Note C. Dispositions and Reserves related to Former Operations

Consolidation of A.J. Wright: On December 8, 2010, the Board of Directors approved the consolidation of the A.J. Wright division whereby TJX would convert 90 A.J. Wright stores into T.J. Maxx, Marshalls or HomeGoods stores and close the remaining 72 stores, A.J. Wright’s two distribution centers and its home office. The liquidation process commenced in the fourth quarter of fiscal 2011 and 20 stores had been closed as of January 29, 2011. The first quarter of fiscal 2012 includes a $49 million A.J. Wright segment loss which reflects the cost to close the remaining stores. The first quarter of fiscal 2012 also includes $20 million of costs to convert the 90 stores to other banners, with $17 million incurred by the Marmaxx segment and $3 million by the HomeGoods segment. The A.J. Wright consolidation was not classified as a discontinued operation due to TJX’s expectation that a significant portion of the sales of the A.J. Wright stores will migrate to other TJX stores.

Reserves Related to Former Operations: TJX has a reserve for its estimate of future obligations of business operations it has closed, sold or otherwise disposed of. The reserve activity is presented below:


	Thirteen Weeks Ended
	April 30,			May 1,
In thousands	2011			2010
Balance at beginning of year	$	54,695		$	35,897
Additions (reductions) to the reserve charged to net income:

A.J. Wright closing costs		32,686			—
Interest accretion		215			369
Charges against the reserve:
Lease-related obligations		(4,882	)		(2,996	)
Termination benefits and all other		(8,928	)		(51	)

Balance at end of period	$	73,786		$	33,219

In the first quarter of fiscal 2012, TJX increased the reserve by $33 million for the estimated cost of closing the remaining A.J. Wright stores that were not converted to other banners. The reserve balance as of April 30, 2011 includes approximately $11 million for severance and termination benefits relating to the A.J. Wright consolidation. The lease-related obligations reflect our estimation of lease costs, net of estimated subtenant income, and the cost of probable claims against TJX for liability as an original lessee or guarantor of the leases of former businesses, after mitigation of the number and cost of these lease obligations. The actual net cost of the various lease obligations included in the reserve may differ from TJX’s estimate. TJX estimates that the majority of the former operations 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.

TJX may also be contingently liable on up to 13 leases of BJ’s Wholesale Club, a former TJX business, and up to seven leases of Bob’s Stores, also a former TJX business, in addition to those included in the reserve. The reserve for discontinued operations does not reflect these leases because TJX believes that the likelihood of future liability to TJX is remote.