OfficeMax 2011 Annual Report Download

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2011ANNUAL REPORT
ROAD TO
SUCCESS

Table of contents

  • Page 1
    2011 ANNUAL REPORT ROAD TO SUCCESS

  • Page 2
    ... business customers seek cost-effective solutions rather than just products. • New Channels-Managing the office supply category for retailers in order to expand our retail presence without investment in brick and mortar. • Mexico-Continue to open additional stores in this growth market where...

  • Page 3
    ...ALLIANCES ACHIEVE POSITIVE FREE CASH FLOW CONTINUE TO DRIVE COST EFFICIENCIES IMPROVE INTERNATIONAL PROFITABILITY LEARNING, GROWTH, PEOPLE Leadership and Teamwork STRONG EXECUTION COMMITTED TO INNOVATION SERVICE ORIENTATION TOP TALENT Workplace innovation that enables customers to work better.

  • Page 4
    ..., diversity, and internal and corporate communications. Prior to joining OfficeMax, Mr. Parsons served as senior vice president, human resources and labor relations of Rite Aid Corporation. REUBEN SLONE, Executive Vice President, Supply Chain and General Manager, Services Reuben Slone joined...

  • Page 5
    2011 OFFICEMAX® ANNUAL REPORT // ROAD TO SUCCESS // I Table of Contents Sales At-a-Glance ...I Strengthening the Core ...IV Growing Our Contract Business ...VI Changing Needs of Our Retail Customers ...XII Enhancing Digital and E-Commerce Experiences ...XVIII Embracing Corporate Social ...

  • Page 6
    OFFICEMAX® IS PROUD TO ACHIEVE ETHISPHERE'S 2012 ETHICS INSIDE® CERTIFICATION Ethics Inside Certified Companies not only have implemented adequate systems and programs to reasonably prevent compliance failures, but can also demonstrably prove a superior organizational culture that promotes ...

  • Page 7
    // III

  • Page 8
    ... of our contract business is in the United States, where we are a leading provider of office products and solutions. We have a real opportunity to grow in new sectors, services and segments while defending margins in the core business across North America and into Australia and New Zealand. We are...

  • Page 9
    ... working toward a system where customers will be able to buy products online and pick up their orders in their local OfficeMax® store, or have orders delivered at a time that's convenient for them. With our OfficeMax ImPress® Mobile application, customers can locate our stores and send a print...

  • Page 10
    ... customers enhanced search, better website analytics and a new pricing tool to streamline the purchasing process and cut overall costs. 2012 is about continuing on this road to success, and the initiatives detailed below-Small and Medium Businesses (SMB), Jan/San and Technology & Document Solutions...

  • Page 11
    // VII

  • Page 12
    ... meet the evolving needs of our customers. Our Contract business reach extends beyond the U.S. We just renewed our strategic alliance with Lyreco, based in Europe, for another three years to work jointly on global Contract accounts. Additionally, Canada, Australia and New Zealand continue...

  • Page 13
    ... aspect we wanted in terms of supporting the academic part of the university, supporting our friends and alumni, delivering a great product, a great solution, and a great price that we felt no one else could offer other than OfficeMax." ® BRETT ANDERSON, VICE PRESIDENT FOR UNIVERSITY ADVANCEMENT...

  • Page 14

  • Page 15
    // XI

  • Page 16
    ... source of tech support-including computer check-ups, tune-ups, software installation and repairs-to customers in every store across the chain. OfficeMax ImPress provides professional copy and print solutions, ranging from binding and finishing to producing letterhead, envelopes, business cards...

  • Page 17
    ..., Texas, put the very products they sell in their stores to great use. Twice a week, associates volunteered by helping with schoolwork and mentoring students at the Bright Elementary homework club. At the closing event, OfficeMax provided the community with $500 gift cards, in addition to all of...

  • Page 18

  • Page 19
    // XV

  • Page 20

  • Page 21
    ...the art of organization. And, OfficeMax work essentials perfectly pair quality and value. These are just a few examples of the private brands we offer. They all have one unifying mission: to help our customers become more efficient and productive, because we want our customers to work smarter, not...

  • Page 22
    ... doing the work to enable customers to buy products online and pick up their orders in their local OfficeMax® store or have them delivered at a convenient time. We will continue to optimize our OfficeMax ImPress® Mobile application-today customers can locate our stores and send a print document...

  • Page 23
    ... in online sales to customers of our Contract and Retail businesses, and has a brand awareness and scale advantages that smaller competitors do not enjoy. We believe that the strategies we have in place will enable us to grow our online channel over the next several years of our strategic plan. //

  • Page 24

  • Page 25
    // XXI

  • Page 26
    ...fied Small Businesses, we can help other companies reach their diversity spend objectives. Donating our time and resources helps us build and sustain a strong community for our associates and customers. OfficeMax Goodworks encompasses various programs focused on providing products and supplies or...

  • Page 27
    .... Each year, associates from across the company help surprise more than 1,000 teachers nationally by gifting them with over $1,000 in school supplies. Our Code of Business Conduct and Ethics sets the standards by which we measure ourselves every day. We act with integrity and accountability when we...

  • Page 28
    XXIV // 2011 OFFICEMAX® ANNUAL REPORT // ROAD TO SUCCESS // CORPORATE SOCIAL RESPONSIBILITY Environmental Performance Metrics OfficeMax is committed to supplying our products and services in a manner with sensitivity to environmental issues throughout our business systems. Responsible ...

  • Page 29
    // XXV

  • Page 30

  • Page 31
    ... For the fiscal year ended December 31, 2011 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-5057 OFFICEMAX INCORPORATED (Exact name of registrant as specified in its charter) (State or other...

  • Page 32
    ... Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security...

  • Page 33
    ... small businesses, government offices and consumers. OfficeMax customers are served by approximately 29,000 associates through direct sales, catalogs, the Internet and retail stores located throughout the United States, Canada, Australia, New Zealand, Mexico, the U.S. Virgin Islands and Puerto Rico...

  • Page 34
    ... supplies and paper, technology products and solutions, office furniture and print and document services through our Contract segment. Contract sells directly to large corporate and government offices, as well as to small and medium-sized offices in the United States, Canada, Australia, New Zealand...

  • Page 35
    ... store. Retail sales were $3.5 billion for 2011 and 2010 and $3.6 billion for 2009. Competition Domestic and international office products markets are highly and increasingly competitive. Customers have many options when purchasing office supplies and paper, print and document services, technology...

  • Page 36
    ... to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K. Identification of Executive Officers Information with respect to our executive officers is set forth as the last item of Part I of this Form 10-K. Employees On December 31, 2011, we...

  • Page 37
    ... and our financial results. Additional future contributions of common stock or cash to the Pension Plans, financial market performance and IRS funding requirements could materially change these expected payments. Our business may be adversely affected by the actions of and risks associated with our...

  • Page 38
    ... international office products markets are highly and increasingly competitive. Customers have many options when purchasing office supplies and paper, print and document services, technology products and solutions and office furniture. We compete with contract stationers, office supply superstores...

  • Page 39
    ... customer or associate data may adversely affect our business. Through our sales and marketing activities, we collect and store certain personal information that our customers provide to purchase products or services, enroll in promotional programs, register on our website, or otherwise communicate...

  • Page 40
    ... from Boise Cascade, L.L.C., or its affiliates or assigns, currently Boise White Paper L.L.C., on a long term basis. Under the new Paper Purchase Agreement which we entered into on June 25, 2011 and which has an initial term that expires at the end of 2017, this restriction continues to apply until...

  • Page 41
    ...office products and services. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various countries, states... including the sources of our income, any agreements we may have with taxing authorities in various jurisdictions, and the tax filing positions we ...

  • Page 42
    ... 3 Contract also operated 46 office products stores in Hawaii (2), Canada (24), Australia (3) and New Zealand (17) and four customer service and outbound telesales centers in Illinois (2), Oklahoma and Virginia. Retail As of the end of the year, Retail operated 978 stores in 47 states, Puerto Rico...

  • Page 43
    ...; and one small distribution center in Mexico through our joint venture. ITEM 3. LEGAL PROCEEDINGS Information concerning legal proceedings is set forth in Note 16, "Legal Proceedings and Contingencies," of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and...

  • Page 44
    .... He also served as vice president, finance for Best Buy Co., Inc., a retailer of consumer electronics, home office products, entertainment software, appliances and related services, from 2002 to 2005. On November 10, 2008, Circuit City and several of its subsidiaries filed voluntary petitions for...

  • Page 45
    ... an officer of the Company in November 2004 and has served as executive vice president, supply chain since that time and as general manager, services since October 2011. Previously, Mr. Slone served as vice president, global supply chain for Whirlpool Corporation, a home appliance manufacturer...

  • Page 46
    ... found at investor.officemax.com by clicking on "Corporate Governance." You also may obtain copies of these policies, charters and codes by contacting our Investor Relations Department, 263 Shuman Boulevard, Naperville, Illinois 60563, or by calling (630) 864-6800. Information concerning securities...

  • Page 47
    ... 100 50 0 2006 2007 2008 2009 2010 2011 ANNUAL RETURN PERCENTAGE Years Ending Company\Index Name Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 OfficeMax Incorporated ...S&P SmallCap 600 Index ...S&P 600 Specialty Retail Index ...INDEXED RETURNS Years Ending Company\Index Name Base Period Dec 06 -57.62...

  • Page 48
    ... data for the years indicated and should be read in conjunction with the disclosures in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 8. Financial Statements and Supplementary Data" of this Form 10-K. 2011(a) 2010(b) 2009(c) 2008(d) 2007...

  • Page 49
    ...27.9 million charge for severance and costs associated with the termination of certain store and site leases. $20.5 million gain related to the Company's Boise Investment, primarily attributable to the sale of a majority interest in its paper and packaging and newsprint businesses. $32.4 million pre...

  • Page 50
    ... both years, adjusted net income available to OfficeMax common shareholders for 2011 was $53.3 million, or $0.61 per diluted share, compared to $77.3 million, or $0.89 per diluted share, for 2010. Results of Operations, Consolidated ($ in millions) 2011 2010 2009 Sales ...Gross profit ...Operating...

  • Page 51
    ...FOR 2010(a) Diluted Net income (loss) income available to (loss) Operating OfficeMax per income common common (loss) shareholders share (millions, except per-share amounts) As reported ...Store asset impairment charge ...Store closure charges and severance adjustments ...Reserve adjustments related...

  • Page 52
    ...loss) Operating OfficeMax per income common common (loss) shareholders share (millions, except per-share amounts) As reported ...Store asset impairment charge ...Store closure and severance charges ...Interest income from a legacy tax escrow ...Boise Cascade Holdings, L.L.C. distribution ...Release...

  • Page 53
    ..., or $0.08 per diluted share. We recorded $14.9 million of severance charges ($13.9 million in Contract, $0.3 million in Retail and $0.7 million in Corporate) related primarily to reorganizations in Canada, Australia, New Zealand, and the U.S. sales and supply chain organizations. In addition, we...

  • Page 54
    ... in 2010 compared to 24.1% of sales in 2009. The gross profit margins increased in both our Contract and Retail segments due to our profitability initiatives and reduced inventory shrinkage expense. We benefited from $15 million of inventory shrinkage reserve adjustments due to the positive results...

  • Page 55
    ... supplies and paper, technology products and solutions, office furniture and print and document services. Contract sells directly to large corporate and government offices, as well as to small and medium-sized offices in the United States, Canada, Australia and New Zealand. This segment markets...

  • Page 56
    ... supplies and paper, print and document services, technology products and solutions and office furniture. In addition, this segment contracts with large national retail chains to supply office and school supplies to be sold in their stores. Our retail office supply stores feature OfficeMax ImPress...

  • Page 57
    ... and internationally. U.S. gross profit margins increased due to strong disciplines instituted to monitor both customer profitability and product costs as well as reduced delivery costs. 2010 also benefited from the reversal of inventory shrinkage reserves due to favorable results from our annual...

  • Page 58
    ... stores. Retail segment gross profit margin decreased 0.5% of sales (50 basis points) to 28.6% of sales for 2011 compared to 29.1% of sales for 2010. The gross profit margin declines were the result of lower customer margins in Mexico, higher freight and delivery expense from increased fuel costs...

  • Page 59
    ... the technology products category to higher-priced items. We ended 2010 with 997 stores. In the U.S., we closed fifteen retail stores during 2010 and opened none, ending the year with 918 retail stores, while Grupo OfficeMax, our majority-owned joint venture in Mexico, opened two stores and closed...

  • Page 60
    ... Company and certain of our subsidiaries in the U.S., Puerto Rico and Canada expires on October 7, 2016 and the credit agreement associated with our subsidiaries in Australia and New Zealand expires on March 15, 2013. At the end of fiscal year 2011, we had $268.2 million of short-term and long-term...

  • Page 61
    ... and Results of Operations for more information. Investing Activities In 2011, capital spending of $69.6 million consisted of system improvements relating to our growth initiatives, overall software enhancements and infrastructure improvements, as well as spending on new stores in Mexico. In 2010...

  • Page 62
    ...line fee was 0.5% at December 31, 2011. On March 15, 2010, the Company's five wholly-owned subsidiaries based in Australia and New Zealand entered into a Facility Agreement (the "Australia/New Zealand Credit Agreement") with a financial institution based in those countries. The Australia/New Zealand...

  • Page 63
    ... on the Lehman Guaranteed Installment Note depends on the proceeds from the Lehman bankruptcy estate. Lehman's disclosure statement on its Chapter 11 Plan (the "Disclosure Statement") was confirmed by the United States Bankruptcy Court for the Southern District of New York on December 6, 2011. The...

  • Page 64
    ... terms of the Wachovia Guaranteed Installment Notes, the notes are stated in our Consolidated Balance Sheet at their original principal amount of $817.5 million. Wachovia was acquired by Wells Fargo & Company in a stock transaction in 2008. An additional adverse impact on our financial results...

  • Page 65
    ... change if we exercised these renewal options and if we entered into additional operating lease agreements. As a result of purchase accounting from the 2004 acquisition of the U.S. retail business, we recorded an asset relating to store leases with terms below market value and a liability for store...

  • Page 66
    ... 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...

  • Page 67
    ... of all its requirements for office paper from Boise Paper or its successor until December 2012, at prices approximating market levels. In accordance with the paper supply contract, the purchase price in Canadian dollars is indexed to the U.S. dollar up until the first business day of the month in...

  • Page 68
    ...to pay benefits, contribution levels and expense are also impacted by the return on the pension plan assets. The pension plan assets include OfficeMax common stock, U.S. equities, international equities, global equities and fixed-income securities, the cash flows of which change as equity prices and...

  • Page 69
    ... the operating performance of certain of our Retail stores due to the macroeconomic factors and market specific change in expected demographics, we determined that there were indicators of potential impairment relating to our Retail stores in 2011, 2010 and 2009. Therefore, we performed the required...

  • Page 70
    ... during the rebate program period. These estimates are reviewed on a quarterly basis and adjusted for changes in anticipated product sales and expected purchase levels. Vendor rebates and allowances earned are recorded as a reduction in the cost of merchandise inventories and are included in...

  • Page 71
    ... expected benefit payments in future years. We base our long-term asset return assumption on the average rate of earnings expected on invested funds. We believe that the accounting estimate related to pensions is a critical accounting estimate because it is highly susceptible to change from period...

  • Page 72
    ... and Asbestos Reserves Environmental and asbestos liabilities that relate to the operation of the paper and forest products businesses and timberland assets prior to the sale of the paper, forest products and timberland assets continue to be liabilities of OfficeMax. We are subject to a variety of...

  • Page 73
    ...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...

  • Page 74
    ...8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OfficeMax Incorporated and Subsidiaries Consolidated Statements of Operations Fiscal year ended December 31, December 25, December 26, 2011 2010 2009 (thousands, except per-share amounts) Sales ...Cost of goods sold and occupancy costs ...Gross profit...

  • Page 75
    OfficeMax Incorporated and Subsidiaries Consolidated Balance Sheets December 31, 2011 December 25, 2010 (thousands) ASSETS Current assets: Cash and cash equivalents ...Receivables, net ...Inventories...net ...Investment in Boise Cascade Holdings, L.L.C...Timber ...consolidated financial statements 43

  • Page 76
    ... ...Other long-term items: Compensation and benefits obligations ...Deferred gain on sale of assets ...Other long-term liabilities ...Noncontrolling interest in joint venture ...Shareholders' equity: Preferred stock-no par value; 10,000,000 shares authorized; Series D ESOP: $.01 stated value; 638...

  • Page 77
    ...for financing: Cash dividends paid - preferred stock ...Payments of short-term debt, net ...Payments of long-term debt ...Borrowings of long-term debt ...Purchase of preferred stock ...Proceeds from exercise of stock options ...Payments related to other share-based compensation ...Other ...Cash used...

  • Page 78
    ... Consolidated Statements of Equity For the fiscal years ended December 31, 2011, December 25, 2010 and December 26, 2009 Accumulated Total Retained Other OfficeMax Additional Earnings Comprehensive ShareNonPreferred Common Paid-In (Accumulated Income holders' controlling Stock Stock Capital...

  • Page 79
    ... and small businesses, government offices and consumers. OfficeMax customers are served by approximately 29,000 associates through direct sales, catalogs, the Internet and a network of retail stores located throughout the United States, Canada, Australia, New Zealand and Mexico. The Company's common...

  • Page 80
    ... Consolidated Statements of Cash Flows, respectively. Accounts Receivable Accounts receivable relate primarily to amounts owed by customers for trade sales of products and services and amounts due from vendors under volume purchase rebate, cooperative advertising and various other marketing programs...

  • Page 81
    ... during the rebate program period. These estimates are reviewed on a quarterly basis and adjusted for changes in anticipated product sales and expected purchase levels. Vendor rebates and allowances earned are recorded as a reduction in the cost of merchandise inventories and are included in...

  • Page 82
    ... in 2011, 2010 and 2009, respectively. Software development costs that do not meet the criteria for capitalization are expensed as incurred. Pension and Other Postretirement Benefits The Company sponsors noncontributory defined benefit pension plans covering certain terminated employees, vested...

  • Page 83
    ... are unfunded. The Company pays postretirement benefits directly to the participants. See Note 12, "Retirement and Benefit Plans," for additional information related to the Company's pension and other postretirement benefits. Facility Closure Reserves The Company conducts regular reviews of its real...

  • Page 84
    ...2011, $228.3 million in 2010 and $211.3 million in 2009, and is recorded in operating, selling and general and administrative expenses in the Consolidated Statements of Operations. Pre-Opening Expenses The Company incurs certain non-capital expenses prior to the opening of a store. These pre-opening...

  • Page 85
    ... in the Consolidated Statements of Operations. Facility closure reserve account activity during 2011, 2010 and 2009 was as follows: Total (thousands) Balance at December 27, 2008 ...Charges related to stores closed in 2009 ...Transfer of deferred rent balance ...Changes to estimated costs included...

  • Page 86
    ... of severance charges ($13.9 million in Contract, $0.3 million in Retail and $0.7 million in Corporate), related primarily to reorganizations in Canada ($8.6 million), Australia and New Zealand ($2.4 million) and the U.S., primarily in the sales and supply chain organizations ($3.3 million). In 2009...

  • Page 87
    ... Lehman Guaranteed Installment Note depends entirely on the proceeds from the Lehman bankruptcy estate. Lehman's disclosure statement on its Chapter 11 Plan (the "Disclosure Statement") was confirmed by the United States Bankruptcy Court for the Southern District of New York on December 6, 2011. The...

  • Page 88
    ...the asset's fair value. No impairment was recorded related to intangible assets in 2011, 2010, or 2009. In 2011, 2010 and 2009, the Company also performed impairment testing for the assets of individual retail stores ("store assets" or "stores"), which consist primarily of leasehold improvements and...

  • Page 89
    ....6 million of store assets in 2011, 2010 and 2009, 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...

  • Page 90
    ...stock were outstanding during 2011 and 2010, respectively, but were not included in the computation of diluted income (loss) per common share because the impact would have been anti-dilutive as the option price was higher than the average market price during the year. Outstanding options to purchase...

  • Page 91
    ... following: 2011 2010 (thousands) 2009 Income tax (expense) benefit at statutory rate ...State taxes (expense) benefit, net of federal effect ...Foreign tax provision differential ...Effect on deferreds due to tax restructuring ...Net operating loss valuation allowance and credits ...Change in tax...

  • Page 92
    ... relating to several state net operating losses. The valuation allowance is reviewed and adjusted based on management's assessments of realizable deferred tax assets. Pre-tax income (loss) related to continuing operations from domestic and foreign sources is as follows: 2011 2010 (thousands) 2009...

  • Page 93
    ... reinvested in the business. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable because of the complexities associated with its hypothetical calculation. 8. Leases The Company leases its retail stores as well as...

  • Page 94
    ... asset and liability were reported in non-current assets and other long-term liabilities in the Consolidated Balance Sheets. 9. Investment in Boise Cascade Holdings, L.L.C. In connection with the sale of the paper, forest products and timberland assets in 2004, the Company invested $175 million in...

  • Page 95
    ... the Consolidated Balance Sheets. The Company receives distributions on the Boise Investment for the income tax liability associated with its share of allocated earnings. During 2009, the Company received a tax-related distribution of $2.6 million. No distributions were received in 2011 or 2010. 10...

  • Page 96
    ... of credit. On March 15, 2010, the Company's five wholly-owned subsidiaries based in Australia and New Zealand entered into a Facility Agreement (the "Australia/New Zealand Credit Agreement") with a financial institution based in those countries. The Australia/New Zealand Credit Agreement permits...

  • Page 97
    ...There were no borrowings under the Company's credit agreements in 2011 or 2010. Other At the end of fiscal year 2011, Grupo OfficeMax, our 51%-owned joint venture in Mexico, had total outstanding borrowings of $8.5 million. This included $4.9 million outstanding under a 60-month installment note due...

  • Page 98
    ... The Securitization Notes supported by Lehman is estimated based on the future cash flows of the Lehman Guaranteed Installment Note (the proceeds from which are the sole source of payment of this note) in a bankruptcy proceeding (Level 3 inputs). • • During 2011, there was no change in assets...

  • Page 99
    ... end of fiscal year 2011 or 2010. 12. Retirement and Benefit Plans Pension and Other Postretirement Benefit Plans The Company sponsors noncontributory defined benefit pension plans covering certain terminated employees, vested employees, retirees and some active employees, primarily in Contract. In...

  • Page 100
    ...: Pension Benefits Other Benefits 2011 2010 2011 2010 (thousands) Change in benefit obligation: Benefit obligation at beginning of year ...Service cost ...Interest cost ...Actuarial loss ...Changes due to exchange rates ...Benefits paid ...Benefit obligation at end of year ...Change in plan assets...

  • Page 101
    ... the amount and timing of future benefit payments. The following table presents the key weighted average assumptions used in the measurement of the Company's benefit obligations as of year-end: Pension Benefits 2011 2010 Other Benefits United States Canada 2011 2010 2011 2010 Discount rate ... 4.93...

  • Page 102
    ... average assumptions used in the measurement of net periodic benefit cost as of year-end: Pension Benefits 2011 2010 2009 Other Benefits United States 2011 2010 2009 2011 Canada 2010 2009 Discount rate ...Expected long-term return on plan assets ... 5.64% 6.15% 6.20% 4.50% 5.10% 6.10% 5.30% 6.40...

  • Page 103
    ... Money market funds ...Equity securities: OfficeMax common stock ...U.S. large-cap ...U.S. small and mid-cap ...International ...Fixed-Income: Corporate bonds ...Government securities ...Other fixed-income ...Other: Equity mutual funds ...Group annuity contracts ...Other, including plan receivables...

  • Page 104
    ... years. Total Company contributions to the defined contribution savings plans were $7.0 million in 2011, $3.2 million in 2010 and $1.3 million in 2009. 13. Shareholders' Equity Preferred Stock At December 31, 2011, 638,353 shares of 7.375% Series D ESOP convertible preferred stock were outstanding...

  • Page 105
    ...below. The Company recognizes compensation expense from all share-based payment transactions with employees in the consolidated financial statements at fair value. Compensation costs related to the Company's share-based plans were $16.7 million, $13.2 million and $8.5 million for 2011, 2010 and 2009...

  • Page 106
    ... management periodically reviews actual performance against the criteria and adjusts compensation expense accordingly. In 2011, 2010 and 2009, the Company recognized $5.6 million, $8.0 million and $6.1 million, respectively, of pre-tax compensation expense and additional paid-in capital related to...

  • Page 107
    ...Stock options granted under the OfficeMax Incentive and Performance Plan generally vest over a three year period. In 2011, 2010 and 2009, the Company recognized $11.1 million, $5.2 million and $2.4 million, respectively, of pre-tax compensation expense and additional paid-in capital related to stock...

  • Page 108
    ... supplies and paper, technology products and solutions, print and document services and office furniture. Contract sells directly to large corporate and government offices, as well as to small and medium-sized offices in the United States, Canada, Australia and New Zealand. This segment markets...

  • Page 109
    ... devoted to print-for-pay and related services. Retail has operations in the United States, Puerto Rico and the U.S. Virgin Islands. The retail segment also operates office products stores in Mexico through a 51%-owned joint venture. Substantially all products sold by Retail are purchased from third...

  • Page 110
    ... Depreciation and Capital amortization expenditures Assets Year ended December 31, 2011 Contract ...Retail ...Corporate and Other ...Total ...Year ended December 25, 2010 Contract ...Retail ...Corporate and Other ...Total ...Year ended December 26, 2009 Contract ...Retail ...Corporate and Other...

  • Page 111
    ... and Guarantees Commitments During the second quarter of 2011, we entered into a new paper supply contract with Boise White Paper, L.L.C. ("Boise"), under which we have agreed to purchase office papers from Boise, and Boise has agreed to supply office papers to us, subject to the terms and...

  • Page 112
    ... financial position, results of operations or cash flows. Over the past several years and continuing in the current year, we have been named a defendant in a number of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to asbestos while working...

  • Page 113
    ... quarterly financial data is as follows: First 2011 2010 Second(a) Third Fourth(b) First(c) Second(d) Third (millions, except per-share and stock price information) Fourth(e) Sales ...Gross Profit ...Percent of sales ...Operating income ...Net income available to OfficeMax common shareholders...

  • Page 114
    ...the Company) as of December 31, 2011 and December 25, 2010, and the related consolidated statements of operations, equity, and cash flows for each of the years in the three-year period ended December 31, 2011. We also have audited OfficeMax Incorporated's internal control over financial reporting as...

  • Page 115
    ... chief financial officer concluded that the Company's disclosure controls and procedures were effective in alerting them in a timely manner to material information that the Company is required to disclose in its filings with the Securities and Exchange Commission. (b) Management's Report on Internal...

  • Page 116
    ... Reporting Compliance" in our proxy statement and is incorporated herein by reference. We have adopted a Code of Ethics that applies to all OfficeMax employees and directors, including our senior financial officers. The Code is available, free of charge, on our website at investor.officemax.com...

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    ...' and management's interests with the Company's long-term performance and the long-term interests of our shareholders. The following table provides information regarding the equity securities that may be issued under our equity compensation plans as of December 31, 2011. Equity Compensation Plan...

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    ...31, 2011, December 25, 2010 and December 26, 2009. Consolidated Statements of Equity for the years ended December 31, 2011, December 25, 2010 and December 26, 2009. Notes to Consolidated Financial Statements. Report of Independent Registered Public Accounting Firm. (2) Financial Statement Schedules...

  • Page 119
    ... by the undersigned, thereunto duly authorized. OfficeMax Incorporated By /S/ RAVICHANDRA SALIGRAM Ravichandra Saligram Chief Executive Officer Dated: February 24, 2012 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 120
    ...the three-year period ended December 31, 2011, and the effectiveness of internal control over financial reporting as of December 31, 2011, which report appears in the December 31, 2011 annual report on Form 10-K of OfficeMax Incorporated. /s/ KPMG LLP KPMG LLP Chicago, Illinois February 24, 2012 88

  • Page 121
    ... the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 Exhibit Number Incorporated by Reference Exhibit File Number Number Filing Date Filed Herewith Exhibit Description Form 2.1 Asset Purchase Agreement dated July 26, 2004, between Boise Cascade Corporation (now OfficeMax...

  • Page 122
    ... Corporation, Lehman Brothers Holdings Inc., OMX Timber Finance Investments I, LLC, OMX Timber Finance Investments II, LLC, OfficeMax Incorporated, Wachovia Capital Markets, LLC, Lehman Brothers Inc. Executive Savings Deferral Plan 2005 Deferred Compensation Plan 2005 Directors Deferred Compensation...

  • Page 123
    ...Deferred Compensation Plan, as amended through September 26, 2003 Nonbusiness Use of Corporate Aircraft Policy, as amended Supplemental Early Retirement Plan for Executive Officers, as amended through September 26, 2003 Boise Cascade Corporation (now OfficeMax Incorporated) Supplemental Pension Plan...

  • Page 124
    ... Unit Award Agreement Executive Officer Severance Pay Policy Form of Executive Officer Change in Control Severance Agreement Amendment to OfficeMax Incorporated 2005 Directors Deferred Compensation Plan Form of Amendment of OfficeMax Incorporated Executive Savings Deferral Plan Form of 2009 Annual...

  • Page 125
    ... 3, 2009 Transition and Retirement Agreement between Mr. Duncan and OfficeMax Incorporated dated February 11, 2010 Form of 2010 Nonqualified Stock Option Award Agreement 2003 OfficeMax Incentive and Performance Plan as amended and restated effective April 14, 2010 Form of 2010 Annual Incentive...

  • Page 126
    ...Agreement between OfficeMax Incorporated and Ravi Saligram Form of 2011 Annual Incentive Award Agreement Form of 2011 Restricted Stock Unit Award Agreement - Performance Based Form of 2011 Nonqualified Stock Option Award Agreement Change in Control Agreement dated as of May 2, 2011 between OfficeMax...

  • Page 127
    ...and Fair Competition Agreement dated as of November 14, 2011 between OfficeMax Incorporated and Mr. Jim Barr 2011 Nonqualified Stock Option Award Agreement dated as of November 14, 2011 between OfficeMax Incorporated and Mr. Jim Barr Inapplicable Inapplicable Inapplicable Code of Ethics 95 8-K 001...

  • Page 128
    ...Section 906 Certifications of Chief Executive Officer and Chief Financial Officer of OfficeMax Incorporated X X X X X †Indicates exhibits that constitute management contracts or compensatory plans or arrangements. (a) Certain information in this exhibit has been omitted and filed separately with...

  • Page 129
    ..., summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ RAVICHANDRA SALIGRAM Ravichandra Saligram Chief Executive Officer b. Date...

  • Page 130
    ... and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ BRUCE BESANKO b. Date: February 24, 2012 Bruce Besanko Chief Financial Officer

  • Page 131
    ... Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. It accompanies OfficeMax Incorporated's annual report on Form 10-K (the "Report") for the fiscal year ended December 31, 2011. I, Ravichandra Saligram, OfficeMax Incorporated's chief executive officer...

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    ..., Supply Chain and General Manager, Services Susan Wagner-Fleming Senior Vice President, Corporate Secretary and Associate General Counsel SHAREHOLDER INFORMATION Corporate Headquarters OfficeMax® Incorporated 263 Shuman Boulevard Naperville, IL 60563 Tel 630.438.7800 Annual Shareholders Meeting...

  • Page 136
    The Ethisphere Institute has named OfficeMax® one of the World's Most Ethical Companies for 2012 in recognition of its outstanding commitment to ethical leadership, compliance practices and corporate social responsibility.