OfficeMax 2005 Annual Report Download - page 80

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amortized on a straight-line basis over their expected useful lives. Customer lists and relationships
are amortized over three to 20 years, noncompete agreements over their terms, which are generally
three to five years, and exclusive distribution rights over ten years. Intangible assets consisted of
the following:
Year Ended December 31, 2005
Gross Carrying Accumulated Net Carrying
Amount Amortization Amount
(thousands)
Trade names .......................... $173,100 $ — $ 173,100
Customer lists and relationships ............ 36,438 (13,438) 23,000
Noncompete agreements ................. 12,852 (5,577) 7,275
Exclusive distribution rights ................ 3,508 (1,651) 1,857
$225,898 $(20,666) $205,232
Year Ended December 31, 2004
Gross Carrying Accumulated Net Carrying
Amount Amortization Amount
(thousands)
Trade names .......................... $173,100 $ — $ 173,100
Customer lists and relationships ............ 34,771 (10,036) 24,735
Noncompete agreements ................. 12,680 (2,921) 9,759
Exclusive distribution rights ................ 3,689 (1,325) 2,364
$224,240 $(14,282) $209,958
Intangible asset amortization expense totaled $6.8 million in 2005, $5.8 million in 2004 and
$3.1 million in 2003. The estimated amortization expense is $6.8 million, $6.7 million, $4.6 million,
$1.5 million and $1.4 million in 2006, 2007, 2008, 2009 and 2010, respectively.
During the first quarter of 2005 and 2004, the Company evaluated the remaining useful lives of
finite-lived purchased intangible assets to determine if any adjustments to the useful lives were
necessary. Based on this review, management determined that no adjustments to the useful lives of
finite-lived purchased intangible assets were necessary.
14. Timber Notes Receivable
In October 2004, OfficeMax sold its timberlands as part of the Sale. In exchange for the
timberlands, the Company received timber installment notes receivable in the amount of
$1,635 million, which were credit enhanced with guarantees. The guarantees were issued by highly-
rated financial institutions and were secured by the pledge of underlying collateral notes issued by
the credit enhancement banks. The timber installment notes receivable are 15-year non-amortizing.
There are two notes that total $817.5 million bearing interest at 4.982% and a third note in the
amount of $817.5 million bearing interest at 5.112%. Interest earned on all of the notes is received
semiannually. See sub-caption ‘‘Timber Notes’’ in Note 15, Debt, for additional information
concerning a securitization transaction involving the timber installment notes receivable.
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