OfficeMax 2007 Annual Report Download - page 15

Download and view the complete annual report

Please find page 15 of the 2007 OfficeMax annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

Over the past several years and continuing in 2008, we have been named a defendant in a
number of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos
products or exposure to asbestos while working at job sites. The claims vary widely and often are
not specific about the plaintiffs’ contacts with the Company. None of the claimants seeks damages
from us individually, and we are generally one of numerous defendants. Many of the cases filed
against us have been voluntarily dismissed, although we have settled some cases. The settlements
we have paid have been covered mostly by insurance, and we believe any future settlements or
judgments in these cases would be similarly covered. To date, no asbestos case against us has
gone to trial, and the nature of these cases makes any prediction as to the outcome of pending
litigation inherently subjective. At this time, however, we believe our involvement in asbestos
litigation is not material to our financial position, our results of operations or our cash flows.
In June 2005, the Company announced that the SEC issued a formal order of investigation
arising from the Company’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 that certain employees acted
inappropriately in requesting promotional payments and in falsifying supporting documentation. 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. In a letter dated
October 23, 2007, the Company received notification from the SEC that it had completed its
investigation against the Company and was not recommending any enforcement action.
On April 25, 2005, a putative derivative action, Homstrom v. Harad, et al., was filed in the
Circuit Court of Cook County, Illinois. The Homstrom complaint names as defendants the following
current and former officers and directors of OfficeMax Incorporated: George J. Harad,
Christopher C. Milliken, Theodore Crumley, Gary J. Peterson, Brian P. Anderson, Warren F. Bryant,
Claire S. Farley, Rakesh Gangwal, Edward E. Hagenlocker, Gary G. Michael, A. William Reynolds,
Francesca Ruiz De Luzuriaga, Jane E. Shaw, Carolyn M. Ticknor, Ward W. Woods, Brian C. Cornell,
David M. Szymanski, Richard R. Goodmanson, Donald N. MacDonald, and Frank A. Schrontz. The
complaint also names the following former directors of OfficeMax, Inc. as defendants: Michael
Feuer, Lee Fisher, Edwin J. Holman, Jerry Sue Thornton, Burnett W. Donoho, Michael F. Killeen,
Ivan J. Winfield, and Jacqueline Woods. OfficeMax Incorporated is named as a nominal defendant.
The complaint purports to assert, among other things, various common law derivative claims
against the individual defendants including breach of fiduciary duty and unjust enrichment. The
complaint seeks an award in favor of OfficeMax and against the individual defendants of an
unspecified amount of damages, disgorgement of benefits and compensation, equitable or
injunctive relief, costs, including attorneys’ fees, and such other relief as the court deems just and
proper. Pursuant to provisions of the Company’s bylaws, fees and other expenses incurred in
connection with the foregoing derivative action are being advanced on behalf of those present and
former officers and directors by the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
11