TJ Maxx 2004 Annual Report Download - page 42

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cost for claims that have been, or are likely to be, made against TJX for liability as an original lessee or guarantor of the leases when
the assignees of the leases filed for bankruptcy, after mitigation of the number and cost of lease obligations.
At January 29, 2005, substantially all leases of discontinued operations that were rejected in the bankruptcies and for which the
landlords asserted liability against TJX had been resolved. It is possible that there will be future costs for leases from these discontinued
operations that were not terminated or have not expired. We do not expect to incur any material costs related to our discontinued
operations in excess of our reserve. The reserve balance amounted to $12.4 million as of January 29, 2005 and $17.5 million as of
January 31, 2004.
We may also be contingently liable on up to 20 leases of BJ’s Wholesale Club, another former TJX business, for which BJ’s Wholesale
Club is primarily liable. Our reserve for discontinued operations does not reflect these leases, because we believe that the likelihood of any
future liability to TJX with respect to these leases is remote due to the current financial condition of BJ’s Wholesale Club.
Off-balance sheet liabilities: We have contingent obligations on leases, for which we were a lessee or guarantor, which were
assigned to third parties without TJX being released by the landlords. Over many years, we have assigned numerous leases that we
originally leased or guaranteed to a significant number of third parties. With the exception of leases of our discontinued operations
discussed above, we have rarely had a claim with respect to assigned leases, and accordingly, we do not expect that such leases will
have a material adverse effect on our financial condition, results of operations or cash flows. We do not generally have sufficient
information about these leases to estimate our potential contingent obligations under them.
We also have contingent obligations in connection with some assigned or sublet properties that we are able to estimate. We
estimate the undiscounted obligations, not reflected in our reserves, of leases of closed stores of continuing operations, BJ’s
Wholesale Club leases discussed in Note K to the consolidated financial statements, and properties of our discontinued operations
that we have sublet, if the subtenants did not fulfill their obligations, is approximately $120 million as of January 29, 2005. We believe
that most or all of these contingent obligations will not revert to TJX and, to the extent they do, will be resolved for substantially less
due to mitigating factors.
We are a party to various agreements under which we may be obligated to indemnify the other party with respect to breach of
warranty or losses related to such matters as title to assets sold, specified environmental matters or certain income taxes. These
obligations are typically limited in time and amount. There are no amounts reflected in our balance sheets with respect to these
contingent obligations.
Investing activities:
Our cash flows for investing activities include capital expenditures for the last two years as set forth in the table below:
Fiscal Year Ended January
In Millions 2005 2004
New stores $162.6 $164.7
Store renovations and improvements 193.7 147.3
Office and distribution centers 72.8 97.0
Capital expenditures $429.1 $409.0
We expect that capital expenditures will approximate $530 million for fiscal 2006. This includes $168 million for new stores,
$262 million for store renovations, expansions and improvements and $100 million for our office and distribution centers. Our
planned rate of growth in selling square footage per year is approximately 8%, on a consolidated basis, for the next several years. Our
rate of store growth and the planned expansion and renovation of existing stores, are the major factors in our increase in planned
capital expenditures.
Investing activities for fiscal 2004 includes a net cash outflow of $57.1 million to acquire Bob’s Stores as discussed in Note B to
the consolidated financial statements.
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