NAPERVILLE, Ill., Aug. 2, 2011 /PRNewswire/ --
OfficeMax® Incorporated (NYSE: OMX) today announced the
results for its fiscal second quarter ended June 25, 2011. Total sales were
$1,647.6 million in the second
quarter of 2011, a decrease of 0.3% from the second quarter of
2010. For the second quarter of 2011, OfficeMax reported a
net loss available to OfficeMax common shareholders of $3.0 million, or $0.04 per diluted share.
Ravi Saligram, President and CEO
of OfficeMax, said, "We continued to experience top line softness
as a result of the difficult macroeconomic environment but have
made progress on gross margin initiatives. We remain focused on
executing the fundamentals better, enhancing the management team
and improving the operations of the business."
Consolidated
Results
|
|
(in millions, except per-share
amounts)
|
2Q11
|
2Q10
|
YTD11
|
YTD10
|
|
Sales
|
$1,647.6
|
$1,653.2
|
$3,510.6
|
$3,570.4
|
|
Sales decline (from prior year
period)
|
-0.3%
|
|
-1.7%
|
|
|
Gross profit
|
$425.1
|
$427.7
|
$899.6
|
$933.2
|
|
Gross profit margin
|
25.8%
|
25.9%
|
25.6%
|
26.1%
|
|
Operating income
|
$4.0
|
$28.1
|
$32.6
|
$77.5
|
|
Adjusted operating
income
|
$17.9
|
$25.3
|
$46.5
|
$88.8
|
|
Adjusted operating income
margin
|
1.1%
|
1.5%
|
1.3%
|
2.5%
|
|
Adjusted diluted income per
common share
|
$0.07
|
$0.12
|
$0.20
|
$0.51
|
|
|
|
|
|
|
|
|
Adjusted operating income and adjusted diluted income per share
are non-GAAP financial measures that exclude the effect of certain
charges and income 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 second quarter of 2011 and 2010 included certain
charges and income that are not considered indicative of core
operating activities. Second quarter 2011 results included a
$5.6 million pre-tax charge recorded
in the Retail segment related to store closures; and pre-tax
severance charges of $8.3 million
($8.0 million in Contract segment and
$0.3 million in Retail segment)
related to reorganizations in Canada, Australia, and the U.S. sales and supply chain
organizations. 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
adjustment 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.
Excluding the items described above, adjusted operating income
in the second quarter of 2011 was $17.9
million, or 1.1% of sales, compared to $25.3 million, or 1.5% of sales in the second
quarter of 2010. Adjusted net income available to OfficeMax
common shareholders in the second quarter of 2011 was $6.0 million, or $0.07 per diluted share, compared to $10.0 million, or $0.12 per diluted share, in the second quarter of
2010.
Contract Segment
Results
|
|
(in millions)
|
2Q11
|
2Q10
|
YTD11
|
YTD10
|
|
Sales
|
$880.3
|
$880.5
|
$1,806.0
|
$1,843.5
|
|
Sales decline (from prior year
period)
|
0.0%
|
|
-2.0%
|
|
|
Gross profit margin
|
22.3%
|
22.7%
|
22.2%
|
22.7%
|
|
Segment income margin
|
2.0%
|
2.2%
|
1.5%
|
2.9%
|
|
|
|
|
|
|
|
|
Contract segment sales of $880.3
million in the second quarter of 2011 were approximately
flat (a decrease of 3.5% on a local currency basis) compared to the
prior year period. This decline reflected a U.S. Contract
operations sales decrease of 2.6% and an international Contract
operations sales increase of 5.7% in U.S. dollars (a sales decrease
of 5.5% on a local currency basis). The U.S. Contract sales
decline in the second quarter primarily reflects weaker sales from
existing corporate accounts. Both U.S. and International
Contract operations showed modest improvements in the rates of
sales declines on a local currency basis compared to the prior
quarter.
Contract segment gross profit margin decreased to 22.3% in the
second quarter of 2011 from 22.7% in the second quarter of 2010,
primarily reflecting increased delivery expense due to higher fuel
costs and less favorable inventory shrinkage reserve adjustments
recorded in the second quarter of 2011 when compared to the second
quarter of 2010. Contract segment operating, selling and
general and administrative expenses as a percentage of sales
decreased to 20.3% in the second quarter of 2011 from 20.5% in the
second quarter of 2010 primarily due to lower incentive
compensation expense, partially offset by unfavorable
benefit-related items and costs associated with growth and
profitability initiatives. Contract segment income was
$17.4 million, or 2.0% of sales, in
the second quarter of 2011 compared to $19.4
million, or 2.2% of sales, in the second quarter of
2010.
Retail Segment
Results
|
|
(in millions)
|
2Q11
|
2Q10
|
YTD11
|
YTD10
|
|
Sales
|
$767.3
|
$772.7
|
$1,704.6
|
$1,726.9
|
|
Same-store sales decrease (from
prior year period)
|
-0.5%
|
|
-0.9%
|
|
|
Gross profit margin
|
29.9%
|
29.5%
|
29.2%
|
29.8%
|
|
Segment income margin
|
1.0%
|
1.8%
|
2.0%
|
3.0%
|
|
|
|
|
|
|
|
|
Retail segment sales decreased 0.7% to $767.3 million in the second quarter of 2011
compared to the second quarter of 2010, reflecting a same-store
sales decrease of 0.5%. A decline in same-store sales in the
U.S. was partially offset by stronger same-store sales in
Mexico.
Retail segment gross profit margin increased to 29.9% in the
second quarter of 2011 from 29.5% in the second quarter of 2010,
primarily due to improved margins from customer sales in the U.S.
and reduced occupancy costs, partially offset by less favorable
inventory shrinkage reserve adjustments recorded in the second
quarter of 2011 when compared to the second quarter of 2010.
Retail segment operating, selling and general and
administrative expenses as a percentage of sales were 28.9% in the
second quarter of 2011 compared with 27.7% in the second quarter of
2010 primarily due to a favorable legal settlement in second
quarter of 2010, unfavorable benefit-related items in 2011, which
were partially offset by lower incentive compensation expense.
Retail segment income was $8.0
million, or 1.0% of sales, in the second quarter of 2011
compared to $13.9 million, or 1.8% of
sales, in the second quarter of 2010.
OfficeMax ended the second quarter of 2011 with a total of 983
Retail stores, consisting of 904 Retail stores in the U.S. and 79
Retail stores in Mexico.
During the second quarter of 2011, OfficeMax closed eight
Retail stores in the U.S.
Corporate and Other Segment Results
The 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 and general and administrative expenses was
$7.5 million in the second quarter of
2011 compared to $8.0 million in the
second quarter of 2010.
Balance Sheet and Cash Flow
As of June 25, 2011 OfficeMax had
total debt of $274.1 million,
excluding $1,470.0 million of
non-recourse debt related to timber securitization notes that have
recourse limited to the timber installment notes receivable and
related guarantees.
During the first six months of 2011, OfficeMax generated
$26.7 million of cash provided by
operations. OfficeMax invested $11.2
million for capital expenditures in the second quarter of
2011 compared to $19.4 million in the
second quarter of 2010.
Outlook
Bruce Besanko, EVP, Chief
Financial Officer and Chief Administrative Officer of OfficeMax,
said, "Sales trends remain soft, with the July domestic total
company year-over-year sales percentage decline slightly
unfavorable compared to that of the second quarter. Accordingly, we
continue to tightly manage expenses in this difficult
environment."
Based on these trends, OfficeMax anticipates that total company
sales for the third quarter will be in line with the third quarter
of 2010, including the favorable impact of foreign currency
translation, and total company sales for the second half of 2011
will be slightly higher than the respective prior-year period,
including the favorable impact of foreign currency translation and
the benefit of the additional fiscal week in the fourth quarter.
Additionally, OfficeMax anticipates that for both the third
quarter and second half of 2011, the adjusted operating income
margin rate will be flat to slightly higher than the respective
prior-year periods.
The company's outlook also includes the following assumptions
for the full year 2011:
- Capital expenditures of approximately $75 million, primarily related to technology,
ecommerce, and infrastructure investments and upgrades
- Depreciation & amortization of approximately $85-90 million
- Pension expense of approximately $11
million and cash contributions to the frozen pension plans
of approximately $4 million
- Interest expense of approximately $72-75
million and interest income of approximately $42-44 million
- An effective tax rate approximately in line with the effective
tax rate in 2010
- Cash flow from operations exceeding capital expenditures
- A net reduction in Retail store count for the year with one
store opening and up to 20 store closures in the U.S., and
approximately 8-10 store openings in Mexico.
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 25, 2010, 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 2011 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
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 approximately 30,000
associates through direct sales, catalogs, e-commerce and nearly
1,000 stores. To find the nearest OfficeMax, call
1-877-OFFICEMAX. For more information, visit
www.officemax.com.
Media Contact
|
Investor Contacts
|
|
Bill Bonner
|
Mike Steele
|
Tony Giuliano
|
|
630 864
6066
|
630 864
6826
|
630 864
6820
|
|
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(unaudited)
|
|
(thousands)
|
|
|
|
|
|
|
|
June
25,
|
|
December
25,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
458,292
|
|
$
462,326
|
|
Receivables,
net
|
548,923
|
|
546,885
|
|
Inventories
|
789,267
|
|
846,463
|
|
Deferred income
taxes and receivables
|
101,828
|
|
99,613
|
|
Other current
assets
|
62,226
|
|
58,999
|
|
Total
current assets
|
1,960,536
|
|
2,014,286
|
|
|
|
|
|
|
Property and
equipment:
|
|
|
|
|
Property and
equipment
|
1,314,977
|
|
1,346,558
|
|
Accumulated
depreciation
|
(925,107)
|
|
(949,269)
|
|
Property and
equipment, net
|
389,870
|
|
397,289
|
|
|
|
|
|
|
Intangible assets,
net
|
83,429
|
|
83,231
|
|
Timber notes
receivable
|
899,250
|
|
899,250
|
|
Deferred income taxes
|
274,099
|
|
284,529
|
|
Other non-current
assets
|
407,136
|
|
400,344
|
|
|
|
|
|
|
Total
assets
|
$ 4,014,320
|
|
$
4,078,929
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
debt
|
$
41,611
|
|
$
4,560
|
|
Accounts
payable
|
649,017
|
|
686,106
|
|
Income taxes
payable
|
4,084
|
|
11,055
|
|
Accrued liabilities
and other
|
302,600
|
|
342,753
|
|
Total
current liabilities
|
997,312
|
|
1,044,474
|
|
|
|
|
|
|
Long-term debt,
less current portion
|
232,467
|
|
270,435
|
|
Non-recourse
debt
|
1,470,000
|
|
1,470,000
|
|
|
|
|
|
|
Other long-term
obligations:
|
|
|
|
|
Compensation and
benefits
|
243,026
|
|
250,756
|
|
Other long-term
liabilities
|
379,693
|
|
393,253
|
|
Total other
long-term liabilities
|
622,719
|
|
644,009
|
|
|
|
|
|
|
Noncontrolling interest in joint
venture
|
40,707
|
|
49,246
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Preferred
stock
|
29,352
|
|
30,901
|
|
Common
stock
|
215,011
|
|
212,644
|
|
Additional paid-in
capital
|
1,003,183
|
|
986,579
|
|
Accumulated
deficit
|
(525,266)
|
|
(533,606)
|
|
Accumulated other
comprehensive loss
|
(71,165)
|
|
(95,753)
|
|
Total shareholders'
equity
|
651,115
|
|
600,765
|
|
|
|
|
|
|
Total liabilities and
equity
|
$ 4,014,320
|
|
$
4,078,929
|
|
|
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(unaudited)
|
|
(thousands,
except per-share amounts)
|
|
|
|
|
|
Quarter
Ended
|
|
|
June
25,
|
|
June
26,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Sales
|
$ 1,647,616
|
|
$ 1,653,173
|
|
Cost of goods sold and occupancy
costs
|
1,222,553
|
|
1,225,439
|
|
Gross
profit
|
425,063
|
|
427,734
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Operating, selling and general
and administrative expenses
|
407,126
|
|
402,463
|
|
Other operating expenses
(income), net (a)
|
13,916
|
|
(2,841)
|
|
Total operating
expenses
|
421,042
|
|
399,622
|
|
|
|
|
|
|
Operating
income
|
4,021
|
|
28,112
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
Interest
expense
|
(18,128)
|
|
(18,372)
|
|
Interest
income
|
10,909
|
|
10,588
|
|
Other income
(expense), net
|
96
|
|
(86)
|
|
|
(7,123)
|
|
(7,870)
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
(3,102)
|
|
20,242
|
|
Income tax benefit
(expense)
|
1,001
|
|
(7,293)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
(2,101)
|
|
12,949
|
|
Joint venture results
attributable to noncontrolling interest
|
(357)
|
|
(509)
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax
|
(2,458)
|
|
12,440
|
|
|
|
|
|
|
Preferred dividends
|
(563)
|
|
(679)
|
|
|
|
|
|
|
Net income (loss) available to
OfficeMax common shareholders
|
$
(3,021)
|
|
$
11,761
|
|
|
|
|
|
|
Basic income (loss) per common
share:
|
$
(0.04)
|
|
$
0.14
|
|
|
|
|
|
|
Diluted income (loss) per common
share:
|
$
(0.04)
|
|
$
0.14
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
Basic
|
85,978
|
|
84,928
|
|
Diluted
|
85,978
|
|
86,101
|
|
|
|
|
|
|
|
|
|
|
(a) The second quarters of
2011 and 2010 include charges recorded in our Retail segment
related to store closures in the U.S. of $5.6 million and $1.1
million, respectively, which increased net loss available to
OfficeMax common shareholders by $3.4 million and $0.6 million, or
$0.04 and $0.01 per diluted share for 2011 and 2010, respectively.
The second quarter of 2011 also included severance charges of $8.3
million ($8.0 million in Contract and $0.3 million in Retail)
related to reorganizations in Canada, Australia and the U.S. sales
and supply chain organizations. The effect of this item increased
net loss by $5.6 million, or $0.07 per diluted share for the second
quarter of 2011. Finally, the second quarter of 2010 also included
income of $3.9 million related to the adjustment 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, for the second quarter of
2010.
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(unaudited)
|
|
(thousands,
except per-share amounts)
|
|
|
|
|
|
Six Months
Ended
|
|
|
June
25,
|
|
June
26,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Sales
|
$ 3,510,617
|
|
$ 3,570,428
|
|
Cost of goods sold and occupancy
costs
|
2,611,042
|
|
2,637,227
|
|
Gross
profit
|
899,575
|
|
933,201
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Operating, selling and general
and administrative expenses
|
853,026
|
|
844,387
|
|
Other operating expenses, net
(a)
|
13,916
|
|
11,348
|
|
Total operating
expenses
|
866,942
|
|
855,735
|
|
|
|
|
|
|
Operating
income
|
32,633
|
|
77,466
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
Interest
expense
|
(36,895)
|
|
(36,688)
|
|
Interest
income
|
21,929
|
|
21,204
|
|
Other income
(expense), net
|
134
|
|
(35)
|
|
|
(14,832)
|
|
(15,519)
|
|
|
|
|
|
|
Pre-tax income
|
17,801
|
|
61,947
|
|
Income tax expense
|
(6,669)
|
|
(22,695)
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
OfficeMax and noncontrolling interest
|
11,132
|
|
39,252
|
|
Joint venture results
attributable to noncontrolling interest
|
(1,687)
|
|
(1,364)
|
|
|
|
|
|
|
Net income attributable to
OfficeMax
|
9,445
|
|
37,888
|
|
|
|
|
|
|
Preferred dividends
|
(1,100)
|
|
(1,348)
|
|
|
|
|
|
|
Net income available to
OfficeMax common shareholders
|
$
8,345
|
|
$
36,540
|
|
|
|
|
|
|
Basic income per common
share:
|
$
0.10
|
|
$
0.43
|
|
|
|
|
|
|
Diluted income per common
share:
|
$
0.10
|
|
$
0.43
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
Basic
|
85,673
|
|
84,791
|
|
Diluted
|
86,774
|
|
85,968
|
|
|
|
|
|
|
|
|
|
|
(a) The first six months
of 2011 and 2010 include charges recorded in our Retail segment
related to store closures in the U.S. of $5.6 million and $14.4
million, respectively, which reduced net income available to
OfficeMax common shareholders by $3.4 million and $8.9 million, or
$0.04 and $0.10 per diluted share for 2011 and 2010, respectively.
The first six months of 2011 and 2010 also include severance
charges of $8.3 million in 2011 ($8.0 million in Contract and $0.3
million in Retail) related to reorganizations in Canada, Australia
and the U.S. sales and supply chain organizations and $0.8 million
in the first quarter of 2010 related to a reorganization of U.S.
customer service operations. The effect of these items reduced net
income by $5.6 million and $0.5 million, or $0.06 and $0.01 per
diluted share for the first six months of 2011 and 2010,
respectively. Finally, the first six months of 2010 also include
income of $3.9 million related to the adjustment 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, for the first six months of
2010.
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(unaudited)
|
|
(thousands)
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June
25,
|
|
June
26,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Cash provided by
operations:
|
|
|
|
|
Net income attributable to
OfficeMax and noncontrolling interest
|
$ 11,132
|
|
$ 39,252
|
|
Items in net income not using
cash:
|
|
|
|
|
Depreciation and
amortization
|
42,555
|
|
51,938
|
|
Other
|
9,181
|
|
5,686
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
Receivables
|
6,864
|
|
32,134
|
|
Inventory
|
68,337
|
|
40,949
|
|
Accounts payable
and accrued liabilities
|
(87,788)
|
|
(110,245)
|
|
Income taxes and
other
|
(23,630)
|
|
8,274
|
|
Cash
provided by operations
|
26,651
|
|
67,988
|
|
|
|
|
|
|
Cash used for
investment:
|
|
|
|
|
Expenditures for property and
equipment
|
(28,192)
|
|
(28,589)
|
|
Proceeds from sale of
assets
|
138
|
|
613
|
|
Cash used
for investment
|
(28,054)
|
|
(27,976)
|
|
|
|
|
|
|
Cash used for
financing:
|
|
|
|
|
Cash dividends paid
|
(1,142)
|
|
(1,348)
|
|
Changes in debt, net
|
(2,019)
|
|
(1,697)
|
|
Other
|
(3,979)
|
|
(1,379)
|
|
Cash used
for financing
|
(7,140)
|
|
(4,424)
|
|
|
|
|
|
|
Effect of exchange rates on cash
and cash equivalents
|
4,509
|
|
(955)
|
|
Increase (decrease) in cash and
cash equivalents
|
(4,034)
|
|
34,633
|
|
Cash and cash equivalents at
beginning of period
|
462,326
|
|
486,570
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
$ 458,292
|
|
$ 521,203
|
|
|
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
NON-GAAP
RECONCILIATION
|
|
(unaudited)
|
|
(millions,
except per-share amounts)
|
|
|
|
|
Quarter
Ended
|
|
|
June 25,
2011
|
|
June 26,
2010
|
|
|
As
|
|
|
|
As
|
|
As
|
|
|
|
As
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$ 1,647.6
|
|
$
-
|
|
$ 1,647.6
|
|
$ 1,653.2
|
|
$
-
|
|
$ 1,653.2
|
|
Cost of goods sold and occupancy
costs
|
1,222.5
|
|
-
|
|
1,222.5
|
|
1,225.5
|
|
-
|
|
1,225.5
|
|
Gross
profit
|
425.1
|
|
-
|
|
425.1
|
|
427.7
|
|
-
|
|
427.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating, selling and general
and administrative expenses
|
407.2
|
|
-
|
|
407.2
|
|
402.4
|
|
-
|
|
402.4
|
|
Other operating expenses
(income), net (a)
|
13.9
|
|
(13.9)
|
|
-
|
|
(2.8)
|
|
2.8
|
|
-
|
|
Total operating
expenses
|
421.1
|
|
(13.9)
|
|
407.2
|
|
399.6
|
|
2.8
|
|
402.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
4.0
|
|
13.9
|
|
17.9
|
|
28.1
|
|
(2.8)
|
|
25.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(18.1)
|
|
-
|
|
(18.1)
|
|
(18.4)
|
|
-
|
|
(18.4)
|
|
Interest
income
|
10.9
|
|
-
|
|
10.9
|
|
10.6
|
|
-
|
|
10.6
|
|
Other income
(expense), net
|
0.1
|
|
-
|
|
0.1
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
|
(7.1)
|
|
-
|
|
(7.1)
|
|
(7.9)
|
|
-
|
|
(7.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
(3.1)
|
|
13.9
|
|
10.8
|
|
20.2
|
|
(2.8)
|
|
17.4
|
|
Income tax benefit
(expense)
|
1.0
|
|
(4.9)
|
|
(3.9)
|
|
(7.3)
|
|
1.0
|
|
(6.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to OfficeMax and noncontrolling interest
|
(2.1)
|
|
9.0
|
|
6.9
|
|
12.9
|
|
(1.8)
|
|
11.1
|
|
Joint venture results
attributable to noncontrolling interest
|
(0.3)
|
|
-
|
|
(0.3)
|
|
(0.5)
|
|
-
|
|
(0.5)
|
|
Net income (loss) attributable
to OfficeMax
|
(2.4)
|
|
9.0
|
|
6.6
|
|
12.4
|
|
(1.8)
|
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends
|
(0.6)
|
|
-
|
|
(0.6)
|
|
(0.6)
|
|
-
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to
OfficeMax common shareholders
|
$
(3.0)
|
|
$
9.0
|
|
$
6.0
|
|
$
11.8
|
|
$
(1.8)
|
|
$
10.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common
share:
|
$ (0.04)
|
|
$
0.11
|
|
$
0.07
|
|
$
0.14
|
|
$
(0.02)
|
|
$
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common
share:
|
$ (0.04)
|
|
$
0.11
|
|
$
0.07
|
|
$
0.14
|
|
$
(0.02)
|
|
$
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
85,978
|
|
|
|
85,978
|
|
84,928
|
|
|
|
84,928
|
|
Diluted
|
85,978
|
|
|
|
86,951
|
|
86,101
|
|
|
|
86,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The second quarters of
2011 and 2010 include charges recorded in our Retail segment
related to store closures in the U.S. of $5.6 million and $1.1
million, respectively, which increased net loss available to
OfficeMax common shareholders by $3.4 million and $0.6 million, or
$0.04 and $0.01 per diluted share for 2011 and 2010, respectively.
The second quarter of 2011 also included severance charges of $8.3
million ($8.0 million in Contract and $0.3 million in Retail)
related to reorganizations in Canada, Australia and the U.S. sales
and supply chain organizations. The effect of this item increased
net loss by $5.6 million, or $0.07 per diluted share for the second
quarter of 2011. Finally, the second quarter of 2010 also included
income of $3.9 million related to the adjustment 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, for the second quarter of
2010.
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
NON-GAAP
RECONCILIATION
|
|
(unaudited)
|
|
(millions,
except per-share amounts)
|
|
|
|
|
Six Months
Ended
|
|
|
June 25,
2011
|
|
June 26,
2010
|
|
|
As
|
|
|
|
As
|
|
As
|
|
|
|
As
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$ 3,510.6
|
|
$
-
|
|
$ 3,510.6
|
|
$ 3,570.4
|
|
$
-
|
|
$ 3,570.4
|
|
Cost of goods sold and occupancy
costs
|
2,611.0
|
|
-
|
|
2,611.0
|
|
2,637.2
|
|
-
|
|
2,637.2
|
|
Gross
profit
|
899.6
|
|
-
|
|
899.6
|
|
933.2
|
|
-
|
|
933.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating, selling and general
and administrative expenses
|
853.1
|
|
-
|
|
853.1
|
|
844.4
|
|
-
|
|
844.4
|
|
Other operating expenses, net
(a)
|
13.9
|
|
(13.9)
|
|
-
|
|
11.3
|
|
(11.3)
|
|
-
|
|
Total operating
expenses
|
867.0
|
|
(13.9)
|
|
853.1
|
|
855.7
|
|
(11.3)
|
|
844.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
32.6
|
|
13.9
|
|
46.5
|
|
77.5
|
|
11.3
|
|
88.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(36.9)
|
|
-
|
|
(36.9)
|
|
(36.7)
|
|
-
|
|
(36.7)
|
|
Interest
income
|
21.9
|
|
-
|
|
21.9
|
|
21.2
|
|
-
|
|
21.2
|
|
Other income
(expense), net
|
0.2
|
|
-
|
|
0.2
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
|
(14.8)
|
|
-
|
|
(14.8)
|
|
(15.6)
|
|
-
|
|
(15.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
|
17.8
|
|
13.9
|
|
31.7
|
|
61.9
|
|
11.3
|
|
73.2
|
|
Income tax expense
|
(6.7)
|
|
(4.9)
|
|
(11.6)
|
|
(22.7)
|
|
(4.3)
|
|
(27.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
OfficeMax and noncontrolling interest
|
11.1
|
|
9.0
|
|
20.1
|
|
39.2
|
|
7.0
|
|
46.2
|
|
Joint venture results
attributable to noncontrolling interest
|
(1.7)
|
|
-
|
|
(1.7)
|
|
(1.4)
|
|
|
|
(1.4)
|
|
Net income attributable to
OfficeMax
|
9.4
|
|
9.0
|
|
18.4
|
|
37.8
|
|
7.0
|
|
44.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends
|
(1.1)
|
|
-
|
|
(1.1)
|
|
(1.3)
|
|
-
|
|
(1.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to
OfficeMax common shareholders
|
$
8.3
|
|
$
9.0
|
|
$
17.3
|
|
$
36.5
|
|
$
7.0
|
|
$
43.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common
share:
|
$
0.10
|
|
$
0.10
|
|
$
0.20
|
|
$
0.43
|
|
$
0.08
|
|
$
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common
share:
|
$
0.10
|
|
$
0.10
|
|
$
0.20
|
|
$
0.43
|
|
$
0.08
|
|
$
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
85,673
|
|
|
|
85,673
|
|
84,791
|
|
|
|
84,791
|
|
Diluted
|
86,774
|
|
|
|
86,774
|
|
85,968
|
|
|
|
85,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The first six months
of 2011 and 2010 include charges recorded in our Retail segment
related to store closures in the U.S. of $5.6 million and $14.4
million, respectively, which reduced net income available to
OfficeMax common shareholders by $3.4 million and $8.9 million, or
$0.04 and $0.10 per diluted share for 2011 and 2010, respectively.
The first six months of 2011 and 2010 also include severance
charges of $8.3 million in 2011 ($8.0 million in Contract and $0.3
million in Retail) related to reorganizations in Canada, Australia
and the U.S. sales and supply chain organizations and $0.8 million
in the first quarter of 2010 related to a reorganization of U.S.
customer service operations. The effect of these items reduced net
income by $5.6 million and $0.5 million, or $0.06 and $0.01 per
diluted share for the first six months of 2011 and 2010,
respectively. Finally, the first six months of 2010 also include
income of $3.9 million related to the adjustment 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, for the first six months of
2010.
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
CONTRACT
SEGMENT STATEMENTS OF OPERATIONS
|
|
(unaudited)
|
|
(millions,
except per-share amounts)
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
June
25,
|
|
|
|
June
26,
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 880.3
|
|
|
|
$ 880.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
195.9
|
|
22.3%
|
|
199.9
|
|
22.7%
|
|
Operating, selling and general
and administrative expenses
|
|
178.5
|
|
20.3%
|
|
180.5
|
|
20.5%
|
|
Segment income
|
|
$
17.4
|
|
2.0%
|
|
$
19.4
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
8.0
|
|
0.9%
|
|
-
|
|
0.0%
|
|
Operating income
|
|
$
9.4
|
|
1.1%
|
|
$
19.4
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
June
25,
|
|
|
|
June
26,
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 1,806.0
|
|
|
|
$ 1,843.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
401.4
|
|
22.2%
|
|
418.3
|
|
22.7%
|
|
Operating, selling and general
and administrative expenses
|
|
375.0
|
|
20.7%
|
|
365.2
|
|
19.8%
|
|
Segment income
|
|
$
26.4
|
|
1.5%
|
|
$
53.1
|
|
2.9%
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
8.0
|
|
0.5%
|
|
0.8
|
|
0.1%
|
|
Operating income
|
|
$
18.4
|
|
1.0%
|
|
$
52.3
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Management evaluates
the segments’ performances using segment income which is based on
operating income after eliminating the effect of certain operating
items that are not indicative of our core operations such as
severances, facility closures and adjustments, and asset
impairments. These certain operating items are reported on the
other operating expenses line in the Consolidated Statements of
Operations.
|
|
|
OFFICEMAX
INCORPORATED AND SUBSIDIARIES
|
|
RETAIL
SEGMENT STATEMENTS OF OPERATIONS
|
|
(unaudited)
|
|
(millions,
except per-share amounts)
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
June
25,
|
|
|
|
June
26,
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 767.3
|
|
|
|
$ 772.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
229.2
|
|
29.9%
|
|
227.8
|
|
29.5%
|
|
Operating, selling and general
and administrative expenses
|
|
221.2
|
|
28.9%
|
|
213.9
|
|
27.7%
|
|
Segment income
|
|
$
8.0
|
|
1.0%
|
|
$
13.9
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
5.9
|
|
0.7%
|
|
1.1
|
|
0.1%
|
|
Operating income
|
|
$
2.1
|
|
0.3%
|
|
$
12.8
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
June
25,
|
|
|
|
June
26,
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 1,704.6
|
|
|
|
$ 1,726.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
498.2
|
|
29.2%
|
|
514.9
|
|
29.8%
|
|
Operating, selling and general
and administrative expenses
|
|
464.6
|
|
27.2%
|
|
462.3
|
|
26.8%
|
|
Segment income
|
|
$
33.6
|
|
2.0%
|
|
$
52.6
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
expenses
|
|
5.9
|
|
0.4%
|
|
14.4
|
|
0.8%
|
|
Operating income
|
|
$
27.7
|
|
1.6%
|
|
$
38.2
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Management evaluates
the segments’ performances using segment income which is based on
operating income after eliminating the effect of certain operating
items that are not indicative of our core operations such as
severances, facility closures and adjustments, and asset
impairments. These certain operating items are reported on the
other operating expenses line in the Consolidated Statements of
Operations.
|
|
|
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 and
adjustments, 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 and first six months of 2011 and 2010.
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.
SOURCE OfficeMax Incorporated