Donald Campbell, Executive Vice President and Chief Financial Officer of The TJX Companies, Inc. stated, "At this time, we do not know how the House2Home leases will be handled in the bankruptcy process or how many leases will result in claims against TJX. TJX may be contingently liable for up to 41 leases because it spun off the House2Home business in 1989. During 1997, House2Home, Inc. spun-off its BJ's Wholesale Club division. House2Home is primarily liable on its leases and has agreed to indemnify TJX for any amounts TJX may have to pay with respect to such leases. In addition, BJ's Wholesale Club, Inc. has agreed to indemnify TJX for all liabilities relating to these leases with respect to the period through January 31, 2003, and 50% of such liabilities thereafter."
Campbell continued, "The after-tax cost to TJX, if it were liable for all 41 of these leases, on a discounted present value basis, without reflecting any mitigating factors, would be $64.6 million after indemnification by BJ's. We do not know how many of these leases House2Home may reject or the level of creditor recoveries that House2Home will provide. Further, the actual number and cost of leases with respect to which TJX may have liability may be reduced by lease terminations, expirations, subletting, assignments, buyouts, lease modifications and other actions. As a result of these many mitigating factors, we believe our $40 million reserve places us in an appropriately conservative posture."
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 670 T.J. Maxx, 565 Marshalls, 104 HomeGoods and 36 A.J. Wright stores in the United States. In Canada, the Company operates 127 Winners and 6 HomeSense stores, and in Europe, 89 T.K. Maxx stores. TJX's press releases and financial information are also available on the Internet at www.tjx.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Certain statements contained in this release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: general economic conditions and consumer demand and preferences; weather patterns in areas where the Company has concentrations of stores; competitive factors, including pressure from pricing and promotional activities of competitors; the impact of excess retail capacity and the availability of desirable store and distribution center locations on suitable terms; recruiting quality sales associates; the availability, selection and purchasing of attractive merchandise on favorable terms; potential disruptions in supply and duties, tariffs and quotas on imported merchandise, as well as economic and political problems in countries from which merchandise is imported; currency and exchange rate factors in foreign operations; expansion of the Company's store base, development of new businesses and application of the Company's off-price strategies in foreign countries; the Company's acquisition and divestiture activities; with respect to potential liability for House2Home leases, actions taken by House2Home in its bankruptcy proceedings, the actual number of leases for which TJX has liability, the success of TJX and BJ's Wholesale Club in mitigating liability under these leases and indemnification of TJX by BJ's Wholesale Club; and other factors that are or may be described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
