OfficeMax 2012 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2012 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 148

  • 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
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

At the time of the sale of the timberlands in 2004, we generated a tax gain and recognized the related
deferred tax liability. The timber installment notes structure allowed the Company to defer the resulting tax
liability until 2020 ($529 million as of December 31, 2011), the maturity date for the Installment Notes. In the
third quarter of 2012 as a result of the agreement transferring our rights to the remaining receivable and the
extinguishment of Securitization Notes guaranteed by Lehman, $269 million of the deferred tax gain was
recognized. Due to available alternative minimum tax credits and net operating losses, which will 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.
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.
5. Intangible Assets and Other Long-lived Assets
Intangible Assets
Intangible assets represent the values assigned to trade names, customer lists and relationships, noncompete
agreements and exclusive distribution rights of businesses acquired. The trade name assets have an indefinite life
and are not amortized. Customer lists and relationships are amortized over three to 20 years and exclusive
distribution rights over ten years. Intangible assets consisted of the following at year-end:
2012
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(thousands)
Trade names ................................................... $ 66,000 $ — $66,000
Customer lists/relationships and exclusive distribution rights ............. 34,698 (19,933) 14,765
Total ......................................................... $100,698 $(19,933) $80,765
2011
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(thousands)
Trade names ................................................... $ 66,000 $ — $66,000
Customer lists/relationships and exclusive distribution rights ............. 34,963 (19,443) 15,520
Total ......................................................... $100,963 $(19,443) $81,520
Intangible asset amortization expense totaled $1.7 million, $1.7 million and $2.0 million in 2012, 2011 and
2010 respectively. The estimated amortization expense is approximately $1.4 to $1.7 million in each of the next
five years.
61