OFFICEMAX INC 
By NAPERVILLE, Ill., Nov. 5, 2013 /PRNewswire/ -- OfficeMax® Incorporated (NYSE:OMX), a leading provider of office and facility supplies, technology and services, today announced the results for its fiscal third quarter ended September 28, 2013.
Consolidated Results
Reported Results
Total sales were $1,664.9 million in the third quarter of 2013, as compared to $1,744.6 in the third quarter of 2012. For the third quarter of 2013, OfficeMax reported operating income of $66.8 million compared to operating income of $33.5 million in the third quarter of 2012; and net income available to OfficeMax common shareholders of $30.4 million, or $0.34 per diluted share, compared to $433.0 million, or $4.92 per diluted share in the third quarter of 2012.
Adjusted Results
"In the third quarter, we continued to experience soft sales overall and weak margins within our Contract business, due to a competitive global environment," said Ravi Saligram, President and CEO of OfficeMax. "However, through our strategic initiatives, we continue to lay the foundation for evolving our business model. We believe that these initiatives, in combination with the anticipated annual cost synergies from our pending merger with Office Depot, will position the combined company well for success."
Consolidated
(in
millions,
except
per-
share
amounts) 3Q13 3Q12 YTD13 YTD12
------------ ---- ---- ----- -----
Sales $1,664.9 $1,744.6 $4,964.6 $5,219.9
----- -------- -------- -------- --------
Sales
decline
(from
prior
year
period) -4.6% -4.9%
-------- ---- ----
Adjusted
sales
decline
(from
prior
year
period)* -3.4% -3.9%
--------- ---- ----
Gross
profit $417.5 $460.4 $1,263.8 $1,352.7
------- ------ ------ -------- --------
Gross
profit
margin 25.1% 26.4% 25.5% 25.9%
------- ---- ---- ---- ----
Adjusted
operating
income* $28.4 $42.7 $61.6 $104.8
---------- ----- ----- ----- ------
Adjusted
operating
income
margin* 1.7% 2.4% 1.2% 2.0%
---------- --- --- --- ---
Adjusted
net
income
available
to
OfficeMax
common
shareholders* $13.6 $22.2 $25.5 $50.7
-------------- ----- ----- ----- -----
Adjusted
diluted
income
per
common
share* $0.15 $0.25 $0.29 $0.58
-------- ----- ----- ----- -----
*Adjusted sales, adjusted
operating income, adjusted
operating income margin,
adjusted net income available
to OfficeMax common
shareholders, and adjusted
diluted income per share are
non-GAAP financial measures
that exclude the effect of
certain items and charges
described in the footnotes to
the accompanying financial
statements. A reconciliation
to the company's GAAP financial
results is included in this
press release.
Excluding the impact of changes in foreign exchange rates, the impact of stores closed and opened, and the difference in the number of business days in the quarter compared to the same quarter last year, adjusted sales for the third quarter of 2013 decreased 3.4% from the third quarter of 2012.
For the third quarter of 2013, adjusted operating income was $28.4 million, or 1.7% of sales, compared to $42.7 million, or 2.4% of sales, in the third quarter of 2012; and adjusted net income available to OfficeMax common shareholders was $13.6 million, or $0.15 per diluted share, compared to $22.2 million, or $0.25 per diluted share, in the third quarter of 2012.
The third quarter of 2013 adjusted figures in the preceding paragraph exclude income of $47.7 million for the recognition of deferred gains related to OfficeMax's investment in Boise Cascade Holdings, L.L.C. and dividend income of $25.4 million related to OfficeMax's voting securities held in Boise Cascade Holdings, L.L.C. reflected in the Corporate and Other segment, as well as charges of $30.5 million in our Corporate and Other segment for certain costs related to our pending merger with Office Depot, and charges of $4.1 million associated with store closures in the U.S. The third quarter of 2012 adjusted figures exclude a non-cash gain of $670.8 million related to the extinguishment of non-recourse debt guaranteed by Lehman Brothers Holdings, Inc. and $11.4 million of expenses to impair fixed assets associated with certain stores and to record a change in the estimated lease obligation of a previously closed store in the U.S. The third quarter of 2012 adjusted figures also exclude $2.2 million of dividend income from the investment in Boise Cascade Holdings, L.L.C. Series A Units, which were subsequently redeemed in the first quarter of 2013. The net effect of these items increased net income by $16.7 million, or $0.19 per diluted share, for the third quarter of 2013, and increased net income by $410.7 million, or $4.67 per diluted share, for the third quarter of 2012.
Contract Segment Results
Contract segment sales decreased 4.4% compared to the prior year period to $841.9 million in the third quarter of 2013. This decrease reflected a U.S. Contract operations sales decrease of 3.6% and an international Contract operations sales decrease of 6.5% in U.S. dollars (a decrease of 0.8% on a local currency basis). The U.S. Contract performance reflects weaker sales to existing corporate accounts.
Contract (in
millions) 3Q13 3Q12 YTD13 YTD12
------------- ---- ---- ----- -----
Sales $841.9 $880.9 $2,612.8 $2,720.3
----- ------ ------ -------- --------
Sales decline (from
prior year period) -4.4% -4.0%
------------------- ---- ----
Gross profit margin 20.7% 22.8% 21.8% 22.5%
------------------- ---- ---- ---- ----
Segment income $8.8 $26.5 $41.3 $79.3
-------------- ---- ----- ----- -----
Segment income
margin 1.0% 3.0% 1.6% 2.9%
-------------- --- --- --- ---
Contract segment gross profit margin decreased to 20.7% in the third quarter of 2013 from 22.8% in the third quarter of 2012, primarily reflecting lower customer margins in U.S. Contract and International Contract. Contract segment operating, selling and general and administrative expenses as a percentage of sales decreased to 19.6% in the third quarter of 2013 from 19.8% in the third quarter of 2012 primarily due to lower incentive compensation expense and net favorable legal and sales tax settlements, partially offset by continued investments in growth and profitability initiatives. Contract segment income was $8.8 million, or 1.0% of sales, in the third quarter of 2013 compared to $26.5 million, or 3.0% of sales, in the third quarter of 2012.
Retail Segment Results
Retail segment sales in the third quarter of 2013 decreased 4.7% to $823.0 million compared to the third quarter of 2012, reflecting a same-store sales decrease on a local currency basis of 2.8% primarily due to decreased traffic and lower technology product category sales. The decrease reflected a U.S. Retail operations same-store sales decrease of 2.8%, and a Mexico retail operations same-store sales decrease of 2.2% on a local currency basis.
Retail (in
millions) 3Q13 3Q12 YTD13 YTD12
----------- ---- ---- ----- -----
Sales $823.0 $863.7 $2,351.8 $2,499.6
----- ------ ------ -------- --------
Same-store sales
decline on a local
currency basis -2.8% -4.0%
------------------- ---- ----
Gross profit margin 29.6% 30.0% 29.6% 29.6%
------------------- ---- ---- ---- ----
Segment income $26.2 $27.7 $44.4 $53.4
-------------- ----- ----- ----- -----
Segment income
margin 3.2% 3.2% 1.9% 2.1%
-------------- --- --- --- ---
Retail segment gross profit margin decreased to 29.6% in the third quarter of 2013 from 30.0% in the third quarter of 2012 primarily reflecting an expiration of favorable purchase accounting for leases as of the end of fiscal 2012, and deleveraging of occupancy costs due to lower sales. Retail segment operating, selling and general and administrative expenses as a percentage of sales decreased to 26.4% in the third quarter of 2013 from 26.8% in the third quarter of 2012, primarily due to favorable sales and property tax settlements, lower store payroll expense, and reduced advertising expenses. Retail segment income was $26.2 million, or 3.2% of sales, in the third quarter of 2013 compared to $27.7 million, or 3.2% of sales, in the third quarter of 2012.
OfficeMax ended the third quarter of 2013 with a total of 921 Retail stores, consisting of 828 Retail stores in the U.S. and 93 Retail stores in Mexico. During the third quarter of 2013, OfficeMax closed 15 stores and opened one store in the U.S.; and opened three stores in Mexico.
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 Contract and Retail segments. Corporate and Other segment operating, selling and general and administrative expenses were $6.7 million in the third quarter of 2013 compared to $11.5 million in the third quarter of 2012 primarily due to favorable sales tax settlements and cost reductions in the third quarter of 2013.
Balance Sheet and Cash Flow
As of September 28, 2013, OfficeMax had total debt of $232.4 million, excluding $735.0 million of non-recourse debt related to the Wells Fargo-backed timber notes.
During the first nine months of 2013, OfficeMax generated $85.2 million of cash flow from operations and invested $65.3 million in capital expenditures. In July of 2013, OfficeMax received a $71.8 million distribution from Boise Cascade Holdings, L.L.C. of which $25.4 million was recorded as dividend income and included in cash provided by operations, and the remaining $46.4 million was recorded as a reduction in the carrying value of the Boise investment and classified as cash provided by investment.
In July of 2013, OfficeMax paid a special dividend to common shareholders of $130.7 million in cash.
Merger Update
On February 20, 2013, OfficeMax and Office Depot announced their entry into an agreement to combine their companies in a merger of equals. On July 10, 2013, stockholders of both companies approved the merger. The companies received FTC clearance for the merger on November 1, 2013 and expect to close the transaction after market close on November 5, 2013. Additional information about the merger process can be found in the "Investors" section of the OfficeMax website.
Additional Comments
OfficeMax expects to post further comments by its President and CEO, Ravi Saligram, and its SVP of Finance, Interim Chief Financial Officer and Chief Accounting Officer, Deb O'Connor, regarding its third quarter 2013 financial results. The comments will be available by visiting the SEC Filings section of the OfficeMax Investor Relations website at investor.officemax.com.
About OfficeMax
OfficeMax Incorporated (NYSE: OMX) is a leader in integrating products, solutions and services for the workplace, whether for business or at home. The OfficeMax mission is simple: We provide workplace innovation that enables our customers to work better. The company provides office supplies and paper, print and document services, technology products and solutions, and furniture to businesses and consumers. OfficeMax consumers and business customers are served by approximately 28,000 associates through OfficeMax.com; OfficeMaxWorkplace.com and Reliable.com; more than 900 stores in the U.S. and Mexico; and direct sales and catalogs. OfficeMax has been named one of the 2013 World's Most Ethical Companies, and is the only company in the office supply industry to receive Ethics Inside(®) Certification by the Ethisphere Institute. To find the nearest OfficeMax, call 1-877-OFFICEMAX. For more information, visit www.OfficeMax.com.
All trademarks, service marks and trade names of OfficeMax Incorporated used herein are trademarks or registered trademarks of OfficeMax Incorporated. Any other product or company names mentioned herein are the trademarks of their respective owners.
FORWARD-LOOKING STATEMENTS
Certain statements made in this document and other written or oral statements made by or on behalf of OfficeMax and Office Depot constitute "forward-looking statements" within the meaning of the federal securities laws, including statements regarding both companies' future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future. OfficeMax and Office Depot cannot guarantee that the macroeconomy will perform within the assumptions underlying their respective projected outlook; that their respective initiatives will be successfully executed and produce the results underlying their respective 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 their respective actual results will be consistent with the forward-looking statements and you should not place undue reliance on them. In addition, forward-looking statements could be affected by the following additional factors, among others, related to the business combination: the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or the failure to satisfy closing conditions; the risk that the synergies from the transaction may not be realized, may take longer to realize than expected, or may cost more to achieve than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the ability to successfully integrate the businesses; unexpected costs or unexpected liabilities that may arise from the transaction, whether or not consummated; the inability to retain key personnel; future regulatory or legislative actions that could adversely affect OfficeMax and Office Depot; and business plans of the customers and suppliers of OfficeMax and Office Depot. The forward-looking statements made herein are based on current expectations and speak only as of the date they are made. OfficeMax and Office Depot undertake 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 OfficeMax and Office Depot that may cause results to differ from expectations are included in the companies' respective Annual Reports on Form 10-K for the year ended December 29, 2012, under 1A "Risk Factors", and in the companies' other filings with the SEC.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities in any jurisdiction in connection with the proposed merger of OfficeMax with Office Depot or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Office Depot has filed with the SEC a registration statement on Form S-4 that includes a definitive Joint Proxy Statement of Office Depot and OfficeMax that also constitutes a definitive prospectus of Office Depot. The registration statement was declared effective by the SEC on June 7, 2013. OfficeMax and Office Depot mailed the definitive Joint Proxy Statement/Prospectus to their respective shareholders in connection with the transaction on or about June 10, 2013. INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT OFFICE DEPOT, OFFICEMAX, THE TRANSACTION AND RELATED MATTERS. Investors and shareholders are able to obtain free copies of the definitive Joint Proxy Statement/Prospectus and other documents filed with the SEC by OfficeMax and Office Depot through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders are able to obtain free copies of the definitive Joint Proxy Statement/Prospectus and other documents filed by OfficeMax by contacting OfficeMax Investor Relations at 263 Shuman Blvd., Naperville, Illinois 60563 or by calling 630-864-6800, and are able to obtain free copies of the definitive Joint Proxy Statement/Prospectus and other documents filed by Office Depot with the SEC by contacting Office Depot Investor Relations at 6600 North Military Trail, Boca Raton, FL 33496 or by calling 561-438-7878.
Investor Contact Media Contact
Mike Steele Julie Treon
630 864 6826 630 864 6155
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands, except per-share amounts)
Quarter Ended
-------------
September 28, September 29,
2013 2012
---- ----
Sales $1,664,859 $1,744,579
Cost
of
goods
sold
and
occupancy
costs 1,247,373 1,284,177
--------- ---------
Gross
profit 417,486 460,402
Operating
expenses:
Operating,
selling
and
general
and
administrative
expenses
(a) 389,127 415,511
Asset
impairments
and
other
operating
expenses
(income),
net
(b) (38,429) 11,432
------- ------
Total
operating
expenses 350,698 426,943
Operating
income 66,788 33,459
------ ------
Other
income
(expense):
Interest
expense (16,643) (16,873)
Interest
income 10,687 11,003
Gain
on
extinguishment
of
non-
recourse
debt
(c) - 670,766
Other
income
(expense),
net (97) 224
--- ---
(6,053) 665,120
------ -------
Pre-
tax
income 60,735 698,579
Income
tax
expense (28,400) (263,331)
------- --------
Net
income
attributable
to
OfficeMax
and
noncontrolling
interest 32,335 435,248
Joint
venture
results
attributable
to
noncontrolling
interest (1,448) (1,740)
------ ------
Net
income
attributable
to
OfficeMax 30,887 433,508
Preferred
dividends (507) (522)
---- ----
Net
income
available
to
OfficeMax
common
shareholders $30,380 $432,986
======= ========
Basic
income
per
common
share: $0.35 $5.00
===== =====
Diluted
income
per
common
share: $0.34 $4.92
===== =====
Weighted
Average
Shares
Basic 87,239 86,661
Diluted 89,183 88,104
(a) The third quarter of
2012 includes $2.2
million of dividend
income related to
OfficeMax's non-voting
securities held in Boise
Cascade Holdings, L.L.C.
The effect of the
dividends increased net
income by $1.3 million,
or $0.02 per diluted
share, for the third
quarter of 2012.
(b) The third quarter of
2013 includes income of
$47.7 million in our
Corporate segment
associated with our
investment in Boise
Cascade Holdings, L.L.C.
for the partial
recognition of the
deferred gain from the
2004 sale of our paper,
forest products and
timberland assets and
dividend income of $25.4
million from the voting
securities held in Boise
Cascade Holdings, L.L.C.
The third quarter of 2013
also includes charges of
$30.5 million in our
Corporate segment for
certain costs related to
our pending merger with
Office Depot, portions of
which may not be
deductible for tax
purposes, and charges
recorded in our Retail
segment related to store
closures in the U.S. of
$4.1 million. The net
effect of the these items
increased net income by
$16.7 million, or $0.19
per diluted share, for
the third quarter of
2013. The third quarter
of 2012 includes a charge
to impair fixed assets
associated with certain
Retail stores in the U.S.
and a charge related to a
change in the estimated
lease obligation of a
closed domestic store.
These items totaled $11.4
million and reduced
income available to
OfficeMax common
shareholders by $7.0
million, or $0.08 per
diluted share, for the
third quarter of 2012.
(c) The third quarter of
2012 includes a non-cash
gain of $670.8 million
related to an agreement
that legally extinguished
the Company's non-
recourse debt guaranteed
by Lehman Brothers
Holdings, Inc. The gain
increased net income
available to OfficeMax
common shareholders by
$416.4 million, or $4.73
per diluted share, for
the third quarter of
2012.
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands, except per-share amounts)
Nine Months Ended
-----------------
September 28, September 29,
2013 2012
---- ----
Sales $4,964,637 $5,219,890
Cost of goods sold and occupancy costs 3,700,854 3,867,198
--------- ---------
Gross profit 1,263,783 1,352,692
Operating expenses:
Operating, selling and general and administrative expenses (a) 1,201,164 1,241,598
Asset impairments and other operating expenses (income), net (b) (105,197) 36,698
-------- ------
Total operating expenses 1,095,967 1,278,296
Operating income 167,816 74,396
------- ------
Other income (expense):
Interest expense (49,999) (52,690)
Interest income 32,156 32,820
Gain on extinguishment of non-recourse debt (c) - 670,766
Other income (expense), net (274) 449
---- ---
(18,117) 651,345
------- -------
Pre-tax income 149,699 725,741
Income tax expense (68,661) (272,251)
------- --------
Net income attributable to OfficeMax and noncontrolling interest 81,038 453,490
Joint venture results attributable to noncontrolling interest (2,843) (3,345)
------ ------
Net income attributable to OfficeMax 78,195 450,145
Preferred dividends (1,514) (1,581)
------ ------
Net income available to OfficeMax common shareholders $76,681 $448,564
======= ========
Basic income per common share: $0.88 $5.18
===== =====
Diluted income per common share: $0.86 $5.12
===== =====
Weighted Average Shares
Basic 87,063 86,526
Diluted 88,692 87,979
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OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(thousands)
September 28, December 29,
2013 2012
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $504,201 $495,056
Receivables, net 549,597 528,279
Inventories 697,724 812,454
Deferred income
taxes and
receivables 59,431 68,568
Other current assets 67,756 79,527
------ ------
Total current assets 1,878,709 1,983,884
Property and
equipment:
Property and
equipment 1,326,880 1,338,837
Accumulated
depreciation (997,420) (986,611)
-------- --------
Property and
equipment, net 329,460 352,226
Intangible assets,
net 79,096 80,765
Investment in Boise
Cascade Holdings,
L.L.C. 40,896 175,000
Timber notes
receivable 817,500 817,500
Deferred income
taxes 50,240 108,759
Other non-current
assets 232,785 266,181
------- -------
Total assets $3,428,686 $3,784,315
========== ==========
LIABILITIES AND
EQUITY
Current liabilities:
Accounts payable $573,838 $699,636
Income taxes payable 1,369 4,222
Accrued liabilities
and other 350,506 342,551
Current portion of
debt 6,620 10,232
----- ------
Total current
liabilities 932,333 1,056,641
Long-term debt,
less current
portion 225,736 225,962
Non-recourse debt 735,000 735,000
Other long-term
obligations:
Compensation and
benefits 342,569 365,568
Deferred gain on
sale of assets 42,008 179,757
Other long-term
liabilities 122,309 142,397
Total other long-
term liabilities 506,886 687,722
Noncontrolling
interest in joint
venture 62,062 44,617
Shareholders'
equity:
Preferred stock 26,245 27,391
Common stock 218,585 217,209
Additional paid-in
capital 1,011,080 1,018,667
Accumulated deficit (150,220) (91,373)
Accumulated other
comprehensive loss (139,021) (137,521)
-------- --------
Total shareholders'
equity 966,669 1,034,373
Total liabilities
and equity $3,428,686 $3,784,315
========== ==========
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(thousands)
Nine Months Ended
-----------------
September 28, September 29,
2013 2012
---- ----
Cash provided by operations:
Net income
attributable to
OfficeMax and
noncontrolling
interest $81,038 $453,490
Non-cash items in net income:
Deferred gain from
investment in Boise
Cascade Holdings,
L.L.C. (137,523) -
Depreciation and
amortization 55,930 55,704
Non-cash impairment
charges - 9,791
Non-cash gain on
extinguishment of
non-recourse debt - (670,766)
Deferred income tax
expense 62,977 250,337
Other 46,398 29,456
Changes in operating assets and liabilities:
Receivables (18,886) 28,360
Inventories 108,787 69,038
Accounts payable and
accrued liabilities (136,012) (22,625)
Current and deferred
income taxes (3,013) 12,810
Collection of
dividends receivable
related to investment
in Boise Cascade
Holdings, L.L.C. 46,137 -
Other (20,609) (57,765)
------- -------
Cash provided by
operations 85,224 157,830
Cash provided by (used for) investment:
Expenditures for
property and
equipment (65,285) (48,173)
Return of investment
in Boise Cascade
Holdings, L.L.C. 134,104 -
Proceeds from sale of
assets 3,833 1,667
Other (997) -
---- ---
Cash provided by (used
for) investment 71,655 (46,506)
Cash used for financing:
Cash dividends paid (136,934) (2,792)
Changes in debt, net (3,793) (31,909)
Other (3,315) (1,005)
------ ------
Cash used for
financing (144,042) (35,706)
Effect of exchange
rates on cash and
cash equivalents (3,692) 3,293
Increase in cash and
cash equivalents 9,145 78,911
Cash and cash
equivalents at
beginning of period 495,056 427,111
------- -------
Cash and cash
equivalents at end of
period $504,201 $506,022
======== ========
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONTRACT SEGMENT STATEMENTS OF INCOME
(unaudited)
(millions)
Quarter Ended
-------------
September 28, September 29,
2013 2012
---- ----
Sales $841.9 $880.9
Gross profit 174.1 20.7% 200.9 22.8%
Operating,
selling and
general and
administrative
expenses 165.3 19.6% 174.4 19.8%
----- -----
Segment
income $8.8 1.0% $26.5 3.0%
==== === ===== ===
Note: Totals may not sum down due to rounding.
Nine Months Ended
-----------------
September 28, September 29,
2013 2012
---- ----
Sales $2,612.8 $2,720.3
Gross profit 568.6 21.8% 612.3 22.5%
Operating,
selling and
general and
administrative
expenses 527.3 20.2% 533.0 19.6%
----- -----
Segment
income $41.3 1.6% $79.3 2.9%
===== === ===== ===
Note: Totals may not sum down due to rounding.
Note: Management evaluates
the segments' performances
using segment income which
is based on operating
income after eliminating
the effect of certain
legacy operating items such
as income associated with
our investment in Boise
Cascade Holdings, L.L.C.
and certain other operating
items such as store closure
costs, costs related to our
pending merger with Office
Depot and severance
charges, all of which are
not indicative of our core
operations.
OFFICEMAX INCORPORATED AND SUBSIDIARIES
RETAIL SEGMENT STATEMENTS OF INCOME
(unaudited)
(millions)
Quarter Ended
-------------
September 28, September 29,
2013 2012
---- ----
Sales $823.0 $863.7
Gross profit 243.4 29.6% 259.5 30.0%
Operating,
selling and
general and
administrative
expenses 217.1 26.4% 231.8 26.8%
----- -----
Segment
income $26.2 3.2% $27.7 3.2%
===== === ===== ===
Note: Totals may not sum down due to rounding.
Nine Months Ended
-----------------
September 28, September 29,
2013 2012
---- ----
Sales $2,351.8 $2,499.6
Gross profit 695.2 29.6% 740.4 29.6%
Operating,
selling and
general and
administrative
expenses 650.8 27.7% 687.0 27.5%
----- -----
Segment
income $44.4 1.9% $53.4 2.1%
===== === ===== ===
Note: Totals may not sum down due to rounding.
Note: Management evaluates
the segments' performances
using segment income which
is based on operating
income after eliminating
the effect of certain
legacy operating items such
as income associated with
our investment in Boise
Cascade Holdings, L.L.C.
and certain other operating
items such as store closure
costs, costs related to our
pending merger with Office
Depot and severance
charges, all of which are
not indicative of our core
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, certain legacy operating items such as income associated with our Boise Investment, and certain other operating items such as store closure costs, costs related to our pending merger with Office Depot, and severance charges, all of which are not indicative of our core operations. We believe our presentation of financial measures before, or excluding, these items, which are non-GAAP measures, enhances our investors' overall understanding of our 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 following tables, we reconcile our non-GAAP financial measures to our reported GAAP financial results.
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.
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION - OPERATING RESULTS
(unaudited)
(millions, except per-share amounts)
Quarter Ended
-------------
September 28, 2013 September 29, 2012
------------------ ------------------
As As As As
Reported Adjustments Adjusted Reported Adjustments Adjusted
-------- ----------- -------- -------- ----------- --------
Sales $1,664.9 $ - $1,664.9 $1,744.6 $ - $1,744.6
Cost of goods sold
and occupancy
costs $1,247.4 - 1,247.4 1,284.2 - 1,284.2
-------- --- ------- ------- --- -------
Gross profit 417.5 - 417.5 460.4 - 460.4
Operating expenses:
Operating, selling
and general and
administrative
expenses (a) 389.1 - 389.1 415.5 2.2 417.7
Asset impairments
and other
operating expenses
(income), net (b) (38.4) 38.4 - 11.4 (11.4) -
----- ---- --- ---- ----- ---
Total operating
expenses 350.7 38.4 389.1 426.9 (9.3) 417.7
Operating income
(loss) 66.8 (38.4) 28.4 33.5 9.3 42.7
---- ----- ---- ---- --- ----
Other income
(expense):
Interest expense (16.6) - (16.6) (16.9) - (16.9)
Interest income 10.7 - 10.7 11.0 - 11.0
Gain on
extinguishment of
non-recourse debt
(c) - 670.8 (670.8) -
Other expense, net (0.1) - (0.1) 0.2 - 0.2
---- --- ---- --- --- ---
(6.0) - (6.0) 665.1 (670.8) (5.7)
---- --- ---- ----- ------ ----
Pre-tax income
(loss) 60.7 (38.4) 22.3 698.6 (661.5) 37.1
Income tax expense (28.4) 21.7 (6.7) (263.3) 250.8 (12.6)
----- ---- ---- ------ ----- -----
Net income (loss)
attributable to
OfficeMax and
noncontrolling
interest 32.3 (16.7) 15.6 435.2 (410.7) 24.5
Joint venture
results
attributable to
noncontrolling
interest (1.4) - (1.4) (1.7) - (1.7)
---- --- ---- ---- --- ----
Net income (loss)
attributable to
OfficeMax 30.9 (16.7) 14.1 433.5 (410.7) 22.8
Preferred dividends (0.5) - (0.5) (0.5) - (0.5)
---- --- ---- ---- --- ----
Net income (loss)
available to
OfficeMax common
shareholders $30.4 $(16.7) $13.6 $433.0 $(410.7) $22.2
===== ====== ===== ====== ======= =====
Basic income (loss)
per common share: $0.35 $(0.19) $0.16 $5.00 $(4.74) $0.26
===== ====== ===== ===== ====== =====
Diluted income
(loss) per common
share: $0.34 $(0.19) $0.15 $4.92 $(4.67) $0.25
===== ====== ===== ===== ====== =====
Weighted Average
Shares
Basic 87,239 87,239 86,661 86,661
Diluted 89,183 89,183 88,104 87,587
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OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION - OPERATING RESULTS
(unaudited)
(millions, except per-share amounts)
Nine Months Ended
-----------------
September 28, 2013 September 29, 2012
------------------ ------------------
As As As As
Reported Adjustments Adjusted Reported Adjustments Adjusted
-------- ----------- -------- -------- ----------- --------
Sales $4,964.6 $ - $4,964.6 $5,219.9 $ - $5,219.9
Cost of goods sold
and occupancy
costs 3,700.9 - 3,700.9 3,867.2 - 3,867.2
------- --- ------- ------- --- -------
Gross profit 1,263.8 - 1,263.8 1,352.7 - 1,352.7
Operating expenses:
Operating, selling
and general and
administrative
expenses (a) 1,201.2 1.0 1,202.2 1,241.6 6.3 1,247.9
Asset impairments
and other
operating expenses
(income), net (b) (105.2) 105.2 - 36.7 (36.7) -
------ ----- --- ---- ----- ---
Total operating
expenses 1,096.0 106.2 1,202.2 1,278.3 (30.4) 1,247.9
Operating income 167.8 (106.2) 61.6 74.4 30.4 104.8
----- ------ ---- ---- ---- -----
Other income
(expense):
Interest expense (50.0) - (50.0) (52.7) - (52.7)
Interest income 32.2 - 32.2 32.8 - 32.8
Gain on
extinguishment of
non-recourse debt
(c) - - - 670.8 (670.8) -
Other income
(expense), net (0.3) - (0.3) 0.4 - 0.4
---- --- ---- --- --- ---
(18.1) - (18.1) 651.3 (670.8) (19.4)
----- --- ----- ----- ------ -----
Pre-tax income 149.7 (106.2) 43.5 725.7 (640.4) 85.4
Income tax expense (68.7) 55.0 (13.6) (272.3) 242.5 (29.7)
----- ---- ----- ------ ----- -----
Net income
attributable to
OfficeMax and
noncontrolling
interest 81.0 (51.2) 29.8 453.5 (397.8) 55.7
Joint venture
results
attributable to
noncontrolling
interest (2.8) - (2.8) (3.3) - (3.3)
---- --- ---- ---- --- ----
Net income
attributable to
OfficeMax 78.2 (51.2) 27.0 450.1 (397.8) 52.3
Preferred dividends (1.5) - (1.5) (1.6) - (1.6)
---- --- ---- ---- --- ----
Net income
available to
OfficeMax common
shareholders $76.7 $(51.2) $25.5 $448.6 $(397.8) $50.7
===== ====== ===== ====== ======= =====
Basic income per
common share: $0.88 $(0.59) $0.29 $5.18 $(4.60) $0.59
===== ====== ===== ===== ====== =====
Diluted income per
common share: $0.86 $(0.58) $0.29 $5.12 $(4.52) $0.58
===== ====== ===== ===== ====== =====
Basic 87,063 87,063 86,526 86,526
Diluted 88,692 88,692 87,979 87,458
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OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION - SALES
(unaudited)
(millions)
Quarter Ended
-------------
September 28, September 29, Percent
2013 2012 Change
---- ---- ------
Sales as
reported $1,664.9 $1,744.6 -4.6%
Adjustment
for
unfavorable
impact
of
change
in
foreign
exchange
rates
(a) $11.5 $ -
Adjustment
for the business basis
impact days (b)
of from
closed year-
and to-year
opened for
stores businesses
and the reporting
difference on a
in $(10.2) $(20.7)
------ ------
Sales
adjusted and
for opened
impact stores
of and
change change
in in
foreign number
exchange of
rates, business
closed $1,666.1 $1,723.9 -3.4%
======== ========
Nine Months Ended
-----------------
September 28, September 29, Percent
2013 2012 Change
---- ---- ------
Sales as
reported $4,964.6 $5,219.9 -4.9%
Adjustment
for
unfavorable
impact
of
change
in
foreign
exchange
rates
(a) $6.0 $ -
Adjustment
for the business basis
impact days (b)
of from
closed year-
and to-year
opened for
stores businesses
and the reporting
difference on a
in $(27.2) $(73.3)
------ ------
Sales
adjusted and
for opened
impact stores
of and
change change
in in
foreign number
exchange of
rates, business
closed $4,943.5 $5,146.6 -3.9%
======== ========
Note: Totals may not
sum down due to
rounding.
(a) Computed by
assuming constant
currency exchange
rates between
periods.
(b) Computed by
reducing current
year and prior year
sales for stores
opened or closed in
the current or prior
year and by
adjusting prior year
sales to reflect the
same number of
business days in the
current year.
SOURCE OfficeMax Incorporated
