OfficeMax 2005 Annual Report Download - page 79

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Voyageur Panel
In May 2004, the Company sold its 47 percent joint venture interest in Voyageur Panel, which
owned and operated an oriented strand board plant in Barwick, Ontario, Canada, to Ainsworth
Lumber Co. Ltd. for $91.2 million in cash. The Company recognized a $46.5 million pretax gain
($28.4 million after tax) on the transaction, which is included in other (income) expense, net in the
Consolidated Statement of Income (Loss) for 2004, and reported in the Boise Building Solutions
segment.
Prior to the sale, the Company accounted for this joint venture interest under the equity
method. Accordingly, segment results do not include the sales of Voyageur Panel, but do include
$6.3 million and $8.7 million of equity in earnings from this investment for 2004 and 2003,
respectively.
Under the terms of an agreement with Voyageur Panel, the Company operated the plant and
marketed its product in exchange for a management fee and sales commissions. During 2004 and
2003, Voyageur Panel paid $2.1 million and $3.7 million, respectively, in sales commissions to the
Company. In addition, Voyager Panel paid management fees to the Company of $0.4 million in
2004 and $1.1 million in 2003.
13. Goodwill and Intangible Assets
Goodwill
Changes in the carrying amount of goodwill by segment are as follows:
Boise
OfficeMax, OfficeMax, Building
Contract Retail Solutions Total
(thousands)
Balance at December 31, 2003 ........... $487,997 $ 607,656 $ 11,639 $ 1,107,292
Effect of foreign currency translation ....... 14,116 — — 14,116
Purchase price adjustments ............. 3,803 51,744 — 55,547
Sale of assets ....................... — — (11,639) (11,639)
Balance at December 31, 2004 ........... 505,916 659,400 — 1,165,316
Effect of foreign currency translation ....... (4,188) — — (4,188)
Businesses acquired ................... 22,461 — — 22,461
Purchase price adjustments ............. (652) 35,263 — 34,611
Balance at December 31, 2005 ........... $523,537 $694,663 $ — $1,218,200
The initial OfficeMax, Inc. purchase price allocation was revised during 2004 as additional
information related to the fair values of the assets acquired and liabilities assumed became
available. These revisions were primarily related to accruals for estimated 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 related
to the pre-acquisition operations of OfficeMax, Inc. and adjusted goodwill to reflect the true-up of
deferred tax assets and liabilities related to the acquired net assets.
Acquired Intangible Assets
Intangible assets represent the values assigned to trade names, customer lists and
relationships, noncompete agreements and exclusive distribution rights of businesses acquired. The
trade name assets have an indefinite life and are not amortized. All other intangible assets are
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