OfficeMax 2008 Annual Report Download - page 74

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been reduced by $45.1 million of minimum sublease rentals due in the future under noncancelable
subleases. These sublease rentals include amounts related to closed stores and other facilities that
are accounted for in the integration activities and facility closures reserve. See ‘‘Note 5, Integration
Activities and Facility Closures.’’
The Company capitalizes lease obligations for which it assumes substantially all property rights
and risks of ownership. The Company did not have any material capital leases during any of the
periods presented.
9. Discontinued Operations
In December 2004, our board of directors authorized management to pursue the divestiture of
a facility near Elma, Washington that manufactured integrated wood-polymer building materials. As
a result, 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 beginning in 2004.
During 2005, the Company experienced unexpected difficulties in achieving anticipated levels of
production at the facility, which delayed the process of identifying and qualifying a buyer for the
business. During the first quarter of 2006, the Company ceased operations at the facility and
recorded a pre-tax charge 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). As of December 27, 2008, the Company has not identified a buyer for
the facility.
The liabilities of the wood-polymer building materials facility near Elma, Washington, are
included in current liabilities ($15.6 million at December 27, 2008 and $15.4 million at December 29,
2007, respectively) in the Consolidated Balance Sheets. The assets related to this facility were fully
impaired in 2006, so that there is no value recorded on the Consolidated Balance Sheets at
December 27, 2008 or December 29, 2007.
10. Investments in Affiliates
In connection with the sale of the paper, forest products and timberland assets in 2004 (the
‘‘Sale’’), the Company invested $175 million in the equity units of affiliates of the buyer, Boise
Cascade, L.L.C. A portion (approximately $66 million) of the equity units received in exchange for
the Company’s investment carry no voting rights. This investment is accounted for under the cost
method as Boise Cascade, L.L.C. does not maintain separate ownership accounts for its members,
and the Company does not have the ability to significantly influence its operating and financial
policies. This investment is included in investments in affiliates in the Consolidated Balance Sheets.
The Boise Cascade, L.L.C. non-voting equity units accrue dividends daily at the rate of 8% per
annum on the liquidation value plus accumulated dividends. Dividends accumulate semiannually to
the extent not paid in cash on the last day of June and December. The Company recognized
dividend income on this investment of $6.2 million in 2008, $6.1 million in 2007 and $5.9 million in
2006. These amounts were recorded as a reduction of general and administrative expenses in the
Consolidated Statements of Income (Loss).
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