TJ Maxx 2009 Annual Report Download - page 73

unit. The fair value of our reporting units, using typical valuation models such as the discounted cash flow method, is
considerably higher than the book values, and no impairment has occurred in the last three fiscal years.
Tradename is also tested for impairment whenever events or changes in circumstances indicate that the carrying
amount of the tradename may exceed its fair value and at least annually in the fourth quarter of each fiscal year. Testing is
performed by comparing the discounted present value of assumed after-tax royalty payments to the carrying value of the
tradename. No impairment has occurred in the last three fiscal years.
Advertising Costs: TJX expenses advertising costs as incurred. Advertising expense was $227.5 million for fiscal
2010, $254.0 million for fiscal 2009 and $255.0 million for fiscal 2008.
Foreign Currency Translation: TJX’s foreign assets and liabilities are translated into U.S. dollars at fiscal year end
exchange rates with resulting translation gains and losses included in shareholders’ equity as a component of accumulated
other comprehensive income (loss). Activity of the foreign operations that affects the statements of income and cash
flowsistranslatedataverageexchangeratesprevailingduringthefiscalyear.
Loss Contingencies: TJX records a reserve for loss contingencies when it is both probable that a loss has been
incurred and the amount of the loss is reasonably estimable. TJX reviews pending litigation and other contingencies at
least quarterly and adjusts the reserve for such contingencies for changes in probable and reasonably estimable losses. TJX
includes an estimate for related legal costs at the time such costs are both probable and reasonably estimable.
New Accounting Standards: In June 2009, the Financial Accounting Standards Board (“FASB”) established the
FASB Accounting Standards Codification (“Codification”), which was effective on July 1, 2009, to become the source of
authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission (“SEC”) under authority of U.S. federal securities laws are also
sources of authoritative U.S. GAAP for SEC registrants. Generally, the Codification is not expected to change
U.S. GAAP. All other accounting literature excluded from the Codification will be considered non-authoritative. The
Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009.
We adopted the new standards for our fiscal year ending January 30, 2010.
In June 2009, FASB issued guidance related to accounting for transfers of financial assets, in order to improve the
relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its
financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and the transferor’s continuing involvement in transferred financial assets. This
guidance must be applied as of the beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual
reporting periods thereafter. Earlier application is prohibited. This guidance must be applied to transfers occurring on or
after the effective date. TJX expects that the adoption of this guidance will have no impact on its financial statements.
Reclassifications: For comparative purposes TJX reclassified $34.4 million in the fiscal 2009 and $42.3 million in
the fiscal 2008 Consolidated Statements of Income from “selling, general and administrative expenses” to “cost of sales,
including buying and occupancy costs” to be consistent with the fiscal 2010 presentation. This reclassification had no
impact on net income or total cash flows as previously reported.
B. Provision for Computer Intrusion related costs
TJX incurred losses as a result of an unauthorized intrusion or intrusions (the intrusion or intrusions, collectively, the
“Computer Intrusion”) into portions of its computer system, which was discovered late in fiscal 2007 and in which TJX
believes customer data were stolen. During the first six months of fiscal 2008, we expensed pre-tax costs of $37.8 million
for costs we incurred related to the Computer Intrusion. In the second quarter of fiscal 2008, we established a pre-tax
reserve of $178.1 million to reflect our estimation of probable losses in accordance with U.S. GAAP with respect to the
Computer Intrusion and recorded a pre-tax charge in that amount. We reduced the Provision for Computer Intrusion
related costs by $30.5 million in fiscal 2009 and $18.9 million in fiscal 2008 as a result of negotiations, settlements,
insurance proceeds and adjustments in our estimated losses. Our reserve of $23.5 million at January 30, 2010 reflected
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