TJ Maxx 2006 Annual Report Download - page 50

Approximately $43 million of the fiscal 2007 reserve balance relates to the A.J. Wright store closings, primarily
our estimation of lease costs, net of estimated subtenant income. The remainder of the reserve reflects our estimation of
the cost of claims, updated quarterly, that have been, or we believe are likely to be, made against TJX for liability as an
original lessee or guarantor of the leases of former businesses, after mitigation of the number and cost of lease
obligations. At January 27, 2007, substantially all the leases of former businesses that were rejected in bankruptcy and
for which the landlords asserted liability against TJX had been resolved. The actual net cost of A.J. Wright lease
obligations may differ from our original estimate. Although TJX’s actual costs with respect to the lease obligations of
former businesses may exceed amounts estimated in our reserve, and TJX may incur costs for leases from these former
businesses that were not terminated or had not expired, TJX does not expect to incur any material costs related to these
discontinued operations in excess of the amounts estimated. We estimate that the majority of this reserve will be paid in
the next three to five years. The actual timing of cash outflows will vary depending on how the remaining lease
obligations are actually settled.
We may also be contingently liable on up to 15 leases of BJ’s Wholesale Club, a 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.
Potential liabilities in connection with Computer Intrusion: We believe that customer information was stolen
in the Computer Intrusion in 2005 and 2006 and that such information most likely primarily relates to transactions at
our stores (other than Bob’s Stores) during the periods 2003 through June 2004 and mid-May 2006 through mid-
December 2006. See Item 1-Business under the caption “Computer Intrusion”.
During the fourth quarter of fiscal 2007, we recorded a pre-tax charge of approximately $5 million, or $0.01 per
share, for costs incurred through the fourth quarter in connection with the Computer Intrusion, which includes costs
incurred to investigate and contain the Computer Intrusion, strengthen computer security and systems, and com-
municate with customers, and for technical, legal and other fees. In addition, various litigation and claims have been (or
may be) asserted against us and/or our acquiring banks on behalf of customers (including various putative class actions
seeking in the aggregate to represent all customers in the United States, Puerto Rico and Canada whose transaction
information was allegedly compromised by the Computer Intrusion), banks and payment card companies seeking
damages allegedly arising out of the Computer Intrusion and other related relief (including a putative class action
seeking to represent all financial institutions that issued payment cards to our customers used at our stores during the
period of the Computer Intrusion) and shareholders. We intend to defend such litigation and claims vigorously,
although the outcome of such litigation and claims cannot be predicted. In addition, various governmental agencies are
investigating the Computer Intrusion, and we may be subject to fines or other obligations as a result of these
investigations. Certain banks have sought, and other banks and payment card companies may seek, either directly
against us or through claims against our acquiring banks as to which we may have an indemnity obligation, payment of
or reimbursement for fraudulent card charges and operating expenses that they believe they have incurred by reason of
the Computer Intrusion, and payment card companies and associations may seek to impose fines by reason of the
Computer Intrusion. We do not have sufficient information to reasonably estimate losses that may result from such
litigation, claims and investigations. As such, no liability has been recorded as of January 27, 2007. We will continue to
evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both
probable that a loss has been incurred and the amount of the loss is reasonably estimable. Such losses could be material
to our results of operations and financial condition. Regardless of the outcome, claims, litigation and proceedings of this
type are expensive and could require us to devote substantial resources and time to defending them.
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 former businesses 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, which could be triggered in the event that one or more of the current tenants does
not fulfill their obligations related to one or more of these leases.
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