OfficeMax 2010 Annual Report Download - page 51

There is no recourse against OfficeMax on the Securitization Notes as recourse is limited to proceeds from
the applicable pledged Installment Notes receivable and underlying guarantees. The non-recourse debt remains
outstanding until it is legally extinguished, which will be when the Installment Note and guaranty are transferred
to and accepted by the securitized note holders. The liability related to the Lehman portion of the Securitization
Notes will be extinguished when the assets of Lehman are distributed and the bankruptcy is finalized. Interest
payments on non-recourse debt will be completely offset by interest income received on the Installment Notes.
We enter into operating leases in the normal course of business. We lease our retail store space as well as
certain other property and equipment under operating leases. Some of our retail store leases require percentage
rentals on sales above specified minimums and contain escalation clauses. The minimum lease payments shown
in the table above do not include contingent rental expense. Some lease agreements provide us with the option to
renew the lease or purchase the leased property. Our future operating lease obligations would change if we
exercised these renewal options and if we entered into additional operating lease agreements. For more
information, see Note 8, “Leases,” of the Notes to Consolidated Financial Statements in “Item 8. Financial
Statements and Supplementary Data” in this Form 10-K. Lease obligations for closed facilities are included in
operating leases and a liability equal to the fair value of these obligations is included in the Company’s
Consolidated Balance Sheets. For more information, see Note 2, “Facility Closure Reserves,” of the Notes to
Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Our Consolidated Balance Sheet as of December 25, 2010 includes $250.8 million of liabilities associated
with our retirement and benefit and other compensation plans and $393.2 million of other long-term liabilities.
Certain of these amounts have been excluded from the above table as either the amounts are fully or partially
funded, or the timing and/or the amount of any cash payment is uncertain. Actuarially-determined liabilities
related to pension and postretirement benefits are recorded based on estimates and assumptions. Key factors used
in developing estimates of these liabilities include assumptions related to discount rates, rates of return on
investments, future compensation costs, healthcare cost trends, benefit payment patterns and other factors.
Changes in assumptions related to the measurement of funded status could have a material impact on the amount
reported. Pension obligations in the table above represent the estimated, minimum contributions required per IRS
funding rules. However, tests required by the Pension Protection Act of 2006, which are to be performed late in
the first quarter of 2011, could result in the acceleration of approximately $17 million and $11 million of
contributions from future years into 2011 and 2012, respectively.
In accordance with an amended and restated joint venture agreement, the minority owner of Grupo
OfficeMax, our joint-venture in Mexico, can elect to require OfficeMax to purchase the minority owner’s 49%
interest in the joint venture if certain earnings targets are achieved. Earnings targets are calculated quarterly on a
rolling four-quarter basis. Accordingly, the targets may be achieved in one quarter but not in the next. If the
earnings targets are achieved and the minority owner elects to require OfficeMax to purchase the minority
owner’s interest, the purchase price is based on the joint venture’s earnings and the current market multiples of
similar companies. At the end of 2010, Grupo OfficeMax met the earnings targets and the estimated purchase
price of the minority owner’s interest was $48.8 million. As the estimated purchase price was greater at the end
of 2010 than the carrying value of the noncontrolling interest, the Company recorded an adjustment to state the
noncontrolling interest at the estimated purchase price, and, as the estimated purchase price approximates fair
value, the offset was recorded to additional paid-in capital.
In addition to the contractual obligations quantified in the table above, we have other obligations for goods
and services entered into in the normal course of business. These contracts, however, are either not enforceable
or legally binding or are subject to change based on our business decisions.
Off-Balance-Sheet Activities and Guarantees
Note 15, “Commitments and Guarantees,” of the Notes to Consolidated Financial Statements in “Item 8.
Financial Statements and Supplementary Data” in this Form 10-K describes certain of our off-balance sheet
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