OfficeMax 2005 Annual Report Download - page 22

Contract Initiatives
We have has also identified several programs for improving growth and efficiency in our
Contract operations. These include continuing to focus on the middle-market and other
high-growth, high-return customers; pursuing product extension opportunities; driving Retail sales
through Contract customers; completing an evaluation of our Canadian operations; and
implementing system-wide cost efficiencies.
Other
As part of our Turnaround Plan for Higher Performance, we are also ceasing operations at the
Company’s wood-polymer building materials facility near Elma, Washington which is reflected as a
discontinued operation in the Consolidated Financial Statements. The estimated pretax costs and
expenses to exit this business total approximately $41 million, including $24 million of asset
write-offs and impairment, $11 million of lease and contract termination costs and $6 million of
other closure and exit costs, including severance. In connection with the decision to cease
operations at the facility, we completed an assessment of the recoverability of the related long-lived
assets and recorded a $28.2 million pretax charge in 2005 that included asset write-off and
impairment and other closure costs.
On September 29, 2005, we announced that Naperville, Illinois was selected as the location for
our new consolidated corporate headquarters. We also announced that our retail headquarters in
Shaker Heights, Ohio and our existing corporate headquarters in Itasca, Illinois would move into the
new corporate headquarters. The relocation and consolidation process is expected to be completed
during the latter half of 2006. We expect that this headquarters consolidation will improve
operational efficiencies, enhance collaboration among departments, and reduce costs over time.
Management expects the total cost of the relocation and consolidation will be $40 to $50 million on
a pre-tax basis. The Company recorded charges of $25 million during the third and fourth 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 Dearborn Partners
LLC (the ‘‘Sale’’). The Sale did not include our facility near Elma, Washington. The Sale completes
the company’s transition, begun in the mid-1990s, from a predominantly manufacturing-based
company to an independent office products distribution company. Some assets of the segments
whose assets we sold, such as the facility near Elma, Washington and Company-owned life
insurance, were retained by OfficeMax, as were some liabilities of the segments whose assets we
sold such as liabilities associated with retiree pension and benefits, litigation, environmental
remediation at selected sites and facilities previously closed. The assets that we sold were included
in our Boise Building Solutions and Boise Paper Solutions segments.
In connection with the Sale, we recorded a $280.6 million gain in our Corporate and Other
segment in our Consolidated Statement of Income (Loss). On October 29, 2004, we invested
$175 million in securities of affiliates of Boise Cascade, L.L.C. This investment represents continuing
involvement as defined in Financial Accounting Standards Board (‘‘FASB’’) Statement 144,
‘‘Accounting for the Impairment or Disposal of Long-Lived Assets.’’ Accordingly, we do not show
the historical results of the paper, forest products and timberland assets as discontinued operations.
An additional $180 million of gain on the Sale was deferred as a result of our continuing
involvement with Boise Cascade, L.L.C. We will recognize this gain as we reduce our investment in
affiliates of Boise Cascade, L.L.C. We realized note and cash proceeds of approximately $3.5 billion
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