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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

OFFICEMAX INCORPORATED
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / /

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K / /.

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes /X/  No / /

        The aggregate market value of the voting common stock held by nonaffiliates of the registrant, computed by reference to the price at which the common stock was sold as of the close of business on June 30, 2004, was $3,309,118,981. Registrant does not have any nonvoting common equities.

        Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

Document incorporated by reference

        Portions of the registrant's proxy statement relating to its 2005 annual meeting of shareholders to be held on May 9, 2005 ("OfficeMax Incorporated's proxy statement") are incorporated by reference into Part III of this Form 10-K.

Table of Contents

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PART I

ITEM 1.    BUSINESS

        As used in this 2004 Annual Report on Form 10-K, the terms "OfficeMax," the "company," and "we" include OfficeMax Incorporated and its consolidated subsidiaries and predecessors. Our Securities and Exchange Commission ("SEC") filings, which include this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all related amendments, are available free of charge on our website at www.officemax.com and can be found by clicking on "About us," "Investors" and then "SEC filings." Our SEC filings are available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Last year, we filed our annual Chief Executive Officer certification dated May 6, 2004, with the New York Stock Exchange. Attached as exhibits to this Form 10-K, you will find certifications of our Chief Executive Officer and Chief Financial Officer required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

General Overview

        OfficeMax is a leader in both business-to-business and retail office products distribution. We provide office supplies and paper, print and document services, technology products and solutions and furniture to large, medium and small businesses and consumers. OfficeMax customers are served by more than 41,000 associates through direct sales, catalogs, the Internet and 935 superstores. Our common stock trades on the New York Stock Exchange under the ticker symbol OMX, and our corporate headquarters is in Itasca, Illinois.

        OfficeMax Incorporated (formerly Boise Cascade Corporation) was organized as Boise Payette Lumber Company, a Delaware corporation, in 1931 as a successor to an Idaho corporation formed in 1913. In 1957, the company's name was changed to Boise Cascade Corporation. On December 9, 2003, Boise Cascade Corporation acquired 100% of the voting securities of OfficeMax, Inc. That acquisition more than doubled the size of our office products distribution business and expanded that business into the retail channel. In connection with the sale of our paper, forest products and timberland assets described below, the company's name was changed from Boise Cascade Corporation to OfficeMax Incorporated, and the names of our office products segments were changed from Boise Office Solutions to OfficeMax, Contract and OfficeMax, Retail. The Boise Cascade Corporation and Boise Office Solutions names were used in documents furnished to or filed with the SEC prior to the sale.

        References made to the OfficeMax, Inc., acquisition and the OfficeMax, Inc., integration in this Form 10-K refer to Boise Cascade Corporation's acquisition of OfficeMax, Inc., in December 2003 and the related integration activities. (For more information about our acquisition of OfficeMax, Inc., see Note 4, OfficeMax, Inc., Acquisition, and Note 5, OfficeMax, Inc., Integration, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.)

        On October 29, 2004, we sold our paper, forest products and timberland assets to affiliates of Boise Cascade, L.L.C., a new company formed by Madison Dearborn Partners LLC (the "Sale"). The Sale did not include our facility near Elma, Washington. (See Note 3, Discontinued Operations, of the Notes to the Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K for more information on the Elma facility.) With the Sale, we completed the company's transition, begun in the mid-1990s, from a predominately manufacturing-based company to an independent office products distribution company. The financial data in this report include the results of the paper, forest products and timberland assets through October 28,

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2004. On October 29, 2004, as part of the Sale, we invested $175 million in the securities of affiliates of Boise Cascade, L.L.C. This investment represents continuing involvement as defined in Financial Accounting Standards Board ("FASB") Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Accordingly, we do not show the historical results of the sold paper, forest products and timberland assets as discontinued operations. (For more information about our Sale, see Note 2, Sale of Paper, Forest Products and Timberland Assets, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.)

        We report our business results using five reportable segments: OfficeMax, Contract; OfficeMax, Retail; Boise Building Solutions; Boise Paper Solutions; and Corporate and Other. All of our segments, except OfficeMax, Retail, had a December 31 year-end. Our OfficeMax, Retail segment maintained a fiscal year that ended on the last Saturday in December, which in 2004 was December 25. Effective March 11, 2005, we amended our bylaws to make the fiscal year-end for OfficeMax Incorporated the last Saturday of December. Our international businesses will maintain the December 31 year-end. We will consolidate the calendar year-end results of our international businesses in OfficeMax Incorporated's fiscal-year results. We present information pertaining to each of our five segments and the geographic areas in which they operate in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

OfficeMax, Contract

        We distribute a broad line of items for the office, including office supplies and paper, technology products and solutions and office furniture through our OfficeMax, Contract segment. OfficeMax, Contract sells directly to large corporate, government and small and medium-sized offices in the United States, Canada, Australia, New Zealand and Mexico. This segment markets and sells through field salespeople, outbound telesales, catalogs, the Internet and office products stores in Canada, Hawaii, Australia and New Zealand. Substantially all products sold by this segment are purchased from outside manufacturers or from industry wholesalers, except office papers. We purchase office papers primarily from the paper operations of Boise Cascade, L.L.C., under a 12-year paper supply contract entered into as part of the Sale. (See Note 20, Commitments and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K for additional information related to the paper supply contract.)

        Customers with more than one location are often served under the terms of one national contract that provides consistent products, prices and service to multiple locations. If the customer desires, we also provide summary billings, usage reporting and other special services. As of February 28, 2005, OfficeMax, Contract operated 68 distribution centers and six customer service and outbound telesales centers. OfficeMax, Contract also operated 100 stores in Canada, Hawaii, Australia and New Zealand. Since the acquisition of OfficeMax, Inc., in December 2003, the OfficeMax, Contract segment also included the results of the former OfficeMax Direct businesses, which included field salespeople, catalogs and a public Internet site. Throughout 2004 and continuing during 2005, the former OfficeMax Direct businesses are being integrated with the operations of the OfficeMax, Contract segment.

        OfficeMax, Contract sales for 2004, 2003 and 2002 were $4,371 million, $3,742 million and $3,546 million, respectively.

        Information regarding sales to external customers, selected components of income/loss and assets for this segment is set forth in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

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OfficeMax, Retail

        OfficeMax, Retail is a retail distributor of office supplies and paper, print and document services, technology products and solutions and office furniture. Our retail segment has operations in the United States, Puerto Rico and the U.S. Virgin Islands. Our retail segment also operates office products superstores in Mexico through a 51%-owned joint venture. In 2004, substantially all products sold by this segment were purchased from outside manufacturers or from industry wholesalers, except office papers. We purchase office papers primarily from the paper operations of Boise Cascade, L.L.C., under a 12-year paper supply contract we entered into as part of the Sale. (See Note 20, Commitments and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K, for additional information related to the paper supply contract.)

        As of February 28, 2005, our retail office products segment operated 935 superstores, three large distribution centers, two small-format stores and one small distribution center. Each superstore offers approximately 8,000 stock keeping units (SKUs) of name-brand and OfficeMax private-branded merchandise and a variety of business services targeted at serving the small business customer, including OfficeMax Print and Document Services.

        OfficeMax, Retail sales for 2004 were $4,481 million. Sales for the period from December 10, 2003, the date of the OfficeMax, Inc., acquisition, to December 27, 2003, the last day of our retail segment's fiscal year, were $283 million.

        Information regarding sales to external customers, selected components of income/loss and assets for this segment is set forth in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

Boise Building Solutions

        Assets of this segment were included in the October 29, 2004 Sale. Boise Building Solutions was a major producer of plywood, lumber and particleboard. This segment also manufactured engineered wood products, including laminated veneer lumber (LVL), which is a high-strength engineered structural lumber product, wood I-joists and laminated beams. Most of the production was sold to independent wholesalers and dealers and through the segment's building materials distribution outlets. Building materials manufactured by this business are used primarily in housing, industrial construction and a variety of manufactured products.

        Boise Building Solutions operated 28 building materials distribution facilities as of October 29, 2004. These operations marketed a wide range of building materials, including lumber, plywood, oriented strand board, particleboard, decking, engineered wood products, paneling, drywall, builders' hardware and metal products. These products were distributed to retail lumber dealers, home centers specializing in the do-it-yourself market and industrial customers. Through October 28, 2004, approximately 25% of the lumber, panels and engineered wood products purchased by the distribution operations were provided by this segment's manufacturing facilities, with the balance purchased from outside sources. Segment sales for January 1 through October 28, 2004, were $3,258 million. Sales for the years ended December 31, 2003 and 2002, were $2,872 million and $2,470 million, respectively.

        Information regarding sales to external customers, selected components of income/loss and assets for this segment is set forth in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

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Boise Paper Solutions

        Assets of this segment were included in the October 29, 2004 Sale. Boise Paper Solutions manufactured and sold uncoated free sheet papers, containerboard, corrugated containers, newsprint and market pulp. Boise Paper Solutions sales for January 1 through October 28, 2004, were $1,670 million. Sales for 2003 and 2002 were $1,853 million and $1,878 million, respectively.

        About 46% of this segments's uncoated free sheet paper, including about 83% of its office papers, was sold through the OfficeMax, Contract and OfficeMax, Retail segments from January 1 through October 28, 2004. In conjunction with the Sale, OfficeMax entered into a 12-year paper supply contract with an affiliate of Boise Cascade, L.L.C. (See Note 20, Commitments and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K, for additional information related to the paper supply contract.)

        Information regarding sales to external customers, selected components of income/loss and assets for this segment is set forth in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

Timber Resources

        On October 29, 2004, we sold substantially all of our timberland assets, including approximately 2.3 million acres of timberland in the United States, 35,000 acres of eucalyptus plantation land in Brazil and a 16,000-acre cottonwood fiber farm near Wallula, Washington, to affiliates of Boise Cascade, L.L.C. (For more information about our Sale, see Note 2, Sale of Paper, Forest Products and Timberland Assets, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.)

Competition

        Domestic and international office products markets are highly competitive. Our competitive position in the office products industry is influenced by many factors, including price, service, quality, product selection and convenient locations. Some of our competitors are larger than OfficeMax and have greater financial resources. These resources afford those competitors greater purchasing power, increased financial flexibility and more capital resources for expansion and improvement, which may enable them to compete more effectively than we can. We can give no assurance that increased competition will not have an adverse effect on our business.

        OfficeMax, Contract.    The business-to-business office products market is highly competitive. Purchasers of office products have many options when purchasing office supplies and paper, technology products and solutions and office furniture. We are among the four largest business-to-business contract stationers in the United States. We also compete with worldwide contract stationers, large retail office products suppliers, direct-mail distributors, discount retailers, drugstores, supermarkets and thousands of local and regional contract stationers, many of whom have long-standing customer relationships.

        Increased competition in the office products industry, together with increased advertising, has heightened price awareness among end-users. Such heightened price awareness has led to margin pressure on office products. Besides price, competition is also based on customer service. We believe our excellent customer service gives us a competitive advantage among business-to-business office products distributors. Our ability to network our distribution centers into an integrated system enables us to serve, at a competitive cost, large national accounts that rely on us to deliver consistent products, prices and service to multiple locations.

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        OfficeMax, Retail.    The office products superstore industry, which includes superstore chains, Internet merchandisers and numerous other competitors, is highly competitive. Businesses in the office products superstore industry compete on the basis of pricing, product selection, convenient locations, customer service and ancillary business offerings. We currently have two direct domestic superstore competitors, Office Depot and Staples, whose stores are similar to OfficeMax superstores in terms of store format, pricing strategy and product selection. We expect to experience increased competition from computer and electronics superstore retailers, mass merchandisers, Internet merchandisers and wholesale clubs. In particular, mass merchandisers, such as Wal-Mart, and wholesale clubs have increased their assortment of office products to attract home office customers and individual consumers. Further, various other retailers that have not historically competed with superstores, such as drugstores and grocery chains, have begun to carry at least a limited assortment of basic office supplies. We expect this trend toward a proliferation of retailers offering a limited assortment of office supplies to continue. Many of our competitors have increased their presence in our markets in recent years.

        We are subject to increasing competition from Internet merchandisers that have minimal barriers to entry. These competitors include traditional retailers that sell through the Internet, Internet sites that target the small business market with a full line of business products or service offerings and Internet sites that sell or resell office products, technology products and business services.

        We also anticipate increasing competition from our office supply superstore competitors and various other providers in the print-for-pay business, which has historically been a key point of difference for OfficeMax superstores. Such increased competition could adversely affect our results of operation and profit margins.

        We believe we compete favorably with our competitors by differentiating ourselves based on the breadth and depth of our in-stock merchandise offering, along with specialized service offerings, everyday low prices, quality customer service and the efficiencies and convenience for our customers of our combined contract and retail distribution channels.

Inflationary and Seasonal Influences

        We believe that neither inflation nor deflation has had a material effect on our financial condition or results of operations; however, there can be no assurance that we will not be affected by inflation or deflation in the future. The company's business is seasonal, with OfficeMax, Retail showing a more pronounced seasonal trend than OfficeMax, Contract. Sales in the second quarter and summer months are historically the slowest of the year. Sales are stronger during the first, third and fourth quarters that include the important new-year office supply restocking month of January, the back-to-school period and the holiday selling season, respectively.

Working Capital

        We have no unusual working capital practices. We believe the management practices followed by OfficeMax with respect to working capital conform to common business practices in the United States.

Environmental Issues

        Our discussion of environmental issues is presented under the caption "Environmental" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. In addition, environmental issues are discussed under "Item 3. Legal Proceedings" of this Form 10-K.

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Capital Investment

        Information concerning our capital expenditures is presented under the caption "Investment Activities" and in the table titled "2004 Capital Investment by Segment" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

Energy

        Until the Sale, the Boise Paper Solutions segment was our primary energy user. Self-generated sources of energy, such as wood wastes, pulping liquors and hydroelectric power, provided approximately 63% of total energy requirements in this segment, compared with 59% in 2003 and 57% in 2002. The remaining 2004 energy requirements were fulfilled by purchased sources as follows: natural gas, 60%; electricity, 32%; and residual fuel oil, 8%.

Acquisitions and Divestitures

        We engage in acquisition and divestiture discussions with other companies and make acquisitions and divestitures from time to time. It is our policy to review our operations periodically and to dispose of assets that fail to meet our criteria for return on investment or cease to warrant retention for other reasons. See Note 2, Sale of Paper, Forest Products and Timberland Assets; Note 4, OfficeMax, Inc., Acquisition; and Note 7, Other (Income) Expense, Net, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

Geographic Areas

        Our discussion of financial information about geographic areas is presented in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

Identification of Executive Officers

        Information with respect to our executive officers is set forth in "Item 10. Directors and Executive Officers of the Registrant" of this Form 10-K.

Employees

        On December 31, 2004, we had approximately 41,000 employees, including about 15,600 part-time employees.

ITEM 2.    PROPERTIES

        The majority of OfficeMax facilities are rented under operating leases. (For more information about our operating leases, see Note 10, Leases, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.) Our properties are in good operating condition and are suitable and adequate for the operations for which they are used.

        Following is a list of our facilities by segment as of February 28, 2005. In addition, our corporate headquarters is in Itasca, Illinois, and our retail operations are headquartered in Shaker Heights, Ohio.

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OfficeMax, Contract

68 distribution centers in 28 states, the District of Columbia, Canada, Australia, New Zealand and Mexico

100 stores in Hawaii (5), Canada (66), Australia (7) and New Zealand (22)

6 customer service and outbound telesales centers in Illinois (2), Ohio, Oklahoma, Virginia and Wyoming

OfficeMax, Retail

935 superstores in 49 states, Puerto Rico, the U.S. Virgin Islands and Mexico

3 large distribution centers in Alabama, Nevada and Pennsylvania

2 small-format stores in Illinois

1 distribution center in Mexico (a)

(a)

Represents the locations for our 51%-owned joint venture in Mexico, OfficeMax de Mexico.

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ITEM 3.    LEGAL PROCEEDINGS

        OfficeMax Incorporated and certain of its subsidiaries are named as defendants in a number of lawsuits, claims and proceedings. Some of these lawsuits and proceedings arise out of the operation of the forest products assets prior to closing of the Sale, for which OfficeMax agreed to retain responsibility. Also, as part of the Sale, we agreed to retain responsibility for all pending or threatened proceedings and future proceedings alleging asbestos-related injuries arising out of the operation of the forest products assets prior to the closing of the Sale. We do not believe any of these retained proceedings are material to our business.

        We have been notified that we are a "potentially responsible party" under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") or similar federal and state laws, or have received a claim from a private party, with respect to 15 active sites where hazardous substances or other contaminants are or may be located. All 15 active sites relate to operations either no longer owned by the company or unrelated to its ongoing operations. In most cases, we are one of many potentially responsible parties, and our alleged contribution to these sites is relatively minor. For sites where a range of potential liability can be determined, we have established appropriate reserves. We believe we have minimal or no responsibility with regard to several other sites. We cannot predict with certainty the total response and remedial costs, our share of the total costs, the extent to which contributions will be available from other parties or the amount of time necessary to complete the cleanups. Based on our investigations; our experience with respect to cleanup of hazardous substances; the fact that expenditures will, in many cases, be incurred over extended periods of time; and the number of solvent potentially responsible parties, we do not believe that the known actual and potential response costs will, in the aggregate, materially affect our financial position or results of operations.

        Over the past several years and continuing into 2005, we have been named a defendant in a number of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to asbestos while working at job sites. The claims vary widely and often are not specific about the plaintiffs' contacts with the company. None of the claims seeks damages from us individually, and we are generally one of numerous defendants. Many of the cases filed against us have been voluntarily dismissed, although we have settled some cases. The settlements we have paid have been covered mostly by insurance, and we believe any future settlements or judgments in these cases would be similarly covered. To date, no asbestos case against us has gone to trial, and the nature of these cases makes any prediction as to the outcome of pending litigation inherently subjective. At this time, however, we believe our involvement in asbestos litigation is not material to either our financial position or our results of operations.

        Five lawsuits were filed against the company during the period from January 13, 2005, to February 18, 2005, alleging violations of the Securities Exchange Act of 1934. One case was voluntarily dismissed by the plaintiff, so the following four cases are currently pending: Roth v. OfficeMax Inc., et al.; Wing v. OfficeMax Incorporated, et al.; Noyes v. OfficeMax Inc., et al.; and Smith v. OfficeMax Inc., et al. OfficeMax is named as a defendant in each complaint. The complaint in Smith also names our chief financial officer and our former chief executive officer as defendants. In addition to the defendants named in the Smith complaint, the Wing and Noyes complaints also name our chief executive officer as a defendant. The complaint in Roth names as defendants each of the defendants named in the other three cases, as well as two former officers of OfficeMax, Inc., one of whom also served as the president of our retail division until January 2005. The lawsuits allege, among other things, that the defendants made false and misleading statements, or failed to disclose allegedly material information, with respect to the company's financial performance, prospects and internal controls. The cases were filed in the United States District Court for the Northern District of Illinois, and each allegedly is brought on behalf of a putative class comprised of persons who purchased (or otherwise acquired) the company's securities during periods specified

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in the complaints. The complaints seek an award of an unspecified amount of compensatory damages, interest, costs, including attorneys' fees, and such equitable or other relief as the court deems just. We believe there are valid factual and legal defenses to these lawsuits and will vigorously defend all claims alleged by the plaintiffs.

        We are also involved in other litigation and administrative proceedings arising in the normal course of our business. In the opinion of management, our recovery, if any, or our liability, if any, under pending litigation or administrative proceedings, including those described in the preceding paragraphs, would not materially affect our financial position or results of operations.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Beginning on October 5, 2004, and ending on November 4, 2004, in connection with our offer to purchase debt securities for cash, we solicited consents from holders of our 6.50% notes, due 2010 (the "6.50% Notes") and our 7.00% notes, due 2013 (the "7.00% Notes"), to amend the indenture dated as of October 1, 1985, between OfficeMax and U.S. Bank Trust National Association (as successor in interest to Morgan Guaranty Trust Company of New York), as amended or supplemented (the "Senior Notes Indenture"). The effect of the proposed amendments would be to eliminate substantially all of the restrictive covenants, some events of default and related provisions contained in the Senior Notes Indenture.

        A total of $300 million in principal amount of the 6.50% Notes was outstanding and entitled to participate in the offer to purchase and the related solicitation of consents. Of the total outstanding, holders of approximately $286 million in principal amount tendered 6.50% Notes in the offer and consented to the proposed amendments, and holders of approximately $14 million in principal amount did not tender 6.50% Notes in the offer and withheld consent to the proposed amendments. The consents received were sufficient to approve the proposed amendments with respect to the 6.50% Notes.

        A total of $200 million in principal amount of the 7.00% Notes was outstanding and entitled to participate in the offer to purchase and the related solicitation of consents. Of the total outstanding holders of approximately $94 million in principal amount tendered 7.00% Notes in the offer and consented to the proposed amendments, and holders of approximately $106 million in principal amount did not tender 7.00% Notes in the offer and withheld consent to the proposed amendments. The consents received were not sufficient to approve the proposed amendments with respect to the 7.00% Notes.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        Our common stock is listed on the New York Stock Exchange (the "Exchange"). The Exchange requires each listed company to distribute an annual report to its shareholders. We are distributing this Form 10-K to our shareholders in lieu of a separate annual report. The reported high and low sales prices for our common stock, as well as the frequency and amount of dividends paid on such stock, are included in Note 22, Quarterly Results of Operations, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K. We expect to continue the practice of paying regular cash dividends in 2005. Information concerning restrictions on the payment of dividends is included in Note 14, Debt, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" and in Liquidity and Capital Resources in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. The approximate number of common shareholders, based upon actual record holders on February 28, 2005, was 23,300.

        We maintain a corporate governance page on our website that includes key information about our corporate governance initiatives. That information includes our Corporate Governance Guidelines, Code of Ethics and charters for our Audit, Executive Compensation and Governance and Nominating Committees, as well as our Committee of Outside Directors. The corporate governance page can be found at www.officemax.com, by clicking on "About us," "Investors" and then "Corporate Governance." You also may obtain copies of these policies and codes by contacting our Corporate Communications Department, 150 Pierce Road, Itasca, Illinois 60143, or by calling 630/773-5000.

Shareholder Rights Plan

        We have had a shareholder rights plan since January 1986. Our current plan, as amended and restated, took effect in December 1998. At that time, the rights under the previous plan expired, and we distributed to our common stockholders one new right for each common share held. The rights become exercisable ten days after a person or group acquires 15% of our outstanding voting securities or ten business days after a person or group commences or announces an intention to commence a tender or exchange offer that could result in the acquisition of 15% of these securities. Each full right, if it becomes exercisable, entitles the holder to purchase one share of common stock at a purchase price of $175 per share, subject to adjustment. Upon payment of the purchase price, the rights may "flip in" and entitle holders to buy common stock or "flip over" and entitle holders to buy common stock in an acquiring entity in such amount that the market value is equal to twice the purchase price. The rights are nonvoting and may be redeemed by the company for one cent per right at any time prior to the tenth day after an individual or group acquires 15% of our voting stock, unless extended. The rights expire in 2008. Additional details are set forth in the Renewed Rights Agreement which is an exhibit to this Form 10-K.

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Stock Repurchases

        Information concerning our stock repurchases during the three months ended December 31, 2004, is as follows:

(a)

In September 1995, our board of directors authorized the purchase of up to 4.3 million shares of our common stock. As part of this authorization, we repurchase odd-lot shares (fewer than 100 shares) from shareholders wishing to exit their holdings in our common stock. We retire the shares that we repurchase under this program. This program will remain in effect until it is either terminated or suspended by our board of directors.

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ITEM 6.    SELECTED FINANCIAL DATA

        The following table sets forth our selected financial data for the years indicated and should be read in conjunction with the disclosures in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

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(a)

2004 included a $67.8 million pretax charge for the write-down of impaired assets at our Elma, Washington, manufacturing facility, which is accounted for as a discontinued operation.

2004 included the results of our Boise Building Solutions and Boise Paper Solutions segments through October 28, 2004. On October 29, 2004, we completed the sale of our paper, forest products and timberland assets to affiliates of Boise Cascade, L.L.C., a new company formed by Madison Dearborn Partners LLC, and recorded a $280.6 million pretax gain. We monetized the timber installment notes related to the sale for proceeds of $1.5 billion in December 2004. At the same time we entered into interest rate swap contracts to hedge the interest rate risk associated with the issuance of debt securities by special-purpose entities formed by the company and in December 2004, recorded $19.0 million of expense in "Timber notes securitization." See the discussion of the timber notes and the swap contracts under the caption "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

2004 included $137.1 million of costs related to our early retirement of debt.

2004 included a pretax gain of $59.9 million on the sale of approximately 79,000 acres of timberland located in western Louisiana.

2004 included a pretax gain of $46.5 million on the sale of our 47% interest in Voyageur Panel.

2004 included $15.9 million of expense in our Corporate and Other segment for one-time benefit costs granted to employees.

(b)

2003 included a pretax charge of $10.1 million for employee-related costs incurred in connection with the 2003 cost-reduction program.

2003 included a net $2.9 million one-time tax benefit related to a favorable tax ruling, net of changes in other tax items.

2003 included a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington.

2003 included income from the OfficeMax, Inc., operations for the period from December 10, 2003, through December 27, 2003, and costs, including incremental interest expense, directly related to the acquisition. The net effect of these items reduced income $4.1 million before taxes, or $2.5 million after taxes.

(c)

2002 included a pretax charge of $23.6 million to record the sale of all of the stock of our wholly owned subsidiary that held our investment in IdentityNow. We also recorded $27.6 million of tax benefits associated with this sale and our 2001 write-down of our equity investment (see d).

(d)

2001 included a pretax charge of $54.0 million for the closure of our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho, and a $4.9 million charge for the write-off of our assets in Chile.

2001 included a pretax charge of $10.9 million to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers.

2001 included a pretax charge of $54.3 million and $4.6 million of tax benefits for the write-down to fair value of an equity-method investment.

2001 included $5.0 million of pretax income for the reversal of unneeded reserves for potential claims rising from the sale in 2000 of our European office products operations.

(e)

2000 included a pretax gain of $98.6 million for the sale of our European office products operations.

(f)

The computation of diluted net loss per common share was antidilutive in the years 2003, 2002 and 2001; therefore, the amounts reported for basic and diluted loss per share are the same.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion contains statements about our future financial performance. These statements are only predictions. Our actual results may differ materially from these predictions. In evaluating these statements, you should review the section of this report entitled "Cautionary and Forward-Looking Statements."

Summary

Sale of Paper, Forest Products and Timberland Assets

        On October 29, 2004, we completed the sale of our paper, forest products and timberland assets for approximately $3.7 billion to affiliates of Boise Cascade, L.L.C., a new company formed by Madison Dearborn Partners LLC (the "Sale"). The Sale did not include our facility near Elma, Washington. (See Note 3, Discontinued Operations, of the Notes to the Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K for more information on the Elma facility.) We realized note and cash proceeds of approximately $3.5 billion from the Sale, after allowing for a $175 million reinvestment in affiliates of Boise Cascade, L.L.C., and transaction-related expenses. The consideration for the timberlands portion of the Sale included $1.6 billion of timber installment notes. We monetized the timber installment notes in December 2004 for proceeds of $1.5 billion. We realized net cash proceeds from the Sale of $3.3 billion after allowing for the $175 million reinvestment, transaction-related expenses and the monetization of the timber installment notes. See the discussion of the timber notes and the monetization process under the caption "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

        With the Sale, we completed the company's transition, begun in the mid-1990s, from a predominately manufacturing-based company to an independent office products distribution company. We used a portion of the cash generated by the Sale to pay down debt. During fourth quarter 2004, we reduced our debt by approximately $1.8 billion, excluding $1.5 billion of timber notes that we securitized, and we retained $1.2 billion of cash. See the discussion of the timber notes and the securitization process under the caption "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

Financial Performance

        In 2004, sales grew 61% to $13.3 billion. Net income was $173.1 million, or income of $1.77 per diluted share, compared with net income of $8.3 million and a loss of 8 cents per diluted share in 2003. In 2004, net income included a $67.8 million pretax charge for the write-down of our Elma, Washington, manufacturing facility, which is accounted for as a discontinued operation; a $59.9 million pretax gain related to the sale of Louisiana timberland; a $46.5 million pretax gain on the sale of our interest in Voyageur Panel; and a $280.6 million gain on the Sale. An additional $180 million of gain realized from the Sale was deferred as a result of our continuing involvement with Boise Cascade, L.L.C. We will realize this gain as we reduce our investment in affiliates of Boise Cascade, L.L.C.

        In 2003, net income included a $10.1 million pretax charge for the 2003 cost-reduction program; a $2.9 million one-time tax benefit related to a favorable tax ruling; a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington; and the effects of the OfficeMax, Inc., acquisition.

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        The December 2003 OfficeMax, Inc., acquisition, strong sales growth in our OfficeMax, Contract segment and strong product prices in our Boise Building Solutions segment were largely responsible for the fiscal 2004 increased sales and net income.

        The OfficeMax, Contract segment operating income declined for the full-year 2004 compared to the prior year despite strong sales growth. The relatively weak profitability was due primarily to losses in the former OfficeMax Direct business acquired with the operations of OfficeMax, Inc. in December 2003. The former OfficeMax Direct business included field salespeople, catalogs, a public Internet site, which were added to our Reliable catalog business. OfficeMax, Contract profitability was also negatively impacted by the phasing in of new account growth, lags in passing through rising paper costs and weaker-than-expected Canadian operations.

        After recording $6.1 million of operating income in the 17 days of 2003 in which we owned it, our retail segment posted operating income of $22.7 million for all of 2004. The low level of profitability in 2004 was due to weaker-than-expected sales, especially during the important back-to-school and holiday periods, which led to reduced margin dollars, lower vendor income, and a higher expense ratio as a percentage of sales. OfficeMax, Retail's profitability was also negatively impacted by greater promotional sales at low or no profitability,

        In total, our office products segments realized synergies from the OfficeMax, Inc. acquisition of approximately $100 million in 2004, which was approximately $20 million more than originally anticipated. These synergies were primarily related to increased purchasing leverage and savings from combining duplicative administrative, marketing and logistic functions. The synergies in 2004 were offset by approximately $30 million of integration and related costs.

        Continuing the trends that started in the second half of 2003, Boise Building Solutions performed strongly throughout the period in 2004 during which we owned it. Continued strong housing starts and low interest rates resulted in robust building products markets. Sales volume in building materials distribution grew, reaching record levels.

        Although paper markets showed signs of cyclical recovery in 2004, weighted average prices for the grades of paper produced by Boise Paper Solutions rose only modestly over 2003 levels. In addition, unit manufacturing costs, especially chemical and fiber costs in Boise Paper Solutions, increased from year-earlier levels.

Sale of Paper, Forest Products and Timberland Assets

        On October 29, 2004, we completed the Sale. The Sale did not include our facility near Elma, Washington. (See Note 3, Discontinued Operations, of the Notes to the Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.) The Sale completes the company's transition, begun in the mid-1990s, from a predominantly manufacturing-based company to an independent office products distribution company. Some assets of the segments whose assets we sold, such as a wood-polymer building materials facility near Elma, Washington that is in a start-up phase and company-owned life insurance, are being retained by OfficeMax, as are some liabilities of the segments whose assets we sold such as liabilities associated with retiree pension and benefits, litigation, environmental remediation at selected sites and facilities previously closed. The assets that we sold were included in our Boise Building Solutions and Boise Paper Solutions segments.

        In connection with the Sale, we recorded a $280.6 million gain in our Corporate and Other segment in our Consolidated Statement of Income. On October 29, 2004, we invested $175 million in securities of affiliates of Boise Cascade, L.L.C. This investment represents continuing involvement as defined in FASB Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Accordingly, we do not show the historical results of the paper, forest products and timberland assets as discontinued operations. An additional $180 million of gain realized from the Sale was

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deferred as a result of our continuing involvement with Boise Cascade, L.L.C. We will realize this gain as we reduce our investment in affiliates of Boise Cascade, L.L.C. We realized note and cash proceeds of approximately $3.5 billion from the Sale, after allowing for the $175 million reinvestment in affiliates of Boise Cascade, L.L.C. and transaction related expenses.

        The consideration for the timberlands portion of the Sale included $1.6 billion of timber installment notes. We monetized the timber installment notes in December for proceeds of $1.5 billion. We realized net cash proceeds from the Sale of $3.3 billion after allowing for the $175 million reinvestment, transaction-related expenses and the monetization of the timber installment notes. See the discussion of the timber notes and the monetization process under the caption "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

        Through debt repurchases and retirements, we reduced our short-term and long-term debt to $693.1 million at December 31, 2004, excluding the $1.5 billion of timber notes securitized. See the discussion of the timber notes and the securitization process under the caption "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." During fourth quarter 2004, we reduced our debt by $1.8 billion and expensed $137.1 million of costs related to the early retirement of debt and made a $45.8 million contribution to the pension plans on behalf of active employees who became employees of Boise Cascade, L.L.C. (See Note 14, Debt, and Note 16, Retirement and Benefit Plans, in the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.)

        On December 16, 2004, holders of our adjustable conversion-rate equity security units received 1.5689 of our common shares upon settlement of each purchase contract, resulting in issuance of a total of 5,412,705 shares.

        During 2004, we also announced plans to return between $800 million and $1 billion of the Sale proceeds to shareholders via common or preferred stock buybacks, cash dividends or a combination of these alternatives. As part of this return of cash to equityholders, we redeemed $110 million of our Series D preferred stock and paid related accrued dividends of $3 million.

        For additional information regarding the Sale, see Note 2, Sale of Paper, Forest Products and Timberland Assets in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

Discontinued Operations

        In December 2004, our board of directors authorized management to pursue the divestiture of our facility near Elma, Washington that manufactures integrated wood-polymer building materials. The board of directors and management concluded that the facility no longer fits with the company's strategic direction. We recorded the facility's assets as held for sale on our Balance Sheets and the results of its operations as discontinued operations in our Statements of Income (Loss). We tested the recoverability of the long-lived assets in accordance with FASB Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and recorded a $67.8 million pretax charge for the write-down of impaired assets. We also recorded $26.4 million of tax benefits associated with the write-down. The write-down resulted from our review of estimated discounted future cash flows.

        The assets and liabilities of the integrated wood-polymer building materials facility near Elma, Washington, are presented in the Balance Sheets as "Assets held for sale" and "Liabilities related

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to assets held for sale." The carrying amounts of the major classes of these assets and liabilities at December 31 were as follows:

OfficeMax, Inc. Acquisition

        On December 9, 2003, we completed our acquisition of OfficeMax, Inc. The results of OfficeMax, Inc. operations after December 9, 2003, are included in our consolidated financial statements.

        The aggregate consideration paid for the acquisition was as follows:

        We paid OfficeMax, Inc., shareholders $1.3 billion for the acquisition, paying 60% of the purchase price in OfficeMax common stock (at the time Boise Cascade Corporation common stock) and 40% in cash. OfficeMax, Inc. shareholders had the opportunity to elect to receive cash or stock for their OfficeMax, Inc. shares. Each shareholder's election was subject to proration, depending on the elections of all OfficeMax, Inc., shareholders. As a result of this proration, OfficeMax, Inc., shareholders electing stock received approximately .230419 share of stock and $3.1746 in cash for each of their OfficeMax, Inc., shares. Fractional shares were paid in cash. OfficeMax, Inc. shareholders electing cash or who had no consideration preference, as well as those shareholders who made no effective election, received $9.333 in cash for each of their OfficeMax, Inc., shares. After the proration, the $1.3 billion paid to OfficeMax, Inc., shareholders consisted of $486.7 million in cash and the issuance of 27.3 million common shares valued at $808.2 million. The value of the common shares issued was determined based on the average market price of our common shares over a ten-day trading period before the acquisition closed on December 9, 2003.

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Pro Forma Financial Information

        The following table summarizes unaudited pro forma financial information assuming the OfficeMax, Inc., acquisition had occurred on January 1, 2003. OfficeMax, Inc.'s fiscal year ended on the Saturday prior to the last Wednesday in January. The unaudited pro forma financial information uses OfficeMax, Inc., data for the months corresponding to our December 31 year-end. This unaudited pro forma financial information does not necessarily represent what would have occurred if the transaction had taken place on the dates presented and should not be taken as representative of our future consolidated results of operations or financial position. This pro forma information does not include all costs related to the integration. In 2004 these integration costs either increased the amount of goodwill recorded or decreased net income, depending on the nature of the costs. We are realizing operating synergies. Synergies come from offering more products and services across more customer segments, purchasing leverage from increased scale and reduced costs in logistics, marketing and administration. The pro forma information does not reflect these expenses and synergies.

Facility Closures

        Prior to our acquisition, OfficeMax, Inc. had identified and closed underperforming facilities. As part of our purchase price allocation, at December 31, 2003, we had $58.7 million of reserves recorded for the estimated fair value of future liabilities associated with these closures. These reserves related primarily to future lease termination costs, net of estimated sublease income. Most of the expenditures for these facilities will be made over the remaining lives of the operating leases, which range from three to 16 years. At December 31, 2004, the remaining reserve in our Consolidated Balance Sheet was $52.8 million.

        In addition to these store closures, at December 31, 2003, we identified 45 OfficeMax, Retail facilities that were no longer strategically or economically viable. We closed these stores during first quarter 2004, eliminating approximately 995 employee positions, of which approximately 310 people were offered transfers to other stores. In accordance with the provisions of EITF Issue No. 95-3, "Recognition of Liabilities in Connection With a Purchase Business Combination," at December 31, 2003, we had $69.4 million of reserves recorded in our Consolidated Balance Sheet. These charges were accounted for as exit activities in connection with the acquisition, and we did not recognize a charge to income in our Consolidated Statements of Income. Most of the cash expenditures for the facilities described above will be made over the remaining lives of the operating leases, which range from one month to twelve years. At December 31, 2004, the remaining reserve in our Consolidated Balance Sheet was $44.1 million.

        During the year ended December 31, 2004, we closed 9 U.S. distribution centers, 2 customer service centers and 2 retail stores (in addition to the 45 retail stores discussed above), eliminating

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approximately 550 employee positions. We expect to reduce the total number of continental U.S. distribution centers from 55 at December 31, 2003, to 29 to 32 by the end of 2006. During 2004, we identified an additional 11 stores that were no longer strategically or economically viable. These stores are scheduled to close by the end of 2005. At December 31, 2004, we had accrued for approximately $25.3 million of costs associated with these closures in our Consolidated Balance Sheet.

Results of Operations, Consolidated

Operating Results

2004 Compared With 2003

        Total sales for 2004 increased 60.9% to $13.3 billion, compared with $8.2 billion in 2003. Sales increased primarily because of the OfficeMax, Inc., acquisition in December 2003, strong sales growth in our OfficeMax, Contract segment and improved product prices in the Boise Building Solutions segment.

        In 2004, materials, labor and other operating expenses decreased by 2.2% of sales. The improved leverage of materials, labor and operating expenses is largely attributable to the acquired retail office products business's higher gross margins. Excluding the impact of our retail office products business, materials, labor and other operating expenses declined by less than 1% of sales, primarily as a result of improved product prices in Boise Building Solutions.

        Selling and distribution expenses increased about 3.2% of sales in 2004, compared with 2003, largely due to our retail office products business's higher selling and distribution expenses as a percentage of sales. Excluding the impact of our retail office products segment, selling and distribution expenses declined by about 0.5% of sales during 2004, compared with the previous fiscal year. The decrease was primarily attributable to leveraging fixed costs on increased sales in Boise Building Solutions due to increased product prices.

        General and administrative expenses increased by 0.4% of sales due to higher payroll and benefit-related expenses.

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        In 2004, "Other (income) expense, net," included a $46.5 million pretax gain on the sale of our 47% interest in Voyageur Panel to Ainsworth Lumber Co. Ltd., a $15.1 million pretax gain on the sale of timberlands, mostly in Idaho, and a $59.9 million pretax gain on the sale of approximately 79,000 acres of timberland in western Louisiana, offset by approximately $18.9 million of costs related to the Sale, $10.2 million of OfficeMax integration costs, $7.1 million of costs related to the sale of our Yakima, Washington, plywood and lumber facilities and other miscellaneous income and expense items.

        In 2003, "Other (income) expense, net" included a $10.1 million pretax charge for employee-related costs incurred in connection with our 2003 cost-reduction program. As part of this program, we announced the termination of approximately 550 employees. At December 31, 2004, we had terminated approximately 544 employees. Under our severance policy, in first quarter 2003, we recorded these costs in accordance with the provisions of FASB Statement 112, Employers' Accounting for Postemployment Benefits. We recorded $9.2 million in the OfficeMax, Contract segment; $0.2 million in the Boise Paper Solutions segment and $0.7 million in our Corporate and Other segment. Employee-related costs are primarily for severance payments, most of which were paid in 2003, with the remainder having been paid in 2004. This item increased our net loss $6.1 million in 2003.

        In 2004, we recorded a $280.6 million gain on the Sale. An additional $180 million of gain realized from the Sale was deferred as a result of our continuing involvement with Boise Cascade, L.L.C. We will realize this gain as we reduce our investment in affiliates of Boise Cascade, L.L.C. (See Note 2, Sale of Paper, Forest Products and Timberland Assets, of the Notes to the Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.)

        Equity in net income (loss) of affiliates was $6.3 million and $8.8 million in 2004 and 2003. The variances were due to increased equity in earnings of Voyageur Panel, in which we had a 47% interest, and which we accounted for under the equity method. The increased equity in earnings of Voyageur Panel resulted from higher oriented strand board (OSB) prices in 2004 than in 2003. In May 2004, we sold our equity interest to Ainsworth Lumber Co. Ltd. for $91.2 million of cash. We recorded a $46.5 million pretax gain in "Other (income) expense, net" in our Boise Building Solutions segment. This item increased net income $28.4 million after taxes for 2004.

        Interest expense was $151.9 million and $132.5 million for 2004 and 2003. The variances were due to incremental interest expense directly related to higher debt levels in 2004, compared with 2003. The higher debt levels in 2004 related to additional borrowings related to the OfficeMax, Inc., acquisition.

        Our effective tax provision rate for continuing operations for the year ended December 31, 2004, was 37.5%, compared with an effective tax rate for continuing operations of 28.1% for 2003. In 2003, we recorded $5.7 million of tax benefits related to the $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington; $4.0 million of tax benefits related to the $10.1 million pretax charge for the 2003 cost-reduction program; and a $2.9 million gain, which included a one-time tax benefit related to a favorable tax ruling, net of changes in other tax items.

        Minority interest in 2004 is related to our majority-owned subsidiary in Mexico. We purchased our ownership interest in this subsidiary as part of the OfficeMax, Inc., acquisition in December 2003. The subsidiary is consolidated in our results of operations. There is no amount associated with 2003 as the results of operations are reported one month in arrears.

        Income before the cumulative effect of accounting changes increased significantly in 2004, compared with the same period a year ago. The increase resulted from the gain on the Sale,

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increased income in our office products business due primarily to the OfficeMax, Inc., acquisition, increased income from operations in Boise Building Solutions due to strong product prices and increased income in Boise Paper Solutions. Boise Paper Solutions reported an operating loss before the timberlands sale during 2004 due to higher year-over-year manufacturing costs and operating difficulties experienced during first quarter 2004 (discussed below). The operating loss was offset by the recording of a $36.6 million after-tax gain for a Louisiana timberland sale and a $28.4 million after-tax gain on the sale of our 47% interest in Voyageur Panel (discussed below).

        In 2003, the $8.8 million recorded in "Cumulative effect of accounting changes, net of income tax" consisted of an after-tax charge of $4.1 million, or 7 cents per share, for the adoption of FASB Statement 143, Accounting for Asset Retirement Obligations, which affects the way we account for landfill closure costs. This statement requires us to record an asset and a liability (discounted) for estimated closure and closed-site monitoring costs and to depreciate the asset over the landfill's expected useful life. Previously, we accrued for the closure costs over the life of the landfill and expensed monitoring costs as incurred. We also recorded an after-tax charge of $4.7 million, or 8 cents per share, for the adoption of EITF 02-16. EITF 02-16 requires that vendor allowances reside in inventory with the product and be recognized when the product is sold, changing the timing of our recognition of these items and creating a one-time, noncash, cumulative-effect adjustment.

        Net income for 2004 was $173.1 million, or $1.77 per diluted share, compared with net income of $8.3 million, or a loss of 8 cents per diluted share, for 2003. Income increased in 2004, compared with 2003, because of the gain on the Sale, increased income in the office products business primarily due to the OfficeMax, Inc., acquisition, increased income from operations in Boise Building Solutions due to strong product prices and the positive impact of a $36.6 million after-tax gain on the sale of Louisiana timberland and a $28.4 million after-tax gain on the sale of our 47% interest in Voyageur Panel.

2003 Compared With 2002

        Total sales in 2003 increased $0.8 billion, or 11%. The increase in sales resulted from $0.3 billion of sales from our retail segment; a $0.2 billion increase in sales in our contract segment, which included 17 days of sales from the former OfficeMax Direct businesses; and an additional $0.4 billion of sales by our Boise Building Solutions segment, offset by a slight decline in Boise Paper Solutions sales. Total sales and same-location sales in our contract segment increased 6% and 5% from 2002 levels. Excluding the sales contributed by the former OfficeMax Direct businesses and the effect of favorable foreign exchange rates, same-location sales were up 1%. Boise Building Solutions sales increased 16% because of higher structural panel prices, increased building materials distribution sales (due to increased commodity prices and volume) and increased engineered wood products sales (due primarily to increased volume). Boise Paper Solutions sales decreased, primarily because of a decrease in sales volume.

        In 2003, materials, labor and other operating expenses decreased 0.7% as a percentage of sales, compared with 2002. Effective January 1, 2003, we adopted an accounting change for vendor credits and allowances to comply with the guidelines issued by the EITF 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received From a Vendor. Under EITF 02-16, consideration received from a vendor is presumed to be a reduction of the cost of the vendor's products or services, unless it is for a specific incremental cost to sell the product. As a result, approximately $45 million of vendor allowances reduced "Materials, labor and other operating expenses" that previously would have been recognized primarily as a reduction of "Selling and distribution expenses." In accordance with the provisions of EITF 02-16, prior-period financial statements have not been reclassified to conform with the current year's presentation.

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        Before the accounting change and excluding the effects of the acquired OfficeMax, Inc., operations, materials, labor and other operating expenses as a percentage of sales increased slightly because of lower sales and increased unit manufacturing costs in Boise Paper Solutions, partially offset by favorable wood costs in Boise Building Solutions.

        Selling and distribution expenses increased 0.9% as a percentage of sales in 2003, compared with 2002. Before the accounting change and excluding the effects of the acquired OfficeMax, Inc., operations, selling and distribution expenses increased only slightly, primarily due to higher pension, healthcare and benefit expenses.

        Due to cost controls, general and administrative expenses decreased 0.2% as a percent of sales in spite of higher pension, healthcare and benefit expenses.

        "Other (income) expense, net" increased to $35.8 million in 2003 from $30.8 million in 2002. The year ended December 31, 2002, included a $23.6 million pretax loss for the sale of the stock of our wholly owned subsidiary that held our investment in IdentityNow and other miscellaneous income and expense items. For more information, see Note 7, Other (Income) Expense, Net, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

        In 2003, "Other (income) expense, net" included a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington, and $4.7 million of acquisition costs incurred in connection with the OfficeMax, Inc., acquisition. In addition, 2003 "Other (income) expense, net" included a $10.1 million pretax charge for employee-related costs incurred in connection with our 2003 cost-reduction program. Under our severance policy, we recorded a pretax charge of $10.1 million for employee-related costs in "Other (income) expense, net" in the Consolidated Statement of Income. We recorded these costs in accordance with the provisions of FASB Statement 112, Employers' Accounting for Postemployment Benefits. We recorded $9.2 million in the Boise Office Solutions, Contract, segment; $0.2 million in the Boise Paper Solutions segment; and $0.7 million in our Corporate and Other segment. Employee-related costs are primarily for severance payments, most of which were paid in 2003, with the remainder paid in 2004. This item decreased net income $6.1 million for the year ended December 31, 2003. As part of the 2003 cost-reduction program, we reduced 2003 operating costs, net of severance costs. We took these actions because of higher pension costs, higher energy costs, business disruptions from severe winter weather in the eastern United States and global political uncertainty. We reduced operating costs by freezing salaries, restricting hiring, reducing discretionary spending at all levels of the company and eliminating approximately 700 positions. We eliminated these positions by terminating approximately 550 employees and leaving vacant positions unfilled.

        Equity in net income (loss) of affiliates was $8.8 million and $(2.4) million in 2003 and 2002, respectively. The variance was due to increased equity in earnings of Voyageur Panel, in which we had a 47% interest and for which we accounted under the equity method. The increased equity in earnings of Voyageur Panel resulted from oriented strand board (OSB) prices that were 67% higher, on average, in 2003 than in 2002. We also recognized no losses in 2003 from our investment in IdentityNow, which we sold in May 2002.

        Interest expense was $132.5 million in 2003 and $131.7 million in 2002. The variance was due to incremental interest expense directly related to additional borrowings in the fourth quarter to provide cash for the OfficeMax, Inc., acquisition. Excluding the incremental interest expense directly related to the OfficeMax, Inc., acquisition, interest expense declined year over year, primarily due to lower 2003 interest rates on our variable-rate debt.

        Our effective tax provision rate for continuing operations for the year ended December 31, 2003, was 28.1%, compared with an effective tax benefit rate for continuing operations of 1,351.8%

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for the year ended December 31, 2002. In 2003, we recorded $5.7 million of tax benefits related to the $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington; $4.0 million of tax benefits related to the $10.1 million pretax charge for the 2003 cost-reduction program; and a $2.9 million gain, which included a one-time tax benefit related to a favorable tax ruling, net of changes in other tax items. In 2002, we recorded a $23.6 million pretax loss for the sale of the stock of our wholly owned subsidiary that held our investment in IdentityNow and $27.6 million of tax benefits associated with this sale and our previous write-down. Before recording these items and before the impact of the OfficeMax, Inc., acquisition, our estimated tax provision rates for the years ended December 31, 2003 and 2002, were 34% and 36%. The difference between the estimated tax provision rates before these items was due to the sensitivity of the rate to changing income levels and the mix of domestic and foreign sources of income.

        In 2003, the $8.8 million recorded in "Cumulative effect of accounting changes, net of income tax" consisted of an after-tax charge of $4.1 million, or 7 cents per share, for the adoption of FASB Statement 143, Accounting for Asset Retirement Obligations, which affects the way we account for landfill closure costs. This statement requires us to record an asset and a liability (discounted) for estimated closure and closed-site monitoring costs and to depreciate the asset over the landfill's expected useful life. Previously, we accrued for the closure costs over the life of the landfill and expensed monitoring costs as incurred. We also recorded an after-tax charge of $4.7 million, or 8 cents per share, for the adoption of EITF 02-16. EITF 02-16 requires that vendor allowances reside in inventory with the product and be recognized when the product is sold, changing the timing of our recognition of these items and creating a one-time, noncash, cumulative-effect adjustment.

Segment Discussion

        We report our business results using five reportable segments: OfficeMax, Contract; OfficeMax, Retail; Boise Building Solutions; Boise Paper Solutions; and Corporate and Other. The financial data in this report includes the results of the Boise Building Solutions and Boise Paper Solutions segments through October 28, 2004. On October 29, 2004, we completed the Sale. As part of the Sale, we invested $175 million in the securities of affiliates of Boise Cascade, L.L.C. This investment represents continuing involvement as defined in FASB Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Accordingly, we do not show the historical results of the Boise Building Solutions and Boise Paper Solutions segments as discontinued operations. We account for our investment in the securities of affiliates of Boise Cascade, L.L.C., under the cost method of accounting.

        All of our segments, except OfficeMax, Retail, had a December 31 year-end. Our OfficeMax, Retail segment maintained a fiscal year that ended on the last Saturday in December, which in 2004 was December 25. We consolidated the fiscal-year results of OfficeMax, Retail with the calendar-year results of our other segments. Effective March 11, 2005, we amended our bylaws to make the fiscal year-end for OfficeMax Incorporated the last Saturday of December. Our international businesses will maintain the December 31 year-end. We will consolidate the calendar year-end results of our international businesses in OfficeMax Incorporated's fiscal-year results.

        OfficeMax, Contract markets and sells office supplies and paper, technology products and solutions and office furniture through field salespeople, outbound telesales, catalogs, the Internet and office products stores. OfficeMax, Retail, markets and sells office supplies and paper, print and document services, technology products and solutions and office furniture through office supply superstores. Boise Building Solutions manufactured, marketed and distributed various products that are used for construction, while Boise Paper Solutions manufactured, marketed and distributed uncoated free sheet papers, containerboard, corrugated containers, newsprint and market pulp.

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Corporate and Other includes support staff services and related assets and liabilities. The segments' profits and losses are measured on operating profits before interest expense, income taxes, minority interest, extraordinary items and cumulative effect of accounting changes.

OfficeMax, Contract

Operating Results

2004 Compared With 2003

        In 2004, our contract segment reported total sales of $4.4 billion, up 17% from the same period a year ago. The total sales increase reflects incremental sales contributed by the former OfficeMax Direct field salespeople, catalogs and public Internet site. Total sales for locations operating in both periods, including OfficeMax Direct 2003 sales on a pro forma basis, increased 7%. Year-over-year pro forma total sales comparisons increased in all major product categories. Compared with 2003, 2004 pro forma sales of office supplies and paper increased 6%, pro forma sales of technology products increased 10%, and pro forma furniture sales increased 10%.

        E-commerce sales in 2004 increased over 40%, compared with E-commerce sales reported during 2003. E-commerce sales represented about 50% of the contract segment's total sales. The growth in E-commerce sales is due to the addition of the OfficeMax E-commerce business and growth at all other locations.

        In 2004, our reported gross profit margin was 23.6%, down 0.7% from 24.3% in 2003. The gross profit margin decline was primarily the result of lower margin of the former OfficeMax Direct businesses due to higher occupancy and delivery costs. When we acquired OfficeMax, Inc., in December 2003, 17 delivery warehouses were serving the former OfficeMax Direct businesses. We are working to reduce excess warehouse capacity and consolidate these operations with our contract distribution centers. For 2004, excluding OfficeMax Direct, contract gross profit margins were essentially flat with 2003 despite purchasing synergies obtained through the OfficeMax, Inc., integration. Excluding 2004 purchasing synergies, contract margin rates declined in 2004 due to the phasing in of new account growth and lags in passing through rising paper costs.

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        During 2004, operating expenses as a percentage of sales decreased 0.2% of sales, including costs related to the OfficeMax, Inc., integration and the 2003 cost-reduction program. Excluding these items, operating expenses as a percentage of sales decreased 0.1% of sales during 2004, despite increased operating expenses associated with redundant former OfficeMax Direct warehouse facilities. The decline in operating expenses as a percentage of sales was due to leveraging fixed costs over higher sales, operating cost synergies obtained due to the OfficeMax, Inc., acquisition as well as lower benefit expenses.

        Our contract segment reported $107.0 million of operating income in 2004, down 2.2% from $109.4 million in 2003. Operating income in 2004 was lower due to the acquired former OfficeMax Direct businesses, the decrease in gross profit margin and weaker than expected Canadian operations.

2003 Compared With 2002

        In 2003, our contract segment included the results of the former OfficeMax Direct businesses from December 10, 2003, to December 27, 2003, or 17 selling days. The former OfficeMax Direct businesses included field salespeople, catalogs, and a public Internet site.

        Total sales and same-location sales increased 6% and 5% in 2003, compared with 2002. Within product categories, the greatest sales growth occurred in office furniture and technology products, up 12% and 10%, respectively, compared with a year ago. These categories represent approximately 40% of overall sales. Sales of office supplies and paper, our largest category, grew 2%.

        Excluding the benefit from favorable foreign exchange rates and the sales from the former OfficeMax Direct businesses, total sales and same-location sales increased 1%. When excluding the same items, the greatest sales growth within product categories occurred in office furniture and technology products, up 8% and 7%, while office supplies and paper experienced a modest decline, compared with a year ago. The shift in sales mix toward furniture and technology products was evident in each quarter of 2003 and is reflective of an improving economy, focused sales efforts and, in the case of technology products, changing buying patterns of our customers.

        E-commerce sales in our contract office products segment increased 30% over 2002 and represented 42% of the segment's worldwide sales.

        In 2003, our gross margin increased 1.2%, compared with 2002. Excluding the effect of adopting EITF 02-16, our gross margin was consistent with the prior year.

        In 2003, our operating expenses were 21.4% of sales, compared with 19.7% in 2002. Operating expenses for our contract segment in 2003 included the expenses of the former OfficeMax Direct businesses, including integration costs; $42.6 million for the vendor allowance classification change; and $9.2 million of employee-related costs for our 2003 cost-reduction program. Before these items, our operating expenses increased only 0.2%, compared with 2002, due primarily to higher pension, healthcare and benefit expenses.

        Excluding the results of the former OfficeMax Direct businesses for the 17 days following the OfficeMax, Inc., acquisition on December 9, 2003, integration costs and the employee-related charge for our cost-reduction program, segment income declined 1%. The decline was primarily attributable to higher pension, healthcare and benefit expenses.

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OfficeMax, Retail

Operating Results

(a)

2003 results include activity from December 10, 2003, through December 27, 2003.

(b)

Includes the sales of our operations in the United States, Puerto Rico and the U.S. Virgin Islands.

(c)

Our majority-owned subsidiary in Mexico is consolidated in our results of operations one month in arrears and is not included in our 2003 results.

2004 Compared With 2003

        Sales for our retail segment were $4.5 billion, down 0.9% from pro forma sales in 2003. The sales decrease primarily resulted from closing 47 U.S. superstores during 2004, most of which closed in the first quarter. Same-store sales increased 1.3% in 2004, compared with pro forma 2003 sales. The comparable-store sales increase was driven primarily by higher average revenue per customer transaction, which increased 2.6% year over year. During 2004, our retail segment opened 7 superstores and 1 small-format store in the U.S. and 5 superstores in Mexico.

        Gross profit margin for the retail segment was 25.6% in 2004, compared with 24.5% in 2003. The gross profit margin in 2003 represents activity for the 17 selling days following the OfficeMax, Inc., acquisition on December 9, 2003, which includes a seasonal shift in sales mix toward lower-margin technology merchandise. Gross profit margins also increased year over year as a result of purchasing and other synergies.

        Operating expenses were 25.1% of sales in 2004, up 2.7% of sales from 2003, as a result of the increased leverage from the high-volume holiday sales in 2003.

        Our retail segment reported operating income of $22.7 million, or 0.5% of sales, in 2004. The low level of profitability in 2004 was due to weaker-than-expected sales, especially during the important back-to-school and holiday periods, which led to reduced margin dollars, lower vendor income, and a higher expense ratio as a percentage of sales. OfficeMax, Retail's profitability was also negatively impacted by greater promotional sales at low or no profitability.

2003 Subsequent to Date of Acquisition

        In 2003, our retail segment reported sales of $283 million, which represents 17 selling days during the holiday season.

        The gross profit margin in the retail segment was 24.5%, reflecting a seasonal shift in sales mix toward lower-margin technology merchandise. Our operating profit margin was 2.2% of sales, with operating income of $6.1 million, reflecting the increased leverage from the high-volume holiday sales in 2003.

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Boise Building Solutions

Operating Results

2004 Compared With 2003

        On October 29, 2004, we completed the Sale. Boise Building Solutions results for 2004 represent the ten months of operation before the Sale.

        Fueled by continued strong plywood and lumber markets, Boise Building Solutions reported income of $319.2 million in the first ten months of 2004, compared with $125.3 million for full year 2003. Results were aided by a $15.3 million pretax gain on the sale of Idaho timberlands and by the sale of our 47% interest in Voyageur Panel in May 2004 to Ainsworth Lumber Co. Ltd. for $91.2 million of cash. We recorded a $46.5 million pretax gain for the Voyageur Panel sale in "Other (income) expense, net." Prior to the sale, we accounted for the joint venture under the equity method. Accordingly, segment results do not include the joint venture's sales but do include $6.3 million of equity in earnings during the ten months ended October 31, 2004, compared with $8.7 million of equity in earnings in 2003 and $0.6 million of equity in losses in 2002. Before the gains recorded on the sale of timberlands and our interest in Voyageur Panel, segment income increased 105% to $257.4 million, compared with full year 2003 income, primarily due to increased product prices.

        Building materials distribution sales increased 19% to $2.4 billion in the first ten months of 2004, compared with full year 2003 sales, due to strong pricing because of strong demand in the building sector. Sales of engineered wood products (laminated veneer lumber, wood I-joists and laminated beams) increased 14% in the first ten months of 2004, compared with full year 2003 sales, also due to strong pricing. As a result of increased demand from residential construction due to low interest rates, average plywood prices rose 26% to $336 per 1,000 square feet during the first ten months of 2004. Average lumber prices increased 28% during the same period. Sales volumes of plywood and lumber for the first ten months of 2004 declined from 2003 volumes because of the shorter reporting period in 2004 and the sale of our Yakima, Washington, plywood

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and lumber facilities in February 2004. The sale of our Yakima facilities did not have a material impact on our financial position or results of operations.

2003 Compared With 2002

        During the second half of 2003, our building products business enjoyed one of the strongest building seasons ever, following a slow start in the first half of 2003 due to wet weather. Boise Building Solutions sales grew 16% in 2003, compared with the previous year. Structural panel prices rose. Building materials distribution sales increased 21% due to strong pricing coupled with an 11% increase in physical sales volume. During 2003, about 21% of building materials distribution's lumber, panel and engineered wood product sales were from products manufactured by Boise. Sales of engineered wood products (laminated veneer lumber, wood I-joists and laminated beams) increased 20% due to increased sales volume.

        After a long, wet and cold spring, especially in the eastern United States, the building season got underway late in the second quarter and held strong through the first two months of fourth quarter 2003. As a result of increased demand from housing construction, prices for our major grades of structural panels reached record levels. Relative to 2002, average plywood prices and sales volume increased 17% and 6%, respectively. In contrast, average prices and volumes for our mix of lumber products, which is mostly ponderosa pine appearance and industrial grades, declined 8%. An unfavorable balance of supply and demand for pine lumber during the first half of the year pushed prices down until late in the third and fourth quarters, which delayed recovery in these grades until later in the year.

        In December 2003, we recorded a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington. We also recorded $5.7 million of tax benefits associated with the write-down. The write-down resulted from our internal review of the operations and indications of current market value. We recorded the write-down in "Other (income) expense, net" and the tax benefits in "Income tax (provision) benefit" in the Consolidated Statement of Income. For the year ended December 31, 2003, the write-down decreased net income $9.0 million.

        In February 2004, we sold the Yakima operations, excluding timberlands. The impact of this sale was not material to our financial position or to our results of operations.

        Segment income increased $72.0 million in 2003, compared with 2002, due primarily to increased structural panel prices, increased building materials distribution sales and favorable wood costs, offset by a pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington. Due to the divestiture of our integrated wood-polymer building materials facility near Elma, Washington, we have restated the 2002 and 2003 results of operations to exclude the results of this facility's activity in our Building Solutions segment. We have reported the results of this facility in "Loss from discontinued operations."

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Boise Paper Solutions

Operating Results

2004 Compared With 2003

        On October 29, 2004, we completed the Sale. Boise Paper Solutions results for 2004 represent the ten months of operation before the Sale.

        Boise Paper Solutions reported income of $38.8 million for the first ten months of 2004, compared with a loss of $13.9 million for full year 2003. Results in 2004 were aided by a pretax gain of $59.9 million on the sale in March of approximately 79,000 acres of timberland in western Louisiana for $84 million. We recorded the $59.9 million pretax gain in "Other (income) expense, net." Excluding this gain, the segment lost $21.1 million in the first ten months of 2004. Results in 2004, excluding the gain, compare unfavorably with 2003 results because of less sales volume as a result of the shorter reporting period in 2004, $2.8 million of costs and/or lost income due to timber and mill damage and lost production at our Alabama paper mill related to disruption from hurricanes in September, increased unit manufacturing costs and operating difficulties due to adverse weather conditions and other production issues in first quarter 2004. Unit manufacturing costs increased 3% during the ten-month period in 2004, compared with full year 2003, primarily due to increased fiber costs.

        Although markets strengthened in 2004, sales for the first ten months of the year were $1.7 billion, compared with $1.9 billion for full year 2003. Total sales volume for the first ten months of 2004 was 13% less than sales volume for full year 2003. Sales and sales volumes declined because of the shorter reporting period in 2004. Weighted average paper prices increased 3%. Average newsprint and containerboard prices increased $37 per ton and $28 per ton, compared with prices in 2003, while the average price for uncoated free sheet, our largest paper grade, was $3 less per ton than in 2003. We took 57,000 tons of market-related downtime during the first ten months of 2004, compared with 197,000 tons during full year 2003. The decrease in curtailment in 2004 reflects growing market demand and a 2% increase in the amount of office paper sold through the OfficeMax, Retail and OfficeMax, Contract segments during ten months in 2004, compared with full year 2003.

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        Sales volumes of value-added papers produced on our smaller machines decreased 6% to approximately 324,000 tons for the first ten months of 2004, compared with full year 2003. Volumes declined because of the shorter reporting period in 2004. The greatest areas of growth in our value-added grades were label, release and specialty papers, whose volume increased 18% during the ten-month period in 2004, compared with full year 2003 levels. Value-added grades generally have higher unit costs than commodity grades but also have higher net sales prices and profit margins. Overall, the average net selling price of our value-added grades during the first ten months of 2004 was $183 per ton higher than the average net selling price of our uncoated commodity grades.

2003 Compared With 2002

        Sales declined 1% in 2003, primarily because weak demand led to a 2% decrease in sales volume. Sales volume decreased despite an increase in the volume of office paper sold through our OfficeMax, Retail and OfficeMax, Contract segments. Weak demand throughout the year led to market-related curtailment of nearly 197,000 tons, up 38% from the amount taken in 2002. Most of the curtailment was taken in uncoated free sheet. Relative to a year earlier, average prices rose only 1%. Higher average newsprint prices were partially offset by lower containerboard prices.

        In 2003, we increased production of value-added papers on our smaller machines. The tonnage of value-added grades from these machines increased 5% to about 345,000 tons. Among our value- added grades, the volume of label, release and specialty papers grew 23% in 2003 versus the year earlier. Overall, the average net selling price of our value-added grades in 2003 was $181 per ton higher than the average net selling price of our uncoated commodity grades.

        Segment results were lower than those of a year ago because of lower unit sales volumes, more market-related curtailment and increased unit manufacturing costs. Total unit manufacturing costs increased 2%, compared with a year ago. In 2003, fiber costs rose 5%, and chemical unit costs increased 6%. Fixed unit costs were also up about 2%.

Liquidity and Capital Resources

        As of December 31, 2004, we had $1.2 billion of cash and cash equivalents and $693.1 million of short-term and long-term debt, excluding the $1.5 billion of timber notes securitized. We also had $113 milion of restricted investments on deposit which offset a portion of the outstanding debt, bringing our net debt to $580.1 million. During 2004, we paid down $1.6 billion of our debt, primarily with the proceeds of the Sale, and expensed $137.1 million of costs related to the early retirement of debt. A significant portion of the premiums paid with respect to the debt we paid down was the result of the current low interest rate environment in the market. In addition, during 2004, we contributed $279.8 million to our pension plans, including the contributions made to our plans that were spun off in connection with the Sale. We also announced plans to return between $800 million and $1 billion of the proceeds from the Sale to shareholders via common or preferred stock buybacks, cash dividends or a combination of these alternatives. As part of this return of cash to equity holders, we redeemed $110 million of our Series D preferred stock and paid related accrued dividends of $3 million.

        Our ongoing cash requirements are expected to be funded through a combination of cash flow from operations and seasonal borrowings under our existing credit facilities.

        The sections that follow discuss in more detail our liquidity and capital resources.

Operating Activities

        Our operating activities used $451.1 million of cash flow in 2004 and generated $324.7 million and $340.4 million of positive cash flow in 2003 and 2002, respectively. In 2004, items included in

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net income provided $265.7 million of cash and unfavorable changes in working capital items used $716.8 million of cash from operations. In 2003, items included in net income provided $407.9 million of cash, and unfavorable changes in working capital items used $83.2 million of cash from operations. Net income items provided $345.3 million of cash in 2002, and unfavorable changes in working capital items $4.9 million of cash from operations.

        We have sold fractional ownership interests in a defined pool of trade accounts receivable. At December 31, 2004, $120.0 million of sold accounts receivable were excluded from "Receivables" in the company's Consolidated Balance Sheet, compared with $250 million and $200 million excluded at December 31, 2003 and 2002. During third quarter 2004, in anticipation of the Sale, we stopped selling the receivables related to these businesses, reducing the receivables sold as a part of this program at the end of the year. The decrease at December 31, 2004, in sold accounts receivable of $130.0 million from the amount at December 31, 2003, used cash from operations in 2004. The increase at December 31, 2003, in sold accounts receivable of $50 million over the amount at December 31, 2002, provided cash from operations in 2003.

        During the period of January 1 through October 28, 2004, some of our employees were covered by noncontributory defined benefit pension plans. Effective July 31, 2004, we spun off the portion of each plan attributable to active employees in the forest products businesses. Effective October 29, 2004, under the terms of the asset purchase agreement with affiliates of Boise Cascade, L.L.C., we transferred sponsorship of the spun-off plans to Boise Cascade, L.L.C., and only those terminated, vested employees and retirees whose employment with us ended on or before July 31, 2004, and some active OfficeMax, Contract employees were covered under the plans remaining with us. The assets of the pension plans are invested primarily in common stocks, fixed-income securities and cash equivalents. The market performance of these investments affects our recorded pension obligations, expense and cash contributions. Pension expense for the year ended December 31, 2004, was $169.7 million, including $94.9 million of curtailment expense related to the Sale, compared with $77.1 million in 2003 and $30.4 million in 2002. These are noncash charges in our consolidated financial statements. In 2004, we made cash contributions to our pension plans totaling $279.8 million, compared with $84.5 million in 2003 and $48.0 million in 2002. The asset purchase agreement with affiliates of Boise Cascade, L.L.C., required us to fully fund the transferred spun-off plans on an accumulated-benefit-obligation basis using a 6.25% liability discount rate. Since our active employees who are covered by the retained plans, as well as all of the inactive participants, are no longer accruing additional benefits, we expect our future contributions to these plans to be greatly reduced. The minimum required contributions are zero in 2005. However, the company may elect to make voluntary contributions. See "Critical Accounting Estimates" in this Management's Discussion and Analysis of Financial Condition and Results of Operations for more information.

        Our ratio of current assets to current liabilities was 1.75:1 at December 31, 2004, compared with 1.31:1 at December 31, 2003. The increase in our ratio of current assets to current liabilities at December 31, 2004, resulted primarily from the increase in cash and cash equivalents in 2004, compared with 2003.

Investment Activities

        Our cash investing activities provided $1.6 billion in 2004, compared with $673.6 million used in 2003 and $310.6 million used in 2002.

        In 2004, cash investing activities included cash expenditures of $298.2 million for property and equipment and timber and timberlands and $175 million for our investment in the securities of affiliates of Boise Cascade, L.L.C., which we are accounting for under the cost method of accounting. These expenditures were offset by $2,038.7 million of proceeds from the Sale and

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$186.9 million of proceeds from the sale of timberlands in Louisiana, the sale of our Yakima, Washington, plywood and lumber facilities and the sale of our Barwick, Ontario, Canada, OSB joint venture during the year ended December 31, 2004. For more information related to the Sale, see the discussion under "Sale of Paper, Forest Products and Timberland Assets" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

        In 2003, cash investing activities included $432.6 million, net of cash acquired, for the acquisition of OfficeMax, Inc., in December 2003. For information related to the acquisition, see Note 4, OfficeMax, Inc., Acquisition, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K. Investing activities also included $223.1 million for property and equipment and timber and timberland purchases.

        In 2002, investing activities included $199.4 million for property and equipment and timber and timberlands. Additionally, they included $6.1 million for the acquisition of assets of a wholesale building products distribution and reload operation in Riverside, California, and $1.1 million in cash for the acquisition of assets of a contract furniture company located in southern California.

        Noncash consideration included in capital spending consisted of the assumption of debt and recording of liabilities totaling $81.6 million in 2003 and $2.8 million in 2002. In 2003, noncash consideration also included $808.2 million for the issuance of 27.3 million OfficeMax Incorporated common shares (at the time, Boise Cascade Corporation common shares) to OfficeMax, Inc. shareholders electing to receive stock in the OfficeMax, Inc. acquisition. Details of 2004 capital investment by segment are included in the table below:

(a)

Quality and efficiency projects include quality improvements, modernization, energy and cost-saving projects.

        We expect our capital investments in 2005 to total between $180 million and $200 million, excluding acquisitions. Our capital spending in 2005 will be for leasehold improvements, new stores, quality and efficiency projects, replacement projects and integration projects.

Financing Activities

        Our financing activities used $76.3 million in 2004, compared with $408.6 million provided in 2003 and $21.4 million used in 2002. Common and preferred dividend payments totaled $64.1 million in 2004, $48.9 million in 2003 and $49.5 million in 2002. In all three years, our quarterly cash dividend was 15 cents per common share. The increase in dividends paid was a result of more common shareholders after the OfficeMax, Inc. acquisition in December 2003.

        During 2004, we had relatively few additions to long-term debt. We paid down $1.6 billion of our debt, primarily with the proceeds of the Sale. We announced plans to return between

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$800 million and $1 billion of the proceeds from the Sale to shareholders via common or preferred stock buybacks, cash dividends or a combination of these alternatives. As part of this return of cash to equity holders, we redeemed $110 million of our Series D preferrred stock and paid related accrued dividends of $3 million. In addition, in 2004, we settled the purchase contracts related to our adjustable conversion-rate equity units and received $172.5 million. For more information, see Note 14, Debt, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.

        Additions to long-term debt in 2003 resulted primarily from our acquisition of OfficeMax, Inc. Additions included $150 million under an unsecured credit agreement, $300 million of 6.50% notes, $200 million of 7.00% notes, $50.0 million of 7.45% medium-term notes and $33.5 million for the sale-leaseback of equipment at our integrated wood-polymer building materials facility near Elma, Washington, that was accounted for as a financing arrangement. Payments of long-term debt in 2003 included $125 million of medium-term notes and $40 million under our revolving credit agreement. Additions to long-term debt in 2002 included $150 million of 7.50% notes due in 2008, a $20 million floating-rate term loan and $62 million in medium-term notes. Payments of long-term debt in 2002 included $125 million of 9.85% notes, $32.5 million of industrial revenue bonds, $15.5 million of bank debt for our Australian operations and $2.3 million of medium-term notes.

        Our debt-to-equity ratio was .27:1 at December 31, 2004, excluding the timber notes securitized, and .98:1 at December 31, 2003. Our debt-to-equity ratio decreased because of the significant decrease in debt in 2004, excluding the timber notes securitized. See the discussion of the timber notes and the securitization process under the caption "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

        We lease our store space and other property and equipment under operating leases. These operating leases are not included in debt; however, they represent a significant commitment. Obligations under operating leases are shown in the "Contractual Obligations" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

        Our debt structure consists of credit agreements, note agreements, and other borrowings as follows. For more information, see "Contractual Obligations" and "Disclosures of Financial Market Risks" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Credit Agreements

        In March 2002, we entered into a three-year, unsecured revolving credit agreement. The agreement permits us to borrow as much as $560 million at variable interest rates based on either the London Interbank Offered Rate ("LIBOR") or the prime rate. We had no outstanding borrowings under the agreement at December 31, 2004. Under the agreement, $52 million of letters of credit were issued and reduced our borrowing capacity to $508 million at December 31, 2004. Letters of credit issued under the terms of the revolving credit agreement were charged at a rate of 1.5%, including the facility fee. In addition, we were charged a fee of 0.3% on the unused portion of our revolving credit balance. We are also charged a 0.25% utilization fee when we utilize over 50% of our borrowing capacity under the agreement. At December 31, 2004, we utilized less than 50% of our borrowing capacity. In November 2004, our interest rate swap to hedge the cash flow risk from the variable interest payments on $50 million of LIBOR-based debt expired and was not renewed. The revolving credit agreement contains customary conditions to borrowing, including compliance with financial covenants relating to minimum net worth, minimum interest coverage ratio and ceiling ratio of debt to capitalization. At December 31, 2004, we were in compliance with these covenants. Under this agreement, the payment of dividends depends on the existence and amount of net

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worth in excess of the defined minimum. Our net worth at December 31, 2004, exceeded the defined minimum by $1,068.6 million. At December 31, 2003, we had outstanding borrowings under the revolving credit agreement of $210 million. In addition to these borrowings, $41 million of letters of credit were issued under the agreement. When the agreement expires in June 2005, any amount outstanding will be due and payable.

        In December 2003, we entered into a 19-month, unsecured credit agreement with 13 major financial institutions. Under the agreement, we borrowed $150 million at variable interest rates based on either the LIBOR or the prime rate. Borrowings under the credit agreement were paid in full on October 29, 2004, with the proceeds from the Sale.

Timber Notes

        In October 2004, OfficeMax sold its timberlands as part of the Sale. In exchange for the timberlands, we received credit-enhanced installment timber notes in the amount of $1,635 million which were credit enhanced with guarantees. The guarantees were issued by financial institutions and were secured by the pledge of underlying collateral notes. Subsequently, in December 2004, we executed a securitization transaction in which, through two bankruptcy remote subsidiaries, we pledged the installment notes and related guarantees and issued securitization notes in the amount of $1,470 million. Recourse on the securitization notes is limited to the pledged timber notes. The timber notes are 15-year non-amortizing. There are two notes that total $817.5 million bearing interest at 4.982% payable semiannually and another note in the amount of $817.5 million bearing interest at 5.112% payable semiannually. The securitization notes are also 15-year non-amortizing, in two equal $735 million tranches paying interest of 5.42% and 5.54% semiannually.

        As a result of these transactions, OfficeMax received $1,470 million in cash from the bankruptcy remote special-purpose entities, will receive approximately $82.5 million per year in interest income and will have interest expense of approximately $80.5 million per year for 15 years. The pledged timber notes and nonrecourse securitization notes will mature in 2020 and 2019, respectively. The securitization notes have an initial term that is approximately three months shorter than the installment notes. The company expects to refinance its ownership of the installment notes in 2019 with a short-term secured borrowing to bridge the period from initial maturity of the securitization notes to the maturity of the installment notes.

        The guidance related to the accounting for the securitization is complex and open to interpretation. The entities issuing the installment notes are variable-interest entities (the "VIE's") under FIN 46R, Consolidation of Variable Interest Entities. The holder of the installment notes is considered to be the primary beneficiary, and therefore, the VIE's are consolidated with the securitization note issuers. Although we believe an argument can be made that the consolidation of the VIE's as a result of this transaction does not disqualify the securitization note issuers from being qualified special purpose entities (QSPE) as described in FASB Statement 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, we have concluded that consolidating the VIE's does disqualify the securitization note issuers from meeting this guidance. As a result, the securitization note issuers are required to consolidate with their ultimate parent, OfficeMax.

Note Agreements

        In August 2003, we issued $50 million of 7.45% medium-term notes due in 2011. The proceeds of the notes were used for general corporate purposes. On November 5, 2004, we purchased $49.6 million of these notes pursuant to a tender offer for these securities. At December 31, 2004, $0.4 million was outstanding.

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        In October 2003, we issued $300 million of 6.50% senior notes due in 2010 and $200 million of 7.00% senior notes due in 2013. Net proceeds from the senior notes were used to repay borrowings under our revolving credit agreement to provide cash for the OfficeMax, Inc. transaction and for other general corporate purposes. (See Note 4, OfficeMax, Inc., Acquisition in the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.) We paid approximately $9.1 million in fees and expenses associated with the senior notes transaction. The fees are being amortized over the terms of the senior notes. At the time of issuance, the senior note indentures contained a number of restrictive covenants. Because of the subsequent transactions described below, substantially all of the restrictive covenants have been eliminated through the execution of supplemental indentures and replaced with covenants found in the base indenture that are applicable to our medium term notes and other public debt. Those covenants include a limitation on mergers and similar transactions, a restriction on secured transactions involving Principal Properties, as defined, and a restriction on sale and leaseback transactions involving Principal Properties.

        On November 5, 2004, we repurchased approximately $286.3 million of 6.50% senior notes and received the requisite consents to adopt amendments to the indenture pursuant to a tender offer for these securities. As a result, the company and the trustee executed a Sixth Supplemental Indenture which eliminated substantially all of the restrictive covenants, certain events of default and related provisions and replaced them with the covenants from our other public debt.

        On December 23, 2004, both Moody's Investors Service, Inc. and Standard & Poor's Rating Services upgraded the credit rating on our 7.00% senior notes to investment grade. The upgrades were the result of actions the company undertook to collateralize the notes by granting the noteholders a security interest in $113 million in principal amount of General Electric Capital and Bank of America Corp. notes maturing in 2008. The notes subject to the security interest are recorded as a "Restricted Investment" on our Balance Sheet. As a result of these ratings upgrades, the senior note covenants have been replaced with the covenants found in our other public debt.

Adjustable Conversion-Rate Equity Securities (ACES)

        In December 2001, we issued 3,450,000 7.50% adjustable conversion-rate equity security units ("ACES") to the public at an aggregate offering price of $172.5 million. The units traded on the New York Stock Exchange under the ticker symbol BEP. At the time of issuance, there were two components of each unit. Investors received a preferred security issued by Boise Cascade Trust I (the Trust), a statutory business trust whose common securities were owned by the company, with a liquidation amount of $50. These preferred securities were mandatorily redeemable in December 2006. Investors also entered into a contract to purchase, for $50, common shares of the company, subject to a collar arrangement. The Trust used the proceeds from the offering to purchase debentures issued by Boise Cascade Corporation (now OfficeMax Incorporated). These debentures were 7.50% senior unsecured obligations that matured in December 2006.

        On September 16, 2004, we dissolved the Trust and distributed the debentures to the unit holders in exchange for their preferred securities. Also on that date, the remarketing of $144.5 million of these debentures was completed. In connection with the remarketing, the 7.5% interest rate on the debentures was reset to 2.75% over the average of the rates for three-month LIBOR on the third business day before the prior quarter's interest payment date. The 2.75% over LIBOR rate will decrease (or increase) by 0.25% if at any time Standard and Poor's Corporation and Moody's Investor Service, Inc., raise (or lower) their ratings of the debentures. The first interest payment on the debentures at the reset rate was made on December 16, 2004, at a rate of 4.62% per annum. On November 5, 2004, we repurchased $144.5 million of these debentures pursuant to an offer to purchase these securities. We made an open market purchase of an additional

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$15.2 million of the debentures in December. As of December 31, 2004, $12.8 million of the debentures remained outstanding and are recorded in "Long-term debt, less current portion."

        On December 16, 2004, holders of our adjustable conversion-rate equity security units received 1.5689 of our common shares upon settlement of each purchase contract resulting in the issuance of a total of 5,412,705 shares. We received $50 per unit, or $172.5 million, as a result of the settlement of the purchase contracts.

        In December 2003, the FASB issued FIN 46R, Consolidation of Variable Interest Entities. FIN 46R, as revised, required us to reclassify the $172.5 million of ACES from "Minority interest" to "Debt" in our Consolidated Balance Sheets and recognize distributions on these securities as "Interest expense" rather than "Minority interest, net of income tax" in our Consolidated Statements of Income (Loss). As allowed by the FASB's FIN 46R, prior years' financial statements were reclassified. In all periods presented, there was no net effect on earnings, and the reclassification of these securities to debt did not affect our financial covenants.

Other

        During 2003, we agreed to enter into a $33.5 million sale-leaseback of equipment at our integrated wood-polymer building materials facility near Elma, Washington. The sale-leaseback has a base term of seven years and an interest rate of 4.67%, was accounted for as a financing arrangement, and is included in "Long-term debt, less current portion" in our Consolidated Balance Sheet.

        The 9.45% debentures, issued in October 1989, contain a provision under which, in the event of the occurrence of both a designated event, as defined (generally a change of control or a major distribution of assets) and a subsequent rating decline, as defined, the holders of these securities may require OfficeMax to redeem the securities.

        Changes in short-term borrowings represent net changes in notes payable. At December 31, 2004 and 2003, we had $10.3 million and $5.2 million of short-term borrowings outstanding. The minimum and maximum amounts of combined short-term borrowings outstanding were $6.2 million and $493.7 million during the year ended December 31, 2004, and were $0 and $117.4 million during the year ended December 31, 2003. The average amounts of short-term borrowings outstanding during the years ended December 31, 2004 and 2003, were $82.8 million and $32.3 million. The average interest rates for these borrowings were 2.8% for 2004 and 1.9% for 2003. The increase in the maximum and average amounts of short-term borrowings outstanding in 2004, compared with 2003, reflect the addition of two $200 million term loan facilities in September 2004 to fund incremental contributions to our pension plans and to decrease our accounts receivable financing. (See Note 16, Retirement and Benefits Plans, and Note 11, Receivables in the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.) In addition, during second quarter 2004, we added two $20 million floating rate term loans. On October 29, 2004, we repaid the two $200 million and two $20 million term loans with the proceeds from the sale.

        Previously, OfficeMax guaranteed the debt used to fund our employee stock ownership plan ("ESOP") that was part of the Savings and Supplemental Retirement Plan for our U.S. salaried employees. (See Note 16, Retirement and Benefit Plans in the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.) The debt was repaid in 2004. The debt was recorded in our 2003 Consolidated Balance Sheet, with an offset in the shareholders' equity section in "Deferred ESOP benefit." We have guaranteed tax indemnities on the ESOP debt. Although the debt was paid, under these indemnities, we would be required to pay additional amounts to the debt holders if the interest payments on the debt were determined to

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be taxable. Any amounts paid under this tax indemnification would be dependent upon future tax rulings and assessments by the Internal Revenue Service and are not quantifiable at this time.

Contractual Obligations

        In the table below, we set forth our enforceable and legally binding obligations as of December 31, 2004. Some of the figures we include in this table are based on management's estimates and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the enforceable and legally binding obligations we will actually pay in future periods may vary from those reflected in the table.