OfficeMax CEO Resigns Amid Accounting Scandal

Itasca, IL-based cataloger/retailer OfficeMax reports that president/CEO Christopher C. Milliken, a 27-year veteran of its office products business, has resigned amid a growing scandal regarding its accounting for vendor income. The company expects to restate quarterly income in each of the first three fiscal quarters of 2004.

Executive chairman George J. Harad has been appointed interim CEO. OfficeMax markets through direct sales, catalogs, the Internet and nearly 1,000 stores.

Six employees have been fired for fabricating supporting documents for approximately $3.3 million in claims billed to a vendor to OfficeMax’s retail business. Certain rebates and other payments from vendors in 2004 were not recorded in the appropriate accounting periods, so that operating income was overstated in the first fiscal quarter of 2004 and understated in the second and third fiscal quarters.

OfficeMax estimates that the amount of overstatement in operating income in the first quarter of 2004 was $5 million-$10 million, and the subsequent understatements in the second and third quarters reduce the net overstatement to $4 million-$6 million through the end of the third quarter 2004.

OfficeMax expects to announce fourth-quarter and full-year 2004 earnings on March 14.

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