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OfficeMax Reports 3Q Results

October 26, 2006

OfficeMax Incorporated (NYSE: OMX) reported results for the third quarter ended September 30, 2006, including net income of $31.4 million, or $.41 per diluted share, compared with a net loss of $3.9 million, or $.07 per diluted share, in the third quarter of 2005.

Results for the third quarter include items which are not expected to be ongoing. A detailed description of these special items and a reconciliation to the company's GAAP financial results are included in this press release. For the third quarter of 2006, net income before special items was $43.2 million, or $.56 per diluted share, compared with net income before special items of $9.9 million, or $.12 per diluted share, in the third quarter of 2005.

"We are pleased with our third quarter results," said Sam Duncan, Chairman and Chief Executive Officer of OfficeMax. "In both our Contract and Retail segments, we continued to execute our turnaround plan objectives to deliver substantial operating income margin growth."

Contract Segment

OfficeMax Contract segment sales increased 1.2% in the third quarter of 2006 compared to the third quarter of 2005, reflecting modest sales growth in both our U.S. and international operations.

Excluding the special item, Contract segment operating income increased to $45.7 million in the third quarter of 2006 from $34.0 million in the third quarter last year. Contract segment gross margin increased to 22.3% in the third quarter of 2006 from 21.7% in the third quarter of 2005, primarily due to a focus on higher margin sales opportunities, including growing our middle market business, and improvement in our international operations. Contract segment operating income in the third quarter of 2006 also benefited from reduced integration costs and targeted cost reduction programs.

Retail Segment

OfficeMax Retail segment same-store sales growth during the third quarter of 2006 was flat. Adjusted for the company''s initiative to eliminate mail-in rebates and to provide instant rebates in lieu of national, vendor-sponsored mail-in rebates, same-store sales improved by approximately 1% during the third quarter of 2006. Retail segment total sales decreased 5% in the third quarter of 2006 compared to the third quarter of 2005, due primarily to the impact of 109 strategic store closings completed during the first quarter of 2006.

Retail segment operating income for the third quarter of 2006 increased to $54.8 million from $16.1 million in the third quarter of 2005. Retail segment gross margin increased to 30.1% for the third quarter of 2006 from 26.7% last year due primarily to more effective promotional activity. Retail segment operating income in the third quarter of 2006 benefited from targeted cost reduction programs, including reduced store labor and advertising expense, partially offset by higher allocated general and administrative expense.

During the third quarter of 2006, OfficeMax opened 10 new retail stores, ending the quarter with 884 retail stores compared with 955 stores at the end of the third quarter of 2005.

Corporate and Other Segment

The OfficeMax Corporate and Other segment includes support staff services and certain other expenses that are not fully allocated to the Retail and Contract segments. Excluding special items in both periods, Corporate and Other segment operating expense increased by $1.6 million to $18.8 million in the third quarter of 2006 from the third quarter of 2005, primarily due to increased incentive compensation expense, partially offset by reduced legacy company costs.

During the third quarter of 2006, OfficeMax generated $188.8 million in cash from operations and used $49.8 million for capital expenditures. For the first nine months of 2006, OfficeMax generated $339.8 million in cash from operations and used $96.8 million for capital expenditures. At September 30, 2006, net debt, or total debt excluding the timber securitization notes less cash and cash equivalents and restricted investments, was $74.0 million.