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OfficeMax Boosts Earnings As Merger Beckons

On the same day the company announced that it had signed a merger agreement with Office Depot, Inc., OfficeMax, Inc. announced that it had posted adjusted net income of $68.5 million, or 78 cents per diluted share, for fiscal 2012 versus $53.3 million, or 61 cents per diluted share, in the fiscal year earlier, which included a benefit of six cents per diluted share due to the additional week in the period. Adjusted operating income in 2012 was $139.2 million versus $118.2 million in the year earlier, which included the benefit of $8 million due to the additional 2011 week of operation.

In unadjusted results, which did not take into considerations such as foreign currency price fluctuation and certain one-time charges, operating income was $24.3 million compared to $86.5 million in 2011, and net income was $414.7 million, or $4.74 per diluted share, compared to net income of $32.8 million, or $0.38 per diluted share in the full year 2011.

Total sales in fiscal 2012 were $6.92 billion, which represented a decrease of 2.8%, the company noted.

In the fourth quarter, adjusted net income was $13.9 million, or 16 cents per diluted share, versus $14.4 million, or 17 cents per diluted share, in the 2011 period. Adjusted operating income in the 2012 quarter was $28.1 million versus $30.4 million in the year earlier period.

Adjusted 2011 fourth quarter figures also include the benefit of $8 million of operating income from the additional week in the 2011 period.

Total sales for the 2012 fourth quarter slipped 7.4% to $1.7 billion, the company pointed out.

Retail segment sales decreased 9.5% in the forth quarter to $815.1 million year over year, reflecting a same-store sales decrease on a local currency basis of 4.1% primarily due to decreased traffic and lower technology product category sales, OfficeMax stated.  The decrease reflected a retail operations comparable store sales decrease of 4.6% in the United States, partially offset by a 0.4% comp increase in Mexico on a local currency basis.

Standard & Poors analyst Michael Souers noted that OfficeMax earnings beat a consensus estimate for the fourth quarter. Earnings had been improved based on product mix and fewer promotions.

OfficeMax ended the 2012 fourth quarter with a total of 941 retail stores, including 851 stores in the U.S. and 90 in Mexico.  In 2012 overall, OfficeMax retail closed 46 stores and opened one in the U.S. while opening 10 stores and closing two in Mexico, the company said.