OfficeMax 2011 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2011 OfficeMax annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Reserve balances were classified in the Consolidated Balance Sheets as follows:
December 31,
2011
December 25,
2010
(thousands)
Accrued expenses and other current liabilities - Other ......................... $10,635 $16,651
Other long-term liabilities ............................................... 38,440 45,022
Total ................................................................ $49,075 $61,673
At December 31, 2011, the lease termination component of the facilities closure reserve consisted of the
following:
Total
(thousands)
Estimated future lease obligations ...................................................... $102,002
Less: anticipated sublease income ...................................................... (52,927)
Total ............................................................................. $ 49,075
In addition, we were the lessee of a legacy building materials manufacturing facility near Elma, Washington
until the end of 2010. During 2006, we ceased operations at the facility, fully impaired the assets and recorded a
reserve for the related lease payments and other contract termination and closure costs. This reserve balance was
not included in the facilities closure reserve described above. During 2010, we sold the facility’s equipment and
terminated the lease. As a result, we recorded income of approximately $9.4 million to adjust the associated
reserve. This income is reported in other operating expenses, net in our Consolidated Statements of Operations.
3. Severance and Other Charges
Over the past few years, we have incurred significant charges related to Company personnel restructuring
and reorganizations. These charges were included in other operating expenses, net in the Consolidated
Statements of Operations.
In 2011, 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 ($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, we recorded $18.1 million of severance and other charges, principally related to reorganizations of
our U.S. and Canadian Contract sales forces, our customer fulfillment centers and our customer service centers,
as well as a streamlining of our Retail store staffing. These charges were recorded by segment in the following
manner: Contract $15.3 million, Retail $2.1 million and Corporate and Other $0.7 million.
As of December 31, 2011, $7.4 million of the severance charges remain unpaid and are included in accrued
expenses and other current liabilities in the Consolidated Balance Sheets.
4. Timber Notes/Non-Recourse Debt
In October 2004, we sold our timberland assets in exchange for $15 million in cash plus credit-enhanced
timber installment notes in the amount of $1,635 million (the “Installment Notes”). The Installment Notes were
issued by single-member limited liability companies formed by affiliates of Boise Cascade, L.L.C. (the “Note
Issuers”). The Installment Notes are 15-year non-amortizing obligations and were issued in two equal
$817.5 million tranches bearing interest at 5.11% and 4.98%, respectively. In order to support the issuance of the
54