OfficeMax 2010 Annual Report Download - page 58

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possible impairment. In assessing impairment, we are required to make estimates of the fair values the assets. If
we determine the fair values are less than the carrying amount recorded on our Consolidated Balance Sheets, we
must recognize an impairment loss in our financial statements. We are also required to assess our long-lived
assets for impairment whenever an indicator of possible impairment exists. In assessing impairment, the
statement requires us to make estimates of the fair value of the assets. If we determine the fair values are less
than the carrying value of the assets, we must recognize an impairment loss in our financial statements.
The measurement of impairment of indefinite life intangibles and other long-lived assets includes estimates
and assumptions which are inherently subject to significant uncertainties. In testing for impairment, we measure
the estimated fair value of our reporting units, intangibles and fixed assets based upon discounted future
operating cash flows using a discount rate reflecting a market-based, weighted average cost of capital. In
estimating future cash flows, we use our internal budgets and operating plans, which include many assumptions
about future growth prospects, margin rates, and cost factors. Differences in assumptions used in projecting
future operating cash flows and in selecting an appropriate discount rate could have a significant impact on the
determination of fair value and impairment amounts.
Recently Issued or Newly Adopted Accounting Standards
There were no recently issued or newly adopted accounting standards that were applicable to the preparation
of our consolidated financial statements for 2010 or that may become applicable to the preparation of our
consolidated financial statements in the future.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Information concerning quantitative and qualitative disclosures about market risk is included under the
caption “Disclosures of Financial Market Risks” in “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this Form 10-K and is incorporated herein by reference.
38