NAPERVILLE, Ill., Feb. 17 /PRNewswire-FirstCall/ --
OfficeMax ® Incorporated today announced the results for its
fiscal fourth quarter and full year ended December 26, 2009. Total
sales were $1,810.5 million in the fourth quarter of 2009, a
decline of 3.9% from the fourth quarter of 2008, while total sales
for the full year 2009 decreased 12.8% to $7,212.1 million compared
to the full year 2008. For the fourth quarter of 2009, OfficeMax
reported a net loss available to OfficeMax common shareholders of
$3.2 million, or $0.04 per diluted share. For the full year 2009,
OfficeMax reported a net loss available to OfficeMax common
shareholders of $2.2 million, or $0.03 per diluted share. Sam
Duncan, Chairman and CEO of OfficeMax, said, "We are pleased with
our strong balance sheet and liquidity position as well as our
improving performance throughout 2009 in what has remained a tough
environment for our business. Notably for the fourth quarter, the
year-over-year sales decrease moderated, which was consistent with
the trend we saw each quarter during the year, and we expanded
gross margin. We believe our company is well positioned to grow
sales and operating margin as the economy improves." Summary
Consolidated Results ---------------------------- (in millions,
except per- share amounts) 4Q 09 4Q 08 YTD 09 YTD 08
------------------------- ----- ----- ------ ------ Sales $1,810.5
$1,883.1 $7,212.1 $8,267.0 ----- -------- -------- --------
-------- Sales decline (from prior year period) -3.9% -12.8%
------------------------- ---- ----- Operating loss $(29.2)
$(430.7) $(4.0) $(1,936.2) -------------- ------ ------- -----
--------- Adjusted operating income (loss) $(2.0) $15.0 $62.9
$191.9 ------------------------- ----- ----- ----- ------ Adjusted
operating income margin -0.1% 0.8% 0.9% 2.3%
------------------------- ---- --- --- --- Adjusted diluted income
(loss) per common share $(0.03) $0.02 $0.24 $1.30
------------------------ ------ ----- ----- ----- Cash and cash
equivalents $486.6 $170.8 ------------------------- ------ ------
Available (unused) borrowing capacity $513.0 $546.9
---------------------------- ------ ------ Adjusted income and
adjusted diluted income per share are non-GAAP financial measures
that exclude the effect of certain charges and items described in
the footnotes to the accompanying financial statements. A
reconciliation to the company's GAAP financial results is included
in this press release. Results for the fourth quarter and full year
2009 and 2008 included certain charges and other items that are not
considered indicative of core operating activities. Fourth quarter
2009 results included a $17.6 million non-cash impairment charge
(pre-tax) related to certain of our Retail stores in the U.S. and
Mexico; $9.6 million of severance and other charges (pre-tax),
principally related to reorganizations of our U.S. and Canadian
Contract sales forces and customer fulfillment centers, as well as
a reduction of our Retail store staffing; and a $14.9 million tax
benefit resulting from the reversal of a reserve associated with
industrial revenue bonds that were under appeal with the Internal
Revenue Service. Fourth quarter 2008 results included a $429.1
million non-cash charge (pre-tax) recorded among the Contract and
Retail segments related to impairment of goodwill, trade names, and
store fixed assets; a $3.2 million non-cash impairment-related
interest expense charge on the securitization notes payable related
to the Lehman Brothers Holdings Inc. ("Lehman") guaranteed
installment notes; and a $16.6 million charge, which was included
in Contract, Retail, and Corporate and Other for reductions in
force in the corporate office and in the field and certain store
and site leases. Excluding the items described above, the adjusted
operating loss in the fourth quarter of 2009 was $2.0 million, or
-0.1% of sales, compared to adjusted operating income of $15.0
million, or 0.8% of sales in the fourth quarter of 2008. The
adjusted net loss available to OfficeMax common shareholders in the
fourth quarter of 2009 was $2.3 million, or $0.03 per diluted
share, compared to adjusted net income available to OfficeMax
common shareholders of $1.9 million, or $0.02 per diluted share, in
the fourth quarter of 2008. Contract Segment Results
------------------------ (in millions) 4Q 09 4Q 08 YTD 09 YTD 08
------------- ----- ----- ------ ------ Sales $947.8 $953.9
$3,656.7 $4,310.0 ----- ------ ------ -------- -------- Sales
decline (from prior year period) -0.6% -15.2%
------------------------------ ---- ----- Gross profit margin 21.8%
21.6% 20.8% 22.0% ------------------- ---- ---- ---- ---- Adjusted
operating income margin 1.5% 2.3% 1.6% 3.9%
-------------------------------- --- --- --- --- OfficeMax Contract
segment sales decreased 0.6% (a decrease of 6.2% after adjusting
for the foreign currency exchange rate impact) compared to the
prior year period to $947.8 million in the fourth quarter of 2009,
reflecting a U.S. Contract operations sales decline of 5.8%, mostly
offset by an International Contract operations sales increase of
13.2% in U.S. dollars (a sales decrease of 7.3% in local
currencies). The U.S. Contract sales decline in the fourth quarter
showed significant improvement from the 15.4% year-over-year sales
decline in the third quarter due to improvement from existing
accounts as well as sales from new customers which exceeded prior
year period sales from former customers. Contract segment gross
profit margin increased to 21.8% in the fourth quarter of 2009 from
21.6% in the fourth quarter of 2008, primarily due to improved
gross profit margin at International Contract, partially offset by
a U.S. sales mix shift to a higher percentage of lower-margin
consumable items and lower sales of off-contract items and higher
customer acquisition and retention expense. Contract segment
operating, selling & administrative expense as a percentage of
sales increased to 20.3% in the fourth quarter of 2009 from 19.3%
in the fourth quarter of 2008, primarily due to higher incentive
compensation expense, partially offset by reduced payroll expense.
Contract segment operating income was $7.1 million in the fourth
quarter of 2009. Contract segment adjusted operating income was
$14.0 million, or 1.5% of sales, in the fourth quarter of 2009
compared to $22.6 million, or 2.3% of sales, in the fourth quarter
of 2008. Retail Segment Results ---------------------- (in
millions) 4Q 09 4Q 08 YTD 09 YTD 08 ------------- ----- -----
------ ------ Sales $862.7 $929.2 $3,555.4 $3,957.0 ----- ------
------ -------- -------- Same-store sales decline (from prior year
period) -6.7% -11.0% ------------------------- ---- ----- Gross
profit margin 27.3% 27.0% 27.4% 28.0% ------------------- ---- ----
---- ---- Adjusted operating income (loss) margin -0.8% 0.0% 1.3%
1.5% ------------------------- ---- --- --- --- OfficeMax Retail
segment sales decreased 7.2% to $862.7 million in the fourth
quarter of 2009 compared to the fourth quarter of 2008, reflecting
a same-store sales decrease of 6.7% (a same-store sales decrease of
6.2% in local currencies) and fewer stores. Retail same-store sales
for the fourth quarter of 2009 declined across all major product
categories primarily due to weaker small business and consumer
spending. Retail segment gross profit margin increased to 27.3% in
the fourth quarter of 2009 from 27.0% in the fourth quarter of
2008, primarily due to reduced inventory shrinkage, partially
offset by deleveraging of fixed occupancy costs from the same-store
sales decrease. Retail segment operating, selling &
administrative expense as a percentage of sales increased to 28.1%
in the fourth quarter of 2009 compared to 27.0% in the fourth
quarter of 2008 primarily due to higher incentive compensation
expense, partially offset by reduced advertising expense and other
targeted cost controls. Retail segment operating loss was $26.5
million in the fourth quarter of 2009. Retail segment adjusted
operating loss was $6.8 million, or -0.8% of sales, in the fourth
quarter of 2009 compared to breakeven results in the fourth quarter
of 2008. OfficeMax ended 2009 with a total of 1,010 retail stores,
consisting of 933 retail stores in the U.S. and 77 retail stores in
Mexico. During the fourth quarter of 2009, OfficeMax opened one
retail store in the U.S., and closed one store in Mexico. During
2009, OfficeMax opened 12 retail stores in the U.S., and closed 18
stores in the U.S. and 6 in Mexico. Corporate and Other Segment
Results The OfficeMax Corporate and Other segment includes support
staff services and certain other expenses that are not fully
allocated to the Retail and Contract segments. Corporate and Other
segment operating, selling & administrative expense was $9.2
million in the fourth quarter of 2009 compared to $7.6 million in
the fourth quarter of 2008. The increase was primarily due to
higher pension expense and incentive compensation expense. Balance
Sheet and Cash Flow As of December 26, 2009, OfficeMax had total
debt of $297.1 million, excluding $1,470.0 million of non-recourse
debt which relates to timber securitization notes that have
recourse limited to the timber installment notes receivable and
related guarantees. At the end of fiscal 2009, OfficeMax had $486.6
million in cash and cash equivalents, and $513.0 million in
available (unused) borrowing capacity under its revolving credit
facilities. The company's unused borrowing capacity reflects an
available borrowing base of $574.1 million, zero outstanding
borrowings, and $61.1 million of standby letters of credit. During
the full year 2009, OfficeMax generated $358.9 million of cash from
operations which reflected significant reductions in inventory
levels and good working capital management and included $71.0
million of tax refunds, net of payments, and $45.7 million from
borrowings on accumulated earnings held in company-owned life
insurance policies. OfficeMax invested $14.3 million for capital
expenditures in the fourth quarter of 2009 compared to $31.9
million in the fourth quarter of 2008. For the full year 2009,
OfficeMax invested $38.3 million for capital expenditures compared
to $144.0 million in 2008. Outlook Mr. Duncan added, "As we enter
2010 with a strong balance sheet and a highly disciplined corporate
culture, we are encouraged by the momentum that we have built in
2009 and we are confident that our team is prepared to execute well
this year and beyond. OfficeMax has been establishing itself as a
key partner for both business and retail customers and we are well
positioned as the economy begins to recover. We expect to continue
progressing on our productivity initiatives in 2010 and,
importantly, we will be increasing our focus toward driving
long-term growth and differentiating our company in the
marketplace." The company expects to continue facing challenging
economic conditions, such as U.S. unemployment trends, over the
near-term with these trends beginning to work in the company's
favor toward the latter part of the year. Additionally, the company
plans to invest in initiatives to drive growth, and the successful
execution of these initiatives is expected to benefit operations
and financial results as the year progresses. Based on these
assumptions, OfficeMax anticipates that for the full year 2010,
total sales, including the impact of foreign currency translation,
and adjusted operating income margin will be slightly higher than
they were in 2009. The company's outlook also includes the
following assumptions for the full year 2010: -- Pension expense of
approximately $7 million and cash contributions to the frozen
pension plans of approximately $4 million -- Capital expenditures
of approximately $90-110 million, primarily related to technology
and infrastructure investments and upgrades -- Depreciation &
amortization of approximately $105-115 million -- Interest expense
of approximately $74-78 million and interest income of
approximately $41-43 million -- Effective tax rate slightly less
than the company's marginal tax rate of approximately 39 percent --
Positive cash flow from operations, although lower than for 2009
due to the projected 2009 incentive compensation payout which will
occur in the first quarter, and from higher inventory levels
working capital -- Liquidity position remaining strong -- Net
reduction in retail store count for the year with two planned
openings in Mexico and up to 20 store closings in the U.S. and
Mexico The January 2010 total sales percentage decrease continued
to moderate compared to the year-over-year fourth quarter of 2009
total sales percentage decrease, and we expect the sales trend for
the first quarter of 2010, including the impact of foreign currency
translation, will be in line with what we saw in January. We also
anticipate adjusted operating income margin for the first quarter
of 2010 will be in line with the prior-year period. Forward-Looking
Statements Certain statements made in this press release and other
written or oral statements made by or on behalf of the company
constitute "forward-looking statements" within the meaning of the
federal securities laws, including statements regarding the
company's future performance, as well as management's expectations,
beliefs, intentions, plans, estimates or projections relating to
the future. Management believes that these forward-looking
statements are reasonable. However, the company cannot guarantee
that the macroeconomy will perform within the assumptions
underlying our projected outlook, or that its actual results will
be consistent with the forward-looking statements and you should
not place undue reliance on them. These statements are based on
current expectations and speak only as of the date they are made.
The company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of future
events, new information or otherwise. Important factors regarding
the company that may cause results to differ from expectations are
included in the company's Annual Report on Form 10-K for the year
ended December 27, 2008, under Item 1A "Risk Factors", and in the
company's other filings with the SEC. Conference Call Information
OfficeMax will host a webcast and conference call with analysts and
investors to review its fourth quarter and full year 2009 financial
results today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).
The live audio webcast of the conference call can be accessed via
the Internet by visiting the OfficeMax website at
http://investor.officemax.com/. The webcast will be archived and
available online for one year following the call and will be posted
on the "Presentations" page located within the "Investors" section
of the OfficeMax website. About OfficeMax OfficeMax Incorporated is
a leader in both business-to-business office products solutions and
retail office products. The OfficeMax mission is simple. We help
our customers do their best work. The company provides office
supplies and paper, in-store print and document services through
OfficeMax ImPress ®, technology products and solutions, and
furniture to consumers and to large, medium and small businesses.
OfficeMax customers are served by over 30,000 associates through
direct sales, catalogs, e-commerce and more than 1,000 stores. To
find the nearest OfficeMax, call 1-877-OFFICEMAX. For more
information, visit http://www.officemax.com/. OFFICEMAX
INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(unaudited) (thousands) December 26, December 27, 2009 2008 ----
---- ASSETS Current assets: Cash and cash equivalents $486,570
$170,779 Receivables, net 539,350 566,846 Inventories 805,646
949,401 Deferred income taxes and receivables 133,836 105,140 Other
current assets 55,934 62,850 ------ ------ Total current assets
2,021,336 1,855,016 Property and equipment: Property and equipment
1,316,855 1,289,279 Accumulated depreciation (894,707) (798,551)
-------- -------- Property and equipment, net 422,148 490,728
Intangible assets, net 83,806 81,793 Timber notes receivable
899,250 899,250 Deferred income taxes 300,900 436,182 Other
non-current assets 342,091 410,614 ------- ------- Total assets
$4,069,531 $4,173,583 ========== ========== LIABILITIES AND EQUITY
Current liabilities: Current portion of debt $22,430 $64,452
Accounts payable 687,340 755,797 Income taxes payable 3,389 18,288
Accrued liabilities and other 378,533 345,081 ------- ------- Total
current liabilities 1,091,692 1,183,618 Long-term debt, less
current portion 274,622 289,922 Non-recourse debt 1,470,000
1,470,000 Other long-term obligations: Compensation and benefits
277,247 502,447 Other long-term liabilities 424,715 415,722 -------
------- Total other long-term liabilities 701,962 918,169
Noncontrolling interest in joint venture 28,059 21,871
Shareholders' equity: Preferred stock 36,479 42,565 Common stock
211,562 189,943 Additional paid-in capital 989,912 925,328
Accumulated deficit (602,242) (600,095) Accumulated other
comprehensive loss (132,515) (267,738) -------- -------- Total
shareholders' equity 503,196 290,003 Total liabilities and equity
$4,069,531 $4,173,583 ========== ========== OFFICEMAX INCORPORATED
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(thousands, except per-share amounts) Quarter Ended ---------------
December 26, December 27, 2009 2008 ---- ---- Sales $1,810,501
$1,883,108 Cost of goods sold and occupancy costs 1,368,106
1,426,564 --------- --------- Gross profit 442,395 456,544
Operating expenses: Operating and selling expenses 355,714 363,927
General and administrative expenses 88,737 77,635 Goodwill and
other asset impairments (a) 17,612 429,122 Other operating expenses
(b) 9,553 16,577 ----- ------ Total operating expenses 471,616
887,261 Operating loss (29,221) (430,717) ------- -------- Other
income (expense): Interest expense (c) (18,406) (24,497) Interest
income 10,820 10,664 Other expense, net (89) (801) --- ---- (7,675)
(14,634) ------ ------- Loss before income taxes (36,896) (445,351)
Income tax benefit (d) 33,183 41,001 ------ ------ Net loss
attributable to OfficeMax and noncontrolling interest (3,713)
(404,350) Joint venture results attributable to noncontrolling
interest (a) 1,132 9,178 ----- ----- Net loss attributable to
OfficeMax (2,581) (395,172) Preferred dividends (659) (824) ----
---- Net loss available to OfficeMax common shareholders $(3,240)
$(395,996) ======= ========= Basic loss per common share $(0.04)
$(5.21) ====== ====== Diluted loss per common share $(0.04) $(5.21)
====== ====== Weighted Average Shares Basic 81,232 75,954 Diluted
81,232 75,954 (a) Fourth quarter of 2009 includes non-cash charges
of $17.6 million to impair fixed assets associated with certain of
our Retail stores in the U.S. and Mexico. These charges reduced net
income (loss) by $9.9 million or $0.12 per diluted share. Fourth
quarter of 2008 includes non-cash impairment charges of $351.5
million and $77.6 million in our Contract and Retail segments,
respectively, to impair goodwill, trade names and fixed assets. The
cumulative effect of these items reduced net income (loss) by
$385.5 million, or $5.07 per diluted share. (b) Fourth quarter of
2009 includes $9.6 million of severance and other charges,
principally related to reorganizations of our U.S. and Canadian
Contract sales forces and customer fulfillment centers, as well as
a streamlining of our Retail store staffing. These items reduced
net income (loss) by $5.9 million, or $0.07 per diluted share.
Fourth quarter of 2008 includes a $16.6 million charge for
severance and the termination of certain store and site leases
which reduced net income (loss) by $10.5 million, or $0.13 per
diluted share. (c) Fourth quarter of 2008 includes $3.2 million
related to the timber installment notes receivable due from Lehman.
Additional interest expense resulted when we stopped accruing
interest income on these installment notes as of the last interest
payment date (April 29, 2008), while continuing to accrue interest
expense on the Lehman guaranteed securitization notes payable until
the default date (October 29, 2008). The additional interest
expense will only be paid if the corresponding interest income is
recovered from Lehman on the installment notes, which we do not
expect to occur. This item reduced net income (loss) by $1.9
million, or $0.03 per diluted share. (d) During the fourth quarter,
the Company was notified that the IRS conceded an issue under
appeal regarding the deductibility of interest on certain of its
industrial revenue bonds and the Company released $14.9 million in
tax uncertainty reserves. This item increased net income (loss) by
$0.18 per diluted share. OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (thousands,
except per-share amounts) Year Ended ------------ December 26,
December 27, 2009 2008 ---- ---- Sales $7,212,050 $8,267,008 Cost
of goods sold and occupancy costs 5,474,452 6,212,591 ---------
--------- Gross profit 1,737,598 2,054,417 Operating expenses:
Operating and selling expenses 1,377,057 1,555,615 General and
administrative expenses 297,654 306,940 Goodwill and other asset
impairments (a)(b) 17,612 2,100,212 Other operating expenses (c)
49,263 27,851 ------ ------ Total operating expenses 1,741,586
3,990,618 Operating loss (3,988) (1,936,201) ------ ----------
Other income (expense): Interest expense (b) (76,363) (113,641)
Interest income (e) 47,270 57,564 Other income, net (d) 2,748
19,878 ----- ------ (26,345) (36,199) ------- ------- Loss before
income taxes (30,333) (1,972,400) Income tax benefit (f) 28,758
306,481 ------ ------- Net loss attributable to OfficeMax and
noncontrolling interest (1,575) (1,665,919) Joint venture results
attributable to noncontrolling interest (a) 2,242 7,987 ----- -----
Net income (loss) attributable to OfficeMax 667 (1,657,932)
Preferred dividends (2,818) (3,663) ------ ------ Net loss
available to OfficeMax common shareholders $(2,151) $(1,661,595)
======= =========== Basic loss per common share $(0.03) $(21.90)
====== ======= Diluted loss per common share $(0.03) $(21.90)
====== ======= Weighted Average Shares Basic 77,483 75,862 Diluted
77,483 75,862 (a) 2009 includes non-cash charges of $17.6 million
to impair fixed assets associated with certain of our Retail stores
in the U.S. and Mexico. These charges reduced net income (loss) by
$9.9 million or $0.12 per diluted share. In 2008, the Company
recorded non-cash impairment charges of $815.5 million and $548.9
million in the Contract and Retail segments, respectively. The
charges related to impairment of goodwill, trade names and fixed
assets. The cumulative effect of these items reduced net income
(loss) by $1,294.7 million, or $17.05 per diluted share. (b) In
2008, a $735.8 million non-cash impairment-related charge was
recorded related to the timber installment notes receivable due
from Lehman. In addition, we stopped accruing interest income on
these installment notes as of the last interest payment date (April
29, 2008), while continuing to accrue interest expense on the
Lehman guaranteed securitization notes payable until the default
date (October 29, 2008). This resulted in $20.4 million of
additional interest expense that will only be paid if the
corresponding interest income is recovered from Lehman on the
installment notes, which we do not expect to occur. The cumulative
effect of these items was a reduction of net income (loss) by
$462.0 million, or $6.08 per diluted share. (c) In 2009, we
recorded $31.2 million of charges in our Retail segment related to
store closures. 2009 also includes $18.1 million of severance and
other charges, principally related to reorganizations of our U.S.
and Canadian Contract sales forces, customer fulfillment centers
and customer service centers, as well as a streamlining of our
Retail store staffing. The cumulative effect of these items was a
reduction of net income (loss) by $30.0 million, or $0.39 per
diluted share. In 2008, $27.9 million of charges were recorded for
severance and the termination of certain store and site leases. The
cumulative effect of these items was a reduction of net income
(loss) by $17.5 million, or $0.23 per diluted share. (d) Other
income includes income related to the company's investment in Boise
Cascade Holdings, L.L.C. of $2.6 million and $20.5 million in 2009
and 2008, respectively. The large distribution in 2008 was
primarily related to Boise's sale of a majority interest in their
paper and packaging and newsprint business. These items increased
net income (loss) by $1.6 million, or $0.02 per diluted share in
2009 and $12.5 million, or $0.16 per diluted share in 2008. (e)
2009 includes a $4.4 million of interest income related to a tax
escrow balance established in a prior period in connection with our
legacy Voyager Panel business sold in 2004. This item increased net
income (loss) by $2.7 million, or $0.04 per diluted share. (f)
During 2009, the Company was notified that the IRS conceded an
issue under appeal regarding the deductibility of interest on
certain of its industrial revenue bonds and the Company released
$14.9 million in tax uncertainty reserves. This item increased net
income (loss) by $0.18 per diluted share. OFFICEMAX INCORPORATED
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands) Year Ended ------------ December 26, December 27, 2009
2008 ---- ---- Cash provided by operations: Net loss attributable
to OfficeMax and noncontrolling interest $(1,575) $(1,665,919)
Items in net income (loss) not using (providing) cash: Depreciation
and amortization 116,417 142,896 Non-cash impairment charges 17,612
2,120,572 Non-cash deferred taxes on impairment charges (6,484)
(357,313) Other 13,961 (4,043) Changes in operating assets and
liabilities: Receivables and inventory 190,361 217,244 Accounts
payable and accrued liabilities (56,471) (137,716) Income taxes and
other 85,123 (92,044) ------ ------- Cash provided by operations
358,944 223,677 Cash provided by (used for) investment:
Expenditures for property and equipment (38,277) (143,968) Proceeds
from sale of restricted investments - 20,252 Proceeds from sale of
assets 980 11,592 Other 40,119 - ------ --- Cash provided by (used
for) investment 2,822 (112,124) Cash used for financing: Cash
dividends paid (3,089) (47,477) Changes in debt, net (57,716)
(39,990) Other 247 1,333 --- ----- Cash used for financing (60,558)
(86,134) Effect of exchange rates on cash and cash equivalents
14,583 (7,277) Increase in cash and cash equivalents 315,791 18,142
Cash and cash equivalents at beginning of period 170,779 152,637
------- ------- Cash and cash equivalents at end of period $486,570
$170,779 ======== ======== OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS NON-GAAP RECONCILIATION
(unaudited) (millions, except per-share amounts) Quarter Ended
--------------- December 26, 2009 December 27, 2008
----------------- ----------------- As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted -------- -------
-------- -------- ------- -------- Sales $1,810.5 $- $1,810.5
$1,883.1 $- $1,883.1 Cost of goods sold and occupancy costs 1,368.1
- 1,368.1 1,426.6 - 1,426.6 ------- --- ------- ------- --- -------
Gross profit 442.4 - 442.4 456.5 - 456.5 Operating expenses:
Operating and selling expenses 355.7 - 355.7 363.9 - 363.9 General
and administrative expenses 88.7 - 88.7 77.6 - 77.6 Goodwill and
other asset impairments (a) 17.6 (17.6) - 429.1 (429.1) - Other
operating expenses (b) 9.6 (9.6) - 16.6 (16.6) - --- ---- --- ----
----- --- Total operating expenses 471.6 (27.2) 444.4 887.2 (445.7)
441.5 Operating income (loss) (29.2) 27.2 (2.0) (430.7) 445.7 15.0
----- ---- ---- ------ ----- ---- Other income (expense): Interest
expense (c) (18.4) - (18.4) (24.5) 3.2 (21.3) Interest income 10.8
- 10.8 10.6 - 10.6 Other expense, net (0.1) - (0.1) (0.8) - (0.8)
---- --- ---- ---- --- ---- (7.7) - (7.7) (14.7) 3.2 (11.5) ----
--- ---- ----- --- ----- Income (loss) before income taxes (36.9)
27.2 (9.7) (445.4) 448.9 3.5 Income tax benefit (expense) (d) 33.2
(25.1) 8.1 41.0 (44.5) (3.5) ---- ----- --- ---- ----- ---- Net
income (loss) attributable to OfficeMax and noncontrolling interest
(3.7) 2.1 (1.6) (404.4) 404.4 - Joint venture results attributable
to noncontrolling interest (a) 1.1 (1.2) (0.1) 9.2 (6.5) 2.7 ---
---- ---- --- ---- --- Net income (loss) attributable to OfficeMax
(2.6) 0.9 (1.7) (395.2) 397.9 2.7 Preferred dividends (0.6) - (0.6)
(0.8) - (0.8) ---- --- ---- ---- --- ---- Net income (loss)
available to OfficeMax common shareholders $(3.2) $0.9 $(2.3)
$(396.0) $397.9 $1.9 ===== ==== ===== ======= ====== ==== Basic
income (loss) per common share $(0.04) $0.01 $(0.03) $(5.21) $5.23
$0.02 ====== ===== ====== ====== ===== ===== Diluted income (loss)
per common share $(0.04) $0.01 $(0.03) $(5.21) $5.23 $0.02 ======
===== ====== ====== ===== ===== Weighted Average Shares Basic
81,232 81,232 75,954 75,954 Diluted 81,232 81,232 75,954 77,852 (a)
Fourth quarter of 2009 includes non-cash charges of $17.6 million
to impair fixed assets associated with certain of our Retail stores
in the U.S. and Mexico. These charges reduced net income (loss) by
$9.9 million or $0.12 per diluted share. Fourth quarter of 2008
includes non-cash impairment charges of $351.5 million and $77.6
million in our Contract and Retail segments, respectively, to
impair goodwill, trade names and fixed assets. The cumulative
effect of these items reduced net income (loss) by $385.5 million,
or $5.07 per diluted share. (b) Fourth quarter of 2009 includes
$9.6 million of severance and other charges, principally related to
reorganizations of our U.S. and Canadian Contract sales forces and
customer fulfillment centers, as well as a streamlining of our
Retail store staffing. These items reduced net income (loss) by
$5.9 million, or $0.07 per diluted share. Fourth quarter of 2008
includes a $16.6 million charge for severance and the termination
of certain store and site leases which reduced net income (loss) by
$10.5 million, or $0.13 per diluted share. (c) Fourth quarter of
2008 includes $3.2 million related to the timber installment notes
receivable due from Lehman. Additional interest expense resulted
when we stopped accruing interest income on these installment notes
as of the last interest payment date (April 29, 2008), while
continuing to accrue interest expense on the Lehman guaranteed
securitization notes payable until the default date (October 29,
2008). The additional interest expense will only be paid if the
corresponding interest income is recovered from Lehman on the
installment notes, which we do not expect to occur. This item
reduced net income (loss) by $1.9 million, or $0.03 per diluted
share. (d) During the fourth quarter, the Company was notified that
the IRS conceded an issue under appeal regarding the deductibility
of interest on certain of its industrial revenue bonds and the
Company released $14.9 million in tax uncertainty reserves. This
item increased net income (loss) by $0.18 per diluted share.
OFFICEMAX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS NON-GAAP RECONCILIATION (unaudited) (millions, except
per-share amounts) Year Ended ------------ December 26, 2009
December 27, 2008 ----------------- ----------------- As Adjust- As
As Adjust- As Reported ments Adjusted Reported ments Adjusted
-------- ------- -------- -------- ------- -------- Sales $7,212.1
$- $7,212.1 $8,267.0 $- $8,267.0 Cost of goods sold and occupancy
costs 5,474.5 - 5,474.5 $6,212.6 - 6,212.6 ------- --- -------
-------- --- ------- Gross profit 1,737.6 - 1,737.6 2,054.4 -
2,054.4 Operating expenses: Operating and selling expenses 1,377.0
- 1,377.0 1,555.6 - 1,555.6 General and administrative expenses
297.7 - 297.7 306.9 306.9 Goodwill and other asset impairments (a),
(b) 17.6 (17.6) - 2,100.2 (2,100.2) - Other operating expenses (c)
49.3 (49.3) - 27.9 (27.9) - ---- ----- --- ---- ----- --- Total
operating expenses 1,741.6 (66.9) 1,674.7 3,990.6 (2,128.1) 1,862.5
Operating income (loss) (4.0) 66.9 62.9 (1,936.2) 2,128.1 191.9
---- ---- ---- -------- ------- ----- Other income (expense):
Interest expense (b) (76.4) - (76.4) (113.6) 20.4 (93.2) Interest
income (e) 47.3 (4.4) 42.9 57.5 - 57.5 Other income (loss), net (d)
2.8 (2.6) 0.2 19.9 (20.5) (0.6) --- ---- --- ---- ----- ---- (26.3)
(7.0) (33.3) (36.2) (0.1) (36.3) ----- ---- ----- ----- ---- -----
Income (loss) before income taxes (30.3) 59.9 29.6 (1,972.4)
2,128.0 155.6 Income tax benefit (expense) (f) 28.7 (37.4) (8.7)
306.5 (359.8) (53.3) ---- ----- ---- ----- ------ ----- Net income
(loss) attributable to OfficeMax and noncontrolling interest (1.6)
22.5 20.9 (1,665.9) 1,768.2 102.3 Joint venture results
attributable to noncontrolling interest (a) 2.2 (1.7) 0.5 8.0 (6.5)
1.5 --- ---- --- --- ---- --- Net income (loss) attributable to
OfficeMax 0.6 20.8 21.4 (1,657.9) 1,761.7 103.8 Preferred dividends
(2.8) - (2.8) (3.7) - (3.7) ---- --- ---- ---- --- ---- Net income
(loss) available to OfficeMax common shareholders $(2.2) $20.8
$18.6 $(1,661.6) $1,761.7 $100.1 ===== ===== ===== =========
======== ====== Basic income (loss) per common share $(0.03) $0.27
$0.24 $(21.90) $23.22 $1.32 ====== ===== ===== ======= ====== =====
Diluted income (loss) per common share $(0.03) $0.27 $0.24 $(21.90)
$23.20 $1.30 ====== ===== ===== ======= ====== ===== Weighted
Average Shares Basic 77,483 77,483 75,862 75,862 Diluted 77,483
78,462 75,862 77,150 (a) 2009 includes non-cash charges of $17.6
million to impair fixed assets associated with certain of our
Retail stores in the U.S. and Mexico. These charges reduced net
income (loss) by $9.9 million or $0.12 per diluted share. In 2008,
the Company recorded non-cash impairment charges of $815.5 million
and $548.9 million in the Contract and Retail segments,
respectively. The charges related to impairment of goodwill, trade
names and fixed assets. The cumulative effect of these items
reduced net income (loss) by $1,294.7 million, or $17.05 per
diluted share. (b) In 2008, a $735.8 million non-cash
impairment-related charge was recorded related to the timber
installment notes receivable due from Lehman. In addition, we
stopped accruing interest income on these installment notes as of
the last interest payment date (April 29, 2008), while continuing
to accrue interest expense on the Lehman guaranteed securitization
notes payable until the default date (October 29, 2008). This
resulted in $20.4 million of additional interest expense that will
only be paid if the corresponding interest income is recovered from
Lehman on the installment notes, which we do not expect to occur.
The cumulative effect of these items was a reduction of net income
(loss) by $462.0 million, or $6.08 per diluted share. (c) In 2009,
we recorded $31.2 million of charges in our Retail segment related
to store closures. 2009 also includes $18.1 million of severance
and other charges, principally related to reorganizations of our
U.S. and Canadian Contract sales forces, customer fulfillment
centers and customer service centers, as well as a streamlining of
our Retail store staffing. The cumulative effect of these items was
a reduction of net income (loss) by $30.0 million, or $0.39 per
diluted share. In 2008, $27.9 million of charges were recorded for
severance and the termination of certain store and site leases. The
cumulative effect of these items was a reduction of net income
(loss) by $17.5 million, or $0.23 per diluted share. (d) Other
income includes income related to the company's investment in Boise
Cascade Holdings, L.L.C. of $2.6 million and $20.5 million in 2009
and 2008, respectively. The large distribution in 2008 was
primarily related to Boise's sale of a majority interest in their
paper and packaging and newsprint business. These items increased
net income (loss) by $1.6 million, or $0.02 per diluted share in
2009 and $12.5 million, or $0.16 per diluted share in 2008. (e)
2009 includes a $4.4 million of interest income related to a tax
escrow balance established in a prior period in connection with our
legacy Voyager Panel business sold in 2004. This item increased net
income (loss) by $2.7 million, or $0.04 per diluted share. (f)
During 2009, the Company was notified that the IRS conceded an
issue under appeal regarding the deductibility of interest on
certain of its industrial revenue bonds and the Company released
$14.9 million in tax uncertainty reserves. This item increased net
income (loss) by $0.18 per diluted share. OFFICEMAX INCORPORATED
AND SUBSIDIARIES CONTRACT SEGMENT STATEMENTS OF OPERATIONS
(unaudited) (millions, except per-share amounts) Quarter Ended
--------------- December 26, December 27, 2009 2008 ---- ---- Sales
$947.8 100.0% $953.9 100.0% Cost of goods sold and occupancy costs
741.2 747.8 ----- ----- Gross profit 206.6 21.8% 206.1 21.6%
Operating expenses: Operating expenses (a) 192.6 20.3% 183.5 19.3%
Goodwill and other asset impairments - 0.0% 351.5 36.8% Other
operating expenses 6.9 0.7% 6.9 0.7% --- --- --- --- Total
operating expenses 199.5 21.0% 541.9 56.8% Operating income (loss)
$7.1 0.8% $(335.8) -35.2% ---- ------- Non-GAAP Reconciliation
----------------------- Operating income (loss) $7.1 0.8% $(335.8)
-35.2% Goodwill and other asset impairments - 0.0% 351.5 36.8%
Other operating expenses 6.9 0.7% 6.9 0.7% --- --- --- --- Adjusted
operating income $14.0 1.5% $22.6 2.3% ----- ----- Year Ended
------------ December 26, December 27, 2009 2008 ---- ---- Sales
$3,656.7 100.0% $4,310.0 100.0% Cost of goods sold and occupancy
costs 2,894.3 3,361.9 ------- ------- Gross profit 762.4 20.8%
948.1 22.0% Operating expenses: Operating expenses (a) 704.4 19.2%
780.8 18.1% Goodwill and other asset impairments - 0.0% 815.5 18.9%
Other operating expenses 15.3 0.4% 9.3 0.2% ---- --- --- --- Total
operating expenses 719.7 19.6% 1,605.6 37.2% Operating income
(loss) $42.7 1.2% $(657.5) -15.2% ----- ------- Non-GAAP
Reconciliation ----------------------- Operating income (loss)
$42.7 1.2% $(657.5) -15.2% Goodwill and other asset impairments -
0.0% 815.5 18.9% Other operating expenses 15.3 0.4% 9.3 0.2% ----
--- --- --- Adjusted operating income $58.0 1.6% $167.3 3.9% -----
------ (a) Operating expenses includes operating and selling
expenses as well as general and administrative expenses. OFFICEMAX
INCORPORATED AND SUBSIDIARIES RETAIL SEGMENT STATEMENTS OF
OPERATIONS (unaudited) (millions, except per-share amounts) Quarter
Ended --------------- December 26, December 27, 2009 2008 ---- ----
Sales $862.7 100.0% $929.2 100.0% Cost of goods sold and occupancy
costs 626.9 678.8 ----- ----- Gross profit 235.8 27.3% 250.4 27.0%
Operating expenses: Operating expenses (a) 242.6 28.1% 250.4 27.0%
Goodwill and other asset impairments 17.6 2.1% 77.6 8.3% Other
operating expenses 2.1 0.2% 5.4 0.6% --- --- --- --- Total
operating expenses 262.3 30.4% 333.4 35.9% Operating loss $(26.5)
-3.1% $(83.0) -8.9% ------ ------ Non-GAAP Reconciliation
----------------------- Operating loss $(26.5) -3.1% $(83.0) -8.9%
Goodwill and other asset impairments 17.6 2.1% 77.6 8.3% Other
operating expenses 2.1 0.2% 5.4 0.6% --- --- --- --- Adjusted
operating income (loss) $(6.8) -0.8% $0.0 0.0% ----- ---- Year
Ended ------------ December 26, December 27, 2009 2008 ---- ----
Sales $3,555.4 100.0% $3,957.0 100.0% Cost of goods sold and
occupancy costs 2,580.2 2,850.7 ------- ------- Gross profit 975.2
27.4% 1,106.3 28.0% Operating expenses: Operating expenses (a)
930.3 26.1% 1,045.1 26.5% Goodwill and other asset impairments 17.6
0.5% 548.9 13.9% Other operating expenses 33.3 1.0% 17.4 0.4% ----
--- ---- --- Total operating expenses 981.2 27.6% 1,611.4 40.8%
Operating loss $(6.0) -0.2% $(505.1) -12.8% ----- ------- Non-GAAP
Reconciliation ----------------------- Operating loss $(6.0) -0.2%
$(505.1) -12.8% Goodwill and other asset impairments 17.6 0.5%
548.9 13.9% Other operating expenses 33.3 1.0% 17.4 0.4% ---- ---
---- --- Adjusted operating income $44.9 1.3% $61.2 1.5% -----
----- (a) Operating expenses includes operating and selling
expenses as well as general and administrative expenses.
Reconciliation of non-GAAP Measures to GAAP Measures In addition to
assessing our operating performance as reported under U.S.
generally accepted accounting principles (GAAP), we also evaluate
our results of operations before non-operating legacy items and
operating items that are not indicative of our core operating
activities such as severances, facility closures, and asset
impairments. We believe our presentation of financial measures
before, or excluding, these items, which are non-GAAP measures,
enhances our investors' overall understanding of our recurring
operational performance and provides useful information to both
investors and management to evaluate the ongoing operations and
prospects of OfficeMax by providing better comparisons. Whenever we
use non-GAAP financial measures, we designate these measures as
"adjusted" and provide a reconciliation of non-GAAP financial
measures to the most closely applicable GAAP financial measure.
Investors are encouraged to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial measure.
In the preceding tables, we reconcile our non-GAAP financial
measures to our reported GAAP financial results for the fourth
quarter and full year of 2009 and 2008. Although we believe the
non-GAAP financial measures enhance an investor's understanding of
our performance, our management does not itself, nor does it
suggest that investors should, consider such non-GAAP financial
measures in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. The non-GAAP
financial measures we use may not be consistent with the
presentation of similar companies in our industry. However, we
present such non-GAAP financial measures in reporting our financial
results to provide investors with an additional tool to evaluate
our operating results in a manner that focuses on what we believe
to be our ongoing business operations. Media Contact Investor
Contacts Bill Bonner Mike Steele Tony Giuliano 630 864 6066 630 864
6826 630 864 6820 DATASOURCE: OfficeMax Incorporated CONTACT:
Media, Bill Bonner, +1-630-864-6066, or Investors, Mike
Steele,+1-630-864-6826, or Tony Giuliano, +1-630-864-6820, all of
OfficeMaxIncorporated Web Site:
http://www.officemax.com/http://investor.officemax.com/
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