TJ Maxx 2000 Annual Report Download - page 17

J. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The major components of accrued expenses and other current liabilities are as follows:
January 27, January 29,
In Thousands 2001 2000
Employee compensation and benefits $133,877 $110,065
Rent, utilities, and occupancy, including real estate taxes 71,305 61,231
Insurance, advertising and all other 338,832 299,863
Accrued expenses and other current liabilities $544,014 $471,159
K. RESERVES
TJX has a reserve for store closing and restructuring costs, primarily relating to its acquisition of Marshalls, and a reserve relating to obli-
gations in connection with certain discontinued operations. The reserve balances, discussed in more detail below, are included in other
long–term liabilities on the balance sheets.
STORE CLOSING AND RESTRUCTURING RESERVE: TJX’s store closing and restructuring reserve relates primarily to a restructuring plan
in connection with its acquisition of Marshalls in November 1995. This reserve, which was initially established in fiscal 1996 and subsequently
adjusted, included the cost of closing 32 T.J. Maxx stores and the cost of closing 70 Marshalls stores and other Marshalls facilities. The
reserve also included other costs in connection with the Marshalls acquisition, primarily inventory markdowns. The T.J. Maxx closing costs
were charged to operations while the costs associated with Marshalls were a component of the allocation of the purchase price. This reserve
also included some activity relating to several HomeGoods store closings, the impact of which was immaterial and currently includes the esti-
mated cost of $3.1 million for settling the lease obligations in connection with the closure of the three T.K. Maxx stores in the Netherlands.
Following is a summary of activity in the store closing and restructuring reserve:
Fiscal Year Ended
January 27, January 29, January 30,
In Thousands 2001 2000 1999
Balance at beginning of year $15,731 $44,598 $57,966
Additions to the reserve 3,109 –1,961
RESERVE ADJUSTMENTS:
Adjust Marshalls restructuring reserve –(3,000) –
Adjust T.J. Maxx store closing reserve –(300) (1,800)
CHARGES AGAINST THE RESERVE:
Lease related obligations (1,922) (23,734) (12,521)
Severance and all other charges ––(927)
Net activity relating to HomeGoods closings (126) (1,833) (81)
Balance at end of year $16,792 $15,731 $44,598
The remaining balance in the store closing and restructuring reserve as of January 27, 2001 of $16.8 million is primarily for the estimated
cost of the future lease obligations of the closed stores. The estimates and assumptions used in developing the remaining reserve
requirements are subject to change; however, TJX believes it has adequate reserves for these obligations. The use of the reserve will
reduce operating cash flows in varying amounts over the next ten to fifteen years as the related leases reach their expiration dates or
are settled. TJX believes this future spending will not have a material impact on its future cash flows or financial condition.
DISCONTINUED OPERATIONS RESERVE: TJX also has a reserve for future obligations relating to certain discontinued operations,
which include the former Zayre and Hit or Miss store chains and the Chadwick’s of Boston catalog operation. The reserves were estab-
lished at the time of the sale of these operations and were adjusted accordingly to reflect TJX’s obligations relating to guarantees on
certain leases of the Zayre and Hit or Miss properties. The current balance in this reserve and the activity for the last three years as
presented below, relates primarily to the lease related obligations of the Zayre and Hit or Miss locations.
THE TJX COMPANIES, INC.
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