OfficeMax 2009 Annual Report Download - page 34

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Retail segment operating, selling and general and administrative expenses increased 1.1% of
sales to 26.5% of sales for 2008 from 25.4% of sales a year earlier, primarily due to deleveraging of
expenses from the same-store sales volume decrease, as well as new stores which have not
ramped up to mature sales volumes, partially offset by reduced incentive compensation expense
and targeted cost controls, including the benefits from the reorganization of our Retail store
management in the second quarter and Retail field and ImPress management undertaken in the
first quarter.
Retail segment income was $61.2 million, or 1.5% of sales, for 2008, compared to
$173.7 million for 2007. The decline in segment income was primarily attributable to the reduction
in sales and gross profit.
For 2008, the Retail segment recorded impairment charges of $548.9 million, consisting of
$386.0 million for impairment of goodwill, $107.1 million for impairment of trade names and
$55.8 million for impairment of store fixed assets, consisting primarily of leasehold improvements.
Retail other operating expense for 2008 included a $12.7 million charge for headcount reductions
primarily for the reorganization of our Retail field and store management and $4.7 million of charges
related to site and store lease terminations. For more information regarding impairment charges,
see the discussion of ‘‘Goodwill and Other Asset Impairments’’ that follows.
The Retail segment’s operating loss was $505.1 million for 2008, compared to operating
income of $173.7 million for 2007.
Corporate and Other
Corporate and Other expenses were $40.7 million for 2009 compared to $773.6 million for
2008. Expenses recorded in 2009 included a $0.7 million pre-tax charge for severance. Increased
incentive compensation expense ($3.8 million more in 2009) and pension costs more than offset
reduced payroll expense resulting from reductions in staff at the corporate headquarters in late
2008. Expenses recorded in 2008 included a $735.8 million charge related to the impairment of the
timber installment note guaranteed by Lehman, a $4.3 million severance charge related to a fourth
quarter reduction in force at our corporate headquarters and a $3.1 million gain, primarily related to
the release of a warranty escrow established at the time of sale of our legacy Voyageur Panel
business in 2004. During 2007, total Corporate and Other expenses were $37.4 million.
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