OfficeMax 2010 Annual Report Download - page 74

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tax purposes, resulting in a tax benefit of $63.2 million, or approximately 4.6% of the pre-tax charge amount.
These charges resulted in a full impairment of our goodwill balances as of the end of 2008, and, as a result, there
will be no future annual assessment of goodwill required.
Also in 2008, the Company concluded that indicators of impairment were present for the trade name assets,
evaluated their carrying values and recorded impairment of the trade names in the Retail reporting unit of
$107.1 million, before taxes. Based on the Company’s assessment and testing, no impairment of indefinite-lived
intangible assets was required in 2009 or 2010.
In 2010, 2009 and 2008, the Company also performed impairment testing for the assets of individual retail
stores (“store assets” or “stores”), which consist primarily of leasehold improvements and fixtures, due to the
existence of indicators of potential impairment of these other long-lived assets. We performed the first step of
impairment testing for other long-lived assets on the store assets and determined that for some stores the
estimated future undiscounted cash flows derived from the assets was less than those assets’ carrying amount and
therefore impairment existed for those store assets. The second step of impairment testing was performed to
calculate the amount of the impairment loss. The loss was measured as the excess of the carrying value over the
fair value of the assets, with the fair value determined based on estimated future discounted cash flows. As a
result, we wrote off $11.0 million, $17.6 million and $55.8 million of store assets in 2010, 2009 and 2008,
respectively.
Acquired Intangible Assets
Intangible assets represent the values assigned to trade names, customer lists and relationships, noncompete
agreements and exclusive distribution rights of businesses acquired. The trade name assets have an indefinite life
and are not amortized. All other intangible assets are amortized on a straight-line basis over their expected useful
lives. Customer lists and relationships are amortized over three to 20 years, noncompete agreements over their
terms, which are generally three to five years, and exclusive distribution rights over ten years. Intangible assets
consisted of the following at year-end:
2010
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(thousands)
Trade names ................................................... $ 66,000 $ — $66,000
Customer lists and relationships ................................... 27,807 (13,789) 14,018
Exclusive distribution rights ...................................... 7,302 (4,089) 3,213
Total ......................................................... $101,109 $(17,878) $83,231
2009
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(thousands)
Trade names .................................................... $66,000 $ — $66,000
Customer lists and relationships .................................... 25,833 (11,288) 14,545
Exclusive distribution rights ....................................... 6,636 (3,375) 3,261
Total .......................................................... $98,469 $(14,663) $83,806
Intangible amortization expense totaled $2.0 million, $1.6 million and $5.4 million in 2010, 2009 and 2008
respectively. The estimated amortization expense is approximately $1.4 to $1.7 million in each of the next five
years.
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