SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2002
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________.
Commission file number 1-13380
-------
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
OFFICEMAX, INC.
----------------------
(Exact name of issuer)
3605 Warrensville Center Road, Shaker Heights, Ohio 44122
---------------------------------------------------------
(Address of principal executive offices) (zip code)
(216) 471-6900
----------------------------------------------------
(Registrant's telephone number, including area code)
OFFICEMAX, INC.
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
Item 1 Not Applicable
Item 2 Not Applicable
Item 3 Not Applicable
Item 4 Financial Statements of the Plan
The Financial Statements of The OfficeMax, Inc. 401(k) Savings
Plan for the fiscal year ended December 31, 2002, together
with the report of KPMG LLP, independent accountants, are
attached to this Annual Report on Form 11-K as Annex A, and
are by specific reference incorporated herein and filed as a
part hereof. The Financial Statements and the Notes thereto
are presented in lieu of the financial statements required by
Items 1, 2 and 3 of Form 11-K and were prepared in accordance
with the financial reporting requirements of the Employee
Retirement Income Security Act of 1974.
Exhibit See Exhibit Index on page 3 of this report
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
OFFICEMAX, INC.
PLAN ADMINISTRATOR OF
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
---------------------------------------
Date: June 27, 2003 By: /s/ Michael F. Killeen
-----------------------------------------------------
Michael F. Killeen
Senior Executive Vice President, Chief Financial Officer
2
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit
- ----------- ----------------------
23.1 Independent Auditor's Consent
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
3
Annex A
to
Form 11-K
THE OFFICEMAX, INC.
401(K) SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 2002 AND 2001
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
- --------------------------------------------------------------------------------
Page
----
Report of Independent Auditors 3
Financial Statements:
Statements of Net Assets Available for Plan Benefits
at December 31, 2002 and 2001 4
Statements of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 2002 5
Notes to Financial Statements 6-13
Supplemental Schedules:
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year) -
December 31, 2002 14
Schedule H, Line 4 (j) - Schedule of Reportable Transactions
for the year ended December 31, 2002 15
Note: All other schedules required by the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because the conditions
under which they are required are not present.
2
INDEPENDENT AUDITORS' REPORT
To the Participants and Administrator of
the OfficeMax, Inc. 401(k) Savings Plan
We have audited the accompanying statement of net assets available for benefits
of the OfficeMax, Inc. 401(k) Savings Plan as of December 31, 2002, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2002. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The accompanying statement of net
assets available for benefits of the OfficeMax, Inc. 401(k) Savings Plan as of
December 31, 2001, was audited by other auditors whose report thereon dated June
14, 2002, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2002, and the changes in net assets available for benefits for the
year ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Schedule H,
line 4i-schedule of assets (held at end of year), Schedule H, line 4j-schedule
of reportable transactions are presented for the purpose of additional analysis
and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KMPG LLP
- -------------
KMPG LLP
Cleveland, Ohio
June 16, 2003
3
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 2002 AND 2001
- -------------------------------------------------------------------------------
2002 2001
---------------- ----------------
Assets:
Investments $ 30,072,224 $ 27,996,778
Liabilities:
Amounts due for securities - 139,845
---------------- ----------------
Net assets available for
plan benefits $ 30,072,224 $ 27,856,933
================ ================
The accompanying notes are an integral part of these financial statements.
4
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
- -------------------------------------------------------------------------------
Additions:
Additions to net assets attributed to:
Interest and dividend income $ 608,145
Contributions:
Participant 6,308,466
Employer 1,602,547
Rollovers into plan 263,072
----------------
Total additions 8,782,230
----------------
Deductions:
Deductions from net assets attributed to:
Withdrawals and terminations 3,938,591
Administrative expenses 35,336
----------------
Total deductions 3,973,927
----------------
Net realized and unrealized depreciation
in the fair value of investments (2,593,012)
----------------
Net increase 2,215,291
Net assets available for plan benefits:
Beginning of year 27,856,933
----------------
End of year $ 30,072,224
================
The accompanying notes are an integral part of these financial statements.
5
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 1 - Summary Description of the Plan
The following description of The OfficeMax, Inc. 401(k) Savings Plan (the
"Plan") provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan administered by the Board of Directors
of OfficeMax, Inc. (the "Company" or the "Employer"). Since February 1, 2002,
the assets of the Plan have been maintained and transactions therein have been
executed by Franklin Templeton Bank and Trust, F.S.B. (the "Trustee"). The
assets of the Plan are the only assets maintained within the Master Trust. The
Plan has elected to report the assets of the Master Trust as Plan assets that
are not part of the Master Trust. The Plan is subject to the provisions of the
Employee Retirement Income Security Act ("ERISA") of 1974.
Eligibility
Generally, all full and part-time employees of the Company are eligible to
participate in the Plan. Participation dates are January 1, April 1, July 1, and
October 1 of each year. Employees are eligible to participate in the Plan on the
first participation date on or after three consecutive months of employment with
250 hours of continuous service and attaining age 21. As of January 1, 2000, the
Plan was expanded to include resident Puerto Rican employees.
Contributions
Eligible employees may elect to contribute a portion of their compensation
consisting of base pay and overtime. Employees may contribute between 2% and 15%
of their compensation (employees that are residents of Puerto Rico may
contribute between 2% and 10% of their compensation), subject to statutory
limitations. Additionally, participants may rollover distributions from other
qualified pension or profit sharing plans.
For the years ended December 31, 2002 and 2001, the Employer made matching
contributions in the Company's common stock equal to 50% of the first 3% of
eligible participant contributions. The amount of Employer contribution made
with respect to any plan year, if any, shall be determined solely by action of
the Board of Directors.
6
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Participant Accounts
Separate total accounts are established and maintained for each participant in
the Plan and consist of the following: i) an employee contribution account; ii)
an Employer contribution account; and iii) a rollover account, if applicable.
Within each of the accounts listed, separate records are maintained reflecting
contributions, investment gains and losses, distributions, loans, withdrawals,
and transfers of the portion of each account invested in available funds of the
Trustee. The net value of each participant account is established each day the
New York Stock Exchange is open for business. Allocations of investment gains
and losses are based on participant account balances, as defined in the Plan.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Vesting
Participants are immediately vested in their contributions plus actual earnings
or losses thereon. Vesting in the Employer's matching contribution plus actual
earnings or losses thereon is based on years of continuous service as follows.
Years of Service Vesting Percentage
---------------- ------------------
Less than 2 0%
2 50%
3 100%
Investment Options
Participants may direct their contributions in any of the following investment
options:
Franklin Stable Value Fund - A collective investment fund designed to
provide a high level of income by investing in high-quality investment
contracts issued or sponsored by insurance companies, banks, and other
financial institutions.
PIMCO Total Return II Institutional Fund - Designed to seek maximum total
return through the investment of at least 65% of its assets in a
diversified portfolio of fixed income instruments of varying maturities.
The fund may invest only in investment grade U.S. dollar denominated
securities.
Franklin Capital Growth Fund - Designed to seek capital appreciation
through investments in equity securities diversified across a wide range
of industries. The fund may invest in securities of any size market
capitalization, including a significant portion of its assets in companies
falling within the small-cap and mid-cap ranges.
7
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Franklin Income Fund - Designed to maximize income while maintaining
prospects for capital appreciation. This fund has a diversified portfolio
of stocks, bonds and cash equivalents from the United States and abroad,
offering the steady income potential of bonds and the growth opportunities
of stocks.
MFS Total Return Fund - Designed to maximize capital appreciation by
investing between 40% and 75% of its assets in common stock and related
securities. The fund also has a target allocation of 25% of assets in
fixed income securities.
Franklin Balance Sheet Investment Fund - Designed to seek high total
return through capital appreciation and income. The fund invests in equity
securities of companies that represent intrinsic values not reflected in
the company's current market value.
Gabelli Asset Fund - Designed to provide growth of capital and current
income by primarily investing in common stocks, preferred stocks and may
also invest in securities which may be converted into common stocks. The
fund may also invest in foreign securities.
Templeton Foreign Fund - Designed to seek long-term capital growth by
investing mainly in equity securities of companies located outside the
United States, including emerging markets.
PIMCO Stocks PLUS Institutional Fund - Designed to exceed the total return
of the Standard & Poor's 500 by investing under normal circumstances
substantially all of its assets in Standard & Poor's 500 derivatives,
backed by a portfolio of fixed income instruments. Investments consist of
common stocks, options, futures, options on futures and swaps.
Oppenheimer Global Fund - Designed to seek capital appreciation by mainly
investing in common stocks of companies in the United States and foreign
companies. The fund can invest without limit in foreign securities and can
invest in any country, including countries with developed or emerging
markets.
OfficeMax, Inc. Common Share Fund - Designed to offer employees the
opportunity to invest in the common stock of OfficeMax, Inc., which is
listed on the New York Stock Exchange and traded under the symbol OMX. All
stock is purchased on the open market at current market prices.
Participants may specify, in 1% increments from 0% to 100%, the percentage of
all future contributions to be invested in each investment fund. There is no
limit as to the number of changes participants may make to their investment
options.
The Plan's mutual fund assets have been maintained and transactions therein have
been executed by the Trustee.
8
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Loans to Participants
The Plan includes loan provisions for eligible participants. Participants may
borrow from their investment fund accounts a minimum of $1,000 up to a maximum
equal to the lesser of $50,000 or one-half of the current value of their vested
account balance. The interest rate on participant loans is equal to the prime
rate published in the Wall Street Journal on the first day of the calendar
quarter in which the loan is effective plus one percent, and must be repaid in
not more than five years.
Current employees pay principal and interest on outstanding loans ratably
through payroll deductions. Participants who retire, or are terminated prior to
meeting their loan obligation, have the option to pay the outstanding balance in
total as of the date of retirement, or termination, or have the loan balance
outstanding considered a distribution, subject to applicable tax laws.
Plan Withdrawals and Terminations
Active participants are permitted to withdraw all or a portion of their vested
accounts upon attaining the age of 59-1/2.
Participant amounts are payable upon retirement, death or other termination of
employment and are made in a lump sum. Payment can be directed to the
participant via direct rollover to an IRA or other qualified plan. If a
participant's account balance exceeds $5,000, the participant may elect to defer
receipt until retirement or such later date as specified by the Plan.
It is possible that a participant will receive less than the aggregate total
amount of contributions should the market value of the funds decrease.
Forfeited Accounts
At December 31, 2002 and 2001, forfeited non-vested accounts totaled $76,066 and
$20,568 respectively. Forfeited accounts are first applied to restore amounts
previously forfeited by participants when required by the Plan and any remaining
amounts are used to reduce future Employer contributions.
9
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Plan Termination
Although the Company has not expressed any intent to terminate the Plan, it
reserves the right to do so at any time. In the event of termination of the
Plan, the interest of each participant with respect to Company contributions
will vest immediately and be non-forfeitable and participants will receive a
total distribution of their participant account.
Note 2 - Summary of Significant Accounting Policies
Method of Accounting
The financial statements of the Plan are prepared on the accrual basis in
accordance with the accounting principles generally accepted in the United
States of America.
Use of Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenue and expenses during the
reporting period. Actual results could differ from these estimates and
assumptions.
Investments
Plan investments are stated at fair market value. Mutual fund investments are
valued at net asset value, representing the value at which shares of the fund
may be purchased or redeemed, which represents fair market value. The loan fund
is valued on the basis of undiscounted estimated future receipts. Investments in
the OfficeMax Common Stock Fund are valued at the closing price of the Company's
Common Shares as reported on the New York Stock Exchange Consolidated
Transaction Reporting System.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis.
The change in the difference between the current fair market value of
investments at the end of the year, less the current fair market value of
investments at the beginning of the year (or acquisition cost, if acquired
during the year), is reflected in the statement of changes in net assets
available for plan benefits as net realized and unrealized appreciation
(depreciation) in fair value of investments. Gains and losses on investments
that were both bought and sold during the year are also included in net realized
and unrealized appreciation (depreciation) in fair value of investments.
10
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Payment of Benefits
Withdrawals and terminations are recorded when paid. For the years ended
December 31, 2002 and 2001 no withdrawals or terminations were transacted but
not yet paid.
Contributions
Employee and Employer contributions are recorded in the period during which the
Company makes the related payroll deductions from the Plan participant's
earnings.
Administrative Expenses
Under the provisions of the Plan, the Company may elect to pay certain expenses
on behalf of the Plan. Such expenses include, but are not limited to, the
compensation of consultants, accountants, legal counsel and other specialists.
During 2002 and 2001, the Company elected to pay certain of these expenses. In
addition, the Plan incurred administrative expenses of $35,336 and $31,339 for
the years ended December 31, 2002 and 2001, respectively.
Note 3 - Tax Status of the Plan
The Company received a favorable determination letter from the Internal Revenue
Service for the Plan dated September 17, 1996 that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has been amended since receiving the letter and has applied for an updated
determination letter of which a response has not yet been received from the IRS.
The Company believes that the Plan is designed and is currently being operated
in compliance with applicable requirements of the IRC and therefore, no
provision for income taxes has been included in the Plan's financial statements.
11
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 4 - Investments
Investments that represent 5 percent or more of the Plan's net assets are as
follows:
December 31, December 31,
2002 2001
----------------- ------------------
Franklin Stable Value Fund $ 8,310,611 $ -
Franklin Capital Growth Fund 3,588,811 -
MFS Total Return Fund 2,906,332 -
PIMCO Stock Plus Institutional Fund 4,887,209 -
Dreyfus-Certus Stable Value Fund - 3,795,539
Dreyfus LifeTime Portfolios, Inc. -
Growth and Income Portfolio - 3,552,214
Dreyfus LifeTime Portfolios, Inc. -
Growth Portfolio - 2,679,352
Dreyfus Disciplined Stock Fund - 5,334,662
Dreyfus New Leaders Fund, Inc. - 5,281,798
OfficeMax, Inc. Common Share Fund
(participant-directed) 1,680,857 1,628,486
OfficeMax, Inc. Common Share Fund
(nonparticipant-directed) 5,167,652 3,884,739
During 2002, the Plan's investments, including gains and losses on investments
bought and sold as well as held during the year, appreciated (depreciated) in
value as follows:
Common Stock $ 677,425
Mutual Funds (3,270,437)
-----------
Total $(2,593,012)
===========
12
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 5 - Nonparticipant-Directed Investments
Information about the significant components of the changes in net assets
relating to the nonparticipant-directed investments is as follows:
Year Ended
December 31, 2002
-----------------
Changes in Net Assets:
Employer contributions $ 1,602,547
Interest income 1,971
Net realized and unrealized
appreciation in fair value of
investments 435,208
Withdrawals and terminations (756,813)
-----------
Net increase in assets $ 1,282,913
===========
Note 6 - Related-Party Transactions
Certain Plan investments and shares of the mutual funds are managed by Franklin
Templeton Bank and Trust, the trustee of the Plan. Therefore, transactions in
these mutual funds qualify as party-in-interest transactions.
Note 7 - Subsequent Events
As of January 1, 2003, Employees may contribute between 0% and 50% of their
compensation, subject to statutory limitations.
13
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
SCHEDULE H, LINE 4 (I) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2002
- -------------------------------------------------------------------------------
SECURITY CURRENT
Identity of Issue Description Cost (a) Value
- ---------------------------------------------------------------------------------------------------------------------------------
Participation in registered Franklin Stable Value Fund $ 8,310,611
investment funds PIMCO Total Return II Institutional Fund 676,738
Franklin Income Fund 171,159
Franklin Capital Growth Fund 3,588,811
Franklin Balance Sheet Investment Fund 825,688
Templeton Foreign Fund 111,383
MFS Total Return Fund 2,906,332
Gabelli Asset Fund 412,743
PIMCO Stock Plus Institutional Fund 4,887,209
Oppenheimer Global Fund 302,159
Participation in OfficeMax, Inc. OfficeMax, Inc. Common Share Fund $ 6,066,185 6,848,509
common stock
Participant Loans Loans to participants, varying maturity dates, 5.25% - 10.50% 1,030,882
--------------
TOTAL OF ASSETS (HELD AT END OF YEAR) $ 30,072,224
==============
(a) Cost omitted for participant-directed investments in registered investment
funds and loans to participants
14
THE OFFICEMAX, INC. 401(K) SAVINGS PLAN
SCHEDULE H, LINE 4 (J) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
- -------------------------------------------------------------------------------
Purchase Selling Lease
Identity of Party Involved Description of Asset Price Price Rental
- -------------------------- -------------------- -------- ------- ------
Series of Transactions:
Bank of New York Dreyfus Certus Stable Value Fund $ - $ 3,788,755 $ -
Dreyfus Lifetime Portfolios, Inc. -
Growth and Income Portfolio $ - $ 3,540,888 $ -
Dreyfus Lifetime Portfolios, Inc. -
Growth Portfolio $ - $ 2,596,198 $ -
Dreyfus Disciplined Stock Fund $ - $ 5,138,203 $ -
Dreyfus New Leaders Fund, Inc. $ - $ 5,251,029 $ -
Franklin Templeton Bank
Franklin Stable Value Fund $ 4,775,040 $ - $ -
Franklin Capital Growth Fund $ 5,247,507 $ - $ -
MFS Total Return Fund $ 3,540,889 $ - $ -
PIMCO Stock Plus Institutional Fund $ 7,734,401 $ - $ -
OfficeMax, Inc. Common Share Fund $ 467,793 (a) $ 4,352 (b) $ -
Expense Cost of Current Value Net
Identity of Party Involved Description of Asset Incurred Asset of Asset Gain/(Loss)
- -------------------------- -------------------- --------- ------- ------------- -----------
Series of Transactions:
Bank of New York Dreyfus Certus Stable Value Fund $ - $ 3,788,755 $ 3,788,755 $ -
Dreyfus Lifetime Portfolios, Inc. -
Growth and Income Portfolio $ - $ 3,873,414 $ 3,540,888 $ (332,526)
Dreyfus Lifetime Portfolios, Inc. -
Growth Portfolio $ - $ 3,182,712 $ 2,596,198 $ (586,514)
Dreyfus Disciplined Stock Fund $ - $ 5,604,128 $ 5,138,203 $ (465,925)
Dreyfus New Leaders Fund, Inc. $ - $ 5,912,335 $ 5,251,029 $ (661,306)
Franklin Templeton Bank
Franklin Stable Value Fund $ - $ - $ - $ -
Franklin Capital Growth Fund $ - $ - $ - $ -
MFS Total Return Fund $ - $ - $ - $ -
PIMCO Stock Plus Institutional Fund $ - $ - $ - $ -
OfficeMax, Inc. Common Share Fund $ - $ 2,480 $ 4,352 $ 1,873
(a) aggregate of 5 transactions
(b) aggregate of 1 transaction
Reportable Transactions for the year ended December 31, 2002 represent a series
of transactions involving a nonparticipant-directed issue which exceeded 5% of
assets available for plan benefits at the beginning of the year.
15