OfficeMax 2011 Annual Report Download - page 82

are not amortized. All other intangible assets are amortized on a straight-line basis over their expected useful
lives, which range from three to 20 years. Intangible assets with indefinite lives are not amortized, but are tested
for impairment at least annually, or more frequently if events and circumstances indicate that the carrying
amount of the asset might be impaired, using a fair-value-based approach. An impairment loss is recognized to
the extent that the carrying amount exceeds the asset’s fair value. No impairment was recorded related to
intangible assets in 2011, 2010, or 2009.
Investment in Boise Cascade Holdings, L.L.C.
Investments in affiliated companies are accounted for under the cost method if the Company does not
exercise significant influence over the affiliated company. At December 31, 2011 and December 25, 2010, the
Company held an investment in Boise Cascade Holdings, L.L.C. (“Boise Investment”) which is accounted for
under the cost method. See Note 9, “Investments in Boise Cascade Holdings, L.L.C.,” for additional information
related to the Company’s investments in affiliates.
Capitalized Software Costs
The Company capitalizes certain costs related to the acquisition and development of internal use software
that is expected to benefit future periods. These costs are amortized using the straight-line method over the
expected life of the software, which is typically three to seven years. Other non-current assets in the Consolidated
Balance Sheets include unamortized capitalized software costs of $32.5 million and $32.4 million at
December 31, 2011 and December 25, 2010, respectively. Amortization of capitalized software costs totaled
$10.5 million, $17.5 million and $17.2 million 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 employees, retirees and some active employees, primarily in Contract. The Company also
sponsors various retiree medical benefit plans. The type of retiree medical benefits and the extent of coverage
vary based on employee classification, date of retirement, location, and other factors. The Company explicitly
reserves the right to amend or terminate its retiree medical plans at any time, subject only to constraints, if any,
imposed by the terms of collective bargaining agreements. Amendment or termination may significantly affect
the amount of expense incurred.
The Company recognizes the funded status of its defined benefit pension, retiree healthcare and other
postretirement plans in the Consolidated Balance Sheets, with changes in the funded status recognized through
accumulated other comprehensive loss, net of tax, in the year in which the changes occur. 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.
The Company measures changes in the funded status of its plans using actuarial models. Since the majority
of participants in the plans are inactive, the actuarial models use an attribution approach that generally spreads
recognition of the effects of individual events over the life expectancy of the participants. Net pension and
postretirement benefit income or expense is also determined using assumptions which include discount rates and
expected long-term rates of return on plan assets. The Company bases the discount rate assumption on the rates
of return for a theoretical portfolio of high-grade corporate bonds (rated Aa1 or better) with cash flows that
generally match our expected benefit payments in future years. The long-term asset return assumption is based
on the average rate of earnings expected on invested funds, and considers several factors including the asset
allocation, actual historical rates of return, expected rates of return and external data.
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