- The company plans to open a total of up to 40 new stores and to complete approximately 60 remodels in the US.
- The company expects capital expenditures for the full year 2008 to total between $200 and $220 million.

Key questions from the first quarter earnings call conducted by OfficeMax Incorporated on April 30, 2008.

Gary Balter (Credit Suisse): Do you think you should be more aggressive in terms of pricing?

Sam Duncan: We are going to pursue profitable business. It is even more important when you get into the current macroeconomic environment that we are in today, you can not go out there and start chasing sales, either in retail and contract because what they have seen in the past is you just make matters worse by your expenses going up due to marketing efforts or whatever. We are going to stick to our strategic brand of continuing to focus on profitable sales. We believe in the long term that is the best avenue for us and we remain committed to it.

Gary Balter (Credit Suisse): How do you measure that against competitor pressures that are going to stay out there?

Sam Duncan: We think so over time and we think if we remain committed to what we are focused on, we will get the improvement over time. We are going to remain committed to it.

Don Civgin: If you look at the way our contract business operates today as opposed to when we started this turnaround, we are able to take more business in a profitable way than we were able to do before, simply because of the discipline we have on the cost to serve side and understanding the dynamics of pricing and all of that for ourselves. You can not just go chase the sales before you are ready for it and we continue to position ourselves to be able to get more sales that may be previously would not have been profitable, but in the future are. It is not a toggle switch where you just say now I want sales; you have to position yourself to be able to do something with those sales and like it when you get it.

Gary Balter (Credit Suisse): What about retail?

Sam Duncan: It is a bigger function of the macroeconomic environment. In our industry we are the first wave that is going to see the economic impact. People do not need to buy a fax or a printer right away, they can put that off and that is what we are seeing. With that being said, we could easily go out there and dump all of this money and marketing and not get an ounce of sales out of it. I have seen that happen in the retail business and we are just not going to do that. We are going to be strategic in what we do on our retail side also. We have got to remain focused on what we are doing and when this macroeconomic environment improves, hopefully we are going to be a lot better off.

Mitch Kaiser (Piper Jaffray): You are not going to chase unprofitable sales on the contract side, you are making some investments in systems, but where do you think you stand in terms of some more cost take out And at what point do you feel the core is ready to start going after some bigger contracts?

Sam Martin: I would say that we have not stopped going after the right sales. Our core in terms of cost reduction is a real equation of the economy and the amount of business that we can garner. There are business gains we get every day as well as some businesses we do forego because of the price that we would need to pay. As a longer term point of view, we continue to go after the sales that we can make profitable for our company. There are sales out there to get.

Mitch Kaiser (Piper Jaffray): How do you think about sales on the contract business?

Sam Duncan: We do not see the current macroeconomic conditions improving in 2008. We are not economists but that is our feelings and from what we see and hear from our customers, we think 2008 is going to be, we are going to continue to face these macroeconomic conditions, but hopefully it will improve after that.

Mitch Kaiser (Piper Jaffray): There are talks about weakness in technology but then some of the consumer electronics retailers talking about strength there. Are you seeing anything in the data on the market share that there is a shift between channels or how would you categorize just where sales are trending on the technology set?

Sam Martin: We primarily look at our sales and look at what we are able to analyze over the course of time. But the shift in technology sales for us has been related to a couple of things: one, the economy in terms of people being able to forego purchases, and second, the comparison to a year prior’s launch of Vista and the product bumps that we received during that launch time.

Mitch Kaiser (Piper Jaffray): Are you seeing a shift when you look at the market share data, are you seeing the consumer electronics retailers taking share?

Sam Martin: I have not seen that in my perspective.

Matthew Fassler (Goldman Sachs): Your same store gross profit trends are holding up relatively better compared to your competitors. Your comps were under pressure but your merchandise margins are up. How aggressive have you been on reducing variable costs?

Sam Martin: As we look at the retail cost structures, we keep in mind the relative comparison to sales and understand that we need to have a certain level of staffing in our stores to be able to satisfy our customer’s shopping experience. It is a complicated equation so to speak but it is a simple expectation that we meet our customer’s needs and we do not cut below the level of staffing if you will to sacrifice that. At the same time we do have to keep a close eye on the relationship of labor with regards to the sales trends.

Matthew Fassler (Goldman Sachs): How deeply have you cut relative to potential, would you say you are at the bone, is there more room to go if sales remain under pressure?