OfficeMax 2011 Annual Report Download - page 64

holders. We expect that this will occur when the remaining guaranty claim of the Securitization Note holders in
the bankruptcy is resolved and as the Lehman assets are in the process of distribution. Accordingly, we expect to
recognize a non-cash gain equal to the difference between the carrying amount of the Securitization Notes
guaranteed by Lehman ($735.0 million at December 31, 2011) and the carrying value of the Lehman Guaranteed
Installment Note ($81.8 million at December 31, 2011) in a later period when the liability is legally extinguished.
The actual gain to be recognized in the future will be measured based on the carrying amounts of the Lehman
Guaranteed Installment Note and the Securitization Notes guaranteed by Lehman at the date of settlement.
Any discussion of the Lehman bankruptcy in this document is strictly based on factual observations from
the bankruptcy cases and should not be interpreted as constituting legal analysis of or admission as to the
ultimate allowances of our claim based on the Lehman Guaranteed Installment Note or any Note Issuers’ claim
based on Collateral Notes, or the interplay thereof.
At the time of the sale of our timberland assets in 2004, we generated a significant tax gain. As the timber
installment notes structure allowed the Company to defer the resulting tax liability until 2020 ($529 million at
December 31, 2011), the maturity date for the Installment Notes, we recognized a deferred tax liability related to
this gain in connection with the sale. The recognition of the Lehman portion of the tax gain will be triggered
when the Lehman Guaranteed Installment Note and the related guaranty are transferred to and accepted by the
Securitization Note holders . In estimating the cash taxes, we will consider our available alternative minimum tax
credits, to reduce the net tax payments.
Through December 31, 2011, we have received all payments due under the Installment Notes guaranteed by
Wachovia (the “Wachovia Guaranteed Installment Notes”), which have consisted only of interest due on the
notes, and have made all payments due on the related Securitization Notes guaranteed by Wachovia, again
consisting only of interest due. As all amounts due on the Wachovia Guaranteed Installment Notes are current,
and we have no reason to believe that we will not collect all amounts due according to the contractual 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 presentation could occur if Wells Fargo
became unable to perform its obligations under the Wachovia Guaranteed Installment Notes, thereby resulting in
a significant impairment impact.
The pledged Installment Notes and Securitization Notes are scheduled to mature in 2020 and 2019,
respectively. The Securitization Notes have an initial term that is approximately three months shorter than the
Installment Notes. We expect that if the Securitization Notes are still outstanding in 2019, we will refinance them
with a short-term borrowing to bridge the period from initial maturity of the Securitization Notes to the maturity
of the Installment Notes.
Other
We made capital contributions to Grupo OfficeMax, commensurate with our ownership percentage in the
joint venture of $6.0 million in 2009. We made no capital contributions to Grupo OfficeMax during 2011 or
2010.
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