OfficeMax 2012 Annual Report Download - page 118

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At December 29, 2012, the aggregate intrinsic value was $10.8 million for outstanding stock options and
$3.2 million for those stock options that were exercisable. The aggregate intrinsic value represents the total pre-
tax intrinsic value (i.e. the difference between the Company’s closing stock price on the last trading day of fiscal
year 2012 and the exercise price, multiplied by the number of in-the-money stock options at the end of the
quarter).
In 2012, the Company granted stock options for 2,087,453 shares of our common stock and estimated the
fair value of each stock option award on the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions: risk-free interest rate of 1.41%, expected life of 4.5 years and expected
stock price volatility of 72.59%.
In 2011, the Company granted stock options for 1,457,280 shares of our common stock and estimated the
fair value of each stock option award on the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions: risk-free interest rate of 1.92%, expected life of 4.5 years and expected
stock price volatility of 65.17%.
In 2010, the Company granted stock options for 2,060,246 shares of our common stock and estimated the
fair value of each stock option award on the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions: risk-free interest rate of 2.12%, expected life of 3.7 years and expected
stock price volatility of 67.21%.
The risk-free interest rate assumptions are based on the applicable U.S. Treasury Bill rates over the options’
expected lives; the expected life assumptions are based on the time period stock options are expected to be
outstanding based on historical experience; and the expected stock price volatility assumptions are based on the
historical and implied volatility of the Company’s common stock.
14. Segment Information
The Company manages its business using three reportable segments: Contract, Retail, and Corporate and
Other. Management reviews the performance of the Company based on these segments.
Contract distributes a broad line of items for the office, including office supplies and paper, technology
products and solutions, office furniture, print and document services and facilities products. 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 and sells through field salespeople, outbound
telesales, catalogs, the Internet and in some markets, including Canada, Australia and New Zealand, through
office products stores. Substantially all products sold by Contract are purchased from third-party manufacturers
or industry wholesalers. Contract purchases office papers for its businesses in the U.S., Canada, and Puerto Rico
primarily from Boise White Paper, L.L.C., under a paper supply contract entered into on June 25, 2011. (For
additional information related to the paper supply contract, see Note 15, “Commitments and Guarantees”.)
Retail is a retail distributor of office supplies and paper, print and document services, technology products
and solutions, office furniture and facilities products. In addition, this segment contracts with large national retail
chains to supply office and school supplies to be sold in their stores. Retail office supply stores feature
OfficeMax ImPress, an in-store module devoted to print-for-pay and related services. Retail has operations in the
United States, Puerto Rico and the U.S. Virgin Islands. Retail also operates office products stores in Mexico
through Grupo OfficeMax. Substantially all products sold by Retail are purchased from third-party manufacturers
or industry wholesalers. Retail purchases office papers for its U.S. businesses primarily from Boise White Paper,
L.L.C., under the paper supply contract described above.
Corporate and Other includes corporate support staff services and certain other legacy expenses as well as
the related assets and liabilities. The income and expense related to certain assets and liabilities that are reported
in the Corporate and Other segment have been allocated to the Contract and Retail segments.
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