OfficeMax 2005 Annual Report Download

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Table of contents

  • Page 1

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  • Page 3
    ... TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 to For the fiscal year ended December 31, 2005 អ For the transition period from Commission File Number: 1-5057 OFFICEMAX INCORPORATED (Exact name of registrant as specified in its charter) Delaware (State...

  • Page 4
    ... ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions ...Principal Accountant Fees and Services ...107 108 108 109 109 PART IV Item 15. Exhibits and Financial Statement Schedules...

  • Page 5
    ...and small businesses, government offices, and consumers. OfficeMax customers are served by more than 35,000 associates through direct sales, catalogs, the Internet and retail stores. Our common stock trades on the New York Stock Exchange under the ticker symbol OMX, and our corporate headquarters is...

  • Page 6
    ... 53 weeks for our retail segment. Fiscal year 2005 ended on December 31, 2005 for all our reportable segments and businesses. OfficeMax, Contract We distribute a broad line of items for the office, including office supplies and paper, technology products and solutions and office furniture through...

  • Page 7
    in the United States, Puerto Rico and the U.S. Virgin Islands. Our retail office supply stores feature OfficeMax Print and Document Services, an in-store module devoted to print-for-pay and related services. Our retail segment also operates office products stores in Mexico through a 51%-owned joint ...

  • Page 8
    ... when purchasing office supplies and paper, technology products and solutions and office furniture. We are among the four largest business-to-business contract stationers in the United States. We also compete with worldwide contract stationers, large retail office products suppliers, direct-mail...

  • Page 9
    ... for other reasons. See Note 2, Sale of Paper, Forest Products and Timberland Assets; Note 4, OfficeMax, Inc., Acquisition; and Note 7, Other (Income) Expense, Net, of the Notes to Consolidated Financial Statements in ''Item 8. Financial Statements and Supplementary Data'' of this Form 10-K for...

  • Page 10
    .... Purchasers of office products have many options when purchasing office supplies and paper, print and document services, technology products and solutions and office furniture. We compete with worldwide contract stationers, large retail office products suppliers, direct-mail distributors, discount...

  • Page 11
    ... are difficult to manage successfully. If we are not able to open and remodel stores as quickly as we have planned, our future financial performance could be materially and adversely affected. Further, we cannot ensure that the new or remodeled stores will achieve the sales or profit levels that we...

  • Page 12
    ...of supply and demand for forest products will affect the price we pay for paper. Our ability to realize the carrying value of our equity interest in affiliates of Boise Cascade L.L.C. is dependent upon many factors, including the operating performance of Boise Cascade L.L.C. and other market factors...

  • Page 13
    ...(7) and New Zealand (22) and 6 customer service and outbound telesales centers in Illinois (2), Ohio, Oklahoma, Virginia and Wyoming OfficeMax, Retail OfficeMax, Retail operated 970 stores in 49 states, Puerto Rico, the U.S. Virgin Islands and Mexico. The following table sets forth the locations of...

  • Page 14
    ... our financial position or results of operations. Over the past several years and continuing into 2006, we have been named a defendant in a number of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to asbestos while working at job sites. The...

  • Page 15
    ...received claims by a vendor to its retail business that certain employees acted inappropriately in requesting promotional payments and in falsifying supporting documentation. The internal investigation was conducted under the direction of the Company's audit committee and was completed in March 2005...

  • Page 16
    ... common stock is listed on the New York Stock Exchange (the ''Exchange''). The Exchange requires each listed company to distribute an annual report to its shareholders. We are distributing this Form 10-K to our shareholders in lieu of a separate annual report. The reported high and low sales prices...

  • Page 17
    ... of 2005 is as follows: Total Number of Shares Purchased as Part Maximum Number Total Number of Publicly of Shares That May Yet of Shares Average Price Announced Plans Be Purchased Under the Purchased Paid per Share or Programs(a) Plans or Programs(a) 6 112 240 29.80 28.09 28.47 6 112 240 4,250,682...

  • Page 18
    ... and ''Item 8. Financial Statements and Supplementary Data'' of this Form 10-K. 2005(a) 2004(b) 2003(c) 2002(d) 2001(e) (millions, except per-share amounts) Assets Current assets ...Property and equipment, net ...Timber, timberlands and timber deposits . Goodwill ...Timber notes receivable ...Other...

  • Page 19
    ...retail store closures; the restructuring of the international operations; the relocation and consolidation of our corporate headquarters; legal settlement with the Department of Justice; and costs for one-time severance payments and professional fees. 2005 included 53 weeks for our OfficeMax, Retail...

  • Page 20
    ..., and severance payments and professional fees. The legal settlement involved the payment to the United States of $9.8 million to settle allegations that the Company submitted false claims when it sold office supply products manufactured in countries not permitted by the Trade Agreements Act to...

  • Page 21
    ... supply chain. Retail Initiatives We have initiated several programs for driving revenue growth and margin improvement in our Retail segment in 2006 and beyond. These include merchandising strategies intended to expand our small business customer base, continuing to grow Print and Document Services...

  • Page 22
    ... quarters of 2005 related to the headquarters relocation and consolidation. Sale of Paper, Forest Products and Timberland Assets On October 29, 2004, we completed the sale of our paper, forest products and timberland assets to affiliates of Boise Cascade, L.L.C., a new company formed by Madison...

  • Page 23
    ...Notes Receivable and Note 15, Debt, of the Notes to Consolidated Financial Statements in ''Item 8. Financial Statements and Supplementary Data'' of this Form 10-K for additional information related to the timber notes. Through debt repurchases and retirements, we reduced our short-term and long-term...

  • Page 24
    ... primarily due to one-time severance payments and higher costs related to employee retirement benefits and retention programs as well as expenses related to the transition of support staff services from Boise Cascade, L.L.C. to OfficeMax Incorporated. In 2005, we reported $59.5 million of expense...

  • Page 25
    ... and retirements funded with proceeds from the Sale. In 2005, interest expense included approximately $81.5 million of interest recognized as a result of consolidating the issuers of $1.5 billion of timber securitization notes in the Company's financial statements. The interest expense associated...

  • Page 26
    ... primarily as a result of improved product prices in Boise Building Solutions. Selling and distribution expenses increased to 14.7% of sales in 2004, compared with 11.5% of sales in 2003, largely due to our retail office products business's higher selling and distribution expenses as a percentage of...

  • Page 27
    ... affiliates of Boise Cascade, L.L.C., under the cost method. OfficeMax, Contract distributes a broad line of items for the office, including office supplies and paper, technology products and solutions and office furniture. OfficeMax, Contract sells directly to large corporate and government offices...

  • Page 28
    ... services, technology products and solutions and office furniture. Our retail segment has operations in the United States, Puerto Rico and the U.S. Virgin Islands. Our retail segment's office supply stores feature OfficeMax Print and Document Services, an in-store module devoted to print-for-pay...

  • Page 29
    ...public Internet site. Total sales for locations operating in both periods, including OfficeMax Direct 2003 sales on a pro forma basis, increased 7%. Year-over-year pro forma total sales comparisons increased in all major product categories. Compared with 2003, 2004 pro forma sales of office supplies...

  • Page 30
    ... operations. OfficeMax, Retail Operating Results ($ in millions) 2005 2004 2003(a) Sales ...Segment income ...Sales by Product Line Office supplies and paper ...Technology products ...Office furniture ...Sales by Geography United States(b) ...International(c) ...Gross profit margin ...Operating...

  • Page 31
    ...higher margin products and services, a direct result of our new promotional and advertising strategy. Retail segment operating expenses were 25.6% of sales in 2005 compared to 25.1% in 2004. In 2005, we recorded $17.9 million in asset impairment charges primarily related to the retail store closures...

  • Page 32
    ...Boise Building Solutions results for 2004 represent the ten months of operation before the Sale. Fueled by continued strong plywood and lumber markets, Boise Building Solutions reported income of $319.2 million in the first ten months of 2004, compared with $125.3 million for full year 2003. Results...

  • Page 33
    ... Prices Uncoated free sheet ...Containerboard ...Newsprint ...2004 Compared With 2003 $ 718 365 434 $ 721 337 397 On October 29, 2004, we completed the Sale. Boise Paper Solutions results for 2004 represent the ten months of operation before the Sale. Boise Paper Solutions reported income...

  • Page 34
    ... impairment and other closing costs. See Note 3, Discontinued Operations, of the Notes to Consolidated Financial Statements in ''Item 8. Financial Statements and Supplementary Data'' of this Form 10-K for additional information related to the discontinued operation. OfficeMax, Inc. Acquisition On...

  • Page 35
    ... Acquisition has allowed management to evaluate the Company's combined office products business to determine what opportunities for consolidating operations may be appropriate. Costs associated with the planned closure and consolidation of acquired OfficeMax, Inc. facilities were accounted for under...

  • Page 36
    In September 2005, the board of directors approved a plan to relocate and consolidate the Company's retail headquarters in Shaker Heights, Ohio and its existing corporate headquarters in Itasca, Illinois into a new facility in Naperville, Illinois. Approximately 650 associates are located at the ...

  • Page 37
    ... in our consolidated financial statements. In 2005, we made contributions to our pension plans totaling $2.8 million. In 2004, we made cash contributions to our pension plans totaling $279.8 million, compared with $84.5 million in 2003. The asset purchase agreement with affiliates of Boise Cascade...

  • Page 38
    ...shares of our common stock and used $198.7 million of cash to reduce short-term borrowings and long-term debt. On September 23, 2005, Standard & Poor's Rating Services downgraded our corporate credit rating to B+. The downgrade increases the reporting requirements under our receivable sale agreement...

  • Page 39
    ... the purchase contracts related to our adjustable conversion-rate equity units and received $172.5 million. Additions to long-term debt in 2003 resulted primarily from our acquisition of OfficeMax, Inc. Additions included $150 million under an unsecured credit agreement, $300 million of 6.50% notes...

  • Page 40
    ..., we sold our timberlands as part of the Sale. In exchange for the timberlands, we received installment timber notes in the amount of $1.6 billion which were credit enhanced with guarantees. The guarantees were issued by financial institutions and were secured by the pledge of underlying collateral...

  • Page 41
    ... traded on the New York Stock Exchange under the ticker symbol BEP . At the time of issuance, there were two components of each unit. Investors received a preferred security issued by Boise Cascade Trust I (the ''Trust''), a statutory business trust whose common securities were owned by the Company...

  • Page 42
    ... rating decline, as defined, the holders of these securities may require the Company to redeem the securities. Previously, OfficeMax guaranteed the debt used to fund our employee stock ownership plan (''ESOP'') that was part of the Savings and Supplemental Retirement Plan for our U.S. salaried...

  • Page 43
    ... Statements in ''Item 8. Financial Statements and Supplementary Data'' in this Form 10-K. (c) The current portion of these liabilities is also included. (d) Our Consolidated Balance Sheet as of December 31, 2005 includes $538.8 million of liabilities associated with our retirement and benefit plans...

  • Page 44
    ... new-year office supply restocking month of January, the back-to-school period and the holiday selling season, respectively. Disclosures of Financial Market Risks Our debt is predominantly fixed-rate. At December 31, 2005, the estimated current market value of our debt, based on quoted market prices...

  • Page 45
    ... entered into an interest rate swap contract with an affiliate of Goldman, Sachs & Co. The contracts were entered into in order to hedge the interest rate risk associated with the issuance of debt securities by the OMXQ's in connection with the timber notes received in the Sale. The Company paid $19...

  • Page 46
    ... to, or receive substantial cash payments from, Boise Cascade, L.L.C. Under the Additional Consideration Agreement, the Sale proceeds may be adjusted upward or downward based on paper prices during the six years following the closing date, subject to annual and aggregate caps. Under the terms of the...

  • Page 47
    ... purchases during the rebate program period. These estimates are reviewed on a quarterly basis and adjusted for changes in anticipated product sales and expected purchase levels. Volume-based rebates and allowances earned are initially recorded as a reduction in the cost of merchandise inventories...

  • Page 48
    ...The salaried pension plan was closed to new entrants on November 1, 2003, and on December 31, 2003, the benefits of OfficeMax, Contract participants were frozen with one additional year of service provided to active OfficeMax, Contract employees on January 1, 2004, at a reduced 1% crediting rate. As...

  • Page 49
    ... our financial statements. At December 31, 2005, we had $1.2 billion of goodwill recorded on our Consolidated Balance Sheet. Of the $1.2 billion, $523.5 million and $694.7 million were recorded in our OfficeMax, Contract and OfficeMax, Retail segments, respectively. The Company completed its annual...

  • Page 50
    ... focus on exchanges of employee services in share-based payment transactions. This statement is a revision to SFAS No. 123 and supersedes Accounting Principles Board (APB) Opinion 25 and its related implementation guidance. It eliminates an entity's ability to account for share-based compensation...

  • Page 51
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OfficeMax Incorporated and Subsidiaries Consolidated Statements of Income (Loss) Year Ended December 31 2005 2004 2003 (thousands, except per-share amounts) Sales ...Costs and expenses Materials, labor and other operating expenses ...Depreciation,...

  • Page 52
    ... Timber notes receivable . Restricted investments . . Deferred charges ...Other non-current assets ... 38,537 359,481 685,545 1,083,563 (548,118) 535,445 1,218,200 205,232 175,000 1,635,000 22,377 52,810 486,029 $6,272,142 Total assets ... See accompanying notes to consolidated financial statements...

  • Page 53
    ...877,242 Other Compensation and benefits ...Deferred gain on sale of assets ...Other non-current liabilities ...Minority interest ...Commitments and contingent liabilities Shareholders' equity Preferred stock-no par value; 10,000,000 shares authorized; Series D ESOP: $.01 stated value; 1,216,335 and...

  • Page 54
    ...-term borrowings (repayments) ...Timber notes securitized ...Additions to long-term debt ...Payments of long-term debt ...Purchase of Series D preferred ...Purchase of common shares ...Proceeds from exercise of stock options . . Stock issued for adjustable conversion-rate Other ...equity security...

  • Page 55
    OfficeMax Incorporated and Subsidiaries Consolidated Statements of Shareholders' Equity For the Years Ended December 31, 2003, 2004 and 2005 Common Shares Outstanding Total Shareholders' Equity Deferred Additional ESOP Common Paid-In Benefit Stock Capital Accumulated Other Comprehensive Loss ...

  • Page 56
    ...of retail stores located throughout the United States, Canada, Australia, New Zealand and Mexico. The Company's common stock is traded on the New York Stock Exchange under the ticker symbol OMX. The Company's corporate headquarters is located in Itasca, Illinois, and the OfficeMax website address is...

  • Page 57
    ... delivery to the customer or third-party delivery service for contract, catalog and Internet sales, and at the point of sale for retail transactions. Service revenue is recognized as the services are rendered. Revenue is reported less an appropriate provision for returns and net of coupons, rebates...

  • Page 58
    ... general economy in the U.S. The Company has an agreement with a third-party service provider that manages the Company's private label credit card program and directly extends credit to customers. The Company has an accounts receivable securitization program under which it sells fractional ownership...

  • Page 59
    ...Accounting by a Customer (Including a Reseller) for Certain Consideration Received From a Vendor.'' (See Note 8, Accounting Changes, for information related to the 2003 accounting change for vendor allowances.) Merchandise Inventories Inventories consist of office products merchandise and are stated...

  • Page 60
    ...the OfficeMax, Retail segment in the fourth quarter of 2005, in connection with the development of management's plan to close 110 retail stores in 2006, and concluded there was no impairment. Intangible assets represent the values assigned to trade names, customer lists and relationships, noncompete...

  • Page 61
    ... 31, 2005 and 2004, the asset retirement obligation for estimated closure and closed-site monitoring costs recorded on the Company's Consolidated Balance Sheet was $4.2 million and $0.3 million, respectively. These obligations are related to assets held for sale. (See Note 8, Accounting Changes, for...

  • Page 62
    ...interpretation and application of complex tax laws. Significant judgment is also required in assessing the timing and amounts of deductible and taxable items. Stock-Based Compensation In 2003, the Company adopted the fair value-based method of accounting for stock-based awards to employees under the...

  • Page 63
    ... the fair value-based method of accounting for stock-based employee compensation to all outstanding and unvested awards in each period. Year Ended December 31 2005 2004 2003 (thousands, except per-share amounts) Reported net income (loss) ...Add: Total stock-based employee compensation expense...

  • Page 64
    ... the opening of a store. These pre-opening expenses consist primarily of straight-line rent from the date of possession, store payroll, supplies and grand opening advertising costs and are expensed as incurred and reflected in selling and distribution expenses. In 2005 and 2004, the Company recorded...

  • Page 65
    ... of these securities to debt did not affect the Company's financial covenants. In October 2004, OfficeMax sold its timberlands as part of the Sale. In exchange for the timberlands, the Company received timber installment notes receivable that were credit enhanced with guarantees. In December...

  • Page 66
    ...the pension plans for active employees who became employees of Boise Cascade, L.L.C. in connection with the Sale. In the second quarter of 2005, the Company used substantially all of the remaining proceeds to repurchase 23.5 million shares of its common stock and the associated common stock purchase...

  • Page 67
    ... office products distribution company. The acquisition was accounted for under the purchase method, and accordingly, the results of operations of OfficeMax, Inc. are included in the Company's consolidated financial statements from the date of the acquisition. The Company changed its name from Boise...

  • Page 68
    ... shares exchanged ...Transaction costs ...Debt assumed ... $ 808,172 486,738 20,000 1,314,910 81,627 $1,396,537 The Company paid OfficeMax, Inc. shareholders $1.3 billion in connection with the acquisition, 60% of which was paid in common stock of the Company (at the time, Boise Cascade Corporation...

  • Page 69
    ... Acquisition has allowed management to evaluate the Company's combined office products business to determine what opportunities for consolidating operations may be appropriate. Costs associated with the planned closure and consolidation of acquired OfficeMax, Inc. facilities were accounted for under...

  • Page 70
    ..., the Company closed 18 U.S. distribution centers and 2 customer service centers. In connection with these closures the Company recorded a charge to income in our Consolidated Statement of Income (Loss) of $29.7 million during 2004. In September 2005, the board of directors approved a plan to...

  • Page 71
    .... Integration and facility closure reserve account activity during 2005, 2004 and 2003 was as follows: Lease\ Asset Contract Severance\ Write-off & Terminations Retention Impairment (thousands) Other $ Total Charges to income . Charges to goodwill Credits to income . . Cash payments ...Non-cash...

  • Page 72
    ... Company's employee stock ownership plan (ESOP) are net of a tax benefit. (b) Adjustments totaling $2.1 million in 2005 and $1.2 million in 2003, which would have reduced the basic loss to arrive at the diluted loss, were excluded because their effect on the calculation of the diluted loss per share...

  • Page 73
    ...,'' in accounting for landfill closure and closed-site monitoring costs related to the sold paper, forest products and timberland assets. This statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time the obligations...

  • Page 74
    ... purchase rebate programs, some of which provide for tiered rebates based on defined levels of purchase volume. These arrangements enable the Company to receive reimbursement for costs incurred to promote the sale of vendor products, or to earn rebates that reduce the cost of merchandise purchased...

  • Page 75
    ... following: Year Ended December 31 2005 2004 2003 (thousands) Tax (provision) benefit at statutory rate ...State taxes, net of federal effect ...Foreign tax provision differential ...Basis difference in investments disposed of Nondeductible compensation ...State NOL valuation allowance ...Change in...

  • Page 76
    ... projected future taxable income, and tax planning strategies in making this assessment. Management believes it is more likely than not that the Company will realize the benefits of these deductible differences, except for certain state net operating losses as noted below. The amount of the deferred...

  • Page 77
    ... stores as well as other property and equipment under operating leases. These leases are noncancelable and generally contain multiple renewal options for periods ranging from three to five years, and require the Company to pay all executory costs such as maintenance and insurance. Rental payments...

  • Page 78
    ... on sale of receivables and discount on retained interests, facility fees and professional fees associated with the program, and are included in the Consolidated Statements of Income (Loss). 12. Investments in Affiliates Boise Cascade, L.L.C., and Affiliates In connection with the Sale, the Company...

  • Page 79
    ...costs associated with retail store closures and the consolidation of the Company's distribution center network and customer service centers, and adjustments to the initial estimates of the fair value of assets acquired and liabilities assumed. During 2005, the Company filed the remaining tax returns...

  • Page 80
    ...OfficeMax sold its timberlands as part of the Sale. In exchange for the timberlands, the Company received timber installment notes receivable in the amount of $1,635 million, which were credit enhanced with guarantees. The guarantees were issued by highlyrated financial institutions and were secured...

  • Page 81
    ... The scheduled payments of long-term debt are $68.6 million in 2006, $25.4 million in 2007, $34.6 million in 2008, $50.9 million in 2009 and $15.7 million in 2010 and $281.4 million thereafter. Credit Agreements On June 24, 2005, the Company entered into a loan and security agreement for a new...

  • Page 82
    ...outstanding under the new revolver during the year ended December 31, 2005, the weighted average interest rate was equal to 6.6%. Fees on letters of credit issued under the revolver were charged at a weighted average rate of 1.125%. In addition, the Company is also charged an unused line fee of 0.25...

  • Page 83
    ... as restricted investments in the Consolidated Balance Sheet. As a result of these ratings upgrades, the original 7.00% senior note covenants have been replaced with the covenants found in the Company's other public debt. During the first quarter of 2005, the Company purchased and cancelled $87...

  • Page 84
    ...Sheet at December 31, 2005. Adjustable Conversion-Rate Equity Securities (ACES) In December 2001, the Company issued 3,450,000 7.50% adjustable conversion-rate equity security units (ACES) to the public at an aggregate offering price of $172.5 million. The units traded on the New York Stock Exchange...

  • Page 85
    ...Timber notes receivable: The fair value is determined as the present value of expected future cash flows discounted at the current interest rate for loans of similar terms with comparable credit risk. • Restricted investments: The fair values of debt securities are based on quoted market prices at...

  • Page 86
    ... rate swap agreements. By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty will fail to perform under the terms of the derivative contract. The Company...

  • Page 87
    ... contract with an affiliate of Goldman, Sachs & Co. The contracts were entered into in order to hedge the interest rate risk associated with the issuance of debt securities in connection with the securitization of the timber notes received in the Sale. (See Note 15. Debt, for additional information...

  • Page 88
    ... products businesses, and transferred associated assets and obligations to the new plans. Effective October 29, 2004, under the terms of the Asset Purchase Agreement, the Company transferred sponsorship of the plans covering active employees of the paper and forest products business to Boise Cascade...

  • Page 89
    ... amounts included in prior periods. Under the terms of the Company's plans, the pension benefit for salaried employees was based primarily on the employees' years of service and highest five-year average compensation. The pension benefit for hourly employees was generally based on a fixed amount per...

  • Page 90
    ... of year ...Service cost ...Interest cost ...Amendments ...Actuarial (gain) loss ...Changes due to exchange rates ...Special termination benefits ...Closures and curtailments ...Spin-off of paper and forest products business . Benefits paid ...Change in plan assets: Fair value of plan assets...

  • Page 91
    ...million and $12.7 million at December 31, 2005 and 2004, respectively, is included in accrued liabilities, compensation and benefits. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of...

  • Page 92
    ...of the Sale, the pension and postretirement benefit obligations for those individuals who became employees of Boise Cascade, L.L.C. were settled. The settlement triggered a new measurement of the discount rate and, as a result, on October 29, 2004, the Company changed the discount rate assumption to...

  • Page 93
    ... pension plan trust assets, while minimizing the risk of significant losses, in order to enable the plans to satisfy their benefit payment obligations over time. Plan assets are invested primarily in U.S. equities, international equities and fixed-income securities. The Company uses benefit payments...

  • Page 94
    ... hourly employees: a plan for OfficeMax, Retail employees, a plan for non-Retail salaried employees, a plan for union hourly employees, and a plan for non-Retail nonunion hourly employees. Effective October 29, 2004, the defined contribution plan account balances for active forest products employees...

  • Page 95
    ... the Sale, was originally issued to the trustee of the Company's ESOP for salaried employees in 1989, and was allocated to eligible participants through 2005. All shares outstanding have been allocated to participants in the plan. Each ESOP preferred share is entitled to one vote, bears an annual...

  • Page 96
    ... of 5,726,239 shares of common stock is reserved for issuance under the 2003 Plan. The Company's executive officers, key employees and nonemployee directors are eligible to receive awards under the 2003 Plan at the discretion of the Executive Compensation Committee of the Board of Directors. Eight...

  • Page 97
    ... over the vesting periods based on the closing prices of the Company's common stock on the grant dates. If these awards contain performance criteria, management periodically reviews actual performance against the criteria and adjusts compensation expense accordingly. In 2005, 2004 and 2003, the...

  • Page 98
    ... value of deferred stock unit accounts is paid in shares of the Company's common stock when an officer retires or terminates employment. At December 31, 2005, 110,429 stock units were allocated to the accounts of these executive officers. Stock Options In addition to the 2003 DSCP and the 2003 Plan...

  • Page 99
    ... contract.) OfficeMax, Retail is a retail distributor of office supplies and paper, print and document services, technology products and solutions and office furniture. OfficeMax, Retail has operations in the United States, Puerto Rico and the U.S. Virgin Islands. OfficeMax office supply stores...

  • Page 100
    .... Boise Paper Solutions manufactured, marketed and distributed uncoated free sheet papers (office papers, printing grades, forms bond, envelope papers and value-added papers), containerboard, corrugated containers, newsprint and market pulp. With the exception of newsprint, these products were...

  • Page 101
    ... at market prices. No single customer accounts for 10% or more of consolidated trade sales. Export sales to foreign unaffiliated customers were $104.0 million in 2004 and $127.2 million in 2003. There were no such sales in 2005. OfficeMax, Contract has foreign operations in Canada, Mexico, Australia...

  • Page 102
    Segment sales to external customers by product line are as follows: Year Ended December 31 2005 2004 2003 (millions) OfficeMax, Contract Office supplies and paper ...Technology products ...Office furniture ...OfficeMax, Retail Office supplies and paper ...Technology products ...Office furniture ......

  • Page 103
    ...Company Capital ments (Loss) of Timber Expendiin Affiliates Harvested tures Assets Affiliates (millions) Year Ended December 31, 2005 OfficeMax, Contract ...$ 4,628.6 $ OfficeMax, Retail ...4,529.1 9,157.7 Boise Building Solutions . Boise Paper Solutions . . Corporate....0 Trade Sales Intersegment...

  • Page 104
    ... payments calculated using industry paper price projections. In connection with the Sale, the Company entered into a paper supply contract with affiliates of Boise Cascade, L.L.C. under which we are obligated to purchase our North American requirements for cut-size office paper, to the extent Boise...

  • Page 105
    ... financial position or results of operations. Over the past several years and continuing into 2006, the Company has been named a defendant in a number of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to asbestos while working at job sites...

  • Page 106
    ...received claims by a vendor to its retail business that certain employees acted inappropriately in requesting promotional payments and in falsifying supporting documentation. The internal investigation was conducted under the direction of the Company's audit committee and was completed in March 2005...

  • Page 107
    ....) (j) Includes $15.9 million of expense for one-time benefits costs granted to employees. (k) Quarters added together may not equal full year amount because each quarter is calculated on a stand-alone basis. (l) The Company's common stock (symbol OMX) is traded on the New York Stock Exchange. 103

  • Page 108
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the...

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    ...'s assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

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    ... chief financial officer concluded that the Company's disclosure controls and procedures were effective in alerting them in a timely manner to material information that the Company is required to disclose in its filings with the Securities and Exchange Commission. (b) Management's Report on Internal...

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    ... the Company in November 2005. Prior to his election as executive vice president, finance of the Company, Mr. Civgin served as senior vice president and chief financial officer of General Binding Corporation, a designer, manufacturer and distributor of branded office equipment, related supplies and...

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    ... Reporting Compliance'' in our proxy statement and is incorporated by reference. We have adopted a Code of Ethics that applies to all OfficeMax employees and directors, including our senior financial officers. Copies of the Code are available, free of charge, on our website at www.officemax.com...

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    ... AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as a part of this Form 10-K: (1) Consolidated Financial Statements. The Consolidated Financial Statements, the Notes to Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm are...

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    ... of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OfficeMax Incorporated By /s/ SAM K. DUNCAN Sam K. Duncan Chief Executive Officer Dated: March 13, 2006 Pursuant to the...

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    ...years in the three-year period ended December 31, 2005, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which reports appear in the December 31, 2005, annual report on Form 10-K of OfficeMax...

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    ... Report on Form 10-K for the Year Ended December 31, 2005 Exhibit Number 2.1 Incorporated by Reference File Exhibit Filing Filed Number Number Date Herewith 001-05057 2 7/14/03 Exhibit Description Agreement and Plan of Merger dated as of July 13, 2003, among Boise Cascade Corporation (now OfficeMax...

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    ... Inc. dated October 29, 2004 Employment Agreement between Boise Cascade Office Products Corporation (now OfficeMax Contract, Inc.) and Phillip P . DePaul dated December 10, 2003 Employment Agreement between Boise Cascade Corporation (now OfficeMax Incorporated) and George J. Harad dated October...

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    ... II, LLC, OfficeMax Incorporated, Wachovia Capital Markets, LLC, Lehman Brothers Inc. Executive Savings Deferral Plan 2005 Deferred Compensation Plan 2005 Directors Deferred Compensation Plan Directors Compensation Summary Sheet Form of Director Restricted Stock Award Agreement 8-K 001-05057...

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    ...31†Executive Life Insurance Program Officer Annual Physical Program Financial Counseling Program Form of Amended 2005 Annual Incentive Award Agreement 2004 Retention Bonus Plan Executive Officer Mandatory Retirement Policy Form of Severance Agreement with Executive Officer (for executive officer...

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    ..., 2003 Directors Stock Option Plan, as amended through September 26, 2003 Form of Agreement with Executive Officers, as amended through September 26, 2003 (for Boise Office Solutions employees who were executive officers of Boise Cascade Corporation) 2001 Key Executive Deferred Compensation Plan, as...

  • Page 121
    ... Boise Cascade Office Products Corporation (now OfficeMax Contract, Inc.) and Ryan Vero dated December 10, 2003 10-K/A 001-05057 10.55 3/24/05 10.55†Settlement and Release Agreement by 8-K and between Gary J. Peterson and OfficeMax Contract, Inc. dated March 22, 2005 Employment Agreement...

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    ...to the OfficeMax Incorporated 2003 Director Stock Compensation Plan Amendment to OfficeMax Incorporated Executive Savings Deferral Plan Amendment to 2003 OfficeMax Incentive and Performance Plan Form of 2006 Annual Incentive Award Agreement Form of 2006 Restricted Stock Unit Award Agreement Ratio of...

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    ... of the Securities Exchange Act of 1934, as amended. (1) The Trust Indenture between Boise Cascade Corporation (now known as OfficeMax Incorporated) and Morgan Guaranty Trust Company of New York, Trustee, dated October 1, 1985, as amended, was filed as exhibit 4 in the Registration Statement on Form...

  • Page 124
    ... to the company's Series D Convertible Preferred Stock held by the company's ESOP (employee stock ownership plan) is net of a tax benefit. (b) For the years ended December 31, 2005 and 2003, the computation of diluted loss per common share was antidilutive; therefore, amounts reported for basic...

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    ... before income taxes, minority interest, and cumulative effect of accounting changes ...Undistributed (earnings) losses of less than 50% owned entities, net of distributions received ...Total fixed charges ...Less: Interest capitalized ...Guarantee of interest on ESOP debt ... ... $ 141,455 - - 120...

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    ... (loss) from continuing operations before income taxes, minority interest, and cumulative effect of accounting changes ...Undistributed (earnings) losses of less than 50% owned entities, net of distributions received ...Total fixed charges ...Less interest capitalized ... $ 141,455 - 120,989 262,444...

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    ... Creek Funding Corporation Grand & Toy Limited National Office Products Ltd. OfficeMax Southern Company OfficeMax New Zealand Limited OfficeMax North America, Inc. OMX Timber Finance Holdings I, LLC OMX Timber Finance Holdings II, LLC Clearfield Insurance Limited OfficeMax de Mexico Note: Delaware...

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    ...process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ SAM K. DUNCAN Sam K. Duncan Chief Executive Officer b. Date: March...

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    ...2002 I, Don Civgin, chief financial officer of OfficeMax Incorporated, certify that: 1. 2. I have reviewed this annual report on Form 10-K of OfficeMax Incorporated; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary...

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    ... OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF OFFICEMAX INCORPORATED We are providing this Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. It accompanies OfficeMax Incorporated's annual report on Form 10-K (the ''Report'') for the year...

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