These items increased net income (loss) available to
OfficeMax common shareholders $1.6 million, or $0.02 per diluted share in
2009 and $12.5 million, or $0.16 per diluted share in 2008.
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(thousands)
Nine Months Ended
-------------------
September 26, September 27,
2009 2008
---- ----
Cash provided by operations:
Net income (loss) attributable to OfficeMax and
noncontrolling interest $2,138 $(1,261,568)
Items in net income (loss) not using (providing)
cash:
Depreciation and amortization 88,693 105,235
Non-cash impairment charges - 1,671,090
Non-cash deferred taxes on impairment
charges - (319,363)
Other 10,002 (6,801)
Changes in operating assets and liabilities:
Receivables and inventory 255,219 144,903
Accounts payable and accrued liabilities (94,038) (19,431)
Income taxes and other 107,122 (67,337)
------- -------
Cash provided by operations 369,136 246,728
Cash provided by (used for) investment:
Expenditures for property and equipment (23,946) (112,065)
Other 40,816 9,440
------ -----
Cash provided by (used for) investment 16,870 (102,625)
Cash used for financing:
Cash dividends paid (3,052) (34,359)
Changes in debt, net (21,810) (26,392)
Other 1,453 130
----- ---
Cash used for financing (23,409) (60,621)
Effect of exchange rates on cash and cash
equivalents 13,570 (1,608)
Increase in cash and cash equivalents 376,167 81,874
Cash and cash equivalents at beginning
of period 170,779 152,637
------- -------
Cash and cash equivalents at end of period $546,946 $234,511
======== ========
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION
(unaudited)
(millions, except per-share amounts)
Quarter Ended
---------------
September 26, 2009 September 27, 2008
------------------ ------------------
As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted
-------- ------- -------- -------- ------- --------
Sales $1,831.9 $- $1,831.9 $2,096.3 $- $2,096.3
Cost of goods sold
and occupancy
costs 1,397.2 - 1,397.2 1,569.8 - 1,569.8
------- - ------- ------- - -------
Gross profit 434.7 - 434.7 526.5 - 526.5
Operating expenses:
Operating and
selling expenses 339.0 - 339.0 394.5 - 394.5
General and
administrative
expenses 69.0 - 69.0 77.7 77.7
Goodwill and other
asset impairments
(a) - - - 735.8 (735.8) -
Other operating
expenses (b) 1.5 (1.5) - - - -
--- ---- --- --- --- ---
Total operating
expenses 409.5 (1.5) 408.0 1,208.0 (735.8) 472.2
Operating income
(loss) 25.2 1.5 26.7 (681.5) 735.8 54.3
---- --- ---- ------ ----- ----
Interest, net (a) (8.4) - (8.4) (26.6) 18.2 (8.4)
---- --- ---- ----- ---- ----
Income (loss) before
income taxes 16.8 1.5 18.3 (708.1) 754.0 45.9
Income tax benefit
(expense) (9.9) (0.6) (10.5) 276.4 (293.3) (16.9)
---- ---- ----- ----- ------ -----
Net income (loss)
attributable to
OfficeMax and
noncontrolling
interest 6.9 0.9 7.8 (431.7) 460.7 29.0
Joint venture
results attributable
to noncontrolling
interest (0.6) - (0.6) (0.2) - (0.2)
---- --- ---- ---- --- ----
Net income (loss)
attributable to
OfficeMax 6.3 0.9 7.2 (431.9) 460.7 28.8
Preferred dividends (0.6) - (0.6) (0.8) - (0.8)
---- --- ---- ---- --- ----
Net income (loss)
available to
OfficeMax common
shareholders $5.7 $0.9 $6.6 $(432.7) $460.7 $28.0
==== ==== ==== ======= ====== =====
Basic income (loss)
per common share $0.07 $0.01 $0.08 $(5.70) $6.07 $0.37
===== ===== ===== ====== ===== =====
Diluted income
(loss) per common
share $0.07 $0.01 $0.08 $(5.70) $6.06 $0.36
===== ===== ===== ====== ===== =====
Weighted Average
Shares
Basic 76,285 76,285 75,931 75,931
Diluted 77,152 77,152 75,931 77,114
(a) In the third quarter of 2008, a $735.8 million non-cash impairment-
related charge was recorded in the Corporate and Other segment related to
the timber installment notes receivable due from Lehman ("installment
notes"). In addition, we stopped accruing interest income on the
installment notes as of the last interest payment date (April 29, 2008),
while continuing to accrue interest expense on the Lehman guaranteed
securitization notes payable until the default date (October 29, 2008).
This resulted in $18.2 million of additional net interest expense. The
cumulative effect of these items was a reduction of net income (loss)
available to OfficeMax common shareholders by $460.7 million or $6.06 per
diluted share.
(b) 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 (loss) available to OfficeMax
common shareholders 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 26, 2009 September 27, 2008
------------------ ------------------
As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted
-------- ------- -------- -------- ------- --------
Sales $5,401.5 $- $5,401.5 $6,383.9 $- $6,383.9
Cost of
goods sold
and occupancy
costs 4,106.3 - 4,106.3 $4,786.0 - 4,786.0
------- --- ------- -------- --- -------
Gross
profit 1,295.2 - 1,295.2 1,597.9 - 1,597.9
Operating expenses:
Operating and
selling
expenses 1,021.4 - 1,021.4 1,191.7 - 1,191.7
General and
administrative
expenses 208.9 - 208.9 229.3 229.3
Goodwill and other
asset impairments
(a)(b) - - - 1,671.1 (1,671.1) -
Other operating
expenses (c) 39.7 (39.7) - 11.3 (11.3) -
---- ----- --- ---- ----- ---
Total operating
expenses 1,270.0 (39.7) 1,230.3 3,103.4 (1,682.4) 1,421.0
Operating income
(loss) 25.2 39.7 64.9 (1,505.5) 1,682.4 176.9
---- ---- ---- -------- ------- -----
Other income (expense):
Interest, net
(b)(d) (21.4) (4.4) (25.8) (42.2) 18.2 (24.0)
Other income,
net (e) 2.8 (2.6) 0.2 20.7 (20.5) 0.2
--- ---- --- ---- ----- ---
(18.6) (7.0) (25.6) (21.5) (2.3) (23.8)
----- ---- ----- ----- ---- -----
Income (loss) before
income taxes 6.6 32.7 39.3 (1,527.0) 1,680.1 153.1
Income tax benefit
(expense) (4.4) (12.4) (16.8) 265.4 (315.6) (50.2)
---- ----- ----- ----- ------ -----
Net income (loss)
attributable to
OfficeMax and
noncontrolling
interest 2.2 20.3 22.5 (1,261.6) 1,364.5 102.9
Joint venture
results attributable
to noncontrolling
interest 1.1 (0.5) 0.6 (1.2) - (1.2)
--- ---- --- ---- --- ----
Net income (loss)
attributable to
OfficeMax 3.3 19.8 23.1 (1,262.8) 1,364.5 101.7
Preferred
dividends (2.2) - (2.2) (2.8) - (2.8)
---- --- ---- ---- --- ----
Net income (loss)
available to
OfficeMax common
shareholders $1.1 $19.8 $20.9 $(1,265.6) $1,364.5 $98.9
==== ===== ===== ========= ======== =====
Basic income (loss)
per common share $0.01 $0.26 $0.27 $(16.69) $17.99 $1.30
===== ===== ===== ======= ====== =====
Diluted income
(loss) per common
share $0.01 $0.26 $0.27 $(16.69) $17.98 $1.29
===== ===== ===== ======= ====== =====
Weighted Average
Shares
Basic 76,233 76,233 75,831 75,831
Diluted 76,846 76,846 75,831 76,915
(a) The first nine months of 2008 includes $935.3 million non-cash
charges related to impairment of goodwill, tradenames and fixed assets.
These charges are recorded by segment in the following manner: Contract
$464.0 million and Retail $471.3 million. The charges reduced net income
(loss) available to OfficeMax common shareholders by $909.3 million or
$11.99 per diluted share.
(b) In the first nine months of 2008, a $735.8 million non-cash
impairment-related charge was recorded in the Corporate and Other segment
related to the timber installment notes receivable due from Lehman
("installment notes"). In addition, we stopped accruing interest income
on the installment notes as of the last interest payment date (April 29,
2008), while continuing to accrue interest expense on the Lehman
guaranteed securitization notes payable until the default date (October
29, 2008). This resulted in $18.2 million of additional net interest
expense. The cumulative effect of these items was a reduction of net
income (loss) available to OfficeMax common shareholders by $460.7
million or $6.06 per diluted share.
(c) The first nine months of 2009 includes $31.2 million of charges in
our Retail segment related to store closures as well as severance and
other charges of $8.4 million in our Contract segment, principally
related to reorganizations of our U.S. and Canadian sales forces and
customer service centers. In total, these charges reduced net income
(loss) available to OfficeMax common shareholders by $24.1 million, or
$0.32 per diluted share.
The first nine months of 2008 includes $14.4 million of severance and
other charges related to the reorganization of Retail store and field
management and the consolidation of the Contract segment's manufacturing
facilities in New Zealand. The first nine months of 2008 also includes a
$3.1 million gain related to the sold legacy Voyageur Panel business.
These items reduced net income (loss) available to OfficeMax common
shareholders by $7.0 million, or $0.09 per diluted share.
(d) The first nine months of 2009 includes $4.4 million of interest
income related to a tax escrow balance established in a prior period in
connection with our legacy Voyager Panel business sold in 2004. This item
increased net income (loss) available to OfficeMax common shareholders by
$2.7 million, or $0.04 per diluted share.
(e) Other income includes income related to the company's investment in
Boise Cascade, L.L.C. of $2.6 million and $20.5 million in 2009 and 2008,
respectively. The large distribution in 2008 was primarily related to
Boise's sale of a majority interest in their paper and packaging and
newsprint business. These items increased net income (loss) available to
OfficeMax common shareholders $1.6 million, or $0.02 per diluted share in
2009 and $12.5 million, or $0.16 per diluted share in 2008.
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONTRACT SEGMENT STATEMENTS OF OPERATIONS
(unaudited)
(millions, except per-share amounts)
Quarter Ended
---------------
September 26, September 27,
2009 2008
---- ----
Sales $899.6 $1,049.1
Cost of goods sold and
occupancy costs 719.9 820.6
----- -----
Gross profit 179.7 20.0% 228.5 21.8%
Operating expenses:
Operating expenses (a) 169.6 18.9% 193.0 18.4%
Other operating expenses 1.5 0.1% - 0.0%
--- --- --- ---
Total operating expenses 171.1 19.0% 193.0 18.4%
Operating income $8.6 1.0% $35.5 3.4%
---- -----
Non-GAAP Reconciliation
-----------------------
Operating income $8.6 1.0% $35.5 3.4%
Other operating expenses 1.5 0.1% - 0.0%
--- --- --- ---
Adjusted operating
income $10.1 1.1% $35.5 3.4%
----- -----
Nine Months Ended
-------------------
September 26, September 27,
2009 2008
---- ----
Sales $2,708.8 100.0% $3,356.1 100.0%
Cost of goods sold and
occupancy costs 2,153.0 2,614.1
------- -------
Gross profit 555.8 20.5% 742.0 22.1%
Operating expenses:
Operating expenses (a) 511.8 18.9% 597.3 17.8%
Goodwill and other
asset impairments - 0.0% 464.0 13.8%
Other operating expenses 8.4 0.3% 2.4 0.1%
--- --- --- ---
Total operating expenses 520.2 19.2% 1,063.7 31.7%
Operating income
(loss) $35.6 1.3% $(321.7) -9.6%
----- -------
Non-GAAP Reconciliation
-----------------------
Operating income
(loss) $35.6 1.3% $(321.7) -9.6%
Goodwill and other
asset impairments - 0.0% 464.0 13.8%
Other operating expenses 8.4 0.3% 2.4 0.1%
--- --- --- ---
Adjusted operating
income $44.0 1.6% $144.7 4.3%
----- ------
(a) Operating expenses includes operating and selling expenses as well as
general and administrative expenses.
OFFICEMAX INCORPORATED AND SUBSIDIARIES
RETAIL SEGMENT STATEMENTS OF OPERATIONS
(unaudited)
(millions, except per-share amounts)
Quarter Ended
---------------
September 26, September 27,
2009 2008
---- ----
Sales $932.3 $1,047.2
Cost of goods sold and occupancy
costs 677.2 749.2
----- -----
Gross profit 255.1 27.4% 298.0 28.5%
Operating expenses:
Operating expenses (a) 226.7 24.4% 268.9 25.7%
Other operating expenses - 0.0% - 0.0%
- --- - ---
Total operating expenses 226.7 24.4% 268.9 25.7%
Operating income $28.4 3.0% $29.1 2.8%
----- -----
Non-GAAP Reconciliation
-----------------------
Operating income $28.4 3.0% $29.1 2.8%
Other operating expenses - 0.0% - 0.0%
--- --- --- ---
Adjusted operating income $28.4 3.0% $29.1 2.8%
----- -----
Nine Months Ended
-------------------
September 26, September 27,
2009 2008
---- ----
Sales $2,692.7 100.0% $3,027.8 100.0%
Cost of goods sold and
occupancy costs 1,953.3 2,172.0
------- -------
Gross profit 739.4 27.5% 855.8 28.3%
Operating expenses:
Operating expenses (a) 687.7 25.6% 794.6 26.3%
Goodwill and other asset
impairments - 0.0% 471.3 15.6%
Other operating expenses 31.2 1.1% 12.0 0.4%
---- --- ---- ---
Total operating expenses 718.9 26.7% 1,277.9 42.3%
Operating income (loss) $20.5 0.8% $(422.1) -14.0%
----- -------
Non-GAAP Reconciliation
-----------------------
Operating income (loss) $20.5 0.8% $(422.1) -14.0%
Goodwill and other asset
impairments - 0.0% 471.3 15.6%
Other operating expenses 31.2 1.1% 12.0 0.4%
---- --- ---- ---
Adjusted operating
income $51.7 1.9% $61.2 2.0%
----- -----
(a) Operating expenses includes operating and selling expenses as well as
general and administrative expenses.
Reconciliation of non-GAAP Measures to GAAP Measures
We evaluate our results of operations before certain costs including facility closure, severance related items, asset impairments, income related to our investment in Boise Cascade, L.L.C. and interest income related to a tax escrow balance, as they are not indicative of our core operating activities. We believe our presentation of financial measures before, or excluding, these items, which are non-GAAP measures, enhances our investors' overall understanding of our recurring operational performance and provides useful information to both investors and management to evaluate the ongoing operations and prospects of OfficeMax by providing better comparisons. Whenever we use non-GAAP financial measures, we designate these measures as "adjusted" and provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure. In the preceding tables, we reconcile our non-GAAP financial measures to our reported GAAP financial results for the third quarter and first nine months of both 2009 and 2008.
Although we believe the non-GAAP financial measures enhance an investor's understanding of our performance, our management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The non-GAAP financial measures we use may not be consistent with the presentation of similar companies in our industry. However, we present such non-GAAP financial measures in reporting our financial results to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what we believe to be our ongoing business operations.
SOURCE OfficeMax Incorporated
