OfficeMax 2009 Annual Report Download - page 64

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Reserve balances were classified in the Consolidated Balance Sheets as follows:
December 26, December 27, December 29,
2009 2008 2007
(thousands)
Other accrued liabilities .................. $16,775 $14,328 $22,213
Other long-term liabilities ................. 44,797 34,605 54,849
Total ................................ $61,572 $48,933 $77,062
At December 26, 2009, the facilities closure reserve consisted of the following:
(thousands)
Estimated future lease obligations ..................................... $112,654
Less: anticipated sublease income ..................................... (51,095)
Total .......................................................... $ 61,559
In addition, the Company is the lessee of a non-operating, building materials manufacturing
facility near Elma, Washington. During 2006, the Company ceased operations at the facility, fully
impaired the assets and recorded a reserve for the lease payments and other contract termination
and closure costs. The Company has not been successful in identifying a buyer for the business
which would include the assumption of the long-term lease. The liabilities of the Elma facility
($14.1 million in total) are recorded in other current liabilities and other long-term liabilities in the
Consolidated Balance Sheets.
3. Severance and Other Charges
In 2009, we recorded $18.1 million of severance and other charges, principally related to
reorganizations of our U.S. and Canadian Contract sales forces, our customer fulfillment centers
and our customer service centers, as well as a streamlining of our Retail store staffing. These
charges are recorded by segment in the following manner: Contract $15.3 million, Retail
$2.1 million and Corporate and Other $0.7 million.
During 2008, the Company 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 the
2008 year-end) and a $2.4 million charge related to the consolidation of the Contract segment’s
manufacturing facilities in New Zealand. These items are included in the caption ‘‘Other operating,
net’’ in the Consolidated Statements of Operations.
As of December 26, 2009, $6.0 million of severance charges recorded in 2009 and 2008
remain unpaid and are included in accrued expenses and other current liabilities in the
Consolidated Balance Sheets.
4. Timber Notes/Non-Recourse Debt
In October 2004, we sold our timberland assets in exchange for $15 million in cash plus credit-
enhanced timber installment notes in the amount of $1,635 million (the ‘‘Installment Notes’’). The
Installment Notes were issued by single-member limited liability companies formed by affiliates of
Boise Cascade, L.L.C. (the ‘‘Note Issuers’’). The Installment Notes are 15-year non-amortizing
obligations and were issued in two equal $817.5 million tranches bearing interest at 5.11% and
4.98%, respectively. In order to support the issuance of the Installment Notes, the Note Issuers
transferred a total of $1,635 million in cash to Lehman Brothers Holdings Inc. (‘‘Lehman’’) and
Wachovia Corporation (‘‘Wachovia’’) (which was later purchased by Wells Fargo & Company)
60