OfficeMax 2005 Annual Report Download - page 66

Reclassifications
Certain amounts included in the prior years’ financial statements have been reclassified to
conform with the current year’s presentation. These reclassifications did not affect the reported
amounts of net income (loss) or earnings (loss) per share.
2. Sale of Paper, Forest Products and Timberland Assets
On October 29, 2004, the Company completed the Sale, which included substantially all of the
assets of the Boise Building Solutions and Boise Paper Solutions segments. In connection with the
Sale, the Company recognized a $280.6 million gain in the Consolidated Statement of Income
(Loss). For segment reporting purposes, the gain was included in the Corporate and Other
segment.
The Sale did not include the wood-polymer building materials facility near Elma, Washington.
(See Note 3, Discontinued Operations for additional information relating to the Elma Washington
facility.) The Company also retained certain other assets and liabilities of the sold paper, forest
products and timberland business, including Company-owned life insurance policies, and liabilities
such as those associated with retiree pension and other benefits, litigation, and environmental
remediation at selected active sites and facilities previously closed.
In connection with the sale, the Company invested $175 million in securities of affiliates of
Boise Cascade, L.L.C. This investment represents continuing involvement as defined in SFAS
No. 144, ‘‘Accounting for the Impairment or Disposal of Long-Lived Assets,’’ and accordingly, the
historical results of the sold paper, forest products and timberland assets are not reported as
discontinued operations. An additional $180 million of gain realized from the Sale was deferred as a
result of the Company’s continuing involvement with Boise Cascade, L.L.C. This deferred gain will
be recognized in earnings as the Company’s investment in affiliates of Boise Cascade, L.L.C. is
reduced.
The Company received cash and other consideration of approximately $3.7 billion from the
Sale. Total proceeds to the Company after allowing for the $175 million investment in the securities
of affiliates of Boise Cascade, L.L.C and transaction related expenses, were approximately
$3.5 billion. The consideration for the timberlands portion of the Sale included $1.6 billion of timber
installment notes receivable. In December 2004, the Company completed a securitization
transaction and transferred its interest in the timber installment notes receivable to wholly owned
bankruptcy remote subsidiaries in exchange for cash proceeds of $1.5 billion. Including the cash
received at the closing of the Sale and the proceeds from the securitization of the timber installment
notes, and deducting the cash used to pay for the $175 million investment and transaction-related
expenses, the Company received a net total of $3.3 billion in cash from the Sale and related
transactions. In 2004, the Company used a portion of these proceeds to repurchase and retire
outstanding debt, to redeem outstanding Series D preferred stock and to make contributions to 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 rights through a modified Dutch auction tender offer.
3. Discontinued Operations
In December 2004, the Company’s board of directors authorized management to pursue the
divestiture of the facility near Elma, Washington that manufactures integrated wood-polymer
building materials. The board of directors and management concluded that the operations of the
facility were no longer consistent with the Company’s strategic direction. The Company has
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