Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - MAPLEBY HOLDINGS MERGER Corp | d390719d8k.htm |
Exhibit 99.1
| OfficeMax Incorporated 263 Shuman Boulevard Naperville, IL 60563 |
| |
News Release
| Investor Contacts | Media Contact | |||||
| Mike Steele | Tony Giuliano | Julie Treon | ||||
| 630 864 6826 | 630 864 6800 | 630 864 6155 | ||||
For Immediate Release: August 2, 2012
OFFICEMAX REPORTS SECOND QUARTER 2012 FINANCIAL RESULTS
ACHIEVES YEAR-OVER-YEAR IMPROVEMENT IN OPERATING INCOME AND EPS
| • | Reiterates 2012 Outlook on Operating Income Margin |
| • | Evaluating Options to Allocate Capital and Simplify Balance Sheet |
| • | Resumes Payment of Quarterly Cash Dividend at $0.02 per Share of Common Stock |
Naperville, Ill. – OfficeMax® Incorporated (NYSE:OMX), a leader in office supplies, technology and services, today announced the results for its fiscal second quarter ended June 30, 2012.
Consolidated Results
Reported Results
Total sales were $1,602.4 million in the second quarter of 2012, a decrease of 2.7% from the second quarter of 2011. For the second quarter of 2012, OfficeMax reported operating income of $23.1 million, compared to $4.0 million in the second quarter of 2011, and net income available to OfficeMax common shareholders of $10.7 million, or $0.12 per diluted share, compared to a net loss of $3.0 million, or $0.04 per diluted share, in the second quarter of 2011.
“Our teams are successfully implementing fundamental improvements in each of our businesses to drive profitable growth,” said Ravi Saligram, President and CEO of OfficeMax. “In particular, we are making good progress in our Contract business and Digital initiatives.”
Added Saligram, “As we gain traction in executing against our strategic plan, we are evaluating options for capital allocation to enhance shareholder value. As a first step, we are pleased to reinstate a quarterly dividend which reflects the progress we are making, and our confidence in the future of OfficeMax.”
Adjusted Results
Excluding the impact of changes in foreign exchange rates, the impact of stores closed and opened, and the shift in weeks resulting from our fiscal calendar, adjusted total sales in the second quarter of 2012 increased 0.3% from the second quarter of 2011.
| (in millions, except per-share amounts) |
2Q12 | 2Q11 | YTD12 | YTD11 | ||||||||||||
| Reported sales |
$ | 1,602.4 | $ | 1,647.6 | $ | 3,475.3 | $ | 3,510.6 | ||||||||
| Reported sales decline (from prior year period) |
-2.7 | % | -1.0 | % | ||||||||||||
| Adjusted sales growth (from prior year period)* |
0.3 | % | 0.2 | % | ||||||||||||
| Gross profit |
$ | 409.5 | $ | 425.1 | $ | 892.3 | $ | 899.6 | ||||||||
| Gross profit margin |
25.6 | % | 25.8 | % | 25.7 | % | 25.6 | % | ||||||||
| Reported operating income |
$ | 23.1 | $ | 4.0 | $ | 40.9 | $ | 32.6 | ||||||||
| Adjusted operating income* |
$ | 23.1 | $ | 17.9 | $ | 66.2 | $ | 46.5 | ||||||||
| Adjusted operating income margin* |
1.4 | % | 1.1 | % | 1.9 | % | 1.3 | % | ||||||||
| Adjusted diluted income per common share* |
$ | 0.12 | $ | 0.07 | $ | 0.35 | $ | 0.20 | ||||||||
| * | Adjusted sales growth, 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. |
1
Contract Segment Results
Contract segment sales decreased 0.2% compared to the prior year period to $878.8 million in the second quarter of 2012 (an increase of 1.0% on a local currency basis). This decrease reflected a U.S. Contract operations sales increase of 2.6% and an international Contract operations sales decrease of 6.0% in U.S. dollars (a decrease of 2.3% on a local currency basis).
| (in millions) |
2Q12 | 2Q11 | YTD12 | YTD11 | ||||||||||||
| Sales |
$ | 878.8 | $ | 880.3 | $ | 1,839.4 | $ | 1,806.0 | ||||||||
| Sales growth or decline (from prior year period) |
-0.2 | % | 0.0 | % | 1.9 | % | -2.0 | % | ||||||||
| Gross profit margin |
22.3 | % | 22.3 | % | 22.4 | % | 22.2 | % | ||||||||
| Segment income margin |
2.9 | % | 2.0 | % | 2.9 | % | 1.5 | % | ||||||||
| Segment income |
$ | 25.7 | $ | 17.4 | $ | 52.8 | $ | 26.4 | ||||||||
Contract segment gross profit margin in the second quarter of 2012 was 22.3%, flat with the second quarter of 2011, reflecting lower supply chain costs, offset by a slight decline in customer margins. Contract segment operating, selling and general and administrative expenses as a percentage of sales decreased to 19.4% in the second quarter of 2012 from 20.3% in the second quarter of 2011 primarily due to lower payroll expense due to reorganizations and facility closures in 2011, partially offset by higher incentive compensation expense. Contract segment income was $25.7 million, or 2.9% of sales, in the second quarter of 2012 compared to $17.4 million, or 2.0% of sales, in the second quarter of 2011.
Retail Segment Results
Retail segment sales decreased 5.7% to $723.6 million in the second quarter of 2012 compared to the second quarter of 2011, reflecting a same-store sales decrease of 1.8% due to unfavorable foreign currency translation and reduced store transactions.
| (in millions) |
2Q12 | 2Q11 | YTD12 | YTD11 | ||||||||||||
| Sales |
$ | 723.6 | $ | 767.3 | $ | 1,635.9 | $ | 1,704.6 | ||||||||
| Same-store sales decline (from prior year period) |
-1.8 | % | -0.5 | % | -2.0 | % | -0.9 | % | ||||||||
| Gross profit margin |
29.5 | % | 29.9 | % | 29.4 | % | 29.2 | % | ||||||||
| Segment income margin |
0.4 | % | 1.0 | % | 1.6 | % | 2.0 | % | ||||||||
| Segment income |
$ | 2.8 | $ | 8.0 | $ | 25.7 | $ | 33.6 | ||||||||
Retail segment gross profit margin decreased to 29.5% in the second quarter of 2012 from 29.9% in the second quarter of 2011, due to lower gross profit margins in Mexico and higher freight and delivery expense in the U.S., which were partially offset by increased customer margins in the U.S. Retail segment operating, selling and general and administrative expenses as a percentage of sales were 29.1% in the second quarter of 2012 and 28.9% in the second quarter of 2011. The increase was due primarily to higher incentive compensation expense, partially offset by lower credit card processing fees and lower advertising expense. Retail segment income was $2.8 million, or 0.4% of sales, in the second quarter of 2012 compared to $8.0 million, or 1.0% of sales, in the second quarter of 2011.
OfficeMax ended the second quarter of 2012 with a total of 957 Retail stores, consisting of 872 Retail stores in the U.S. and 85 Retail stores in Mexico. During the second quarter of 2012, OfficeMax opened two stores in Mexico, and closed two stores in the U.S. and one 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 Retail and Contract segments. Corporate and Other segment operating, selling and general and administrative expenses was $5.5 million in the second quarter of 2012 compared to $7.5 million in the second quarter of 2011. The decrease was primarily due to lower pension expense.
2
Balance Sheet and Cash Flow
As of June 30, 2012, OfficeMax had total debt of $237.4 million, excluding $1,470 million of non-recourse debt related to timber securitization notes that have recourse limited to the timber installment notes receivable and related guarantees. OfficeMax repaid a $35 million medium-term note at maturity in June 2012.
During the first six months of 2012, OfficeMax generated $82.1 million of cash from operations and invested $32.6 million for capital expenditures.
Outlook
Third Quarter 2012
Based on the current environment, OfficeMax anticipates that total company sales for the third quarter will be approximately flat, to slightly higher than, the third quarter of 2011, including the projected unfavorable impact of foreign currency translation. Additionally, OfficeMax anticipates that for the third quarter of 2012, adjusted operating income margin will be approximately in line with the 2.3% for the prior year period.
Full Year 2012
For the full year 2012, OfficeMax anticipates that total company sales will be approximately in line with the prior year, including the projected unfavorable impact of foreign currency translation in 2012 and excluding the additional week in 2011, which generated $86 million in sales. For the full year 2012, OfficeMax anticipates that adjusted operating income margin will be approximately in line with, to slightly higher than, the 1.7% for the prior year.
“We have continued to streamline and contain costs in a challenging economic environment, which puts us in a better position to take steps to address our capital structure,” said Bruce Besanko, EVP, Chief Financial Officer and Chief Administrative Officer of OfficeMax. “We are also continuing to explore ways to simplify our balance sheet and to leverage the value of our operating and non-operating assets.”
The company’s full year 2012 outlook also includes the following:
| • | Capital expenditures of approximately $75-85 million, primarily related to maintenance and investments in IT, ecommerce, and infrastructure improvements and upgrades |
| • | Depreciation & amortization of approximately $75-85 million |
| • | Pension expense of approximately $3 million and cash contributions to the frozen pension plans of $21-28 million |
| • | Interest expense of approximately $69-72 million and interest income of approximately $42-45 million |
| • | An adjusted effective tax rate approximately in line with the adjusted effective tax rate in the full year 2011 |
| • | Cash flow from operations exceeding capital expenditures |
| • | A net reduction in Retail store count for the year with up to 35 store closures and 1-2 store openings in the U.S., as well as 8-10 store openings and 1-2 store closures in Mexico |
Quarterly Dividend Reinstated
OfficeMax also announced today that its board of directors has reinstated the payment of quarterly cash dividends on the company’s common stock, given progress in executing its strategic plan to achieve sustainable, profitable growth. The first quarterly dividend following this decision will be $0.02 per share, or $0.08 per share on an annualized basis, payable on August 31, 2012, to shareholders of record as of the close of business on August 15, 2012. The company suspended its dividend to shareholders of common stock on December 18, 2008. The board and management are continuing to evaluate additional options for capital allocation.
Forward-Looking Statements
Certain statements made in this press release and other written or oral statements made by or on behalf of the company constitute “forward-looking statements” within the meaning of the federal securities laws, including statements regarding the company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future. Management believes that these forward-looking statements are reasonable. However, the company cannot guarantee that the macroeconomy will perform within the assumptions underlying its projected outlook; that its initiatives will be successfully executed and produce the results underlying its expectations, due to the uncertainties inherent in new initiatives, including customer acceptance,
3
unexpected expenses or challenges, or slower-than-expected results from initiatives; or that its actual results will be consistent with the forward-looking statements and you should not place undue reliance on them. These statements are based on current expectations and speak only as of the date they are made. The company undertakes 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 the company that may cause results to differ from expectations are included in the company’s Annual Report on Form 10-K for the year ended December 31, 2011, under Item 1A “Risk Factors”, and in the company’s other filings with the SEC.
Conference Call Information
OfficeMax will host a webcast and conference call with analysts and investors to review its second quarter 2012 financial results today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The live audio webcast of the conference call can be accessed via the Internet by visiting the OfficeMax website at investor.officemax.com. The webcast and a podcast will be archived and available online for one year following the call and will be posted on the “Presentations” page located within the “Investors” section of the OfficeMax website.
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, in-store print and document services through OfficeMax ImPress®, technology products and solutions, and furniture to businesses and consumers. OfficeMax customers are served by approximately 29,000 associates through e-commerce, more than 900 stores in the U.S. and Mexico, direct sales and catalogs. OfficeMax has been named one of the 2012 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.
# # #
4
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(thousands)
| June 30, 2012 |
December 31, 2011 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 444,504 | $ | 427,111 | ||||
| Restricted cash |
49,562 | — | ||||||
| Receivables, net |
519,304 | 558,635 | ||||||
| Inventories |
773,771 | 821,999 | ||||||
| Deferred income taxes and receivables |
40,564 | 63,382 | ||||||
| Other current assets |
72,814 | 67,847 | ||||||
|
|
|
|
|
|||||
| Total current assets |
1,900,519 | 1,938,974 | ||||||
| Property and equipment: |
||||||||
| Property and equipment |
1,297,756 | 1,308,637 | ||||||
| Accumulated depreciation |
(945,013 | ) | (943,701 | ) | ||||
|
|
|
|
|
|||||
| Property and equipment, net |
352,743 | 364,936 | ||||||
| Intangible assets, net |
81,026 | 81,520 | ||||||
| Timber notes receivable |
849,688 | 899,250 | ||||||
| Deferred income taxes |
373,397 | 370,439 | ||||||
| Other non-current assets |
426,020 | 414,156 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 3,983,393 | $ | 4,069,275 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of debt |
$ | 10,113 | $ | 38,867 | ||||
| Accounts payable |
607,421 | 654,918 | ||||||
| Income taxes payable |
2,803 | 9,553 | ||||||
| Accrued liabilities and other |
310,416 | 309,963 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
930,753 | 1,013,301 | ||||||
| Long-term debt, less current portion |
227,281 | 229,323 | ||||||
| Non-recourse debt |
1,470,000 | 1,470,000 | ||||||
| Other long-term obligations: |
||||||||
| Compensation and benefits |
376,297 | 393,293 | ||||||
| Other long-term liabilities |
353,447 | 362,442 | ||||||
|
|
|
|
|
|||||
| Total other long-term liabilities |
729,744 | 755,735 | ||||||
| Noncontrolling interest in joint venture |
32,406 | 31,923 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred stock |
28,332 | 28,726 | ||||||
| Common stock |
216,560 | 215,397 | ||||||
| Additional paid-in capital |
1,018,570 | 1,015,374 | ||||||
| Accumulated deficit |
(485,275 | ) | (500,843 | ) | ||||
| Accumulated other comprehensive loss |
(184,978 | ) | (189,661 | ) | ||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
593,209 | 568,993 | ||||||
| Total liabilities and equity |
$ | 3,983,393 | $ | 4,069,275 | ||||
|
|
|
|
|
|||||
5
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands, except per-share amounts)
| Quarter Ended | ||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||
| Sales |
$ | 1,602,399 | $ | 1,647,616 | ||||
| Cost of goods sold and occupancy costs |
1,192,886 | 1,222,553 | ||||||
|
|
|
|
|
|||||
| Gross profit |
409,513 | 425,063 | ||||||
| Operating expenses: |
||||||||
| Operating, selling and general and administrative expenses |
386,425 | 407,126 | ||||||
| Other operating expenses (a) |
— | 13,916 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
386,425 | 421,042 | ||||||
| Operating income |
23,088 | 4,021 | ||||||
|
|
|
|
|
|||||
| Other income (expense): |
||||||||
| Interest expense |
(17,453 | ) | (18,128 | ) | ||||
| Interest income |
10,998 | 10,909 | ||||||
| Other income (expense), net |
(15 | ) | 96 | |||||
|
|
|
|
|
|||||
| (6,470 | ) | (7,123 | ) | |||||
|
|
|
|
|
|||||
| Pre-tax income (loss) |
16,618 | (3,102 | ) | |||||
| Income tax (expense) benefit |
(5,291 | ) | 1,001 | |||||
|
|
|
|
|
|||||
| Net income (loss) attributable to OfficeMax and noncontrolling interest |
11,327 | (2,101 | ) | |||||
| Joint venture results attributable to noncontrolling interest |
(79 | ) | (357 | ) | ||||
|
|
|
|
|
|||||
| Net income (loss) attributable to OfficeMax |
11,248 | (2,458 | ) | |||||
| Preferred dividends |
(529 | ) | (563 | ) | ||||
|
|
|
|
|
|||||
| Net income (loss) available to OfficeMax common shareholders |
$ | 10,719 | $ | (3,021 | ) | |||
|
|
|
|
|
|||||
| Basic income (loss) per common share: |
$ | 0.12 | $ | (0.04 | ) | |||
|
|
|
|
|
|||||
| Diluted income (loss) per common share: |
$ | 0.12 | $ | (0.04 | ) | |||
|
|
|
|
|
|||||
| Weighted Average Shares |
||||||||
| Basic |
86,576 | 85,978 | ||||||
| Diluted |
87,461 | 85,978 | ||||||
| (a) | The second quarter of 2011 included charges recorded in our Retail segment related to store closures in the U.S. of $5.6 million which increased net loss available to OfficeMax common shareholders by $3.4 million or $0.04 per diluted share. The second quarter of 2011 also included severance charges of $8.3 million ($8.0 million in Contract and $0.3 million in Retail) related to reorganizations in Canada, Australia and the U.S. sales and supply chain organizations. The effect of this item increased net loss by $5.6 million, or $0.07 per diluted share for the second quarter of 2011. |
6
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands, except per-share amounts)
| Six Months Ended | ||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||
| Sales |
$ | 3,475,311 | $ | 3,510,617 | ||||
| Cost of goods sold and occupancy costs |
2,583,021 | 2,611,042 | ||||||
|
|
|
|
|
|||||
| Gross profit |
892,290 | 899,575 | ||||||
| Operating expenses: |
||||||||
| Operating, selling and general and administrative expenses |
826,087 | 853,026 | ||||||
| Other operating expenses (a) |
25,266 | 13,916 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
851,353 | 866,942 | ||||||
| Operating income |
40,937 | 32,633 | ||||||
|
|
|
|
|
|||||
| Other income (expense): |
||||||||
| Interest expense |
(35,817 | ) | (36,895 | ) | ||||
| Interest income |
21,817 | 21,929 | ||||||
| Other income, net |
225 | 134 | ||||||
|
|
|
|
|
|||||
| (13,775 | ) | (14,832 | ) | |||||
|
|
|
|
|
|||||
| Pre-tax income |
27,162 | 17,801 | ||||||
| Income tax expense |
(8,920 | ) | (6,669 | ) | ||||
|
|
|
|
|
|||||
| Net income attributable to OfficeMax and noncontrolling interest |
18,242 | 11,132 | ||||||
| Joint venture results attributable to noncontrolling interest |
(1,605 | ) | (1,687 | ) | ||||
|
|
|
|
|
|||||
| Net income attributable to OfficeMax |
16,637 | 9,445 | ||||||
| Preferred dividends |
(1,059 | ) | (1,100 | ) | ||||
|
|
|
|
|
|||||
| Net income available to OfficeMax common shareholders |
$ | 15,578 | $ | 8,345 | ||||
|
|
|
|
|
|||||
| Basic income per common share: |
$ | 0.18 | $ | 0.10 | ||||
|
|
|
|
|
|||||
| Diluted income per common share: |
$ | 0.18 | $ | 0.10 | ||||
|
|
|
|
|
|||||
| Weighted Average Shares |
||||||||
| Basic |
86,459 | 85,673 | ||||||
| Diluted |
87,393 | 86,774 | ||||||
| (a) | The first six months of 2012 includes charges recorded in our Retail segment of $25.3 million related to store closures in the U.S. The cumulative effect of these charges reduced net income by $15.4 million, or $0.18 per diluted share for the first six months of 2012. The first six months of 2011 included charges recorded in our Retail segment related to store closures in the U.S. of $5.6 million which increased net loss available to OfficeMax common shareholders by $3.4 million or $0.04 per diluted share. The first six months of 2011 also included severance charges of $8.3 million ($8.0 million in Contract and $0.3 million in Retail) related to reorganizations in Canada, Australia and the U.S. sales and supply chain organizations. The effect of this item increased net loss by $5.6 million, or $0.06 per diluted share for the first six months of 2011. |
7
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(thousands)
| Six Months Ended | ||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||
| Cash provided by operations: |
||||||||
| Net income attributable to OfficeMax and noncontrolling interest |
$ | 18,242 | $ | 11,132 | ||||
| Items in net income not using cash: |
||||||||
| Depreciation and amortization |
37,266 | 42,555 | ||||||
| Other |
27,209 | 9,181 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Receivables |
40,309 | 6,864 | ||||||
| Inventory |
48,129 | 68,337 | ||||||
| Accounts payable and accrued liabilities |
(47,668 | ) | (87,788 | ) | ||||
| Current and deferred income taxes |
(354 | ) | (2,911 | ) | ||||
| Other |
(40,995 | ) | (20,719 | ) | ||||
|
|
|
|
|
|||||
| Cash provided by operations |
82,138 | 26,651 | ||||||
| Cash used for investment: |
||||||||
| Expenditures for property and equipment |
(32,572 | ) | (28,192 | ) | ||||
| Proceeds from sale of assets |
1,586 | 138 | ||||||
|
|
|
|
|
|||||
| Cash used for investment |
(30,986 | ) | (28,054 | ) | ||||
| Cash used for financing: |
||||||||
| Cash dividends paid |
(1,046 | ) | (1,142 | ) | ||||
| Changes in debt, net |
(30,096 | ) | (2,019 | ) | ||||
| Other |
(1,114 | ) | (3,979 | ) | ||||
|
|
|
|
|
|||||
| Cash used for financing |
(32,256 | ) | (7,140 | ) | ||||
| Effect of exchange rates on cash and cash equivalents |
(1,503 | ) | 4,509 | |||||
| Increase (decrease) in cash and cash equivalents |
17,393 | (4,034 | ) | |||||
| Cash and cash equivalents at beginning of period |
427,111 | 462,326 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | 444,504 | $ | 458,292 | ||||
|
|
|
|
|
|||||
8
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION — OPERATING RESULTS
(unaudited)
(millions, except per-share amounts)
| Quarter Ended | ||||||||||||||||||||||||
| June 30, 2012 | June 25, 2011 | |||||||||||||||||||||||
| As Reported |
Adjustments | As Adjusted |
As Reported |
Adjustments | As Adjusted |
|||||||||||||||||||
| Sales |
$ | 1,602.4 | $ | — | $ | 1,602.4 | $ | 1,647.6 | $ | — | $ | 1,647.6 | ||||||||||||
| Cost of goods sold and occupancy costs |
1,192.9 | — | 1,192.9 | 1,222.5 | — | 1,222.5 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
409.5 | — | 409.5 | 425.1 | — | 425.1 | ||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||
| Operating, selling and general and administrative expenses |
386.4 | — | 386.4 | 407.2 | — | 407.2 | ||||||||||||||||||
| Other operating expenses (a) |
— | — | — | 13.9 | (13.9 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total operating expenses |
386.4 | — | 386.4 | 421.1 | (13.9 | ) | 407.2 | |||||||||||||||||
| Operating income |
23.1 | — | 23.1 | 4.0 | 13.9 | 17.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Other income (expense): |
||||||||||||||||||||||||
| Interest expense |
(17.5 | ) | — | (17.5 | ) | (18.1 | ) | — | (18.1 | ) | ||||||||||||||
| Interest income |
11.0 | — | 11.0 | 10.9 | — | 10.9 | ||||||||||||||||||
| Other income, net |
— | — | — | 0.1 | — | 0.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (6.5 | ) | — | (6.5 | ) | (7.1 | ) | — | (7.1 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Pre-tax income (loss) |
16.6 | — | 16.6 | (3.1 | ) | 13.9 | 10.8 | |||||||||||||||||
| Income tax (expense) benefit |
(5.3 | ) | — | (5.3 | ) | 1.0 | (4.9 | ) | (3.9 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) attributable to OfficeMax and noncontrolling interest |
11.3 | — | 11.3 | (2.1 | ) | 9.0 | 6.9 | |||||||||||||||||
| Joint venture results attributable to noncontrolling interest |
(0.1 | ) | — | (0.1 | ) | (0.3 | ) | — | (0.3 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) attributable to OfficeMax |
11.2 | — | 11.2 | (2.4 | ) | 9.0 | 6.6 | |||||||||||||||||
| Preferred dividends |
(0.5 | ) | — | (0.5 | ) | (0.6 | ) | — | (0.6 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) available to OfficeMax common shareholders |
$ | 10.7 | $ | — | $ | 10.7 | $ | (3.0 | ) | $ | 9.0 | $ | 6.0 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Basic income (loss) per common share: |
$ | 0.12 | $ | — | $ | 0.12 | $ | (0.04 | ) | $ | 0.11 | $ | 0.07 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Diluted income (loss) per common share: |
$ | 0.12 | $ | — | $ | 0.12 | $ | (0.04 | ) | $ | 0.11 | $ | 0.07 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Weighted Average Shares |
||||||||||||||||||||||||
| Basic |
86,576 | 86,576 | 85,978 | 85,978 | ||||||||||||||||||||
| Diluted |
87,461 | 87,461 | 85,978 | 86,951 | ||||||||||||||||||||
Note: Totals may not sum down or across due to rounding
| (a) | The second quarter of 2011 included charges recorded in our Retail segment related to store closures in the U.S. of $5.6 million which increased net loss available to OfficeMax common shareholders by $3.4 million or $0.04 per diluted share for the second quarter of 2011. The second quarter of 2011 also included severance charges of $8.3 million ($8.0 million in Contract and $0.3 million in Retail) related to reorganizations in Canada, Australia and the U.S. sales and supply chain organizations. The effect of this item increased net loss by $5.6 million, or $0.07 per diluted share for the second quarter of 2011. |
9
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION — OPERATING RESULTS
(unaudited)
(millions, except per-share amounts)
| Six Months Ended | ||||||||||||||||||||||||
| June 30, 2012 | June 25, 2011 | |||||||||||||||||||||||
| As Reported |
Adjustments | As Adjusted |
As Reported |
Adjustments | As Adjusted |
|||||||||||||||||||
| Sales |
$ | 3,475.3 | $ | — | $ | 3,475.3 | $ | 3,510.6 | $ | — | $ | 3,510.6 | ||||||||||||
| Cost of goods sold and occupancy costs |
2,583.0 | — | 2,583.0 | 2,611.0 | — | 2,611.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
892.3 | — | 892.3 | 899.6 | — | 899.6 | ||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||
| Operating, selling and general and administrative expenses |
826.1 | — | 826.1 | 853.1 | — | 853.1 | ||||||||||||||||||
| Other operating expenses (a) |
25.3 | (25.3 | ) | — | 13.9 | (13.9 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total operating expenses |
851.4 | (25.3 | ) | 826.1 | 867.0 | (13.9 | ) | 853.1 | ||||||||||||||||
| Operating income |
40.9 | 25.3 | 66.2 | 32.6 | 13.9 | 46.5 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Other income (expense): |
||||||||||||||||||||||||
| Interest expense |
(35.8 | ) | — | (35.8 | ) | (36.9 | ) | — | (36.9 | ) | ||||||||||||||
| Interest income |
21.8 | — | 21.8 | 21.9 | — | 21.9 | ||||||||||||||||||
| Other income, net |
0.2 | — | 0.2 | 0.2 | — | 0.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (13.8 | ) | — | (13.8 | ) | (14.8 | ) | — | (14.8 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Pre-tax income |
27.2 | 25.3 | 52.4 | 17.8 | 13.9 | 31.7 | ||||||||||||||||||
| Income tax expense |
(8.9 | ) | (9.8 | ) | (18.7 | ) | (6.7 | ) | (4.9 | ) | (11.6 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income attributable to OfficeMax and noncontrolling interest |
18.2 | 15.4 | 33.7 | 11.1 | 9.0 | 20.1 | ||||||||||||||||||
| Joint venture results attributable to noncontrolling interest |
(1.6 | ) | — | (1.6 | ) | (1.7 | ) | — | (1.7 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income attributable to OfficeMax |
16.6 | 15.4 | 32.1 | 9.4 | 9.0 | 18.4 | ||||||||||||||||||
| Preferred dividends |
(1.1 | ) | — | (1.1 | ) | (1.1 | ) | — | (1.1 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income available to OfficeMax common shareholders |
$ | 15.6 | $ | 15.4 | $ | 31.0 | $ | 8.3 | $ | 9.0 | $ | 17.3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Basic income per common share: |
$ | 0.18 | $ | 0.18 | $ | 0.36 | $ | 0.10 | $ | 0.10 | $ | 0.20 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Diluted income per common share: |
$ | 0.18 | $ | 0.18 | $ | 0.35 | $ | 0.10 | $ | 0.10 | $ | 0.20 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Weighted Average Shares |
||||||||||||||||||||||||
| Basic |
86,459 | 86,459 | 85,673 | 85,673 | ||||||||||||||||||||
| Diluted |
87,393 | 87,393 | 86,774 | 86,774 | ||||||||||||||||||||
Note: Totals may not sum down or across due to rounding
| (a) | The first six months of 2012 includes charges recorded in our Retail segment of $25.3 million related to store closures in the U.S. The cumulative effect of these charges reduced net income by $15.4 million, or $0.18 per diluted share for the first six months of 2012. The first six months of 2011 included charges recorded in our Retail segment related to store closures in the U.S. of $5.6 million which increased net loss available to OfficeMax common shareholders by $3.4 million or $0.04 per diluted share. The second quarter of 2011 also included severance charges of $8.3 million ($8.0 million in Contract and $0.3 million in Retail) related to reorganizations in Canada, Australia and the U.S. sales and supply chain organizations. The effect of this item increased net loss by $5.6 million, or $0.06 per diluted share for the first six months of 2011. |
10
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONTRACT SEGMENT STATEMENTS OF OPERATIONS
(unaudited)
(millions, except per-share amounts)
| Quarter Ended | ||||||||||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||||||||||
| Sales |
$ | 878.8 | $ | 880.3 | ||||||||||||
| Gross profit |
196.1 | 22.3 | % | 195.9 | 22.3 | % | ||||||||||
| Operating, selling and general and administrative expenses |
170.4 | 19.4 | % | 178.5 | 20.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment income |
$ | 25.7 | 2.9 | % | $ | 17.4 | 2.0 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Six Month Ended | ||||||||||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||||||||||
| Sales |
$ | 1,839.4 | $ | 1,806.0 | ||||||||||||
| Gross profit |
411.4 | 22.4 | % | 401.4 | 22.2 | % | ||||||||||
| Operating, selling and general and administrative expenses |
358.6 | 19.5 | % | 375.0 | 20.7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment income |
$ | 52.8 | 2.9 | % | $ | 26.4 | 1.5 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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 operating items that are not indicative of our core operations such as severance, facility closures and adjustments, and asset impairments. These certain operating items are reported on the other operating expenses line in the Consolidated Statements of Operations.
11
OFFICEMAX INCORPORATED AND SUBSIDIARIES
RETAIL SEGMENT STATEMENTS OF OPERATIONS
(unaudited)
(millions, except per-share amounts)
| Quarter Ended | ||||||||||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||||||||||
| Sales |
$ | 723.6 | $ | 767.3 | ||||||||||||
| Gross profit |
213.4 | 29.5 | % | 229.2 | 29.9 | % | ||||||||||
| Operating, selling and general and administrative expenses |
210.5 | 29.1 | % | 221.2 | 28.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment income |
$ | 2.8 | 0.4 | % | $ | 8.0 | 1.0 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Six Month Ended | ||||||||||||||||
| June 30, 2012 |
June 25, 2011 |
|||||||||||||||
| Sales |
$ | 1,635.9 | $ | 1,704.6 | ||||||||||||
| Gross profit |
480.9 | 29.4 | % | 498.2 | 29.2 | % | ||||||||||
| Operating, selling and general and administrative expenses |
455.2 | 27.8 | % | 464.6 | 27.2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment income |
$ | 25.7 | 1.6 | % | $ | 33.6 | 2.0 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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 operating items that are not indicative of our core operations such as severance, facility closures and adjustments, and asset impairments. These certain operating items are reported on the other operating expenses line in the Consolidated Statements of Operations.
12
OFFICEMAX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP RECONCILIATION — SALES
(unaudited)
(millions)
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, 2012 |
June 25, 2011 |
Percent Change |
June 30, 2012 |
June 25, 2011 |
Percent Change |
|||||||||||||||||||
| Sales as reported |
$ | 1,602.4 | $ | 1,647.6 | -2.7 | % | $ | 3,475.3 | $ | 3,510.6 | -1.0 | % | ||||||||||||
| Less: Unfavorable impact of change in foreign exchange rates (a) |
$ | (17.6 | ) | $ | — | $ | (14.7 | ) | $ | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Sales adjusted for impact of change in foreign exchange rates |
$ | 1,620.0 | $ | 1,647.6 | -1.7 | % | $ | 3,490.0 | $ | 3,510.6 | -0.6 | % | ||||||||||||
| Adjustment for same store and shift in weeks (b) |
$ | (13.4 | ) | $ | (46.4 | ) | $ | (22.6 | ) | $ | (51.5 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Sales adjusted for impact of change in foreign exchange rates and adjustment for same stores and shift in weeks |
$ | 1,606.6 | $ | 1,601.2 | 0.3 | % | $ | 3,467.4 | $ | 3,459.1 | 0.2 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Note: Totals may not sum down due to rounding
| (a) | Computed by assuming constant exchange rates between periods. |
| (b) | Impact from stores closed and opened during 2012 and 2011 and the shift in calendar weeks resulting from reporting fifty-three weeks in fiscal 2011. |
13
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 and operating items that are not indicative of our core operating activities such as severance, facility closure and adjustments, and asset impairments. We also assess the underlying core change in sales excluding the impact of changes in foreign exchange rates, the impact of stores closed and opened, and the shift in weeks resulting from our fiscal calendar. 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 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 preceding tables, we reconcile our non-GAAP financial measures to our reported GAAP financial results for the second quarter and first six months of 2012 and 2011.
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.
14