TJ Maxx 2004 Annual Report Download - page 81

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K. Discontinued Operations Reserve And Related Contingent Liabilities
We have a reserve for potential future obligations of discontinued operations that relates primarily to real estate leases of former
TJX businesses that have been sold or spun off. The reserve reflects TJX’s estimation of its 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.
During the second quarter ended July 31, 2004, we received a $2.3 million creditor recovery in the House2Home bankruptcy
which we offset by a $2.3 million addition to our reserve. We expect to receive some additional creditor recovery, but the amount
has not yet been determined.
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.
L. Guarantees And Contingent Obligations
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 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.
M. Supplemental Cash Flows Information
The cash flows required to satisfy contingent obligations of the discontinued operations as discussed in Note K, are classified as
a reduction in cash provided by continuing operations. There are no remaining operating activities relating to these operations.
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