OfficeMax 2008 Annual Report Download - page 40

valuations, such as retirement rates and pension members living longer. In addition to changes in
pension plan obligations, the amount of plan assets available to pay benefits, contribution levels
and expense are also impacted by the return on the pension plan assets. The pension plan assets
include U.S. equities, international equities, global equities and fixed-income securities, the cash
flows of which change as equity prices and interest rates vary. The risk is that market movements in
equity prices and interest rates could result in assets that are insufficient over time to cover the
level of projected obligations. This in turn could result in significant changes in pension expense
and funded status, further impacting future required contributions. Management, together with the
trustees who act on behalf of the pension plan beneficiaries, assess the level of this risk using
reports prepared by independent external actuaries and take action, where appropriate, in terms of
setting investment strategy and agreed contribution levels.
(in millions except rates)
Year Ended
2008 2007
Expected Payments There- Fair Fair
2009 2010 2011 2012 2013 after Total Value Total Value
Debt
Fixed-rate debt payments .......... $51.1 $14.0 $0.8 $35.4 $1.9 $228.9 $332.1 $214.6 $384.2 $382.4
Average interest rates ........... 8.9% 6.5% 8.0% 7.9% 8.4% 6.4% 6.9% —% 6.9% —%
Variable-rate debt payments ........ $13.4 $ 2.2 $2.2 $ 2.2 $2.3 $ 0.6 $ 22.9 $ 22.1 $ 14.2 $ 14.2
Average interest rates ........... 11.9% 9.5% 9.5% 9.5% 9.5% 9.5% 10.9% —% 9.0% —%
Timber notes securitized
Wachovia ................. $ — $ — $— $ — $— $735.0 $735.0 $736.8 $735.0 $790.9
Average interest rates ......... —% —% —% —% —% 5.4% 5.4% —% 5.4% —%
Lehman .................. $ — $ — $— $ — $— $735.0 $735.0 $ 81.8 $735.0 $790.9
Average interest rates ......... —% —% —% —% —% 5.5% 5.5% —% 5.5% —%
2008 2007
Carrying amount Fair value Carrying amount Fair value
(millions)
Financial assets:
Timber notes receivable
Wachovia— ............. $817.5 $801.9 $817.5 $881.8
Lehman— .............. 81.8 81.8 817.5 881.8
Restricted investments ....... 2.1 2.1 22.4 21.8
Additional Consideration Agreement
Pursuant to an Additional Consideration Agreement between OfficeMax and Boise
Cascade, L.L.C. entered into in connection with the Sale, we may have been required to make
substantial cash payments to, or entitled to receive substantial cash payments from, Boise
Cascade, L.L.C. In February 2008, Boise Cascade, L.L.C. sold a majority interest in its paper and
packaging and newsprint businesses to Aldabra 2 Acquisition Corp. As a result of this transaction,
the Additional Consideration Agreement terminated and no further payments will be required of
either party. Prior to the termination of the Additional Consideration Agreement, we recorded
changes in the fair value of the Additional Consideration Agreement in net income (loss) in the
period they occurred; however, any potential payments from Boise Cascade, L.L.C. to us were not
recorded in net income (loss) until all contingencies had been satisfied, which was generally at the
end of a 12-month measurement period ending on September 30. Due to increases in actual and
projected paper prices, the change in the estimated fair value of this agreement resulted in the
recognition of non-operating income in our Consolidated Statement of Income (Loss) of
$32.5 million in 2007 and $48.0 million in 2006.
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