OfficeMax 2006 Annual Report Download - page 71

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67
10. 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 accountedfor under the cost
method as Boise Cascade, L.L.C. does not maintain separateownership accounts for its members,
and the Company has less thana 20 percent votinginterest 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 ConsolidatedBalance Sheets. The Company hasdetermined
that it is not practicable to estimate thefair 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 of8%per
annum on the liquidation value plus accumulated dividends. Dividends accumulate semiannually to
the extent not paid incash on the last day ofany June and December. The Company recognized
dividend income on this investment of$5.9 million in 2006 and $5.5 million in 2005.
Voyageur Panel
In May 2004, theCompany sold its 47 percent joint venture interest inVoyageur Panel, which
owned and operated an oriented strandboard plant in Barwick, Ontario,Canada, to Ainsworth
Lumber Co. Ltd. for $91.2 million incash. The Company recognized a $46.5 million pre-tax gain
($28.4 million after tax) on the transaction, which is included in other operating, net in the
Consolidated Statement of Income (Loss) for 2004, andreported in the Boise Building Solutions
segment.
Prior to the sale, the Company accounted forthis joint venture interest under the equity method.
Accordingly, segment results do not include thesales ofVoyageur Panel, but do include $6.3 million
of equity inearnings from this investmentfor 2004.
Under the terms of anagreement with Voyageur Panel, theCompany operated the plant and
marketed its product in exchange for amanagement fee and sales commissions. During 2004,
Voyageur Panelpaid $2.1 million in sales commissions and $0.4 millioninmanagement fees to the
Company.