EX-99.1 3 l04130aexv99w1.txt EX-99.1 PRESS RELEASE, DATED NOVEMBER 13, 2003 Exhibit 99.1 OFFICEMAX, INC. Headquarters: 3605 Warrensville Center Rd., Shaker Heights, OH 44122-5203 Mailing Address: P.O. Box 228070, Cleveland, OH 44122-8070 NEWS RELEASE FOR IMMEDIATE RELEASE For inquiries: Investors Media Michael Weisbarth Steve Baisden Senior Vice President, Manager, Investor & Treasurer Public Relations (216) 471-6698 (216) 471-3441 investor@officemax.com OFFICEMAX REPORTS THIRD QUARTER AND NINE MONTHS OPERATING RESULTS SAME-STORE SALES UP THREE PERCENT WITH FOUR PERCENT LESS INVENTORY, AS PROMOTIONAL ACTIVITIES ARE RATCHETED DOWN IN THE LAST MONTH OF THE QUARTER; NET INCOME UP 46 PERCENT VERSUS 3Q LAST YEAR, INCLUDING COSTS ASSOCIATED WITH PENDING BUSINESS COMBINATION WITH BOISE CASCADE CORPORATION; AND COMPANY ENDS QUARTER WITH CASH OF $143 MILLION, NO SHORT-TERM BORROWINGS, A $122 MILLION IMPROVEMENT IN CASH, NET OF SHORT-TERM DEBT, OVER LAST YEAR CLEVELAND - Nov. 13, 2003 - OfficeMax, Inc. (NYSE: OMX) today reported operating results for its third quarter and nine months ended Oct. 25, 2003. The Company said its domestic same-store sales for the third quarter climbed three percent on top of a strong eight percent increase for the same period a year ago. OfficeMax said its comparable-store sales results reflect a ratcheting down of its originally planned promotional activities during the last month of the quarter, which, in part, was a result of preparations for the completion of its business combination with Boise Cascade Corporation (NYSE: BCC) as previously announced on July 14, 2003. In the third quarter, consolidated sales, including the Company's Mexico and U.S. operations, rose to $1.29 billion, up two percent, compared to $1.26 billion last year. Consolidated same-store sales increased three percent. Same-store sales for OfficeMax's Mexico segment increased four percent in local currency, but declined five percent after currency conversion as a result of year-over-year devaluation in the Mexican peso against the U.S. dollar. Michael Feuer, OfficeMax's chairman and chief executive officer, said, "We are very pleased with our third quarter results as we achieved same-store sales gains in each of our major merchandise categories: technology; furniture; and supplies; up against robust gains last year. We are particularly pleased this sales gain was accomplished while enhancing gross margins, moderating our marketing efforts and at the same time reducing inventory levels by $42 million on a year-over-year basis. The positive same-store sales increase was also realized despite some temporary sales disruption due to 38 store remodels completed during the quarter and negative impacts of the August 2003 major power blackout in the Northeast and Midwest, affecting 124 stores, and Hurricane Isabel which disrupted business at 35 stores. Mr. Feuer also noted that the prior quarter's remodeling activity completed the Company's previously announced program to remodel approximately 250 stores this year, and positions OfficeMax well for its fourth quarter holiday and January back-to-business selling seasons. EARNINGS INCREASE 46 PERCENT OVER LAST YEAR ON A GAAP BASIS On a Generally Accepted Accounting Principles (GAAP) basis, which excludes a net tax effect, OfficeMax said it posted a 46 percent increase in net income to $24.1 million, or 18 cents per diluted share, compared to net income of $16.5 million, or 13 cents per diluted share, for its third quarter last year. The Company said this year's results include various deal costs incurred as a result of its pending business combination with Boise. In addition, the third quarter diluted earnings per share calculation includes an 8.3 million increase in the number of shares outstanding from the previous quarter and 7.9 million shares from the same period a year ago. This increase predominantly reflects the dilutive effect of stock options that have recently become "in the money," as OfficeMax's average stock price increased 45 percent for its third quarter over its second quarter and more than doubled over the same period a year ago. The Company stated that its GAAP results do not reflect a normalized tax provision or benefit because of the required accounting treatment of the Company's deferred tax assets and related valuation allowance. Assuming an estimated tax rate of approximately 40 percent, which is how Wall Street analysts typically evaluate the Company's year-over-year performance, and including an estimated two cents per share after-tax impact from costs associated with its business combination with Boise, OfficeMax said it - more - PAGE 2 OF 6 OFFICEMAX, INC. 3Q03 OPERATING RESULTS NOV. 13, 2003 would have increased its net income to approximately $14.6 million, or 11 cents per share. These results represent a $4.6 million improvement over last year's third quarter net income which, assuming the same tax rate, was approximately $10.0 million, or eight cents per diluted share. Mr. Feuer noted that excluding costs associated with its business combination with Boise, OfficeMax's third quarter results were in line with the current Wall Street analysts' consensus estimate. CONTINUED IMPROVEMENTS IN WORKING CAPITAL OfficeMax reported that it ended its third quarter with cash of $143 million and no short-term borrowings, which represents a $122 million improvement in cash, net of short-term debt, over last year's level of $21 million. Total inventory was down $42 million to $936 million from $978 million at the end of the same period last year. NINE MONTHS OPERATING RESULTS SHOW SIGNIFICANT IMPROVEMENT Domestic same-store sales for the nine months increased four percent. Consolidated sales for the first nine months of this year increased three percent to $3.56 billion, compared to $3.44 billion last year. On a GAAP basis, OfficeMax posted net income for nine months of $7.1 million, or six cents per diluted share. This compares to net income of $46.7 million, or 37 cents per diluted share, for the same period a year ago which includes a $57.5 million, or 46 cents per share, benefit from a cash tax refund recorded in the first quarter of fiscal 2002. The Company said excluding the cash tax refund from the first quarter of fiscal 2002, assuming an estimated tax rate of approximately 40 percent for both fiscal years, and including an estimated reduction of two cents per diluted share related to costs associated with its business combination with Boise, it would have reported an improvement of approximately $10.9 million, with net income of nearly $4.3 million, or three cents per diluted share. This would compare to a net loss of approximately $6.6 million, or five cents per share, for the same period last year. UPDATE ON BUSINESS COMBINATION WITH BOISE CASCADE CORPORATION On Nov. 6, OfficeMax announced that a special meeting of its shareholders will be held on Dec. 9, 2003, at 10 a.m. ET, to vote on a proposal concerning the previously announced merger with Boise. OfficeMax also announced that the registration statement on Form S-4 has been declared effective and contains the joint proxy statement that is being mailed to OfficeMax shareholders in connection with its Dec. 9 special meeting. If shareholders of both OfficeMax and Boise approve the transaction, then the companies expect to close the transaction after the vote on Dec. 9. ABOUT OFFICEMAX OfficeMax serves its customers through nearly 1,000 superstores, e-commerce Web sites and direct-mail catalogs. The Company has operations in the United States, Canada, Puerto Rico, the U.S. Virgin Islands and Mexico. In addition to offering office products, business machines and related items, OfficeMax superstores feature CopyMax and FurnitureMax, store-within-a-store modules devoted exclusively to "print-for-pay" services and office furniture. The Company also reaches customers in the United States with an offering of over 40,000 items through its award winning e-commerce site, OfficeMax.com, its direct-mail catalogs and its outside sales force, all of which are serviced by its three PowerMax distribution facilities, 17 delivery centers and two national customer call and contact centers. Note: Statements in this news release, other than those concerning historical information (including information incorporated by reference), contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any information in this news release that is not historical information is a forward-looking statement which may be identified by the use of language such as "may," "will," "should," "expects," "plans," "anticipates," "estimates," "believes," "thinks," "continues," "indicates," "outlook," "looks," "goals," "initiatives," "projects," or similar expressions. These statements are likely to address the Company's growth strategy, future financial performance (including sales, gross margin and earnings), strategic initiatives (including the Company's proposed combination with Boise Cascade Corporation), marketing and expansion plans, and the impact of operating initiatives. The forward-looking statements, which speak only as of the date the statement was made, are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those stated, projected or implied in the forward-looking statements. These risks and uncertainties include those described in Exhibit 99.1 of the Company's Annual Report on Form 10-K for the fiscal year ended January 25, 2003, and in other reports and exhibits to those reports filed with the Securities and Exchange Commission. You are strongly urged to review such filings for a more detailed discussion of such risks and uncertainties. The Company's filings with the Securities and Exchange Commission are available at no charge at www.sec.gov and www.freeEDGAR.com, as well as on a number of other web sites including OfficeMax.com, under the investor information section. These risks and uncertainties also include the following: risks associated with general economic conditions (including the effects of the continuing hostilities in Iraq and Afghanistan, additional terrorist attacks and hostilities, decline in the stock market, currency devaluation, slower than anticipated economic recovery and declining employment rate or other changes in our customers' business environments, including an increase in bankruptcy filings); increasing competition that includes office supply superstores, wholesale clubs, contract stationers, computer and electronics superstore retailers, Internet merchandisers and mass merchandisers, as well as grocery and drug store chains; the result of continuing FAS 142 assessments; the impact of the adoption of EITF 02-16 and FIN 46 along with other new accounting pronouncements; and the risk that the Company's proposed combination with Boise Cascade Corporation is not consummated due to the failure to obtain required shareholder approvals or other unforeseen reasons. The foregoing list of important factors is not exclusive. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. # # # (Financial tables follow) PAGE 3 OF 6 OFFICEMAX, INC. 3Q03 OPERATING RESULTS NOV. 13, 2003 OFFICEMAX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
13 WEEKS ENDED 39 WEEKS ENDED ------------------------- ------------------------- (Unaudited) (Unaudited) OCT. 25, Oct. 26, OCT. 25, Oct. 26, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Sales ............................. $ 1,286,223 $ 1,255,606 $ 3,558,739 $ 3,440,029 Cost of merchandise sold, including buying and occupancy costs ...... 943,473 937,942 2,647,098 2,576,054 ----------- ----------- ----------- ----------- Gross profit ...................... 342,750 317,664 911,641 863,975 Store operating and selling expenses.......................... 282,057 265,963 800,407 766,263 General and administrative expenses 34,520 32,859 99,668 102,041 ----------- ----------- ----------- ----------- Total operating expenses .......... 316,577 298,822 900,075 868,304 ----------- ----------- ----------- ----------- Operating income (loss) ........... 26,173 18,842 11,566 (4,329) Interest expense and other, net ... 1,028 1,280 2,443 4,746 ----------- ----------- ----------- ----------- Income (loss) before income taxes and minority interest ........... 25,145 17,562 9,123 (9,075) Income tax benefit ................ -- -- -- (57,500) Minority interest ................. 1,079 1,050 1,980 1,757 ----------- ----------- ----------- ----------- Net income ........................ $ 24,066 $ 16,512 $ 7,143 $ 46,668 =========== =========== =========== =========== EARNINGS PER COMMON SHARE: Basic ............................ $ 0.19 $ 0.13 $ 0.06 $ 0.38 Diluted .......................... $ 0.18 $ 0.13 $ 0.06 $ 0.37 =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic ............................ 127,961 124,011 126,138 123,723 Diluted .......................... 132,647 124,790 128,493 124,867 =========== =========== =========== ===========
PAGE 4 OF 6 OFFICEMAX, INC. 3Q03 OPERATING RESULTS NOV. 13, 2003 OFFICEMAX, INC. BUSINESS SEGMENT DATA (In thousands, except per share data)
13 WEEKS ENDED 39 WEEKS ENDED (Unaudited) (Unaudited) OCT. 25, Oct. 26, OCT. 25, Oct. 26, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- DOMESTIC BUSINESS SEGMENT Sales .................................................. $ 1,243,962 $ 1,213,243 $ 3,451,721 $ 3,323,434 Cost of merchandise sold, including buying and occupancy costs ............................ 911,637 905,881 2,567,394 2,486,487 ----------- ----------- ----------- ----------- Gross profit ........................................... 332,325 307,362 884,327 836,947 Operating income (loss) ................................ 24,030 16,835 8,153 (7,470) Net income ............................................. $ 22,945 $ 15,419 $ 5,083 $ 44,840 =========== =========== =========== =========== INTERNATIONAL BUSINESS SEGMENT Sales .................................................. $ 42,261 $ 42,363 $ 107,018 $ 116,595 Cost of merchandise sold, including buying and occupancy costs ............................ 31,836 32,061 79,704 89,567 ----------- ----------- ----------- ----------- Gross profit ........................................... 10,425 10,302 27,314 27,028 Operating income ....................................... 2,143 2,007 3,413 3,141 Net income ............................................. $ 1,121 $ 1,093 $ 2,060 $ 1,828 =========== =========== =========== =========== EARNINGS PER DILUTED SHARE: Domestic Business Segment ............................ $ 0.17 $ 0.12 $ 0.04 $ 0.36 International Business Segment ....................... $ 0.01 $ 0.01 $ 0.02 $ 0.01
PAGE 5 OF 6 OFFICEMAX, INC. 3Q03 OPERATING RESULTS NOV. 13, 2003 OFFICEMAX, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
OCT. 25, JAN. 25, 2003 2003 -------------------------- ASSETS (Unaudited) Current assets: Cash and equivalents $ 143,346 $ 137,143 Accounts receivable, net of allowances of $1,020 and $1,073, respectively 114,693 90,339 Merchandise inventories 936,313 927,679 Other current assets 34,448 27,585 ----------- ----------- Total current assets 1,228,800 1,182,746 Property and equipment: Buildings and land 36,271 36,133 Leasehold improvements 219,247 183,547 Furniture, fixtures and equipment 669,485 645,466 ----------- ----------- Total property and equipment 925,003 865,146 Less: Accumulated depreciation (628,786) (567,709) ----------- ----------- Property and equipment, net 296,217 297,437 Other assets and deferred charges 15,316 14,763 Goodwill, net of accumulated amortization of $89,757 290,495 290,495 ----------- ----------- $ 1,830,828 $ 1,785,441 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable - trade $ 502,632 $ 437,884 Accrued expenses and other liabilities 196,725 227,022 Accrued salaries and related expenses 47,336 60,190 Taxes other than income taxes 89,864 79,781 Redeemable preferred shares - Series B -- 21,750 Mortgage loan, current portion 133 128 ----------- ----------- Total current liabilities 836,690 826,755 Mortgage loan 1,281 1,390 Other long-term liabilities 152,673 157,587 ----------- ----------- Total liabilities 990,644 985,732 ----------- ----------- Minority interest 20,047 19,264 Shareholders' equity: Common shares 869,405 887,556 Deferred stock compensation (191) (153) Cumulative translation adjustment (3,716) (2,457) Retained deficit (6,722) (13,865) Less: Treasury stock at cost (38,639) (90,636) ----------- ----------- Total shareholders' equity 820,137 780,445 ----------- ----------- $ 1,830,828 $ 1,785,441 =========== ===========
PAGE 6 OF 6 OFFICEMAX, INC. 3Q03 OPERATING RESULTS NOV. 13, 2003 OfficeMax's accompanying news release includes non-GAAP earnings per share results for the Company's third quarter and 39-weeks ended Oct. 25, 2003 and the comparative periods from fiscal 2002. For the third quarter and 39-weeks, the results include the effect of a normalized tax provision excluding a change in the Company's valuation allowance for deferred tax assets. This information is included to provide operating results on a more comparable basis to OfficeMax's historical operating results, its industry peers and estimates projected by securities analysts. Below is a reconciliation of the Company's GAAP earnings per share results to the non-GAAP measures presented in the release:
(In thousands, except per share data) 13 Weeks Ended 39 Weeks Ended ----------------------------------------- ------------------------------------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Oct. 25, 2003 EPS Oct. 26, 2002 EPS Oct. 25, 2003 EPS Oct. 26, 2002 EPS ------------- ----- ------------- ----- ------------- ----- ------------- ------ GAAP net income $ 24,066 $0.18 $ 16,512 $0.13 $ 7,143 $0.06 $ 46,668 $0.37 Income tax benefit -- -- -- -- -- -- (57,500) (0.46) Estimated tax benefit (expense) (9,506) (0.07) (6,522) (0.05) (2,821) (0.03) 4,279 0.04 -------- ----- -------- ----- -------- ----- -------- ------ Non-GAAP net income (loss) $ 14,560 $0.11 $ 9,990 $0.08 $ 4,322 $0.03 $ (6,553) $(0.05) ======== ===== ======== ===== ======== ===== ======== ====== Weighted average number of common shares outstanding 132,647 124,790 128,493 124,867