OfficeMax 2008 Annual Report Download - page 60

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Prior Period Revisions
Certain amounts included in the prior year financial statements have been revised to conform
with the current year presentation. In the current year, amounts for the sub-components of property
and equipment in the Consolidated Balance Sheet were revised to correct the amounts reported
within each sub-component. As a result, land and land improvements and buildings and
improvements increased by $6.5 million and $48.0 million, respectively, while machinery and
equipment decreased by $54.5 million from the amounts previously reported. There was no change
to total property and equipment. Also in the current year, amounts related to earnings from affiliates,
previously recorded as ‘‘Other operating, net’’ in the Consolidated Statements of Income (Loss),
were reclassified into general and administrative expenses due to their immateriality. The effect of
these revisions on the amounts reported for 2007 and 2006 was not material.
2. Significant Charges and Credits
Other Operating, Net
The components of Other operating, net in the Consolidated Statements of Income (Loss) are
as follows:
2008 2007 2006
(thousands)
Integration activities and facility closure costs, net (see Note 5) ..... $ 4,691 $— $ 135,932
Severance, reorganization and other related activities ............ 26,260 — 10,284
Gain related to Voyageur Panel ............................ (3,100) — —
$27,851 $— $146,216
During 2008, we recorded a $23.9 million pre-tax severance charge related to various sales and
field reorganizations in our Retail and Contract segments as well as a significant reduction in force
at the corporate headquarters (of which $15 million was paid by year-end) and $2.4 million related
to the consolidation of the Contract segment’s manufacturing facilities in New Zealand. In 2008 we
also recorded $8.7 million of charges related to four domestic retail stores where we have signed
lease commitments but have decided not to open the stores due to the current economic
environment. This charge was offset by a $4.0 million favorable adjustment relating to our other
lease obligations. We also recorded a $3.1 million pre-tax gain primarily related to the release of a
warranty escrow established at the time of sale of our legacy Voyageur Panel business in 2004.
During 2006, we closed 109 underperforming, domestic retail stores and recorded a pre-tax
charge of $89.5 million, comprised of $11.3 million for employee severance, asset write-off and
impairment and other closure costs and $78.2 million of estimated future lease obligations. In
September 2005, the board of directors approved a plan to relocate and consolidate our corporate
headquarters in Naperville, Illinois. We began the consolidation and relocation process in the latter
half of 2005, and in 2006 we expensed $46.4 million related to the effort. The consolidation and
relocation process was completed during the second half of 2006. We also announced the
reorganization of our Contract segment in 2006 and recorded a pre-tax charge of $7.3 million for
employee severance related to the reorganization. The Contract segment also recorded an
additional $3.0 million of costs during 2006, primarily related to a facility closure and employee
severance.
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