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IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF ILLINOI S

EASTERN DIVISION

DAVID ROTH, On Behalf of Himself and All }Others Similarly Situated, )

Plaintiff, )

}vs. }

F I L ' 1-'1

RAG- 1 ZOQ5MICr `° '

CLERK , U.S . UISTEIt l COUR T

} No . 05-C-0236 (Consolidated)OFFICEMAX INC., et al., }

Judge GottschallDefendants . } Magistrate Judge Denlow

}

} DEMAND FOR JURY TRIAL}}

NOTICE OF FILING

PLEASE TAKE NOTICE that on Monday, August 1, 2005, we filed with the Clerk of the

United States District Court for the Northern District of Illinois, Eastern Division, 219 South

Dearborn Street, Chicago, Illinois, the Consolidated Complaint for Violation of the FederalSecurities Laws , a copy of which is hereby served upon you .

/I -I , Qa&-P~alv/Dated : August 1, 2005 By :

4V ,M . MIL RJENNIFER W. SPRENGELNYRAN ROSE PEARSONMILLER FAUCHER AND CAFFERTY LLP30 North LaSalle Street , Suite 3200Chicago , Illinois 60602(312) 782-4880

u fivu - 1 i" 1 4 .I_ 5

U.S . D STR C T COURT

-1-

CERTIFICATE OF SERVICE

I, Jennifer W. Sprengel, one of the atto rneys for plaintiff, hereby certify that I caused theConsolidated Complaint for Violation of the Federal Securities Laws to be served upon all counselon the attached service list by placing a copy of the same in the United States Mail at 30 NorthLaSalle Street, Chicago , Illinois, this Pt day of August, 2005 .

0j ,Jennifer prengel

OFFICEMAX 05 (LEAD )

Service List - 8/1/2005 (05-0008)

Page 1 of 1

Counsel For Defendant(s)

John W. RotunnoDaniel J . HayesErik F. DyhrkoppBell, Boyd & Lloyd LL C70 West Madison Street, Suite 3300Chicago, IL 6060 2

312/372-1120312/372-2098 (Fax )

Phillip M . GoldbergThomas P . KrebsLisa L . TharpeFoley & Lardner LL P321 N. Clark Street, Suite 2700Chicago, IL 60610

312/755-1900312/755-1925(Fax )

Counsel For Plaintiff(s)

William S . LerachMark SolomonX. Jay AlvarezLerach Coughlin Stoia Geller Rudman &Robbins LLP401 B Street, Suite 1600San Diego, CA 92101-4297

619/231-1058619/231-7423(Fax)

Joel J . BellowsLaurel G . BellowsGretchen L . GradingerBellows & Bellows, P .C.209 South LaSalle Street, Suite 800Chicago, IL 60604

312/332-3340312/332-1190(Fax)

Patrick T. StantonJohn L. Conlon

Schwartz, Cooper, Greenberg & Krauss180 N . La Salle Street, Suite 2700Chicago, IL 6060 1

312/346-1300312/782-8416(Fax)

Marvin A . MillerJennifer Winter SprengelNyran Rose PearsonMiller Faucher and Cafferty LLP30 N . LaSalle Street, Suite 3200Chicago, IL 60602

312/782-488 0312/782-4485(Fax)

nl-

L }

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOI S

EASTERN DIVISION

DAVID ROTH, On Behalf of Himself and AllOthers Similarly Situated,

Plaintiff,

vs .

OFFICEMAX INC., et al .,

Defendants .

- . .? OO5HUG- I 0005

CLERK, U.S . U SIR-ft. COURT

No. 05-C-0236 (Consolidated)

CLASS ACTION

Judge GottschallMagistrate Judge Denlo w

CONSOLIDATED COMPLAINT FOR VIOLATIONOF THE FEDERAL SECURITIES LAW S

"1 Lf

SUMMARY AND OVERVIE W

1 . This is a federal class action on behalf of those who purchased or otherwise acquire d

the publicly traded securities of OfficeMax Inc . ("OfficeMax" or the "Company"), between

December 1, 2003 and January 11, 2005 (the "Class Period"), against OfficeMax and certain of it s

current and former officers and directors for violations of the Securities Exchange Act of 1934 (the

"1934 Act") .

2. In July 2003, defendants announced a $1 .4 billion proposed acquisition of old-

OfficeMax by Boise Cascade Corporation ("Boise") . Many of Boise's larger shareholders objecte d

to the terms of the proposed sale, questioning the price being paid for OfficeMax , the amount of debt

Boise would take on and the viability of the management team that would be left to run the

combined company .

3. The Class Period begins on December 1, 2003, when defendants issued false and

misleading statements concerning OfficeMax's then-current financial performance and the combine d

company's expected financial performance in order to obtain shareholder approval of the propose d

sale. On December 9, 2003, both companies' shareholders approved the sale of old-OfficeMax t o

Boise for $10 .50 per share .

4. Harad and others considered the acquisition of old-OfficeMax to be the first step i n

Boise's "transformation" from a forest products manufacturing company to a major retai l

distribution company . In October 2004, Boise would sell its remaining forest product assets, adopt

the name "OfficeMax," and abandon its wood product manufacturing business segments in favor of

its office supply retail business . Today, OfficeMax is a multinational contract and retail distributor

of office supplies and paper , technology products and office furniture .

I

5 . On December 20, 2004, the Company shocked the market by issuing a press release

entitled "OfficeMax Announces Financial Events, Commences Investigation." The release stated in

part :

[A]t the direction of the audit committee of its board of directors, the company hascommenced an internal investigation into claims by a vendor to its retail businessthat certain employees acted inappropriately in requesting promotional payments andin falsifying supporting documentation for approximately $3 .3 million in claimsbilled to the vendor by OfficeMax during 2003 and 2004 .

6. Later, on January 12, 2005, OfficeMax announced that the release of its Q4 2004

results would be delayed in order for the Company to complete an investigation of its 2003 and

interim 2004 financial results . The Company also announced the resignation of its newly hired

Chief Financial Officer after only two months on the job . The Company subsequently restated its

results to eliminate $7 .1 million in income that had been improperly recognized in the first quarter of

2004. While the Company did not restate its 2003 financial statements, it has only represented that

the vendor manipulations were "not material" to the results for the year ended December 31, 2003 .

7 . OfficeMax has admitted that it inappropriately recorded vendor income included in it s

results during the Class Period, and has restated its interim 2004 results to remove millions in

improperly reported income , such that its 2003 and interim 2004 financi al statements were not a fair

presentation of OfficeMax 's results and were presented in violation of Generally Accepted

Accounting Principles ("GAAP") and Securities and Exchange Commission ("SEC") rules .

8 . In June 2005 , the SEC issued a formal order of investigation into the misstatements .

9. Defendants ' statements had their intended effect as the merger was consummated and

tens of millions of dollars in severance and change-in-control payments were eventually paid to

defendants. Subsequent to the merger, the Company's stock was sold at inflated prices as the

OfficeMax unit reported favorable results and the Individual Defendants received large bonuses . In

late 2004, OfficeMax was able to sell $1 .5 billion worth of notes on favorable terms .

J.

JURISDICTION AND VENUE

10. Jurisdiction is conferred by §27 of the 1934 Act. The claims asserted herein arise

under § § 10(b) and 20(a) of the 1934 Act and Rule I Ob-5 .

11 . Venue is proper in this District pursuant to §27 of the 1934 Act . Many of the false

and misleading statements were made in or issued from this District .

12. The Company's principal executive offices are in Itasca, Illinois, where the day-to-

day operations of the Company are directed and managed .

THE PARTIE S

13 . Lead Plaintiff - Pursuant to the June 9, 2005 Minute Entry - Wayne Count y

Employees' Retirement System ("Lead Plaintiff ')purchased OfficeMax publicly traded securities as

described in the certification previously filed with the Court and was damaged thereby .

14. Defendant OfficeMax is a multinational contract and retail distributor of offic e

supplies and paper, technology products and office furniture .

15. Defendant Christopher C . Milliken ("Milliken") was the President, CEO and a

director of OfficeMax until his resignation on February 14, 2005 . Milliken signed false and

misleading SEC filings during the Class Period . Milliken received a bonus of $396,415 for 200 4

based on the reported operating results of the office products business, in addition to his salary o f

$753,577 .

16. Defendant Theodore Crumley ("Crumley") is the CFO of OfficeMax . Crumley

signed false and misleading SEC filings and Sarbanes -Oxley Act of 2002 ("Sarbanes -Oxley")

certifications during the Class Period. Crumley received a bonus of $487,829 for 2004 based in part

on OfficeMax's performance, in addition to his salary of $507,586 .

17. Defendant Gary J. Peterson (" Peterson") served as President of OfficeMax' s Retai l

Division until he was terminated on January 5, 2004 . Peterson issued false and misleading

statements concerning OfficeMax's operations during the Class Period . Peterson received a bonus

of $1,460,188 for 2004 based in part on OfficeMax's performance, in addition to his salary of

$700,962 .

18. Defendant Thomas E . Carlile ("Carlile") was the Vice President and Controller of

OfficeMax. Carlile signed false and misleading SEC filings during the Class Period .

19. Defendant Michael Feuer ("Feuer") founded old-OfficeMax in 1988 and served as its

Chairman and CEO until OfficeMax was sold to Boise on December 9, 2003 . Feuer signed the

Proxy Statement to shareholders recommending approval of the acquisition of old-OfficeMax by

Boise and issued positive statements about OfficeMax to induce approval of the sale during the Class

Period.

20. Defendant George J . Harad ("Harad") is the Executive Chairman of the Board o f

OfficeMax, a capacity he has served in since relinquishing the Chief Executive position at Boise in

October 2004, when Boise sold its forest product assets and changed its name to OfficeMax . Harad

signed the Proxy Statement to shareholders recommending approval of the acquisition of old-

OfficeMax by Boise and issued positive statements about both companies throughout the Class

Period. Harad signed false and misleading SEC filings and Sarbanes-Oxley certifications . Harad

received a bonus of $1 .54 million for 2004 in addition to his salary of more than $1 million due in

part to OfficeMax's performance . This bonus was nearly double his bonus for 2003 .

21, The individuals named as defendants in TT 115-20 are referred to herein as the

"Individual Defendants ." The Individual Defendants, because of their positions with the Company,

possessed the power and authority to control the contents of OfficeMax's quarterly reports, press

releases and presentations to securities analysts, money and portfolio managers and institutional

investors, i .e ., the market . Each defendant was provided with copies of the Company's reports and

press releases alleged herein to be misleading prior to or shortly after their issuance and had the

ability and opportunity to prevent their issuance or cause them to be corrected . Because of their

positions and access to material non-public information available to them but not to the public, eac h

of these defendants knew that the adverse facts specified herein had not been disclosed to and wer e

being concealed from the public and that the positive representations which were being made wer e

then materially false and misleading . The Individual Defendants are liable for the false statement s

pleaded herein at ¶¶47-74, as those statements were each "group -published" information and the

result of the collective actions of the Individual Defendants .

22. In addition to the above-described involvement, each Individual Defendant ha d

knowledge of OfficeMax' s problems and was motivated to conceal such problems . Crumley, as

CFO, and Carlile as Controller, were responsible for financial reporting and communications wit h

the market. Many of the internal reports showing OfficeMax's forecasted and actual growth wer e

prepared by the finance department under Crumley ' s and Carlile 's direction. Defendant Milliken, a s

CEO and President, was responsible for the financial results and press releases issued by the

Company. Defendant Peterson, as President of OfficeMax's Retail Division, participated in th e

falsification of the Company's financial results . Old Defendants Harad and Feuer, while serving a s

the CEOs and Chairmen of the Board of Directors ("the Board") of Boise and OfficeMax ,

respectively, were responsible for financial reporting and communications with the market . Each

Individual Defendant sought to demonstrate that he could lead the Company successfully and

generate the growth expected by the market .

23 . A big part of Defendants' strategy was to merge the two companies and then sell th e

manufacturing operations involved the planned expansion of the retail operations . Thus, the success

and future prospects of the retail operations - including the 970 superstores - were a focus of th e

Individual Defendants . One characteristic of the retail operations was extremely low operatin g

margins . Due to competition in the office superstore industry, it was crucial to keep prices low .

This was exacerbated by competition from other large retailers, including Wal-Mart and Costco .

Consequently, operating margins in the retail industry were frequently lower than 3% of sales . One

important way retailers can improve their margins is through the use of vendor credits which vendors

give retailers for various items, including for levels of inventory purchases, for advertising or fo r

product placement . Because of the relatively low margins, the amount of vendor credits could hav e

a dramatic effect on margins . Thus, OfficeMax management closely monitored the credits offere d

by various vendors, to determine whether OfficeMax qualified for the credits and to determine whe n

the credits could be recorded .

24. For example, in the first quarter of 2004, OfficeMax reported operating income fro m

the retail segment of just $24 million on sales of $1 .22 billion . Of the $24 million, $7 .1 million

(30%) was from improperly recorded vendor credits . An additional port ion of the operating income

was likely generated from legitimate vendor credits . Thus, the level of vendor credits recorded eac h

quarter was one of the most important business metrics OfficeMax management monitored .

25 . Defendants were motivated to engage in the fraudulent practices alleged herein i n

order to ensure shareholder approval of the sale of old-OfficeMax to Boise, to obtain financing fo r

the Company, to collect on severance and change-in-control payments, and to receive large bonuse s

based on OfficeMax' s apparent success .

26. Harad, Feuer and the Company's other executives stood to gain substantially by

completing the sale of OfficeMax to Boise :

(a) Feuer. Feuer would obtain about $60 million in severance and other cas h

payments upon closing of the sale. Feuer would also receive a consulting contract worth $1 millio n

a year for five years . On December 15, 2003, Feuer would cause the Company to register

542,469 shares of Boise common stock he received in the acquisition for resale ; and

(b) Harad. Though Harad would stay on as Executive Chairman of the combine d

company - at least temporarily - the completion of sale of the Company' s forest products and paper

assets and the transformation to OfficeMax on October 29, 2004 would satisfy the performanc e

requirements for 260,300 shares of restricted stock the Board granted him in 2003, then worth jus t

more than $8 mi ll ion . Harad would also sign a new employment agreement with OfficeMax

containing a substantial severance package on that same day . Pursuant to the new agreement, when

Harad would step down as the Executive Chairman of OfficeMax in June 2005 he would be

guaranteed an incentive and severance package worth over $10 million-

(i) $1 .32 million incentive bonus ;

(ii) $1 .5 million retention payment ;

(iii) $7 .26 million severance payment;

(iv) Paid office space and secretarial assistance in Boise for two years that

cannot exceed $80,000 a year ;

(v) Three years of continued eligibility in the Company's health, life ,

disability and accident insurance plans; and

(vi) A $5,000 per year financial counseling allowance for three years .

27. Other Executives . OfficeMax entered into change-in-control employmen t

agreements with each of its executive officers that provided each executive officer with millions o f

dollars worth of severance benefits if their employment with OfficeMax was terminated after th e

merger , and additional tax gross-up payments . All vested and unvested OfficeMax stock option s

would be cashed out for millions of dollars . Additionally, thousands of shares of restricted stoc k

would prematurely vest upon consummation of the sale .

FRAUDULENT SCHEME AND COURSE OF BUSINES S

28. Each defendant is liable for : (i) making false statements ; or (ii) failing to disclos e

adverse facts known to him about OfficeMax . Defendants' fraudulent scheme and course o f

business that operated as a fraud or deceit on those who purchased or otherwise acquired OfficeMax

publicly traded securities was a success, as it : (i) deceived the investing public regarding

OfficeMax' s prospects and business ; (ii) allowed defendants to obtain shareholder approval of

Boise's acquisition of OfficeMax, triggering tens of millions of dollars in severance and related

payments to themselves ; (iii) artificially inflated the prices of OfficeMax's publicly traded securities;

(iv) allowed defendants to arrange to sell $1 .5 billion worth of OfficeMax notes in late 2004 ; (v)

allowed the Individual Defendants to receive large bonuses based in part on OfficeMax's apparen t

operating performance ; and (vi) caused Lead plaintiff and other members of the Class to purchase

OfficeMax publicly traded securities at inflated prices .

BACKGROUND

29. Boise. Boise was incorporated under the laws of Delaware in 1931 under the name

Boise Payette Lumber Company of Delaware, as a successor to an Idaho corporation formed i n

1913 . In 1957, the company' s name w as changed to Boise Cascade Corporation . Boise was a majo r

distributor of building materials and an integrated manufacturer and distributor of paper, packaging ,

and wood products . In March 2004, Boise owned or controlled approximately 2 .4 million acres of

timberland in the United States .

30 . OfficeMax . In 1988, defendant Feuer founded OfficeMax, a chain of high-volume

office products superstores . In 1994 , Feuer launched what was then the largest retail initial publi c

offering ("IPO"), receiving $675 million in proceeds . As of January 25, 2003, OfficeMax owned

and operated 970 superstores in 49 states , Puerto Rico , the U.S . Virgin Islands and, through a

majority-owned subsidiary, in Mexico .

31 . OfficeMax's IPO was the largest, but compared to the 1989 IPO of office supply

chain pioneer Staples, which raised just $36 million, it was not the most profitable for shareholders .

Returns for shareholders in the rival chains differed sharply . OfficeMax shares traded flat for nine

years after their debut, while Staples' shares rose nearly 500% over that same period . By the end of

2001, OfficeMax was carrying a debt-load of at least $220 million . By the middle of 2002,

OfficeMax had posted eight straight quarterly losses . By October 2002, OfficeMax's stock, whic h

had traded as high as $20 per share in 1998, reached a 52-week low of $3 .05. Feuer told the Daily

Deal in April 2004 that he "knew a year and a half ago that we couldn 't stay public . "

32. Feuer began discussing selling OfficeMax to paper products giant Boise . After

several months of negotiations that stretched from OfficeMax's Ohio headquarters to the Sear s

Tower in Chicago to the French Riviera, Feuer and Harad agreed to terms . On July 14, 2003, Bois e

offered to purchase OfficeMax for 30% cash and 70% stock . The price closed at $10 .50 per share .

In November 2003, Institutional Shareholder Services urged Boise's shareholders to vote against th e

acquisition because of concerns about overpaying, taking on too much debt, and doubts about th e

inexperience of the ongoing management of the combined company . Additionally, some large Boise

shareholders wanted to see the forest products company divest its timberlands or building product s

line before more than doubling the size of its existing office products unit . Harad adamantly

defended the combined company's proposed management , but by late November 2003, Bois e

announced that once it closed its purchase of OfficeMax, it would exit both the paper and buildin g

products businesses . Goldman Sachs, who represented Boise in the acquisition of OfficeMax, wa s

retained to sell the forest products assets .

33 . Bo ise consummated its acquisition of OfficeMax on December 9, 2003, for

approximately $1 .06 billion. Though having stated in July 2003 when the deal was announced that

he had signed a five-year employment agreement with OfficeMax and planned to "hang around for

the fun part," since he co-founded the company, on the same day the OfficeMax acquisition closed,

Feuer announced he and Ralph Della Ratta, a former investment banker at KeyCorp's McDonald

Investments Inc . ("McDonald Investments"), had since established Max-Ventures, a venture capita l

firm focusing on specialty retailing . McDonald Investments helped take OfficeMax public in its IP O

and advised OfficeMax in its sale to Boise . Feuer signed a five-year consulting contract wit h

OfficeMax.

34. Boise Chairman and CEO Harad had been with Boise since 1971 . Following the

December 2003 consummation of Boise's acquisition of OfficeMax, Harad stepped down as CEO ,

assuming the Executive Chairman title of OfficeMax.

35. In July 2004, the Company announced that the Chicago buyout firm of Madison

Dearborn Partners LLC had agreed to buy its paper, forest products and timberland businesses fo r

$3.7 billion, which included Boise's headquarters in Boise, its Boise Building Solutions unit, and 2 . 3

million acres of U .S. timberland, 35,000 acres of eucalyptus plantation land in Brazil and a 16,000-

acre cottonwood fiber farm. The spun-off entity would be called Boise Cascade , LLC and the

Company would rename itself "OfficeMax Inc ." OfficeMax would keep a 19% ownership stake in

Boise Cascade, LLC and would take back a timberland installment note . The Company would als o

continue purchasing paper from old-Boise for undisclosed terms, purchasing about 700,000 tons i n

2004 alone.

36. In October 2004, Boise completed the sale of its paper and timberland assets for $3 .7

billion. Approximately $2.2 billion of the net proceeds went to pay down debt Boise took on buying

OfficeMax.

37. On November 1, 2004, OfficeMax issued a press rele ase entitled "OfficeMax

Announces Changes to Board, Executive Management Team." The press release stated in part ;

OfficeMax(R), Incorporated, formerly Boise Cascade Corporation, todayannounced changes to its board of directors and executive management team.

George J . Harad, previously chairman and chief executive officer of BoiseCascade Corporation, was elected executive chairman of the board of OfficeMax .Chris Milliken, formerly division president and chief executive officer of BoiseOffice Solutions, was elected president, chief executive officer, and a director ofOfficeMax .

Effective today, Boise Cascade Corporation changed its company name toOfficeMax, Incorporated . This change followed the completion of the sale of thecompany's paper, forest products, and timberland assets for approximately$3 .7 billion to affiliates of Madison Dearborn Partners .

38 . Then, on December 20, 2004, OfficeMax announced an investigation into certain

vendor allegations . The release stated in part :

[A]t the direction of the audit committee of its board of directors, the company hascommenced an internal investigation into claims by a vendor to its retail businessthat certain employees acted inappropriately in requesting promotional payments andin falsifying supporting documentation for approximately $3 .3 million in claimsbilled to the vendor by OfficeMax during 2003 and 2004 . Because the company'sinvestigation has only recently begun, the company is postponing a decision as to theform and timing of share repurchases until the investigation is complete .

39 . Later, on January 12, 2005, OfficeMax announced that the release of its Q4 2004

results would be delayed in order for the Company to complete an investigation of its 2003 and

interim 2004 financial results . The Company also announced the resignation of its newly hire d

Chief Financial Officer after only two months on the job . The Company subsequently restated its

results to eliminate $7.1 million in income that had been improperly recognized in the first quarter o f

2004. While the Company did not restate its 2003 financial statements, it has only represented tha t

the vendor manipulations were "not material " to the results for the year ended December 31, 2003.

40, OfficeMax has admitted that it inappropriately recorded vendor income included in it s

results during the Class Period , and has restated its interim 2004 results to remove millions in

improperly reported income, such that its 2003 and interim 2004 financial statements were not a fair

presentation of OfficeMax ' s results and were presented in violation of GAAP and SEC rules .

41 . During the Class Period, OfficeMax improperly recognized income from vendors .

Specifically, it recognized vendor incomes even though collection was not probable . Companies like

OfficeMax receive money from vendors to feature the supplier 's products in ads and circulars .

Frequently, an ad in the newspaper for OfficeMax for a certain brand of product was compensated i n

part by the vendor of that brand . By overstating the expected amount of such compensation ,

OfficeMax was able to manipulate its reported financials .

42. OfficeMax improperly took the same deductions from vendor invoices twice ,

essentially "double dipping." OfficeMax's various vendors had certain "profiles" which would b e

used to calculate the amount of vendor promotions to be deducted from payments to the vendors .

After the merger , many vendors tightened up their vendor promotion policies which would hav e

resulted in much lower income for OfficeMax . To inflate its income, OfficeMax did not use the

updated policies in their vendor profiles but continued to use the old profiles . This resulted in

improper vendor allowances being deduction from payments to vendors . Another metho d

OfficeMax used to inflate deductions was to take deductions based on inventory that had bee n

returned to the vendor for which OfficeMax was already receiving a credit .

43 . Naturally, vendors would complain about the improper deductions taken from

OfficeMax's payments to them . OfficeMax's strategy to handle the complaints was to delay

answering the complaints as long as possible . The vendor calls went to the Accounts Payabl e

department at OfficeMax but Accounts Payable could not answer the questions since account s

payable had not calculated the deductions . Accounts Payable was not allowed to forward the vendor

calls to those who had calculated the deductions . Those who calculated the deductions, the Vendo r

Income Planning and Analysis ("VIPA") group, would also pre-date the deductions, or record th e

deductions as much as two months before OfficeMax had earned them.

44. Some vendors were so angry with these practices, they put OfficeMax on credit hol d

and others even went to OfficeMax's offices to get the monies OfficeMax had not paid them .

Ultimately, vendor complaints made it impossible for OfficeMax' s scheme to continue .

45 . Ironically, at the same time OfficeMax was improperly recording unjustifie d

deductions on payments to its vendors, the Company was apparently denying legitimate rebates to it s

customers . On January 14, 2005, Associated Press reported that the Ohio attorney general had sue d

OfficeMax, alleging deceptive business practices. The story stated in part :

Attorney General Jim Petro sued office supply company OfficeMax Inc . onFriday, saying it responded to more than 100 customer complaints only after the stateintervened.

The suit, filed in Franklin County Common Pleas Court, accuses the companyof unfair and deceptive business practices by failing to honor rainchecks and rebaterequests. The attorney general's office said it handled more than 100 complaints inthe past two years from customers who said they had no luck getting rebates orrainchecks to buy out-of-stock items at advertised sale prices .

The suit asks that OfficeMax pay unspecified damages to customers who didnot receive rainchecks and that it honor all advertisements and rebates in compliancewith state law .

"The continual pattern of complaints that we got showed us that they werenot fixing the problem . They were only fixing the problem when we stepped in,"attorney general spokeswoman Michelle Gatchell said .

46. In June 2005, the SEC issued a formal order of investigation into the misstatements .

DEFENDANTS' FALSE AND MISLEADINGSTATEMENTS ISSUED DURING THE CLASS PERIOD

47 . On the morning of December 1, 2003, Feuer was interviewed by Bloomberg News

which was broadcast by Bloomberg. Feuer reported that holiday sales were "fantastic," and that

"sales increased an astounding almost 35 percent over last year ." In an article following the

interview and based on Feuer's statements to Bloomberg, Bloomberg reported that "OfficeMax Say s

4th-Quarter Sales to Exceed Forecast ." Those forecasts, as reported in the Bloomberg article, were

earnings of $0.19 a share and sales of $1 .4 billion in Q4 2003 . The article also noted that

OfficeMax's stock price had increased 18% since the sale to Boise was announced and that bot h

companies' shareholders were scheduled to vote on the proposed transaction on December 9, 2003 .

48. In the following days, Harad would report that Boise's projected debt for the purchas e

of OfficeMax was about $2 .3 billion . Large Boise investors were concerned that the debt loa d

would leave the combined company with a debt-to-equity ratio more than double that of its office

products competitors Office Depot and Staples . The rising debt load would also lower the combine d

company's cash flow for other uses .

49. On December 9, 2003, OfficeMax's and Boise's shareholders agreed to the sale o f

OfficeMax to Boise at concurrent meetings . On December 9, 2003, Boise issued a press release,

entitled "Boise Completes OfficeMax Acquisition for $1 .3 Billion More than Double the Size o f

Boise Office Solutions," which stated in relevant part :

"Our acquisition of OfficeMax represents a major step in the transformationof Boise's office products distribution business and Boise as a whole," said George J .Harad, chairman and chief executive officer . "The combined office productsbusiness will be strategically stronger and better able to deliver compelling value toits customers through all channels and across all segments of the market . "

Christopher C. Milliken, division president and chief executive officer ofBoise Office Solutions, said, "In combining our two complementary organizations,we will strive to be the leading provider of office products and services through arelentless focus on our customers . We will succeed by providing our customers withan unparalleled customer experience - in service, in product, in time savings, and invalue."

"OfficeMax co-founder, Chairman, and CEO Michael Feuer deservesrecognition for his leadership in building OfficeMax into the nation's third-largestoffice products retailer," Harad said . "His vision and skill helped to create theoutstanding business we are acquiring today . "

The acquisition of OfficeMax more than doubles the size of Boise OfficeSolutions to pro forma 2002 sales of $8 .3 billion. Boise anticipates that synergybenefits from the acquisition will reach an annual amount of $160 million : $100million in 2004, $150 million in 2005, and $160 million in 2006 .

50. On December 9, 2003, OfficeMax issued a press release, entitled "OfficeMax

Shareholders Approve and Adopt Agreement and Plan of Merger to Combine with Boise Cascad e

Corporation," stating in relevant part :

OfficeMax Inc . today said its shareholders overwhelmingly approved andadopted the agreement and plan of merger to combine with Boise CascadeCorporation, creating a new organization with "all-in " sales of over $12 billion .

Michael Feuer, OfficeMax's co-founder, chairman and chief executiveofficer, said, "Shareholders of OfficeMax will receive a combination of cash andBoise stock approximating $1 .4 billion, which represents a nearly 70 percent increasein the Company's stock price since last year on the same date . "

51 . On January 22, 2004, the Company issued a press release announcing its fourth

quarter and full year 2003 financial results . The press release stated in part :

Boise Cascade Corporation today reported fourth quarter 2003 net income of$6.9 million, or 5 cents per diluted share . Before a special item and the net impact ofthe OfficeMax acquisition, Boise's net income was $18 .3 million, or 24 cents perdiluted share . By comparison, Boise reported net income of $6.2 million, or 5 centsper diluted share, in fourth quarter 2002 and $30 .0 million, or 43 cents per dilutedshare, in third quarter 2003, before a special item. For the full year 2003, net incomewas $8.3 million, or a loss of 8 cents per diluted share . Before special items and thenet impact of the OfficeMax acquisition, Boise posted net income of $31 .8 million,or 32 cents per diluted share . In 2002, before a special item, net income was$7 .3 million, or a loss of 10 cents per diluted share .

Financial Highlights($ in millions, except per-share amounts )

4Q 4Q 3Q Full Year2003 2002 2003 2003 2002

SalesNet incom eNet income (loss) per diluted shareBefore special items an d

net impact of OfficeMax acquisitionNet incom eNet income (loss) per diluted share

$ 2,352 $ 1,801 $ 2,11I $ 8,245 $ 7,412$ 6.9 S 6.2 $ 32 .9 $ 8.3 $ 11 .3$ 0.05 $ 0.05 $ 0 .48 $ (0.08) $ (0 .03 )

$ 18.3 $ 6.2 $ 30 .0 $ 31 .8 $ 7.35 0.24 $ 0,05 $ 0 .43 $ 0.32 $(0.10 )

Sales in fourth quarter 2003 were $2 .4 billion, 31 % higher than sales in fourthquarter 2002 . Sales for full year 2003 were $8 .2 billion, an 11% increase over salesin 2002 . The sales increases were mostly due to strong prices for wood products and

growth in Boise Office Solutions, including the OfficeMax acquisition . Excludingthe impact of the OfficeMax acquisition, sales increased 14% and 7% for the fourthquarter and full year, respectively .

Boise Office Solutions($ in millions)

4Q

2003

4Q

20023Q2003

Full Yea r

2003 2002

Sales $1,248 $906 $934 $4,025 $3,546Operating income $40 .0 $32.4 $31 .0 $115.5 $123 . 0Operating income before specia l

items and net impact ofOfficeMax acquisition $36 .9 $32.4 $31 .0 $121 .6 $123 . 0

On December 9, 2003, Boise acquired OfficeMax, Inc . Following thatacquisition, the company began reporting two operating segments, Contract andRetail, within Boise Office Solutions, its office products distribution business . Takentogether, the two operating segments make up our Boise Office Solutions business .

For fourth quarter 2003, Boise Office Solutions reported operating income of$40.0 million, compared with $32 .4 million in fourth quarter 2002 and $31 .0 millionin third quarter 2003 . For full year 2003, the business reported operating income of$115.5 million, compared with $123 .0 million in 2002 .

Before special items and the net impact of the OfficeMax acquisition, BoiseOffice Solutions earned $36 .9 million, compared with $32.4 million in fourth quarter2002 and $31 .0 million in third quarter 2003 . For full year 2003, the business hadoperating income of $121 .6 million, compared with $123.0 million in 2002 .

Sales of $1 .2 billion in fourth quarter 2003 were 38% higher than sales infourth quarter 2002 and 34% higher than in third quarter 2003, due primarily to theacquisition of OfficeMax. Year-over-year same-store sales, which excludeOfficeMax sales, rose 4% in the fourth quarter, with the increase attributable toforeign exchange rates .

Full-year sales of $4.0 billion in this business were 14% higher than the yearearlier, while same-store sales rose 5%, with 4% of the lift generated by foreignexchange rates. Sales volume of Boise's office papers increased 4% to 568,000 tons .

Boise Office Solutions , Contract Segment($ in millions )

4Q 4Q 3Q Full Year2003 2002 2003 2003 2002

Sales $965 $906 $934 $3,742 $3,546Operating income $33 .9 $32.4 $31 .0 $109.4 $123 . 0Operating income before special item s

and impact of OfficeMax acquisition $36 .9 $32.4 $31 .0 $121 .6 $123 . 0

For fourth quarter 2003, Boise Office Solutions, Contract, reported operatingincome of $33 .9 million, compared with $32 .4 million in fourth quarter 2002 and$31 .0 million in third quarter 2003 . For full year 2003, this segment reportedoperating income of $109 .4 million, compared with $123 .0 million in 2002 .

Before special items in fourth quarter 2003 and full year 2003 and the impactof the OfficeMax acquisition, operating income in Boise Office Solutions, Contract,in the fourth quarter was $36 .9 million, up from $32.4 million in fourth quarter a yearago and $3 1 .0 million in third quarter 2003 . When excluding the same items for fullyear 2003, the segment reported operating income of $121 .6 million, compared with$123.0 million in 2002 .

Sales of $965 million in fourth quarter 2003 were 6% higher than sales infourth quarter 2002 and 3% higher than in third quarter 2003 . Year-over-year same-store sales in the fourth quarter rose 4%; however, excluding foreign exchange rates,same-store sales were essentially flat .

Full-year sales of $3 .7 billion for this segment were 6% higher than the yearearlier, while same-store sales rose 5%, fueled by a 4% lift from foreign exchangerates .

Excluding special items and the impact of the OfficeMax acquisition, thefourth-quarter operating margin for the Contract segment was 3 .9%, up from 3 .6% inthe fourth quarter a year ago and 3 .3% in the third quarter . For the full year, theoperating margin, before special items and the impact of the OfficeMax acquisition,was 3 .3%, compared with 3 .5% in 2002 .

Boise Office Solutions, Retail Segment

($ in millions)

4Q

2003

Sales $ 283Operating income $ 6. 1

Boise began reporting its Boise Office Solutions, Retail, segment onDecember 10, 2003 . For 17 selling days in fourth quarter 2003, the segmentrecorded sales of $283 million, operating income of $6 .1 million, and an operatingmargin of 2 .2%.

"Boise's sales and income should increase substantially in 2004," saidGeorge J. Harad, chairman and chief executive officer .

"With the acquisition of OfficeMax, Boise Office Solutions will post sharplyhigher sales and operating income in 2004 . Same-store sales growth should continueto be positive. However, operating margins will be lower in 2004 than in 2003, aswe integrate the lower-margin retail business into our operations," Harad said .

52. On March 2, 2004, the Company filed its Form 10-K for the fiscal year ended

December 31, 2003, including the Company's results previously reported for 2003 . The Form 10-K

was signed by defendants Harad as Chairman CEO, Crumley as CFO and Carlile as Controller . In

their Sarbanes -Oxley Certifications , defendants Harad and Crumley also claimed that the y

personally supervised the evaluation of the design and operation of the Company's disclosur e

procedures pursuant to Rule 13a-15(e) of the Exchange Act (pursuant to §392 of Sarbanes-Oxley )

("Rule 13a-15(e)"), to ensure that the Company's controls would alert them to material informatio n

which would conflict with GAAP and/or require disclosure . Defendants affirmatively stated on

March 2, 2004 that no such disclosure issues or control problems existed .

53. In fact, OfficeMax did have internal control weaknesses which were required to b e

disclosed . Ultimately, in March 2005, when OfficeMax filed its Form 10-K for 2004, it would admi t

to the internal control deficiencies . OfficeMax' s internal control deficiencies are alleged more fully

in the section entitled "OfficeMax' s Violations of SEC Regulations Due to Its Inadequate Internal

Controls . "

54. On April 20, 2004, the Company announced its first quarter 2004 financial results .

The press release stated in part :

Boise Cascade Corporation today reported first quarter 2004 net income of$63 .5 million, or 66 cents per diluted share, compared with a net loss of$27 .5 million, or 53 cents per diluted share, in first quarter 2003 . Fourth quarter2003 net income was $6.9 million, or 5 cents per diluted share .

The quarter's results include a pretax gain of $59 .9 million, or 40 cents perdiluted share, from the sale of 79,000 acres of timberland in Louisiana . Before thisspecial item, the company posted first quarter 2004 net income of $26 .9 million, or26 cents per diluted share .

FINANCIAL HIGHLIGHT S($ in millions, except per-share amounts )

1Q 1Q 4Q

2004 2003 2003

Sales $3,530 $1,853 $2,352Net income (loss) $63.5 $(27 .5) $6 . 9Net income (loss) per diluted share $0.66 $(0 .53) $0.05

BEFORE SPECIAL ITEM SNet income (loss) $26.9 $(12 .6) $15 .9Net income (loss) per diluted share $0.26 $(0 .27) $0.1 8

Sales in first quarter 2004 nearly doubled to $3 .5 billion, compared with $1 .9billion in the first quarter a year ago . Sales in fourth quarter 2003 were $2 .4 billion.Sales increased primarily because of the acquisition of OfficeMax in December 2003but were also aided by strong product prices in Boise Building Solutions .

REVIEW OF OPERATIONSBoise Office Solutions

($ in millions)

1Q2004

Sales $2,34 1Operating income $58 . 4Operating margin 2 .5 %BEFORE SPECIAL ITEMOperating income $58 . 4Operating margin 2 .5 %

OUTLOOK

lQ 4Q

2003 2003

$938 $1,24 8$20 .7 $40 . 02 .2% 3.2%

$29.9 $40.03.2% 3.2%

"For Boise overall, we continue to expect significantly higher sales andincome for full year 2004, relative to 2003, both as the result of the acquisition ofOfficeMax and strong or improving performance in all of our businesses," saidGeorge J. Harad, chairman and chief executive officer .

In Boise Office Solutions, the second quarter of the year is always seasonall yweak, for both the Contract and Retail segments . We expect sales to declinesequentially and operating income to be substantially lower than in the first quarter .However, we are pleased with the progress we are making in integrating OfficeMaxinto our operations and continue to expect to meet our targets for the full year of $80

million in integration synergies, same-store sales growth of 4% to 6%, and anoperating margin of 2 .4% to 2.6%.

On December 9, 2003, Boise acquired OfficeMax, Inc . Following thatacquisition, the company began reporting two operating segments, Contract andRetail, within Boise Office Solutions, its office products distribution business . Takentogether, the two operating segments make up the company's Boise Office Solutionsbusiness .

For first quarter 2004, Boise Office Solutions sales increased 150% to $2 .3billion, compared with the same quarter a year ago . Sales for locations operating inboth periods, including OfficeMax locations on a pro forma basis, increased 5% .Total pro forma sales of office supplies and paper increased 4%, sales of technologyproducts increased 5%, and sales of furniture were up 4% . Boise's office papers soldthrough Boise Office Solutions increased 16% to 167,000 tons, compared with a yearago .

Boise Office Solutions operating income was $58 .4 million, up from $20 .7million in first quarter 2003 and $40.0 million in fourth quarter 2003 . The resultsincreased, relative to comparison periods, due to the OfficeMax acquisition . Theoperating margin was 2 .5%, compared with 3 .2%, before a special item, in firstquarter 2003 and 3 .2% in fourth quarter 2003 .

In first quarter 2004, Boise Office Solutions achieved $12 .6 million of the$80 million in integration synergies expected for the year . Integration costs of $8 .9million occurred primarily in the contract segment, as the business began toconsolidate delivery warehouses, customer service centers, and administrativestaffing. Boise Office Solutions also recorded acquisition-related step-up costs of$4.5 million .

Below is the review of operations for the Boise Office Solutions Contract andRetail segments .

Boise Office Solutions , Contract Segment

($ in millions)

1Q IQ 4Q

• 2004 2003 2003

Sales $ 1,120 $938 $96 5Operating income $34 .4 $20 .7 $33 . 9Operating margin 3 .1% 2.2% 3 .5%BEFORE SPECIAL ITE MOperating income $34 .4 $29 .9 $33 . 9Operating margin 3 .1% 3 .2% 3 .5%

Boise Office Solutions, Contract, sales of $1 .1 billion in first quarter 2004were 19% higher than sales in first quarter 2003 and 16% higher than in fourth

quarter 2003 . Excluding foreign exchange gains, sales rose 15% . Year- over-yearsame-location sales, excluding foreign exchange gains, in the first quarter rose 4%.

This segment reported first quarter 2004 operating income of $34 .4 million,compared with $29.9 million, before a special item, in first quarter 2003 and $33 .9million in fourth quarter 2003 . The operating margin was 3 .1 %, compared with 3 .2%before a special item, in first quarter 2003 and 3 .5% in fourth quarter 2003 .

Boise Office Solutions, Retail Segment($ in millions)

IQ 4Q

2004 2003

Sales $1,220 $283Operating income $24.0 $6.1Operating margin 2.0% 2.2%

Boise began reporting its Boise Office Solutions, Retail, segment onDecember 10, 2003 . In first quarter 2004, segment sales of $1 .2 billion were 1%higher, and same-store sales were 3% higher, than pro forma sales in first quarter2003 . Boise Office Solutions, Retail, reported operating income of $24 .0 million andan operating margin of 2 .0% in first quarter 2004 .

OUTLOOK

"For Boise overall, we continue to expect significantly higher sales andincome for full year 2004, relative to 2003, both as the result of the acquisition ofOfficeMax and strong or improving performance in all of our businesses," saidGeorge J. Harad, chairman and chief executive officer .

In Boise Office Solutions, the second quarter of the year is always seasonallyweak, for both the Contract and Retail segments . We expect sales to declinesequentially and operating income to be substantially lower than in the first quarter .However, we are pleased with the progress we are making in integrating OfficeMaxinto our operations and continue to expect to meet our targets for the full year of $80million in integration synergies, same-store sales growth of 4% to 6%, and anoperating margin of 2 .4% to 2 .6% .

Effective January 1, 2003, we adopted an accounting change for vendorallowances to comply with the guidelines issued by the Financial AccountingStandards Board's Emerging Issues Task Force (EITF) 02-16, Accounting by aCustomer (Including a Reseller) for Certain Consideration Received From a Vendor .Under the new guidance, vendor allowances reside in inventory with the product andare recognized when the product is sold, changing the timing of our recognition of

these items . This change resulted in a one-time, noncash , cumulative -effectadjustment of $4 .7 million, or 8 cents per share .

55. On May 7, 2004, the Company filed its Form 10-Q for the period ended March 30 ,

2004. The 10-Q was signed by Thomas E. Carlile as Vice President and Controller . In their

Sarbanes-Oxley Certifications, defendants Harad and Crumley claimed that they personally

supervised the evaluation of the design and operation of the Company's disclosure procedure s

pursuant to Rule 13a-15(e), to ensure that the Company' s controls would alert them to material

information which would conflict with GAAP and/or require disclosure . Defendants Harad and

Crumley also affirmatively stated on May 7, 2004 that no such disclosure issues or control problem s

existed .

56. In fact, OfficeMax' s financial statements for the first quarter 2004 were materiall y

false and misleading and operating income was overstated by $7 .1 million due to the improper

recording of vendor allowances and OfficeMax has significant internal control problems as more

fully disclosed herein .

57. These results were viewed favorably by the market . In June 2004, OfficeMax's stock

would reach its Class Period of more than $37.70 per share .

58. On July 20, 2004, the Company announces its second quarter 2004 financial results .

The press release stated in part :

Boise Cascade Corporation today reported second quarter 2004 net income of$50.4 million, or 52 cents per diluted share, compared with a net loss of $3 .9 million,or 12 cents per diluted share, in second quarter 2003 . In first quarter 2004, Boisereported net income of $63 .5 million, or 66 cents per diluted share .

The quarter's results include a pretax gain of approximately $46 .5 million, or31 cents per diluted share, on the sale of Boise's 47% interest in Voyageur Panel inMay 2004 . Before this special item, the company posted second quarter 2004 netincome of $22.0 million, or 21 cents per diluted share .

FINANCIAL HIGHLIGHT S($ in millions , except per-share amounts )

2Q 2Q 1Q2004 2003 2004

Sales $3,401 $1,929 $3,53 0Net income (loss) $50 .4 $(3 .9) $63 . 5Net income (loss) per diluted share $0 .52 $(0 .12) $0 .6 6BEFORE SPECIAL ITEMSNet income (loss) $22 .0 $(3 .9) $26 . 9Net income (loss) per diluted share $0 .21 $(0 .12) $0 .2 6

Sales in second quarter 2004 increased 76% to $3 .40 billion, compared with$1 .93 billion in the second quarter a year ago . Sales in first quarter 2004 were $3.53billion. Year-over-year sales increased primarily because of the acquisition ofOfficeMax in December 2003 but were also aided by strong product prices in Bois eBuilding Solutions .

REVIEW OF OPERATIONS

Boise Office Solutions{$ in millions )

2Q 2Q 1Q2004 2004 2003

SalesOperating incomeOperating margin

$2,005 $905 $2,341$16.0 $23.9 $58.40.8% 2,6% 2.5%

On December 9, 2003, Boise acquired OfficeMax, Inc . Following thatacquisition, the company began reporting two operating segments, Contract andRetail, within Boise Office Solutions, its office products distribution business . Takentogether, the two operating segments make up the company's Boise Office Solutionsbusiness .

For second quarter 2004, Boise Office Solutions sales increased 122% to $2 .0billion, compared with $905 million in the same quarter a year ago. Sales forlocations operating in both periods, including OfficeMax retail store locations on apro forma basis, increased 2%. Total pro forma sales of office supplies and paper andtechnology products increased 1 %, and sales of furniture were up 4% . Boise's officepapers sold through Boise Office Solutions increased 23% to 177,000 tons, comparedwith a year ago .

Boise Office Solutions operating income was $16 .0 million, down from $23 .9million in second quarter 2003 and $58 .4 million in first quarter 2004 . The operatingmargin was 0 .8%, compared with 2.6% in second quarter 2003 and 2.5% in firstquarter 2004 . Results weakened from year-ago levels primarily because of seasonallosses in the Retail segment. The sharp decline in operating income from first tosecond quarter, although more severe in Retail than in Contract, reflected normalseasonality in both segments .

In second quarter 2004, Boise Office Solutions achieved $31 .7 million ofintegration synergies and recorded integration costs of $8 .3 million . In the first halfof 2004, synergies totaled $44 .3 million of the $80 million expected for the year.First half integration costs were $17 .2 million .

Below is the review of operations for the Boise Office Solutions Contract andRetail segments .

Boise Office Solutions , Contract Segment($ in millions)

2Q 2Q 1Q

2003 2004 2004

Sales $1,038 $905 $1,120Operating income $21 .4 $23.9 $34.4Operating margin 2 .1% 2.6% 3 .1 %

Boise Office Solutions, Contract, sales of $1 .0 billion in second quarter 2004were 15% higher than sales in second quarter 2003 and 7% lower than first quarter2004 . Year-over-year same-location sales on a pro forma basis rose 5% in the secondquarter . Excluding the impact of foreign exchange, same-location sales grew 3% .

This segment reported second quarter 2004 operating income of $21 .4million, compared with $23 .9 million in the second quarter 2003 and $34 .4 million infirst quarter 2004 . The operating margin was 2 .1 %, compared with 2 .6% in secondquarter 2003 and 3 .1 % in first quarter 2004 . The Contract segment includes theformer OfficeMax direct business, with its extensive warehouse infrastructure, whichrecorded losses in the first and second quarters .

Boise Office Solutions, Retail Segment($ in millions)

2Q IQ

2004 2004

Sales $967 $1,221Operating income(loss) $(5.4) $24.0Operating margin (0.6)% 2,0%

Boise began reporting its Boise Office Solutions, Retail, segment onDecember 10, 2003 . In second quarter 2004, segment sales of $967 million were 3%lower than OfficeMax retail sales on a pro forma basis in second quarter 2003 .Second quarter sales no longer include sales from the 45 retail stores closed in thefirst quarter 2004 . Same-location pro forma sales were flat . Retail segment salesdeclined 21% from first quarter 2004 sales, reflecting normal seasonality .

The Retail segment reported an operating loss of $5 .4 million in secondquarter 2004, compared with income of $24 .0 million in first quarter 2004 and anoperating margin of (0 .6)%, compared with 2.0% in first quarter 2004 .

59, On July 26, 2004, the defendants announced that Boise would sell off its fores t

products assets for $3.7 billion and change its name to OfficeMax .

60. On August 5, 2004, the Company filed its Form 10-Q for the period ended June 30 ,

2004 . The 10-Q was signed by Thomas E . Carlile as Vice President and Controller . In the 10-Q,

defendants Harad and Crumley claimed that they personally supervised the evaluation of the desig n

and operation of the Company' s disclosure procedures pursuant to Rule 13a-15(e), to ensure that the

Company's controls would alert them to material information which would conflict with GAAP

and/or require disclosure. Defendants Harad and Crumley affirmatively stated on August 5, 200 4

that no such disclosure issues or control problems existed .

61 . On October 19, 2004, the Company announced its third quarter 2004 financial results .

The release stated in part :

Boise Cascade Corporation today reported third-quarter net income of $61 . 1 million,or 63 cents per diluted share .

The results included a $13 .1 million pretax gain on the sale of certain Idahotimberlands recorded in our Boise Building Solutions segment ; $8 .8 million of costsrelated to the announced sale of our forest products assets in Corporate and Other ;and $5 .8 million of costs and lost income in Boise Office Solutions, Retail, and BoisePaper Solutions related to disruption from hurricanes in the southeastern UnitedStates .

By comparison, Boise reported net income of $32 .9 million, or 48 cents per

diluted share, in third quarter 2003 and $50 .4 million, or 52 cents per diluted share,

in second quarter 2004 . Before special items, Boise earned $30 .0 million, or 43 cents

per diluted share, in third quarter 2003 and $22 .0 million, or 21 cents per diluted

share, in second quarter 2004 .

FINANCIAL HIGHLIGHT S($ in millions, except per-share amounts)

3Q 3Q 2Q

2004 2003 2004

Sale $3,651 $2,111 $3,401Net income $61 .1 $32.9 $50 .4

Net income per diluted share $ 0 .63 $0.48 $0 .52BEFORE SPECIAL ITEMS

Net income $61.1 $30.0 $22.0Net income per diluted share $0.63 $0.43 $0.2 1

Sales in third quarter 2004 increased 73% to $3 .65 billion, compared with$2.11 billion in third quarter a year ago and $3 .40 billion in second quarter 2004 .Year-over-year sales increased primarily because of our acquisition of OfficeMax inDecember 2003, Sales were also aided by strong product prices in Boise BuildingSolutions and improving product prices in Boise Paper Solutions .

Boise Office Solutions($ in millions)

3Q 3Q 2Q

2004 2003 2004

Sales $2,235 $934 $2,005Operating income $56.5 $31.0 $16.0Operating margin 2.5% 3.3% 0.8%

On December 9, 2003, Boise acquired OfficeMax, Inc . Following thatacquisition, the company began reporting two operating segments, Contract andRetail, within Boise Office Solutions, its office products distribution business . Takentogether, the two operating segments make up the company's Boise Office Solutionsbusiness .

In third quarter 2004, Boise Office Solutions sales increased 139% to $2 .235billion, compared with $934 million in the same quarter a year ago . Sales forlocations operating in both periods, including OfficeMax retail store locations on apro forma basis, increased 4%. Pro forma sales of office supplies and paper,technology products, and furniture each increased 3% . Boise's office papers soldthrough Boise Office Solutions increased 26% to 178,000 tons, compared with lastyear .

Boise Office Solutions operating income in the third quarter was $56 .5million, up from $31 .0 million in the same quarter a year ago and $16 .0 million insecond quarter. Segment sales, income, and operating margin increased sequentiallyin the third quarter. The operating margin was 2 .5% in third quarter 2004, comparedwith 3 .3% in the third quarter a year ago and 0 .8% in second quarter 2004 .

In third quarter 2004, Boise Office Solutions achieved $30 .8 million ofintegration synergies related to its acquisition of OfficeMax and recorded integrationcosts of $6 .9 million. In the first nine months of 2004, synergies totaled $75 .2million of the $80 million expected for the year, and integration costs reached $24 .1million .

Below is the review of operations for the Contract and Retail office productssegments .

Boise Office Solutions, Contract Segment($ in millions)

3Q 3Q 2Q2004 2003 2004

Sales $1 ,096 $934 $1,038

Operating income $31 .4 $31.0 $21 .4Operating margin 2.9% 3 ,3% 2.1%

Boise Office Solutions, Contract, sales of $1 .096 billion in third quarter 2004were 17% higher than sales in third quarter 2003 and 6% higher than in secondquarter 2004. Year-over-year same-location sales on a pro forma basis rose 7% inthe third quarter .

This segment reported third quarter 2004 operating income of $31 .4 million,compared with $31 .0 million in third quarter 2003 and $21 .4 million in secondquarter 2004 . The operating margin was 2 .9%, compared with 3 .3% in third quartera year ago and 2 .1 % in second quarter 2004. The Contract segment includes theformer OfficeMax direct business, which is supported by excess warehouse capacityand recorded losses in the first, second, and third quarters of 2004 .

Boise Office Solutions, Retail Segment($ in millions )

SalesOperating income (loss)Operating margin

3Q 2Q2004 2004

$1,138 $967$25 .1 S(5 .4)2 .2% (0.6%

Boise began reporting its Boise Office Solutions, Retail, segment onDecember 10, 2003 . In third quarter 2004, segment sales of $1 .138 billion were 1%lower than OfficeMax retail sales on a pro forma basis in third quarter 2003 and 18%higher than sales in second quarter 2004 . In first quarter 2004, the company closed45 retail stores. Same-store pro forma sales were 1 % higher than the year-ago thirdquarter .

The Retail segment reported operating income of $25.1 million in thirdquarter 2004, compared with a loss of $5 .4 million in second quarter 2004, and anoperating margin of 2 .2%, compared with (0 .6)% in second quarter 2004 . Thirdquarter 2004 results were hampered by hurricanes in the southeastern United States,which caused temporary retail store closures, lost sales, and an estimated $3 .0million in lost income .

OUTLOOK

In July 2004, Boise Cascade Corporation announced the sale of its paper,forest products, and timberland assets for approximately $3 .7 billion to affiliates of

Boise Cascade, LLC, a new company formed by Madison Dearborn Partners LLC(MDP). The targeted completion date for this transaction is October 29 .

When the transaction with MDP closes, Boise Cascade Corporation willchange its name to OfficeMax Incorporated . It will continue to operate the officeproducts distribution business as its principal business . OfficeMax will trade on theNew York Stock Exchange under the ticker symbol OMX, and its corporateheadquarters will be in Itasca, Illinois . Privately held Boise Cascade , LLC, willoperate from its headquarters in Boise , Idaho.

Effective January 1, 2003, we adopted an accounting change for vendorallowances to comply with the guidelines issued by the Financial AccountingStandards Board's Emerging Issues Task Force EITF 02-16, Accounting by aCustomer (Including a Reseller) for Certain Consideration Received From a Vendor .Under the new guidance, vendor allowances reside in inventory with the product andare recognized when the product is sold, changing the timing of our recognition ofthese items. This change resulted in a one-time, noncash, cumulative-effectadjustment of $4 .7 million, or 8 cents per share .

62. On November 9, 2004, the Company filed its Form 10-Q for the period ende d

September 30, 2004. The 10-Q was signed by defendants Milliken as CEO and Crumley as CFO . In

the 10-Q, defendants claimed that they personally supervised the evaluation of the design an d

operation of the Company's disclosure procedures pursuant to Rule 13a-1 5(e), to ensure that the

Company's controls would alert them to material information which would conflict with GAAP

and/or require disclosure . Defendants affirmatively stated on November 9, 2004 that no suc h

disclosure issues or control problems existed .

63 . On November 11, 2004, two days after the November 9, 2004 10-Q was filed ,

Bloomberg issued an article entitled "OfficeMax Hires Anderson as Chief Financial Officer ." The

article stated in part :

OfficeMax, Inc., the office supply retailer that was acquired by Boise Cascade Corp .in December, named Brian Anderson chief financial officer and executive vicepresident of finance.

64. Defendant Crumley immediately resigned .

65 . On December 17, 2004, Bloomberg issued an article entitled "OfficeMax Sells $1 .47

Bin in Debt, Due October 2019." The art icle stated in part :

OfficeMax Inc ., the U.S. office-supply retailer acquired by Boise Cascade Corp ., saidit will sell $1 .47 billion in debt .

The debt, to be issued in two notes with interest rates of 5 .42 percent and 5 .54percent, respectively, will be payable in October 2019, the Itasca, Illinois-based [sic]said in a filing with the U.S . Securities and Exchange Commission .

The company also settled $1 .47 billion in interest-rate swaps with GoldmanSachs Group Inc . unit J . Aron & Co. Dec . 16, paying $19 million to J . Aron, becauseof a decline in long-term interest rates, OfficeMax said in the filing.

66 . On December 20, 2004, the Company issued a press release entitled "OfficeMax

Announces Financial Events, Commences Investigation." The press release stated in part :

OfficeMax® Incorporated, a leader in office products and services, todayannounced monetization of the promissory notes received from the sale of itstimberlands and the distribution of OMX common stock to holders of its AdjustableConversion-Rate Equity Security (ACES) units . The company also announced it hascommenced an investigation into certain vendor allegations, and that it is postponinga decision on the form and timing of equity repurchases until the investigation iscomplete .

On October 29, 2004, OfficeMax closed the sale of its paper and forestproducts businesses . At that time, the company received $2 .025 billion in cash forthe assets sold, and an additional $15 million in cash and promissory notes of $1 .63 5billion for the timberlands portion of the sale . On December 21, 2004, the companywill realize $1 .470 billion in cash, before transaction expenses and related costs,from the monetization of those notes . In addition to $15 million received at closingand $1 .470 billion realized from the monetization, the company will retain a residualinterest in timber promissory notes of $165 million due in 2019 .

On December 16, 2004, holders of OfficeMax's outstanding 7 .50% equitysecurity units received 5 .41 million newly issued shares of OMX common stock inexchange for cash proceeds to OMX of $172 .5 million. The settlement rate was1 .5689 shares of OMX common stock for each purchase contract forming a part ofthe $50 stated amount of each equity security unit . Following the conversion,OfficeMax has approximately 95 million fully diluted shares of common stock .

OfficeMax intends to use the proceeds from monetization of the timberpromissory notes and conversion of the equity security units to continue its debtreduction program and to repurchase between $775 million and $815 million of itscommon stock . However, at the direction of the audit committee of its board ofdirectors, the company has commenced an internal investigation into claims by a

vendor to its retail business that certain employees acted inappropriately inrequesting promotional payments and in falsifying supporting documentation forapproximately $3.3 million in claims billed to the vendor by OfficeMax during2003 and 2004. Because the company's investigation has only recently begun, thecompany is postponing a decision as to the form and timing of share repurchasesuntil the investigation is complete .

67. On January 5, 2005, the Company issued a press release entitled "OfficeMax

Announces Peterson Resignation ." The article stated in part :

OfficeMax® Incorporated, a leader in office products and services, todayannounced the resignation of Gary Peterson, president of the company's retaildivision, effective immediately . The company noted that the timing of Mr .Peterson's departure is unrelated to the company's current investigation intoallegations of impropriety regarding vendor promotional payments .

68. Then, on January 12, 2005, the Company issued a press release entitled "OfficeMax

Announces Resignation of CFO, Delays Earnings Release Pending Investigation and Reiterate s

Intent to Repurchase Common Shares ." The press release stated in relevant part :

OfficeMax . . . announced today that Brian Anderson, executive vice president andchief financial officer, has resigned . Ted Crumley, the former chief financial officerof OfficeMax, will return to that position on an interim basis . The company hasbegun a search for a permanent replacement . . . .

OfficeMax also announced that it will postpone the release of its earnings forthe fourth quarter and full year 2004, pending the conclusion of its previouslyannounced internal investigation into issues relating to its accounting for vendorincome. The investigation is being conducted under the direction of the auditcommittee of OfficeMax's board of directors .

To date, the company's investigation has confirmed the claims by a vendor toits retail business that certain employees fabricated supporting documentation forapproximately $3 .3 million in claims billed to the vendor by OfficeMax during 2003and 2004 . As a result of information discovered in the course of its investigation, thecompany has expanded the scope of its investigation to include a review of themanner in which it recorded rebates and other payments from vendors for fiscal years2003 and 2004 . The issues involved in this aspect of the investigation principallyinvolve the proper timing for the recognition of such payments . The company hasterminated four employees, based on the information discovered through itsinvestigation .

69. On January 12, 2005, CBSMarketWatch issued an article entitled "OfficeMax delay s

earnings report ; CFO quits ." The article stated in part :

Office Max Inc . said Wednesday it will postpone the release of its fourth-quarter andfull-year earnings reports, pending the conclusion of a now-expanded probe into anaccounting fraud .

In addition, the company said Chief Financial Officer Brian Andersonresigned after two months on the job . Former CFO Ted Crumley will return to thatpost on an interim basis, the company said.

OfficeMax, which first disclosed the investigation Dec. 20, said it hasconfirmed claims by a vendor that certain employees created false documents tosupport about $3.3 million in claims billed to a vendor in 2003 and 2004.

Four employees have been fired as a result of the investigation, thecompany said .

OfficeMax spokesman Bill Bonner said the company could not reveal thename of the employees, or the vendor, as the investigation is still underway .

The Itasca, Ill .-based office products retailer said that as a result ofinformation discovered in its investigation, ithas expanded the scope of the inquiryto include accounting proceduresfor rebates and other vendor payments in fiscal2003 and 2004 .

OfficeMax said it expects to finish the probe by the third full-week ofFebruary, and intends to proceed with its previously stated share repurchase programonce fiscal 2004 results have been reported .

70. After this news was released, OfficeMax's stock declined to as low as $27 .82 per

share before closing at $28.88 per share, on volume of 7 .7 million shares .

71 . On February 14, 2005, the Company issued a press release entitled "Resignation o f

CEO Sets Expected Date for Release of Fourth Quarter and Full-Year 2004 Earnings Wit h

Preliminary Guidance Comments on Preliminary Results of Internal Investigation Reiterates Inten t

to Repurchase Common Stock." The press release stated in part :

OfficeMax® Incorporated announced today that Christopher C . Milliken hasresigned as president, chief executive officer and as a director . George J . Harad,executive chairman, has been appointed by the board of directors to serve as chiefexecutive officer on an interim basis . The board has formed a committee to beginimmediately a search for a permanent chief executive officer .

Fourth Quarter and Full-Year 2004 Earnings

OfficeMax now expects to announce fourth-quarter and full-year 2004earnings on March 14, 2005, and to host an investor conference call on that date .Based on preliminary unaudited results, and without considering adjustments whichmay arise from the company's investigation into its accounting for vendor income inprior periods, operating income for the company's office products businesses isexpected to range from $125 million to $135 million for full-year 2004 .

The company does not expect to provide further information about the resultsof its operations until 2004 financial results have been reported .

Internal Investigation

As previously announced, OfficeMax is currently conducting an investigationunder the direction of its audit committee into its accounting for vendor income inprior periods. Based on the work completed to date, the company has confirmed thatcertain employees fabricated supporting documents for approximately $3 .3 million inclaims billed to a vendor to its retail business . In addition, the company hasdetermined that certain rebates and other payments from vendors in 2004 were notrecorded in the appropriate accounting periods, so that operating income in thefirstfiscal quarter of 2004 was overstated and the second and thirdfiscal quartersof 2004 were understated. Six employees have been terminated for cause inconnection with the investigation.

The company currently estimates that the amount of overstatement inoperating income in the first quarter of 2004 was in the range of $5 million to $10million, and the subsequent understatements in the second and third quarters reducethe net overstatement to a range of $4 million to $6 million through the end of thethird quarter 2004 . As a result, subject to completion of the investigation, acceptanceof a final investigation report by the audit committee, and review by the company'sauditors, OfficeMax now expects to restate quarterly income in each of the first threefiscal quarters of 2004 . Accordingly, the company believes that its previously issuedinterim statements of operating results for those periods should no longer be reliedupon .

OfficeMax believes that its financial statements as of and for the year endedDecember 31, 2003, were not materially impacted .

The company expects its investigation to be complete by the third full weekof February, 2005 .

72 . On March 1, 2005, the Company issued a press release entitled "OfficeMa x

Announces Completion of Internal Investigation ." The press release stated in part :

OfficeMax® Incorporated, a leader in office products and services, todayannounced the completion of an internal investigation into its accounting for vendorincome in prior periods. As a result of the investigation, and as previously

announced, the company expects to restate quarterly income for each of the firstthree fiscal quarters of 2004 .

The investigation began in December 2004 and was conducted under thedirection of the company's audit committee. Subject to final review by thecompany's auditors, OfficeMax currently estimates that it overstated operatingincome in first quarter 2004 by approximately $7 million and understated operatingincome by approximately $1 million in each of the second and third quarters of 2004 .The cumulative net operating income overstatement for the first nine months of 2004is estimated to be approximately $4 to $5 million . Accordingly, the companyexpects to restate quarterly income for each of the first three fiscal quarters of2004 and believes that itspreviously issued interim statements of operating resultsfor those periods should no longer be relied upon .

OfficeMax believes that its financial statements as of and for the year endedDecember 31, 2003, were not materially impacted .

73 . On March 14, 2005, OfficeMax reported its fourth quarter 2004 results . The retai l

segment operating margin was a negative 1 .5%, which was lower than prior years . OfficeMax

attributed the decline in profitability to weak sales but also to "lower vendor income ." Thus,

OfficeMax's profitability has been adversely affected by its inability to engage in the manipulation s

with vendor promotions which occurred in 2003 and interim 2004 .

74. On June 14, 2005, the Company issued a press release entitled "OfficeMax

Announces SEC Order Relating to Previously-Announced Internal Investigation ." The press release

stated in part :

OfficeMax@ Incorporated today announced that the Securities and Exchange

Commission (SEC) has issued a formal order of investigation arising from the

company's previously-announced internal investigation into its accounting forvendor income . OfficeMax launched its internal investigation in December 2004when the company received claims by a vendor to its retail business that certain

employees acted inappropriately in requesting promotional payments and in

falsifying supporting documentation . The internal investigation was conducted under

the direction of the company's audit committee and was completed in March 2005 .

In connection with the investigation, six employees were terminated for cause and

OfficeMax reported in amended Quarterly Reports on Form 10-Q that it overstatedits cumulative net operating income in the first three fiscal quarters of 2004 by $4 .3

million. OfficeMax intends to cooperate fully with the SEC .

75. The true facts, which were known by each of the defendants but concealed from the

investing public during the Class Period, were as follows :

(a) that the Company had inappropriately sought promotional payments fro m

vendors and falsified supporting documentation for millions of dollars in claims billed to vendor s

during 2003 and 2004 ;

(b) that the Company's Q4 2004 results and those beyond would be eroded by th e

halting of the Company's abusive vendor allowance scheme ; and

(c) that the Company lacked the necessary internal controls to ensure all revenu e

reported complied with GAAP .

OFFICEMAX'S FALSE FINANCIAL REPORTING DURING THE CLASS PERIO D

76. In order to inflate the price of OfficeMax' s stock , defendants caused the Company to

falsely report its results for 2003 through Q3 2004 through accounting for vendor income .

77. The interim 2004 results were included in Form 10-Qs filed with the SEC . The 2003

results were included in a Form 10-K filed with the SEC . The results were also included in pres s

releases disseminated to the public .

78. OfficeMax has admitted that it inappropriately recorded vendor income included in it s

Q 1 through Q3 2004 results, and has restated those results to remove millions in improperly reporte d

income, such that its 2003 and interim 2004 financial statements were not a fair presentation o f

OfficeMax' s results and were presented in violation of GAAP and SEC rules .

79. GAAP are those principles recognized by the accounting profession as th e

conventions, rules and procedures necessary to define accepted accounting practice at a particula r

time. SEC Regulation S-X (17 C.F.R. §210.4-01 (a)(1)) states that financial statements filed with the

SEC which are not prepared in compliance with GAAP are presumed to be misleading and

inaccurate, despite footnote or other disclosure . Regulation S-X requires that interim financial

statements must also comply with GAAP, with the exception that interim financial statements nee d

not include disclosure which would be duplicative of disclosures accompanying annual financia l

statements . 17 C.F.R. §210.10-01(a) .

80 . In OfficeMax's 2003 Form 10-K for the year ended December 31, 2003, filed o n

March 2, 2004, it represented that :

We receive rebates and allowances from our vendors under a number of differentprograms, including cooperative advertising programs and other vendor marketingprograms. These rebates and allowances are accounted for in accordance withEmerging Issues Task Force (EITF) 02-16, Accounting by a Customer (Including aReseller) for Certain Consideration Received from a Vendor . Rebates andallowances received from our vendors are deferred in inventory with the cost of theassociated product and are recognized as a reduction of "Materials, labor, and otheroperating expenses" when the product is sold, unless the rebates and allowances arelinked to a specific incremental cost to sell a vendor's product. Amounts receivedfrom vendors that are linked to specific selling and distribution expenses arerecognized as a reduction of "Selling and distribution expenses" in the period theexpense is incurred . See Note 5, Accounting Changes, for information related to the2003 accounting change for vendor allowances .

Included in the vendor rebate programs referred to above are various volumepurchase rebate programs . These programs generally include annual purchase rebateprograms . These programs generally include annual purchase targets and may offerincreasing tiered rebates based on our reaching defined purchase levels . For suchtiered rebate programs, the company calculates an estimated consideration based onexpected purchases during the rebate program period . We review sales projectionsand related purchases on a quarterly basis and adjust the estimated considerationaccordingly. We record consideration received for these programs as a reduction of"Materials, labor, and other operating expenses" as the related inventory is sold .

81 . Pursuant to GAAP, as set forth in Emerging Issues Task Force ("EITF") 02-16 which

describes the accounting for consideration received from a vendor, vendor income should not b e

recognized unless it is probable and can be reasonably estimated . EITF 02 -1 6 states in part :

4. [C]ash consideration received by a customer from a vendor ispresumed to be a reduction of the prices of the vendor's products or services andshould, therefore, be characterized as a reduction of cost of sales when recognized inthe customer's income statement . However, that presumption is overcome when theconsideration is either (a) a payment for assets or services delivered to the vendor, inwhich case the cash consideration should be characterized as revenue (or otherincome, as appropriate) when recognized in the customer's income statement, or (b)a reimbursement of costs incurred by the customer to sell the vendor's products, in

which case the cash consideration should be characterized as a reduction of that costwhen recognized in the customer's income statement .

7. The Task Force reached a consensus on Issue 2 that a rebate or refun dof a specified amount of cash consideration that is payable pursuant to a bindingarrangement only if the customer completes a specified cumulative level ofpurchases or remains a customer for a specified time period should be recognized asa reduction of the cost of sales based on a systematic and rational allocation of thecash consideration offered to each of the underlying transactions that results inprogress by the customer toward earning the rebate or refund provided the amountsare probable and reasonably estimable . If the rebate or refund is not probable andreasonably estimable, it should be recognized as the milestones are achieved .

8. The Task Force observed that the ability to make a reasonableestimate of the amount of future cash rebates or refunds depends on many factors andcircumstances that will vary from case to case . However, the Task Force reached aconsensus that the following factors may impair a customer's ability to determinewhether the rebate or refund is probably and reasonably estimable :

a. The rebate or refund relates to purchases that will occur over a relativelylong period .

b. There is an absence of historical experience with similar products or theinability to apply such experience because of changing circumstances .

c . Significant adjustments to expected cash rebates or refunds have beennecessary in the past .

d . The product is susceptible to significant external factors (for example,technological obsolescence or changes in demand) .

82. During the Class Period, OfficeMax improperly recognized income from vendor s

even though the conditions required by GAAP, as described in EITF 02-16, did not exist .

Specifically, it recognized vendor incomes even though collection was not probable . Companies like

OfficeMax receive money from vendors to feature the supplier's products in ads and circulars .

Frequently, an ad in the newspaper for OfficeMax for a certain brand of product was compensated in

part by the vendor of that brand. By overstating the expected amount of such compensation ,

OfficeMax was able to manipulate its reported results .

83 . OfficeMax improperly took the same deductions from vendor invoices twice ,

essentially "double dipping." OfficeMax's various vendors had certain "profiles" which would b e

used to calculate the amount of vendor promotions to be deducted from payments to the vendors .

After the merger, many vendors tightened up their vendor promotion policies which would hav e

resulted in much lower income for OfficeMax. Many of the vendors changed their policies becaus e

of the acquisition of OfficeMax by Boise Cascade . To inflate its income, OfficeMax did not use th e

updated policies in their vendor profiles but continued to use the old profiles . This resulted in

improper vendor allowances being deduction from payments to vendors . Another method

OfficeMax used to inflate deductions was to take deductions based on inventory that had bee n

returned to the vendor for which OfficeMax was already receiving a credit . Naturally, vendors

would complain about the improper deductions taken from OfficeMax's payments to them .

OfficeMax' s strategy to handle the complaints was to delay answering the complaints as long a s

possible . The vendor calls went to the accounts payable department at OfficeMax, but account s

payable could not answer the questions since accounts payable had not calculated the deductions .

Accounts payable was not allowed to forward the vendor calls to those who had calculated the

deductions . Those who calculated the deductions, the VIPA group, were often unresponsive to

vendor complaints . VIPA, in addition to double dipping , would also pre-date the deductions, or

record the deductions as much as two months before OfficeMax had earned them . Some vendors

were so angry with these practices, they put OfficeMax on credit hold and others even went to

OffaceMax's offices to get the monies OfficeMax had not paid them . Ultimately, vendor complaints

made it impossible for OfficeMax's scheme to continue .

84. On December 20, 2004, OfficeMax announced an investigation into certain vendor

allegations . The release stated in part :

[Alt the direction of the audit commi ttee of its board of directors, thecompany has commenced an inte rnal investigation into claims by a vendor to its

retail business that certain employees acted inappropriately in requesting promotionalpayments and in falsifying supporting documentation for approximately $3 .3 millionin claims billed to the vendor by OfficeMax during 2003 and 2004 . Because thecompany's investigation has only recently begun, the company is postponing adecision as to the form and timing of share repurchases until the investigation iscomplete .

85. Later on January 12, 2005, OfficeMax announced that its release of its Q4 2004

results would be delayed in order for the Company to complete its investigation of its 2003 an d

interim 2004 financial results . The Company subsequently restated its Q1 through Q3 2004 result s

to eliminate $7.4 million in income that had been improperly recognized in Q1 2004. While the

Company did not restate its 2003 financial statements, it has only represented that the vendo r

manipulations were not material to the results for the year ended December 31, 2003 . The 2004

10-K filed on March 16, 2005 stated :

We have amended our Quarterly Reports on Form 10-Q for the quarterlyperiods in the fiscal year ended December 31, 2004 . The purpose of the restatementis to correct the accounting for vendor income, after we determined that rebates andother payments from vendors in 2004 were not recorded in the appropriateaccounting periods . As a result, income from continuing operations was overstatedby approximately $7 .1 million in the first quarter of 2004 and was understated byapproximately $1 .1 million and $1 .7 million in the second and third quarters of 2004,respectively .

86. The fact that OfficeMax has restated its financial statements for interim 2004 is an

admission that (i) the financial statements originally issued were materially false and misleading ; and

(ii) the financial statements reported during the Class Period were incorrect based on information

available to defendants at the time the results were originally reported. Pursuant to GAAP, as set

forth in Accounting Principles Board Opinion ("APB") No . 20, the type of restatement announce d

by OfficeMax was to correct for material errors in its previously issued financial statements . See

APB No. 20, T¶7-13 . As recently noted by the SEC, "GAAP only allows a restatement of prio r

financial statements based upon information "that existed at the time the financial statements were

prepared," and "restatements should not be used to make any adjustments to take into account

subsequent information that did not and could not have existed at the time the original financia l

statements were prepared."' The Accounting Principles Board ("APB") has defined the kind o f

"errors" that may be corrected through a restatement : "`Errors in financial statements result from

mathematical mistakes, mistakes in the application of accounting principles, or oversight or misus e

of facts that existed at the time that thefinancial statements were prepared." See APB 20 ¶J7-13 .

(Emphasis added.) The restatement at issue here was not due to a simple mathematical error, hones t

misapplication of a standard or oversight as alleged below, it was due to intentional misuse of th e

facts that were known at the time .

87. The SEC has recently reiterated its position that, in its investigations of restated

financial statements , it often finds that the persons responsible for the improper accounting acte d

with scienter :

[Tjhe Commission often seeks to enter into evidence restated financial statements,and the documentation behind those restatements, in its securities fraud enforcementactions in order, inter alia, to prove the falsity and materiality of the originalfinancial statements [and] to demonstrate that persons responsiblefor the originalmisstatements acted with scienter .

Sunbeam Sec . Litig,, SEC Amicus Curiae Brief Regarding Defendants' Motion In Limine to Exclude

Evidence of the Restatement and Restatement Report. (Emphasis added.) The resignations o f

Peterson and Milliken after the misstatements were discovered is suggestive of their involvement i n

the scheme.

88. In June 2005, the SEC issued a formal order of investigation into the misstatements .

' In re Sunbeam Sec. Litig., No . 98-8258-Civ .-Middlebrooks, SEC Amicus Curiae Brief regardingDefendants' Motion In Limine to Exclude Evidence ofthe Restatement and the Restatement Report (S .D. Fla .filed Jan . 31, 2002) .

89. Due to these accounting improprieties, the Company presented its financial results

and statements in a manner which violated GAAP, including the following fundamental accounting

principles :

(a) The principle that interim financial reporting should be based upon the sam e

accounting principles and practices used to prepare annual financial statements was violated (AP B

No . 28, 10) ;

(b) The principle that financial reporting should provide information that is useful

to present and potential investors and creditors and other users in making rational investment, credi t

and similar decisions was violated (FASB Statement of Concepts No . 1, 34) ;

(c) The principle that financial reporting should provide information about the

economic resources of an enterprise, the claims to those resources, and effects of transactions, event s

and circumstances that change resources and claims to those resources was violated Financial

Accounting Standards Board ("FASB") Statement of Concepts No . 1, 40) ;

(d) The principle that financial reporting should provide information about how

management of an enterprise has discharged its stewardship responsibility to owners (stockholders)

for the use of enterprise resources entrusted to it was violated . To the extent that management offer s

securities of the enterprise to the public, it voluntarily accepts wider responsibilities fo r

accountability to prospective investors and to the public in general (FASB Statement of Concept s

No. 1, 50) ;

(e) The principle that financial reporting should provide information about an

enterprise's financial performance during a period was violated . Investors and creditors often use

information about the past to help in assessing the prospects of an enterprise . Thus, although

investment and credit decisions reflect investors' expectations about future enterprise performance,

those expectations are commonly based at least partly on evaluations of past enterprise performanc e

(FASB Statement of Concepts No. 1, 42) ;

(f) The principle that financial reporting should be reliable in that it represent s

what it purports to represent was violated . That information should be reliable as well as relevant i s

a notion that is central to accounting (FASB Statement of Concepts No . 2, 58-59) ;

(g) The principle of completeness, which means that nothing is left out of th e

information that may be necessary to insure that it validly represents underlying events an d

conditions was violated (FASB Statement of Concepts No . 2, 79) ; and

(h) The principle that conservatism be used as a prudent reaction to uncertainty to

try to ensure that uncertainties and risks inherent in business situations are adequately considere d

was violated . The best way to avoid injury to investors is to try to ensure that what is reporte d

represents what it purports to represent (FASB Statement of Concepts No . 2, 95, 97) .

90. Further, the undisclosed adverse information concealed by defendants during the

Class Period is the type of information which, because of SEC regulations, regulations of th e

national stock exchanges and customary business practice, is expected by investors and securitie s

analysts to be disclosed and is known by corporate officials and their legal and financial advisors to

be the type of information which is expected to be and must be disclosed .

OfficeMax's Violations of SEC Regulations Due to Its Inadequate Internal Control s

91 . In addition to the foregoing improper accounting practices, the Company als o

suffered from a severe breakdown of its internal accounting controls throughout the Class Period ,

which tendered OfficeMax's financial reporting inherently corrupt, subject to manipulation an d

unreliable, and this problem resulted in materially false and misleading financial statements .

i

92. In this regard, the Individual Defendants failed to design and implement an interna l

control system over the Company's financial reporting processes and this failure allowed th e

Company, in violation of GAAP , to improperly recognize vendor income .

93 . In its Form 10-K for the year ended December 31, 2004, OfficeMax admitted that it s

internal control deficiencies had contributed to the accounting problems :

Based on this assessment, management concluded that as of December 31,2004, OfficeMax's internal control over financial reporting was not effective due to amaterial weakness in internal control associated with the control environment of anentity acquired near the end of 2003 . This material weakness resulted from thecombination of the following internal control deficiencies that, when aggregated,resulted in there being more than a remote likelihood that a material misstatement ofthe annual or interim financial statements would not be prevented or detected on atimely basis by management or employees in the normal course of performing theirassigned functions : (i) insufficient policies and procedures to ensure that employeesin the merchandizing department of the acquired entity acted in accordance with ourCode of Conduct, (ii) insufficient policies and procedures regarding the follow-up oncommunications from vendor(s) regarding disputed claims, including the lack ofadequate segregation of duties involving initiation of transactions and disputeresolution, and (iii) inadequately trained personnel within the merchandising andaccounting departments. As a result of the deficiencies, the company overstatedoperating income in the first quarter of 2004 and understated operating income in thesecond and third quarters of 2004 . The company has restated each of theaforementioned quarters to properly reflect the appropriate accounting in eachperiod .

94. Section 13(b)(2) of the Exchange Act states, in pertinent part, that every reportin g

company must : "(A) make and keep books, records, and accounts which, in reasonable detail ,

accurately and fairly reflect the transactions and dispositions of the assets of the issuer ; [and] (B )

devise and maintain a system of internal controls sufficient to provide reasonable assurances that . . .

transactions are recorded as necessary . . . to permit preparation of financial statements in conformity

with [GAAP]." 15 U.S.C. §78m(b)(A) . These provisions require an issuer to employ and supervis e

reliable personnel, to maintain reasonable assurances that transactions are executed as authorized, to

record transactions on an issuer's books and, at reasonable intervals, to compare accounting records

with physical assets .

is

95. OfficeMax has now admitted that its disclosure controls and procedures during th e

Class Period were inadequate . OfficeMax admitted to these significant and material deficiencies in

its 2004 10-K filed with the SEC on March 16, 2005, in which OfficeMax acknowledged th e

necessity of making the following remediation :

• Terminated employees who knowingly violated company policies ;

• Completed a review of all outstanding vendor claims and receivables ;

Converted a substantial portion of our vendor credits to standard agreementsthat emphasize purchase volume credits over promotion and event drivencredits, thereby ensuring the use of objective criteria to determine when acredit has been earned and may be taken into income by the company ;

Expanded the practice of requesting vendor confirmation of vendor creditclaims and outstanding receivables ; and

• Clarified the duties and responsibilities of the company personnel whointeract with vendors to reinforce accountability .

• Improve the training of personnel in the accounting and merchandisingdepartments with respect to the company's vendor income policies andpractices ;

• Enhance the skill level, staffing and reporting authority of personnel in theaccounting and merchandising departments ; and

• Vest a senior executive with the responsibility to review issues related tovendor credits, such as outstanding receivables and disagreements withvendors, and regularly report his or her findings directly to the auditcommittee .

96 . This case is not a simple matter of a company having a few minor internal contro l

problems but rather the widespread nature of the deficiencies over an important part of OfficeMax' s

business .

97. OfficeMax' s lack of adequate internal controls rendered OfficeMax's Class Period

financial reporting inherently unreliable and precluded the Company from preparing financia l

statements that complied with GAAP . Nonetheless , throughout the Class Period , the Company

y

regularly issued quarterly financial statements without ever disclosing the existence ofthe significan t

and material deficiencies in its internal accounting controls and falsely asserted that its financia l

statements complied with GAAP .

LOSS CAUSATION/ECONOMIC LOS S

98 . During the Class Period, as detailed herein, defendants engaged in a scheme t o

deceive the market and a course of conduct that artificially inflated OfficeMax's stock price and

operated as a fraud or deceit on Class Period purchasers of OfficeMax stock by misrepresenting th e

Company's financial results, the success of its integration of OfficeMax into Boise and the

Company's future business prospects . Defendants achieved this facade of success , growth and

strong future business prospects by misrepresenting earnings through vendor rebate manipulations .

99. Later, however, when the truth concerning OfficeMax's troubled business operations ,

finances and internal control deficiencies entered the market and became apparent to investors ,

OfficeMax stock fell as the prior artificial inflation came out of OfficeMax' s stock price . As a result

of their purchases of OfficeMax stock during the Class Period, plaintiff and other members of th e

Class suffered economic loss, i.e ., damages under the federal securities laws .

100. By misrepresenting its earnings, the defendants presented a misleading picture of

OfficeMax' s business and prospects . Thus, instead of truthfully disclosing during the Class Perio d

that OfficeMax' s business was not as healthy as represented , defendants caused OfficeMax to falsely

report earnings and to understate its "materials, labor and other operating expense."

101 . Defendants' false and misleading statements had the intended effect and cause d

OfficeMax stock to trade at artificially inflated levels, reaching as high as $38 .01 per share ,

throughout the Class Period.

102 . On December 20, 2004, defendants were forced to publicly announce an investigation

into inappropriate vendor deductions it had recorded due to a vendor's complaints regarding some

$3 .3 million in inappropriate promotional payments in 2003 and 2004 . As investors and the market

became aware that OfficeMax's prior financials may have been falsified, the prior artificial inflatio n

began to come out of OfficeMax's stock price, dropping from above $32 per share to $30 per share .

Later, on January 12, 2005, OfficeMax announced it would delay its earnings due to the

investigation, announced the resignation of its CFO (Brian Anderson) after only two months on th e

job and that OfficeMax had fired four employees . As the seriousness of the accounting issue s

became apparent, OfficeMax's stock dropped to as low as $27 .82 per share before closing at $28 .88

per share on January 12, 2005, damaging investors .

101 As a direct result of defendants' admissions and the public revelations regarding th e

truth about OfficeMax's finances and its actual business prospects going forward, OfficeMax' s stock

price plummeted 12%, falling from $32.50 on December 17, 2004 to $28 .88 per share on January 12 ,

2004, a 17 day drop of $3 .62 per share . This drop removed the inflation from OfficeMax's stoc k

price, causing real economic loss to investors who had purchased the stock during the Class Period .

In sum, as the truth about defendants' fraud and OfficeMax's business performance was revealed ,

the Company's stock price plummeted, the artificial inflation came out of the stock and plaintiff an d

other members of the Class were damaged, suffering economic losses .

104. The 12% decline in OfficeMax's stock price at the end of the Class Period was a

direct result of the nature and extent of defendants' fraud finally being revealed to investors and th e

market . The timing and magnitude of OfficeMax's stock price declines negate any inference that th e

loss suffered by plaintiff and other Class members was caused by changed market conditions ,

macroeconomic or industry factors or Company-specific facts unrelated to the defendants' fraudulen t

conduct. During the same period in which OfficeMax's stock price fell 12% as a result o f

defendants ' fraud being revealed , the Standard & Poor' s 500 Consumer Discretionary Index was up

1 %. The economic loss, i.e., damages, suffered by plaintiff and other members of the Class was a

direct result of defendants' fraudulent scheme to artificially inflate OfficeMax's stock price and th e

subsequent significant decline in the value of OfficeMax's stock when defendants' prio r

misrepresentations and other fraudulent conduct was revealed .

FIRST CLAIM FOR RELIEF

For Violation of §10(b) of the 1934 Actand Rule 10b-5 Against All Defendant s

105 . Plaintiff incorporates 1-104 by reference .

106 . During the Class Period, defendants disseminated or approved the false statements

specified above, which they knew or deliberately disregarded were misleading in that they containe d

misrepresentations and failed to disclose material facts necessary in order to make the statement s

made, in light of the circumstances under which they were made, not misleading .

107 . Defendants violated § 10(b) of the 1934 Act and Rule 10b-5 in that they :

(a) Employed devices, schemes, and artifices to defraud ;

(b) Made untrue statements of material facts or omitted to state material fact s

necessary in order to make the statements made, in light of the circumstances under which they were

made, not misleading ; or

(c) Engaged in acts, practices, and a course of business that operated as a fraud o r

deceit upon plaintiff and others similarly situated in connection with their purchase or acquisition o f

OfficeMax publicly traded securities during the Class Period .

108 . Plaintiff and the Class have suffered damages in that, in reliance on the integrity o f

the market, they paid artificially inflated prices for OfficeMax publicly traded securities . Plaintiff

and the Class would not have purchased or acquired OfficeMax publicly traded securities at th e

prices they paid, or at all, if they had been aware that the market prices had been artificially and

falsely inflated by defendants ' misleading statements .

109. As a direct and proximate result of these defendants' wrongful conduct, plaintiff an d

the other members of the Class suffered damages in connection with their purchase or acquisition o f

OfficeMax publicly traded securities during the Class Period .

SECOND CLAIM FOR RELIEF

For Violation of §20 (a) of the 1934 ActAgainst All Defendant s

110. Plaintiff incorporates 1-109 by reference .

111 . The Individual Defendants acted as controlling persons of OfficeMax within th e

meaning of §20(a) of the 1934 Act . By reason of their positions as officers and/or directors o f

OfficeMax, and their ownership of OfficeMax stock, the Individual Defendants had the power and

authority to cause OfficeMax to engage in the wrongful conduct complained of herein . OfficeMax

controlled each of the Individual Defendants and all of its employees . By reason of such conduct,

the Individual Defendants and OfficeMax are liable pursuant to §20(a) of the 1934 Act .

CLASS ACTION ALLEGATION S

112. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rule s

of Civil Procedure on behalf of all persons who purchased or otherwise acquired OfficeMax publicl y

traded securities (the "Class") on the open market during the Class Period . Excluded from the Class

are defendants .

113 . The members of the Class are so numerous that joinder of all members i s

impracticable . The disposition of their claims in a class action will provide substantial benefits t o

the parties and the Court . OfficeMax had more than 94 million shares of stock outstanding, owne d

by hundreds if not thousands of persons .

114. There is a well -defined community of interest in the questions of law and fac t

involved in this case . Questions of law and fact common to the members of the Class which

predominate over questions which may affect individual Class members include :

> - J

(a) Whether the 1934 Act was violated by defendants ;

(b) Whether defendants omitted and/or misrepresented material facts ;

(c) Whether defendants' statements omi tted material facts necessary to make the

statements made, in light of the circumstances under which they were made, not misleading ;

(d) Whether defendants knew or deliberately disregarded that their statement s

were false and misleading ;

(e) Whether the prices of OfficeMax's publicly traded securities were artificially

inflated; and

(f) The extent of damage sustained by Class members and the appropriate

measure of damages.

115 . Lead Plaintiff's claims are typical of those of the Class because plaintiff and the Clas s

sustained damages from defendants' wrongful conduct .

116. Plaintiff will adequately protect the interests of the Class and has retained counse l

who are experienced in class action securities litigation . Plaintiff has no interests which conflict

with those of the Class .

117. A class action is superior to other available methods for the fair and efficien t

adjudication of this controversy .

PRAYER FOR RELIE F

WHEREFORE, Lead Plaintiff pray for judgment as follows:

A. Declaring this action to be a proper class action pursuant to Federal Rule of Civi l

Procedure 23 ;

B. Awarding Lead Plaintiff and the members of the Class damages, including interest ;

C. Awarding Lead Plaintiff reasonable costs, including attorneys' fees ; and

D. Awarding such equitable/injunctive or other relief as the Court may deem just an d

proper .

JURY DEMAND

Plaintiff demands a trial by jury.

DATED: August 1, 2005 MILLER FAUCHER AND CAFFERTY LLPMARVIN A . MILLERJENNIFER W. SPRENGELNYRAN ROSE PEARSON

jw~- ~JENNIFER . SPRE EL

30 North LaSalle Street, Suite 3200Chicago, IL 6060 2Telephone: 312/782-4880312/782-4485 (fax)

Liaison Counsel

LERACH COUGHLIN STOIA GELLERRUDMAN & ROBBINS LL P

WILLIAM S. LERACHMARK SOLOMONWILLIAM J. DOYLE IIUDOKA NWANNA401 B Street , Suite 1600San Diego , CA 92101-4297Telephone : 619/231-10586191231-7423 (fax)

Lead Counsel for Plaintiffs

S :1CasesSD\OfficeMax 05\Cpt OfficeMax consol .doc