. The selected financial data for the period from
inception (March 8, 2004) to January 1, 2005, the
period from January 4, 2004 to May 7, 2004 (the
aggregate period from January 4, 2004 through
January 1, 2005 referred to herein as fiscal
2004), the fiscal year ended January 3, 2004
(fiscal 2003), the fiscal year ended
December 28, 2002 (fiscal 2002), the fiscal
year ended December 29, 2001 (fiscal 2001) and
the fiscal year ended December 30, 2000 (fiscal
2000) have been derived from the Companys and the
Divisions audited financial statements included elsewhere
in this Annual Report on Form 10-K. The financial
statements prior to May 7, 2004 are referred to as
pre-acquisition period statements. The following
information should be read in conjunction with the
Companys financial statements and Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
The acquisition of the assets of the Division was accounted for
using the purchase method of accounting, and the assets acquired
and liabilities assumed were accounted for at their fair market
values at the date of consummation.
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BlueLinx | |
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Pre-acquisition Period | |
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Period from | |
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Inception | |
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Period from | |
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(March 8, 2004) | |
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January 4, | |
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Year Ended | |
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Year Ended | |
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Year Ended | |
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Year Ended | |
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to January 1, | |
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2004 to May 7, | |
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January 3, | |
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December 28, | |
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December 29, | |
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December 30, | |
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2005 | |
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2004 | |
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2004 | |
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2002 | |
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2001 | |
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2000 | |
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(In thousands, except per share data) | |
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Statement of Operations Data:
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Net sales
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$ |
3,672,820 |
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$ |
1,885,334 |
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$ |
4,271,842 |
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$ |
3,734,029 |
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$ |
3,768,700 |
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$ |
4,224,935 |
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Cost of sales
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3,339,590 |
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1,658,123 |
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3,814,375 |
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3,370,995 |
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3,395,184 |
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3,880,766 |
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Gross profit
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333,230 |
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227,211 |
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457,467 |
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363,034 |
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373,516 |
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344,169 |
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Operating expenses:
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Selling, general and administrative expenses
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248,291 |
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139,203 |
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346,585 |
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295,492 |
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298,576 |
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301,349 |
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Depreciation and amortization
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10,132 |
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6,175 |
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19,476 |
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21,757 |
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26,747 |
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30,393 |
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Total operating expenses
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258,423 |
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145,378 |
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366,061 |
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317,249 |
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325,323 |
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331,742 |
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Operating income
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74,807 |
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81,833 |
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91,406 |
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45,785 |
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48,193 |
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12,427 |
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Non-operating expenses (income):
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Interest expense
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28,765 |
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Write-off of debt issue costs
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2,871 |
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Other expense (income), net
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(516 |
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614 |
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376 |
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348 |
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448 |
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560 |
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Income before provision for income taxes
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43,687 |
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81,219 |
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91,030 |
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45,437 |
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47,745 |
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11,867 |
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Provision for income taxes
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17,781 |
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30,782 |
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34,877 |
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17,597 |
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18,470 |
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4,628 |
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Net income
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$ |
25,906 |
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$ |
50,437 |
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$ |
56,153 |
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$ |
27,840 |
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$ |
29,275 |
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$ |
7,239 |
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Less: preferred stock dividends
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5,226 |
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