OfficeMax 2005 Annual Report Download - page 105

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There are twelve operating leases that have been assigned to other parties but for which the
Company remains contingently liable in the event of nonpayment by the other parties. The lease
terms vary and, assuming exercise of renewal options, extend through 2032. Annual rental
payments under these leases are approximately $3.4 million.
The Company and its affiliates enter into a wide range of indemnification arrangements in the
ordinary course of business. These include tort indemnifications, tax indemnifications, officer and
director indemnifications against third-party claims arising out of arrangements to provide services
to us and indemnifications in merger and acquisition agreements. It is impossible to quantify the
maximum potential liability under these indemnifications. At December 31, 2005, the Company is
not aware of any material liabilities arising from these indemnifications.
21. Legal Proceedings and Contingencies
OfficeMax Incorporated and certain of its subsidiaries are named as defendants in a number of
lawsuits, claims and proceedings. Some of these lawsuits and proceedings arise out of the
operation of the paper and forest products assets prior to closing of the Sale, for which OfficeMax
agreed to retain responsibility. Also, as part of the Sale, the Company agreed to retain responsibility
for all pending or threatened proceedings and future proceedings alleging asbestos-related injuries
arising out of the operation of the paper and forest products assets prior to the closing of the Sale.
The Company does not believe any of these retained proceedings are material to its business.
The Company has been notified that it is a ‘‘potentially responsible party’’ under the
Comprehensive Environmental Response, Compensation and Liability Act (‘‘CERCLA’’) or similar
federal and state laws, or have received a claim from a private party, with respect to 15 active sites
where hazardous substances or other contaminants are or may be located. All 15 active sites relate
to operations either no longer owned by the Company or unrelated to its ongoing operations. In
most cases, the Company is one of many potentially responsible parties, and its alleged
contribution to these sites is relatively minor. For sites where a range of potential liability can be
determined, the Company has established appropriate reserves. The Company believes it has
minimal or no responsibility with regard to several other sites. The Company cannot predict with
certainty the total response and remedial costs, its share of the total costs, the extent to which
contributions will be available from other parties or the amount of time necessary to complete the
cleanups. Based on its investigations; its experience with respect to cleanup of hazardous
substances; the fact that expenditures will, in many cases, be incurred over extended periods of
time; and the number of solvent potentially responsible parties, the Company does not believe that
the known actual and potential response costs will, in the aggregate, materially affect its 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. The claims vary widely
and often are not specific about the plaintiffs’ contacts with the Company. None of the claims seeks
damages from us individually, and the Company is generally one of numerous defendants. Many of
the cases filed against us have been voluntarily dismissed, although the Company has settled some
cases. The settlements we have paid have been covered mostly by insurance, and we believe any
future settlements or judgments in these cases would be similarly covered. To date, no asbestos
case against us has gone to trial, and the nature of these cases makes any prediction as to the
outcome of pending litigation inherently subjective. At this time, however, the Company believes its
involvement in asbestos litigation is not material to either its financial position or its results of
operations.
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