TJ Maxx 2009 Annual Report Download - page 52

to make significant judgments and estimates. The use of different assumptions and estimates could have a material
impact on the estimated fair value of stock option grants and the related expense.
Casualty insurance: In fiscal 2008, we initiated a fixed premium program for our casualty insurance. Previously, our
casualty insurance program required us to estimate the total claims we would incur as a component of our annual
insurancecost.Theestimatedclaimsaredeveloped,withtheassistance of an actuary, based on historical experience and
other factors. These estimates involve significant judgments and assumptions, and actual results could differ from these
estimates. A large portion of these claims are funded with a non-refundable payment during the policy year, offsetting
our estimated claims accrual. We had a net accrual of $17.1 million for the unfunded portion of our casualty insurance
program as of January 30, 2010.
Income taxes: Like many large corporations, our income tax returns are regularly audited by federal, state and local
tax authorities in the United States and in foreign countries where we operate. Such authorities may challenge positions
we take, and we are engaged in various proceedings with such authorities with respect to assessments, claims, deficiencies
and refunds. In accordance with U.S. GAAP, we evaluate uncertain tax positions based on our understanding of the facts,
circumstances and information available at the reporting date, and we accrue for exposure when we believe that it is more
likely than not, based on the technical merits, that the positions will not be sustained upon examination. However, it is
possible that amounts accrued or paid as the result of the final resolutions of examinations, judicial or administrative
proceedings, changes in facts or law, expirations of statute of limitations in specific jurisdictions or other resolutions of, or
changes in, tax positions, will differ either positively or negatively from the amounts we have accrued, and may result in
accruals or payments for periods not currently under examination or for which no claims have been made. It is possible
that such final resolutions or changes in accruals could have a material adverse impact on the results of operations of the
period in which a examination or proceeding is resolved or in the period in which a changed outcome becomes probable
and reasonably estimable.
Reserves for Computer Intrusion related costs and for discontinued operations: As discussed in Note B and
Note N to the consolidated financial statements and elsewhere in the Management’s Discussion and Analysis, we have
reserves for probable losses arising out of the Computer Intrusion and for leases relating to operations discontinued by us
whereweweretheoriginallesseeoraguarantorandwhichhavebeenassignedorsublettothirdparties.TheComputer
Intrusion reserve requires us to make estimates and assumptions about the outcome and costs of claims, litigation and
investigations and costs and expenses we will incur. We make these estimates based on our best judgments of the
outcome of such claims, litigation and investigations and of the amount of such costs and expenses. The leases relating to
discontinued operations are long-term obligations, and the estimated cost to us involves numerous estimates and
assumptions including whether and for how long we remain obligated with respect to particular leases, the extent to
which assignees or subtenants will fulfill our financial and other obligations under the leases, how particular obligations
may ultimately be settled and what mitigating factors, including indemnification, may exist to any liability we may have.
We develop these assumptions based on past experience and by evaluating various probable outcomes and the
circumstances surrounding each situation and location. We believe that our reserves are a reasonable estimate of the most
likely outcomes arising out of the Computer Intrusion and the leases relating to discontinued operations and that the
reserves should be adequate to cover the ultimate cash costs we will incur. However, actual results may differ from our
current estimates, and such differences could be material. We may decrease or increase the amount of our reserves to
adjust for developments relating to the underlying assumptions and other factors.
Loss contingencies: Certain conditions may exist as of the date the financial statements are issued that may result in a
loss to us but will not be resolved until one or more future events occur or fail to occur. Our management, where relevant,
with the assistance of our legal counsel, assesses such contingent liabilities, and such assessments inherently involve
exercises of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or claims
that may result in such proceedings, our legal counsel assists us in evaluating the perceived merits of any legal proceedings
or claims as well as the perceived merits of the relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount
of the liability can be reasonably estimated, then we will accrue for the estimated liability in the financial statements. If
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