CEO of OfficeMax Steps Down
Retailer OfficeMax Inc. announced the resignation Monday of Chief Executive Christopher Milliken and acknowledged misstating 2004 results amid an accounting scandal.
The company also said it had fired two more employees, increasing to six the number terminated for sending $3.3 million in bogus bills to a supplier over a two-year period.
The disclosures were the latest in a series of problems for the company since last fall, when it changed its name from Boise Cascade Corp. and moved its headquarters from Idaho to Itasca, Ill. That move followed the late 2003 acquisition of OfficeMax -- then based in Cleveland -- for $1.2 billion by Boise Cascade, which sold off its wood and paper products operations to focus on office products.
Shares of OfficeMax fell $1.73, or 5.5%, to $30.02 on the New York Stock Exchange. They are down more than 20% since June.
Milliken, who had been president and CEO since November, departed in what OfficeMax characterized as a “mutual decision” of the CEO and the board of directors related to the company’s poor recent performance.
He is the third top-level executive to leave this year. Chief Financial Officer Brian Anderson and retail chief Gary Peterson resigned last month, when the company also said its fourth-quarter earnings report would be delayed because of accounting problems.
Chairman George Harad, who recently announced plans to retire in June, took over as interim chief executive while the company began the search for a permanent CEO. Harad spent 10 years as CEO of Boise Cascade and helped orchestrate its purchase of OfficeMax.
“We are taking steps to strengthen the OfficeMax management team, and fully expect to demonstrate the value inherent in this business for our shareholders,” Harad said in a statement.
Analysts said the company’s efforts to find a top-notch leader probably would be further complicated by the fact rival Office Depot Inc. also is searching for a CEO. Market leader Staples Inc. and Office Depot both are outperforming No. 3 OfficeMax.
OfficeMax said it would have to restate recent results after overstating operating income for the first quarter of fiscal 2004 by $5 million to $10 million by failing to record certain rebates and payments to vendors. It said the accounting error led to an understatement of income in the second and third quarters.
The accounting problems first surfaced in December with the disclosure of a vendor’s allegations that some employees had demanded promotional payments and falsified documents. Poor holiday sales compounded the problems for OfficeMax, which reduced its 2004 operating forecast the next day and announced the resignations of Peterson and Anderson soon afterward. Four employees were fired last month for the phony billing.
OfficeMax said Monday that it would report fourth-quarter and full-year results March 14. It expects operating income to be $125 million to $135 million for 2004.
The company said its investigation should conclude by next week.
