OfficeMax 2012 Annual Report Download - page 70

gain in the third quarter of 2012. Due to available alternative minimum tax credits and net operating losses,
which offset a significant portion of the taxable income, the Company made a cash tax payment of $15 million in
the fourth quarter of 2012. At December 29, 2012, the remaining deferred tax gain of $260 million is related to
the Installment Notes guaranteed by Wachovia (the “Wachovia Guaranteed Installment Notes”), and will be
recognized upon maturity.
Through December 29, 2012, we have received all payments due under 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 be
able to collect all amounts due according to the contractual terms of the Wachovia Guaranteed Installment Notes,
the notes are reflected in our Consolidated Balance Sheets 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 & Company became unable to perform its
obligations under the Wachovia Guaranteed Installment Notes, thereby resulting in a significant impairment
impact.
The Wachovia Guaranteed Installment Notes and related 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 Wachovia Guaranteed 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 Wachovia Guaranteed Installment Notes.
Investment in Boise Cascade Holdings, L.L.C.
In connection with the sale of the paper, forest products and timberland assets in 2004, we invested
$175 million in affiliates of Boise Cascade, L.L.C. Due to restructurings conducted by those affiliates, our
investment is currently in Boise Cascade Holdings, L.L.C., a building products company.
The Boise Investment is accounted for under the cost method, as Boise Cascade Holdings, L.L.C. does not
maintain separate ownership accounts for its members’ interests, and we do not have the ability to significantly
influence the operating and financial policies of Boise Cascade Holdings, L.L.C.
In exchange for its investment in Boise Cascade Holdings, L.L.C., we received voting securities and non-
voting securities. The non-voting securities of Boise Cascade Holdings, L.L.C. accrue dividends daily at the rate
of 8% per annum on the liquidation value plus accumulated dividends. These dividends accumulate semiannually
to the extent not paid in cash on the last day of June and December. It is our policy to record the income
associated with these dividends as a reduction of operating, selling and general and administrative expenses in
the Consolidated Statements of Operations. The voting securities do not accrue dividends.
We recognized dividend income from the non-voting securities of $8.5 million in 2012, $7.8 million in 2011
and $7.3 million in 2010 in the Corporate and Other segment. The dividend receivable associated with these
dividends was $45.1 million and $38.0 million at December 29, 2012 and December 31, 2011, respectively, and
was recorded in the Corporate and Other segment in other non-current assets in the Consolidated Balance Sheets.
During 2012, we received a distribution of $1.7 million from Boise Cascade Holdings, L.L.C., for the
income tax liability associated with our share of allocated earnings, the majority of which was used to reduce the
accrued dividend balance. No such distributions were received in 2011 or 2010.
A subsidiary of Boise Cascade Holdings, L.L.C., Boise Cascade, L.L.C. filed a registration statement with
the Securities and Exchange Commission in November 2012 to register stock for an initial public offering
(“Boise IPO”). Boise Cascade, L.L.C. announced the commencement of the Boise IPO on January 23, 2013, and
the Boise IPO was completed on February 11, 2013.
In February of 2013, we received approximately $129 million in cash proceeds related to the Boise
investment. We received approximately $112 million related to the redemption of all of the non-voting equity
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