OfficeMax Reports Third Quarter 2010 Financial Results
NAPERVILLE, Ill., Oct. 28 /PRNewswire-FirstCall/ -- OfficeMax® Incorporated (NYSE: OMX) today announced the results for its fiscal third quarter ended September 25, 2010. Total sales were $1,813.4 million in the third quarter of 2010, a decrease of 1.0% from the third quarter of 2009. For the third quarter of 2010, OfficeMax reported net income available to OfficeMax common shareholders of $20.0 million, or $0.23 per diluted share.
Sam Duncan, Chairman and CEO of OfficeMax, said, "I am very pleased with our third quarter results. During the quarter, we drove strong margin increases over the prior year period, reflecting improved customer acquisition and retention costs as we maintained our disciplined approach to serving both new and existing business customers. Additionally, we successfully managed through the very important back-to-school season, rolling out a staggered advertising campaign which proved effective, despite a challenging environment. Overall, the improvements we achieved in the third quarter reflect our continued focus on key initiatives and the successful execution of our five-year plan."
Consolidated Results |
|||
(in millions, except per-share amounts) |
3Q10 |
3Q09 |
|
Sales |
$1,813.4 |
$1,831.9 |
|
Sales decline (from prior year period) |
-1.0% |
-12.6% |
|
Operating income |
$40.9 |
$25.2 |
|
Adjusted operating income* |
$40.9 |
$26.7 |
|
Adjusted operating income margin* |
2.3% |
1.5% |
|
Adjusted diluted income per common share* |
$0.23 |
$0.08 |
|
* There are no adjustments for 3Q10 |
|||
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.
Adjusted operating income in the third quarter of 2010 was $40.9 million, or 2.3% of sales, compared to $26.7 million, or 1.5% of sales in the third quarter of 2009. Adjusted operating income for both the third quarters of 2010 and 2009 include approximately equivalent amounts of favorable tax settlements. Adjusted net income available to OfficeMax common shareholders in the third quarter of 2010 was $20.0 million, or $0.23 per diluted share, compared to $6.6 million, or $0.08 per diluted share, in the third quarter of 2009.
Contract Segment Results |
|||
(in millions) |
3Q10 |
3Q09 |
|
Sales |
$877.3 |
$899.6 |
|
Sales decline (from prior year period) |
-2.5% |
-14.3% |
|
Gross profit margin |
22.8% |
20.0% |
|
Segment income margin |
2.2% |
1.1% |
|
OfficeMax Contract segment sales decreased 2.5% compared to the prior year period to $877.3 million in the third quarter of 2010 (a decrease of 4.3% in local currency). This decline reflected a U.S. Contract operations sales decrease of 2.9% and an International Contract operations sales decrease of 1.4% in U.S. dollars (a sales decrease of 7.4% in local currencies).
Contract segment gross profit margin increased to 22.8% in the third quarter of 2010 from 20.0% in the third quarter of 2009, reflecting improved gross profit margin at both the U.S. and International businesses primarily due to OfficeMax's profitability initiatives and lower customer acquisition and retention costs. Contract segment operating, selling & administrative expense as a percentage of sales increased to 20.6% in the third quarter of 2010 from 18.9% in the third quarter of 2009. The increase was a result of higher incentive compensation expense and costs associated with growth and profitability initiatives, partially offset by favorable sales/use tax settlements. Contract segment income was $19.5 million, or 2.2% of sales, in the third quarter of 2010 compared to $10.1 million, or 1.1% of sales, in the third quarter of 2009.
Retail Segment Results |
|||
(in millions) |
3Q10 |
3Q09 |
|
Sales |
$936.1 |
$932.3 |
|
Same-store sales increase (from prior year period) |
0.4% |
-11.5% |
|
Gross profit margin |
28.9% |
27.4% |
|
Segment income margin |
3.5% |
3.0% |
|
OfficeMax Retail segment sales increased 0.4% to $936.1 million in the third quarter of 2010 compared to the third quarter of 2009, reflecting a same-store sales increase of 0.4%. A slight decline in same-store sales in the U.S. was more than offset by stronger sales in Mexico compared to weak sales in the third quarter of 2009 during the influenza epidemic.
Retail segment gross profit margin increased to 28.9% in the third quarter of 2010 from 27.4% in the third quarter of 2009, primarily due to OfficeMax's profitability initiatives, reduced freight and occupancy costs, and reduced inventory shrinkage expense. Retail segment operating, selling & administrative expense as a percentage of sales increased to 25.4% in the third quarter of 2010 compared to 24.4% in the third quarter of 2009 primarily due to higher incentive compensation expense, costs related to growth initiatives. Additionally, favorable property tax settlements in the third quarter of 2009 were partially offset by favorable sales/use tax settlements in the third quarter of 2010. Retail segment income was $32.4 million, or 3.5% of sales, in the third quarter of 2010 compared to $28.4 million, or 3.0% of sales, in the third quarter of 2009.
OfficeMax ended the third quarter of 2010 with a total of 998 retail stores, consisting of 920 retail stores in the U.S. and 78 retail stores in Mexico. During the third quarter of 2010, OfficeMax closed three retail stores in the U.S.
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 $11.0 million in the third quarter of 2010 compared to $11.8 million in the third quarter of 2009.
Balance Sheet and Cash Flow
As of September 25, 2010, OfficeMax had total debt of $294.0 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 third quarter 2010, OfficeMax had $570.0 million in available borrowing capacity under its revolving credit facilities.
During the first nine months of 2010, OfficeMax generated $156.0 million of cash provided by operations. OfficeMax invested $21.6 million for capital expenditures in the third quarter of 2010 compared to $5.4 million in the third quarter of 2009.
Outlook
Mr. Duncan added, "Looking forward through the balance of 2010, we expect the macroeconomic environment to remain muted. Consequently, in the fourth quarter, we will continue to take a disciplined approach to generating sales and investing in the business. As we complete the first year of our five-year plan, we will work with our incoming CEO, Ravi Saligram, to ensure a seamless transition."
Bruce Besanko, EVP, Chief Financial Officer and Chief Administrative Officer of OfficeMax, said, "We are very pleased with our performance through the first nine months of 2010. To date in the fourth quarter, the company's domestic sales are lower than the comparable prior year period. As a result of our disciplined cash flow management and strong financial foundation, we are confident that we are in an excellent position to achieve our 2010 objectives."
Based on these assumptions, OfficeMax anticipates that for the fourth quarter, total company sales will be slightly lower than the prior year's fourth quarter, including the favorable impact of foreign currency translation, and the adjusted operating income margin rate will be significantly higher than the prior year's fourth quarter, primarily due to an unusually large amount of incentive compensation expense recorded in the fourth quarter of 2009. For the full year 2010, OfficeMax anticipates that total company sales will be slightly lower than 2009, including the favorable impact of foreign currency translation, and the year-over-year adjusted operating income margin rate improvement will be in line with, to slightly greater than, the 120-basis point year-over-year margin improvement in the first nine months 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 $80-90 million, primarily related to technology and infrastructure investments and upgrades
- Depreciation & amortization of approximately $100-105 million
- Interest expense of approximately $73-75 million and interest income of approximately $41-43 million
- Effective tax rate approximately in line with the effective tax rate in the first nine months of 2010
- Cash flow from operations exceeding capital expenditures
- Liquidity position remaining strong
- Net reduction in retail store count for the year with two 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 third 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) |
|||||
September 25, |
December 26, |
||||
2010 |
2009 |
||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 587,936 |
$ 486,570 |
|||
Receivables, net |
540,842 |
539,350 |
|||
Inventories |
764,047 |
805,646 |
|||
Deferred income taxes and receivables |
106,299 |
133,836 |
|||
Other current assets |
55,459 |
55,934 |
|||
Total current assets |
2,054,583 |
2,021,336 |
|||
Property and equipment: |
|||||
Property and equipment |
1,330,276 |
1,316,855 |
|||
Accumulated depreciation |
(934,586) |
(894,707) |
|||
Property and equipment, net |
395,690 |
422,148 |
|||
Intangible assets, net |
82,942 |
83,806 |
|||
Timber notes receivable |
899,250 |
899,250 |
|||
Deferred income taxes |
299,374 |
300,900 |
|||
Other non-current assets |
347,469 |
342,091 |
|||
Total assets |
$ 4,079,308 |
$ 4,069,531 |
|||
LIABILITIES AND EQUITY |
|||||
Current liabilities: |
|||||
Current portion of debt |
$ 22,638 |
$ 22,430 |
|||
Accounts payable |
639,479 |
687,340 |
|||
Income taxes payable |
6,094 |
3,389 |
|||
Accrued liabilities and other |
387,926 |
378,533 |
|||
Total current liabilities |
1,056,137 |
1,091,692 |
|||
Long-term debt, less current portion |
271,337 |
274,622 |
|||
Non-recourse debt |
1,470,000 |
1,470,000 |
|||
Other long-term obligations: |
|||||
Compensation and benefits |
267,074 |
277,247 |
|||
Other long-term liabilities |
404,233 |
424,715 |
|||
Total other long-term liabilities |
671,307 |
701,962 |
|||
Noncontrolling interest in joint venture |
38,075 |
28,059 |
|||
Shareholders' equity: |
|||||
Preferred stock |
32,615 |
36,479 |
|||
Common stock |
212,565 |
211,562 |
|||
Additional paid-in capital |
992,024 |
989,912 |
|||
Accumulated deficit |
(546,286) |
(602,242) |
|||
Accumulated other comprehensive loss |
(118,466) |
(132,515) |
|||
Total shareholders' equity |
572,452 |
503,196 |
|||
Total liabilities and equity |
$ 4,079,308 |
$ 4,069,531 |
|||
OFFICEMAX INCORPORATED AND SUBSIDIARIES |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
(unaudited) |
|||||
(thousands, except per-share amounts) |
|||||
Quarter Ended |
|||||
September 25, |
September 26, |
||||
2010 |
2009 |
||||
Sales |
$ 1,813,366 |
$ 1,831,947 |
|||
Cost of goods sold and occupancy costs |
1,342,944 |
1,397,215 |
|||
Gross profit |
470,422 |
434,732 |
|||
Operating expenses: |
|||||
Operating and selling expenses |
341,748 |
339,043 |
|||
General and administrative expenses |
87,750 |
69,019 |
|||
Other operating expenses (a) |
- |
1,473 |
|||
Total operating expenses |
429,498 |
409,535 |
|||
Operating income |
40,924 |
25,197 |
|||
Other income (expense): |
|||||
Interest expense |
(18,444) |
(19,289) |
|||
Interest income |
10,646 |
10,873 |
|||
Other expense, net |
(23) |
(3) |
|||
(7,821) |
(8,419) |
||||
Income before income taxes |
33,103 |
16,778 |
|||
Income tax expense |
(11,678) |
(9,942) |
|||
Net income attributable to OfficeMax and noncontrolling interest |
21,425 |
6,836 |
|||
Joint venture results attributable to noncontrolling interest |
(886) |
(558) |
|||
Net income attributable to OfficeMax |
20,539 |
6,278 |
|||
Preferred dividends |
(573) |
(622) |
|||
Net income available to OfficeMax common shareholders |
$ 19,966 |
$ 5,656 |
|||
Basic income per common share: |
$ 0.23 |
$ 0.07 |
|||
Diluted income per common share: |
$ 0.23 |
$ 0.07 |
|||
Weighted Average Shares |
|||||
Basic |
85,014 |
76,285 |
|||
Diluted |
86,543 |
77,152 |
|||
(a) The third quarter of 2009 includes a $1.5 million charge in our Contract segment related to the reorganization of our customer service centers. This charge reduced net income by $0.9 million, or $0.01 per diluted share. |
|||||
OFFICEMAX INCORPORATED AND SUBSIDIARIES |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
(unaudited) |
|||||
(thousands, except per-share amounts) |
|||||
Nine Months Ended |
|||||
September 25, |
September 26, |
||||
2010 |
2009 |
||||
Sales |
$ 5,383,794 |
$ 5,401,549 |
|||
Cost of goods sold and occupancy costs |
3,980,171 |
4,106,346 |
|||
Gross profit |
1,403,623 |
1,295,203 |
|||
Operating expenses: |
|||||
Operating and selling expenses |
1,026,667 |
1,021,343 |
|||
General and administrative expenses |
247,219 |
208,917 |
|||
Other operating expenses (a) |
11,348 |
39,710 |
|||
Total operating expenses |
1,285,234 |
1,269,970 |
|||
Operating income |
118,389 |
25,233 |
|||
Other income (expense): |
|||||
Interest expense |
(55,132) |
(57,956) |
|||
Interest income (b) |
31,850 |
36,449 |
|||
Other income (expense), net (c) |
(57) |
2,837 |
|||
(23,339) |
(18,670) |
||||
Income before income taxes |
95,050 |
6,563 |
|||
Income tax expense |
(34,374) |
(4,425) |
|||
Net income attributable to OfficeMax and noncontrolling interest |
60,676 |
2,138 |
|||
Joint venture results attributable to noncontrolling interest |
(2,249) |
1,111 |
|||
Net income attributable to OfficeMax |
58,427 |
3,249 |
|||
Preferred dividends |
(1,921) |
(2,159) |
|||
Net income available to OfficeMax common shareholders |
$ 56,506 |
$ 1,090 |
|||
Basic income per common share: |
$ 0.67 |
$ 0.01 |
|||
Diluted income per common share: |
$ 0.65 |
$ 0.01 |
|||
Weighted Average Shares |
|||||
Basic |
84,865 |
76,233 |
|||
Diluted |
86,442 |
76,846 |
|||
(a) The first nine 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 nine months of 2010 and 2009 also include severance charges recorded in our Contract segment consisting of $0.8 million in 2010 and $8.4 million in 2009. The effect of these items reduced net income by $0.5 million and $5.3 million, or $0.01 and $0.07 per diluted share for the first nine months of 2010 and 2009, respectively. Finally, the first nine 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 nine months of 2010. |
|||||
(b) The first nine months of 2009 include $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 nine 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) |
||||
Nine Months Ended |
||||
September 25, |
September 26, |
|||
2010 |
2009 |
|||
Cash provided by operations: |
||||
Net income attributable to OfficeMax and noncontrolling interest |
$ 60,676 |
$ 2,138 |
||
Items in net income not using cash: |
||||
Depreciation and amortization |
76,586 |
88,693 |
||
Other |
7,044 |
10,002 |
||
Changes in operating assets and liabilities: |
||||
Receivables and inventory |
52,229 |
255,219 |
||
Accounts payable and accrued liabilities |
(50,850) |
(94,038) |
||
Income taxes and other |
10,293 |
107,122 |
||
Cash provided by operations |
155,978 |
369,136 |
||
Cash provided by (used for) investment: |
||||
Expenditures for property and equipment |
(50,153) |
(23,946) |
||
Other |
1,607 |
40,816 |
||
Cash provided by (used for) investment |
(48,546) |
16,870 |
||
Cash used for financing: |
||||
Cash dividends paid |
(2,575) |
(3,052) |
||
Changes in debt, net |
(3,341) |
(21,810) |
||
Other |
(1,756) |
1,453 |
||
Cash used for financing |
(7,672) |
(23,409) |
||
Effect of exchange rates on cash and cash equivalents |
1,606 |
13,570 |
||
Increase in cash and cash equivalents |
101,366 |
376,167 |
||
Cash and cash equivalents at beginning of period |
486,570 |
170,779 |
||
Cash and cash equivalents at end of period |
$ 587,936 |
$ 546,946 |
||
OFFICEMAX INCORPORATED AND SUBSIDIARIES |
|||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||
NON-GAAP RECONCILIATION |
|||||||||||||
(unaudited) |
|||||||||||||
(millions, except per-share amounts) |
|||||||||||||
Quarter Ended |
|||||||||||||
September 25, 2010 |
September 26, 2009 |
||||||||||||
As |
As |
As |
As |
||||||||||
Reported |
Adjustments |
Adjusted |
Reported |
Adjustments |
Adjusted |
||||||||
Sales |
$ 1,813.4 |
$ - |
$ 1,813.4 |
$ 1,831.9 |
$ - |
$ 1,831.9 |
|||||||
Cost of goods sold and occupancy costs |
1,343.0 |
- |
1,343.0 |
1,397.2 |
- |
1,397.2 |
|||||||
Gross profit |
470.4 |
- |
470.4 |
434.7 |
- |
434.7 |
|||||||
Operating expenses: |
|||||||||||||
Operating and selling expenses |
341.7 |
- |
341.7 |
339.0 |
- |
339.0 |
|||||||
General and administrative expenses |
87.8 |
- |
87.8 |
69.0 |
- |
69.0 |
|||||||
Other operating expenses (a) |
- |
- |
- |
1.5 |
(1.5) |
- |
|||||||
Total operating expenses |
429.5 |
- |
429.5 |
409.5 |
(1.5) |
408.0 |
|||||||
Operating income |
40.9 |
- |
40.9 |
25.2 |
1.5 |
26.7 |
|||||||
Other income (expense): |
|||||||||||||
Interest expense |
(18.4) |
- |
(18.4) |
(19.3) |
- |
(19.3) |
|||||||
Interest income |
10.6 |
- |
10.6 |
10.9 |
- |
10.9 |
|||||||
(7.8) |
- |
(7.8) |
(8.4) |
- |
(8.4) |
||||||||
Income before income taxes |
33.1 |
- |
33.1 |
16.8 |
1.5 |
18.3 |
|||||||
Income tax expense |
(11.7) |
(11.7) |
(9.9) |
(0.6) |
(10.5) |
||||||||
Net income attributable to OfficeMax and noncontrolling interest |
21.4 |
- |
21.4 |
6.9 |
0.9 |
7.8 |
|||||||
Joint venture results attributable to noncontrolling interest |
(0.9) |
- |
(0.9) |
(0.6) |
- |
(0.6) |
|||||||
Net income attributable to OfficeMax |
20.5 |
- |
20.5 |
6.3 |
0.9 |
7.2 |
|||||||
Preferred dividends |
(0.5) |
- |
(0.5) |
(0.6) |
- |
(0.6) |
|||||||
Net income available to OfficeMax common shareholders |
$ 20.0 |
$ - |
$ 20.0 |
$ 5.7 |
$ 0.9 |
$ 6.6 |
|||||||
Basic income per common share: |
$ 0.23 |
$ - |
$ 0.23 |
$ 0.07 |
$ 0.01 |
$ 0.08 |
|||||||
Diluted income per common share: |
$ 0.23 |
$ - |
$ 0.23 |
$ 0.07 |
$ 0.01 |
$ 0.08 |
|||||||
Weighted Average Shares |
|||||||||||||
Basic |
85,014 |
85,014 |
76,285 |
76,285 |
|||||||||
Diluted |
86,543 |
86,543 |
77,152 |
77,152 |
|||||||||
(a) The third quarter of 2009 includes a $1.5 million charge in our Contract segment related to the reorganization of our customer service centers. This charge reduced net income by $0.9 million, or $0.01 per diluted share. |
|||||||||||||
OFFICEMAX INCORPORATED AND SUBSIDIARIES |
|||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||
NON-GAAP RECONCILIATION |
|||||||||||||
(unaudited) |
|||||||||||||
(millions, except per-share amounts) |
|||||||||||||
Nine Months Ended |
|||||||||||||
September 25, 2010 |
September 26, 2009 |
||||||||||||
As |
As |
As |
As |
||||||||||
Reported |
Adjustments |
Adjusted |
Reported |
Adjustments |
Adjusted |
||||||||
Sales |
$ 5,383.8 |
$ - |
$ 5,383.8 |
$ 5,401.5 |
$ - |
$ 5,401.5 |
|||||||
Cost of goods sold and occupancy costs |
3,980.2 |
- |
3,980.2 |
$ 4,106.3 |
- |
4,106.3 |
|||||||
Gross profit |
1,403.6 |
- |
1,403.6 |
1,295.2 |
- |
1,295.2 |
|||||||
Operating expenses: |
|||||||||||||
Operating and selling expenses |
1,026.7 |
- |
1,026.7 |
1,021.4 |
- |
1,021.4 |
|||||||
General and administrative expenses |
247.2 |
- |
247.2 |
208.9 |
- |
208.9 |
|||||||
Other operating expenses (a) |
11.3 |
(11.3) |
- |
39.7 |
(39.7) |
- |
|||||||
Total operating expenses |
1,285.2 |
(11.3) |
1,273.9 |
1,270.0 |
(39.7) |
1,230.3 |
|||||||
Operating income |
118.4 |
11.3 |
129.7 |
25.2 |
39.7 |
64.9 |
|||||||
Other income (expense): |
|||||||||||||
Interest expense |
(55.1) |
- |
(55.1) |
(57.9) |
- |
(57.9) |
|||||||
Interest income (b) |
31.9 |
31.9 |
36.5 |
(4.4) |
32.1 |
||||||||
Other income (expense), net (c) |
(0.1) |
- |
(0.1) |
2.8 |
(2.6) |
0.2 |
|||||||
(23.3) |
- |
(23.3) |
(18.6) |
(7.0) |
(25.6) |
||||||||
Income before income taxes |
95.1 |
11.3 |
106.4 |
6.6 |
32.7 |
39.3 |
|||||||
Income tax expense |
(34.4) |
(4.3) |
(38.7) |
(4.4) |
(12.4) |
(16.8) |
|||||||
Net income attributable to OfficeMax and noncontrolling interest |
60.7 |
7.0 |
67.7 |
2.2 |
20.3 |
22.5 |
|||||||
Joint venture results attributable to noncontrolling interest |
(2.3) |
- |
(2.3) |
1.1 |
(0.5) |
0.6 |
|||||||
Net income attributable to OfficeMax |
58.4 |
7.0 |
65.4 |
3.3 |
19.8 |
23.1 |
|||||||
Preferred dividends |
(1.9) |
- |
(1.9) |
(2.2) |
- |
(2.2) |
|||||||
Net income available to OfficeMax common shareholders |
$ 56.5 |
$ 7.0 |
$ 63.5 |
$ 1.1 |
$ 19.8 |
$ 20.9 |
|||||||
Basic income per common share |
$ 0.67 |
$ 0.08 |
$ 0.75 |
$ 0.01 |
$ 0.26 |
$ 0.27 |
|||||||
Diluted income per common share |
$ 0.65 |
$ 0.08 |
$ 0.73 |
$ 0.01 |
$ 0.26 |
$ 0.27 |
|||||||
Weighted Average Shares |
|||||||||||||
Basic |
84,865 |
84,865 |
76,233 |
76,233 |
|||||||||
Diluted |
86,442 |
86,442 |
76,846 |
76,846 |
|||||||||
(a) The first nine 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 nine months of 2010 and 2009 also include severance charges recorded in our Contract segment consisting of $0.8 million in 2010 and $8.4 million in 2009. The effect of these items reduced net income by $0.5 million and $5.3 million, or $0.01 and $0.07 per diluted share for the first nine months of 2010 and 2009, respectively. Finally, the first nine 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 nine months of 2010. |
|||||||||||||
(b) The first nine months of 2009 include $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 nine 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 |
|||||||||
September 25, |
September 26, |
||||||||
2010 |
2009 |
||||||||
Sales |
$ 877.3 |
$ 899.6 |
|||||||
Gross profit |
199.9 |
22.8% |
179.7 |
20.0% |
|||||
Operating, selling and general and administrative expenses |
180.4 |
20.6% |
169.6 |
18.9% |
|||||
Segment income |
$ 19.5 |
2.2% |
$ 10.1 |
1.1% |
|||||
Other operating expenses |
- |
0.0% |
1.5 |
0.1% |
|||||
Operating income |
$ 19.5 |
2.2% |
$ 8.6 |
1.0% |
|||||
Nine Months Ended |
|||||||||
September 25, |
September 26, |
||||||||
2010 |
2009 |
||||||||
Sales |
$ 2,720.8 |
$ 2,708.8 |
|||||||
Gross profit |
618.3 |
22.7% |
555.8 |
20.5% |
|||||
Operating, selling and general and administrative expenses |
545.7 |
20.0% |
511.8 |
18.9% |
|||||
Segment income |
$ 72.6 |
2.7% |
$ 44.0 |
1.6% |
|||||
Other operating expenses |
0.8 |
0.1% |
8.4 |
0.3% |
|||||
Operating income |
$ 71.8 |
2.6% |
$ 35.6 |
1.3% |
|||||
Note: Management evaluates the segments' performances based on operating income 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 |
|||||||||
September 25, |
September 26, |
||||||||
2010 |
2009 |
||||||||
Sales |
$ 936.1 |
$ 932.3 |
|||||||
Gross profit |
270.5 |
28.9% |
255.1 |
27.4% |
|||||
Operating, selling and general and administrative expenses |
238.1 |
25.4% |
226.7 |
24.4% |
|||||
Segment income |
$ 32.4 |
3.5% |
$ 28.4 |
3.0% |
|||||
Other operating expenses |
- |
0.0% |
- |
0.0% |
|||||
Operating income |
$ 32.4 |
3.5% |
$ 28.4 |
3.0% |
|||||
Nine Months Ended |
|||||||||
September 25, |
September 26, |
||||||||
2010 |
2009 |
||||||||
Sales |
$ 2,663.0 |
$ 2,692.7 |
|||||||
Gross profit |
785.3 |
29.5% |
739.4 |
27.5% |
|||||
Operating, selling and general and administrative expenses |
700.2 |
26.3% |
687.7 |
25.6% |
|||||
Segment income |
$ 85.1 |
3.2% |
$ 51.7 |
1.9% |
|||||
Other operating expenses |
14.4 |
0.5% |
31.2 |
1.1% |
|||||
Operating income |
$ 70.7 |
2.7% |
$ 20.5 |
0.8% |
|||||
Note: Management evaluates the segments' performances based on operating income 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 third quarter and first nine months of 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
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