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| OMX > SEC Filings for OMX > Form 10-Q on 6-Nov-2008 | All Recent SEC Filings |
6-Nov-2008
Quarterly Report
Summary
The following discussion contains statements about our future financial performance. These statements are only predictions. Our actual results may differ materially from these predictions. In evaluating these statements, you should review Part II, Item 1A, "Risk Factors" of this Form 10-Q, including "Cautionary and Forward-Looking Statements."
Financial Performance
Sales for the third quarter of 2008 decreased 9.5% to $2,096.3 million from $2,315.2 million in the third quarter of 2007. Year-to-date, sales decreased 7.3% to $6,383.9 million in 2008 from $6,883.9 million in 2007. Gross profit margin decreased by 0.3% of sales to 25.1% of sales for the third quarter of 2008 compared to 25.4% of sales for the third quarter of 2007. For the first nine months of 2008, gross profit margin declined by 0.4% of sales to 25.0% of sales compared to 25.4% of sales in the first nine months of 2007. Net loss for the third quarter of 2008 was $431.9 million, or $5.70 per diluted share compared to net income of $49.9 million, or $0.64 per diluted share in the same period last year. Net loss for the first nine months of 2008 was $1,262.8 million, or $16.69 per diluted share compared to net income of $135.9 million, or $1.74 per diluted share in the same period last year.
Our results for the nine months of 2008 and 2007 include several items which we do not consider to be indicative of our core operating activities, herein referred to as unusual items. These items include:
º •
º During the third quarter of 2008, we recorded a pre-tax impairment
charge of $735.8 million on the Lehman Guaranteed Installment Note.
This impairment charge, recorded in the Corporate and Other segment,
is included in the caption "Goodwill and other asset impairments" in
the Consolidated Statements of Income. In addition, we also recorded
the ongoing interest expense on the Lehman Guaranteed Securitization
Notes, while impairing $18.2 million of accrued interest receivable
related to the Lehman Guaranteed Installment Note. The interest
receivable impairment was included in the caption "Interest income" in
the Consolidated Statements of Income. These charges resulted in a
reduction of net income of $460.7 million, or $6.06 per diluted share
for the quarter. For information regarding this impairment charge see
our discussion of timber notes under the heading "Timber Notes" in
this section.
º •
º During the second quarter of 2008, we recorded estimated pre-tax
impairment charges of $935.3 million related to goodwill and other
assets, a portion of which was reflected in each of our Contract and
Retail segments. These non-cash charges resulted in a reduction in net
income of $909.3 million, or $11.99 per diluted share for the first
nine months of 2008 and were included in the caption "Goodwill and
other asset impairments" in the Consolidated Statements of Income.
º •
º During the second quarter of 2008, we recorded a $10.2 million pre-tax
charge in our Retail segment related to employee severance costs for a
reorganization of our Retail store management, and in our Corporate
segment, we recorded a $3.1 million pre-tax gain primarily related to
the release of a warranty escrow established at the time of sale of
our legacy Voyageur Panel business in 2004. In the first quarter of
2008, we recorded pre-tax charges of $2.4 million related to the
consolidation of the Contract segment's manufacturing facilities in
New Zealand, and $1.8 million related to employee severance costs for
reorganization of the Retail field and ImPress print and document
services management organization. These charges were included in the
caption "Other operating expense" in the Consolidated Statements of
º •
º During the first quarter of 2008, we recorded $20.5 million of pre-tax
income related to a distribution received from affiliates of Boise
Cascade, L.L.C. We receive distributions from Boise Cascade, L.L.C.
for the income tax liability associated with allocated earnings of
Boise Cascade, L.L.C. The distribution received was primarily related
to the income tax liability associated with the allocated gain on the
sale by Boise Cascade, L.L.C. of a majority interest in its paper and
packaging and newsprint businesses during the first quarter of 2008.
This income was included in other income (expense), net
(non-operating) in the Consolidated Statements of Income, and resulted
in an increase in after-tax income of $12.5 million, or $0.17 per
diluted share.
º •
º We recorded a $1.1 million loss, net of tax, from the sale of Contract
operations in Mexico to Grupo OfficeMax, our 51% owned joint venture
in the first quarter of 2007. This loss is reported in minority
interest, net of income tax in the Consolidated Statements of Income
and caused a reduction in after-tax income of $1.1 million, or $0.01
per diluted share. Grupo OfficeMax's results of operations are
included in our consolidated results of operations.
Outlook
Given the expected weak economic outlook, we are cautious in our expectations about performance for the fourth quarter of 2008. We expect significant sales declines and a weaker 2008 holiday selling season than last year. In addition, we will be cycling significant expense reductions we began generating in the fourth quarter of 2007. As a result of these factors, and based on the current outlook, we expect increased deleveraging of costs and expenses in the fourth quarter of 2008 compared to the first nine months of the year.
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