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OfficeMax Ousts CEO, Fires Two More
Monday February 14, 4:37 PM EST
By Ellis Mnyandu
NEW YORK (Reuters) - OfficeMax Inc. (OMX) on Monday ousted its chief executive after less than four months on the job as a billing scandal at the office products retailer led to the firing of two more employees.
OfficeMax, whose stock fell 5.45 percent, said a total of six employees have now been fired in connection with an internal investigation into the fabrication of documents to support a bill to a vendor.
The company also said it had uncovered accounting errors in recording rebates and other payments from vendors last year. It said it would restate results for the first three quarters of 2004.
Company spokesman Bill Bonner said the departure of Chief Executive Christopher Milliken was not specifically tied to the investigation. "It was a mutual decision between Milliken and the board of directors," he told Reuters.
Anthony Chukumba, an analyst at Chicago-based Morningstar, said Milliken's departure would further dent investor confidence in OfficeMax.
"Given the Tycos, the Enrons, the HealthSouths and the Adelphias of the world, anything that smells of accounting impropriety, investors are going to sell first and ask questions later," said Chukumba, who owns no OfficeMax shares.
Milliken is the second senior executive to leave OfficeMax amid the billing scandal. Brian Anderson resigned as chief financial officer in January after just two months on the job.
Milliken was named CEO last November following the merger of OfficeMax with paper products company Boise Cascade Corp. He was formerly president and chief executive of the Boise Office Solutions unit. OfficeMax said a search for a successor to Milliken was underway.
OfficeMax, based in Itasca, Illinois, has delayed the release of its 2004 results because of the investigation.
Commenting on the probe, launched in December, the company said certain employees fabricated supporting documents for about $3.3 million in claims billed to a vendor.
An OfficeMax spokesman said there was no information about motive, but Chukumba at Morningstar said he was "fairly certain the employees were doing this to enrich themselves."
The six fired employees all worked in retail merchandising, an OfficeMax spokesman said. He gave no other details. The first four firings were announced last month.
OfficeMax said it had determined that certain rebates and other payments from vendors in 2004 had not been recorded in the appropriate accounting periods.
Retailers often have arrangements with vendors through which they can submit claims for payment for promotional activities such as product placement or discount coupons.
The accounting errors came to light as the company probed the billing scandal, OfficeMax said.
The errors led to the overstatement of operating income in the first quarter of 2004, and the understatement of operating income in the second and third quarters, it said.
It said it expects to release 2004 fourth-quarter and full-year results on March 14, and expects its investigation to be completed by next week.
OfficeMax shares closed down $1.73 to $30.02 on the New York Stock Exchange after falling as low as $29.30 earlier in the session.
Monday February 14, 4:37 PM EST
By Ellis Mnyandu
NEW YORK (Reuters) - OfficeMax Inc. (OMX) on Monday ousted its chief executive after less than four months on the job as a billing scandal at the office products retailer led to the firing of two more employees.
OfficeMax, whose stock fell 5.45 percent, said a total of six employees have now been fired in connection with an internal investigation into the fabrication of documents to support a bill to a vendor.
The company also said it had uncovered accounting errors in recording rebates and other payments from vendors last year. It said it would restate results for the first three quarters of 2004.
Company spokesman Bill Bonner said the departure of Chief Executive Christopher Milliken was not specifically tied to the investigation. "It was a mutual decision between Milliken and the board of directors," he told Reuters.
Anthony Chukumba, an analyst at Chicago-based Morningstar, said Milliken's departure would further dent investor confidence in OfficeMax.
"Given the Tycos, the Enrons, the HealthSouths and the Adelphias of the world, anything that smells of accounting impropriety, investors are going to sell first and ask questions later," said Chukumba, who owns no OfficeMax shares.
Milliken is the second senior executive to leave OfficeMax amid the billing scandal. Brian Anderson resigned as chief financial officer in January after just two months on the job.
Milliken was named CEO last November following the merger of OfficeMax with paper products company Boise Cascade Corp. He was formerly president and chief executive of the Boise Office Solutions unit. OfficeMax said a search for a successor to Milliken was underway.
OfficeMax, based in Itasca, Illinois, has delayed the release of its 2004 results because of the investigation.
Commenting on the probe, launched in December, the company said certain employees fabricated supporting documents for about $3.3 million in claims billed to a vendor.
An OfficeMax spokesman said there was no information about motive, but Chukumba at Morningstar said he was "fairly certain the employees were doing this to enrich themselves."
The six fired employees all worked in retail merchandising, an OfficeMax spokesman said. He gave no other details. The first four firings were announced last month.
OfficeMax said it had determined that certain rebates and other payments from vendors in 2004 had not been recorded in the appropriate accounting periods.
Retailers often have arrangements with vendors through which they can submit claims for payment for promotional activities such as product placement or discount coupons.
The accounting errors came to light as the company probed the billing scandal, OfficeMax said.
The errors led to the overstatement of operating income in the first quarter of 2004, and the understatement of operating income in the second and third quarters, it said.
It said it expects to release 2004 fourth-quarter and full-year results on March 14, and expects its investigation to be completed by next week.
OfficeMax shares closed down $1.73 to $30.02 on the New York Stock Exchange after falling as low as $29.30 earlier in the session.
