OfficeMax 2006 Annual Report Download - page 72

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68
11. Goodwill and Intangible Assets
Goodwill
Changes in the carrying amount of goodwill by segment are as follows:
OfficeMax,
Contract
OfficeMax,
Retail Total
Balanceat December 31, 2004....................... $505,916 $ 659,400 $1,165,316
Effect of foreign currencytranslation................... (4,188)—(4,188)
Businesses acquired................................ 22,461 —22,461
Purchase accountingadjustments..................... (652)35,26334,611
Balanceat December 31, 2005....................... 523,537 694,663 1,218,200
Effect of foreign currencytranslation................... 6,423—6,423
Businesses acquired................................ 1,114—1,114
Purchase accounting adjustments..................... (2,984) (6,721) (9,705)
Balanceat December 30, 2006....................... $ 528,090 $ 687,942 $ 1,216,032
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 toaccruals for estimated costs associated with retail store
closures and the consolidation of the Company’s distribution center network and customer service
centers. During 2005, the Company filed the remaining tax returns related to the pre-acquisition
operations of OfficeMax, Inc.and adjustedgoodwill to reflect adjustments to the deferred tax assets
and liabilitiesrelated to the acquired net assets.During 2006, additional adjustments were necessary
to reflect the recognitionofcertainidentifiable assets in the contract seqment and the reversal ofa
portion of the EITF 95-3 liability recorded in purchase accounting related to the retail segment.
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 amortized on a
straight-linebasis 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 at year end:
2006
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
(thousands)
Trade names ............................... $173,150 $ — $ 173,150
Customer lists and relationships .............. 39,681 (17,678 )22,003
Noncompete agreements .................... 12,853 (8,213 ) 4,640
Exclusive distribution rights.................. 3,616(2,105) 1,511
$ 229,300$ ( 27,996) $201,304