OfficeMax president and CEO, Christopher C. Milliken has resigned resulting from a probe into improper vendor payments.
OfficeMax is currently conducting an investigation under the direction of its audit committee into its accounting for vendor income in prior periods. Based on the work completed to date, the company has confirmed that certain employees fabricated supporting documents for approximately $3.3 million in claims billed to a vendor to its retail business. In addition, the company has determined that certain rebates and other payments from vendors in 2004 were not recorded in the appropriate accounting periods, so that operating income in the first fiscal quarter of 2004 was overstated and the second and third fiscal quarters of 2004 were understated. Six employees have been terminated for cause in connection with the investigation.
George J. Harad, executive chairman, has been appointed by the board of directors to serve as CEO on an interim basis. The board has formed a committee to begin immediately a search for a permanent CEO.
Harad said, “OfficeMax made substantial progress in 2004 toward integrating its contract and retail office products businesses. We appreciate the contributions that Chris has made in that effort and throughout his 27-year career with our office products business. We are taking steps to strengthen the OfficeMax management team, and fully expect to demonstrate the value inherent in this business for our shareholders.”
OfficeMax now expects to announce fourth-quarter and full-year 2004 earnings on March 14, 2005, and to host an investor conference call on that date. Based on preliminary unaudited results, and without considering adjustments which may arise from the company’s investigation into its accounting for vendor income in prior periods, operating income for the company’s office products businesses is expected to range from $125 million to $135 million for full-year 2004.
The company does not expect to provide further information about the results of its operations until 2004 financial results have been reported.
OfficeMax believes that its financial statements as of and for the year ended December 31, 2003, were not materially impacted.
The company expects its investigation to be complete by the third full week of February, 2005.
murdok | Breaking eBusiness News
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