OfficeMax 2006 Annual Report Download - page 32

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28
Prior to its acquisition by Boise Cascade Corporation, OfficeMax, Inc. had identified and closed
underperforming facilities. As part of ourpurchase price allocation, we recorded$58.7 million of
reservesfor the estimated fair value of future liabilitiesassociated with these closures.These reserves
related primarily to future lease termination costs, net of estimated sublease income. Most ofthe
expenditures for thesefacilities will be made over the remaining lives of the operat ing leases.In
addition to these store closures, at December 31,2003, we identified and closed 45 OfficeMax, Retail
facilities that were no longer strategically and economically viable and recorded a $69.4 million liability
in theConsolidated Balance Sheet. During 2004, we identified and closed an additional 11 stores.
These charges were accounted for as exit activities in connectionwith the acquisition and were not
recorded as a charge to income.
Since the OfficeMax, Inc. acquisition, we have closed 18 ofour U.S.distribution centers and 2
customer service centers. In connection with these closureswe recorded a charge to income in our
Consolidated Statement of Income (Loss) of $29.7 million during 2004.
In September 2005, the board of directors approved a plan to relocate and consolidate our retail
headquarters in Shaker Heights, Ohio and existing corporate headquarters in Itasca, Illinois into a new
facility inNaperville, Illinois. We began the consolidation and relocation process inthe latter half of
2005.As of December 30, 2006, we have expensed approximately $70.9 million of costs related to the
headquarters consolidation in our Corporate and Other segment, including $45.9 million recognized
during 2006 and $25.0 million recognized during the second half of2005. The consolidation and
relocation process was completedduring the second half of 2006and we do not expectto incur any
additional charges.
Also in 2005, we recordedcharges to income of $23.2 million for the write-down of impaired
assets related to underperforming retail stores and the restructuring of our Canadian operations.
During 2006, we announced the reorganization of our Contract segment andrecorded a pre-tax
charge of$7.3 million for employee severance related to the reorganization. TheContract segment
also recorded an additional $3.0 million of costs during 2006, primarily related toa facility closure and
employee severance.
During 2006, we closed 109underperforming,domestic retail stores and recorded a pre-tax
charge of $89.5 million, comprised of$11.3million for employee severance, asset write-off and
impairment and other closure costs and $78.2 million of estimated future lease obligations.