Officemax (OMX)

Impairment

        During 2008, the Company recorded non-cash impairment charges associated with goodwill, intangible assets and other long-lived assets of $1,364.4 million before taxes. After adjusting for taxes and a favorable impact to minority interest, the reduction in net income was $1,294.7 million after-tax or $17.05 per diluted share. These charges were recognized in the second and fourth quarters, and were measured and recognized following the guidance in SFAS No. 142, "Goodwill and Other Intangible Assets," ("SFAS 142") and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS 144") which require that the carrying value of long-lived assets be tested for impairment whenever circumstances indicate that impairment may exist. During the second quarter, the Company recorded an estimated impairment charge of $935.3 million, before taxes, and reported that the final analysis of second quarter impairment would be completed by year-end. During the fourth quarter, the Company completed the final analysis of the second quarter impairment and recorded an additional non-cash pre-tax impairment charge of $103.8 million. During the fourth quarter, the Company recorded non-cash pre-tax charges of $325.3 million, associated with the interim impairment test performed in that period. These non-cash charges consisted of $1,201.5 million of goodwill impairment in both the Contract ($815.5 million)

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and Retail ($386.0 million) segments; $107.1 million of impairment of trade names in our Retail segment; and $55.8 million of impairment related to fixed assets in our Retail segment. The impairment charges related to goodwill, intangibles and other long-lived assets are included in the caption "Goodwill and other asset impairments" in the Consolidated Statements of Income (Loss). These charges resulted in a full impairment of our goodwill balances and, as a result, there will be no future annual assessment of goodwill.

        In the second quarter of 2008, management concluded that indicators of potential impairment were present and that an evaluation of the carrying values of goodwill, intangibles and other long-lived assets was therefore required. Management reached the conclusion that an impairment test was required to be performed during the second quarter based on its assessment of the conditions that contributed to the Company's sustained low stock price and reduced market capitalization relative to the book value of its equity, including generally weak economic conditions, macroeconomic factors impacting industry business conditions, recent and forecasted operating performance, and continued tightening of the credit markets, along with other factors. These conditions had resulted in lower levels of consumer and business spending, intense competition and industry consolidation. Weighing all of these factors, management determined that indicators of potential impairment had occurred and an interim test for impairment was required as of the end of the second quarter of 2008.

        In the fourth quarter of 2008, due to a further decline in our market capitalization in relation to the book value of equity, a worsening economic environment, increasing unemployment and a decline in actual results and forecasted operating performance, management concluded that indicators of potential impairment were again present and that a new interim test for impairment was required as of the end of the fourth quarter.

        Under SFAS 142, the measurement of impairment of goodwill consists of two steps. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the results of the first test indicate that the fair value of the reporting unit is less than the carrying value, SFAS 142 requires the Company to perform a second step, which is to determine the implied fair value of each reporting unit's goodwill, and to compare it to the carrying value of the reporting unit's goodwill. An impairment loss is recognized for the excess of carrying value over the implied fair value of reporting unit goodwill. In the second quarter, the Company determined that the fair value of both of the Company's reporting units was less than their corresponding carrying values, thereby requiring the second step to be performed for both reporting units. The activities in the second step include hypothetically valuing all of the tangible and intangible assets of the impaired reporting unit as if the reporting unit had been acquired in a business combination. Due to the extensive work involved in performing these valuations, management initially recognized an estimated impairment loss in the second quarter and indicated that the final impairment measurement would be completed by year-end. As noted above, the Company completed the second step of the second quarter impairment test and recorded an additional non-cash impairment change in the fourth quarter. As a result of the final second quarter impairment work, the goodwill of the Retail reporting unit was fully impaired, while the goodwill of the Contract reporting unit was partially impaired. During the fourth quarter, the Company performed new impairment tests for the remaining Contract goodwill, which resulted in the recording of an additional non-cash pre-tax impairment charge of $252.7 million. As a result of the fourth quarter impairment, the Contract goodwill was fully impaired.

        Under SFAS 142, the measurement of impairment of indefinite-lived intangible assets consists of calculating the implied fair value and comparing that value to the intangible asset's carrying value. The implied fair value is calculated based on the estimated future discounted cash flows associated with the intangible asset. In the second quarter, the Company recorded estimated impairment of the trade names in the Retail reporting unit of $80.0 million, before taxes. Upon

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completion of the second quarter impairment test in the fourth quarter, the Company recorded an additional $5.0 million non-cash, pre-tax impairment charge for the Retail trade names. During the fourth quarter, the Company performed an additional review of the carrying value of the remaining Retail trade name and recognized a non-cash, pre-tax impairment charge of $22.1 million.

        In addition, as required under SFAS 144, interim impairment tests of the Company's long-lived assets were also performed in both the second and fourth quarters. Impairment testing under SFAS No. 144 is also a two-step process. In the first step ("the recoverability test"), a determination of potential impairment is made based on a comparison of the estimated future undiscounted cash flows derived from the asset to its carrying amount. If estimated future undiscounted cash flows are less than the carrying value of the asset, then the second step is completed and the impairment loss is measured as the excess of the carrying value over the fair value of the asset, with fair value determined based on estimated future discounted cash flows. The Company performed the recoverability test for all the long-lived assets of each reporting unit, in aggregate. The recoverability test did not identify potential impairment for these asset groups. The Company also performed the recoverability test for the assets of individual retail stores ("store assets" or "stores"), which consist primarily of leasehold improvements and fixtures. The recoverability test did identify potential impairment at certain stores. As a result we completed the second step and concluded that $50.5 million of store assets were required to be written-off.

        As a result of these reviews for the full year of 2008, the Company recorded non-cash pre-tax impairment charges consisting of $1,201.5 million for goodwill, $107.1 million for trade names and $55.8 million for fixed assets. Of these charges, $548.9 million were recorded in the Retail segment and $815.5 million were recorded in the Contract segment. The impairment charge included a portion of goodwill that was not deductible for tax purposes, resulting in a tax benefit of $63.2 million, or approximately 4.6% of the pre-tax charge amount.

Impairment

        During 2008, the Company recorded non-cash impairment charges associated with goodwill, intangible assets and other
long-lived assets of $1,364.4 million before taxes. After adjusting for taxes and a favorable impact to minority interest, the reduction in net income was $1,294.7 million
after-tax or $17.05 per diluted share. These charges were recognized in the second and fourth quarters, and were measured and recognized following the guidance in SFAS No. 142,
"Goodwill and Other Intangible Assets," ("SFAS 142") and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS 144") which require
that the carrying value of long-lived assets be tested for impairment whenever circumstances indicate that impairment may exist. During the second quarter, the Company recorded an
estimated impairment charge of $935.3 million, before taxes, and reported that the final analysis of second quarter impairment would be completed by year-end. During the fourth
quarter, the Company completed the final analysis of the second quarter impairment and recorded an additional non-cash pre-tax impairment charge of $103.8 million.
During the fourth quarter, the Company recorded non-cash pre-tax charges of $325.3 million, associated with the interim impairment test performed in that period. These
non-cash charges consisted of $1,201.5 million of goodwill impairment in both the Contract ($815.5 million)

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and
Retail ($386.0 million) segments; $107.1 million of impairment of trade names in our Retail segment; and $55.8 million of impairment related to fixed assets in our Retail
segment. The impairment charges related to goodwill, intangibles and other long-lived assets are included in the caption "Goodwill and other asset impairments" in the Consolidated
Statements of Income (Loss). These charges resulted in a full impairment of our goodwill balances and, as a result, there will be no future annual assessment of goodwill.

        In
the second quarter of 2008, management concluded that indicators of potential impairment were present and that an evaluation of the carrying values of goodwill, intangibles and other
long-lived assets was therefore required. Management reached the conclusion that an impairment test was required to be performed during the second quarter based on its assessment of the
conditions that contributed to the Company's sustained low stock price and reduced market capitalization relative to the book value of its equity, including generally weak economic conditions,
macroeconomic factors impacting industry business conditions, recent and forecasted operating performance, and continued tightening of the credit markets, along with other factors. These conditions
had resulted in lower levels of consumer and business spending, intense competition and industry consolidation. Weighing all of these factors, management determined that indicators of potential
impairment had occurred and an interim test for impairment was required as of the end of the second quarter of 2008.

        In
the fourth quarter of 2008, due to a further decline in our market capitalization in relation to the book value of equity, a worsening economic environment, increasing unemployment
and a decline in actual results and forecasted operating performance, management concluded that indicators of potential impairment were again present and that a new interim test for impairment was
required as of the end of the fourth quarter.

        Under
SFAS 142, the measurement of impairment of goodwill consists of two steps. In the first step, the Company compares the fair value of each reporting unit to its carrying
value. If the results of the first test indicate that the fair value of the reporting unit is less than the carrying value, SFAS 142 requires the Company to perform a second step, which is to
determine the implied fair value of each reporting unit's goodwill, and to compare it to the carrying value of the reporting unit's goodwill. An impairment loss is recognized for the excess of
carrying value over the implied fair value of reporting unit goodwill. In the second quarter, the Company determined that the fair value of both of the Company's reporting units was less than their
corresponding carrying values, thereby requiring the second step to be performed for both reporting units. The activities in the second step include hypothetically valuing all of the tangible and
intangible assets of the impaired reporting unit as if the reporting unit had been acquired in a business combination. Due to the extensive work involved in performing these valuations, management
initially recognized an estimated impairment loss in the second quarter and indicated that the final impairment measurement would be completed by year-end. As noted above, the Company
completed the second step of the second quarter impairment test and recorded an additional non-cash impairment change in the fourth quarter. As a result of the final second quarter
impairment work, the goodwill of the Retail reporting unit was fully impaired, while the goodwill of the Contract reporting unit was partially impaired. During the fourth quarter, the Company
performed new impairment tests for the remaining Contract goodwill, which resulted in the recording of an additional non-cash pre-tax impairment charge of
$252.7 million. As a result of the fourth quarter impairment, the Contract goodwill was fully impaired.

        Under
SFAS 142, the measurement of impairment of indefinite-lived intangible assets consists of calculating the implied fair value and comparing that value to the intangible
asset's carrying value. The implied fair value is calculated based on the estimated future discounted cash flows associated with the intangible asset. In the second quarter, the Company recorded
estimated impairment of the trade names in the Retail reporting unit of $80.0 million, before taxes. Upon

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completion
of the second quarter impairment test in the fourth quarter, the Company recorded an additional $5.0 million non-cash, pre-tax impairment charge for the Retail trade
names. During the fourth quarter, the Company performed an additional review of the carrying value of the remaining Retail trade name and recognized a non-cash, pre-tax
impairment charge of $22.1 million.

        In
addition, as required under SFAS 144, interim impairment tests of the Company's long-lived assets were also performed in both the second and fourth quarters.
Impairment testing under SFAS No. 144 is also a two-step process. In the first step ("the recoverability test"), a determination of potential impairment is made based on a
comparison
of the estimated future undiscounted cash flows derived from the asset to its carrying amount. If estimated future undiscounted cash flows are less than the carrying value of the asset, then the
second step is completed and the impairment loss is measured as the excess of the carrying value over the fair value of the asset, with fair value determined based on estimated future discounted cash
flows. The Company performed the recoverability test for all the long-lived assets of each reporting unit, in aggregate. The recoverability test did not identify potential impairment for
these asset groups. The Company also performed the recoverability test for the assets of individual retail stores ("store assets" or "stores"), which consist primarily of leasehold improvements and
fixtures. The recoverability test did identify potential impairment at certain stores. As a result we completed the second step and concluded that $50.5 million of store assets were required to
be written-off.

        As
a result of these reviews for the full year of 2008, the Company recorded non-cash pre-tax impairment charges consisting of $1,201.5 million for goodwill,
$107.1 million for trade names and $55.8 million for fixed assets. Of these charges, $548.9 million were recorded in the Retail segment and $815.5 million were recorded in
the Contract segment. The impairment charge included a portion of goodwill that was not deductible for tax purposes, resulting in a tax benefit of $63.2 million, or approximately 4.6% of the
pre-tax charge amount.

Impairment

        In the second quarter of 2008, the Company recorded an estimated non-cash impairment charge associated with goodwill, intangible assets and other long-lived assets of $935.3 million pre-tax, which is $909.3 million after-tax or $11.99 per share for the first nine months of 2008. This charge was measured and recognized on an estimated basis following the guidance in SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 144 "Accounting for the Impairment or Disposal of Long-

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Notes to Quarterly Consolidated Financial Statements (Unaudited) (Continued)

5. Goodwill, Intangible Assets and Other Long-lived Assets (Continued)

Lived Assets," which require that the carrying value of long-lived assets be tested for impairment whenever circumstances indicate that impairment may exist. The Company reported that an adjustment to the estimated impairment charge will be required when the Company finalizes its analysis. The Company continues to complete its analysis, and is expecting to finalize it by the end of 2008. The estimates and assumptions made in calculating the impairment charge are inherently subject to significant uncertainties. As a result, any adjustment resulting from the completion of the analysis and finalization of the charge could be material, but will be non-cash. Although the Company is finalizing its estimated non-cash impairment charge recorded in the second quarter of 2008, its common stock has continued to trade below book value per share during the third quarter of 2008. Management will continue to monitor the relationship of the Company's market capitalization to its book value, which management attributes to both retail industry-wide and Company specific factors, and evaluate the carrying value of goodwill and other intangibles.

        In the second quarter of 2008, management concluded that indicators of potential impairment were present and that an evaluation of the carrying values of goodwill, intangibles and other long-lived assets was therefore required. Management reached the conclusion that an impairment test was required to be performed during the second quarter based on its assessment of the conditions that contributed to the Company's sustained low stock price and reduced market capitalization relative to the book value of its equity, including generally weak economic conditions, macroeconomic factors impacting industry business conditions, recent and forecasted segment operating performance, the increased competitive environment, and continued tightening of the credit markets, along with other factors. These conditions have resulted in lower levels of consumer and business spending, intense competition and industry consolidation. Weighing all of these factors, management determined that indicators of potential impairment had occurred and an interim test for impairment was required as of the end of the second quarter of 2008.

        Under SFAS No. 142, the measurement of impairment of goodwill consists of two steps. In the first step, the Company compares the fair value of each reporting unit to its carrying value. At the end of the second quarter, management completed a high level valuation of the fair value of our reporting units which incorporated existing market-based considerations as well as a discounted cash flow methodology based on current results and projections. Based on this evaluation, it was determined that the fair value of the Company was less than the carrying value. Following this assessment, SFAS No. 142 requires the Company to perform a second step in order to determine the implied fair value of each reporting unit's goodwill, and to compare it to the carrying value of the reporting unit's goodwill. The activities in the second step include hypothetically valuing all of the tangible and intangible assets of the impaired reporting unit as if the reporting unit had been acquired in a business combination, which includes valuing all of the Company's intangibles, even if they are not currently recorded within the carrying value. Management has not completed the second step of the goodwill impairment test. However, a preliminary review of the significant intangible assets (trade name and customer contract values) was completed and considered in measuring the estimated impairment charge recorded during the second quarter of 2008.

        In addition, as required under SFAS No. 144, an interim impairment test of the Company's long-lived assets was also performed. Under SFAS 144, an impairment loss is recognized if the estimated future undiscounted cash flows derived from the asset are less than its carrying amount. The impairment loss is measured as the excess of the carrying value over the fair value of the asset, with fair value determined based on estimated future discounted cash flows.

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Notes to Quarterly Consolidated Financial Statements (Unaudited) (Continued)

5. Goodwill, Intangible Assets and Other Long-lived Assets (Continued)

        Following these reviews, the Company recorded, for the second quarter of 2008, an estimate of the impairment charge. The components of the estimated non-cash impairment charge consisted of $850 million of goodwill, $80 million of trade names and $5.3 million of fixed assets, comprised primarily of impairments of leasehold improvements at certain underperforming retail stores. The charge recorded was in the Retail segment ($471 million) and the Contract segment ($464 million). The impairment charge included a portion of goodwill that was not deductible for tax purposes, resulting in a tax benefit of $26 million or approximately three percent of the pre-tax charge amount.

Impairment

        In July 2008, the Company made the determination to record an estimated non-cash impairment charge associated with goodwill, intangible assets and other long-lived assets of $935.3 million pre-tax, which is $909.3 million after-tax or $11.98 per share. This charge was measured and recognized on an estimated basis following the guidance in SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," which require that the carrying value of long-lived assets be tested for impairment whenever circumstances indicate that impairment may exist.

10

4. Goodwill, Intangible Assets and Other Long-lived Assets (Continued)

        In the second quarter of 2008, management concluded that indicators of potential impairment were present and that an evaluation of the carrying values of goodwill, intangibles and other long-lived assets was therefore required. Management reached the conclusion that an impairment test was required to be performed during the second quarter based on its assessment of the conditions that have contributed to the Company's sustained low stock price and reduced market capitalization relative to the book value of its equity, including generally weak economic conditions, macroeconomic factors impacting industry business conditions, recent and forecasted segment operating performance, the increased competitive environment, and continued tightening of the credit markets, along with other factors. These conditions have resulted in lower levels of consumer and business spending, intense competition and industry consolidation. Weighing all of these factors, management determined that indicators of potential impairment had occurred and an interim test for impairment was required as of the end of the second quarter of 2008.

        Under SFAS No. 142, the measurement of impairment of goodwill consists of two steps. In the first step, the Company compares the fair value of each reporting unit to its carrying value. At the end of the second quarter, management completed a high level valuation of the fair value of our reporting units which incorporated existing market-based considerations as well as a discounted cash flow methodology based on current results and projections. Based on this evaluation, it was determined that the fair value of the Company was less than the carrying value. Following this assessment, SFAS No. 142 requires the Company to perform a second step in order to determine the implied fair value of each reporting unit's goodwill, and to compare it to the carrying value of the reporting unit's goodwill. The activities in the second step include hypothetically valuing all of the tangible and intangible assets of the impaired reporting unit as if the reporting unit had been acquired in a business combination, which includes valuing all of the Company's intangibles, even if they are not currently recorded within the carrying value. Management has not completed the second step of the goodwill impairment test. However, a preliminary review of the significant intangible assets (trade name and customer contract values) was completed and considered in measuring the estimated impairment charge recorded during the second quarter of 2008.

        In addition, as required under SFAS No. 144, an interim impairment test of the Company's long-lived assets was also performed. Under SFAS 144, an impairment loss is recognized if the estimated future undiscounted cash flows derived from the asset are less than its carrying amount. The impairment loss is measured as the excess of the carrying value over the fair value of the asset, with fair value determined based on estimated future discounted cash flows.

        Following these reviews, the Company recorded an estimate of the impairment charge. The components of the estimated non-cash impairment charge consisted of $850 million of goodwill, $80 million of trade names and $5.3 million of fixed assets, comprised primarily of impairments of leasehold improvements at certain underperforming retail stores. The charge recorded was in the Retail segment ($471 million) and the Contract segment ($464 million). The impairment charge included a portion of goodwill that was not deductible for tax purposes, resulting in a tax benefit of $26 million or approximately three percent of the pre-tax charge amount.

        The estimates and assumptions made in assessing the fair value of the reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Accordingly, an adjustment to the estimated impairment charge will be required when the Company finalizes its analysis, which is expected to be completed by the end of 2008. Any such adjustment could be material, but will be non-cash.

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4. Goodwill, Intangible Assets and Other Long-lived Assets (Continued)