Disappointment over Senate’s rejection of 1099 Health Care Tax Repeal
The National Lumber and Building Material Dealers Association (NLBMDA) expressed disappointment again today at the rejection of a newly revamped Johanns Amendment to the Food Safety Bill by a 61-35 vote, which would have repealed the onerous 1099 healthcare tax.
“Senators on both sides of the aisle, President Obama, even House Speaker Nancy Pelosi have all come out in support of repealing this burdensome provision, and yet the Senate refuses to pass a repeal for a third time,” said NLBMDA president Michael O’Brien, in a prepared statement. “What is it going to take for our Senators and Representatives to stop the party politics and get back to working for the American people and job creators, namely small businesses? NLBMDA will continue to fight for repeal, and we urge all of our members to contact their Senators to not only express their frustration with the recent votes, but to continue to urge the repeal of a provision that will significantly hurt lumber dealers and small businesses across the country and severely weaken the already fragile economy.”
The repeal effort was led by Sen. Mike Johanns (R-NE). To pass, this particular amendment needed a 2/3 majority, which is 67 votes in the Senate. The Johanns Amendment would pay for the repeal with other federal spending cuts.
In addition, the Senators had another shot at repeal with the introduction of the Baucus Amendment by Senator Max Baucus (D-MT). This amendment would have repealed the 1099 provision with no offsetting spending cuts. It was soundly defeated by the Senate with a 44-53 vote. This too needed 67 votes for passage. In all, three votes have been taken by the Senate to repeal the provision, and all three have been defeated.
According to Section 9006 of the 2,409-page Patient Protection and Affordable Care Act, all businesses will be required to send 1099 tax forms to every company or individual from which they purchased more than $600 in services and goods throughout the tax year, beginning Jan. 1, 2012. The new 1099 requirement is expected to generate $17 billion over 10 years to help pay for the new healthcare bill.
Beacon Roofing Supply reports sales declines
Beacon Roofing Supply, one of the nation’s largest distributors of roofing, siding and other exterior building products, reported sales of $482.6 million for its fourth fiscal quarter, a 1.1% decline over sales of $487.7 million in the same quarter of 2009. Excluded from the results were seven additional branches that were not in operation during the same period last year.
Net income for the fourth quarter, which ended Sept. 30, was $16.9 million compared with $19 million in 2009, a decline of 11.4%. The lower net income was primarily due to a lower gross margin rate, the company said, which was partially offset by the benefit from reduced expenses, including lower interest expense and income taxes.
For its full fiscal year, sales declined at Beacon Roofing by 7.2% to $1.61 billion in 2010 from $1.73 billion in 2009, while existing market sales decreased 8.7%. Residential roofing sales in existing markets decreased 18%, while non-residential roofing sales and complementary product sales increased 1.2% and 2.1%, respectively.
Net income was $34.5 million compared with $52.4 million in 2009, a decline of 34.1%.
Robert Buck, Beacon’s chairman and CEO, said in a prepared statement: “Our fourth quarter and fiscal 2010 results were disappointing as industry and economic conditions remained more challenging than anticipated. We were also up against a year that had significant storm business and record annual earnings. Despite these factors, our total sales declined only 1% in the fourth quarter due, in part, to the positive impact from our current-year acquisitions. In addition, our non-residential roofing and complementary product sales continued to rebound.
“We started to see some gains in residential business later in the year in a few of our regions that did not benefit from storms last year. We believe the favorable long-term industry growth factors remain in place, and we are in a good position to expand our company in 2011.”
Headquartered in Peabody, Mass., Beacon Roofing ranked third on the Home Channel News Top 350 Scoreboard in 2010, with 173 locations at the close of 2009.
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Builders FirstSource amends credit facility
Builders FirstSource has announced the amendment of a 2007 senior secured revolving credit facility that will increase the pro dealer’s borrowing capabilities while reducing its commitment fees.
Commenting on the transaction, Builders FirstSource senior VP CFO Chad Crow said, “We could not be more pleased with this amendment and the willingness of our bank group, led by Wells Fargo Bank, to partner with us in getting this done. This amendment provides us with up to $25.0 million of additional borrowing availability by reducing our minimum liquidity requirement, and also reduces the maximum borrowing capacity under the facility from $250 million to $150 million.”
The change will lower the Dallas-based company’s annual interest expense related to commitment fees by approximately $0.4 million, Crow said. “This is a significant improvement to our overall liquidity and should not limit our future borrowing capacity as we do not anticipate our borrowing base will support borrowings in excess of $150 million prior to the expiration of the facility in December 2012,” he added.
The new loan package has certain restrictive covenants, including a fixed charge coverage ratio of 1:1 that, prior to the amendment, was triggered if Builders FirstSource’s excess availability, as determined under the borrowing base formula, fell below a minimum liquidity requirement of $35 million. Under the terms of the new amendment, the minimum liquidity requirement was reduced and will now be determined on a sliding scale based on the company’s average gross availability, as outlined in a Securities and Exchange Commission filing.
Builders FirstSource operates in nine states, principally in the southern and eastern United States, and has 53 distribution centers and 47 manufacturing facilities, many of which are located on the same site. Manufacturing facilities include floor trusses, wall panels, stairs, aluminum and vinyl windows, custom millwork and pre-hung doors.
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