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
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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