OfficeMax 2008 Annual Report Download - page 38

debt are not included in the table above because the timing and amount of any required payments
cannot be reasonably estimated. However, the table under the heading Financial Instruments in this
section presents principal cash flows and related weighted average interest rates by expected
maturity dates. For obligations with variable interest rates, the table sets forth payout amounts
based on rates as of December 27, 2008 and does not attempt to project future rates.
The securitized timber notes payable have recourse limited to the applicable pledged
installment note receivable and underlying guarantees. The debt remains outstanding until it is
legally extinguished, which will be when the Installment note and guaranty are transferred to and
accepted by the securitized note holders.
We enter into operating leases in the normal course of business. We lease our retail store
space as well as certain other property and equipment under operating leases. Some of our retail
store leases require percentage rentals on sales above specified minimums and contain escalation
clauses. These minimum lease payments do not include contingent rental expense. Some lease
agreements provide us with the option to renew the lease or purchase the leased property. Our
future operating lease obligations would change if we exercised these renewal options and if we
entered into additional operating lease agreements. For more information, see Note 8, Leases, of
the Notes to Consolidated Financial Statements in ‘‘Item 8. Financial Statements and
Supplementary Data’’ in this Form 10-K. Lease obligations for closed facilities are included in
operating leases and a liability equal to the fair value of these obligations is included in the
Company’s Consolidated Balance Sheets. For more information, see Note 5, Integration Activities
and Facility Closures, of the Notes to Consolidated Financial Statements in ‘‘Item 8. Financial
Statements And Supplementary Data’’ in this Form 10-K.
Our Consolidated Balance Sheet as of December 27, 2008 includes $502.4 million of liabilities
associated with our retirement and benefit plans and $222.1 million of other long-term liabilities.
Certain of these amounts have been excluded from the above table as either the amounts are fully
or partially funded, or the timing and/or the amount of any cash payment is uncertain. Actuarially-
determined liabilities related to pension and postretirement benefits are recorded based on
estimates and assumptions. Key factors used in developing estimates of these liabilities include
assumptions related to discount rates, rates of return on investments, future compensation costs,
healthcare cost trends, benefit payment patterns and other factors. Changes in assumptions related
to the measurement of funded status could have a material impact on the amount reported.
In accordance with an amended and restated joint venture agreement, the minority owner of
our subsidiary in Mexico, Grupo OfficeMax, can elect to put its remaining 49% interest in the
subsidiary to OfficeMax if earnings targets are achieved. Earnings targets are calculated quarterly
on a rolling four-quarter basis. Accordingly, the targets can be achieved in one quarter but not in
the next. If the earnings targets are achieved and the minority owner elects to put its ownership
interest, the purchase price would be equal to fair value, calculated based on both the subsidiary’s
earnings for the last four quarters before interest, taxes and depreciation and amortization, and the
current market multiples of similar companies. At December 27, 2008, Grupo OfficeMax did not
meet the earnings targets.
In addition to the contractual obligations quantified in the table above, we have other
obligations for goods and services entered into in the normal course of business. These contracts,
however, are either not enforceable or legally binding or are subject to change based on our
business decisions.
Off-Balance-Sheet Activities and Guarantees
‘‘Note 16, Commitments and Guarantees,’’ of the Notes to Consolidated Financial Statements
in ‘‘Item 8. Financial Statements and Supplementary Data’’ in this Form 10-K describes the nature
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