TJ Maxx 2015 Annual Report Download - page 53

Reserves for uncertain tax positions: Like many large corporations, our income and other tax returns and
reports are regularly audited by federal, state and local tax authorities in the United States and in foreign
jurisdictions where we operate and such authorities may challenge positions we take. We are engaged in various
administrative and judicial proceedings in multiple jurisdictions with respect to assessments, claims, deficiencies
and refunds and other tax matters, which proceedings are in various stages of negotiation, assessment,
examination, litigation and settlement. The outcomes of these proceedings are uncertain. In accordance with
GAAP, we evaluate our 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 we have taken will not be sustained. However, in the
next twelve months and in future periods, the amounts we accrue for uncertain tax positions from time to time or
ultimately pay, as the result of the final resolutions of examinations, judicial or administrative proceedings,
changes in facts, law, or legal interpretations, expirations of applicable statute of limitations or other resolutions
of, or changes in, tax positions may differ either positively or negatively from the amounts we have accrued, and
may result in reductions to or additions to accruals, refund claims or payments for periods not currently under
examination or for which no claims have been made. Final resolutions of our tax positions or changes in accruals
for uncertain tax positions could result in additional tax expense or benefit and could have a material impact on
our results of operations of the period in which an examination or proceeding is resolved or in the period in
which a changed outcome becomes probable and reasonably estimable.
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, with the assistance of our legal counsel, assesses such contingent liabilities. Such assessments
inherently involve the exercise 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, we will accrue for the estimated liability in the financial
statements. If the assessment indicates that a potentially material loss contingency is not probable, but is
reasonably possible, or is probable but cannot be reasonably estimated, 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 the consolidated financial statements included in this annual report on Form 10-K for recently
issued accounting standards, including the dates of adoption and estimated effects on our results of operations,
financial position or cash flows.
ITEM 7A. Quantitative and Qualitative Disclosure about Market Risk
TJX is exposed to market risks in the ordinary course of business. Some potential market risks are
discussed below:
FOREIGN CURRENCY EXCHANGE RISK
We are exposed to foreign currency exchange rate risk on the translation of our foreign operations into the
U.S. dollar and on purchases of goods in currencies that are not the local currencies of stores where the goods
are sold and on intercompany debt and interest payable between and among our domestic and international
operations. Our currency risk primarily relates to our activity in the Canadian dollar, British pound and Euro. As
more fully described in Note E to our consolidated financial statements, we use derivative financial instruments
to hedge a portion of certain merchandise purchase commitments, primarily at our international operations, and
a portion of our intercompany transactions with and within our international operations. We enter into derivative
contracts only for the purpose of hedging the underlying economic exposure. We utilize currency forward and
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