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OfficeMax Swings to Fourth-Quarter Profit

Office supplies retailer OfficeMax said Thursday it swung to a profit in the fourth-quarter from a year-ago period hurt by hefty costs and asset writedowns, and the company said improved vendor income and lower delivery costs helped boost margins in its contract segment.

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Quarterly net income after paying preferred dividends totaled $57 million, or 76 cents per share, compared with a loss of $44.1 million, or 62 cents per share, during the year-ago period, which included a loss from discontinued operations of $20.5 million as well as higher rent and other costs.

Excluding one-time charges relating to a headquarters consolidation, the closure of a facility and severance, as well as a credit related to the 2004 sale of some assets, earnings for the latest quarter were 48 cents per share.

Revenue fell 8% to $2.26 billion from $2.46 billion in the prior-year quarter.

Analysts polled by Thomson Financial expected net income of 40 cents per share on higher revenue of $2.31 billion.

Contract segment sales fell 3.5% in the quarter due to fewer selling days but increased 2% when adjusted for the selling days. Retail same-store sales fell 0.4%. Same-store sales, or sales in stores open at least one year, are a key measure of industry performance.

Adjusted for its initiative to end mail-in rebates and provide instant rebates, same-store sales grew 2%, OfficeMax said.

For the year, earnings after paying preferred dividends totaled $87.7 million, or $1.19 per share, up from a loss of $78.1 million, or 99 cents per share, in 2005. Excluding items, profit totaled $159.2 million, or $2.10 per share, in the latest period, compared with adjusted profit of $23.6 million, or 24 cents per share, in 2005.

Revenue fell 2% to $8.97 billion, from $9.16 billion in 2005.

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