OfficeMax 2006 Annual Report Download - page 15

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11
In June 2005,the Company announced that the SEC issued aformalorder of investigation arising
from theCompany’s previously announced internal investigation into its accounting for vendor
income. The Company launched its internal investigation in December 2004 when the Company
received claims by a vendor to its retail business thatcertain employees acted inappropriately in
requesting promotional paymentsand infalsifying supporting document ation. The internal
investigation was conducted under the direction of the Company’s audit committee and was
completed in March 2005. The Company cooperated fully with the SEC. The Company has had no
communication with the SEC since August 2005.
Putative derivative actions havebeen filed in the Circuit Courts ofCookCounty (Homstrom v.
Harad, et al.) and DuPage County, Illinois (Bryan v. Anderson, et al.)against a number of current and
former officers and/or directors of the Company or its predecessor in connection with alleged
misrepresentation of financial results (and, in the case of one former director and officer, for allegedly
selling Companycommon stock while in possession of material, non-public information concerning
the Company’s financial position and future prospects). Both derivative actions assert claims for
breach offiduciary duty and unjust enrichment, and the Homstrom complaint also includes claims for
alleged abuse of control, mismanagement, and waste of corporate assets. The relief soughtfrom the
defendants includes recovery of costs incurred by the Company in its internal investigation and
restatement,the disgorgement of compensation and , in the Homstrom case, the attorneys’ fees
incurred by the Company in defending the Rothputative class actionand the Company’s asserted
exposure to a potentially substantial settlement or adverse judgment in the Roth case. The Company
is anominal defendant inthe putative derivative actions and no monetaryreliefis sought fromthe
Company. However,the Company has exposure insuch cases for amounts it may be requiredto
advance or incur onbehalf of the individual defendants under its indemnification obligations. On
February 21, 2007,the Bryan case was dismissed without prejudice.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.