TJ Maxx 2004 Annual Report Download - page 65

vesting period). This Statement is effective for public entities as of the beginning of the first interim or annual reporting period that
begins after June 15, 2005 (our third quarter of fiscal 2006). We disclose the pro forma impact of expensing stock options in
accordance with SFAS No. 123, as originally issued, in our notes to the consolidated financial statements and we are still assessing the
impact that SFAS No. 123R will have on our financial statements.
In November 2004, the FASB issued SFAS No. 151, ‘‘Inventory Costs,’’ which clarifies the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material (spoilage) by requiring these items to be recognized as current-
period charges. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, with earlier
application permitted. We do not believe the adoption of this Statement will have any material impact on our financial statements.
In December 2004, the FASB issued SFAS No. 153, ‘‘Exchanges of Nonmonetary Assets,’’ an amendment of APB Opinion
No. 29. This Statement addresses the measurement of exchanges of nonmonetary assets. It eliminates the exception from fair value
measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB 29 and replaces it with an exception
for exchanges that do not have commercial substance. This Statement is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. We do not believe the adoption of this Statement will have any material impact on our
financial statements.
On January 12, 2004, the FASB released Staff Position No. SFAS 106-1, ‘‘Accounting and Disclosure Requirements Related
to the Medicare Prescription Drug, Improvement and Modernization Act of 2003’’ which addresses the accounting and disclosure
implications that are expected to arise as a result of the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the ‘‘Act’’) enacted on December 8, 2003. We are in the process of determining if our plan is actuarially equivalent to Medicare Part
D and our disclosed postretirement medical cost of $6.7 million for fiscal 2005 has not been reduced by any federal subsidy. We do
not expect that any subsidy for which we may qualify will be material.
B. Acquisition of Bob’s Stores
On December 24, 2003, TJX completed the acquisition of Bob’s Stores, a value-oriented retail chain in the Northeast United
States. Pursuant to the acquisition agreement, TJX purchased substantially all of the assets of Bob’s Stores, including one owned
location, and assumed leases for 30 of Bob’s Stores locations, its Meriden, Connecticut office and warehouse lease, along with
specified operating contracts and customer, vendor and employee obligations. The purchase price, which is net of proceeds received
from a third party, amounted to $57.6 million.
The acquisition was accounted for using the purchase method of accounting in accordance with SFAS No. 141, ‘‘Business
Combinations.’’ Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based
on their estimated fair values. The excess purchase price over the fair value is recorded as goodwill and conversely, the excess fair
value over purchase price, ‘‘negative goodwill,’’ is allocated as a reduction to the long-lived assets. The purchase accounting method
allows a one year period to finalize the fair values of the net assets acquired. No further adjustments to fair market values are made
after that point.
The initial allocation of the purchase price resulted in the allocation of $2.4 million of negative goodwill. Subsequent to our
fiscal year ended January 31, 2004, it was determined that additional inventory related obligations should have been reflected on the
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