OfficeMax has announced the completion of the internal investigation into its accounting for vendor income in prior periods, and is to restate quarterly income for the first three quarters of 2004.
Subject to review by the company’s auditors, OfficeMax currently estimates that it overstated operating income in Q1 of 2004 by approximately $7 million, and understated operating income by approximately $1 million in Q2 and Q3. Cumulative net income for the first nine months of 2004 was overstated by $4 million to $5 million, it disclosed.
It claimed that financial statements for 2003 "were not materially impacted".
The investigation stemmed from claims by a vendor in December that certain company employees falsified invoice documents to the value of $3.3 million.
On 14 March, OfficeMax released its delayed Q4 results, with profits plummeting 90 per cent due to weak sales during the holiday season.
The company posted a Q4 loss of $695,000, or a loss per share of $0.02, compared with $6.87 million, or EPS of $0.05, registered a year ago. Analysts had been expecting a penny per share profit. Sales lifted 14 per cent, however, to $2.7 billion.
Morningstar analyst Anthony Chukumba said: "They had a bad quarter. There are still some kinks that they have to work out."(see ‘At a junction’, page 32)