OfficeMax 2005 Annual Report Download - page 78

For operating leases with remaining terms of more than one year, the minimum lease payment
requirements are: $361.0 million for 2006, $315.1 million for 2007, $284.3 million for 2008,
$255.4 million for 2009, $229.5 million for 2010 and $762.3 million thereafter. These minimum lease
payments do not include contingent rental payments that may be due based on a percentage of
sales in excess of stipulated amounts. These future minimum lease payment requirements also
have not been reduced by $68.4 million of minimum sublease rentals due in the future under
noncancelable subleases.
The Company capitalizes lease obligations for which it assumes substantially all property rights
and risks of ownership. The Company did not have any material capital leases during any of the
periods presented.
11. Sales of Accounts Receivable
On June 20, 2005, the Company entered into a Third Amended and Restated Receivables Sale
Agreement with a group of lenders. The agreement allows the Company to sell, on a revolving
basis, an undivided interest in a defined pool of receivables while retaining a subordinated interest
in a portion of the receivables. The amount of available proceeds under the program is limited to
$200 million, and is subject to change based on the level of eligible receivables, restrictions on
concentrations of receivables and the historical performance of the receivables. The receivables
sale agreement will expire on June 19, 2006.
The eligible receivables are sold without legal recourse to third party conduits through a wholly
owned bankruptcy-remote special purpose entity that is consolidated for financial reporting
purposes. The Company continues servicing the sold receivables and charges the third party
conduits a monthly servicing fee at market rates. The program qualifies for sale treatment under
SFAS 140. At December 31, 2005 and 2004, $163.0 million and $120.0 million of sold accounts
receivable were excluded from receivables in the accompanying Consolidated Balance Sheets. The
Company’s subordinated retained interest in the transferred receivables was $73.3 million at
December 31, 2005. Expenses associated with the securitization program totaled $5.5 million,
$4.2 million and $3.3 million, in 2005, 2004 and 2003, respectively. These expenses relate primarily
to the loss 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 invested $175 million in the equity units of affiliates
of Boise Cascade, L.L.C. A portion (approximately $66 million) of the equity units received in
exchange for the Company’s investment carry no voting rights. This investment is accounted for
under the cost method as the Company has less than a 20 percent voting interest in Boise
Cascade L.L.C. and does not have the ability to significantly influence its operating and financial
policies. This investment is included in investment in affiliates in the Consolidated Balance Sheet.
The Company has determined that it is not practicable to estimate the fair value of this investment.
However, the Company did not observe any events or changes in circumstances that would have
had a significant adverse effect on the fair value of the investment.
The Boise Cascade L.L.C. non-voting equity units accrue dividends daily at the rate of 8% per
annum on the liquidation value plus accumulated dividends. Dividends accumulate semiannually to
the extent not paid in cash on the last day of any June and December. The Company recognized
dividend income on this investment of $5.5 million in 2005 and $0.9 million in 2004.
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