OfficeMax 2007 Annual Report Download - page 62

the first annual reporting period beginning on or after December 15, 2008. SFAS No. 141R will
impact the accounting for business combinations completed beginning January 1, 2009.
In December 2007, the FASB issued SFAS No. 160, ‘‘Noncontrolling Interests in Consolidated
Financial Statements.’’ SFAS 160 requires noncontrolling interests (previously referred to as minority
interests) to be treated as a separate component of equity, not as a liability or other item outside of
permanent equity. SFAS 160 applies to the accounting for noncontrolling interests and transactions
with noncontrolling interest holders in consolidated financial statements and is effective for periods
beginning on or after December 15, 2008. Earlier application is prohibited. SFAS No. 160 will be
applied prospectively to all noncontrolling interests, including those that arose before the effective
date, except that comparative prior period information must be recast to classify noncontrolling
interests in equity and provide other disclosures required by SFAS No. 160. The Company is
currently evaluating the impact of the provisions of SFAS 160.
Prior Period Revisions
Certain amounts included in the prior years’ financial statements have been revised to conform
with the current year’s presentation. In the current year, the Company separately presented the
effect of exchange rate changes on cash in the consolidated Statements of Cash Flows. In prior
periods, these amounts were included in other operating activities. The effect of this revision on the
amounts reported for 2006 and 2005 was not material.
2. Discontinued Operations
In December 2004, the Company’s board of directors authorized management to pursue the
divestiture of a facility near Elma, Washington that manufactured integrated wood-polymer building
materials. The board of directors and management concluded that the operations of the facility
were no longer consistent with the Company’s strategic direction. As a result of that decision, the
Company recorded the facility’s assets as held for sale on the Consolidated Balance Sheets and
reported the results of its operations as discontinued operations.
During 2005, the Company experienced unexpected difficulties in achieving anticipated levels
of production at the facility. These issues delayed the process of identifying and qualifying a buyer
for the business. While management made substantial progress in addressing the manufacturing
issues that caused production to fall below plan, during the fourth quarter of 2005, the Company
concluded that it was unable to attract a buyer in the near term and elected to cease operations at
the facility during the first quarter of 2006. As of December 29, 2007, the Company has not
identified a buyer for the facility.
In accordance with SFAS No. 144, ‘‘Accounting for the Impairment or Disposal of Long-Lived
Assets,’’ the Company recorded pre-tax charges, including $28.2 million recorded in the fourth
quarter of 2005, to reduce the carrying value of the long-lived assets of the Elma, Washington
facility to their estimated fair value. During the first quarter of 2006, the Company ceased operations
at the facility and recorded pre-tax expenses of $18.0 million for contract termination and other
closure costs. These charges and expenses were reflected within discontinued operations in the
Consolidated Statements of Income (Loss).
The liabilities of the wood-polymer building materials facility near Elma, Washington, are
included in current liabilities ($15.4 million at December 29, 2007 and $15.5 million at December 30,
2006, respectively) in the Consolidated Balance Sheets. There were no assets related to this facility
included in the Consolidated Balance Sheets at December 29, 2007 or December 30, 2006.
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