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<SEC-DOCUMENT>0000950123-09-048407.txt : 20091207
<SEC-HEADER>0000950123-09-048407.hdr.sgml : 20091207
<ACCEPTANCE-DATETIME>20091005180650
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-09-048407
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20091005

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BlueLinx Holdings Inc.
		CENTRAL INDEX KEY:			0001301787
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-LUMBER, PLYWOOD, MILLWORK & WOOD PANELS [5031]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0101

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		4300 WILDWOOD PARKWAY
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30339
		BUSINESS PHONE:		770-953-7000

	MAIL ADDRESS:	
		STREET 1:		4300 WILDWOOD PARKWAY
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30339
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">BlueLinx Holdings Inc.<BR>
4300 Wildwood Parkway<BR>
Atlanta, GA 30338
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">October&nbsp;5, 2009

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>VIA EDGAR CORRESPONDENCE</B></U><BR>
United States Securities &#038; Exchange Commission<BR>
100 F Street, NE<BR>
Mail Stop 4631<BR>
Washington, D.C. 20549

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Attn: Mr.&nbsp;Rufus Decker, Accounting Branch Chief
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 6%; margin-top: 6pt"><B>RE: BlueLinx Holdings, Inc.<BR>
Form&nbsp;10-K for Fiscal Year Ended January 3,</B> <B>2009, Form&nbsp;10-Q<BR>
for Fiscal Quarter Ended April&nbsp;4, 2009</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dear Mr.&nbsp;Decker:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On behalf of BlueLinx Holdings Inc. (&#147;we&#148;, &#147;our&#148;, &#147;us&#148; or the &#147;Company&#148;), this letter
responds to the comments of the Staff of the United States Securities and Exchange Commission
(the &#147;Staff&#148;) to the above referenced filings, as set forth in your letter dated September&nbsp;22,
2009. Each of the Company&#146;s responses is set forth immediately below the text of the correlative
Staff comment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt"><U>Form&nbsp;10-K for the Year Ended January&nbsp;3, 2009</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>General</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Where a comment below requests additional disclosures or other revisions to be made, these
revisions should be included in your future filings, including your interim filings if
applicable.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company acknowledges the foregoing comment and will make in its future filings, including
interim filings, such additional disclosures or other revisions, as applicable, as are required
to address the Staff&#146;s comments below.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Financial Statements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>2. Summary of Significant Accounting Policies, page 48</U>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Restricted Cash, page 48</U>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We have read your response to comment eight from our letter dated July&nbsp;30, 2009. You
indicated that you considered the changes in restricted cash held in escrow associated with
your mortgage as a financing activity. However, given the size of the restricted cash held
in escrow related to the mortgage as compared to the entire restricted cash balance, and
total cash flows from operations in your </B><B>Form 10-K</B><B> for the year ended January&nbsp;3, 2009, the
reclassification of such amounts was not required as the amount was immaterial. Please tell
us what consideration you gave to the materiality of the changes in restricted cash held in
escrow associated with your mortgage on operating activities for the six months ended July&nbsp;4,
2009. Please also tell us how you determined that your restricted cash held in escrow
associated with your mortgage as compared to the entire restricted cash balance is not
material as of January&nbsp;3, 2009 and July&nbsp;4, 2009.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We considered the following quantitative and qualitative characteristics when evaluating
materiality of cash flows related to the mortgage:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The change in restricted cash associated with the mortgage facility during the year
ended January&nbsp;3, 2009 was a cash use of $9.1&nbsp;million, compared to total cash provided
by operations as reported of $181.3&nbsp;million or approximately 5% of the operating cash
flows for the period;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash flows in the prior year corresponding periods associated with the mortgage
related to restricted cash was $0;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The change in restricted cash associated with the mortgage facility during the six
months ended July&nbsp;4, 2009 was a cash use of $6.4&nbsp;million, compared to total cash used
in operations as reported of $12.8&nbsp;million or approximately 50% of the operating cash
flows for the period. Cash flows associated with mortgage related restricted cash for
the six months ended June&nbsp;28, 2008 was $0, compared with total cash provided by
operating activities of $30.8&nbsp;million. The small base of total cash flows used in
operating activities during 2009 was caused by the significant net loss in the period,
offset by changes in working capital account balances;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The restricted cash related to the mortgage was 40% and 57% of the total restricted
cash balance at January&nbsp;3, 2009 and July&nbsp;4, 2009, respectively. The restricted cash
balance is classified in the other non-current asset line item in the balance sheet.
Total non-current assets at January&nbsp;3, 2009 and July&nbsp;4, 2009 were $212.7&nbsp;million and
$185.4&nbsp;million, respectively, of which mortgage related restricted cash was $10.3
million and $16.7&nbsp;million, respectively;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Reclassification of the change in restricted cash associated with the mortgage
facility would result in an improvement to operating cash flows for the year ended
January&nbsp;3, 2009 and the six months ended July&nbsp;4, 2009;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The classification of the change in restricted cash associated with the mortgage
facility as cash used in operations did not impact any cash flow trends;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The classification as operating cash flows did not hide a failure to meet analysts&#146;
consensus expectation for the enterprise as it relates to the generation of operating
cash flows, primarily due to the fact that the classification of restricted cash
relative to the mortgage decreased cash provided by operations for the periods
presented;
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The classification of the change in restricted cash associated with the mortgage
facility as cash used in operations did not cause a shift from cash provided by
operations to cash used by operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The classification of these cash flows does not impact the Company&#146;s compliance with
regulatory requirements, loan covenants or other contractual requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company does have annual bonuses contingent upon certain performance metrics
related to operating cash flow; however, the change in restricted cash related to the
mortgage decreased cash provided by operations for the periods presented. Therefore,
changes in cash relative to the mortgage did not have the effect of increasing
management&#146;s compensation in the periods presented;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The classification does not involve the concealment of an unlawful transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The classification did not mask a change in earnings as the presentation only
related to the cash flow statement classification and has no impact to the results of
operations or balance sheets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company determined that reclassification of the change in cash flows would have
no impact on the volatility of the price of the Company&#146;s securities, primarily due to
the fact that the change in cash flows did not mask failures to meet analyst
expectations relative to operating cash flow expectations. In addition, the
classification of restricted cash flow changes relative to the mortgage would not
effect earnings and related earnings per share which are the primary financial
performance indicators used by investors. As a result management also determined that
reclassification was not likely to change how the Company would be viewed by investors
or trigger a positive or negative market reaction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company considered the potential for confusion created by disparate
classifications of the components of restricted cash in the statement of cash flows,
and determined that the benefit of separate classification of portions of restricted
cash did not outweigh the potential confusion that such treatment might create to the
users of the financial statements.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Considering the positive and negative factors discussed above, the Company concluded that the
cash flows associated with the mortgage were not material to operating cash flows in our Form
10-K for the year end period January&nbsp;3, 2009 and the Form 10-Q for the six month period ended
July&nbsp;4, 2009. However, the Company recognizes that the restricted cash balance associated with
the mortgage is likely to continue to grow for the foreseeable future. Based on management&#146;s
evaluation of the Staff&#146;s comment and the potential for continued future growth in the cash flow
streams related to the mortgage, the Company will classify the change in restricted cash
required by the mortgage facility, in our Form 10-Q for the period ending October&nbsp;3, 2009, as
cash used in financing activities in the statement of cash flows, and will reclassify such
amounts for all prior periods presented. The Company will disclose the nature of the
reclassification in the notes to the financial statements.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Exhibits, page 87</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your response to comment 15 in our letter dated July&nbsp;30, 2009. Please file
exhibits and schedules to exhibits 10.11 and 10.14 in their entirety with your next Exchange
Act report.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We will file the exhibits and schedules to exhibits 10.11 and 10.14 with our Form 10-Q for the
period ending October&nbsp;3, 2009. We intend to file a confidential treatment request with the
Staff for certain information in the schedules.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Critical Accounting Policies, page 38</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Income Taxes, page 41</U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We have read your response to comment 21 from our letter dated July&nbsp;30, 2009. You indicated
that you considered available positive and negative evidence, relative to the four sources of
taxable income, to determine whether a valuation allowance was necessary. We have the
following comments.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please disclose and provide a more robust discussion of the positive and negative evidence
you considered in your determination of whether your deferred tax assets were recoverable and
also disclose how that evidence was weighted;</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Your revised disclosure should also disclose the facts and circumstances that changed from
the end of fiscal year 2008 to the end of the first quarter of fiscal 2009 regarding your
valuation allowance;</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please enhance the revised disclosure of your income taxes critical accounting policy to
include a discussion of the significant estimates outlined in your response; including but not
limited to the estimates used for calculating future taxable income; and</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Disclose the financial statement impact if actual results differ from the estimates and
assumption made by management. Refer to the SEC Interpretive Release No.&nbsp;33-8350 and SEC
Other Release No.&nbsp;33-8040. Please show us supplementally what your revised disclosure will
look like.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In response to the Staff&#146;s comments, the Company proposes to include the following disclosure in
the Notes to our Consolidated Financial Statements, substantially in the form below in future
annual and interim filings:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Our financial statements contain certain deferred tax assets which have arisen primarily as a
result of tax benefits associated with the loss before income taxes incurred during fiscal 2008 and
the first nine months of fiscal 2009, as well as deferred income tax assets resulting from other
temporary differences related to certain reserves, pension obligations and differences between book
and tax depreciation and amortization. Generally Accepted Accounting Principals (&#147;GAAP&#148;) require
the consideration of a valuation allowance to reflect the likelihood of realization of deferred tax
assets. In evaluating our ability to recover our deferred income tax assets, we considered
available positive and negative evidence.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the year ended January&nbsp;3, 2009, the Company reported a net loss. This reported loss along
with losses reported in prior periods was considered negative evidence which carried substantial
weight. Therefore, the Company considered evidence related to the four sources of taxable income,
to determine whether such positive evidence outweighed the negative evidence associated with the
losses incurred. The positive evidence considered included:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>taxable income in prior carryback years, if carryback is permitted under the tax law;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>future reversals of existing taxable temporary differences (i.e., offset gross deferred
tax assets against gross deferred tax liabilities);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>tax planning strategies; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>future taxable income exclusive of reversing temporary differences and carryforwards.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of January&nbsp;3, 2009, there was no taxable income in carryback years to offset the net losses
recorded as deferred tax assets as of January&nbsp;3, 2009. The Company considered the future reversal
of temporary differences prior to projecting future taxable income. Net deferred tax assets that
would not be offset by future reversal of deferred tax liabilities
totaled $29.3&nbsp;million at January
3, 2009.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of January&nbsp;3, 2009, the Company projected a cumulative pre tax profit for the three year period
ended</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>2010. The cumulative profit was substantially driven by projected positive results from operations
in 2010, which was developed using the housing start forecasts available at that time and operating
expense reductions of 15% in 2009 and 6% in 2010. The Company&#146;s business is closely tied to
housing starts and third party estimates of housing starts are considered when estimating our
revenue. The Company develops housing starts assumptions using internal data, which is validated
using external housing start forecasts published by third party sources. At the end of fiscal 2008
and through early March&nbsp;2009, housing starts were projected to be 716,000 for 2009 and 950,000 for
2010.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, expected gains from the disposal of appreciated real estate in 2009 and 2010
impacted the Company&#146;s projections of cumulative pretax income for the three year period ended
2010. The fair value of the Company&#146;s real estate assets substantially exceed the carrying value,
which resulted in the Company being in a position with the ability to forecast and consider such
gains in our projection of future income.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Based on the weight of the available positive and negative evidence at the end of fiscal 2008 and
through early March&nbsp;2009, the Company concluded that the evidence relative to potential future
income generated from operations and the sale of appreciated real estate carried enough weight to
overcome the weight of the negative evidence of losses. Therefore, management determined that the
existing federal deferred tax assets would be realized in conjunction with closing and reporting
fiscal year 2008 and did not record any valuation allowance related to federal deferred tax assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">In regard to our state deferred tax assets, we considered the positive evidence associated with tax
planning strategies that would be implemented to avoid the loss of these assets. Considering the
weight of this evidence, the Company believed the positive evidence overcame the negative evidence
of the fiscal year 2008 loss and previously reported losses in the states where the tax planning
strategy was executable. For those states where we would not be able
to execute the strategy, we recorded a valuation allowance of $1.1&nbsp;million as of the end of fiscal year 2008 and
$0.3&nbsp;million related to non-deductible excess compensation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">During the first quarter of fiscal year 2009, our net deferred tax assets increased to $40.2
million, net of a $1.1&nbsp;million valuation allowance. The increase in deferred tax assets was
primarily attributable to a pretax loss of approximately $33&nbsp;million for the first quarter of 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The Company evaluated the weight of available positive and negative evidence during the first
quarter 2009 closing and reporting process. In late March and April, subsequent to the filing of
the 10-K, there was a substantial drop in revenue compared to expectations. In addition, due to a
combination of tighter lending standards and deteriorating conditions
in residential and commercial construction,
negotiations stalled or were terminated for several of the Company&#146;s planned sales of real estate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Due to the changes in the environment and Company plans noted above, the Company updated its
projection of future income. As previously discussed, the Company utilizes third party forecasts
in developing its annual projections, specifically related to housing starts. As projections were
received in March and April&nbsp;2009, we noted that comparative third party estimate of 2009 housing
starts had decreased significantly from previous estimates. During the first quarter, such
external estimates for 2009 housing starts dropped from 716,000 to 616,000. We considered the new
information in relation to our experience in March and April.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The changes in our internal assumptions and revised external expectations of 2009 housing starts
resulted in a change in our projections from cumulative pre tax income for the three year period
ended 2010 to a cumulative pre tax loss for the three year period ended 2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The downward revisions in forecasted housing starts at the end of the first quarter 2009, the lack
of signs of recovery in the overall economy and the inability to close real estate deals in late
March and April led
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">the Company to conclude that, as of April&nbsp;4, 2009, the weight of the positive evidence was no
longer sufficient to overcome the weight of the negative evidence of
reported losses
and a full valuation allowance of $40.2&nbsp;million for all deferred income tax assets was necessary as
of April&nbsp;4, 2009.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">In response to the Staff&#146;s comments, the Company proposes to include the following disclosure in
the &#147;Management&#146;s Discussion and Analysis&#148; section, substantially in the form below, contained in
our future annual and interim filings:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&#147;Our financial statements contain certain deferred tax assets which have arisen primarily as a
result of tax benefits associated with the loss before income taxes incurred during fiscal 2008
and fiscal 2009, as well as deferred income tax assets resulting from temporary differences.
Generally Accepted Accounting Principles (&#147;GAAP&#148;) require the consideration of a valuation
allowance to reflect the likelihood of realization of deferred tax assets. Significant management
judgment is required in determining any valuation allowance recorded against net deferred tax
assets. In evaluating our ability to recover our deferred income tax assets, we considered
available positive and negative evidence, including our past operating results, our ability to
carryback losses against prior taxable income, the existence of cumulative losses in the most
recent years, our forecast of future taxable income and an excess of appreciated assets over the
tax basis of our net assets. In estimating future taxable income, we developed assumptions
including the amount of future state and federal pretax operating and non-operating income, the
reversal of temporary differences and the implementation of feasible and prudent tax planning
strategies. These assumptions required significant judgment about the forecasts of future taxable
income, including, but not limited to, projected cost savings and changes in housing starts as
well as projected gains on the sale of real estate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the realization of deferred tax assets in the future is considered more likely than not, a
reduction to the valuation allowance related to the deferred tax assets would increase net income
in the period such determination is made. Such a determination would be based on the
consideration of all available evidence and the weight of such evidence.&#148;
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>* * * *</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The Company hereby acknowledges that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company is responsible for the adequacy and accuracy of the disclosure in its
filings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very Truly Yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left"><I>/s/ H. Douglas Goforth</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">H. Douglas Goforth&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


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</DIV>



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