NAPERVILLE, Ill., Aug. 3 /PRNewswire-FirstCall/ -- OfficeMax®
Incorporated (NYSE: OMX) today announced the results for its fiscal
second quarter ended June 26, 2010.
Total sales were $1,653.2
million in the second quarter of 2010, a decrease of 0.3%
from the second quarter of 2009. For the second quarter of
2010, OfficeMax reported net income (loss) available to OfficeMax
common shareholders of $11.8 million,
or $0.14 per diluted share.
Sam Duncan, Chairman and CEO of
OfficeMax, said, "We are pleased with our strong performance for
the second quarter and first half of 2010. Importantly, we
continue to operate with a significant amount of discipline across
all areas of our business, which has helped us drive margin
expansion. Overall, we believe that our results are
indicative of the progress we are making on our profitability
initiatives."
Consolidated Results
|
|
(in millions, except per-share
amounts)
|
2Q 10
|
2Q 09
|
|
Sales
|
$1,653.2
|
$1,657.9
|
|
Operating income
(loss)
|
$28.1
|
$(27.5)
|
|
Adjusted operating
income
|
$25.3
|
$0.8
|
|
Adjusted operating income
margin
|
1.5%
|
0.1%
|
|
Adjusted diluted income (loss)
per common share
|
$0.12
|
$(0.04)
|
|
|
|
|
|
|
Adjusted income and adjusted diluted income per share are
non-GAAP financial measures that exclude the effect of certain
charges described below and 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 second quarter of 2010 and 2009 included certain
charges that are not considered indicative of core operating
activities. Second quarter 2010 results included a $1.1 million pre-tax charge recorded in the
Retail segment related to store closures, and pre-tax income of
$3.9 million related to the release
of a reserve associated with our legacy building materials
manufacturing facility near Elma,
Washington due to an agreement with the lessor to terminate
the lease. Second quarter 2009 results included a
$21.3 million pre-tax charge
primarily related to Retail store closures; a $6.9 million pre-tax severance charge recorded in
the Contract segment related principally to U.S. and Canadian sales
force reorganizations; and a pre-tax benefit of $4.4 million recorded as interest income related
to a tax escrow balance established in a prior period in connection
with our legacy Voyageur Panel business sold in 2004.
Excluding the items described above, adjusted operating income
in the second quarter of 2010 was $25.3
million, or 1.5% of sales, compared to adjusted operating
income of $0.8 million, or 0.1% of
sales in the second quarter of 2009. Adjusted net income
available to OfficeMax common shareholders in the second quarter of
2010 was $10.0 million, or
$0.12 per diluted share, compared to
an adjusted net loss of $3.1 million,
or $0.04 per diluted share, in the
second quarter of 2009.
Contract Segment Results
|
|
(in millions)
|
2Q 10
|
2Q 09
|
|
Sales
|
$880.5
|
$881.7
|
|
Sales decline (from prior year
period)
|
-0.1%
|
|
|
Gross profit margin
|
22.7%
|
20.6%
|
|
Segment income margin
|
2.2%
|
1.4%
|
|
|
|
|
|
|
OfficeMax Contract segment sales decreased 0.1% compared to the
prior year period to $880.5 million in the second quarter of 2010
(a decrease of 4.1% in local currency). This decline
reflected a U.S. Contract operations sales decline of 3.6%, which
was mostly offset by an International Contract operations sales
increase of 8.7% in U.S. dollars (a sales decrease of 5.2% in local
currencies).
Contract segment gross profit margin increased to 22.7% in the
second quarter of 2010 from 20.6% in the second quarter of 2009,
reflecting improved gross profit margin at both the U.S. and
International businesses primarily due to OfficeMax's profitability
initiatives, reversal of inventory shrinkage reserves due to
favorable results from our annual physical inventory counts, and
reduced occupancy and delivery expense. Contract segment
operating, selling & administrative expense as a percentage of
sales increased to 20.5% in the second quarter of 2010 from 19.2%
in the second quarter of 2009. The increase was a result of
higher incentive compensation and expenses associated with growth
initiatives. Contract segment income was $19.4 million, or 2.2% of sales, in the second
quarter of 2010 compared to $12.4
million, or 1.4% of sales, in the second quarter of
2009.
Retail Segment Results
|
|
(in millions)
|
2Q 10
|
2Q 09
|
|
Sales
|
$772.7
|
$776.2
|
|
Same-store sales decline (from
prior year period)
|
-0.3%
|
|
|
Gross profit margin
|
29.5%
|
27.5%
|
|
Segment income margin
|
1.8%
|
-0.3%
|
|
|
|
|
|
|
OfficeMax Retail segment sales decreased 0.5% to $772.7 million in the second quarter of 2010
compared to the second quarter of 2009, reflecting a same-store
sales decrease of 0.3% and fewer stores. Retail same-store
sales for the second quarter of 2010 declined primarily due to a
continued weak market environment, partially offset by stronger
sales in Mexico compared to weak
sales in the second quarter of 2009 during the influenza
epidemic.
Retail segment gross profit margin increased to 29.5% in the
second quarter of 2010 from 27.5% in the second quarter of 2009,
primarily due to reversal of inventory shrinkage reserves due to
favorable results from our annual physical inventory counts, and
reduced occupancy costs. Retail segment operating, selling
& administrative expense as a percentage of sales decreased
slightly to 27.7% in the second quarter of 2010 compared to 27.8%
in the second quarter of 2009 primarily due to favorable
year-over-year benefit-related items, partially offset by higher
incentive compensation expense. Retail segment income was
$13.9 million, or 1.8% of sales, in
the second quarter of 2010. This compares to a segment loss
of $2.0 million in the second quarter
of 2009.
OfficeMax ended the second quarter of 2010 with a total of 1,001
retail stores, consisting of 923 retail stores in the U.S. and 78
retail stores in Mexico.
During the second quarter of 2010, OfficeMax closed three
retail stores in the U.S. and opened one retail store 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 $8.0 million in the second quarter of 2010
compared to $9.6 million in the
second quarter of 2009.
Balance Sheet and Cash Flow
As of June 26, 2010, OfficeMax had
total debt of $295.6 million,
excluding $1,470 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 the second quarter
2010, OfficeMax had $521.2 million in
cash and cash equivalents, and $568.9
million in available (unused) borrowing capacity under its
U.S., Canadian and Australasian revolving credit facilities.
The company's unused borrowing capacity reflects an available
borrowing base of $626.4 million,
zero outstanding borrowings, and $57.5
million of standby letters of credit.
During the first six months of 2010, OfficeMax generated
$68.0 million of cash provided by
operations. OfficeMax invested $19.4
million for capital expenditures in the second quarter of
2010 compared to $7.7 million in the
second quarter of 2009.
Outlook
Mr. Duncan added, "Based on our performance in the first half of
2010, we are confident in our ability to continue executing on our
five-year plan as we transform into an office effectiveness and
efficiency solutions company. Our disciplined cash flow
management provides us with the strong financial foundation to
invest in and grow the business. While the economy appears to
be recovering more slowly than we had previously expected, we are
well positioned to achieve our 2010 and long-term financial
objectives."
Bruce Besanko, EVP, Chief
Financial Officer and Chief Administrative Officer of OfficeMax,
said, "To date in the third quarter, the company has experienced
year-over-year domestic sales percentage declines in line with the
second quarter 2010 year-over-year domestic sales percentage
declines. We expect to face headwinds in the second half of
the year including challenging global macroeconomic conditions and
continued weak U.S. employment trends. As planned, we are
investing in initiatives to drive growth, and the successful
execution of these initiatives is expected to benefit operations
and financial results in the long-term, but negatively impact
earnings in 2010, including the third quarter."
Based on these assumptions, OfficeMax anticipates that for the
third quarter, total company sales will be slightly lower than the
prior year's third quarter, including the favorable impact of
foreign currency translation, and adjusted operating income margin
rate will be lower than the prior year's third quarter. For
the full year 2010, OfficeMax anticipates that total company sales
will be flat to slightly lower than 2009, including the favorable
impact of foreign currency translation, and adjusted operating
income margin rate will be higher than 2009, but the margin
improvement will be significantly less than the 140 basis point
year-over-year margin improvement in the first half of 2010.
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 $80-100 million, primarily related to technology
and infrastructure investments and upgrades
- Depreciation & amortization of approximately $100-110 million
- Interest expense of approximately $73-75
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
- Cash flow from operations exceeding capital expenditures
- Liquidity position remaining strong
- Net reduction in retail store count for the year with less than
five planned openings in Mexico
and approximately 15 store closings in the U.S.
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 its
projected outlook; that its initiatives will be successfully
executed and produce the results underlying its expectations, due
to the uncertainties inherent in new initiatives, including
customer acceptance, unexpected expenses or challenges, or
slower-than-expected results from initiatives; 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 26, 2009, 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 second quarter 2010 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 and a podcast 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 (NYSE: OMX) 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 businesses and individual consumers. OfficeMax
customers are served by over 30,000 associates through direct
sales, catalogs, e-commerce and approximately 1,000 stores.
To find the nearest OfficeMax, call 1-877-OFFICEMAX.
For more information, visit www.officemax.com.
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
(unaudited)
|
|
(thousands)
|
|
|
|
|
|
|
|
|
|
June 26,
|
|
December 26,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
521,203
|
|
$
486,570
|
|
Receivables,
net
|
|
503,965
|
|
539,350
|
|
Inventories
|
|
762,110
|
|
805,646
|
|
Deferred income taxes and
receivables
|
|
121,554
|
|
133,836
|
|
Other current
assets
|
|
56,431
|
|
55,934
|
|
Total current
assets
|
|
1,965,263
|
|
2,021,336
|
|
|
|
|
|
|
|
Property and
equipment:
|
|
|
|
|
|
Property and
equipment
|
|
1,310,201
|
|
1,316,855
|
|
Accumulated
depreciation
|
|
(914,396)
|
|
(894,707)
|
|
Property and
equipment, net
|
|
395,805
|
|
422,148
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
82,252
|
|
83,806
|
|
Timber notes
receivable
|
|
899,250
|
|
899,250
|
|
Deferred income taxes
|
|
307,138
|
|
300,900
|
|
Other non-current
assets
|
|
346,019
|
|
342,091
|
|
|
|
|
|
|
|
Total
assets
|
|
$ 3,995,727
|
|
$
4,069,531
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current portion of
debt
|
|
$
22,898
|
|
$
22,430
|
|
Accounts
payable
|
|
621,343
|
|
687,340
|
|
Income taxes
payable
|
|
6,661
|
|
3,389
|
|
Accrued liabilities and
other
|
|
337,110
|
|
378,533
|
|
Total current
liabilities
|
|
988,012
|
|
1,091,692
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
272,694
|
|
274,622
|
|
Non-recourse
debt
|
|
1,470,000
|
|
1,470,000
|
|
|
|
|
|
|
|
Other long-term
obligations:
|
|
|
|
|
|
Compensation and
benefits
|
|
272,464
|
|
277,247
|
|
Other long-term
liabilities
|
|
422,116
|
|
424,715
|
|
Total other
long-term liabilities
|
|
694,580
|
|
701,962
|
|
|
|
|
|
|
|
Noncontrolling interest in joint
venture
|
|
34,558
|
|
28,059
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred stock
|
|
33,052
|
|
36,479
|
|
Common stock
|
|
212,535
|
|
211,562
|
|
Additional paid-in
capital
|
|
991,940
|
|
989,912
|
|
Accumulated
deficit
|
|
(565,699)
|
|
(602,242)
|
|
Accumulated other
comprehensive loss
|
|
(135,945)
|
|
(132,515)
|
|
Total shareholders'
equity
|
|
535,883
|
|
503,196
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$ 3,995,727
|
|
$
4,069,531
|
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
(unaudited)
|
|
(thousands, except per-share
amounts)
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
June 26,
|
|
June 27,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Sales
|
|
$ 1,653,173
|
|
$ 1,657,878
|
|
Cost of goods sold and occupancy
costs
|
|
1,225,439
|
|
1,262,969
|
|
Gross
profit
|
|
427,734
|
|
394,909
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Operating and selling
expenses
|
|
321,949
|
|
323,621
|
|
General and administrative
expenses
|
|
80,514
|
|
70,455
|
|
Other operating expenses
(income) (a)
|
|
(2,841)
|
|
28,296
|
|
Total operating
expenses
|
|
399,622
|
|
422,372
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
28,112
|
|
(27,463)
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Interest
expense
|
|
(18,372)
|
|
(19,319)
|
|
Interest income
(b)
|
|
10,588
|
|
15,115
|
|
Other income (expense),
net
|
|
(86)
|
|
213
|
|
|
|
(7,870)
|
|
(3,991)
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
20,242
|
|
(31,454)
|
|
Income tax benefit
(expense)
|
|
(7,293)
|
|
13,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
|
12,949
|
|
(17,728)
|
|
Joint venture results
attributable to noncontrolling interest
|
|
(509)
|
|
780
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax
|
|
12,440
|
|
(16,948)
|
|
|
|
|
|
|
|
Preferred dividends
|
|
(679)
|
|
(766)
|
|
|
|
|
|
|
|
Net income (loss) available to
OfficeMax common shareholders
|
|
$
11,761
|
|
$
(17,714)
|
|
|
|
|
|
|
|
Basic income (loss) per common
share:
|
|
$
0.14
|
|
$
(0.23)
|
|
|
|
|
|
|
|
Diluted income (loss) per common
share:
|
|
$
0.14
|
|
$
(0.23)
|
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
|
Basic
|
|
84,928
|
|
76,285
|
|
Diluted
|
|
86,101
|
|
76,285
|
|
(a) Second quarter 2010 and 2009
includes charges recorded in our Retail segment of $1.1
million
and $21.3 million, respectively,
related to store closures in the U.S. and Mexico (2009
only).
Second quarter of 2010 also
includes income of $3.9 million related to the release of a
reserve
associated with our legacy
building materials manufacturing facility near Elma, Washington due
to
an agreement with the lessor to
terminate the lease, while second quarter of 2009 also
includes
severance charges of $6.9
million in our Contract segment, principally related to U.S.
and
Canadian sales force
reorganizations. The cumulative effect of these
items increased net income for
2010 by $1.8 million, or $0.02
per diluted share, and reduced net income for 2009 by $17.3
million,
or $0.23 per diluted
share.
(b) Second quarter of 2009
includes $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 by $2.7 million, or $0.04 per diluted share.
|
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
(unaudited)
|
|
(thousands, except per-share
amounts)
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 26,
|
|
June 27,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Sales
|
|
$ 3,570,428
|
|
$ 3,569,602
|
|
Cost of goods sold and occupancy
costs
|
|
2,637,227
|
|
2,709,131
|
|
Gross
profit
|
|
933,201
|
|
860,471
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Operating and selling
expenses
|
|
684,919
|
|
682,301
|
|
General and administrative
expenses
|
|
159,468
|
|
139,898
|
|
Other operating expenses
(a)
|
|
11,348
|
|
38,236
|
|
Total operating
expenses
|
|
855,735
|
|
860,435
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
77,466
|
|
36
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Interest
expense
|
|
(36,688)
|
|
(38,667)
|
|
Interest income
(b)
|
|
21,204
|
|
25,577
|
|
Other income (expense),
net (c)
|
|
(35)
|
|
2,840
|
|
|
|
(15,519)
|
|
(10,250)
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
61,947
|
|
(10,214)
|
|
Income tax benefit
(expense)
|
|
(22,695)
|
|
5,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
|
39,252
|
|
(4,697)
|
|
Joint venture results
attributable to noncontrolling interest
|
|
(1,364)
|
|
1,669
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax
|
|
37,888
|
|
(3,028)
|
|
|
|
|
|
|
|
Preferred dividends
|
|
(1,348)
|
|
(1,538)
|
|
|
|
|
|
|
|
Net income (loss) available to
OfficeMax common shareholders
|
|
$
36,540
|
|
$
(4,566)
|
|
|
|
|
|
|
|
Basic income (loss) per common
share:
|
|
$
0.43
|
|
$
(0.06)
|
|
|
|
|
|
|
|
Diluted income (loss) per common
share:
|
|
$
0.43
|
|
$
(0.06)
|
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
|
Basic
|
|
84,791
|
|
76,207
|
|
Diluted
|
|
85,968
|
|
76,207
|
|
(a) The first six months of 2010
and 2009 include charges recorded in our Retail
segment of $14.4 million and
$31.2 million, respectively, related to store closures
in
the U.S. and Mexico (2009 only).
The cumulative effect of these items reduced net income
by $8.9 million and $18.8
million, or $0.10 and $0.25 per diluted share for 2010 and
2009,
respectively. The first six
months of 2010 and 2009 also include severance charges recorded
in
our Contract segment consisting
of $0.8 million in 2010 and $6.9 million in 2009. The
effect
of these items reduced net
income by $0.5 million and $4.4 million, or $0.01 and $0.06
per
diluted share for 2010 and 2009,
respectively. Finally, the first six months of 2010 also
include
income of $3.9 million related
to the release of a reserve associated with our legacy
building
materials manufacturing facility
near Elma, Washington due to an agreement with the
lessor
to terminate the lease.
This item increased net income by $2.4 million, or $0.03 per
diluted share.
(b) Second quarter of 2009
includes $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 by $2.7 million, or $0.04 per diluted
share.
(c) Other income
(expense), net for the first six months of 2009 includes $2.6
million of
income for tax distributions
related to our investment in Boise Cascade Holdings,
L.L.C.
This item increased net
income $1.6 million, or $0.02 per diluted share.
|
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
(unaudited)
|
|
(thousands)
|
|
|
|
|
|
Six Months Ended
|
|
|
June 26,
|
|
June 27,
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
Cash provided by
operations:
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
$ 39,252
|
|
$ (4,697)
|
|
Items in net income not using
(providing) cash:
|
|
|
|
|
Depreciation and
amortization
|
51,938
|
|
60,419
|
|
Other
|
5,686
|
|
8,170
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
Receivables and
inventory
|
73,083
|
|
212,104
|
|
Accounts payable and
accrued liabilities
|
(110,245)
|
|
(192,096)
|
|
Income taxes and
other
|
8,274
|
|
30,307
|
|
Cash provided by
operations
|
67,988
|
|
114,207
|
|
|
|
|
|
|
Cash provided by (used for)
investment:
|
|
|
|
|
Expenditures for property and
equipment
|
(28,589)
|
|
(18,591)
|
|
Other
|
613
|
|
40,761
|
|
Cash provided by
(used for) investment
|
(27,976)
|
|
22,170
|
|
|
|
|
|
|
Cash used for
financing:
|
|
|
|
|
Cash dividends paid
|
(1,348)
|
|
(1,662)
|
|
Changes in debt, net
|
(1,697)
|
|
(20,301)
|
|
Other
|
(1,379)
|
|
1,444
|
|
Cash used for
financing
|
(4,424)
|
|
(20,519)
|
|
|
|
|
|
|
Effect of exchange rates on cash
and cash equivalents
|
(955)
|
|
9,202
|
|
Increase in cash and cash
equivalents
|
34,633
|
|
125,060
|
|
Cash and cash equivalents at
beginning of period
|
486,570
|
|
170,779
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
$ 521,203
|
|
$ 295,839
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
NON-GAAP
RECONCILIATION
|
|
(unaudited)
|
|
(millions, except per-share
amounts)
|
|
|
|
|
|
Quarter Ended
|
|
|
|
June 26, 2010
|
|
June 27, 2009
|
|
|
|
As
|
|
|
|
As
|
|
As
|
|
|
|
As
|
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 1,653.2
|
|
$
-
|
|
$ 1,653.2
|
|
$ 1,657.9
|
|
$
-
|
|
$ 1,657.9
|
|
Cost of goods sold and occupancy
costs
|
|
1,225.5
|
|
-
|
|
1,225.5
|
|
1,263.0
|
|
-
|
|
1,263.0
|
|
Gross
profit
|
|
427.7
|
|
-
|
|
427.7
|
|
394.9
|
|
-
|
|
394.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and selling
expenses
|
|
321.9
|
|
-
|
|
321.9
|
|
323.6
|
|
-
|
|
323.6
|
|
General and administrative
expenses
|
|
80.5
|
|
-
|
|
80.5
|
|
70.5
|
|
-
|
|
70.5
|
|
Other operating expenses
(income) (a)
|
|
(2.8)
|
|
2.8
|
|
-
|
|
28.3
|
|
(28.3)
|
|
-
|
|
Total operating
expenses
|
|
399.6
|
|
2.8
|
|
402.4
|
|
422.4
|
|
(28.3)
|
|
394.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
28.1
|
|
(2.8)
|
|
25.3
|
|
(27.5)
|
|
28.3
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(18.4)
|
|
-
|
|
(18.4)
|
|
(19.3)
|
|
-
|
|
(19.3)
|
|
Interest income
(b)
|
|
10.6
|
|
-
|
|
10.6
|
|
15.1
|
|
(4.4)
|
|
10.7
|
|
Other income (expense),
net
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
0.2
|
|
-
|
|
0.2
|
|
|
|
(7.9)
|
|
-
|
|
(7.9)
|
|
(4.0)
|
|
(4.4)
|
|
(8.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
20.2
|
|
(2.8)
|
|
17.4
|
|
(31.5)
|
|
23.9
|
|
(7.6)
|
|
Income tax benefit
(expense)
|
|
(7.3)
|
|
1.0
|
|
(6.3)
|
|
13.8
|
|
(9.1)
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
|
12.9
|
|
(1.8)
|
|
11.1
|
|
(17.7)
|
|
14.8
|
|
(2.9)
|
|
Joint venture results
attributable to noncontrolling interest
|
|
(0.5)
|
|
-
|
|
(0.5)
|
|
0.8
|
|
(0.2)
|
|
0.6
|
|
Net income (loss) attributable
to OfficeMax
|
|
12.4
|
|
(1.8)
|
|
10.6
|
|
(16.9)
|
|
14.6
|
|
(2.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends
|
|
(0.6)
|
|
-
|
|
(0.6)
|
|
(0.8)
|
|
-
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to
OfficeMax common shareholders
|
|
$
11.8
|
|
$
(1.8)
|
|
$
10.0
|
|
$ (17.7)
|
|
$
14.6
|
|
$
(3.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common
share:
|
|
$
0.14
|
|
$
(0.02)
|
|
$
0.12
|
|
$ (0.23)
|
|
$
0.19
|
|
$ (0.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common
share:
|
|
$
0.14
|
|
$
(0.02)
|
|
$
0.12
|
|
$ (0.23)
|
|
$
0.19
|
|
$ (0.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
84,928
|
|
|
|
84,928
|
|
76,285
|
|
|
|
76,285
|
|
Diluted
|
|
86,101
|
|
|
|
86,101
|
|
76,285
|
|
|
|
76,285
|
|
(a) Second quarter 2010 and 2009
includes charges recorded in our Retail segment of $1.1 million and
$21.3 million, respectively, related to store closures in the U.S.
and Mexico (2009 only). Second quarter of 2010 also includes income
of $3.9 million related to the release of a reserve associated with
our legacy building materials manufacturing facility near Elma,
Washington due to an agreement with the lessor to terminate the
lease, while second quarter of 2009 also includes severance charges
of $6.9 million in our Contract segment, principally related to
U.S. and Canadian sales force reorganizations. The cumulative
effect of these items increased net income for 2010 by $1.8
million, or $0.02 per diluted share, and reduced net income for
2009 by $17.3 million, or $0.23 per diluted share.
(b) Second quarter of 2009
includes $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
by $2.7 million, or $0.04 per diluted share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
NON-GAAP
RECONCILIATION
|
|
(unaudited)
|
|
(millions, except per-share
amounts)
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 26, 2010
|
|
June 27, 2009
|
|
|
|
As
|
|
|
|
As
|
|
As
|
|
|
|
As
|
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 3,570.4
|
|
$
-
|
|
$ 3,570.4
|
|
$ 3,569.6
|
|
$
-
|
|
$ 3,569.6
|
|
Cost of goods sold and occupancy
costs
|
|
2,637.2
|
|
-
|
|
2,637.2
|
|
$ 2,709.1
|
|
-
|
|
2,709.1
|
|
Gross
profit
|
|
933.2
|
|
-
|
|
933.2
|
|
860.5
|
|
-
|
|
860.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and selling
expenses
|
|
684.9
|
|
-
|
|
684.9
|
|
682.3
|
|
-
|
|
682.3
|
|
General and administrative
expenses
|
|
159.5
|
|
-
|
|
159.5
|
|
139.9
|
|
|
|
139.9
|
|
Other operating expenses
(a)
|
|
11.3
|
|
(11.3)
|
|
-
|
|
38.2
|
|
(38.2)
|
|
-
|
|
Total operating
expenses
|
|
855.7
|
|
(11.3)
|
|
844.4
|
|
860.4
|
|
(38.2)
|
|
822.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
77.5
|
|
11.3
|
|
88.8
|
|
0.1
|
|
38.2
|
|
38.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(36.7)
|
|
-
|
|
(36.7)
|
|
(38.7)
|
|
-
|
|
(38.7)
|
|
Interest income
(b)
|
|
21.2
|
|
|
|
21.2
|
|
25.6
|
|
(4.4)
|
|
21.2
|
|
Other income (expense),
net (c)
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
2.8
|
|
(2.6)
|
|
0.2
|
|
|
|
(15.6)
|
|
-
|
|
(15.6)
|
|
(10.3)
|
|
(7.0)
|
|
(17.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
61.9
|
|
11.3
|
|
73.2
|
|
(10.2)
|
|
31.2
|
|
21.0
|
|
Income tax benefit
(expense)
|
|
(22.7)
|
|
(4.3)
|
|
(27.0)
|
|
5.5
|
|
(11.8)
|
|
(6.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
|
39.2
|
|
7.0
|
|
46.2
|
|
(4.7)
|
|
19.4
|
|
14.7
|
|
Joint venture results
attributable to noncontrolling interest
|
|
(1.4)
|
|
-
|
|
(1.4)
|
|
1.7
|
|
(0.5)
|
|
1.2
|
|
Net income (loss) attributable
to OfficeMax
|
|
37.8
|
|
7.0
|
|
44.8
|
|
(3.0)
|
|
18.9
|
|
15.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends
|
|
(1.3)
|
|
-
|
|
(1.3)
|
|
(1.6)
|
|
-
|
|
(1.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to
OfficeMax common shareholders
|
|
$
36.5
|
|
$
7.0
|
|
$
43.5
|
|
$
(4.6)
|
|
$
18.9
|
|
$
14.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common
share
|
|
$
0.43
|
|
$
0.08
|
|
$
0.51
|
|
$ (0.06)
|
|
$
0.25
|
|
$
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common
share
|
|
$
0.43
|
|
$
0.08
|
|
$
0.51
|
|
$ (0.06)
|
|
$
0.25
|
|
$
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
84,791
|
|
|
|
84,791
|
|
76,207
|
|
|
|
76,207
|
|
Diluted
|
|
85,968
|
|
|
|
85,968
|
|
76,207
|
|
|
|
76,857
|
|
(a) The first six months of 2010
and 2009 include charges recorded in our Retail segment of $14.4
million and $31.2 million, respectively, related to store closures
in the U.S. and Mexico (2009 only). The cumulative effect of these
items reduced net income by $8.9 million and $18.8 million, or
$0.10 and $0.25 per diluted share for 2010 and 2009, respectively.
The first six months of 2010 and 2009 also include severance
charges recorded in our Contract segment consisting of $0.8 million
in 2010 and $6.9 million in 2009. The effect of these items reduced
net income by $0.5 million and $4.4 million, or $0.01 and $0.06 per
diluted share for 2010 and 2009, respectively. Finally, the first
six months of 2010 also include income of $3.9 million related to
the release of a reserve associated with our legacy building
materials manufacturing facility near Elma, Washington due to an
agreement with the lessor to terminate the lease. This item
increased net income by $2.4 million, or $0.03 per diluted
share.
(b) Second quarter of 2009
includes $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
by $2.7 million, or $0.04 per diluted share.
(c) Other income (expense), net
for the first six months of 2009 includes $2.6 million of income
for tax distributions related to our investment in Boise Cascade
Holdings, L.L.C. This item increased net income $1.6 million,
or $0.02 per diluted share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
CONTRACT SEGMENT STATEMENTS OF
OPERATIONS
|
|
(unaudited)
|
|
(millions, except per-share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
June 26,
|
|
|
|
June 27,
|
|
|
|
|
|
|
2010
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$
880.5
|
|
|
|
$ 881.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
199.9
|
|
22.7%
|
|
181.5
|
|
20.6%
|
|
Operating, selling and general
and administrative expenses
|
|
|
180.5
|
|
20.5%
|
|
169.1
|
|
19.2%
|
|
Segment income
|
|
|
$
19.4
|
|
2.2%
|
|
$
12.4
|
|
1.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
-
|
|
0.0%
|
|
6.9
|
|
0.8%
|
|
Operating income
|
|
|
$
19.4
|
|
2.2%
|
|
$
5.5
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Month Ended
|
|
|
|
|
June 26,
|
|
|
|
June 27,
|
|
|
|
|
|
|
2010
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$ 1,843.5
|
|
|
|
$ 1,809.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
418.3
|
|
22.7%
|
|
376.1
|
|
20.8%
|
|
Operating, selling and general
and administrative expenses
|
|
|
365.2
|
|
19.8%
|
|
342.2
|
|
18.9%
|
|
Segment income
|
|
|
$
53.1
|
|
2.9%
|
|
$
33.9
|
|
1.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
0.8
|
|
0.1%
|
|
6.9
|
|
0.4%
|
|
Operating income
|
|
|
$
52.3
|
|
2.8%
|
|
$
27.0
|
|
1.5%
|
|
Note: Management evaluates the
segments' performances based on operating income (loss)
after
eliminating the effect of
certain operating matters such as severances, facility closures,
and asset
impairments, that are not
indicative of our core operations ("segment income".)
|
|
|
|
|
|
|
|
|
|
|
|
OFFICEMAX INCORPORATED AND
SUBSIDIARIES
|
|
RETAIL SEGMENT STATEMENTS OF
OPERATIONS
|
|
(unaudited)
|
|
(millions, except per-share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
June 26,
|
|
|
|
June 27,
|
|
|
|
|
|
2010
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
772.7
|
|
|
|
$
776.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
227.8
|
|
29.5%
|
|
213.4
|
|
27.5%
|
|
Operating, selling and general
and administrative expenses
|
|
213.9
|
|
27.7%
|
|
215.4
|
|
27.8%
|
|
Segment income
(loss)
|
|
$
13.9
|
|
1.8%
|
|
$
(2.0)
|
|
-0.3%
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
1.1
|
|
0.1%
|
|
21.3
|
|
2.7%
|
|
Operating income
(loss)
|
|
$
12.8
|
|
1.7%
|
|
$
(23.3)
|
|
-3.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 26,
|
|
|
|
June 27,
|
|
|
|
|
|
2010
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 1,726.9
|
|
|
|
$ 1,760.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
514.9
|
|
29.8%
|
|
484.4
|
|
27.5%
|
|
Operating, selling and general
and administrative expenses
|
|
462.3
|
|
26.8%
|
|
461.1
|
|
26.2%
|
|
Segment income
(loss)
|
|
$
52.6
|
|
3.0%
|
|
$
23.3
|
|
1.3%
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
14.4
|
|
0.8%
|
|
31.2
|
|
1.8%
|
|
Operating income
(loss)
|
|
$
38.2
|
|
2.2%
|
|
$
(7.9)
|
|
-0.5%
|
|
Note: Management evaluates the
segments' performances based on operating income (loss)
after
eliminating the effect of
certain operating matters such as severances, facility closures,
and asset
impairments, that are not
indicative of our core operations ("segment income".)
|
|
|
|
|
|
|
|
|
|
|
|
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
evaluate our results of operations before non-operating legacy
items and operating items that are not indicative of our core
operating activities such as severance, facility closure (including
adjustments to legacy reserves), 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 the 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 second
quarter of both 2010 and 2009.
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
|
|
|
|
|
SOURCE OfficeMax Incorporated
Copyright g. 3 PR Newswire