What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-04 compared with 2020-10-28 · 200 added, 264 removed, 348 unchanged (57% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Three Months Ended

April 3, 2021 March 28, 2020

Net sales $ 1,025,469 $ 662,070

4 unchanged sentences

Depreciation and amortization 7,465 7,635

Amortization of deferred gains on real estate ( 984 ) ( 984 )

Gains from sales of property ( 1,287 ) ( 525 )

5 unchanged sentences

Other income, net ( 314 ) ( 237 )

Income (loss) before provision for income taxes 70,918 ( 6,799 ) 75,238 ( 7,392 )

Provision for income taxes 15,802 244 14,214 69

Income (loss) before provision for (benefit from) income taxes 83,606 ( 5,813 )

Provision for (benefit from) income taxes 21,746 ( 5,026 )

Net income (loss) $ 61,860 $ ( 787 )

4 unchanged sentences

Other comprehensive income (loss):

Foreign currency translation, net of tax ( 12 ) ( 9 ) 8 ( 2 )

Amortization of unrecognized pension loss, net of tax 294 ( 1,834 ) 604 ( 1,403 )

Pension curtailment, net of tax — — — ( 632 )

Amortization of unrecognized pension gain, net of tax 239 196

Other 11 ( 16 )

Total other comprehensive income (loss) 289 ( 1,850 ) 602 ( 2,028 )

Total other comprehensive income 250 180

Comprehensive income (loss) $ 62,110 $ ( 607 )

3 unchanged sentences

(In thousands, except share data)

September 26, 2020 December 28, 2019

April 3, 2021 January 2, 2021

Current assets:

14 unchanged sentences

Total assets $ 1,212,480 $ 1,048,130

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

1 unchanged sentence

Accrued compensation 10,798 24,751

Taxes payable 33,646 7,847

Current maturities of long-term debt, net of debt issuance costs of $ 0 and $ 74 , respectively

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Commitments and Contingencies

STOCKHOLDERS’ EQUITY (DEFICIT):

STOCKHOLDERS’ EQUITY:

Common Stock, $ 0.01 par value, 20,000,000 shares authorized,

9,461,540 and 9,365,768 outstanding on September 26, 2020 and December 28, 2019, respectively

9,468,042 and 9,462,774 outstanding on April 3, 2021 and January 2, 2021, respectively

Additional paid-in capital 268,006 266,695

1 unchanged sentence

Accumulated stockholders’ deficit ( 109,846 ) ( 171,706 )

Total stockholders’ equity (deficit) 38,213 ( 26,083 )

Total liabilities and stockholders’ equity (deficit) $ 1,023,234 $ 971,425

Total stockholders’ equity 122,513 59,092

Total liabilities and stockholders’ equity $ 1,212,480 $ 1,048,130

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

Common Stock Additional

Paid-In Capital Accumulated

Comprehensive Loss Accumulated Deficit Stockholders’ Equity Total

Shares Amount

Balance, Balance, January 2, 2021 9,463 $ 95 $ 266,695 $ ( 35,992 ) $ ( 171,706 ) $ 59,092

Net income — — — — 61,860 61,860

Foreign currency translation, net of tax — — — ( 6 ) — ( 6 )

Impact of pension plan, net of tax — — — 239 — 239

Vesting of restricted stock units 8 — — — — —

Compensation related to share-based grants — — 1,410 — — 1,410

Repurchase of shares to satisfy employee tax withholdings ( 3 ) — ( 99 ) — — ( 99 )

Other — — — 17 — 17

Balance, April 3, 2021 9,468 95 268,006 ( 35,742 ) ( 109,846 ) 122,513

Common Stock Additional

Paid-In Capital Accumulated

Comprehensive Loss Accumulated Deficit Stockholders’ Deficit Total

Shares Amount

Balance, Balance, December 28, 2019 9,366 $ 94 $ 260,974 $ ( 34,563 ) $ ( 252,588 ) $ ( 26,083 )

Net loss — — — — ( 787 ) ( 787 )

Foreign currency translation, net of tax — — — 3 — 3

Impact of pension plan, net of tax — — — 196 — 196

Vesting of restricted stock units 2 — — — — —

Compensation related to share-based grants — — 1,004 — — 1,004

Repurchase of shares to satisfy employee tax withholdings ( 1 ) — ( 7 ) — — ( 7 )

Other — — 9 ( 19 ) — ( 10 )

Balance, March 28, 2020 9,367 94 261,980 ( 34,383 ) ( 253,375 ) ( 25,684 )

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended

September 26, 2020 September 28, 2019

Three Months Ended

April 3, 2021 March 28, 2020

Cash flows from operating activities:

Net income (loss) $ 61,860 $ ( 787 )

Adjustments to reconcile net income (loss) to cash provided by (used in) operations:

Provision for income taxes 14,214 69

Adjustments to reconcile net income (loss) to cash used in operations:

Provision for (benefit from) income taxes 21,746 ( 5,026 )

Depreciation and amortization 7,465 7,635

Amortization of debt issuance costs 603 956

Adjustments to debt issuance costs associated with term loan 5,791 —

Gains from sales of property ( 1,287 ) ( 525 )

Amortization of deferred gain ( 2,951 ) ( 2,972 )

Amortization of deferred gains from real estate ( 984 ) ( 984 )

Share-based compensation 1,410 1,004

5 unchanged sentences

Other assets and liabilities ( 14,291 ) ( 608 )

Net cash provided by (used in) operating activities 74,396 ( 37,623 )

Net cash used in operating activities ( 24,608 ) ( 59,187 )

Cash flows from investing activities:

Acquisition of business, net of cash acquired — 6,009

Proceeds from sale of assets 1,810 44

Property and equipment investments ( 1,122 ) ( 1,245 )

Net cash provided by investing activities 8,799 16,387

Net cash provided by (used in) investing activities 688 ( 1,201 )

Cash flows from financing activities:

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Principal payments on finance lease liabilities ( 2,129 ) ( 2,562 )

Net cash (used in) provided by financing activities ( 84,684 ) 25,144

Net cash provided by financing activities 24,017 61,303

Net change in cash 97 915

2 unchanged sentences

Supplemental Cash Flow Information

Net income tax payments during the period $ 610 $ 4,461

Net income tax refunds during the period $ — $ 352

Interest paid during the period $ 9,971 $ 13,558

1 unchanged sentence

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

Common Stock Additional

Paid-In Capital Accumulated

Comprehensive Loss Accumulated Deficit Stockholders’ Equity (Deficit) Total

Shares Amount

Balance, December 28, 2019 9,366 $ 94 $ 260,974 $ ( 34,563 ) $ ( 252,588 ) $ ( 26,083 )

Net loss — — — — ( 787 ) ( 787 )

Foreign currency translation, net of tax — — — 3 — 3

Unrealized gain from pension plan, net of tax — — — 196 — 196

Vesting of restricted stock units 2 — — — — —

Compensation related to share-based grants — — 1,004 — — 1,004

Repurchase of shares to satisfy employee tax withholdings ( 1 ) — ( 7 ) — — ( 7 )

Other — — 9 ( 19 ) — ( 10 )

Balance, March 28, 2020 9,367 94 261,980 ( 34,383 ) ( 253,375 ) ( 25,684 )

Net income — — — — 6,695 6,695

Foreign currency translation, net of tax — — — 17 — 17

Unrealized gain from pension plan, net of tax — — — 114 — 114

Vesting of restricted stock units 122 1 — — — 1

Compensation related to share-based grants — — 854 — — 854

Repurchase of shares to satisfy employee tax withholdings ( 28 ) — ( 247 ) — — ( 247 )

Other — — — 2 — 2

Balance, June 27, 2020 9,461 95 262,587 ( 34,250 ) ( 246,680 ) ( 18,248 )

Net income — — — — 55,116 55,116

Foreign currency translation, net of tax — — — ( 12 ) — ( 12 )

Unrealized gain from pension plan, net of tax — — — 294 — 294

Vesting of restricted stock units 1 — — — — —

Compensation related to share-based grants — — 1,057 — — 1,057

Repurchase of shares to satisfy employee tax withholdings — — ( 1 ) — — ( 1 )

Other — — — 7 — 7

Balance, September 26, 2020 9,462 $ 95 $ 263,643 $ ( 33,961 ) $ ( 191,564 ) $ 38,213

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands)

Common Stock Additional

Paid-In Capital Accumulated

Comprehensive Loss Accumulated Deficit Stockholders’ Deficit Total

Shares Amount

Balance, December 29, 2018 9,294 $ 92 $ 258,596 $ ( 37,129 ) $ ( 236,222 ) $ ( 14,663 )

Net loss — — — — ( 6,719 ) ( 6,719 )

Adoption of ASC 842, net of tax — — — — 1,291 1,291

Foreign currency translation, net of tax — — — 7 — 7

Unrealized gain from pension plan, net of tax — — — 1,077 — 1,077

Vesting of restricted stock units 49 1 — — — 1

Compensation related to share-based grants — — 706 — — 706

Other — — — 15 — 15

Balance, March 30, 2019 9,343 93 259,302 ( 36,030 ) ( 241,650 ) ( 18,285 )

Net income — — — — 6,301 6,301

Unrealized loss from pension plan, net of tax — — — ( 1,278 ) — ( 1,278 )

Vesting of restricted stock units 32 1 — — — 1

Compensation related to share-based grants — — 635 — — 635

Repurchase of shares to satisfy employee tax withholdings ( 10 ) — ( 208 ) — — ( 208 )

Other — — ( 2 ) 1 — ( 1 )

Balance, June 29, 2019 9,365 94 259,727 $ ( 37,307 ) $ ( 235,349 ) $ ( 12,835 )

Net loss — — — — ( 7,043 ) ( 7,043 )

Foreign currency translation, net of tax — — — ( 9 ) — ( 9 )

Unrealized loss from pension plan, net of tax — — — ( 1,834 ) — ( 1,834 )

Compensation related to share-based grants — — 1,156 — — 1,156

Other — — — ( 7 ) 1 ( 6 )

Balance, September 28, 2019 9,365 $ 94 $ 260,883 $ ( 39,157 ) $ ( 242,391 ) $ ( 20,571 )

See accompanying Notes.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 26, 2020

April 3, 2021

Basis of Presentation and Summary of Significant Accounting Policies

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and its wholly owned subsidiaries (the “Company”).

We derived the condensed consolidated balance sheet at September 26, 2020, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (the “Fiscal 2019 Form 10-K”), as filed with the Securities and Exchange Commission on March 11, 2020.

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income (loss) for the three and nine months ended September 26, 2020, and September 28, 2019, our balance sheets at September 26, 2020, and December 28, 2019, our statements of cash flows for the nine months ended September 26, 2020, and September 28, 2019, and our statements of stockholders’ equity (deficit) for the three and nine months ended September 26, 2020, and September 28, 2019.

We derived the condensed consolidated balance sheet at April 3, 2021, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021 (the “Fiscal 2020 Form 10-K”), as filed with the Securities and Exchange Commission on March 3, 2021.

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income (loss) for the three months ended April 3, 2021, and March 28, 2020, our balance sheets at April 3, 2021, and January 2, 2021, our statements of stockholders’ equity (deficit) for the three months ended April 3, 2021, and March 28, 2020, and our statements of cash flows for the three months ended April 3, 2021, and March 28, 2020.

We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report.

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In addition, certain prior period amounts have been reclassified to conform to the current period's presentation.

These reclassifications did not materially impact operating income or consolidated net income (loss).

The results for the three and nine months ended September 26, 2020, are not necessarily indicative of results that may be expected for the full year ending January 2, 2021, or any other interim period.

These reclassifications did not impact operating income or consolidated net income (loss).

The results for the three months ended April 3, 2021, are not necessarily indicative of results that may be expected for the full year ending January 1, 2022, or any other interim period.

We operate on a 5-4-4 fiscal calendar.

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Our 2021 fiscal year contains 52 weeks and ends on January 1, 2022.

Fiscal 2019 contained 52 weeks and ended on December 28, 2019.

Fiscal 2020 contained 53 weeks and ended on January 2, 2021.

Our financial statements are prepared in conformity with U.S.

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The severity, magnitude, and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing, and difficult to predict.

As a result, our accounting estimates and assumptions may change over time in response to COVID-19.

As a result, our accounting estimates and assumptions may change over time in response to the continuing COVID-19 pandemic.

On April 13, 2018, we completed the acquisition of Cedar Creek Holdings, Inc.

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Reclassification of Prior Period Presentation

An adjustment has been made to the Condensed Consolidated Statements of Cash Flows for the nine months ended September 28, 2019, to include outstanding payments as part of the change in accounts payable within cash flows from operating activities.

In previous periods, this change was included within cash flows from financing activities.

We have reclassified certain costs within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the nine months ended September 26, 2020, and the three and nine months ended September 28, 2019, from selling, general and administrative to other operating expenses.

These costs primarily relate to the integration of the acquisition of Cedar Creek.

We have reclassified certain costs within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 28, 2020, from selling, general and administrative to amortization of deferred gains on real estate and other operating expenses.

These costs primarily relate to the amortization of gains from prior real estate sales and the integration of the acquisition of Cedar Creek.

We have reclassified certain payables within the Condensed Consolidated Balance Sheets for the year ended January 2, 2021, from other current liabilities to taxes payable.

These payables relate to amounts due to various tax authorities.

Recently Adopted Accounting Standards

In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “Leases (Topic 842).” Topic 842 established a new lease accounting model.

The most significant changes included the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a corresponding lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which were designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

Expenses were recognized in the consolidated statement of income in a manner similar to prior accounting guidance.

Lessor accounting under the new standard was substantially unchanged.

We adopted this standard, and all related amendments thereto, effective December 30, 2018, the first day of our 2019 fiscal year, using a modified retrospective approach, which applied the provisions of the new guidance at the effective date without adjusting the comparative periods presented.

We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption.

We have made an accounting policy election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

We implemented internal controls and a lease accounting information system to enable the preparation of financial information required by the new standard.

The adoption of Topic 842 had a material impact on our condensed consolidated balance sheets but did not have a material impact on our condensed consolidated statements of operations and comprehensive loss.

The most significant impact was the recognition of right-of-use assets and lease liabilities of $ 57.5 million on the condensed consolidated balance sheet as of the adoption date.

Additionally, $ 1.7 million of deferred gains associated with sale-leaseback transactions was recorded as a cumulative-effect adjustment to accumulated deficit.

Defined Benefit Pension Plan .

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-14, “Compensation-Retirement-Benefits-Defined Benefit Plans-General (Subtopic 715-20).” The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing six previously required disclosures and adding two.

The ASU also removes

the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement healthcare benefits.

We adopted this standard effective for fiscal year 2020.

The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Fair Value Measurement .

In August 2018, the FASB issued ASU No, 2018-13, “Fair Value (“FV”) Measurement (Topic 820).” In addition to making certain modifications, the standard removed the requirements to disclose:

(i) the amount of and reasons for transfers between Level 1 and Level 2 of the FV hierarchy;

(ii) the policy for timing transfers between levels;

and (iii) the valuation process for Level 3 FV measurements.

The standard will require public entities to disclose:

(a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 FV measurements held at the end of the reporting period;

and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 FV measurements.

The additional disclosure requirements should be applied prospectively for the most recent interim or annual period presented in the fiscal year of adoption.

All other amendments should be applied retrospectively to all periods presented.

We adopted this standard effective December 29, 2019, the first day of our 2020 fiscal year.

The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Accounting Standards Effective in Future Periods

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We have not completed our assessment of the standard, but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Defined Benefit Pension Plan .

In August 2018, the FASB issued ASU No.

The amendments also clarify certain other disclosure requirements.

The amendments in this standard are effective for fiscal years ending after December 15, 2020.

Early adoption is permitted.

Income Taxes .

In December 2019, the FASB issued ASU No.2019-12, “Income taxes (Topic 740):

Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

The amendments in this standard are effective for interim periods and fiscal years beginning after December 15, 2020.

Early adoption is permitted.

We are currently assessing the impact of the new guidance, but do not expect the adoption to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.

Goodwill and Other Intangible Assets

In connection with the acquisition of Cedar Creek, we acquired certain intangible assets.

As of September 26, 2020, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

As of April 3, 2021, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations.

As of September 26, 2020, goodwill was $ 47.8 million.

As of April 3, 2021, goodwill was $ 47.8 million.

Goodwill is not subject to amortization but must be tested for impairment at least annually.

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Such events and indicators may include, without limitation, significant declines in the industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization.

Our one reporting unit has a fair value that exceeds its book value as of September 26, 2020.

No such indicators were present during the first quarter of fiscal 2021.

Our one reporting unit has a fair value that exceeds its carrying value as of April 3, 2021.

Definite-Lived Intangible Assets

On September 26, 2020, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Gross carrying amounts Accumulated

On April 3, 2021, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Weighted Average Remaining Useful Lives Gross Carrying Amounts Accumulated

Amortization (1)

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Amortization Expense

The weighted average estimated useful life remaining for customer relationships, noncompete agreements, and trade names is approximately 10 years, 2 years, and 1 year, respectively.

Amortization expense for the definite-lived intangible assets was $ 1.8 million and $ 5.6 million for the three- and nine-month periods ended September 26, 2020, respectively.

For the three- and nine-month periods ended September 28, 2019, amortization expense was $ 2.0 million and $ 6.1 million, respectively.

Amortization expense for the definite-lived intangible assets was $ 1.8 million and $ 2.0 million for the three-month periods ended April 3, 2021, and March 28, 2020, respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of 2021 and the next five fiscal years is as follows:

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Revenue Recognition

We recognize revenue when control of promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We recognize revenue when the following criteria are met:

(1) Contract with the customer has been identified;

(2) Performance obligations in the contract have been identified;

(3) Transaction price has been determined;

(4) Transaction price has been allocated to the performance obligations;

and (5) When (or as) performance obligations are satisfied.

Contracts with our customers are generally in the form of standard terms and conditions of sale.

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Trade allowances are based on the estimated obligations and historical experience.

Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for each of the reported periods.

Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for

each of the reported periods.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration.

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Sales and usage-based taxes are excluded from revenues.

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

(In thousands) (In thousands)

Three Months Ended

April 3, 2021 March 28, 2020

(In thousands)

Structural products $ 462,409 $ 240,722

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The following table presents our revenues disaggregated by sales channel.

Warehouse sales are delivered from our warehouses.

Reload sales are similar to warehouse sales but are shipped from third-party warehouses where we store owned products to enhance our operating efficiencies.

This channel is employed primarily to service strategic customers that would be less economical to service from our warehouses, and to distribute large volumes of imported products from port facilities.

Direct sales are shipped from the manufacturer to the customer without our taking physical possession of the inventory and, as a result, typically generate lower margins than our warehouse and reload distribution channels.

This distribution channel requires the lowest amount of committed capital and fixed costs.

Following the acquisition and integration of Cedar Creek, our reload sales were less distinct from warehouse sales, as they have been classified in prior periods.

In addition, from time to time we may also make changes to certain intercompany allocations amongst sales channels.

As a result, certain prior period amounts have been reclassified to conform to the current period revenues disaggregated by sales channel.

Such reclassifications do not have an impact on total net sales as reported in any period.

Sales and usage-based taxes are excluded from revenues.

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

(In thousands) (In thousands)

Three Months Ended

April 3, 2021 March 28, 2020

(In thousands)

Warehouse and reload $ 849,419 $ 545,892

2 unchanged sentences

Total net sales $ 1,025,469 $ 662,070

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less.

These costs are recorded within selling, general, and administrative expense.

We have made an accounting policy election to treat outbound shipping and handling activities as an expense.

Assets Held for Sale

Two of our non-operating properties were designated as held for sale as of September 26, 2020.

These properties consisted of two former distribution facilities located in the Midwest and Southeast.

We vacated these properties and designated them as

held for sale during fiscal 2019 due to their proximity to other locations after the Cedar Creek acquisition.

During the three-month period ended September 26, 2020, one property identified as held for sale during fiscal 2019 was returned to operations as we decided to restart operations at our owned Grand Rapids facility.

As of September 26, 2020, and December 28, 2019, the net book value of total assets held for sale was $ 0.7 million and $ 1.1 million, respectively, and was included in “Other current assets” in our Condensed Consolidated Balance Sheets.

We continue to actively market all properties that are designated as held for sale, and we plan to sell these properties within the next 12 months.

During the quarter ended April 3, 2021, we sold the non-operating facility located in Birmingham, Alabama, previously identified as “held for sale.” We recognized a gain of $ 1.3 million in the Condensed Consolidated Statement of Operations as a result of this sale.

As of April 3, 2021, and January 2, 2021, the net book value of total assets held for sale was $ 0.9 million and $ 1.3 million, respectively, and was included in “Other current assets” in our Condensed Consolidated Balance Sheets.

Only one of our non-operating properties was designated as “held for sale” as of April 3, 2021.

This property is a former distribution facility located in Houston, Texas.

We vacated this property and designated it as held for sale during fiscal 2020.

We continue to actively market this property, and we plan to sell this property within the next 12 months.

Long-Term Debt

As of September 26, 2020, and December 28, 2019, long-term debt consisted of the following:

September 26, 2020 December 28, 2019

As of April 3, 2021, and January 2, 2021, long-term debt consisted of the following:

April 3, 2021 January 2, 2021

(In thousands)

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Term Loan Facility (2)

57,813 146,674

Finance lease obligations (3)

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Long-term debt, net of current maturities $ 629,714 $ 588,713

(1) The weighted average interest rate was 2.5 percent and 3.9 percent as of September 26, 2020 and December 28, 2019, respectively.

(2) The weighted average interest rate was 8.0 percent and 8.7 percent as of September 26, 2020 and December 28, 2019, respectively.

(1) The average effective interest rate was 2.4 percent and 2.8 percent for the quarters ended April 3, 2021 and January 2, 2021, respectively.

(2) The average interest rate, exclusive of fees and prepayment premiums, was 8.0 percent for the quarters ended April 3, 2021, and January 2, 2021.

(3) Refer to Note 8, Leases , for interest rates associated with finance lease obligations.

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Loans under the Revolving Credit Facility bear interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the amount of such margin determined based upon the average of our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the amount of such margin determined based upon the average of our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.

We amended the Revolving Credit Facility on January 31, 2020, to provide that (i) the “Seasonal Period” will run from November 15, 2019, through July 15, 2020, for the calendar year 2019, and from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for the calendar year 2020 and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days.

The adjustment to the Seasonal Period better aligns advance rates under the Revolving Credit Facility with the seasonality in our business and provided us with an enhanced borrowing base and greater liquidity through July 15, 2020.

As of September 26, 2020, we had outstanding borrowings of $ 263.0 million , excess availability of $ 202.1 million, and a weighted average interest rate of 2.5 percent.

As of December 28, 2019, our principal balance was $ 326.5 million , excess availability was $ 80.0 million, and our weighted average interest rate was 3.9 percent.

As of April 3, 2021, we had outstanding borrowings of $ 358.5 million and excess availability of $ 238.1 million under our Revolving Credit Facility.

As of January 2, 2021, we had outstanding borrowings of $ 288.2 million and excess availability of $ 184.3 million under our Revolving Credit Facility.

Our average effective interest rate under the facility was 2.4 percent and 2.8 percent for the quarters ended April 3, 2021 and January 2, 2021, respectively.

For the quarter ended March 28, 2020, our average effective interest rate under the Revolving Credit Facility was 4.2 percent.

The Revolving Credit Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants.

We were in compliance with all covenants under the Revolving Credit Facility as of September 26, 2020.

We were in compliance with all covenants under the Revolving Credit Facility as of April 3, 2021.

Term Loan Facility

We have a term loan facility that we entered into in April 2018 with HPS Investments Partners, LLC, as administrative and collateral agent, and certain other financial institutions party thereto (the “Term Loan Facility”), with a maturity date of October 13, 2023.

The Term Loan Facility provides for a senior secured first lien loan facility in an initial aggregate principal amount of $ 180 million and is secured by a security interest in substantially all of our assets.

The Term Loan Facility requires monthly interest payments, and also requires quarterly principal payments of $ 402,282 , in arrears, with the remaining balance due on the maturity date.

The Term Loan Facility also requires certain mandatory prepayments of outstanding loans, subject to certain exceptions.

The Term Loan Facility required maintenance of a total net leverage ratio of 8.75 to 1.00 for the quarter ending September 26, 2020.

We were in compliance with all covenants under the Term Loan Facility as of September 26, 2020.

Borrowings under the Term Loan Facility may be made as Base Rate Loans or Eurodollar Rate Loans.

The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S.

prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent, provided that the Base Rate shall at no time be less than 2.00 percent per annum;

plus (ii) the Applicable Margin, as described below.

Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum;

plus (ii) the Applicable Margin.

The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.

We amended the Term Loan Facility on December 31, 2019, to extend the period for satisfying the designated principal balance level required to maintain the modified total net leverage ratio covenant levels for the 2019 fourth and subsequent quarters thereunder, which was satisfied on January 31, 2020, through repayments from proceeds from the real estate financing transactions described in Note 8.

On February 28, 2020, we further amended the Term Loan Facility to provide that we would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility is less than $ 45 million.

On April 1, 2020, we amended the Term Loan Facility to, among other things, modify the total net leverage ratio covenant levels for the 2020 second and third quarters.

All other total net leverage ratio covenant levels for prior and future quarters were unchanged.

As of September 26, 2020, we had outstanding borrowings of $ 57.8 million under the Term Loan Facility and an interest rate of 8.0 percent per annum.

As of December 28, 2019, our principal balance was $ 146.7 million with an interest rate of 8.7 percent per annum.

The decrease in the outstanding borrowings was due to the principal payments described above and the net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.

On October 2, 2020, we reduced the principal balance of the Term Loan Facility to $ 44.4 million, and as a result we are no longer subject to the Facility’s total net leverage ratio covenant beginning with our 2020 fourth quarter.

We previously had a term loan facility that we entered into in April 2018 with HPS Investments Partners, LLC, as administrative and collateral agent, and certain other financial institutions party thereto (the “Term Loan Facility”), with a maturity date of October 13, 2023.

The Term Loan Facility provided for a senior secured first lien loan facility in an initial aggregate principal amount of $ 180 million and was secured by a security interest in substantially all of our assets.

As of January 2, 2021, we had outstanding borrowings of $ 43.2 million under the Term Loan Facility.

On April 2, 2021, we repaid the remaining outstanding principal balance of the Term Loan Facility, and, as a result, as of April 3, 2021, we had no outstanding borrowings under the Term Loan Facility, which has been extinguished.

In connection with our repayment of the outstanding principal balance in full on April 2, 2021, we expensed $ 5.8 million of debt issuance costs that we had been amortizing in connection with our former Term Loan Facility.

These costs are included within interest expense, net, on the

Condensed Consolidated Statements of Operations and reported separately as an adjustment to net income in our Condensed Consolidated Statements of Cash Flows.

Our average interest rate under the facility, exclusive of fees and prepayment premiums, was approximately 8.0 percent for the quarters ended April 3, 2021 and January 2, 2021.

For the quarter ended March 28, 2020, our average interest rate under the Term Loan Facility, exclusive of fees and prepayment premiums, was approximately 8.7 percent.

Finance Lease Obligations

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For more information on our finance lease obligations, refer to Note 8, Leases .

Net Periodic Pension (Benefit) Cost

The following table shows the components of our net periodic pension (benefit) cost:

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

(In thousands) (In thousands)

Net Periodic Pension Benefit

The following table shows the components of our net periodic pension benefit:

Three Months Ended

April 3, 2021 March 28, 2020

(In thousands)

Service cost (1)

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Expected return on plan assets ( 1,140 ) ( 1,210 )

Amortization of unrecognized loss 263 278 789 857

Net periodic pension (benefit) cost $ ( 224 ) $ ( 151 ) $ ( 672 ) $ 118

Amortization of unrecognized gain 321 263

Net periodic pension benefit $ ( 314 ) $ ( 224 )

(1) Service cost is not a part of our net periodic pension benefit as our pension plan is frozen for all participants.

Stock Compensation

Stock Compensation Expense

During the three months ended September 26, 2020, and September 28, 2019, we incurred stock compensation expense of $ 1.1 million and $ 1.2 million, respectively.

During the nine months ended September 26, 2020, and September 28, 2019, we incurred stock compensation expense of $ 2.9 million and $ 2.5 million, respectively.

The increase in our stock compensation expense for the nine-month period is attributable to having more outstanding equity-based awards during these periods than in the prior year and the vesting of awards in connection with the departure of certain employees.

During the three months ended April 3, 2021, and March 28, 2020, we incurred stock compensation expense of $ 1.4 million and $ 1.0 million, respectively.

The increase in our stock compensation expense for the three-month period is attributable to having more outstanding equity-based awards during this period than in the prior year.

We have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment.

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Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”).

The known changes to lease payments are included in the lease liability at lease commencement.

Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

In addition, a subset of our vehicle lease cost is considered variable.

Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets.

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These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5 -year renewal options, with one having a single 10 -year renewal option.

We accounted for these transactions in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, which was the lease accounting standard in effect at the inception of these arrangements.

We accounted for these transactions in accordance with the FASB’s Accounting Standards Codification (“ASC”) Topic 840, which was the lease accounting standard in effect at the inception of these arrangements.

We have recorded these transactions as finance lease liabilities on our balance sheet.

As of September 26, 2020, and December 28, 2019, total unrecognized deferred gains related to these transactions were $ 83.0 million and $ 85.8 million , respectively.

As of April 3, 2021, and January 2, 2021, total unrecognized deferred gains related to these transactions were $ 81.1 million and $ 82.0 million, respectively.

During 2019, we entered into real estate financing transactions on two warehouse facilities.

On May 19, 2019, we completed a real estate financing transaction on a warehouse facility in University Park, IL for net proceeds of $ 21.8 million.

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Gross proceeds of these transactions were $ 45.0 million.

During the first quarter of fiscal 2020, we completed several real estate financing transactions.

During fiscal 2020, we completed several real estate financing transactions.

On December 31, 2019, we completed real estate financing transactions on warehouse facilities in Madison, TN;

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Gross proceeds of these transactions were $ 78.3 million.

We determined that the transactions in fiscal 2019 and in the first quarter of the current fiscal year did not qualify as sales in accordance with ASC 842.

We determined that the transactions in fiscal 2019 and 2020 did not qualify as sales in accordance with ASC 842.

Therefore, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions, and no gain or loss was recorded.

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The net book value of the assets related to these transactions remains on our books as property and equipment and we continue to depreciate the assets over their remaining useful lives.

On August 14, 2020, we entered into a sale-leaseback arrangement on our warehouse facility in Denver, CO.

We determined that this transaction qualified as a sale in accordance with ASC 842 and the lease qualified for operating lease treatment.

Gross proceeds of this transaction were $ 11.0 million and we recognized a related gain of $ 8.7 million.

Upon completion of the transaction, we entered into a long-term lease on the property for an initial term of five years with multiple 5 -year renewal options.

Net proceeds of the transaction were $ 10.6 million, which were used to pay down our Term Loan Facility.

A portion of our real estate lease cost is generally subject to annual changes in the Consumer Price Index (“CPI”).

The known changes to lease payments are included in the lease liability at lease commencement.

Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

In addition, a subset of our vehicle lease cost is considered variable.

The following table presents our assets and liabilities related to our leases as of September 26, 2020 and December 28, 2019:

September 26, 2020 December 28, 2019

During the first quarter of 2021, we recorded finance leases of $ 10.2 million related to new tractors put into service as part of our mobile fleet.

These leases were entered into for a period of four years each.

The following table presents our assets and liabilities related to our leases as of April 3, 2021 and January 2, 2021:

April 3, 2021 January 2, 2021

(In thousands)

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Total lease liabilities $ 330,418 $ 324,159

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 55.9 million and $ 30.8 million as of September 26, 2020 and December 28, 2019, respectively.

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 62.5 million and $ 58.6 million as of April 3, 2021 and January 2, 2021, respectively.

The components of lease expense were as follows:

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

(In thousands) (In thousands)

Three Months Ended

April 3, 2021 March 28, 2020

(In thousands)

Operating lease cost:

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Supplemental cash flow information related to leases was as follows:

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

( In thousands)

Three Months Ended

April 3, 2021 March 28, 2020

(In thousands)

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Supplemental balance sheet information related to leases was as follows:

September 26, 2020 December 28, 2019

April 3, 2021 January 2, 2021

(In thousands)

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Finance leases 9.82 % 9.87 %

The major categories of our finance lease liabilities as of September 26, 2020 and December 28, 2019 are as follows:

September 26, 2020 December 28, 2019

The major categories of our finance lease liabilities as of April 3, 2021 and January 2, 2021 are as follows:

April 3, 2021 January 2, 2021

(In thousands)

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Total finance leases $ 281,274 $ 273,118

As of September 26, 2020, maturities of lease liabilities were as follows:

As of April 3, 2021, maturities of lease liabilities were as follows:

Operating leases Finance leases

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Total $ 49,144 $ 281,274

On December 28, 2019, maturities of lease liabilities were as follows:

On January 2, 2021, maturities of lease liabilities were as follows:

Operating leases Finance leases

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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 and receivables recorded for expected receipts from settlements.

Management further believes that, while the ultimate outcome of one or more of these matters could be material to operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.

Management further believes that, while the ultimate outcome of one or more of these matters could be material to our operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.

Collective Bargaining Agreements

As of September 26, 2020, we had 2,000 employees on a full-time basis, and approximately 22 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”).

Approximately 1 percent of our employees are covered by three CBAs that are up for renewal in fiscal 2020.

As of September 26, 2020, one of these CBAs was renewed and the remaining two are expected to be renegotiated before the end of the year.

As of April 3, 2021, we employed approximately 2,100 employees and less than 1 percent of our employees are employed on a part-time basis.

Approximately 23 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”).

Five CBAs covering approximately five percent of our employees are up for renewal in fiscal 2021, with one having been successfully renegotiated earlier this year.

We expect to renegotiate the remaining CBAs by the end of the year.

Accumulated Other Comprehensive Loss

Comprehensive loss includes both net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive Loss.

Accumulated other comprehensive loss is separately presented on our Condensed Consolidated Balance Sheets as part of stockholders’ equity (deficit).

The changes in balances for each component of accumulated other comprehensive loss for the nine months ended September 26, 2020, were as follows:

Comprehensive income (loss) includes both net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Accumulated other comprehensive loss is separately presented on our Condensed Consolidated Balance Sheets as part of stockholders’ equity.

The changes in balances for each component of accumulated other comprehensive loss for the three months ended April 3, 2021, were as follows:

Foreign currency, net

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(In thousands)

December 28, 2019, beginning balance $ 666 $ ( 35,441 ) $ 212 $ ( 34,563 )

Other comprehensive income, net of tax (1)

January 2, 2021, beginning balance, net of tax $ 660 $ ( 36,855 ) $ 203 $ ( 35,992 )

Other comprehensive income (loss), net of tax (1)

( 6 ) 239 17 250

September 26, 2020, ending balance, net of tax $ 674 $ ( 34,837 ) $ 202 $ ( 33,961 )

(1) For the nine months ended September 26, 2020, the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of net periodic pension cost was $ 0.8 million , net of tax of $ 0.2 million.

Please see Note 6, Net Periodic Pension (Benefit) Cost , for further information.

Our effective tax rate for the three months ended September 26, 2020, and September 28, 2019, was 22.3 percent and ( 3.6 ) percent, respectively.

Our effective tax rate for the three months ended September 26, 2020, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and officer’s compensation, and the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest under 163(j) of the Internal Revenue Code (“IRC”).

Our effective tax rate for the three months ended September 28, 2019, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including $ 0.6 million in discrete tax expense related to prior periods.

In addition, we recorded discrete tax expense of $ 0.2 million for a shortfall on the vesting of our restricted stock units, which was offset by a $ 0.2 million discrete tax benefit for claiming tax credits.

Our effective tax rate was 18.9 percent and ( 0.9 ) percent, for the first nine months of fiscal 2020 and 2019, respectively.

Our effective tax rate for the nine months ended September 26, 2020, was impacted by (i) the discrete tax benefit of $ 3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under Section 163(j) of the IRC as a result of changes under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (which was enacted on March 27, 2020, and contained, among other things, several tax-based measures meant to counteract the effects of the COVID-19 pandemic) to increase the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) recording discrete tax expense of $ 0.4 million for a shortfall on the vesting of our restricted stock units, (iii) the permanent addback of certain nondeductible expenses, including meals and entertainment and nondeductible compensation, and (iv) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest expense under Section 163(j) of the IRC.

Our effective tax rate for the nine months ended September 28, 2019, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation and the effect of the valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including $ 0.6 million in discrete tax expense related to prior periods.

In addition, during the first nine months of fiscal 2019, we recorded discrete tax expense of $ 0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $ 0.2 million discrete tax benefit for claiming state tax credits.

Our financial statements contain certain deferred tax assets which primarily resulted from tax benefits associated with temporary differences related to certain reserves, pension obligations, differences between book and tax depreciation and amortization, realized gains upon the sales of real estate, and both federal and state net operating losses.

Currently, we have a valuation allowance that covers (i) certain company state net operating loss carryforwards and (ii) disallowed interest calculated pursuant to the changes made by the Tax Cuts and Jobs Act of 2017, as adjusted by the CARES Act.

We record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried forward under tax law.

At the end of each quarter, we evaluate the weight of available evidence (both positive and negative).

We considered the recent reported income generated in the current quarter and prior years (adjusted for unusual one-time items) and income generated in 2017, including the prior year income from Cedar Creek.

We also considered evidence

related to the four sources of taxable income to determine whether such positive evidence outweighed the negative evidence.

April 3, 2021, ending balance, net of tax $ 654 $ ( 36,616 ) $ 220 $ ( 35,742 )

(1) For the three months ended April 3, 2021, the actuarial gain recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of net periodic pension benefit was $ 0.3 million, net of tax of $ 0.1 million.

Please see Note 6, Net Periodic Pension Benefit , for further information.

Effective Tax Rate

Our effective tax rate for the three months ended April 3, 2021, and March 28, 2020, was 26.0 percent and 86.5 percent, respectively.

Our effective tax rate for the three months ended April 3, 2021 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, slightly offset by the partial release of the valuation allowance for state net operating loss carryforwards we anticipate being able to utilize based on our taxable income through the end of the first quarter of fiscal 2021, combined with a benefit from the vesting of restricted stock units, which occurred during the period.

Our effective tax rate for the three months ended March 28, 2020 was primarily impacted by a discrete tax benefit of $ 3.9 million resulting from the release of the valuation allowance associated with nondeductible interest expense under Section 163(j) of the Internal Revenue Code (“IRC”) as a result of changes allowed under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that was enacted on March 27, 2020 which raised the allowable percentage of deductible interest from 30 percent to 50 percent of adjusted taxable income.

Our effective tax rate for the three months ended March 28, 2020, was further impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses.

Deferred Tax Assets

Quarterly, we assess the carrying value of our deferred tax assets for impairment by evaluating the weight of available evidence at the end of each fiscal quarter.

In our evaluation of the weight of available evidence at the end of the current quarter, we considered the recent reported income in the current quarter, as well as the reported income for 2020 and the reported losses for 2019 and 2018, which resulted in a three-year cumulative income situation as positive evidence which carried substantial weight.

While this was substantial, it was not the only evidence we evaluated.

We also considered evidence related to the four sources of taxable income to determine whether such positive evidence outweighed the negative evidence.

The evidence considered included:

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• tax planning strategies.

At the end of the 2020 and 2019 fiscal third quarters, in our evaluation of the weight of available evidence, we concluded that the weight of the positive evidence outweighed the negative evidence.

In addition to the evidence discussed above, we considered as positive evidence forecasted future taxable income, the detail scheduling of the timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies described below.

Although we believe our estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgments.

One of our long-standing deferred tax assets has been our net operating losses for federal income tax purposes.

With our real estate sales discussed in Note 8 and our net income during the first nine months of 2020, we believe we will fully utilize all of our remaining federal net operating losses upon filing of our 2020 federal income tax return in 2021.

In addition, we believe that the change in control under IRC Section 382 resulting from the completion of the secondary offering on October 23, 2017, will not cause any of our federal net operating losses to be limited as we have effectively implemented a real estate strategy involving the sale and leaseback of real estate.

Those sale and leaseback transactions involved four warehouses in January 2018, two warehouses during 2019, and fifteen warehouses in 2020.

Additionally, the acquisition of Cedar Creek did not generate any limitations under IRC Section 382 on Cedar Creek’s tax assets.

In addition to the positive evidence discussed above, we considered as positive evidence forecasted taxable income, the detail scheduling of timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies.

As of April 3, 2021, in our evaluation of the weight of available evidence, we concluded that our deferred tax assets were not impaired.

Income (Loss) per Share

We calculate basic income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding.

We calculate diluted income (loss) per share using the treasury stock method, by dividing net income (loss) by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units, and performance units .

Due to the financial results for the three- and nine-month periods ended September 28, 2019, 0.1 million and 0.0 million of incremental shares were excluded from the computation of diluted weighted averages outstanding, because their effect would be anti-dilutive.

The reconciliation of basic net income (loss) and diluted net income (loss) per common share for the three- and nine-month periods ended September 26, 2020, and September 28, 2019, were as follows:

Three Months Ended Nine Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

(In thousands, except per share data) (In thousands, except per share data)

Due to the financial results for the three-month period ended March 28, 2020, 0.1 million of incremental shares were excluded from the computation of diluted weighted averages outstanding, because their effect would be anti-dilutive.

The reconciliation of basic net income (loss) and diluted net income (loss) per common share for the three-month periods ended April 3, 2021, and March 28, 2020, were as follows:

Three Months Ended

April 3, 2021 March 28, 2020

(In thousands, except per share data)

Net income (loss) $ 61,860 $ ( 787 )

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements