NAPERVILLE, Ill., Sept. 19 /PRNewswire-FirstCall/ -- OfficeMax(R)
Incorporated (NYSE: OMX) today announced that the Lehman Brothers Holdings
Inc. bankruptcy is not expected to have an adverse impact on OfficeMax
operations.
On September 18, 2008, OfficeMax Incorporated filed a Current Report on
Form 8-K with the Securities and Exchange Commission. OfficeMax does not
believe any outcome related to the event of default under the installment
notes referenced in that filing will have any adverse impact on the
company's operations. The company believes any potential cash impact would
be funded adequately by the company's excess cash position and the
company's credit facility, and would be limited to an approximately $1
million net reduction in annual interest income and a potential
acceleration of a portion of the tax liability related to the 2004
timberlands sale transaction.
The September 18, 2008 Form 8-K contained information related to an
event of default under the timber installment notes transaction from 2004.
The timber installment notes were issued to bankruptcy remote special
purpose entities of OfficeMax. The notes were issued by Boise Land & Timber
II, L.L.C. with a guaranty from Lehman Brothers Holdings Inc. These
installment notes were monetized through the issuance of securitization
notes by the bankruptcy remote special purpose entities of OfficeMax.
Recourse on the securitization notes is limited to the pledged installment
notes and the related guaranty from Lehman Brothers Holdings Inc., and
OfficeMax has no obligation with respect to the securitization notes.
OfficeMax is assessing the impact of the Lehman Brothers Holdings Inc.
bankruptcy filing, but believes the impact is limited to the following
areas:
Currently, one of the OfficeMax special purpose entities receives
approximately $41 million in interest annually under the portion of the
installment notes portion related to the Lehman guarantee. This interest
income funds approximately $40 million in interest payable annually to
holders of the securitization notes, which results in net interest income
to OfficeMax of approximately $1 million. Any nonpayment of the installment
notes or related Lehman guaranty could result in a loss of this $1 million
of annual net interest income.
In addition, at the time of the 2004 sale of its timberlands, the
company generated a significant tax gain and the resulting tax liability of
$543 million, approximately half of which is impacted by payment or
nonpayment of the Lehman-related installment notes, was deferred until
2019, the maturity for the installment notes. In the event of an impairment
of the Lehman- related installment notes, recognition of a portion of the
tax gain could be accelerated and the tax liability could be due earlier.
The company has outstanding alternative minimum tax credits, a portion of
which resulted from tax payments relating to this transaction, which could
be utilized to reduce the ultimate tax payment.
As stated in the September 18, 2008 Form 8-K, the aggregate principal
amount of the securitization notes held by one of the OfficeMax special
purpose entities is $735 million, secured by $817.5 million aggregate
principal of Lehman-related installment notes and the Lehman guaranty. In
the event of an impairment of the Lehman-related installment notes,
OfficeMax could incur a non-cash earnings charge of up to $82.5 million,
which represents the difference between the proceeds due from the
Lehman-related installment notes and securitization notes.
OfficeMax will continue to monitor the status of the Lehman Brothers
Holdings Inc. bankruptcy filing and the impact on OfficeMax.
About OfficeMax
OfficeMax Incorporated (NYSE: OMX) is a leader in both business-to-
business office products solutions and retail office products. The
OfficeMax mission is simple. We help our customers do their best work. The
company provides office supplies and paper, in-store print and document
services through OfficeMax ImPress(R), technology products and solutions,
and furniture to consumers and to large, medium and small businesses.
OfficeMax customers are served by approximately 32,000 associates through
direct sales, catalogs, e-commerce and nearly 1,000 stores. To find the
nearest OfficeMax, call 1-877-OFFICEMAX. For more information, visit
http://www.officemax.com/.
Forward-Looking Statements
Certain statements made in this press release and other written or oral
statements made by or on behalf of the company constitute "forward-looking
statements" within the meaning of the federal securities laws, including
statements regarding the company's future performance, as well as
management's expectations, beliefs, intentions, plans, estimates or
projections relating to the future. Management believes that these
forward-looking statements are reasonable. However, the company cannot
guarantee that it will successfully execute its turnaround plans or that
its actual results will be consistent with the forward-looking statements
and you should not place undue reliance on them. These statements are based
on current expectations and speak only as of the date they are made. The
company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of future events, new
information or otherwise. Important factors regarding the company which may
cause results to differ from expectations are included in the company's
Annual Report on Form 10-K for the year ended December 29, 2007, under Item
1A "Risk Factors", and in the company's other filings with the SEC.
OfficeMax Media Contacts: OfficeMax Investor Contact:
William Bonner Jennifer Rook John Jennings
630-864-6057 630-864-6057 630-864-6820
SOURCE OfficeMax Incorporated
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Related links:
http://www.officemax.com
CONTACT:
Media, William Bonner or Jennifer Rook,
+1-630-864-6057, or Investors, John Jennings, +1-630-864-6820,
all of OfficeMax Incorporated
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