TJ Maxx 2009 Annual Report Download - page 53

the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is
probable but cannot be reasonably estimated, then we will disclose the nature of the contingent liability, together with an
estimate of the range of the possible loss or a statement that such loss is not reasonably estimable.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note A to our consolidated financial statements included in this annual report for recently issued accounting
standards, including the expected dates of adoption and estimated effects on our consolidated financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We do not enter into derivatives for speculative or trading purposes.
FOREIGN CURRENCY EXCHANGE RISK
We are exposed to foreign currency exchange rate risk on our investment in our Canadian and European operations
on the translation of these foreign operations into the U.S. dollar and on purchases by our operations of goods in
currencies that are not their local currencies. As more fully described in Note E to our consolidated financial statements,
we hedge a portion of our intercompany transactions with foreign operations and certain merchandise purchase
commitments incurred by these operations with derivative financial instruments. During fiscal 2009, we ceased hedging
our net investment position in our foreign operations. We enter into derivative contracts only when there is an
underlying economic exposure. We utilize currency forward and swap contracts designed to offset the gains or losses in
the underlying exposures. The contracts are executed with banks we believe are creditworthy and are denominated in
currencies of major industrial countries. We have performed a sensitivity analysis assuming a hypothetical 10% adverse
movement in foreign currency exchange rates applied to the hedging contracts and the underlying exposures described
above as well as the translation of our foreign operations into our reporting currency. As of January 30, 2010, the analysis
indicated that such an adverse movement would not have a material effect on our consolidated financial position but
could have reduced our pre-tax income from continuing operations for fiscal 2010 by approximately $42 million.
INTEREST RATE RISK
Our cash equivalents, short-term investments and certain lines of credit bear variable interest rates. Changes in
interest rates affect interest earned and paid by us. In addition, changes in the gross amount of our borrowings and future
changes in interest rates will affect our future interest expense. We periodically enter into financial instruments to manage
our cost of borrowing; however, we believe that the use of primarily fixed rate debt minimizes our exposure to market
conditions. We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in interest rates
applied to the maximum variable-rate debt outstanding, cash and cash equivalents and short-term investments. As of
January 30, 2010, the analysis indicated that such an adverse movement would not have a material effect on our
consolidated financial position, results of operations or cash flows.
EQUITY PRICE RISK
The assets of our qualified pension plan, a large portion of which are invested in equity securities, are subject to the
risks and uncertainties of the financial markets. We allocate the pension assets in a manner that attempts to minimize and
control our exposure to market uncertainties. Investments, in general, are exposed to various risks, such as interest rate,
credit, and overall market volatility risks. The significant decline in the financial markets over the last several years has
impacted the value of our pension plan assets and the funded status of our plan, resulting in increased contributions to
the plan.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item may be found on pages F-1 through F-33 of this Annual Report on
Form 10-K.
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