OfficeMax 2008 Annual Report Download - page 67

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The changes in intangible gross carrying amounts from December 29, 2007 to December 27,
2008 were as follows:
Effect of
Foreign
2007 Gross Impairment Currency 2008 Gross
Carrying Amount Charges Translation Carrying Amount
Trade names ............. $173,150 $ 107,150 $ — $ 66,000
Customer lists and
relationships ........... 43,381 — 8,614 34,767
Noncompete agreements .... 12,884 — 40 12,844
Exclusive distribution rights . . 6,977 — 1,722 5,255
$236,392 $107,150 $10,376 $118,866
5. Integration Activities and Facility Closures
The Company conducts regular reviews of its real estate portfolio to identify underperforming
facilities, and closes those facilities that are no longer strategically or economically viable. The
Company records a liability for the cost associated with a facility closure at its fair value in the
period in which the liability is incurred, which is the location’s cease-use date. Upon closure,
unrecoverable costs are included in facility closure reserves on the Consolidated Balance Sheets
and include provisions for the present value of future lease obligations, less contractual or
estimated sublease income. Accretion expense is recognized over the life of the payments.
During 2006, the Company 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 retail
headquarters in Shaker Heights, Ohio and existing corporate headquarters in Itasca, Illinois into a
new facility in Naperville, Illinois. We began the consolidation and relocation process in the latter
half of 2005 and throughout 2006, we incurred expenses of $46.4 million. 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.
In the second quarter of 2008, the Company recorded $3.1 million of charges principally to
close five stores and reduced rent and severance accruals by $3.4 million relating to prior closed
stores. In the fourth quarter of 2008, the Company 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 partially offset by reduced rent
accruals of $4.0 million on other store lease obligations.
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