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Dispositions and Reserves Related to Former Operations | 12 Months Ended
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Feb. 02, 2013
Dispositions and Reserves Related to Former Operations | 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 A.J. Wright’s remaining 72 stores, two distribution centers and home office. The liquidation process commenced in the fourth quarter of fiscal 2011 and was completed during the first quarter of fiscal 2012. The A.J. Wright consolidation was not classified as a discontinued operation due to our expectation that a significant portion of the sales of the A.J. Wright stores would migrate to other TJX stores. Thus the costs incurred in fiscal 2012 and fiscal 2011 relating to the A.J. Wright consolidation are reflected in continuing operations as part of the A.J. Wright segment which reported a segment loss of $49 million for fiscal 2012 and $130 million for fiscal 2011 including the following:
|  | Fiscal Year Ended |
In thousands |  | January 28, 2012 |  |  | January 29, 2011 |
Fixed asset impairment charges – Non cash |  | $ | — |  |  | $ | 82,589 |
Severance and termination benefits |  |  | — |  |  |  | 25,400 |
Lease obligations and other closing costs |  |  | 32,686 |  |  |  | 11,700 |
Operating losses |  |  | 16,605 |  |  |  | 10,297 |
Total segment loss |  | $ | 49,291 |  |  | $ | 129,986 |
The impairment charges relate to furniture and fixtures and leasehold improvements that were disposed of and deemed to have no value, as well as the costs of closure and adjustment to fair market value of A.J. Wright’s two owned distribution centers, which were then classified as ‘held for sale’. Both distribution centers had been sold as of February 2, 2013. Fiscal 2012 also included $20 million of costs to convert the 90 A.J. Wright stores to other banners, with $17 million incurred by the Marmaxx segment and $3 million incurred by the HomeGoods segment. Reserves Related to Former Operations: TJX has a reserve for its estimate of future obligations of business operations it has closed or sold. The reserve activity for the last three fiscal years is presented below:
|  | Fiscal Year Ended |
In thousands |  | February 2, 2013 |  |  | January 28, 2012 |  |  | January 29, 2011 |
Balance at beginning of year |  | $ | 45,381 |  |  | $ | 54,695 |  |  | $ | 35,897 |
Additions (reductions) to the reserve charged to net income: |  |  |  |  |  |  |  |  |  |  |  |
Reduction in reserve for lease related obligations of former operations classified as discontinued operations |  |  | — |  |  |  | — |  |  |  | (6,000 | )
A.J. Wright closing costs |  |  | 16,000 |  |  |  | 32,686 |  |  |  | 37,100 |
Interest accretion |  |  | 996 |  |  |  | 861 |  |  |  | 1,475 |
Charges against the reserve: |  |  |  |  |  |  |  |  |  |  |  |
Lease related obligations |  |  | (15,682 | ) |  |  | (21,821 | ) |  |  | (7,155 | )
Termination benefits and all other |  |  | (1,466 | ) |  |  | (21,040 | ) |  |  | (6,622 | )
Balance at end of year |  | $ | 45,229 |  |  | $ | 45,381 |  |  | $ | 54,695 |
In the third quarter of fiscal 2013, TJX increased this reserve by $16 million to reflect a change in TJX’s estimate of lease related obligations. In the first quarter of fiscal 2012, TJX increased this reserve by $33 million for the estimated costs of closing the A.J. Wright stores that were not converted to other banners or closed in fiscal 2011. In the fourth quarter of fiscal 2011 TJX reduced its reserve by $6 million to reflect a lower estimated cost for lease obligations for former operations. TJX also added to the reserve the consolidation costs of the A.J. Wright chain detailed above. The lease-related obligations included in the reserve reflect TJX’s 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 A.J. Wright and other former TJX businesses, after mitigation of the number and cost of these lease obligations. The actual net cost of these lease-related obligations 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 12 leases of BJ’s Wholesale Club, a former TJX business, and up to four leases of Bob’s Stores, also a former TJX business, in addition to leases included in the reserve. The reserve for former operations does not reflect these leases because TJX believes that the likelihood of future liability to TJX is remote.

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