OfficeMax 2014 Annual Report Download - page 80

Table of Contents
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Grupo OfficeMax
In August 2014, the Company completed the sale of its 51% capital stock interest in Grupo OfficeMax, the former OfficeMax business in Mexico, to its joint
venture partner for net cash proceeds of approximately $43 million. The loss associated with the disposed business amounted to approximately $2 million,
which resulted primarily from the release of the net foreign currency remeasurement differences from investment to the disposition date recorded in other
comprehensive income (cumulative translation adjustment) and fees incurred to complete the transaction. The loss on disposition is included in Merger,
restructuring, and other operating expenses, net in the Consolidated Statements of Operations. This disposition will not have a major effect on the Company’s
operations and financial results, therefore, the transaction does not meet the discontinued operations criteria under the recently issued and early adopted
accounting standards disclosed in Note 1.
The amounts included in the 2014 Consolidated Statements of Operations for this business through the date of sale are as follows:
(In millions)
Sales $155
Income before income taxes 6
Income attributable to Office Depot, before income taxes 4
Office Depot de Mexico
In the third quarter of 2013, the Company sold its 50 percent investment in Office Depot de Mexico, S.A. de C.V. (“Office Depot de Mexico”) to its joint
venture partner, Grupo Gigante, S.A.B. de C.V. (“Grupo Gigante”). The transaction generated cash proceeds of the Mexican Peso amount of 8,777 million in
cash (approximately $680 million at then-current exchange rates). A pretax gain of $382 million was recognized in 2013 as Gain on the disposition of joint
venture in Other income (expense) in the Consolidated Statement of Operations. The gain is net of third party fees, as well as recognition of $39 million of
cumulative translation losses released from Other comprehensive income because the subsidiary holding the joint venture investment was substantially
liquidated following the disposition. The investment in this joint venture was accounted for under the equity method of accounting; accordingly, the
disposition is not reflected as discontinued operations. Refer to Note 6 for additional information on this former joint venture. The disposition of this asset
from the International Division and return of sale proceeds to the Company’s U.S. parent resulted in the fair value of the related reporting unit falling below
its carrying value. Refer to Notes 5 and 9 for further information on the goodwill impairment recorded in 2013 and income tax impacts of the sale,
respectively.
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In recent years, the Company has taken actions to adapt to changing and competitive conditions. These actions include closing facilities, consolidating
functional activities, eliminating redundant positions, disposing of businesses and assets, and taking actions to improve process efficiencies. Additionally, in
2013, the Merger was completed and integration activities similar to the actions described above began. The Company assumed certain restructuring
liabilities previously recorded by OfficeMax.
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