e10vk
united
states
securities
and exchange commission
washington,
dc
20549
form
10-k
[ x ] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended January
30, 2010
or
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
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For the transition period
from
to
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Commission file number
1-4908
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the
tjx companies, inc.
(Exact name of registrant as
specified in its charter)
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Delaware
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04-2207613
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer Identification No.)
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770 Cochituate Road
Framingham, Massachusetts
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01701
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(Address of principal executive
offices)
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(Zip Code)
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Registrants telephone number, including area code
(508) 390-1000
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
Common Stock, par value $1.00
per share
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Name of each exchange
on which registered
New
York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. YES [ x ] NO [ ]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. YES [ ] NO [ x ]
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [ x ] NO [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such files).
YES [ x ] NO [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
(§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K. [
x ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large Accelerated Filer [ x ]
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Accelerated Filer [ ]
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Non-Accelerated Filer [ ]
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Smaller Reporting Company [ ]
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(Do not check if a smaller reporting
company)
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Act).
YES [ ] NO [ x ]
The aggregate market value of the voting common stock held by
non-affiliates of the registrant on August 1, 2009 was
$15,271,706,337, based on the closing sale price as reported on
the New York Stock Exchange.
There were 409,386,126 shares of the registrants
common stock, $1.00 par value, outstanding as of
January 30, 2010.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be filed with the Securities
and Exchange Commission in connection with the Annual Meeting of
Stockholders to be held on June 2, 2010 (Part III).
Cautionary
Note Regarding Forward-Looking Statements
This
Form 10-K
and our 2009 Annual Report to Shareholders contain
forward-looking statements intended to qualify for
the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995, including some of the
statements in this
Form 10-K
under Item 1, Business, Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations, and Item 8,
Financial Statements and Supplementary Data, and in
our 2009 Annual Report to Shareholders under Letter to
Shareholders and Financial Graphs.
Forward-looking statements are inherently subject to risks,
uncertainties and potentially inaccurate assumptions. Such
statements give our current expectations or forecasts of future
events; they do not relate strictly to historical or current
facts. We have generally identified such statements by using
words such as anticipate, believe,
could, estimate, expect,
forecast, intend, looking
forward, may, plan,
potential, project, should,
target, will and would or
any variations of these words or other words with similar
meanings. All statements that address activities, events or
developments that we intend, expect or believe may occur in the
future are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as
amended, or Exchange Act. These forward looking
statements may relate to such matters as our future
actions, future performance or results of current and
anticipated sales, expenses, interest rates, foreign exchange
rates and results and the outcome of contingencies such as legal
proceedings.
We cannot guarantee that the results and other expectations
expressed, anticipated or implied in any forward-looking
statement will be realized. The risks set forth under
Item 1A of this
Form 10-K
describe major risks to our business. A variety of factors
including these risks could cause our actual results and other
expectations to differ materially from the anticipated results
or other expectations expressed, anticipated or implied in our
forward-looking statements. Should known or unknown risks
materialize, or should our underlying assumptions prove
inaccurate, actual results could differ materially from past
results and those anticipated, estimated or projected in the
forward-looking statements. You should bear this in mind as you
consider forward-looking statements.
Our forward-looking statements speak only as of the dates on
which they are made, and we do not undertake any obligation to
update any forward-looking statement, whether to reflect new
information, future events or otherwise. You are advised,
however, to consult any further disclosures we may make in our
future reports to the Securities and Exchange Commission
(SEC), on our website, or otherwise.
2
TABLE OF CONTENTS
Part I
BUSINESS
OVERVIEW
The TJX Companies, Inc. (TJX) is the leading off-price apparel
and home fashions retailer in the United States and worldwide.
Our over 2,700 stores offer a rapidly changing assortment of
quality, brand-name and designer merchandise at prices generally
20% to 60% below department and specialty store regular prices
every day.
Retail Concepts. We operate eight off-price retail
chains in the U.S., Canada and Europe and are known for our
treasure hunt shopping experience and excellent values on
brand-name merchandise. We turn our inventories rapidly relative
to traditional retailers to create a sense of urgency and
excitement for our customers and to encourage frequent customer
visits. Our flexible no walls business model allows
us to expand and contract merchandise categories quickly in
response to consumers changing tastes. The values we offer
appeal to a broad range of customers across demographic groups
and income levels. The operating platforms and strategies of all
of our retail concepts are synergistic. As a result, we
capitalize on our off-price expertise and systems throughout our
business, leveraging best practices, initiatives and new ideas
and developing talent across our concepts. We also leverage the
substantial buying power of our businesses to develop our global
relationships with vendors.
In the United States:
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T.J. MAXX and MARSHALLS: T.J. Maxx and Marshalls
(together known as Marmaxx) are the largest off-price retailers
in the United States with a total of 1,703 stores. We founded
T.J. Maxx in 1976 and acquired Marshalls in 1995. Both chains
sell family apparel (including footwear and accessories), home
fashions (including home basics, accent furniture, lamps, rugs,
wall décor, decorative accessories and giftware) and other
merchandise, primarily targeting the middle to upper-middle
income customer demographic. We differentiate T.J. Maxx and
Marshalls through product assortment (including an expanded
assortment of fine jewelry and accessories at T.J. Maxx and a
full line of footwear and broader mens and juniors
offerings at Marshalls), in-store initiatives, marketing and
store appearance. This differentiated shopping experience at
T.J. Maxx and Marshalls encourages our customers to shop both
chains.
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HOMEGOODS: HomeGoods, introduced in 1992, is an
off-price retailer of home fashions in the U.S. Through 323
stores, it sells a broad array of home basics, giftware, accent
furniture, lamps, rugs, wall décor, decorative accessories,
childrens furniture, seasonal merchandise and other
fashions for the home. The HomeGoods target customers are
similar to those of T.J. Maxx and Marshalls.
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A.J. WRIGHT: Launched in 1998, A.J. Wright, like
T.J. Maxx and Marshalls, sells off-price family apparel, home
fashions and other merchandise. Catering to the entire family,
key apparel categories for A.J. Wrights 150 stores include
basics, childrens, womens plus sizes, juniors, young
mens and footwear. Different from all of our other chains,
A.J. Wright primarily targets the moderate-income customer
demographic.
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In Canada:
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WINNERS: Acquired in 1990, Winners is the leading
off-price apparel and home fashions retailer in Canada. The
merchandise offering at its 211 stores across Canada and its
target customers are similar to T.J. Maxx and Marshalls. In
2008, Winners began testing StyleSense, a new concept that
offers family footwear and accessories.
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HOMESENSE: HomeSense introduced the home fashions
off-price concept to Canada in 2001. The chain has 79 stores
with a merchandise mix of home fashions and target customers
similar to HomeGoods.
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In Europe:
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T.K. MAXX: Launched in 1994, T.K. Maxx introduced
off-price to Europe and remains Europes only major
off-price retailer of apparel and home fashions. With 263
stores, T.K. Maxx operates in the U.K. and Ireland as
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well as Germany, where it expanded in 2007, and Poland, where it
expanded in 2009. T.K. Maxx offers a merchandise mix and targets
customers similar to T.J. Maxx and Marshalls in the
U.S. and Winners in Canada.
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HOMESENSE: HomeSense introduced the home fashions
off-price concept to the U.K. in 2008 and its 14 stores offer a
merchandise mix of home fashions in the U.K. like that of
HomeGoods in the U.S. and HomeSense in Canada. HomeSense
primarily targets customers similar to those of HomeGoods in the
U.S. and HomeSense in Canada.
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Flexible Business Model. Our off-price business
model is flexible, particularly for a company of our size,
allowing us to react to market trends. Our opportunistic buying
and inventory management strategies give us flexibility to
adjust our assortments more frequently than traditional
retailers, and our stores and distribution centers are built and
designed to support this flexibility. By maintaining a liquid
inventory position, our merchants can buy close to need,
enabling them to buy into current market trends and to take
advantage of opportunities in the marketplace. Buying close to
need gives us the ability to turn our inventory more rapidly and
adjust our pricing to the current market more frequently than
conventional retailers. Our selling floor space is flexible,
without walls between departments and largely free of permanent
fixtures, so we can easily expand and contract departments in
response to customer demand, available merchandise and fashion
trends. Our distribution facilities are designed to accommodate
our methods of receiving and shipping both small and large
quantities of product to our large store base quickly and
efficiently.
Opportunistic Buying. We are differentiated from
traditional retailers by our opportunistic buying of quality,
brand name merchandise. We purchase the majority of our apparel
inventory and a significant portion of our home fashion
inventory opportunistically and purchase virtually all of our
inventory at discounts from initial wholesale prices. Our
merchant organization numbers over 700, and we operate 12 buying
offices in the U.S. and abroad. We continue to open many
new vendors each year, sourcing from a vendor universe of over
12,000 in fiscal 2010. In contrast to traditional retailers,
which typically order goods far in advance of the time the
product appears on the selling floor, our merchants are in the
marketplace virtually every week, buying primarily for the
current selling season, and to a limited extent, for a future
selling season.
We have not experienced difficulty in obtaining adequate amounts
of quality inventory for our business in either favorable or
difficult retail environments and believe that we will continue
to have adequate inventory as we continue to grow. Buying later
in the inventory cycle than traditional retailers and
maintaining flexibility in adapting to changing conditions, we
are able to take advantage of opportunities to acquire
merchandise at substantial discounts, such as order
cancellations and manufacturer overruns, which regularly arise
from the routine flow of inventory in the highly fragmented
apparel and home fashions marketplace. As a result, we are able
to buy the vast majority of our inventory opportunistically and
directly from manufacturers, with some coming from retailers and
other sources. A small percentage of the merchandise we sell is
private label merchandise produced specifically for us by third
party manufacturers.
We believe a number of factors make us an attractive outlet for
the vendor community and provide us excellent access on an
ongoing basis to leading branded merchandise. We are willing to
purchase
less-than-full
assortments of items, styles and sizes, pay promptly and do not
ask for typical retail concessions (such as advertising,
promotional and markdown allowances), delivery concessions (such
as drop shipments to stores or delayed deliveries) or return
privileges. We are able to purchase quantities of inventory that
range from small to very large, and we have the ability to sell
product through a geographically diverse network of stores.
Importantly, in TJX, we offer vendors an outlet with financial
strength and an excellent credit rating.
Inventory Management. We offer our customers a
rapidly changing selection of merchandise to create a
treasure hunt experience in our stores. To achieve
this, we seek to rapidly turn the inventory in our stores,
regularly offering fresh selections of apparel and home fashions
at excellent values. Our specialized inventory planning,
purchasing, monitoring and markdown systems, coupled with
distribution center storage, processing, handling and shipping
systems, enable us to tailor the merchandise in our stores to
local preferences, achieve rapid in-store inventory turnover on
a vast array of products and sell substantially all merchandise
within targeted selling periods. We make pricing and markdown
decisions and store inventory replenishment determinations
centrally, using information provided by specialized computer
4
systems, designed to move inventory through our stores in a
timely and disciplined manner. We do not generally engage in
promotional pricing activity.
Low Cost Operations. We operate with a low cost
structure compared to many other traditional retailers. We focus
aggressively on expenses throughout our business. Our
advertising budget as a percentage of sales is low compared to
traditional retailers. We design our stores, generally located
in community shopping centers, to provide a pleasant, convenient
shopping environment but do not spend heavily on store fixtures.
Additionally, our distribution network is designed to run cost
effectively. We continue to pursue cost saving strategies in
areas such as non-merchandise procurement, operating
efficiencies in our distribution centers and stores, as well as
efficiencies in our supply chain.
Customer Service. While we offer a self-service
format, we train our store associates to provide friendly and
helpful customer service. We also have customer-friendly return
policies. We accept a variety of payment methods including cash,
credit cards and debit cards. In the U.S., we offer a co-branded
TJX credit card and a private label credit card, both through a
major bank, but do not maintain customer credit receivables
related to either program.
Distribution. We operate 13 distribution centers
in the U.S., 2 in Canada and 4 in the U.K. Our distribution
centers encompass approximately 11 million square feet. We
ship substantially all of our merchandise to our stores through
these distribution centers, which are large, highly automated
and built to suit our specific, off-price business model, as
well as warehouses operated by third parties. We shipped
approximately 1.6 billion units to our stores during fiscal
2010.
Store Growth. Expansion of our business through
the addition of new stores is an important part of our strategy
for TJX as a global, off-price, value company. The following
table provides information on the growth and potential growth of
each of our chains:
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Approximate
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Number of Stores at Year End
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Estimated
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Average Store
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Fiscal 2011
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Ultimate Number
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Size (square feet)
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Fiscal 2009
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Fiscal 2010
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(estimated)
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of Stores
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In the United States:
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T.J. Maxx
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30,000
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874
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890
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Marshalls
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32,000
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806
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813
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Marmaxx
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1,680
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1,703
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1,756
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2,000
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HomeGoods
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25,000
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318
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323
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332
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550-600
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A.J. Wright
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25,000
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135
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150
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158
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500
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In Canada:
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Winners
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29,000
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202
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211
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215
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240
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HomeSense
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24,000
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75
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79
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81
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90
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In Europe:
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T.K. Maxx
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32,000
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235
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263
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311
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650-725
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*
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HomeSense
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20,000
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7
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14
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20
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100-150
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**
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2,652
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2,743
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2,873
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4,130-4,305
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*
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U.K., Ireland, Germany and Poland
only
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**
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U.K. and Ireland only
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Included in the Marshalls store counts above are free-standing
ShoeMegaShop by Marshalls stores, which sell family footwear (3
stores at fiscal 2010 year end). Included in the Winners
store counts above are StyleSense stores in Canada, which sell
family footwear and accessories (3 stores at fiscal
2010 year end). Some of our HomeGoods and HomeSense stores
are co-located with one of our apparel stores in a superstore
format. We count each of the stores in the superstore format as
a separate store.
5
Revenue Information. The percentages of our
consolidated revenues by geography for the last three fiscal
years were as follows:
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Fiscal 2008
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Fiscal 2009
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Fiscal 2010
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United States
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77
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%
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77
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%
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78
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%
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Northeast
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26%
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26%
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26
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%
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Midwest
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13%
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13%
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13
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%
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South (including Puerto Rico)
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25%
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25%
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26
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%
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West
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13%
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13%
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13
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%
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Canada
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11
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%
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11
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%
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11
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%
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Europe
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12
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%
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12
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%
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11
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%
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Total
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100
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%
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100
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%
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100
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%
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The percentages of our consolidated revenues by major product
category for the last three fiscal years were as follows:
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Fiscal 2008
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Fiscal 2009
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Fiscal 2010
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Clothing including footwear
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62
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%
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62
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%
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61
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%
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Home fashions
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26
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%
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25
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%
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26
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%
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Jewelry and accessories
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12
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%
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13
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%
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13
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%
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Total
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100
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%
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100
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%
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100
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%
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Segment Overview. We operate five business
segments: three in the U.S. and one in each of Canada and
Europe. Each of our segments has its own administrative, buying
and merchandising organization and distribution network. Of our
U.S.-based
stores, T.J. Maxx and Marshalls, referred to as Marmaxx, are
managed together and reported as a single segment, and A.J.
Wright and HomeGoods each is reported as a separate segment.
Outside the U.S., our chains in Canada are managed together, and
our chains in Europe are managed together. Thus, Canada is
reported as a segment and Europe is reported as a segment. More
detailed information about our segments, including financial
information for each of the last three fiscal years, can be
found in Note Q to the consolidated financial statements.
6
STORE
LOCATIONS
We operated stores in the following locations as of
January 30, 2010:
Stores
Located in the United States:
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T.J.
Maxx*
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Marshalls*
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HomeGoods*
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A. J. Wright
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Alabama
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18
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4
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2
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Arizona
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11
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14
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6
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Arkansas
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8
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1
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California
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81
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114
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34
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7
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Colorado
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11
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|
|
|
7
|
|
|
|
4
|
|
|
|
|
|
Connecticut
|
|
|
25
|
|
|
|
23
|
|
|
|
10
|
|
|
|
7
|
|
Delaware
|
|
|
3
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
District of Columbia
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Florida
|
|
|
67
|
|
|
|
71
|
|
|
|
33
|
|
|
|
3
|
|
Georgia
|
|
|
37
|
|
|
|
27
|
|
|
|
10
|
|
|
|
7
|
|
Idaho
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
Illinois
|
|
|
37
|
|
|
|
41
|
|
|
|
17
|
|
|
|
19
|
|
Indiana
|
|
|
17
|
|
|
|
10
|
|
|
|
2
|
|
|
|
8
|
|
Iowa
|
|
|
6
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Kansas
|
|
|
6
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
Kentucky
|
|
|
10
|
|
|
|
4
|
|
|
|
3
|
|
|
|
2
|
|
Louisiana
|
|
|
9
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Maine
|
|
|
8
|
|
|
|
4
|
|
|
|
3
|
|
|
|
|
|
Maryland
|
|
|
11
|
|
|
|
23
|
|
|
|
7
|
|
|
|
7
|
|
Massachusetts
|
|
|
47
|
|
|
|
49
|
|
|
|
21
|
|
|
|
20
|
|
Michigan
|
|
|
33
|
|
|
|
20
|
|
|
|
11
|
|
|
|
8
|
|
Minnesota
|
|
|
12
|
|
|
|
12
|
|
|
|
8
|
|
|
|
|
|
Mississippi
|
|
|
5
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Missouri
|
|
|
13
|
|
|
|
12
|
|
|
|
6
|
|
|
|
|
|
Montana
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nebraska
|
|
|
4
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Nevada
|
|
|
7
|
|
|
|
8
|
|
|
|
4
|
|
|
|
|
|
New Hampshire
|
|
|
14
|
|
|
|
8
|
|
|
|
5
|
|
|
|
1
|
|
New Jersey
|
|
|
31
|
|
|
|
40
|
|
|
|
23
|
|
|
|
8
|
|
New Mexico
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
48
|
|
|
|
62
|
|
|
|
24
|
|
|
|
21
|
|
North Carolina
|
|
|
29
|
|
|
|
20
|
|
|
|
10
|
|
|
|
|
|
North Dakota
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio
|
|
|
38
|
|
|
|
18
|
|
|
|
9
|
|
|
|
8
|
|
Oklahoma
|
|
|
4
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Oregon
|
|
|
8
|
|
|
|
5
|
|
|
|
3
|
|
|
|
|
|
Pennsylvania
|
|
|
39
|
|
|
|
31
|
|
|
|
12
|
|
|
|
6
|
|
Puerto Rico
|
|
|
|
|
|
|
16
|
|
|
|
6
|
|
|
|
|
|
Rhode Island
|
|
|
5
|
|
|
|
6
|
|
|
|
4
|
|
|
|
2
|
|
South Carolina
|
|
|
19
|
|
|
|
9
|
|
|
|
4
|
|
|
|
|
|
South Dakota
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tennessee
|
|
|
25
|
|
|
|
13
|
|
|
|
6
|
|
|
|
3
|
|
Texas
|
|
|
43
|
|
|
|
66
|
|
|
|
15
|
|
|
|
|
|
Utah
|
|
|
10
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Vermont
|
|
|
4
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
Virginia
|
|
|
31
|
|
|
|
25
|
|
|
|
8
|
|
|
|
9
|
|
Washington
|
|
|
15
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
West Virginia
|
|
|
6
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
Wisconsin
|
|
|
17
|
|
|
|
6
|
|
|
|
5
|
|
|
|
3
|
|
Wyoming
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stores
|
|
|
890
|
|
|
|
813
|
|
|
|
323
|
|
|
|
150
|
|
|
|
|
|
*
|
|
Includes T.J. Maxx, Marshalls or
HomeGoods portion of a superstore.
|
7
Stores
Located in Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners*
|
|
|
HomeSense*
|
|
|
|
|
Alberta
|
|
|
24
|
|
|
|
9
|
|
British Columbia
|
|
|
27
|
|
|
|
14
|
|
Manitoba
|
|
|
6
|
|
|
|
1
|
|
New Brunswick
|
|
|
2
|
|
|
|
2
|
|
Newfoundland
|
|
|
3
|
|
|
|
1
|
|
Nova Scotia
|
|
|
8
|
|
|
|
2
|
|
Ontario
|
|
|
98
|
|
|
|
36
|
|
Prince Edward Island
|
|
|
1
|
|
|
|
|
|
Quebec
|
|
|
39
|
|
|
|
12
|
|
Saskatchewan
|
|
|
3
|
|
|
|
2
|
|
|
Total Stores
|
|
|
211
|
|
|
|
79
|
|
|
|
|
|
*
|
|
Includes Winners or HomeSense
portion of a superstore.
|
Stores
Located in Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
HomeSense
|
|
|
|
|
United Kingdom
|
|
|
220
|
|
|
|
14
|
|
Republic of Ireland
|
|
|
15
|
|
|
|
|
|
Germany
|
|
|
24
|
|
|
|
|
|
Poland
|
|
|
4
|
|
|
|
|
|
|
Total Stores
|
|
|
263
|
|
|
|
14
|
|
|
Competition.
The retail apparel and home fashion business is highly
competitive. We compete on the basis of fashion, quality, price,
value, merchandise selection and freshness, brand name
recognition, service, reputation and store location. We compete
with local, regional, national and international department,
specialty, off-price, discount, warehouse and outlet stores as
well as other retailers that sell apparel, home fashions and
other merchandise that we sell, whether in stores, through
catalogues or media or over the internet.
Employees.
At January 30, 2010, we had approximately
154,000 employees, many of whom work less than
40 hours per week. In addition, we hire temporary employees
during the peak
back-to-school
and holiday seasons.
Trademarks.
We have the right to use our principal trademarks and service
marks, which are T.J. Maxx, Marshalls, HomeGoods, Winners,
HomeSense, T.K. Maxx and A.J. Wright, in relevant countries. Our
rights in these trademarks and service marks endure for as long
as they are used.
Seasonality.
Our business is subject to seasonal influences. In the second
half of the year, which includes the
back-to-school
and holiday seasons, we generally realize higher levels of sales
and income.
Sale of
Bobs Stores.
In fiscal 2009, we sold Bobs Stores, a value-oriented,
branded apparel chain we acquired in fiscal 2004. The loss on
the sale and historical results of operations have been
accounted for as discontinued operations.
SEC
Filings and Certifications.
Copies of our annual reports on
Form 10-K,
proxy statements, quarterly reports on
Form 10-Q
and current reports on
Form 8-K
filed with or furnished to the SEC, and any amendments to those
documents, are available free of charge on our website,
www.tjx.com, under SEC Filings, as soon as
reasonably practicable after they are electronically filed
8
with or furnished to the SEC. They are also available free of
charge from TJX Investor Relations, 770 Cochituate Road,
Framingham, Massachusetts, 01701. The public can read and copy
materials at the SECs Public Reference Room at
100 F Street, NE, Washington, DC 20549,
1-800-SEC-0330.
The SEC maintains a website containing all reports, proxies,
information statements, and all other information regarding
issuers that file electronically
(http://www.sec.gov).
Information appearing on TJXs website is not a part of,
and is not incorporated by reference in, this
Form 10-K.
Unless otherwise indicated, all store information in this
Item 1 is as of January 30, 2010, and references to
store square footage are to gross square feet. Fiscal 2008 means
the fiscal year ended January 26, 2008, fiscal 2009 means
the fiscal year ended January 31, 2009, fiscal 2010 means
the fiscal year ended January 30, 2010 and fiscal 2011
means the fiscal year ending January 29, 2011.
Unless otherwise stated or the context otherwise requires,
references in this
Form 10-K
to TJX, we, us and
our refer to The TJX Companies, Inc. and its
subsidiaries.
The statements in this section describe the major risks to our
business and should be considered carefully, in connection with
all of the other information set forth in this annual report on
Form 10-K.
The risks that follow, individually or in the aggregate, are
those that we think could cause our actual results to differ
materially from those stated or implied in forward-looking
statements.
Global
economic conditions may adversely affect our financial
performance.
In 2009, economies worldwide were in crisis, and global
financial markets experienced extreme volatility, disruption and
credit contraction. The volatility and disruption to the capital
markets significantly adversely affected global economic
conditions, resulting in additional significant recessionary
pressures and declines in employment levels, disposable income
and actual and perceived wealth. Although there has been some
recent improvement, continuing or worsened adverse economic
conditions, including higher unemployment, energy and health
care costs, interest rates and taxes and tighter credit, could
continue to affect consumer confidence and discretionary
consumer spending adversely and may adversely affect our sales,
cash flows and results of operations. Additionally, renewed
financial turmoil in the financial and credit markets could
adversely affect our costs of capital and the sources of
liquidity available to us and could increase our pension funding
requirements.
Fluctuations
in foreign currency exchange rates may lead to lower revenues
and earnings.
In addition to our U.S. businesses, we operate stores in
Canada and Europe and plan to continue to expand our
international operations. Sales made by our stores outside the
United States are denominated in the currency of the country in
which the store is located, and changes in foreign exchange
rates affect the translation of the sales and earnings of these
businesses into U.S. dollars for financial reporting
purposes. Because of this, movements in exchange rates have had
and are expected to continue to have a significant impact on our
net sales and earnings.
Additionally, we routinely enter into inventory-related hedging
instruments to mitigate the impact of foreign exchange on
merchandise margins of merchandise purchased by our
international segments that is denominated in currencies other
than their local currencies. In accordance with U.S. GAAP,
we evaluate the fair value of these hedging instruments and make
mark-to-market
adjustments at the end of an accounting period. These
adjustments are of a much greater magnitude when there is
significant volatility in currency exchange rates and may have a
significant impact on our earnings.
In addition, changes in foreign exchange rates can increase the
cost of inventory purchases by our businesses that are
denominated in a currency other than the local currency of the
business. When these changes occur suddenly, it can be difficult
for us to adjust retail prices accordingly, and gross margin can
be adversely affected.
Although we implement foreign currency hedging and risk
management strategies to reduce our exposure to fluctuations in
earnings and cash flows associated with changes in foreign
exchange rates, we expect that foreign currency fluctuations
could have a material adverse effect on our net sales and
results of operations.
9
Failure
to execute our opportunistic buying and inventory management
could adversely affect our business.
We purchase the majority of our apparel inventory and much of
our home inventory opportunistically with our buyers purchasing
close to need. To drive traffic to the stores and to increase
same store sales, the treasure hunt nature of the off-price
buying experience requires continued replenishment of fresh,
high quality, attractively priced merchandise in our stores.
While opportunistic buying provides our buyers the ability to
buy at desirable times and prices, in the quantities we need and
into market trends, it places considerable discretion in our
buyers, subjecting us to risks on the timing, pricing, quantity
and nature of inventory flowing to the stores. In addition, we
base our purchases of inventory, in part, on sales forecasts. If
our sales forecasts do not match customer demand, we may
experience higher inventory levels and decreased profit margins
if we have excess or slow-moving inventory, or we may have
insufficient inventory to meet customer demand, either of which
could adversely affect our financial performance. In addition to
acquiring inventory, we must properly execute our inventory
management strategies through effectively allocating merchandise
among our stores, timely and efficiently distributing inventory
to stores, maintaining an appropriate mix and level of inventory
in stores, appropriately changing the allocation of floor space
of stores among product categories to respond to customer demand
and effectively managing pricing and markdowns. Failure to
execute our opportunistic inventory buying and inventory
management well could adversely affect our performance and our
relationship with our customers.
Failure
to continue to expand our operations successfully could
adversely affect our financial results.
We have steadily expanded the number of concepts and stores we
operate. Our revenue growth is dependent, among other things,
upon our ability to continue to expand successfully through new
store openings as well as our ability to increase same store
sales. Successful store growth requires acquisition and
development of appropriate real estate including selection of
store locations in appropriate geographies, availability of
attractive stores or store sites in such locations and
negotiation of acceptable terms. Competition for desirable
sites, increases in real estate, construction and development
costs and availability and costs of capital could limit our
ability to open new stores in desirable locations in the future
or adversely affect the economics of new stores. We may
encounter difficulties in attracting customers in new markets
for various reasons including customers lack of
familiarity with our brands or our lack of familiarity with
local customer preferences and cultural differences. New stores
may not achieve the same sales or profit levels as our existing
stores, and new and existing stores in a market area may
adversely affect each others sales and profitability.
Further, expansion places significant demands on the
administrative, merchandising, store operations, distribution
and other organizations in our businesses to manage rapid
growth, and we may not do so successfully.
Failure
to successfully identify customer trends and preferences to meet
customer demand could negatively impact our
performance.
Because our success depends on our ability to meet customer
demand, we take various steps to keep up with customer trends
and preferences including contacts with vendors, monitoring
product category and fashion trends and comparison shopping. Our
flexible business model allows us to buy close to need and in
response to consumer preferences and trends and to expand and
contract merchandise categories in response to consumers
changing tastes. However, identifying consumer trends and
preferences and successfully meeting customer demand is
challenging, and we may not successfully do so, which could
adversely affect our results.
Our
quarterly operating results can be subject to significant
fluctuations and may fall short of either a prior quarter or
investors expectations.
Our operating results have fluctuated from quarter to quarter at
points in the past, and they may continue to do so in the
future. Our earnings may not continue to grow at rates we plan
and may fall short of either a prior quarter or investors
expectations. If we fail to meet the expectations of securities
analysts or investors, our share price may decline. Factors that
could cause us not to meet our securities analysts or
investors earnings expectations include some factors that
are within our control, such as the execution of our off-price
buying; selection, pricing and mix of merchandise; and inventory
management including flow, markon and markdowns; and some
factors that are not within our control, including actions of
competitors, weather conditions, economic conditions, consumer
confidence and seasonality. In addition, if we do not repurchase
the number of shares we contemplate pursuant to our stock
repurchase program, our earnings per share may be adversely
affected. Most of our operating expenses, such as rent expense
and associate salaries, do not vary directly with the amount of
sales and are difficult to adjust in the short term. As a
result, if sales in a particular
10
quarter are below expectations for that quarter, we may not
proportionately reduce operating expenses for that quarter, and
therefore such a sales shortfall would have a disproportionate
effect on our net income for the quarter. We maintain a
forecasting process that seeks to project sales and align
expenses. If we do not correctly forecast sales or appropriately
adjust to actual results, our financial performance could be
adversely affected.
Our
future performance is dependent upon our ability to continue to
expand within our existing markets and to extend our off-price
model in new product lines, chains and geographic
regions.
Our strategy is to continue to expand within existing markets
and to expand to new markets and geographies. This growth
strategy includes developing new ways to sell more or different
merchandise within our existing stores, continued expansion of
our existing chains in our existing markets and countries,
expansion of these chains to new markets and countries, and
development and opening of new chains, all of which entail
significant risk. Our growth is dependent upon our ability to
successfully extend our off-price retail apparel and home
fashions concepts in these ways. Unsuccessful extension of our
model could adversely affect future growth or financial
performance.
Failure
to implement our marketing, advertising and promotional programs
successfully, or if our competitors are more effective with
their programs than we are, may adversely affect our
revenue.
We use marketing, advertising and promotional programs to
attract customers to our stores. We use various media for these
programs, including print, television, database marketing and
direct marketing. Some of our competitors may have substantially
larger expenditures for their programs, which may provide them
with a competitive advantage. There can be no assurance that we
will be able to continue to execute our marketing, advertising
and promotional programs effectively, and any failure to do so
could have a material adverse effect on our revenue and results
of operations.
Compromises
of our data security could materially harm our reputation and
business.
In the ordinary course of our business, we collect and store
certain personal information from individuals, such as our
customers and associates, and we process customer payment card
and check information. We suffered an unauthorized intrusion or
intrusions (such intrusion or intrusions, collectively, the
Computer Intrusion) into portions of our computer
system that process and store information related to customer
transactions, discovered late in fiscal 2007 in which we believe
customer data were stolen. We have taken steps designed to
further strengthen the security of our computer system and
protocols and have instituted an ongoing program with respect to
data security, consistent with a consent order with the Federal
Trade Commission. Nevertheless, there can be no assurance that
we will not suffer a future data compromise. We rely on
commercially available systems, software, tools and monitoring
to provide security for processing, transmission and storage of
confidential information. Further, the systems currently used
for transmission and approval of payment card transactions, and
the technology utilized in payment cards themselves, all of
which can put payment card data at risk, are determined and
controlled by the payment card industry, not by us. This is also
true for check information and approval. Computer hackers may
attempt to penetrate our computer system and, if successful,
misappropriate personal information, payment card or check
information or confidential Company business information. In
addition, a Company associate, contractor or other third party
with whom we do business may attempt to circumvent our security
measures in order to obtain such information may or
inadvertently cause a breach involving such information.
Advances in computer and software capabilities and encryption
technology, new tools and other developments may increase the
risk of such a breach. Any such compromise of our data security
and loss of personal or business information could disrupt our
operations, damage our reputation and customers
willingness to shop in our stores, violate applicable laws,
regulations, orders and agreements, and subject us to additional
costs and liabilities which could be material.
Our
business is subject to seasonal influences; a decrease in sales
or margins during the second half of the year could
disproportionately adversely affect our operating
results.
Our business is subject to seasonal influences; we generally
realize higher levels of sales and income in the second half of
the year, which includes the
back-to-school
and year-end holiday seasons. Any decrease in sales or margins
during this period could have a disproportionately adverse
effect on our results of operations.
11
We may
experience risks associated with our substantial size and
scale.
We operate eight retail chains in the U.S., Canada and Europe.
Some aspects of the businesses and operations of the chains are
conducted with relative autonomy. The large size of our
operations, our multiple businesses and the autonomy afforded to
the chains increase the risk that systems and practices will not
be implemented uniformly throughout our company and that
information will not be appropriately shared across different
chains and countries.
Unseasonable
weather in the markets in which our stores operate or our
distribution centers are located could adversely affect our
operating results.
Adverse and unseasonable weather affects customers
willingness to shop and their demand for the merchandise in our
stores. Severe weather could also affect our ability to
transport merchandise to our stores from our distribution
centers. As a result, frequent, unusually heavy, unseasonable or
untimely weather in our markets, such as snow, ice or rain
storms, severe cold or heat or extended periods of unseasonable
temperatures, could adversely affect our sales and increase
markdowns.
Our
results may be adversely affected by serious disruptions or
catastrophic events.
Unforeseen public health issues, such as pandemics and
epidemics, as well as natural disasters such as hurricanes,
tornadoes, floods, earthquakes and other adverse weather and
climate conditions, whether occurring in the United States
or abroad, could disrupt the operations of one or more of our
vendors or could severely damage or destroy one or more of our
stores or distribution facilities located in the affected areas.
Our ability to receive products from our vendors or transport
products to our stores could be adversely affected or we could
be required to close stores or distribution centers in the
affected areas or in areas served by the affected distribution
center. As a result, our business could be adversely affected.
We
operate in highly competitive markets, and we may not be able to
compete effectively.
The retail apparel and home fashion business is highly
competitive. We compete with many other local, regional,
national and international retailers that sell apparel, home
fashions and other merchandise that we sell, whether in stores,
through catalogues or media or over the internet. We compete on
the basis of fashion, quality, price, value, merchandise
selection and freshness, brand name recognition, service,
reputation and store location. Other competitive factors that
influence the demand for our merchandise include our
advertising, marketing and promotional activities and the name
recognition and reputation of our chains. If we fail to compete
effectively, our sales and results of operations could be
adversely affected.
Failure
to attract and retain quality sales, distribution center and
other associates in appropriate numbers as well as experienced
buying and management personnel could adversely affect our
performance.
Our performance depends on recruiting, developing, training and
retaining quality sales, distribution center and other
associates in large numbers as well as experienced buying and
management personnel. Many of our associates are in entry level
or part-time positions with historically high rates of turnover.
The nature of the workforce in the retail industry subjects us
to the risk of immigration law violations, which risk has
increased in recent years. Our ability to meet our labor needs
while controlling labor costs is subject to external factors
such as unemployment levels, prevailing wage rates, minimum wage
legislation, changing demographics, health and other insurance
costs and governmental labor and employment requirements. In the
event of increasing wage rates, if we fail to increase our wages
competitively, the quality of our workforce could decline,
causing our customer service to suffer, while increasing our
wages could cause our earnings to decrease. In addition, certain
associates in our distribution centers are members of unions and
therefore subject us to the risk of labor actions. Because of
the distinctive nature of our off-price model, we must do
significant internal training and development for a substantial
number of our associates. The market for retail management is
highly competitive and, in common with other retailers, we face
challenges in securing sufficient management talent. If we do
not continue to attract and retain quality associates and
management personnel, our performance could be adversely
affected.
12
If we
engage in mergers or acquisitions of new businesses, or divest
any of our current businesses, our business will be subject to
additional risks.
We have grown our business in part through mergers and
acquisitions and may acquire new businesses or divest current
businesses. Acquisition or divestiture activities may divert
attention of management from operating the existing businesses.
We may do a
less-than-optimal
job of evaluating target companies and their risks and benefits,
and integration of acquisitions can be difficult and
time-consuming. Acquisitions may not meet our performance and
other expectations or may expose us to unexpected or
greater-than-expected
liabilities and risks. Divestiture also involves risks, such as
the risks of exposure on lease obligations, obligations
undertaken in the disposition and potential liabilities that may
arise under law as a result of the disposition or the subsequent
failure of the acquirer. Failure to execute on mergers or
divestitures in a satisfactory manner could adversely affect our
future results of operations and financial condition.
Failure
to operate information systems and implement new technologies
effectively could disrupt our business or reduce our sales or
profitability.
The efficient operation and successful growth of our business
depends on our information systems, including our ability to
operate them effectively and to select and implement new
technologies, systems, controls and adequate disaster recovery
systems successfully. The failure of our information systems to
perform as designed or our failure to implement and operate them
effectively could disrupt our business or subject us to
liability and thereby harm our profitability.
We depend
upon strong cash flows from our operations to supply capital to
fund our expansion, operations, interest and debt repayment,
stock repurchases and dividends.
Our business depends upon our operations to generate strong cash
flow, and to some extent upon the availability of financing
sources, to supply capital to fund our expansions, general
operating activities, stock repurchases, dividends, interest and
debt repayment. Our inability to continue to generate sufficient
cash flows to support these activities or the lack of
availability of financing in adequate amounts and on appropriate
terms when needed could adversely affect our financial
performance including our earnings per share.
General
economic and other factors may adversely affect consumer
spending, which could adversely affect our sales and operating
results.
Interest rates; recession; inflation; deflation; consumer credit
availability; consumer debt levels; energy costs; tax rates and
policy; unemployment trends; threats or possibilities of war,
terrorism or other global or national unrest; actual or
threatened epidemics; political or financial instability; and
general economic, political and other factors beyond our control
have significant effects on consumer confidence and spending.
Consumer spending, in turn, affects sales at retailers, which
may include TJX. Although we benefit from being an off-price
retailer, these factors could adversely affect our sales and
performance if we are not able to implement strategies to
mitigate them promptly and successfully.
Issues
with merchandise quality or safety could damage our reputation,
sales and financial results.
Various governmental authorities in the jurisdictions where we
do business regulate the quality and safety of the merchandise
we sell in our stores. Regulations and standards in this area,
including those related to the Consumer Product Safety
Improvement Act of 2008 in the United States, may change from
time to time. Our inability to comply on a timely basis with
regulatory requirements could result in significant fines or
penalties, which could have a material adverse effect on our
financial results. Issues with the quality and safety and
genuineness of merchandise, regardless of our fault, or customer
concerns about such issues, could cause damage to our reputation
and could result in lost sales, uninsured product liability
claims or losses, merchandise recalls and increased costs, and
regulatory, civil or criminal fines or penalties, any of which
could have a material adverse effect on our financial results.
13
We are
subject to import risks associated with importing merchandise
from abroad.
Many of the products sold in our stores are sourced by our
vendors and, to a limited extent, by us, in many foreign
countries. As a result, we are subject to the various risks of
doing business in foreign markets and importing merchandise from
abroad, such as:
|
|
|
|
|
potential disruptions in supply;
|
|
|
|
changes in duties, tariffs, quotas and voluntary export
restrictions on imported merchandise;
|
|
|
|
strikes and other events affecting delivery;
|
|
|
|
consumer perceptions of the safety of imported merchandise;
|
|
|
|
product compliance with laws and regulations of the destination
country;
|
|
|
|
concerns about human rights, working conditions and other labor
rights and conditions in foreign countries where merchandise is
produced;
|
|
|
|
compliance with laws and regulations concerning ethical business
practices, such as the U.S. Foreign Corrupt Practices
Act; and
|
|
|
|
economic, political or other problems in countries from or
through which merchandise is imported.
|
Political or financial instability, trade restrictions, tariffs,
currency exchange rates, labor conditions, transport capacity
and costs, compliance with U.S. and foreign laws and
regulations and other factors relating to international trade
and imported merchandise beyond our control could affect the
availability and the price of our inventory. Furthermore,
although we have implemented policies and procedures designed to
facilitate compliance with laws and regulations relating to
doing business in foreign markets and importing merchandise from
abroad, there can be no assurance that our associates,
contractors, agents, vendors or other third parties with whom we
do business will not violate such laws and regulations or our
policies, which could adversely affect our operations or
operating results.
Our
expanding international operations increasingly expose us to
risks inherent in operating in foreign jurisdictions.
We have a significant retail presence in Canada and Europe, as
well as buying offices around the world, and our goal as a
global retailer is to continue to expand into other
international markets in the future. Our foreign operations
encounter risks similar to those faced by our
U.S. operations, as well as risks inherent in foreign
operations, such as understanding the retail climate and trends,
local customs and competitive conditions in foreign markets,
complying with foreign laws, rules and regulations, and foreign
currency fluctuations, which could have an adverse impact on our
profitability.
Our
results may be adversely affected by fluctuations in the price
of oil.
Prices of oil have fluctuated dramatically in the past.
Fluctuations may result in an increase in our transportation
costs for distribution, utility costs for our retail stores and
costs to purchase our products from suppliers. Continued
volatility in oil prices could adversely affect consumer
spending and demand for our products and increase our operating
costs, both of which could have an adverse effect on our
performance.
Failure
to comply with existing laws, regulations and orders or changes
in existing laws and regulations could negatively affect our
business operations and financial performance.
We are subject to federal, state, provincial and local laws,
rules and regulations in the United States and abroad, any of
which may change from time to time, as well as orders and
assurances. If we fail to comply with these laws, rules,
regulations and orders, we may be subject to fines or other
penalties, which could materially adversely affect our
operations and our financial results and condition. We must also
comply with new and changing laws. Further, U.S. GAAP may
change from time to time, and these changes could have material
effects on our reported financial results and condition. In
addition, there have been a large number of new legislative and
regulatory initiatives and reforms introduced in the U.S., and
the initiatives and reforms that have been and may be enacted
may increase our costs.
14
Our
results may be materially adversely affected by the outcomes of
litigation and other legal proceedings.
We are periodically involved in various legal proceedings, which
may involve local state and federal government inquiries and
investigations; tax, employment, real estate, tort, consumer
litigation and intellectual property litigation; or other
disputes. In addition, we may be subject to investigations and
other proceedings by regulatory agencies, including, but not
limited to, consumer protection laws, advertising regulations,
escheat and employment and wage and hour regulations. Results of
legal and regulatory proceedings cannot be predicted with
certainty and may differ from reserves we make estimating the
probable outcome. Regardless of merit, litigation may be both
time-consuming and disruptive to our operations and cause
significant expense and diversion of management attention. Legal
and regulatory proceedings and investigations could expose us to
significant defense costs, fines, penalties and liability to
private parties and governmental entities for monetary
recoveries and other amounts and attorneys fees
and/or
require us to change aspects of our operations, any of which
could have a material adverse effect on our business and results
of operations.
Our real
estate leases generally obligate us for long periods, which
subjects us to various financial risks.
We lease virtually all of our store locations, generally for
long terms and either own or lease for long periods our primary
distribution centers and administrative offices. Accordingly, we
are subject to the risks associated with owning and leasing real
estate. While we have the right to terminate some of our leases
under specified conditions by making specified payments, we may
not be able to terminate a particular lease if or when we would
like to do so. If we decide to close stores, we may be required
to continue to perform obligations under the applicable leases,
which may include, among other things, paying rent and operating
expenses for the balance of the lease term, or paying to
exercise rights to terminate, and the performance of any of
these obligations may be expensive. When we assign or sublease
leases, we can remain liable on the lease obligations if the
assignee or sublessee does not perform. In addition, when leases
expire, we may be unable to negotiate renewals, either on
commercially acceptable terms or at all, which could cause us to
close stores.
Our stock
price may fluctuate based on market expectations.
The public trading of our stock is based in large part on market
expectations that our business will continue to grow and that we
will achieve certain levels of net income. If the securities
analysts that regularly follow our stock lower their rating or
lower their projections for future growth and financial
performance, the market price of our stock is likely to drop. In
addition, if our quarterly financial performance does not meet
the expectations of securities analysts, our stock price would
likely decline. The decrease in the stock price may be
disproportionate to the shortfall in our financial performance.
15
Tax
matters could adversely affect our results of operations and
financial condition.
We are subject to income taxes in both the United States and
numerous foreign jurisdictions. Our provision for income taxes
and cash tax liability in the future could be adversely affected
by numerous factors including, but not limited to, income before
taxes being lower than anticipated in countries with lower
statutory tax rates and higher than anticipated in countries
with higher statutory tax rates, changes in the valuation of
deferred tax assets and liabilities, changes in U.S. tax
legislation and regulation, foreign tax laws, regulations and
treaties, exposure to additional tax liabilities, changes in
accounting principles and interpretations relating to tax
matters, which could adversely impact our results of operations
and financial condition in future periods. In addition, we are
subject to the continuous examination of our income tax returns
by federal, state and local tax authorities in the U.S. and
foreign countries, such authorities may challenge positions we
take, and we are engaged in various proceedings with such
authorities with respect to assessments, claims, deficiencies
and refunds, and the results of these examinations, judicial
proceedings or as a result of the expiration of statute of
limitations in specific jurisdictions. We regularly assess the
likelihood of adverse outcomes resulting from these examinations
to determine the adequacy of our provision for income taxes.
However, it is possible that the actual results of proceedings
with tax authorities and in courts, changes in facts, expiration
of statutes of limitations or other resolutions of tax positions
will differ from the amounts we have accrued in either a
positive or a negative manner, which could materially affect our
effective income tax rate in a given financial period, the
amount of taxes we are required to pay and our results of
operations.
|
|
ITEM 1B.
|
UNRESOLVED
STAFF COMMENTS
|
None.
16
ITEM 2. PROPERTIES
We lease virtually all of our over 2,700 store locations,
generally for 10 years with options to extend the lease
term for one or more
5-year
periods. We have the right to terminate some of these leases
before the expiration date under specified circumstances and
some with specified payments.
The following is a summary of our primary owned and leased
distribution centers and primary administrative office locations
by segment as of January 30, 2010. Square footage
information for the distribution centers represents total
ground cover of the facility. Square footage
information for office space represents total space occupied:
DISTRIBUTION
CENTERS
|
|
|
|
|
Marmaxx
|
|
|
|
|
T.J. Maxx
|
|
Worcester, Massachusetts
|
|
494,000 s.f.owned
|
|
|
Evansville, Indiana
|
|
989,000 s.f.owned
|
|
|
Las Vegas, Nevada
|
|
713,000 s.f. shared with
|
|
|
|
|
Marshallsowned
|
|
|
Charlotte, North Carolina
|
|
595,000 s.f.owned
|
|
|
Pittston Township, Pennsylvania
|
|
1,017,000 s.f.owned
|
Marshalls
|
|
Decatur, Georgia
|
|
780,000 s.f.owned
|
|
|
Woburn, Massachusetts
|
|
472,000 s.f.leased
|
|
|
Bridgewater, Virginia
|
|
562,000 s.f.leased
|
|
|
Philadelphia, Pennsylvania
|
|
1,001,000 s.f.leased
|
HomeGoods
|
|
Brownsburg, Indiana
|
|
805,000 s.f.owned
|
|
|
Bloomfield, Connecticut
|
|
803,000 s.f.owned
|
A.J. Wright
|
|
Fall River, Massachusetts
|
|
501,000 s.f.owned
|
|
|
South Bend, Indiana
|
|
542,000 s.f.owned
|
TJX Canada
|
|
Brampton, Ontario
|
|
507,000 s.f.leased
|
|
|
Mississauga, Ontario
|
|
669,000 s.f.leased
|
TJX Europe
|
|
Milton Keynes, England
|
|
108,000 s.f.leased
|
|
|
Wakefield, England
|
|
176,000 s.f.leased
|
|
|
Stoke, England
|
|
261,000 s.f.leased
|
|
|
Walsall, England
|
|
275,000 s.f.leased
|
OFFICE
SPACE
|
|
|
|
|
Corporate, Marmaxx, HomeGoods, A.J. Wright
|
|
Framingham and Westboro, Massachusetts
|
|
1,271,000 s.f.leased in several buildings
|
TJX Canada
|
|
Mississauga, Ontario
|
|
171,000 s.f.leased
|
TJX Europe
|
|
Watford, England
|
|
61,000 s.f.leased
|
|
|
Dusseldorf, Germany
|
|
14,000 s.f.leased
|
17
ITEM 3. LEGAL
PROCEEDINGS
The Company settled with the remaining financial institutions
that either were or sought to be named plaintiffs in the
financial track of the putative class action with respect to the
Computer Intrusion, TJX Companies Retail Security Breach
Litigation, Docket
No. 07-10162-WGY,
MDL Docket No. 1838, and that case and related state court
litigation were dismissed. Under the settlement, the Company
paid $525,000, which primarily reimbursed the settling financial
institutions for a portion of their expenses, excluding
attorneys fees, incurred in pursuing the putative
financial institutions class action, and denied all wrongdoing.
ITEM 4. (REMOVED
AND RESERVED)
18
Part II
ITEM 5. MARKET
FOR THE REGISTRANTS COMMON EQUITY, RELATED SECURITY HOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Price
Range of Common Stock
Our common stock is listed on the New York Stock Exchange
(Symbol: TJX). The quarterly high and low sale prices for the
equity for fiscal 2010 and fiscal 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2010
|
|
|
Fiscal 2009
|
|
Quarter
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
|
|
First
|
|
$
|
29.17
|
|
|
$
|
19.19
|
|
|
$
|
34.93
|
|
|
$
|
29.44
|
|
Second
|
|
$
|
37.00
|
|
|
$
|
26.62
|
|
|
$
|
36.44
|
|
|
$
|
30.32
|
|
Third
|
|
$
|
40.64
|
|
|
$
|
33.80
|
|
|
$
|
37.52
|
|
|
$
|
23.20
|
|
Fourth
|
|
$
|
39.75
|
|
|
$
|
35.75
|
|
|
$
|
28.01
|
|
|
$
|
17.80
|
|
|
The approximate number of common shareholders at
January 30, 2010 was 59,000.
We declared four quarterly dividends of $0.12 per share for
fiscal 2010 and $0.11 per share for fiscal 2009. While our
dividend policy is subject to periodic review by our Board of
Directors, we are currently planning to pay a $0.15 per share
quarterly dividend in fiscal 2011 and intend to continue to pay
comparable dividends in the future.
Information
on Share Repurchases
The number of shares of common stock repurchased by TJX during
the fourth quarter of fiscal 2010 and the average price paid per
share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Number
|
|
|
|
|
|
|
|
|
|
|
|
|
(or Approximate
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar Value) of
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
Shares that May Yet
|
|
|
|
Total
|
|
|
Average Price Paid
|
|
|
Purchased as Part of a
|
|
|
be Purchased Under
|
|
|
|
Number of Shares
|
|
|
Per
|
|
|
Publicly Announced
|
|
|
the Plans or
|
|
Period
|
|
Repurchased(1)
|
|
|
Share(2)
|
|
|
Plan or
Program(3)
|
|
|
Programs
|
|
|
|
|
November 1, 2009 through November 28, 2009
|
|
|
2,891,700
|
|
|
$
|
38.85
|
|
|
|
2,891,700
|
|
|
$
|
1,091,951,792
|
|
November 29, 2009 through January 2, 2010
|
|
|
7,097,500
|
|
|
$
|
37.22
|
|
|
|
7,097,500
|
|
|
$
|
827,807,068
|
|
January 3, 2010 through January 30, 2010
|
|
|
873,300
|
|
|
$
|
37.59
|
|
|
|
873,300
|
|
|
$
|
794,975,793
|
|
|
Total:
|
|
|
10,862,500
|
|
|
|
|
|
|
|
10,862,500
|
|
|
|
|
|
|
|
|
|
(1)
|
|
All shares were purchased as part
of publicly announced plans.
|
|
(2)
|
|
Average price paid per share
includes commissions and is rounded to the nearest two decimal
places.
|
|
(3)
|
|
Our fourth quarter fiscal 2010
repurchases completed the $1 billion stock repurchase
program approved by the Board of Directors and announced in
February 2008 and included the repurchase of 5.5 million
shares at a cost of $205 million under the $1 billion
stock repurchase program approved by the Board of Directors and
announced in September 2009. As of January 30, 2010,
$795 million remained available for purchase under the
current $1 billion program. In February 2010, the Board of
Directors approved and announced an additional $1 billion
stock repurchase program.
|
19
The following table provides certain information as of
January 30, 2010 with respect to our equity compensation
plans:
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
Number of Securities to
|
|
|
Weighted-Average Exercise
|
|
|
Number of Securities Remaining
|
|
|
|
be Issued Upon Exercise
|
|
|
Price of Outstanding
|
|
|
Available for Future Issuance Under
|
|
|
|
of Outstanding Options,
|
|
|
Options, Warrants and
|
|
|
Equity Compensation Plans (Excluding
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Rights
|
|
|
Securities Reflected in Column(a))
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
27,975,194
|
|
|
$
|
27.92
|
|
|
|
22,726,883
|
|
Equity compensation plans not approved by security
holders(1)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Total
|
|
|
27,975,194
|
|
|
$
|
27.92
|
|
|
|
22,726,883
|
|
|
|
|
|
(1)
|
|
All equity compensation plans have
been approved by shareholders
|
For additional information concerning our equity compensation
plans, see Note H to our consolidated financial statements.
20
ITEM 6. SELECTED
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
January(1)
|
|
Amounts in thousands except per share amounts
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
(53 Weeks)
|
|
|
|
|
|
|
|
|
|
|
|
Income statement and per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
20,288,444
|
|
|
$
|
18,999,505
|
|
|
$
|
18,336,726
|
|
|
$
|
17,104,013
|
|
|
$
|
15,667,463
|
|
Income from continuing operations
|
|
$
|
1,213,572
|
|
|
$
|
914,886
|
|
|
$
|
782,432
|
|
|
$
|
787,172
|
|
|
$
|
706,653
|
|
Weighted average common shares for diluted earnings per share
calculation
|
|
|
427,619
|
|
|
|
442,255
|
|
|
|
468,046
|
|
|
|
480,045
|
|
|
|
491,500
|
|
Diluted earnings per share from continuing operations
|
|
$
|
2.84
|
|
|
$
|
2.08
|
|
|
$
|
1.68
|
|
|
$
|
1.65
|
|
|
$
|
1.45
|
|
Cash dividends declared per share
|
|
$
|
0.48
|
|
|
$
|
0.44
|
|
|
$
|
0.36
|
|
|
$
|
0.28
|
|
|
$
|
0.24
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,614,607
|
|
|
$
|
453,527
|
|
|
$
|
732,612
|
|
|
$
|
856,669
|
|
|
$
|
465,649
|
|
Working capital
|
|
$
|
1,908,870
|
|
|
$
|
858,238
|
|
|
$
|
1,231,301
|
|
|
$
|
1,365,833
|
|
|
$
|
888,276
|
|
Total assets
|
|
$
|
7,463,977
|
|
|
$
|
6,178,242
|
|
|
$
|
6,599,934
|
|
|
$
|
6,085,700
|
|
|
$
|
5,496,305
|
|
Capital expenditures
|
|
$
|
429,282
|
|
|
$
|
582,932
|
|
|
$
|
526,987
|
|
|
$
|
378,011
|
|
|
$
|
495,948
|
|
Long-term
obligations(2)
|
|
$
|
790,169
|
|
|
$
|
383,782
|
|
|
$
|
853,460
|
|
|
$
|
808,027
|
|
|
$
|
807,150
|
|
Shareholders equity
|
|
$
|
2,889,276
|
|
|
$
|
2,134,557
|
|
|
$
|
2,131,245
|
|
|
$
|
2,290,121
|
|
|
$
|
1,892,654
|
|
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax return (continuing operations) on average
shareholders equity
|
|
|
48.3
|
%
|
|
|
42.9
|
%
|
|
|
35.4
|
%
|
|
|
37.6
|
%
|
|
|
38.8
|
%
|
Total debt as a percentage of total
capitalization(3)
|
|
|
21.5
|
%
|
|
|
26.7
|
%
|
|
|
28.6
|
%
|
|
|
26.1
|
%
|
|
|
29.9
|
%
|
Stores in operation at fiscal year end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
890
|
|
|
|
874
|
|
|
|
847
|
|
|
|
821
|
|
|
|
799
|
|
Marshalls
|
|
|
813
|
|
|
|
806
|
|
|
|
776
|
|
|
|
748
|
|
|
|
715
|
|
HomeGoods
|
|
|
323
|
|
|
|
318
|
|
|
|
289
|
|
|
|
270
|
|
|
|
251
|
|
A.J.
Wright(4)
|
|
|
150
|
|
|
|
135
|
|
|
|
129
|
|
|
|
129
|
|
|
|
152
|
|
In Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
211
|
|
|
|
202
|
|
|
|
191
|
|
|
|
184
|
|
|
|
174
|
|
HomeSense
|
|
|
79
|
|
|
|
75
|
|
|
|
71
|
|
|
|
68
|
|
|
|
58
|
|
In Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
263
|
|
|
|
235
|
|
|
|
226
|
|
|
|
210
|
|
|
|
197
|
|
HomeSense
|
|
|
14
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,743
|
|
|
|
2,652
|
|
|
|
2,529
|
|
|
|
2,430
|
|
|
|
2,346
|
|
|
Selling Square Footage at year-end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
20,890
|
|
|
|
20,543
|
|
|
|
20,025
|
|
|
|
19,390
|
|
|
|
18,781
|
|
Marshalls
|
|
|
20,513
|
|
|
|
20,388
|
|
|
|
19,759
|
|
|
|
19,078
|
|
|
|
18,206
|
|
HomeGoods
|
|
|
6,354
|
|
|
|
6,248
|
|
|
|
5,569
|
|
|
|
5,181
|
|
|
|
4,859
|
|
A.J.
Wright(4)
|
|
|
3,012
|
|
|
|
2,680
|
|
|
|
2,576
|
|
|
|
2,577
|
|
|
|
3,054
|
|
In Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
4,847
|
|
|
|
4,647
|
|
|
|
4,389
|
|
|
|
4,214
|
|
|
|
4,012
|
|
HomeSense
|
|
|
1,527
|
|
|
|
1,437
|
|
|
|
1,358
|
|
|
|
1,280
|
|
|
|
1,100
|
|
In Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
6,106
|
|
|
|
5,404
|
|
|
|
5,096
|
|
|
|
4,636
|
|
|
|
4,216
|
|
HomeSense
|
|
|
222
|
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
63,471
|
|
|
|
61,454
|
|
|
|
58,772
|
|
|
|
56,356
|
|
|
|
54,228
|
|
|
|
|
|
(1)
|
|
Fiscal 2008 and prior fiscal years
have been adjusted to reclassify the operating results of
Bobs Stores to discontinued operations. Fiscal 2006 has
been adjusted to reclassify the operating results of the A.J.
Wright store closings to discontinued operations.
|
|
(2)
|
|
Includes long-term debt, exclusive
of current installments and capital lease obligation, less
portion due within one year.
|
|
(3)
|
|
Total capitalization includes
shareholders equity, short-term debt, long-term debt and
capital lease obligation, including current maturities.
|
|
(4)
|
|
A.J. Wright stores in operation and
selling square footage for fiscal 2006 include store counts and
square footage for the stores that are part of discontinued
operations.
|
21
ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The discussion that follows relates to our 52-week fiscal year
ended January 30, 2010 (fiscal 2010), the 53-week fiscal
year ended January 31, 2009 (fiscal 2009) and the
52-week fiscal year ended January 26, 2008 (fiscal 2008).
Like most retailers we have a 53-week fiscal period every five
to six years. This extra week of sales volume, which also
provides a lift to pre-tax margins due to the flow of certain
monthly and annual expenses, impacts comparisons to other fiscal
periods.
RESULTS
OF OPERATIONS
We entered fiscal 2010 faced with the challenges of a worldwide
recession and established a three-pronged strategy for managing
through the challenging economic times: conservatively plan same
store sales, allowing better flow-through to the bottom line if
we exceed plans; run with very lean inventories and buy closer
to need than in the past, increasing inventory turns and
protecting gross margins; and focus on cost-cutting measures and
controlling expenses. Implementing this strategy has proven
successful, and we posted results significantly above our
expectations and ahead of last year on a consolidated basis and
for each of our businesses. Customer traffic increased as the
year progressed, driving sales. Additionally, we took advantage
of opportunities the environment presented, opening more new
stores than planned and adding many new vendors. We are
confident in our ability to continue to grow both sales and
earnings in fiscal 2011, driving market share with our value
proposition and continuing the marketing, inventory management
and cost reduction strategies that were successful in fiscal
2010.
Highlights of our financial performance for fiscal 2010 include
the following:
|
|
|
|
|
Same store sales for fiscal 2010 increased 6% over the prior
year. Same store sales growth was driven by significant
increases in customer traffic, as we attracted new customers
across various income levels, and strong performance by all of
our businesses.
|
|
|
|
Net sales increased 7% to $20.3 billion for fiscal 2010.
Stores in operation and selling square footage were both up 3%
at the end of fiscal 2010 compared to last fiscal year end.
Increases in consolidated same store sales and sales growth from
our new stores were partially offset by foreign currency
exchange rates, which negatively impacted sales growth by
2 percentage points. Unlike many other retailers, we had a
53rd week
in fiscal 2009, which benefited fiscal 2009 sales but negatively
impacted the fiscal 2010 comparison by approximately
1 percentage point.
|
|
|
|
Our fiscal 2010 pre-tax margin (the ratio of pre-tax income to
net sales) was 9.6% compared to 7.6% for fiscal 2009. The
improvement in fiscal 2010 was primarily driven by increased
merchandise margins, which were achieved as a result of managing
the business with substantially lower levels of inventory. The
comparison of pre-tax margins for fiscal 2010 to fiscal 2009 was
adversely impacted by the
53rd week
in the fiscal 2009 calendar and a favorable adjustment to the
Provision for Computer Intrusion related costs in fiscal 2009.
Combined, these two items benefited the fiscal 2009 pre-tax
margin by approximately 0.4 percentage points.
|
|
|
|
Our cost of sales ratio for fiscal 2010 decreased
2.1 percentage points, primarily due to improved
merchandise margins and leverage of buying and occupancy costs
on strong same store sales, partially offset by the benefit to
fiscal 2009s cost of sales ratio due to the
53rd week
included in fiscal 2009. The selling, general and administrative
expense ratio for fiscal 2010 decreased by 0.1 percentage
points, with the benefit of cost reduction programs and expense
leverage on strong same store sales in fiscal 2010, partially
offset by a 0.5 percentage point increase due to
performance-based incentive compensation.
|
|
|
|
Income from continuing operations was $1.2 billion, or
$2.84 per diluted share, for fiscal 2010 compared to
$914.9 million, or $2.08 per diluted share, for fiscal
2009. Fiscal 2009 diluted earnings per share from continuing
operations benefited by $0.16 per share from a number of items,
which affected the
year-over-year
comparison; the
53rd week
added $0.09 per share, the credit to the Provision for Computer
Intrusion related costs added $0.04 per share and a tax related
adjustment added $0.03 per share.
|
22
|
|
|
|
|
During fiscal 2010, we repurchased 27.0 million shares of
our common stock for $950 million. This years
repurchases included the use of the $375 million proceeds
from our April 2009 debt offering to repurchase a majority of
the 15.1 million shares issued upon conversion of our zero
coupon convertible subordinated notes called for redemption.
Diluted earnings per share reflect the benefit of the stock
repurchase program.
|
|
|
|
Consolidated average per store inventories from our continuing
operations, including inventory on hand at our distribution
centers, were down 10% at the end of fiscal 2010 over the prior
year end as compared to a decrease of 6% at the end of fiscal
2009 over the prior year end.
|
The following is a discussion of our consolidated operating
results, followed by a discussion of our segment operating
results.
Net sales: Consolidated net sales for fiscal
2010 totaled $20.3 billion, a 7% increase over net sales of
$19.0 billion in fiscal 2009. The increase reflected a 6%
increase from same store sales and a 4% increase from new
stores, offset by a 2% decline from the negative impact of
foreign currency exchange rates and a 1% decrease from the
53rd week
in fiscal 2009. Consolidated net sales for fiscal 2009 increased
4% over net sales of $18.3 billion for fiscal 2008. The
increase reflected a 4% increase from new stores, a 1% increase
from the
53rd week
in fiscal 2009 and a 1% increase in same store sales, offset by
a 2% decline from the negative impact of foreign currency
exchange rates.
New stores have been a significant source of sales growth. Both
our consolidated store count and our selling square footage
increased by 3% in fiscal 2010 as compared to fiscal 2009. Both
our consolidated store count and our selling square footage
increased by 5% in fiscal 2009 over the prior fiscal year. We
expect to add 130 stores (net of store closings) in fiscal 2011,
a 5% increase in both our consolidated store base and our
selling square footage.
The 6% same store sales increase in fiscal 2010 was driven by
significant increases in customer traffic at all of our
businesses, partially offset by a decline in the value of the
average transaction. The increase in customer traffic
accelerated during the course of the year. Juniors, dresses,
childrens apparel, footwear, accessories and home fashions
performed particularly well in fiscal 2010. Geographically, same
store sales increases in Europe and Canada trailed the
consolidated average. In the U.S., sales were strong throughout
the country with the Midwest, Southeast and West Coast above the
average, and New England and Florida below the average.
The 1% same store sales increase in fiscal 2009 reflected a
strong first half performance, especially at our international
segments, partially offset by same store sales decreases in the
second half of the year largely due to the economic recession.
Customer traffic increased at virtually all of our businesses in
fiscal 2009, even in the third and fourth quarters, but was
partially offset by a reduction in the value of the average
transaction. As for merchandise categories, footwear,
accessories and dresses were the strongest performers, while
home fashions were adversely affected by the weak housing market
and economic conditions. Geographically, same store sales in
Canada and Europe were above the consolidated average for fiscal
2009, while in the U.S., same store sales in the West Coast and
Florida trailed the consolidated average.
We define same store sales to be sales of those stores that have
been in operation for all or a portion of two consecutive fiscal
years, or in other words, stores that are starting their third
fiscal year of operation. We classify a store as a new store
until it meets the same store sales criteria. We determine which
stores are included in the same store sales calculation at the
beginning of a fiscal year and the classification remains
constant throughout that year, unless a store is closed. We
calculate same store sales results by comparing the current and
prior year weekly periods that are most closely aligned.
Relocated stores and stores that have increased in size are
generally classified in the same way as the original store, and
we believe that the impact of these stores on the consolidated
same store percentage is immaterial. Same store sales of our
foreign divisions are calculated on a constant currency basis,
meaning we translate the current years same store sales of
our foreign divisions at the same exchange rates used in the
prior year. This removes the effect of changes in currency
exchange rates, which we believe is a more accurate measure of
divisional operating performance.
23
The following table sets forth our consolidated operating
results as a percentage of net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
Cost of sales, including buying and occupancy costs
|
|
|
73.8
|
|
|
|
75.9
|
|
|
|
75.7
|
|
Selling, general and administrative expenses
|
|
|
16.4
|
|
|
|
16.5
|
|
|
|
16.3
|
|
Provision for Computer Intrusion related costs
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
1.1
|
|
Interest (income) expense, net
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
|
|
|
Income from continuing operations before provision for income
taxes*
|
|
|
9.6
|
%
|
|
|
7.6
|
%
|
|
|
6.9
|
%
|
|
|
|
|
*
|
|
Due to rounding, the individual
items may not foot to Income from continuing operations before
provision for income taxes.
|
Impact of foreign currency exchange
rates: Our operating results can benefit or be
adversely affected by foreign currency exchange rates as a
result of significant changes in the value of the
U.S. dollar in relation to other currencies. Two of the
more significant ways in which foreign currency impacts us are
as follows:
Translation of foreign operating results into
U.S. dollars: In our financial statements, we translate
the operations of our stores in Canada and Europe from local
currencies into U.S. dollars using currency rates in effect
at different points in time. Significant changes in foreign
exchange rates between comparable prior periods can result in
meaningful variations in consolidated net sales, income from
continuing operations and earnings per share growth as well as
the net sales and operating results of our Canadian and European
segments. Currency translation generally does not affect
operating margins, as sales and expenses of the foreign
operations are translated at essentially the same rates each
period.
Inventory hedges: We routinely enter into
inventory-related hedging instruments to mitigate the impact of
foreign currency exchange rates on merchandise margins when our
international divisions purchase goods in currencies other than
their local currencies (primarily U.S. dollar purchases).
As we have not elected hedge accounting as defined
by U.S. GAAP, we record a
mark-to-market
gain or loss on the hedging instruments in our results of
operations at the end of each reporting period. In subsequent
periods, the income statement impact of these adjustments is
effectively offset when the inventory being hedged is sold.
While these effects occur every reporting period, they are of
much greater magnitude when there are sudden and significant
changes in currency exchange rates during a short period of
time. The
mark-to-market
adjustment on these hedges does not affect net sales, but it
does affect cost of sales, operating margins and reported
earnings.
Cost of sales, including buying and occupancy
costs: Cost of sales, including buying and
occupancy costs, as a percentage of net sales was 73.8% in
fiscal 2010, 75.9% in fiscal 2009 and 75.7% in fiscal 2008. The
improvement in fiscal 2010 was primarily due to improved
consolidated merchandise margin, which increased
2.1 percentage points, along with expense leverage on the
6% same store sales increase, particularly in occupancy costs,
which improved by 0.3 percentage points. Merchandise margin
improvement was driven by our strategy of operating with leaner
inventories and buying closer to need, which resulted in an
increase in markon, along with a reduction in markdowns compared
to the prior year. These improvements were partially offset by a
benefit to this expense ratio in fiscal 2009 due to the
53rd week
(approximately 0.2 percentage points). Additionally, for
fiscal 2010, buying and occupancy expense leverage was offset by
higher accruals for performance-based incentive compensation
that covers many associates across our organization. The higher
accruals are the result of operating performance that was well
ahead of our objectives.
This ratio for fiscal 2009, as compared to fiscal 2008,
increased 0.2 percentage points primarily due to deleverage
of buying and occupancy costs on the 1% same store sales
increase. This deleverage more than offset a benefit to this
expense ratio due to the
53rd week
in fiscal 2009 (approximately 0.2 percentage points) as
well as an improvement in our consolidated merchandise margin of
0.2 percentage points. Throughout fiscal 2009, we
effectively executed our off-price fundamentals, buying close to
need, operating with leaner inventories and taking advantage of
opportunities in the market place.
Selling, general and administrative
expenses: Selling, general and administrative
expenses as a percentage of net sales were 16.4% in fiscal 2010,
16.5% in fiscal 2009 and 16.3% in fiscal 2008. The improvement
in fiscal 2010 compared to fiscal 2009 was due to levering of
expenses and savings from our expense reduction initiatives.
These
24
improvements were partially offset by the increase in
performance-based incentive compensation mentioned above, which
had an even greater impact on selling, general and
administrative expense ratio increasing it by
0.5 percentage points.
The fiscal 2009 expense ratio increased slightly compared to
fiscal 2008 due to deleverage from the low same store sales
increase, primarily in store payroll and field costs, partially
offset by savings from cost containment initiatives. Advertising
costs as a percentage of net sales in fiscal 2009 were
essentially flat compared to fiscal 2008.
Provision for Computer Intrusion related
costs: In the second quarter of fiscal 2008, we
established a reserve to reflect our estimate of our probable
losses in accordance with U.S. GAAP with respect to the
Computer Intrusion.
From the time of the discovery of the Computer Intrusion late in
fiscal 2007, through the end of fiscal 2010, we cumulatively
expensed $171.5 million (pre-tax) with respect to the
Computer Intrusion, including a net charge of
$159.2 million in fiscal 2008 to reserve for probable
losses, costs of $42.8 million incurred prior to the
establishment of the reserve ($5 million of which was
recorded in fiscal 2007) and a $30.5 million reduction
in the reserve in fiscal 2009 as a result of negotiations,
settlements, insurance proceeds and adjustments in our estimated
losses. Costs relating to the Computer Intrusion incurred and
paid after establishment of the reserve were charged against the
reserve, which is included in accrued expenses and other
liabilities on our balance sheet.
As of January 30, 2010, our reserve balance was
$23.5 million, which reflects our current estimate of
remaining probable losses with respect to the Computer
Intrusion, including litigation, proceedings and other claims,
as well as legal, monitoring, reporting and other costs. As an
estimate, our reserve is subject to uncertainty, our actual
costs may vary from our current estimate and such variations may
be material. We may decrease or increase the amount of our
reserve as a result of developments in litigation and claims,
related expenses, receipt of insurance proceeds and for other
changes.
Interest expense (income), net: Interest
expense (income), net amounted to expense of $39.5 million
for fiscal 2010, expense of $14.3 million for fiscal 2009
and income of $1.6 million for fiscal 2008. The components
of net interest expense (income) for the last three fiscal years
are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in thousands
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Interest expense
|
|
$
|
49,278
|
|
|
$
|
38,123
|
|
|
$
|
39,926
|
|
Capitalized interest
|
|
|
(758)
|
|
|
|
(1,647)
|
|
|
|
(799)
|
|
Interest (income)
|
|
|
(9,011)
|
|
|
|
(22,185)
|
|
|
|
(40,725)
|
|
|
Net interest expense (income)
|
|
$
|
39,509
|
|
|
$
|
14,291
|
|
|
$
|
(1,598)
|
|
|
Gross interest expense for fiscal 2010 increased over fiscal
2009 as a result of the incremental interest cost of the
$375 million aggregate principal amount of 6.95% notes
issued in April 2009 and the $400 million aggregate
principal amount of 4.20% notes issued in July 2009. The
6.95% notes were issued in conjunction with the call for
redemption of our zero coupon convertible securities, and we
refinanced our C$235 million credit facility prior to its
scheduled maturity with a portion of the proceeds of the
4.20% notes. The impact on earnings per share of the
incremental interest cost of these two debt issuances was
partially offset by a benefit in our earnings per share, as the
majority of the 15.1 million shares issued upon conversion
of the convertible notes were repurchased with the net proceeds
of the 6.95% notes. On a full year basis, we expect the
benefit of the share repurchase to more than offset the impact
on fully diluted earnings per share from the interest on the
6.95% notes. For more information on these note offerings,
see the discussion under Liquidity and Capital Resources.
In addition, interest income for fiscal 2010 was less than
fiscal 2009 due to considerably lower rates of return on
investments more than offsetting higher cash balances available
for investment during fiscal 2010.
The change in net interest expense in fiscal 2009 compared to
fiscal 2008 was driven by the change in interest income. In
fiscal 2008, we generated more interest income due to higher
cash balances available for investment as well as higher
interest rates earned on our investments.
25
Income taxes: Our effective annual income tax
rate was 37.8% in fiscal 2010, 36.9% in fiscal 2009 and 37.9% in
fiscal 2008.
The increase in our effective income tax rate for fiscal 2010 as
compared to fiscal 2009 is primarily attributed to the favorable
impact in fiscal 2009 of a $19 million reduction in the
reserve for uncertain tax positions arising from the settlement
of several state tax audits. The absence of this fiscal 2009
benefit increased the effective income tax rate in fiscal 2010
by 1.3 percentage points, partially offset by a reduction
in the effective income tax rate related to foreign income.
The decrease in the tax rate for fiscal 2009 as compared to
fiscal 2008 reflected a 1.3 percentage point favorable
impact of a reduction in the reserve for uncertain tax position.
This benefit in the annual income tax rate in fiscal 2009 was
offset by the absence of a fiscal 2008 favorable tax benefit of
0.4 percentage points relating to the tax treatment of our
Puerto Rico subsidiary. See Note K to the consolidated
financial statements.
TJX anticipates an effective annual income tax rate of 38.0% to
38.5% for fiscal 2011.
Income from continuing operations and income per share
from continuing operations: Income from continuing
operations was $1.2 billion in fiscal 2010, a 33% increase
over the $914.9 million in fiscal 2009, which in turn was a
17% increase over the $782.4 million in fiscal 2008. Income
from continuing operations per share was $2.84 in fiscal 2010,
$2.08 in fiscal 2009 and $1.68 in fiscal 2008. Several items,
discussed below, affected earnings per share comparisons for
fiscal 2010, fiscal 2009 and fiscal 2008.
We estimate that the
53rd week
in fiscal 2009 favorably affected earnings per share in that
year by $0.09 per share.
The reduction in the Provision for Computer Intrusion related
costs in fiscal 2009 benefited income from continuing operations
in fiscal 2009 by approximately $0.04 per share. The charge
relating to the Computer Intrusion related costs in fiscal 2008
adversely affected income from continuing operations in that
year by $0.25 per share.
Foreign currency exchange rates also affected the comparability
of our results. Foreign currency rates reduced earnings per
share by $0.01 per share in fiscal 2010 compared to a $0.01 per
share benefit in fiscal 2009. When comparing fiscal 2009 to
fiscal 2008, foreign currency exchange rates reduced earnings
per share by $0.05 per share in fiscal 2009 compared to a $0.01
per share benefit in fiscal 2008.
In addition, our weighted average diluted shares outstanding
affect the comparability of earnings per share, which are
benefited by our share repurchase programs. We repurchased
27.0 million shares of our stock at a cost of
$950 million in fiscal 2010; 24.0 million shares at a
cost of $741 million in fiscal 2009; and 33.3 million
shares at a cost of $950 million in fiscal 2008. We
significantly reduced our weighted average diluted shares
outstanding from 442.3 million to 427.6 million in
fiscal 2010 with the incremental purchase over those planned
under our stock repurchase program by using the proceeds of our
April 2009 debt offering to repurchase the majority of the
15.1 million shares issued on conversion of our zero coupon
convertible subordinated notes following their call.
Discontinued operations and net
income: Fiscal 2009 and prior periods include the
loss on the sale of the Bobs Stores division in
discontinued operations. In addition, the operating results for
Bobs Stores for all periods prior to the sale are included
in discontinued operations. Including the impact of discontinued
operations, net income was $1.2 billion, or $2.84 per
share, for fiscal 2010, $880.6 million, or $2.00 per share,
for fiscal 2009 and $771.8 million, or $1.66 per share, for
fiscal 2008.
Segment information: The following is a
discussion of the operating results of our business segments. In
the United States, our T.J. Maxx and Marshalls stores are
aggregated as the Marmaxx segment, and each of HomeGoods and
A.J. Wright is reported as a separate segment. TJXs
stores operated in Canada (Winners and HomeSense) are reported
as the TJX Canada segment, and TJXs stores operated in
Europe (T.K. Maxx and HomeSense) are reported as the TJX Europe
segment. We evaluate the performance of our segments based on
segment profit or loss, which we define as pre-tax
income before general corporate expense, Provision for Computer
Intrusion related costs and interest. Segment profit or
loss, as we define the term, may not be comparable to
similarly titled measures used by other entities. In addition,
this measure of performance should not be considered an
alternative to net income or cash flows from
26
operating activities as an indicator of our performance or as a
measure of liquidity. Presented below is selected financial
information related to our business segments:
U.S.
Segments:
Marmaxx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
$
|
13,270.9
|
|
|
$
|
12,362.1
|
|
|
$
|
11,966.7
|
|
Segment profit
|
|
$
|
1,588.5
|
|
|
$
|
1,155.8
|
|
|
$
|
1,158.2
|
|
Segment profit as a percentage of net sales
|
|
|
12.0
|
%
|
|
|
9.3
|
%
|
|
|
9.7
|
%
|
Percent increase in same store sales
|
|
|
7
|
%
|
|
|
0
|
%
|
|
|
1
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
890
|
|
|
|
874
|
|
|
|
847
|
|
Marshalls
|
|
|
813
|
|
|
|
806
|
|
|
|
776
|
|
|
Total Marmaxx
|
|
|
1,703
|
|
|
|
1,680
|
|
|
|
1,623
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
20,890
|
|
|
|
20,543
|
|
|
|
20,025
|
|
Marshalls
|
|
|
20,513
|
|
|
|
20,388
|
|
|
|
19,759
|
|
|
Total Marmaxx
|
|
|
41,403
|
|
|
|
40,931
|
|
|
|
39,784
|
|
|
Net sales at Marmaxx increased 7% in fiscal 2010 as compared to
fiscal 2009. Same store sales for Marmaxx were up 7% compared to
being flat in fiscal 2009.
Sales at Marmaxx for fiscal 2010 reflected significantly
increased customer traffic, partially offset by a decrease in
the value of the average transaction. Categories that posted
particularly strong same store sales increases included juniors,
dresses, childrens apparel and footwear. Home categories
improved significantly at Marmaxx during the year, with same
store sales increases above the chain average for fiscal 2010.
Geographically, there were strong trends throughout the country.
Same store sales were strongest in the Midwest, West Coast and
Southeast, while New England and Florida trailed the chain
average for fiscal 2010. We also saw a lift in the net sales of
stores renovated during the year, and we anticipate increasing
our store renovation program in fiscal 2011.
Segment profit as a percentage of net sales (segment
margin or segment profit margin) increased to
12.0% in fiscal 2010 from 9.3% in fiscal 2009. This increase in
segment margin for fiscal 2010 was primarily due to an increase
in merchandise margin of 2.4 percentage points driven by
lower markdowns and higher markon. In addition, the 7% increase
in same store sales provided expense leverage on numerous costs
as a percentage of net sales, particularly occupancy costs,
which improved by 0.3 percentage points. These increases
were partially offset by an increase in administrative costs as
a percentage of sales, primarily due to higher accruals for
performance-based incentive compensation as a result of
operating performance well ahead of objectives.
Segment margin decreased to 9.3% in fiscal 2009 from 9.7% in
fiscal 2008. Segment margin was negatively impacted by an
increase in occupancy costs as a percentage of net sales
(0.5 percentage points) due to deleverage on the flat same
store sales. This decrease was partially offset by an increase
in merchandise margin (0.1 percentage point) due to
increased markon.
As of January 30, 2010, Marmaxxs average per store
inventories, including inventory on hand at its distribution
centers, were down 10% as compared to these inventory levels at
the same time last year. Average per store inventories at
January 31, 2009 were down 4% compared to those of the
prior year period. As of January 30, 2010, inventory
commitments (inventory on hand and merchandise on order) were
essentially flat on a per store basis compared to the end of
fiscal 2009.
We expect to open approximately 53 new stores (net of closings)
in fiscal 2011, increasing the Marmaxx store base by 3% and
increasing its selling square footage by 3%.
27
HomeGoods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
$
|
1,794.4
|
|
|
$
|
1,578.3
|
|
|
$
|
1,480.4
|
|
Segment profit
|
|
$
|
137.5
|
|
|
$
|
42.4
|
|
|
$
|
76.2
|
|
Segment profit as a percentage of net sales
|
|
|
7.7
|
%
|
|
|
2.7
|
%
|
|
|
5.1
|
%
|
Percent increase (decrease) in same store sales
|
|
|
9
|
%
|
|
|
(3)
|
%
|
|
|
3
|
%
|
Stores in operation at end of period
|
|
|
323
|
|
|
|
318
|
|
|
|
289
|
|
Selling square footage at end of period (in thousands)
|
|
|
6,354
|
|
|
|
6,248
|
|
|
|
5,569
|
|
|
HomeGoods net sales increased 14% in fiscal 2010 compared
to fiscal 2009. Same store sales increased 9% in fiscal 2010,
driven by significantly increased customer traffic, compared to
a decrease of 3% in fiscal 2009. Segment margin of 7.7% was up
significantly from 2.7% for fiscal 2009, due to increased
merchandise margins driven by increased markon and decreased
markdowns, levering of expenses on the 9% same store sales and
operational efficiencies. The merchandise margin improvements
were driven by managing this business with much lower inventory
levels, which drove better off-price buying and increased
inventory turns. These improvements were partially offset by
higher accruals for performance-based incentive compensation as
a result of operating performance well ahead of objectives.
HomeGoods net sales for fiscal 2009 increased 7% compared
to fiscal 2008, and same store sales decreased 3%. Segment
margin of 2.7% for fiscal 2009 was down from 5.1% for fiscal
2008. Merchandise margins declined in fiscal 2009, primarily due
to increased markdowns and operating costs delevered as a result
of the decline in same store sales.
In fiscal 2011, we plan to add a net of 9 HomeGoods stores and
increase selling square footage by 3%.
A.J.
Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
$
|
779.8
|
|
|
$
|
677.6
|
|
|
$
|
632.7
|
|
Segment profit (loss)
|
|
$
|
12.6
|
|
|
$
|
2.9
|
|
|
$
|
(1.8)
|
|
Segment profit (loss) as a percentage of net sales
|
|
|
1.6
|
%
|
|
|
0.4
|
%
|
|
|
(0.3)
|
%
|
Percent increase in same store sales
|
|
|
9
|
%
|
|
|
4
|
%
|
|
|
2
|
%
|
Stores in operation at end of period
|
|
|
150
|
|
|
|
135
|
|
|
|
129
|
|
Selling square footage at end of period (in thousands)
|
|
|
3,012
|
|
|
|
2,680
|
|
|
|
2,576
|
|
|
A.J. Wrights net sales increased 15% in fiscal 2010 as
compared to fiscal 2009, and same store sales increased 9%. A.J.
Wrights improvement in sales was driven by an increasingly
better understanding of its customers tastes and shopping
habits, which has led to improved merchandising and marketing.
Segment profit increased significantly to $12.6 million in
fiscal 2010, compared to segment profit of $2.9 million in
fiscal 2009. The increase in segment margin in fiscal 2010 was
primarily due to improved merchandise margin. Like our other
divisions, cost reduction initiatives and the benefit of expense
leverage on the same store sales increase was partially offset
by higher accruals for performance-based incentive compensation.
A.J. Wrights net sales increased 7% for fiscal 2009
compared to fiscal 2008, and segment profit increased to
$2.9 million compared to a loss of $1.8 million in
fiscal 2008. Same store sales increased 4% for fiscal 2009 and
A.J. Wright recorded its first segment profit in fiscal 2009
compared to losses in the prior years.
In fiscal 2011, we plan to add a net of 8 A.J. Wright stores and
increase selling square footage by 6%.
28
International
Segments:
TJX
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
U.S. Dollars in millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
$
|
2,167.9
|
|
|
$
|
2,139.4
|
|
|
$
|
2,040.8
|
|
Segment profit
|
|
$
|
255.0
|
|
|
$
|
236.1
|
|
|
$
|
235.1
|
|
Segment profit as a percentage of net sales
|
|
|
11.8
|
%
|
|
|
11.0
|
%
|
|
|
11.5
|
%
|
Percent increase in same store sales
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
5
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
211
|
|
|
|
202
|
|
|
|
191
|
|
HomeSense
|
|
|
79
|
|
|
|
75
|
|
|
|
71
|
|
|
Total
|
|
|
290
|
|
|
|
277
|
|
|
|
262
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
4,847
|
|
|
|
4,647
|
|
|
|
4,389
|
|
HomeSense
|
|
|
1,527
|
|
|
|
1,437
|
|
|
|
1,358
|
|
|
Total
|
|
|
6,374
|
|
|
|
6,084
|
|
|
|
5,747
|
|
|
Net sales for TJX Canada (which includes Winners and HomeSense)
increased 1% in fiscal 2010 as compared to fiscal 2009. Currency
exchange translation reduced fiscal 2010 sales by approximately
$62 million, or 3%, as compared to fiscal 2009. Same store
sales were up 2% in fiscal 2010 compared to an increase of 3% in
fiscal 2009. Same store sales of juniors, dresses, mens and
footwear, as well as HomeSense on a standalone basis, were above
the segment average for fiscal 2010.
Segment profit for fiscal 2010 increased to $255 million
compared to $236 million in fiscal 2009. The impact of
foreign currency translation decreased segment profit by
$4 million, or 2%, in fiscal 2010 compared to fiscal 2009.
The
mark-to-market
adjustment on inventory related hedges did not have a material
impact on segment profit in fiscal 2010 compared to fiscal 2009.
Segment margin increased 0.8 percentage points to 11.8% in
fiscal 2010, compared to 11.0% in fiscal 2009, which was
primarily due to an improvement in merchandise margins.
Improvements in store payroll and distribution costs as a
percentage of net sales in fiscal 2010 due to operating
efficiencies were offset by higher accruals for
performance-based incentive compensation as a result of
operating performance well ahead of objectives.
Net sales for fiscal 2009 increased by 5% over fiscal 2008.
Currency exchange translation reduced fiscal 2009 sales by
approximately $68 million. Same store sales increased 3% in
fiscal 2009 compared to an increase of 5% in fiscal 2008.
Segment profit for fiscal 2009 increased slightly to
$236 million compared to $235 million in fiscal 2008,
while segment margin decreased 0.5 percentage points to
11.0%. Currency exchange translation reduced segment profit by
$11 million for fiscal 2009, as compared to fiscal 2008.
However, because currency translation impacts both sales and
expenses, it has little or no impact on segment margin. In
addition, the
mark-to-market
adjustment of inventory related hedges reduced segment profit in
fiscal 2009 by $1 million, in contrast to a $5 million
benefit in fiscal 2008, which adversely impacted segment margin
comparisons by 0.3 percentage points. Segment margin for
fiscal 2009 reflected increases in distribution center costs and
store payroll costs as a percentage of net sales, partially
offset by an increase in merchandise margins.
We expect to add a net of 6 stores in Canada in fiscal 2011 and
plan to increase selling square footage by 2%.
29
TJX
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
U.S. Dollars in millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
$
|
2,275.4
|
|
|
$
|
2,242.1
|
|
|
$
|
2,216.2
|
|
Segment profit
|
|
$
|
164.0
|
|
|
$
|
137.6
|
|
|
$
|
127.2
|
|
Segment profit as a percentage of net sales
|
|
|
7.2
|
%
|
|
|
6.1
|
%
|
|
|
5.7
|
%
|
Percent increase in same store sales
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
6
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
263
|
|
|
|
235
|
|
|
|
226
|
|
HomeSense
|
|
|
14
|
|
|
|
7
|
|
|
|
|
|
|
Total
|
|
|
277
|
|
|
|
242
|
|
|
|
226
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
6,106
|
|
|
|
5,404
|
|
|
|
5,096
|
|
HomeSense
|
|
|
222
|
|
|
|
107
|
|
|
|
|
|
|
Total
|
|
|
6,328
|
|
|
|
5,511
|
|
|
|
5,096
|
|
|
Net sales for TJX Europe increased in fiscal 2010 to
$2.3 billion compared to $2.2 billion in fiscal 2009.
Currency exchange rate translation reduced fiscal 2010 sales by
approximately $252 million, or 11%, as compared to fiscal
2009. Same store sales increased 5% for fiscal 2010 compared to
a 4% increase in fiscal 2009. Segment profit for fiscal 2010
increased 19% to $164 million, and segment profit margin
increased 1.1 percentage points to 7.2%. The increase in
segment margin for fiscal 2010 reflects improved merchandise
margins and leverage of expenses on the 5% same store sales
increase, partially offset by costs of operations in Germany and
Poland along with higher accruals for performance-based
incentive compensation. We are encouraged by the performance of
our stores in Germany and Poland and our HomeSense stores in the
U.K., but as newer operations, they reduce the segment margin
generated by the more established T.K. Maxx stores in the U.K.
and Ireland. We also invested in strengthening the shared
services infrastructure for our planned European expansion.
Foreign currency had an immaterial impact on fiscal 2010 segment
profit, while segment profit for fiscal 2009 included a
favorable
mark-to-market
adjustment of $10 million, primarily relating to the
conversion of Euros to Pound Sterling.
Net sales for TJX Europe for fiscal 2009 were up 1% compared to
fiscal 2008. Currency exchange rate translation negatively
affected fiscal 2009 net sales by approximately
$282 million. Segment profit for fiscal 2009 increased 8%
to $137.6 million, and segment margin increased
0.4 percentage points to 6.1% compared to fiscal 2008.
Currency exchange rate translation negatively affected segment
profit by approximately $26 million in fiscal 2009 as
compared to fiscal 2008. The increase in segment margin in
fiscal 2009 reflected improved merchandise margins, partially
offset by an increase in occupancy costs as a percentage of
sales and the cost of operations in Germany. During fiscal 2009,
T.K. Maxx added 4 more stores in Germany, following the opening
of its first 5 stores in Germany in fiscal 2008. In fiscal 2009,
T.K. Maxx also introduced the HomeSense concept into the U.K.
with 7 new stores.
As a result of the performance of TJX Europe and the opportunity
for off-price retail in Europe, we intend to increase the rate
of expansion in Europe. In fiscal 2011, we plan to open a net of
48 new T.K. Maxx stores in Europe and a net of 6 HomeSense
stores in the U.K. for a net total of 54 new stores in Europe.
We also plan to expand total TJX Europe selling square footage
by 16%.
General
Corporate Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
General corporate expense
|
|
$
|
166.4
|
|
|
$
|
140.0
|
|
|
$
|
139.4
|
|
|
General corporate expense for segment reporting purposes
represents those costs not specifically related to the
operations of our business segments and is included in selling,
general and administrative expenses. The increase in general
corporate expense in fiscal 2010 compared to fiscal 2009 is
primarily due to an $18 million contribution to the
30
TJX Foundation in fiscal 2010 compared to no contribution in
fiscal 2009. Additionally, fiscal 2010 had higher
performance-based incentive and benefit plan accruals as
compared to fiscal 2009, which were partially offset by benefits
related to hedging activity.
General corporate expense in fiscal 2009 versus fiscal 2008 was
virtually flat.
LIQUIDITY
AND CAPITAL RESOURCES
Operating
activities:
Net cash provided by operating activities was
$2,272 million in fiscal 2010, $1,155 million in
fiscal 2009 and $1,375 million in fiscal 2008. The cash
generated from operating activities in each of these fiscal
years was largely due to operating earnings. The decrease in
fiscal 2009 reflected the effects of the economic recession.
Operating cash flows for fiscal 2010 increased
$1,117 million compared to fiscal 2009. Net income provided
cash of $1,214 million in fiscal 2010, an increase of
$333 million over net income of $881 million in fiscal
2009. The change in merchandise inventory, net of the related
change in accounts payable, provided a source of cash of
$345 million in fiscal 2010, compared to a
$210 million use of cash in fiscal 2009. The reduction in
inventory in fiscal 2010 was the result of the ongoing
implementation of our strategy of operating with leaner
inventories and buying closer to need, which, in turn, increased
inventory turnover. Changes in current income taxes
payable/recoverable increased cash in fiscal 2010 by
$191 million compared to a decrease in cash of
$49 million in fiscal 2009. The change in prepaid expenses
and other current assets had a favorable impact on fiscal 2010
cash flows of $64 million, primarily due to the timing of
February rental payments. The change in accrued expenses and
other liabilities provided cash of $31 million in fiscal
2010, compared to a $35 million use of cash in fiscal 2009,
reflecting higher accruals in fiscal 2010 for performance-based
incentive compensation, partially offset by increased funding of
the pension plan. Partially offsetting these favorable changes
to fiscal 2010 operating cash flows was the change in the
deferred income tax provision, which reduced cash flows by
$79 million compared to fiscal 2009 and the unfavorable
impact of $61 million of all other items, which primarily
reflects unrealized gains on assets of the executive savings
plan in fiscal 2010 versus unrealized losses in fiscal 2009.
Operating cash flows for fiscal 2009 decreased by
$220 million as compared to fiscal 2008. Net income and the
non-cash impact of depreciation and the sale of Bobs
Stores assets of $31 million in fiscal 2009 (including the
benefit of the
53rd
week), provided cash of $1,314 million, an increase of
$173 million from the adjusted $1,141 million in
fiscal 2008. The change in deferred income taxes favorably
impacted cash flows in fiscal 2009 by $132 million, while
last years deferred income taxes reduced cash flows by
$102 million. Deferred taxes in fiscal 2008 reflected the
non-cash tax benefit of $47 million relating to the
establishment of the Computer Intrusion reserve. The favorable
impact on deferred income taxes in fiscal 2009 reflected the tax
treatment of payments against the Computer Intrusion reserve and
favorable impact of tax depreciation. The change in merchandise
inventory, net of the related change in accounts payable offset
the favorable changes in cash flows in fiscal 2009, as it
resulted in a use of cash of $210 million in fiscal 2009,
compared to a source of cash of $5 million in fiscal 2008.
The change in merchandise inventories and accounts payable in
fiscal 2009 was primarily driven by a timing difference in the
payment of our accounts payable due to a change in our buying
pattern. The change in accrued expenses and other liabilities
resulted in a use of cash of $35 million in fiscal 2009
versus a source of cash of $203 million in fiscal 2008. In
fiscal 2008, the increase in accrued expenses and other
liabilities reflected $117 million for the pre-tax reserve
established for the Computer Intrusion, which favorably impacted
cash flows, while fiscal 2009s cash flows were reduced by
$75 million for payments against and adjustments to this
reserve. Changes in current income taxes payable/recoverable
reduced cash in fiscal 2009 by $49 million compared to an
increase of $56 million in fiscal 2008 and the change in
prepaid expenses reduced fiscal 2009 operating cash flows by an
additional $65 million, primarily due to the timing of
February rental payments.
31
Discontinued operations reserve: We have a reserve
for future obligations of discontinued operations that relates
primarily to real estate leases associated with the closure of
34 A.J. Wright stores in fiscal 2007, as well as certain leases
of former TJX businesses. The balance in the reserve and the
activity for the last three fiscal years is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In thousands
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Balance at beginning of year
|
|
$
|
40,564
|
|
|
$
|
46,076
|
|
|
$
|
57,677
|
|
Additions to the reserve charged to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
A.J. Wright store closings
|
|
|
8
|
|
|
|
(2,908
|
)
|
|
|
|
|
Other lease related obligations
|
|
|
(8
|
)
|
|
|
2,908
|
|
|
|
|
|
Interest accretion
|
|
|
1,761
|
|
|
|
1,820
|
|
|
|
1,820
|
|
Charges against the reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease-related obligations
|
|
|
(5,891
|
)
|
|
|
(7,323
|
)
|
|
|
(11,214
|
)
|
Termination benefits and all other
|
|
|
(537
|
)
|
|
|
(9
|
)
|
|
|
(2,207
|
)
|
|
Balance at end of year
|
|
$
|
35,897
|
|
|
$
|
40,564
|
|
|
$
|
46,076
|
|
|
The charges against the reserve in fiscal 2010, fiscal 2009 and
fiscal 2008 related primarily to the closed A.J. Wright stores.
In fiscal 2009, we reserved an additional $3 million for
exposure to properties related to the sale of Bobs Stores,
which was offset by a comparable amount due to favorable
settlements on several A.J. Wright locations. The majority of
the reserve relates to lease obligations with respect to the
closure of the A.J. Wright stores and the sale of Bobs
Stores. The remainder of the reserve reflects our estimation of
the cost of claims, updated quarterly, that have been, or we
believe are likely to be, made against us 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 our initial
estimate. Although our actual costs with respect to the lease
obligations may exceed amounts estimated in our reserve, and we
may incur costs for other leases from former discontinued
operations, we do not expect to incur any material costs related
to these discontinued operations in excess of the amounts
estimated. We estimate that the majority of the discontinued
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.
We may also be contingently liable on up to 15 leases of
BJs Wholesale Club and 7 additional Bobs Stores
leases, both former TJX businesses. Our reserve for discontinued
operations does not reflect these leases, because we currently
believe that the likelihood of any future liability to us is not
probable.
Off-balance sheet liabilities: We have contingent
obligations on leases, for which we were a lessee or guarantor,
which were assigned to third parties without TJX being released
by the landlords. Over many years, we have assigned numerous
leases that we originally leased or guaranteed to a significant
number of third parties. With the exception of leases of our
former businesses for which we have reserved, we have rarely had
a claim with respect to assigned leases, and accordingly, we do
not expect that such leases will have a material adverse impact
on our financial condition, results of operations or cash flows.
We do not generally have sufficient information about these
leases to estimate our potential contingent obligations under
them, which could be triggered in the event that one or more of
the current tenants do not fulfill their obligations related to
one or more of these leases.
We also have contingent obligations in connection with some
assigned or sublet properties that we are able to estimate. We
estimate the undiscounted obligations, not reflected in our
reserves, of leases of closed stores of continuing operations,
BJs Wholesale Club and Bobs Stores leases discussed
above, and properties of our discontinued operations that we
have sublet, if the subtenants did not fulfill their
obligations, to be approximately $94 million as of
January 30, 2010. We believe that most or all of these
contingent obligations will not revert to us and, to the extent
they do, will be resolved for substantially less due to
mitigating factors.
We are a party to various agreements under which we may be
obligated to indemnify other parties with respect to breach of
warranty or losses related to such matters as title to assets
sold, specified environmental matters or certain income taxes.
These obligations are typically limited in time and amount.
There are no amounts reflected in our balance sheets with
respect to these contingent obligations.
32
Investing
activities:
Our cash flows for investing activities include capital
expenditures for the last three fiscal years as set forth in the
table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In millions
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
New stores
|
|
$
|
127.8
|
|
|
$
|
147.6
|
|
|
$
|
120.7
|
|
Store renovations and improvements
|
|
|
206.8
|
|
|
|
264.3
|
|
|
|
269.8
|
|
Office and distribution centers
|
|
|
94.7
|
|
|
|
171.0
|
|
|
|
136.5
|
|
|
Capital expenditures
|
|
$
|
429.3
|
|
|
$
|
582.9
|
|
|
$
|
527.0
|
|
|
We expect that capital expenditures will approximate
$750 million for fiscal 2011, which we expect to fund
through internally generated funds. This includes
$216 million for new stores, $289 million for store
renovations, expansions and improvements and $245 million
for our office and distribution centers. The planned increase in
capital expenditures is attributable to investment in systems,
distribution and other infrastructure to support growth as well
as an increase in planned store openings, and increased spending
on renovations and improvements to existing stores.
Investing activities for fiscal 2010 include the purchase and
sale of some short-term investments by TJX Canada, as excess
cash was invested in funds with initial maturities greater than
three months to enhance investment returns. Investing activities
for fiscal 2009 and 2008 also include cash flows associated with
our net investment hedges. During fiscal 2009, we suspended our
policy of hedging the net investment in our foreign subsidiaries
and settled such hedges during the fourth quarter. The net cash
received on net investment hedges during fiscal 2009 amounted to
$14.4 million versus net cash payments of
$13.7 million in fiscal 2008.
Financing
activities:
Cash flows from financing activities resulted in net cash
outflows of $584 million in fiscal 2010, $769 million
in fiscal 2009 and $953 million in fiscal 2008. The
majority of this outflow relates to our share repurchase
programs.
Cash flows from financing activities for fiscal 2010 include the
net proceeds of $774 million from two debt offerings. On
April 7, 2009, we issued $375 million aggregate
principal amount of 6.95% ten-year notes. Related to this
transaction, TJX called for the redemption of its zero coupon
convertible subordinated notes, virtually all of which were
converted into 15.1 million shares of common stock. We used
the proceeds of the 6.95% notes to repurchase additional
shares of common stock under our stock repurchase program. On
July 23, 2009, we issued $400 million aggregate
principal amount of 4.20% six-year notes. We used a portion of
the proceeds of this offering to refinance our
C$235 million term credit facility on August 10, 2009,
prior to its scheduled maturity, and used the remainder,
together with funds from operations, to pay our 7.45% notes
on their scheduled maturity of December 15, 2009.
We spent $950 million in fiscal 2010, $741 million in
fiscal 2009 and $950 million in fiscal 2008 under our stock
repurchase programs. We repurchased 27.0 million shares in
fiscal 2010, 24.0 million shares in fiscal 2009 and
33.3 million shares in fiscal 2008. All shares repurchased
were retired. We record the repurchase of our stock on a cash
basis, and the amounts reflected in the financial statements may
vary from the above due to the timing of the settlement of our
repurchases. During fiscal 2010, we completed the
$1 billion stock repurchase program approved by the Board
of Directors in fiscal 2009 and initiated another multi-year
repurchase program that had been approved by the Board in
September 2009. As of January 30, 2010, $795 million
remained available for purchase under the program authorized in
September 2009. In February 2010, the Board authorized an
additional $1 billion stock repurchase program. We
currently plan to repurchase up to approximately
$900 million to $1 billion of our stock in fiscal
2011. We determine the timing and amount of repurchases and
execution of
Rule 10b5-1
plans from time to time based on our assessment of various
factors including excess cash flow, liquidity, market
conditions, the economic environment and prospects for the
business and other factors, and the timing and amount of these
purchases may change.
We declared quarterly dividends on our common stock which
totaled $0.48 per share in fiscal 2010, $0.44 per share in
fiscal 2009 and $0.36 per share in fiscal 2008. Cash payments
for dividends on our common stock totaled
33
$198 million in fiscal 2010, $177 million in fiscal
2009 and $151 million in fiscal 2008. We announced our
intention to increase the quarterly dividend on our common stock
to $0.15 per share, effective with the dividend payable in June
2010, subject to the approval of our Board of Directors.
Financing activities also included proceeds of $170 million
in fiscal 2010, $142 million in fiscal 2009 and
$134 million in fiscal 2008 from the exercise of employee
stock options.
We traditionally have funded our seasonal merchandise
requirements through cash generated from operations, short-term
bank borrowings and the issuance of short-term commercial paper.
We have a $500 million revolving credit facility maturing
in May 2010 and a $500 million revolving credit facility
maturing in May 2011. TJX pays six basis points annually on the
committed amounts under each of these credit facilities. These
agreements have no compensating balance requirements and have
various covenants including a requirement of a specified ratio
of debt to earnings. These agreements serve as backup to our
commercial paper program. As of January 30, 2010 and
January 31, 2009 there were no outstanding short-term
borrowings. The maximum amount of our U.S. short-term
borrowings outstanding was $165 million during fiscal 2010
and $222 million during fiscal 2009. The weighted average
interest rate on our U.S. short-term borrowings was 1.01%
in fiscal 2010.
As of January 30, 2010 and January 31, 2009, our
foreign subsidiaries had uncommitted credit facilities. TJX
Canada had two credit lines, a C$10 million credit facility
for operating expenses and a C$10 million letter of credit
facility. There were no borrowings under the Canadian credit
line for operating expenses in fiscal 2010 or fiscal 2009. There
were no amounts outstanding on the Canadian credit line for
operating expenses at the end of fiscal 2010 or fiscal 2009. As
of January 30, 2010 and January 31, 2009, TJX Europe
had a credit line of £20 million for our European
operations. The maximum amount outstanding under this U.K.
credit line was £1.9 million in fiscal 2010 and
£6.1 million in fiscal 2009. There were no outstanding
borrowings on this U.K. credit line at the end of fiscal 2010 or
fiscal 2009.
We believe that internally generated funds and our current
credit facilities are more than adequate to meet our operating,
debt and capital needs for at least the next twelve months. See
Note D to the consolidated financial statements for further
information regarding our long-term debt and other financing
sources.
Contractual obligations: As of January 30,
2010, we had payment obligations (including current
installments) under long-term debt arrangements, leases for
property and equipment and purchase obligations that will
require cash outflows as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
Less Than
|
|
|
1-3
|
|
|
3-5
|
|
|
More Than
|
|
Tabular Disclosure of Contractual Obligations
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
|
|
Long-term debt obligations including estimated interest and
current installments
|
|
$
|
1,135,751
|
|
|
$
|
42,863
|
|
|
$
|
85,725
|
|
|
$
|
85,725
|
|
|
$
|
921,438
|
|
Operating lease commitments
|
|
|
5,695,061
|
|
|
|
1,005,366
|
|
|
|
1,771,055
|
|
|
|
1,307,773
|
|
|
|
1,610,867
|
|
Capital lease obligation
|
|
|
22,945
|
|
|
|
3,726
|
|
|
|
7,809
|
|
|
|
7,824
|
|
|
|
3,586
|
|
Purchase obligations
|
|
|
2,329,719
|
|
|
|
2,264,578
|
|
|
|
62,028
|
|
|
|
3,113
|
|
|
|
|
|
|
Total Obligations
|
|
$
|
9,183,476
|
|
|
$
|
3,316,533
|
|
|
$
|
1,926,617
|
|
|
$
|
1,404,435
|
|
|
$
|
2,535,891
|
|
|
The long-term debt obligations above include estimated interest
costs. The lease commitments in the above table are for minimum
rent and do not include costs for insurance, real estate taxes,
other operating expenses and, in some cases, rentals based on a
percentage of sales; these items totaled approximately one-third
of the total minimum rent for the fiscal year ended
January 30, 2010.
Our purchase obligations primarily consist of purchase orders
for merchandise; purchase orders for capital expenditures,
supplies and other operating needs; commitments under contracts
for maintenance needs and other services; and commitments under
executive employment and other agreements. We exclude from
purchase obligations long-term agreements for services and
operating needs that can be cancelled without penalty.
We also have long-term liabilities which include
$254.5 million for employee compensation and benefits, the
majority of which will come due beyond five years,
$151.0 million for accrued rent, the cash flow requirements
of which
34
are included in the lease commitments in the above table, and
$181.7 million for uncertain tax positions for which it is
not reasonably possible for us to predict when they may be paid.
CRITICAL
ACCOUNTING POLICIES
We prepare our consolidated financial statements in accordance
with accounting principles generally accepted in the United
States (U.S. GAAP) which require us to make certain
estimates and judgments that impact our reported results. These
judgments and estimates are continually reviewed and based on
historical experience and other factors which we believe are
reasonable. We consider our most critical accounting policies,
involving management estimates and judgments, to be those
relating to the areas described below.
Inventory valuation: We use the retail method for
valuing inventory on a
first-in
first-out basis. Under the retail method, the cost value of
inventory and gross margins are determined by calculating a
cost-to-retail
ratio and applying it to the retail value of inventory. This
method is widely used in the retail industry and involves
management estimates with regard to such things as markdowns and
inventory shrinkage. A significant factor involves the recording
and timing of permanent markdowns. Under the retail method,
permanent markdowns are reflected in inventory valuation when
the price of an item is reduced. We believe the retail method
results in a more conservative inventory valuation than other
inventory accounting methods. In addition, as a normal business
practice, we have a specific policy as to when markdowns are to
be taken, greatly reducing the need for management estimates.
Inventory shortage involves estimating a shrinkage rate for
interim periods, but is based on a full physical inventory near
the fiscal year end. Thus, the difference between actual and
estimated amounts of shrinkage may cause fluctuations in
quarterly results, but is not a significant factor in full year
results. Overall, we believe that the retail method, coupled
with our disciplined permanent markdown policy and the full
physical inventory taken at each fiscal year end, results in an
inventory valuation that is fairly stated. Lastly, many
retailers have arrangements with vendors that provide for
rebates and allowances under certain conditions, which
ultimately affect the value of inventory. We have historically
not entered into such arrangements with our vendors in our
continuing operations.
Impairment of long-lived assets: We review the
recoverability of the carrying value of our long-lived assets at
least annually and whenever events or circumstances occur that
would indicate that the carrying amounts of those assets are not
recoverable. Significant judgment is involved in projecting the
cash flows of individual stores, as well as our business units,
which involve a number of factors including historical trends,
recent performance and general economic assumptions. If we
determine that an impairment of long-lived assets has occurred,
we record an impairment charge equal to the excess of the
carrying value of those assets over the estimated fair value of
the assets. We believe as of January 30, 2010 that the
carrying value of our long-lived assets is appropriate.
Retirement obligations: Retirement costs are
accrued over the service life of an employee and represent, in
the aggregate, obligations that will ultimately be settled far
in the future and are therefore subject to estimates. We are
required to make assumptions regarding variables, such as the
discount rate for valuing pension obligations and the long-term
rate of return assumed to be earned on pension assets, both of
which impact the net periodic pension cost for the period. The
discount rate, which we determine annually based on market
interest rates, and our estimated long-term rate of return,
which can differ considerably from actual returns, are two
factors that can have a considerable impact on the annual cost
of retirement benefits and the funded status of our qualified
pension plan. The market performance on plan assets during
fiscal 2009 was considerably worse than our expected return, and
as a result the unfunded status of our qualified plan increased
significantly at the end of fiscal 2009. Despite this, we were
not required to fund our plan during fiscal 2009, primarily due
to voluntary funding in prior years. In fiscal 2010 we funded
our qualified pension plan with $132.7 million and may make
additional voluntary contributions during fiscal 2011.
Share-based compensation: In accordance with
U.S. GAAP, TJX estimates the fair value of stock awards
issued to employees and directors under its stock incentive
plan. The fair value of the awards is amortized as
share-based compensation expense over the vesting
periods during which the recipients are required to provide
service. We use the Black-Scholes option pricing model for
determining the fair value of stock options granted, which
requires management to make significant judgments and estimates.
The use of different assumptions and estimates could have a
material impact on the estimated fair value of stock option
grants and the related expense.
35
Casualty insurance: In fiscal 2008, we initiated a
fixed premium program for our casualty insurance. Previously,
our casualty insurance program required us to estimate the total
claims we would incur as a component of our annual insurance
cost. The estimated claims are developed, with the assistance of
an actuary, based on historical experience and other factors.
These estimates involve significant judgments and assumptions,
and actual results could differ from these estimates. A large
portion of these claims are funded with a non-refundable payment
during the policy year, offsetting our estimated claims accrual.
We had a net accrual of $17.1 million for the unfunded
portion of our casualty insurance program as of January 30,
2010.
Income taxes: Like many large corporations, our
income tax returns are regularly audited by federal, state and
local tax authorities in the United States and in foreign
countries where we operate. Such authorities may challenge
positions we take, and we are engaged in various proceedings
with such authorities with respect to assessments, claims,
deficiencies and refunds. In accordance with U.S. GAAP, we
evaluate 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 will not be sustained upon examination. However,
it is possible that amounts accrued or paid as the result of the
final resolutions of examinations, judicial or administrative
proceedings, changes in facts or law, expirations of statute of
limitations in specific jurisdictions or other resolutions of,
or changes in, tax positions, will differ either positively or
negatively from the amounts we have accrued, and may result in
accruals or payments for periods not currently under examination
or for which no claims have been made. It is possible that such
final resolutions or changes in accruals could have a material
adverse impact on the results of operations of the period in
which a examination or proceeding is resolved or in the period
in which a changed outcome becomes probable and reasonably
estimable.
Reserves for Computer Intrusion related costs and for
discontinued operations: As discussed in Note B and
Note N to the consolidated financial statements and
elsewhere in the Managements Discussion and Analysis, we
have reserves for probable losses arising out of the Computer
Intrusion and for leases relating to operations discontinued by
us where we were the original lessee or a guarantor and which
have been assigned or sublet to third parties. The Computer
Intrusion reserve requires us to make estimates and assumptions
about the outcome and costs of claims, litigation and
investigations and costs and expenses we will incur. We make
these estimates based on our best judgments of the outcome of
such claims, litigation and investigations and of the amount of
such costs and expenses. The leases relating to discontinued
operations are long-term obligations, and the estimated cost to
us involves numerous estimates and assumptions including whether
and for how long we remain obligated with respect to particular
leases, the extent to which assignees or subtenants will fulfill
our financial and other obligations under the leases, how
particular obligations may ultimately be settled and what
mitigating factors, including indemnification, may exist to any
liability we may have. We develop these assumptions based on
past experience and by evaluating various probable outcomes and
the circumstances surrounding each situation and location. We
believe that our reserves are a reasonable estimate of the most
likely outcomes arising out of the Computer Intrusion and the
leases relating to discontinued operations and that the reserves
should be adequate to cover the ultimate cash costs we will
incur. However, actual results may differ from our current
estimates, and such differences could be material. We may
decrease or increase the amount of our reserves to adjust for
developments relating to the underlying assumptions and other
factors.
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, where
relevant, with the assistance of our legal counsel, assesses
such contingent liabilities, and such assessments inherently
involve exercises 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, then 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
36
probable but cannot be reasonably estimated, then 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 our consolidated financial statements
included in this annual report for recently issued accounting
standards, including the expected dates of adoption and
estimated effects on our consolidated financial statements.
ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We do not enter into derivatives for speculative or trading
purposes.
FOREIGN
CURRENCY EXCHANGE RISK
We are exposed to foreign currency exchange rate risk on our
investment in our Canadian and European operations on the
translation of these foreign operations into the
U.S. dollar and on purchases by our operations of goods in
currencies that are not their local currencies. As more fully
described in Note E to our consolidated financial
statements, we hedge a portion of our intercompany transactions
with foreign operations and certain merchandise purchase
commitments incurred by these operations with derivative
financial instruments. During fiscal 2009, we ceased hedging our
net investment position in our foreign operations. We enter into
derivative contracts only when there is an underlying economic
exposure. We utilize currency forward and swap contracts
designed to offset the gains or losses in the underlying
exposures. The contracts are executed with banks we believe are
creditworthy and are denominated in currencies of major
industrial countries. We have performed a sensitivity analysis
assuming a hypothetical 10% adverse movement in foreign currency
exchange rates applied to the hedging contracts and the
underlying exposures described above as well as the translation
of our foreign operations into our reporting currency. As of
January 30, 2010, the analysis indicated that such an
adverse movement would not have a material effect on our
consolidated financial position but could have reduced our
pre-tax income from continuing operations for fiscal 2010 by
approximately $42 million.
INTEREST
RATE RISK
Our cash equivalents, short-term investments and certain lines
of credit bear variable interest rates. Changes in interest
rates affect interest earned and paid by us. In addition,
changes in the gross amount of our borrowings and future changes
in interest rates will affect our future interest expense. We
periodically enter into financial instruments to manage our cost
of borrowing; however, we believe that the use of primarily
fixed rate debt minimizes our exposure to market conditions. We
have performed a sensitivity analysis assuming a hypothetical
10% adverse movement in interest rates applied to the maximum
variable-rate debt outstanding, cash and cash equivalents and
short-term investments. As of January 30, 2010, the
analysis indicated that such an adverse movement would not have
a material effect on our consolidated financial position,
results of operations or cash flows.
EQUITY
PRICE RISK
The assets of our qualified pension plan, a large portion of
which are invested in equity securities, are subject to the
risks and uncertainties of the financial markets. We allocate
the pension assets in a manner that attempts to minimize and
control our exposure to market uncertainties. Investments, in
general, are exposed to various risks, such as interest rate,
credit, and overall market volatility risks. The significant
decline in the financial markets over the last several years has
impacted the value of our pension plan assets and the funded
status of our plan, resulting in increased contributions to the
plan.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item may be found on pages F-1
through F-33 of this Annual Report on
Form 10-K.
37
ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS
AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
We have carried out an evaluation, under the supervision and
with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures, as defined in
Rules 13a-15(e)
and
15d-15(e)
under the Exchange Act, as of the end of the period covered by
this report pursuant to
Rules 13a-15
and 15d-15
of the Exchange Act. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in ensuring
that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is
(i) recorded, processed, summarized and reported, within
the time periods specified in the SECs rules and forms;
and (ii) accumulated and communicated to our management,
including our principal executive and principal financial
officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosures. Management recognizes that any controls and
procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating
the cost-benefit relationship of implementing possible controls
and procedures.
(b) Changes in Internal Control Over Financial Reporting
Effective January 1, 2010, we implemented a new payroll
processing system for our domestic business operations within
the Company which resulted in material changes to our processes
and procedures affecting internal control over financial
reporting. Otherwise there were no changes in our internal
control over financial reporting (as defined in
Rules 13a-15(f)
and
15d-15(f)
under the Exchange Act) during the fourth quarter of fiscal 2010
identified in connection with our Chief Executive Officers
and Chief Financial Officers evaluation that have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
(c) Managements Annual Report on Internal Control
Over Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal
control over financial reporting is defined in
Rules 13a-15(f)
and
15d-15(f)
promulgated under the Exchange Act as a process designed by, or
under the supervision of, our principal executive and principal
financial officers, or persons performing similar functions, and
effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
U.S. GAAP and includes those policies and procedures that:
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|
|
|
|
Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions
of the assets of TJX;
|
|
|
|
Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with U.S. GAAP, and that receipts and expenditures of
TJX are being made only in accordance with authorizations of
management and directors of TJX; and
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|
|
Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
TJXs assets that could have a material effect on the
financial statements.
|
Our internal control system is designed to provide reasonable
assurance to our management and Board of Directors regarding the
preparation and fair presentation of published financial
statements. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may
38
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting
as of January 30, 2010 based on the framework in
Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on that evaluation, management
concluded that its internal control over financial reporting was
effective as of January 30, 2010.
(d) Attestation Report of the Independent Registered Public
Accounting Firm
PricewaterhouseCoopers LLP, the independent registered public
accounting firm that audited and reported on our consolidated
financial statements contained herein, has audited the
effectiveness of our internal control over financial reporting
as of January 30, 2010, and has issued an attestation
report on the effectiveness of our internal control over
financial reporting included herein.
ITEM 9B. OTHER
INFORMATION
Not applicable.
39
Part III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following are the executive officers of TJX as of
March 30, 2010:
|
|
|
|
|
Name
|
|
Age
|
|
Office and Employment During Last Five Years
|
|
|
Bernard Cammarata
|
|
70
|
|
Chairman of the Board since 1999. Acting Chief Executive Officer
from September 2005 to January 2007 and Chief Executive Officer
from 1989 to 2000. Led TJX and its former TJX subsidiary and
T.J. Maxx Division from the organization of the business in 1976
until 2000, including serving as Chief Executive Officer and
President of TJX, Chairman and President of TJXs T.J. Maxx
Division, and Chairman of The Marmaxx Group.
|
Ernie Herrman
|
|
49
|
|
Senior Executive Vice President, Group President since August
2008. Senior Executive Vice President since January 2007 and
President, Marmaxx from January 2005 to August 2008. Senior
Executive Vice President, Chief Operating Officer, Marmaxx from
2004 to 2005. Executive Vice President, Merchandising, Marmaxx
from 2001 to 2004. Various merchandising positions with TJX
since joining in 1989.
|
Carol Meyrowitz
|
|
56
|
|
Chief Executive Officer since January 2007, Director since
September 2006 and President since October 2005. Consultant to
TJX from January 2005 to October 2005. Senior Executive Vice
President from March 2004 to January 2005. President of Marmaxx
from 2001 to January 2005. Executive Vice President of TJX from
2001 to 2004.
|
Jeffrey G. Naylor
|
|
51
|
|
Senior Executive Vice President, Chief Financial and
Administrative Officer since February 2009. Senior Executive
Vice President, Chief Administrative and Business Development
Officer, June 2007 to February 2009. Chief Financial and
Administrative Officer, September 2006 to June 2007. Senior
Executive Vice President, Chief Financial Officer, from March
2004 to September 2006, Executive Vice President, Chief
Financial Officer effective February 2004.
|
Jerome Rossi
|
|
66
|
|
Senior Executive Vice President, Group President, since January
2007. Senior Executive Vice President, Chief Operating Officer,
Marmaxx from 2005 to January 2007. President, HomeGoods, from
2000 to 2005. Executive Vice President, Store Operations, Human
Resources and Distribution Services, Marmaxx from 1996 to 2000.
|
Paul Sweetenham
|
|
45
|
|
Senior Executive Vice President, Group President, Europe, since
January 2007. President, T.K. Maxx since 2001. Senior Vice
President, Merchandising and Marketing, T.K. Maxx from 1999 to
2001. Various merchandising positions with T.K. Maxx from 1993
to 1999.
|
All officers hold office until the next annual meeting of the
Board in June 2010 and until their successors are elected, or
appointed, and qualified.
TJX will file with the Securities and Exchange Commission a
definitive proxy statement no later than 120 days after the
close of its fiscal year ended January 30, 2010 (Proxy
Statement). The information required by this Item and not given
in this Item will appear under the headings Election of
Directors, Corporate Governance, Audit
Committee Report and Beneficial Ownership in
our Proxy Statement, which sections are incorporated in this
item by reference.
TJX has a Code of Ethics for TJX Executives governing its
Chairman, Chief Executive Officer, President, Chief Financial
and Administrative Officer, Principal Accounting Officer and
other senior operating, financial and legal executives. The Code
of Ethics for TJX Executives is designed to ensure integrity in
its financial reports and public disclosures. TJX also has a
Code of Conduct and Business Ethics for Directors which promotes
honest and ethical conduct, compliance with applicable laws,
rules and regulations and the avoidance of conflicts of
interest. Both of these codes of conduct are published at
www.tjx.com. We intend to disclose any future amendments
to, or waivers from, the Code of Ethics for TJX Executives or
the Code of Business Conduct and Ethics for Directors within
four business days of
40
the waiver or amendment through a website posting or by filing a
Current Report on
Form 8-K
with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE
COMPENSATION
The information required by this Item will appear under the
heading Executive Compensation in our Proxy
Statement, which section is incorporated in this item by
reference.
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item will appear under the
heading Beneficial Ownership in our 2010 Proxy
Statement, which section is incorporated in this item by
reference.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item will appear under the
headings Transactions with Related Persons and
Corporate Governance in our Proxy Statement, which
sections are incorporated in this item by reference.
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The information required by this Item will appear under the
heading Audit Committee Report in our Proxy
Statement, which section is incorporated in this item by
reference.
41
Part IV
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ITEM 15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
|
(a) Financial Statement Schedules
For a list of the consolidated financial information included
herein, see Index to the Consolidated Financial Statements on
page F-1.
X. Schedule of Valuation and Qualifying Accounts Disclosure
Schedule IIValuation and Qualifying Accounts
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
Amounts
|
|
|
Write-Offs
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
Charged to
|
|
|
Against
|
|
|
End of
|
|
In thousands
|
|
of Period
|
|
|
Net Income
|
|
|
Reserve
|
|
|
Period
|
|
|
|
|
Sales Return Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
14,006
|
|
|
$
|
1,015,470
|
|
|
$
|
1,012,621
|
|
|
$
|
16,855
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
15,298
|
|
|
$
|
934,017
|
|
|
$
|
935,309
|
|
|
$
|
14,006
|
|
|
Fiscal Year Ended January 26, 2008
|
|
$
|
14,182
|
|
|
$
|
913,036
|
|
|
$
|
911,920
|
|
|
$
|
15,298
|
|
|
Discontinued Operations Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
40,564
|
|
|
$
|
1,761
|
|
|
$
|
6,428
|
|
|
$
|
35,897
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
46,076
|
|
|
$
|
1,820
|
|
|
$
|
7,332
|
|
|
$
|
40,564
|
|
|
Fiscal Year Ended January 26, 2008
|
|
$
|
57,677
|
|
|
$
|
1,820
|
|
|
$
|
13,421
|
|
|
$
|
46,076
|
|
|
Casualty Insurance Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
20,759
|
|
|
$
|
1,093
|
|
|
$
|
4,736
|
|
|
$
|
17,116
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
26,373
|
|
|
$
|
1,232
|
|
|
$
|
6,846
|
|
|
$
|
20,759
|
|
|
Fiscal Year Ended January 26, 2008
|
|
$
|
31,443
|
|
|
$
|
17,673
|
|
|
$
|
22,743
|
|
|
$
|
26,373
|
|
|
Computer Intrusion Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
42,211
|
|
|
$
|
|
|
|
$
|
18,730
|
|
|
$
|
23,481
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
117,266
|
|
|
$
|
(13,000
|
)
|
|
$
|
62,055
|
|
|
$
|
42,211
|
|
|
Fiscal Year Ended January 26, 2008
|
|
$
|
|
|
|
$
|
159,200
|
|
|
$
|
41,934
|
|
|
$
|
117,266
|
|
|
42
(b) Exhibits
Listed below are all exhibits filed as part of this report. Some
exhibits are filed by the Registrant with the Securities and
Exchange Commission pursuant to
Rule 12b-32
under the Exchange Act.
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
3(i).1
|
|
Fourth Restated Certificate of Incorporation is incorporated
herein by reference to Exhibit 99.1 to the
Form 8-A/A
filed September 9, 1999. Certificate of Amendment of Fourth
Restated Certificate of Incorporation is incorporated herein by
reference to Exhibit 3(i) to the
Form 10-Q
filed for the quarter ended July 28, 2005.
|
3(ii).1
|
|
By-laws of TJX, as amended, are incorporated herein by reference
to Exhibit 3.1 to the
Form 8-K
filed on September 22, 2009.
|
4.1
|
|
Indenture between TJX and U.S. Bank National Association dated
as of April 2, 2009, incorporated by reference to
Exhibit 4.1 of the Registration Statement on
Form S-3
filed on April 2, 2009.
|
4.2
|
|
First Supplemental Indenture between TJX and U.S. Bank National
Association dated as of April 7, 2009, incorporated by
reference to Exhibit 4.1 to the
Form 8-K
filed on April 7, 2009.
|
4.3
|
|
Second Supplemental Indenture between TJX and U.S. Bank National
Association dated as of July 23, 2009, incorporated herein
by reference to Exhibit 4.1 to the
Form 8-K
filed on July 23, 2009.
|
10.1
|
|
4-year
Revolving Credit Agreement dated May 5, 2005 among various
financial institutions as lenders, including Bank of America,
N.A., JP Morgan Chase Bank, National Association, The Bank of
New York, Citizens Bank of Massachusetts, Key Bank National
Association and Union Bank of California, N.A., as co-agents is
incorporated herein by reference to Exhibit 10.1 to the
Form 8-K
filed May 6, 2005. The related Amendment No. 1 to the
4-year
Revolving Credit Agreement dated May 12, 2006 is
incorporated herein by reference to Exhibit 10.1 to the
Form 8-K
filed May 17, 2006.
|
10.2
|
|
5-year
Revolving Credit Agreement dated May 5, 2005 among various
financial institutions as lenders, including Bank of America,
N.A., JP Morgan Chase Bank, National Association, The Bank of
New York, Citizens Bank of Massachusetts, Key Bank National
Association and Union Bank of California, N.A., as co-agents is
incorporated herein by reference to Exhibit 10.2 to the
Form 8-K
filed May 6, 2005. The related Amendment No. 1 to the
5-year
Revolving Credit Agreement dated May 12, 2006 is
incorporated herein by reference to Exhibit 10.2 to the
Form 8-K
filed May 17, 2006.
|
10.3
|
|
The Employment Agreement dated as of June 2, 2009 between
Bernard Cammarata and TJX is incorporated herein by reference to
Exhibit 10.2 to the
Form 10-Q filed
for the quarter ended August 1,
2009.*
|
10.4
|
|
The Employment Agreement dated as of February 1, 2009
between Carol Meyrowitz and TJX is incorporated herein by
reference to Exhibit 10.1 to the
Form 8-K filed on
February 1,
2009.*
|
10.5
|
|
The Employment Agreement dated as of April 5, 2008 between
Jeffrey Naylor and TJX is incorporated herein by reference to
Exhibit 10.1 to the
Form 8-K filed on
April 7, 2008. The Amendment to Employment Agreement, dated
April 21, 2009, between Jeffrey Naylor and TJX is
incorporated herein by reference to Exhibit 10.2 to the
Form 8-K filed on
April 24,
2009.*
|
10.6
|
|
The Amendment to Employment Agreement, dated April 21,
2009, between Ernie Herrman and TJX is incorporated herein by
reference to Exhibit 10.1 to the
Form 8-K filed on
April 24, 2009. The letter agreement, dated
September 17, 2008, between Ernie Herrman and TJX is
incorporated herein by reference to Exhibit 10.1 to the
Form 10-Q filed
for the quarter ended October 31, 2009. The Employment
Agreement dated as of January 29, 2010 between Ernie
Herrman and TJX is incorporated herein by reference to
Exhibit 10.1 to the
Form 8-K filed on
January 29,
2010.*
|
10.7
|
|
The Form of 409A Amendment to Employment Agreements for the
named executive officers is incorporated herein by reference to
Exhibit 10.9 to the
Form 10-K filed
for the fiscal year ended January 31,
2009.*
|
10.8
|
|
The Employment Agreement dated as of January 29, 2010
between Jerome Rossi and TJX is filed
herewith.*
|
43
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
10.9
|
|
The Employment Agreement dated as of January 29, 2010
between and among Paul Sweetenham, TJX U.K., and TJX is filed
herewith.*
|
10.10
|
|
The Management Incentive Plan, as amended through April 5,
2007, is incorporated herein by reference to Exhibit 10.1
to the Form 10-Q
filed for the quarter ended April 28, 2007. The 409A
Amendment to the Management Incentive Plan, effective as of
January 1, 2008, is incorporated herein by reference to
Exhibit 10.10 to the
Form 10-K filed
for the fiscal year ended January 31,
2009.*
|
10.11
|
|
The Stock Incentive Plan, as amended through June 2, 2009,
is incorporated herein by reference to Exhibit 10.1 to the
Form 10-Q filed
for the quarter ended August 1,
2009.*
|
10.12
|
|
The Form of a Non-Qualified Stock Option Certificate Granted
Under the Stock Incentive Plan (for certain executives) is
incorporated herein by reference to Exhibit 12.1 to the
Form 10-Q filed
for the quarter ended October 31, 2009. The Form of
Non-Qualified Stock Option Terms and Conditions Granted Under
the Stock Incentive Plan (for employees) is incorporated herein
by reference to Exhibit 12.2 to the
Form 10-Q filed
for the quarter ended October 31,
2009.*
|
10.13
|
|
The Form of a Performance-Based Restricted Stock Award Granted
Under Stock Incentive Plan is filed
herewith.*
|
10.14
|
|
The Form of a Performance-Based Deferred Stock Award Granted
Under Stock Incentive Plan is filed
herewith.*
|
10.15
|
|
Description of Director Compensation Arrangements is
incorporated herein by reference to Exhibit 10.15 to the
Form 10-K for the
fiscal year ended January 26,
2008.*
|
10.16
|
|
The Long Range Performance Incentive Plan, as amended through
April 5, 2007, is incorporated herein by reference to
Exhibit 10.2 to the
Form 10-Q filed
for the quarter ended April 28, 2007. The 409A Amendment to
the Long Range Performance Incentive Plan, effective as of
January 1, 2008, is incorporated herein by reference to
Exhibit 10.16 to the
Form 10-K filed
for the fiscal year ended January 31,
2009.*
|
10.17
|
|
The General Deferred Compensation Plan (1998 Restatement) and
related First Amendment, effective January 1, 1999, are
incorporated herein by reference to Exhibit 10.9 to the
Form 10-K for the
fiscal year ended January 30, 1999. The related Second
Amendment, effective January 1, 2000, is incorporated
herein by reference to Exhibit 10.10 to the
Form 10-K filed
for the fiscal year ended January 29, 2000. The related
Third and Fourth Amendments are incorporated herein by reference
to Exhibit 10.17 to the
Form 10-K for the
fiscal year ended January 28, 2006. The related Fifth
Amendment, effective January 1, 2008 is incorporated herein
by reference to Exhibit 10.17 to the
Form 10-K filed
the fiscal year ended January 31,
2009.*
|
10.18
|
|
The Supplemental Executive Retirement Plan (2008 Restatement) is
incorporated herein by reference to Exhibit 10.18 to the
Form 10-K filed
for the fiscal year ended January 31,
2009.*
|
10.19
|
|
The Executive Savings Plan, as amended and restated, as of
January 1, 2008, is incorporated herein by reference to
Exhibit 10.19 to the
Form 10-K filed
for the fiscal year ended January 31,
2009.*
|
10.20
|
|
The form of Indemnification Agreement between TJX and each of
its officers and directors is incorporated herein by reference
to Exhibit 10(r) to the
Form 10-K filed
for the fiscal year ended January 27,
1990.*
|
10.21
|
|
The Trust Agreement dated as of April 8, 1988 between
TJX and State Street Bank and Trust Company is incorporated
herein by reference to Exhibit 10(y) to the
Form 10-K filed
for the fiscal year ended January 30,
1988.*
|
10.22
|
|
The Trust Agreement dated as of April 8, 1988 between
TJX and Fleet Bank (formerly Shawmut Bank of Boston, N.A.) is
incorporated herein by reference to Exhibit 10(z) to the
Form 10-K filed
for the fiscal year ended January 30,
1988.*
|
10.23
|
|
The Trust Agreement for Executive Savings Plan dated as of
January 1, 2005 between TJX and Wells Fargo Bank, N.A. is
incorporated herein by reference to Exhibit 10.26 to the
Form 10-K filed
for the fiscal year ended January 29,
2005.*
|
21
|
|
Subsidiaries:
|
|
|
A list of the Registrants subsidiaries is filed herewith.
|
44
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
23
|
|
Consents of Independent Registered Public Accounting Firm:
|
|
|
The Consent of PricewaterhouseCoopers LLP is filed herewith.
|
24
|
|
Power of Attorney:
|
|
|
The Power of Attorney given by the Directors and certain
Executive Officers of TJX is filed herewith.
|
31.1
|
|
Certification Statement of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
31.2
|
|
Certification Statement of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
32.1
|
|
Certification Statement of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
32.2
|
|
Certification Statement of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
|
|
|
|
|
*
|
|
Management contract or compensatory
plan or arrangement.
|
45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE TJX COMPANIES, INC.
Jeffrey G. Naylor, Senior Executive Vice President, Chief
Financial and Administrative Officer, on behalf of The TJX
Companies, Inc.
Dated: March 30, 2010
46
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
date indicated.
|
|
|
/S/ CAROL MEYROWITZ
Carol
Meyrowitz, President and Chief Executive Officer and Director
|
|
JEFFREY G.
NAYLOR* Jeffrey
G. Naylor, Chief Financial and
Administrative Officer
|
|
|
|
|
|
|
JOSE B.
ALVAREZ* Jose
B. Alvarez, Director
|
|
AMY B.
LANE*
Amy
B. Lane, Director
|
|
|
|
|
|
|
ALAN M.
BENNETT* Alan
M. Bennett, Director
|
|
JOHN F.
OBRIEN* John
F. OBrien, Director
|
|
|
|
|
|
|
DAVID A.
BRANDON* David
A. Brandon, Director
|
|
ROBERT F.
SHAPIRO* Robert
F. Shapiro, Director
|
|
|
|
|
|
|
BERNARD
CAMMARATA* Bernard
Cammarata, Chairman of the Board of Directors
|
|
WILLOW B.
SHIRE* Willow
B. Shire, Director
|
|
|
|
|
|
|
DAVID T.
CHING* David
T. Ching, Director
|
|
FLETCHER H.
WILEY* Fletcher
H. Wiley, Director
|
|
|
|
|
|
|
MICHAEL F.
HINES* Michael
F. Hines, Director
|
|
|
|
|
|
|
*BY
|
/S/ JEFFREY G. NAYLOR
|
Jeffrey G. Naylor
for himself and as attorney-in-fact
Dated: March 30, 2010
47
The TJX
Companies, Inc.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
For Fiscal
Years Ended January 30, 2010, January 31, 2009 and
January 26, 2008
|
|
|
|
|
F-2
|
Consolidated Financial Statements:
|
|
|
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
|
F-7
|
|
|
|
|
|
42
|
F-1
Report of
Independent Registered Public Accounting Firm
To The Board of Directors and Shareholders of The TJX Companies,
Inc:
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects,
the financial position of The TJX Companies, Inc. and its
subsidiaries (the Company) as of January 30,
2010 and January 31, 2009, and the results of their
operations and their cash flows for each of the three years in
the period ended January 30, 2010 in conformity with
accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in
all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial
reporting as of January 30, 2010, based on criteria
established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Companys management is
responsible for these financial statements and the financial
statement schedule, for maintaining effective internal control
over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting,
included in Managements Annual Report on Internal Control
over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on these financial
statements, on the financial statement schedule, and on the
Companys internal control over financial reporting based
on our integrated audits. We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement and
whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
As discussed in Note K to the accompanying consolidated
financial statements, the Company changed its method of
accounting for uncertain tax positions as of January 28,
2007.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 30, 2010
F-2
The TJX
Companies, Inc.
Consolidated
Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
Amounts in thousands
|
|
January 30,
|
|
|
January 31,
|
|
|
January 26,
|
|
except per share amounts
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
Net sales
|
|
$
|
20,288,444
|
|
|
$
|
18,999,505
|
|
|
$
|
18,336,726
|
|
|
Cost of sales, including buying and occupancy costs
|
|
|
14,968,429
|
|
|
|
14,429,185
|
|
|
|
13,883,952
|
|
Selling, general and administrative expenses
|
|
|
3,328,944
|
|
|
|
3,135,589
|
|
|
|
2,997,263
|
|
Provision (credit) for Computer Intrusion related costs
|
|
|
|
|
|
|
(30,500
|
)
|
|
|
197,022
|
|
Interest expense (income), net
|
|
|
39,509
|
|
|
|
14,291
|
|
|
|
(1,598
|
)
|
|
Income from continuing operations before provision for income
taxes
|
|
|
1,951,562
|
|
|
|
1,450,940
|
|
|
|
1,260,087
|
|
Provision for income taxes
|
|
|
737,990
|
|
|
|
536,054
|
|
|
|
477,655
|
|
|
Income from continuing operations
|
|
|
1,213,572
|
|
|
|
914,886
|
|
|
|
782,432
|
|
(Loss) from discontinued operations, net of income taxes
|
|
|
|
|
|
|
(34,269
|
)
|
|
|
(10,682
|
)
|
|
Net income
|
|
$
|
1,213,572
|
|
|
$
|
880,617
|
|
|
$
|
771,750
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
2.90
|
|
|
$
|
2.18
|
|
|
$
|
1.77
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
Net income
|
|
$
|
2.90
|
|
|
$
|
2.10
|
|
|
$
|
1.74
|
|
Weighted average common sharesbasic
|
|
|
417,796
|
|
|
|
419,076
|
|
|
|
443,050
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
2.84
|
|
|
$
|
2.08
|
|
|
$
|
1.68
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
Net income
|
|
$
|
2.84
|
|
|
$
|
2.00
|
|
|
$
|
1.66
|
|
Weighted average common sharesdiluted
|
|
|
427,619
|
|
|
|
442,255
|
|
|
|
468,046
|
|
Cash dividends declared per share
|
|
$
|
0.48
|
|
|
$
|
0.44
|
|
|
$
|
0.36
|
|
The accompanying notes are an integral part of the financial
statements.
F-3
The TJX
Companies, Inc.
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2010
|
|
|
2009
|
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,614,607
|
|
|
$
|
453,527
|
|
Short-term investments
|
|
|
130,636
|
|
|
|
|
|
Accounts receivable, net
|
|
|
148,126
|
|
|
|
143,500
|
|
Merchandise inventories
|
|
|
2,532,318
|
|
|
|
2,619,336
|
|
Prepaid expenses and other current assets
|
|
|
255,707
|
|
|
|
274,091
|
|
Current deferred income taxes, net
|
|
|
122,462
|
|
|
|
135,675
|
|
|
Total current assets
|
|
|
4,803,856
|
|
|
|
3,626,129
|
|
|
Property at cost:
|
|
|
|
|
|
|
|
|
Land and buildings
|
|
|
281,527
|
|
|
|
280,278
|
|
Leasehold costs and improvements
|
|
|
1,930,977
|
|
|
|
1,728,362
|
|
Furniture, fixtures and equipment
|
|
|
3,087,419
|
|
|
|
2,784,316
|
|
|
Total property at cost
|
|
|
5,299,923
|
|
|
|
4,792,956
|
|
Less accumulated depreciation and amortization
|
|
|
3,026,041
|
|
|
|
2,607,200
|
|
|
Net property at cost
|
|
|
2,273,882
|
|
|
|
2,185,756
|
|
|
Property under capital lease, net of accumulated amortization of
$19,357 and $17,124, respectively
|
|
|
13,215
|
|
|
|
15,448
|
|
Other assets
|
|
|
193,230
|
|
|
|
171,381
|
|
Goodwill and tradename, net of amortization
|
|
|
179,794
|
|
|
|
179,528
|
|
|
TOTAL ASSETS
|
|
$
|
7,463,977
|
|
|
$
|
6,178,242
|
|
|
|
LIABILITIES
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
|
$
|
|
|
|
$
|
392,852
|
|
Obligation under capital lease due within one year
|
|
|
2,355
|
|
|
|
2,175
|
|
Accounts payable
|
|
|
1,507,892
|
|
|
|
1,276,098
|
|
Accrued expenses and other current liabilities
|
|
|
1,248,002
|
|
|
|
1,096,766
|
|
Federal, foreign and state income taxes payable
|
|
|
136,737
|
|
|
|
|
|
|
Total current liabilities
|
|
|
2,894,986
|
|
|
|
2,767,891
|
|
|
Other long-term liabilities
|
|
|
697,099
|
|
|
|
765,004
|
|
Non-current deferred income taxes, net
|
|
|
192,447
|
|
|
|
127,008
|
|
Obligation under capital lease, less portion due within one year
|
|
|
15,844
|
|
|
|
18,199
|
|
Long-term debt, exclusive of current installments
|
|
|
774,325
|
|
|
|
365,583
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Common stock, authorized 1,200,000,000 shares, par value
$1, issued and outstanding 409,386,126 and 412,821,592,
respectively
|
|
|
409,386
|
|
|
|
412,822
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(134,124
|
)
|
|
|
(217,781
|
)
|
Retained earnings
|
|
|
2,614,014
|
|
|
|
1,939,516
|
|
|
Total shareholders equity
|
|
|
2,889,276
|
|
|
|
2,134,557
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
|
|
$
|
7,463,977
|
|
|
$
|
6,178,242
|
|
|
The accompanying notes are an integral part of the financial
statements.
F-4
The TJX
Companies, Inc.
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
January 30,
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,213,572
|
|
|
$
|
880,617
|
|
|
$
|
771,750
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
435,218
|
|
|
|
401,707
|
|
|
|
369,396
|
|
Assets of discontinued operation sold
|
|
|
|
|
|
|
31,328
|
|
|
|
|
|
Loss on property disposals and impairment charges
|
|
|
10,270
|
|
|
|
23,903
|
|
|
|
25,944
|
|
Deferred income tax provision (benefit)
|
|
|
53,155
|
|
|
|
132,480
|
|
|
|
(101,799
|
)
|
Amortization of share-based compensation expense
|
|
|
55,145
|
|
|
|
51,229
|
|
|
|
57,370
|
|
Excess tax benefits from stock compensation expense
|
|
|
(17,494
|
)
|
|
|
(18,879
|
)
|
|
|
(6,756
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) in accounts receivable
|
|
|
(1,862
|
)
|
|
|
(8,245
|
)
|
|
|
(25,516
|
)
|
Decrease (increase) in merchandise inventories
|
|
|
147,805
|
|
|
|
(68,489
|
)
|
|
|
(112,411
|
)
|
Decrease (increase) in prepaid expenses and other current assets
|
|
|
21,219
|
|
|
|
(118,830
|
)
|
|
|
2,144
|
|
Increase (decrease) in accounts payable
|
|
|
197,496
|
|
|
|
(141,580
|
)
|
|
|
117,304
|
|
Increase (decrease) in accrued expenses and other liabilities
|
|
|
31,046
|
|
|
|
(34,525
|
)
|
|
|
202,893
|
|
Increase (decrease) in income taxes payable
|
|
|
152,851
|
|
|
|
(10,488
|
)
|
|
|
37,909
|
|
Other
|
|
|
(26,495
|
)
|
|
|
34,344
|
|
|
|
36,546
|
|
|
Net cash provided by operating activities
|
|
|
2,271,926
|
|
|
|
1,154,572
|
|
|
|
1,374,774
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property additions
|
|
|
(429,282
|
)
|
|
|
(582,932
|
)
|
|
|
(526,987
|
)
|
Proceeds (payments) to settle net investment hedges
|
|
|
|
|
|
|
14,379
|
|
|
|
(13,667
|
)
|
Purchase of short-term investments
|
|
|
(278,692
|
)
|
|
|
|
|
|
|
|
|
Sales and maturities of short-term investments
|
|
|
153,275
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
(5,578
|
)
|
|
|
(34
|
)
|
|
|
753
|
|
|
Net cash (used in) investing activities
|
|
|
(560,277
|
)
|
|
|
(568,587
|
)
|
|
|
(539,901
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
774,263
|
|
|
|
|
|
|
|
|
|
Principal payments on current portion of long-term debt
|
|
|
(393,573
|
)
|
|
|
|
|
|
|
|
|
Cash payments for debt issuance expenses
|
|
|
(7,202
|
)
|
|
|
|
|
|
|
|
|
Payments on capital lease obligation
|
|
|
(2,174
|
)
|
|
|
(2,008
|
)
|
|
|
(1,854
|
)
|
Cash payments for repurchase of common stock
|
|
|
(944,762
|
)
|
|
|
(751,097
|
)
|
|
|
(940,208
|
)
|
Proceeds from sale and issuance of common stock
|
|
|
169,862
|
|
|
|
142,154
|
|
|
|
134,109
|
|
Excess tax benefits from stock compensation expense
|
|
|
17,494
|
|
|
|
18,879
|
|
|
|
6,756
|
|
Cash dividends paid
|
|
|
(197,662
|
)
|
|
|
(176,749
|
)
|
|
|
(151,492
|
)
|
|
Net cash (used in) financing activities
|
|
|
(583,754
|
)
|
|
|
(768,821
|
)
|
|
|
(952,689
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
33,185
|
|
|
|
(96,249
|
)
|
|
|
(6,241
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
1,161,080
|
|
|
|
(279,085
|
)
|
|
|
(124,057
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
453,527
|
|
|
|
732,612
|
|
|
|
856,669
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
1,614,607
|
|
|
$
|
453,527
|
|
|
$
|
732,612
|
|
|
The accompanying notes are an integral part of the financial
statements.
F-5
The TJX
Companies, Inc.
Consolidated
Statements of Shareholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Par Value
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Retained
|
|
|
|
|
In thousands
|
|
Shares
|
|
|
$1
|
|
|
Capital
|
|
|
Income (Loss)
|
|
|
Earnings
|
|
|
Total
|
|
|
|
|
Balance, January 27, 2007
|
|
|
453,650
|
|
|
$
|
453,650
|
|
|
$
|
|
|
|
$
|
(33,989
|
)
|
|
$
|
1,870,460
|
|
|
$
|
2,290,121
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
771,750
|
|
|
|
771,750
|
|
Gain due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,998
|
|
|
|
|
|
|
|
20,998
|
|
(Loss) on net investment hedge contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,823
|
)
|
|
|
|
|
|
|
(15,823
|
)
|
(Loss) on cash flow hedge contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,526
|
)
|
|
|
|
|
|
|
(1,526
|
)
|
Recognition of prior service cost and gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,393
|
|
|
|
|
|
|
|
1,393
|
|
Amount of cash flow hedge reclassified from other comprehensive
income to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
429
|
|
|
|
|
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
777,221
|
|
Implementation of accounting for uncertain tax positions (see
note K)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,178
|
)
|
|
|
(27,178
|
)
|
Implementation of the measurement provisions relating to
retirement obligations (see note L)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(167
|
)
|
|
|
(1,641
|
)
|
|
|
(1,808
|
)
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(158,202
|
)
|
|
|
(158,202
|
)
|
Amortization of share-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
57,370
|
|
|
|
|
|
|
|
|
|
|
|
57,370
|
|
Stock options repurchased by TJX
|
|
|
|
|
|
|
|
|
|
|
(3,266
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,266
|
)
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
7,253
|
|
|
|
7,253
|
|
|
|
129,942
|
|
|
|
|
|
|
|
|
|
|
|
137,195
|
|
Common stock repurchased
|
|
|
(32,953
|
)
|
|
|
(32,953
|
)
|
|
|
(184,046
|
)
|
|
|
|
|
|
|
(723,209
|
)
|
|
|
(940,208
|
)
|
|
Balance, January 26, 2008
|
|
|
427,950
|
|
|
|
427,950
|
|
|
|
|
|
|
|
(28,685
|
)
|
|
|
1,731,980
|
|
|
|
2,131,245
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
880,617
|
|
|
|
880,617
|
|
(Loss) due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(171,225
|
)
|
|
|
|
|
|
|
(171,225
|
)
|
Gain on net investment hedge contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,816
|
|
|
|
|
|
|
|
68,816
|
|
Recognition of prior service cost and gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,206
|
)
|
|
|
|
|
|
|
(1,206
|
)
|
Recognition of unfunded post retirement liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86,158
|
)
|
|
|
|
|
|
|
(86,158
|
)
|
Amount of cash flow hedge reclassified from other comprehensive
income to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
677
|
|
|
|
|
|
|
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
691,521
|
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(183,694
|
)
|
|
|
(183,694
|
)
|
Amortization of share-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
51,229
|
|
|
|
|
|
|
|
|
|
|
|
51,229
|
|
Issuance of common stock upon conversion of convertible debt
|
|
|
1,717
|
|
|
|
1,717
|
|
|
|
39,326
|
|
|
|
|
|
|
|
|
|
|
|
41,043
|
|
Stock options repurchased by TJX
|
|
|
|
|
|
|
|
|
|
|
(987
|
)
|
|
|
|
|
|
|
|
|
|
|
(987
|
)
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
7,439
|
|
|
|
7,439
|
|
|
|
147,858
|
|
|
|
|
|
|
|
|
|
|
|
155,297
|
|
Common stock repurchased
|
|
|
(24,284
|
)
|
|
|
(24,284
|
)
|
|
|
(237,426
|
)
|
|
|
|
|
|
|
(489,387
|
)
|
|
|
(751,097
|
)
|
|
Balance, January 31, 2009
|
|
|
412,822
|
|
|
|
412,822
|
|
|
|
|
|
|
|
(217,781
|
)
|
|
|
1,939,516
|
|
|
|
2,134,557
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,213,572
|
|
|
|
1,213,572
|
|
Gain due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,678
|
|
|
|
|
|
|
|
76,678
|
|
Recognition of prior service cost and gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,191
|
|
|
|
|
|
|
|
8,191
|
|
Recognition of unfunded post retirement liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,212
|
)
|
|
|
|
|
|
|
(1,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,297,229
|
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(201,490
|
)
|
|
|
(201,490
|
)
|
Amortization of share-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
55,145
|
|
|
|
|
|
|
|
|
|
|
|
55,145
|
|
Issuance of common stock upon conversion of convertible debt
|
|
|
15,094
|
|
|
|
15,094
|
|
|
|
349,994
|
|
|
|
|
|
|
|
|
|
|
|
365,088
|
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
8,329
|
|
|
|
8,329
|
|
|
|
175,180
|
|
|
|
|
|
|
|
|
|
|
|
183,509
|
|
Common stock repurchased
|
|
|
(26,859
|
)
|
|
|
(26,859
|
)
|
|
|
(580,319
|
)
|
|
|
|
|
|
|
(337,584
|
)
|
|
|
(944,762
|
)
|
|
Balance, January 30, 2010
|
|
|
409,386
|
|
|
$
|
409,386
|
|
|
$
|
|
|
|
$
|
(134,124
|
)
|
|
$
|
2,614,014
|
|
|
$
|
2,889,276
|
|
|
The accompanying notes are an integral part of the financial
statements.
F-6
The TJX
Companies, Inc.
Notes
to Consolidated Financial Statements
|
|
A.
|
Summary
of Accounting Policies
|
Basis of Presentation: The consolidated financial
statements of The TJX Companies, Inc. (referred to as
TJX or we) include the financial
statements of all of TJXs subsidiaries, all of which are
wholly owned. All of its activities are conducted by TJX or its
subsidiaries and are consolidated in these financial statements.
All intercompany transactions have been eliminated in
consolidation.
Fiscal Year: During fiscal 2010, TJX amended its
bylaws to provide that its fiscal year will end on the Saturday
nearest to the last day of January of each year. Prior to this
TJXs fiscal year ended on the last Saturday of January.
This change only affects TJX prospectively by shifting the
timing of its next 53 week fiscal year. The fiscal year
ended January 30, 2010 (fiscal 2010) included
52 weeks, the fiscal year ended January 31, 2009
(fiscal 2009) included 53 weeks and the fiscal
year ended January 26, 2008 (fiscal 2008)
included 52 weeks.
Earnings Per Share: All earnings per share amounts
discussed refer to diluted earnings per share unless otherwise
indicated.
Use of Estimates: The preparation of the financial
statements, in conformity with accounting principles generally
accepted in the United States of America
(U.S. GAAP), requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosure of contingent
liabilities, at the date of the financial statements as well as
the reported amounts of revenues and expenses during the
reporting period. TJX considers its accounting policies relating
to inventory valuation, impairments of long-lived assets,
retirement obligations, share-based compensation, casualty
insurance, income taxes, reserves for Computer Intrusion related
costs and for discontinued operations, and loss contingencies to
be the most significant accounting policies that involve
management estimates and judgments. Actual amounts could differ
from those estimates, and such differences could be material.
Revenue Recognition: TJX records revenue at the
time of sale and receipt of merchandise by the customer, net of
a reserve for estimated returns. We estimate returns based upon
our historical experience. We defer recognition of a layaway
sale and its related profit to the accounting period when the
customer receives the layaway merchandise. Proceeds from the
sale of store cards as well as the value of store cards issued
to customers as a result of a return or exchange, are deferred
until the customers use the cards to acquire merchandise. Based
on historical experience, we estimate the amount of store cards
that will not be redeemed (store card breakage) and,
to the extent allowed by local law, these amounts are amortized
into income over the redemption period. Revenue recognized from
store card breakage was $7.8 million in fiscal 2010,
$10.7 million in fiscal 2009 and $10.1 million in
fiscal 2008.
Consolidated Statements of Income Classifications:
Cost of sales, including buying and occupancy costs, includes
the cost of merchandise sold and gains and losses on inventory
and fuel-related derivative contracts; store occupancy costs
(including real estate taxes, utility and maintenance costs and
fixed asset depreciation); the costs of operating our
distribution centers; payroll, benefits and travel costs
directly associated with buying inventory; and systems costs
related to the buying and tracking of inventory.
Selling, general and administrative expenses include store
payroll and benefit costs; communication costs; credit and check
expenses; advertising; administrative and field management
payroll, benefits and travel costs; corporate administrative
costs and depreciation; gains and losses on non-inventory
related foreign currency exchange contracts; and other
miscellaneous income and expense items.
Cash and Cash Equivalents: TJX generally considers
highly liquid investments with a maturity of three months or
less at the date of purchase to be cash equivalents. Investments
with maturities greater than three months but less than one year
at the date of purchase are included in short-term investments.
Our investments are primarily high-grade commercial paper,
institutional money market funds and time deposits with major
banks.
F-7
Merchandise Inventories: Inventories are stated at
the lower of cost or market. TJX uses the retail method for
valuing inventories on the
first-in
first-out basis. We almost exclusively utilize a permanent
markdown strategy and lower the cost value of the inventory that
is subject to markdown at the time the retail prices are lowered
in our stores. We accrue for inventory obligations at the time
inventory is shipped rather than when received and accepted by
TJX. At January 30, 2010 and January 31, 2009,
in-transit inventory included in merchandise inventories was
$396.8 million and $329.9 million, respectively.
Comparable amounts were reflected in accounts payable at those
dates.
Common Stock and Equity: Equity transactions
consist primarily of the repurchase of our common stock under
our stock repurchase programs and the amortization of expense
and issuance of common stock under our stock incentive plan. In
fiscal 2010, we also issued shares upon conversion of
convertible notes called for redemption, discussed in
Note D. Under our stock repurchase programs we repurchase
our common stock on the open market. The par value of the shares
repurchased is charged to common stock with the excess of the
purchase price over par first charged against any available
additional paid-in capital (APIC) and the balance
charged to retained earnings. Due to the high volume of
repurchases over the past several years, we have no remaining
balance in APIC in any of the years presented. All shares
repurchased have been retired.
Shares issued under TJXs stock incentive plan are issued
from authorized but unissued shares, and proceeds received are
recorded by increasing common stock for the par value of the
shares with the excess over par added to APIC. Income tax
benefits upon the expensing of options result in the creation of
a deferred tax asset, while income tax benefits due to the
exercise of stock options reduce deferred tax assets to the
extent that an asset for the related grant has been created. Any
tax benefits greater than the deferred tax assets created at the
time of expensing the options are credited to APIC; any
deficiencies in the tax benefits are debited to APIC to the
extent a pool for such deficiencies exists. In the absence of a
pool any deficiencies are realized in the related periods
statements of income through the provision for income taxes. Any
excess income tax benefits are included in cash flows from
financing activities in the statements of cash flows. The par
value of restricted stock awards is also added to common stock
when the stock is issued, generally at grant date. The fair
value of the restricted stock awards in excess of par value is
added to APIC as the awards are amortized into earnings over the
related vesting periods. Upon the call of our convertible notes
most holders of the notes chose to convert into TJX common
stock. When converted the face value of the convertible notes
less unamortized debt discount was relieved, common stock was
credited with the par value of the shares issued and the excess
of the carrying value of the convertible notes over par was
added to APIC.
Share-Based Compensation: TJX accounts for share
based compensation in accordance with U.S. GAAP whereby it
estimates the fair value of each option grant on the date of
grant using the Black-Scholes option pricing model. See
Note H for a detailed discussion of share-based
compensation.
Interest: TJXs interest expense (income) is
presented as a net amount. The following is a summary of net
interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 30,
|
|
|
January 31,
|
|
|
January 26,
|
|
Dollars in thousands
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Interest expense
|
|
$
|
49,278
|
|
|
$
|
38,123
|
|
|
$
|
39,926
|
|
Capitalized interest
|
|
|
(758
|
)
|
|
|
(1,647
|
)
|
|
|
(799
|
)
|
Interest (income)
|
|
|
(9,011
|
)
|
|
|
(22,185
|
)
|
|
|
(40,725
|
)
|
|
Net interest expense (income)
|
|
$
|
39,509
|
|
|
$
|
14,291
|
|
|
$
|
(1,598
|
)
|
|
We capitalize interest during the active construction period of
major capital projects. Capitalized interest is added to the
cost of the related assets.
Depreciation and Amortization: For financial
reporting purposes, TJX provides for depreciation and
amortization of property by the use of the straight-line method
over the estimated useful lives of the assets. Buildings are
depreciated over 33 years. Leasehold costs and improvements
are generally amortized over their useful life or the committed
lease term (typically 10 years), whichever is shorter.
Furniture, fixtures and equipment are depreciated over 3 to
10 years. Depreciation and amortization expense for
property was $435.8 million for fiscal 2010,
$398.0 million for fiscal 2009
F-8
and $364.2 million for fiscal 2008. Amortization expense
for property held under a capital lease was $2.2 million in
fiscal 2010, 2009 and 2008. Maintenance and repairs are charged
to expense as incurred. Significant costs incurred for
internally developed software are capitalized and amortized over
3 to 10 years. Upon retirement or sale, the cost of
disposed assets and the related accumulated depreciation are
eliminated and any gain or loss is included in income.
Pre-opening costs, including rent, are expensed as incurred.
Lease Accounting: TJX begins to record rent
expense when it takes possession of a store, which is typically
30 to 60 days prior to the opening of the store and
generally occurs before the commencement of the lease term, as
specified in the lease.
Long-Lived Assets: Presented below is information
related to carrying values of our long-lived assets by
geographic location:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
|
|
|
January 31,
|
|
|
January 26,
|
|
Dollars in thousands
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
United States
|
|
$
|
1,607,733
|
|
|
$
|
1,631,370
|
|
|
$
|
1,533,914
|
|
TJX Canada
|
|
|
195,434
|
|
|
|
178,176
|
|
|
|
217,342
|
|
TJX Europe
|
|
|
483,930
|
|
|
|
391,658
|
|
|
|
483,879
|
|
|
Total long-lived assets
|
|
$
|
2,287,097
|
|
|
$
|
2,201,204
|
|
|
$
|
2,235,135
|
|
|
Goodwill and Tradename: Goodwill is primarily the
excess of the purchase price paid over the carrying value of the
minority interest acquired in fiscal 1990 in TJXs former
83%-owned subsidiary and represents goodwill associated with the
T.J. Maxx chain. In addition, goodwill includes the excess of
cost over the estimated fair market value of the net assets of
Winners acquired by TJX in fiscal 1991.
Goodwill totaled $72.1 million as of January 30, 2010,
$71.8 million as of January 31, 2009 and
$72.2 million as of January 26, 2008. Goodwill is
considered to have an indefinite life and accordingly is not
amortized. Changes in goodwill are attributable to the effect of
exchange rate changes on Winners reported goodwill.
Tradename is the value assigned to the name
Marshalls, acquired by TJX in fiscal 1996 as part of
the acquisition of the Marshalls chain. The value of the
tradename was determined by the discounted present value of
assumed after-tax royalty payments, offset by a reduction for
their pro-rata share of negative goodwill acquired. The
Marshalls tradename is carried at a value of $107.7 million
and is considered to have an indefinite life.
TJX occasionally acquires or licenses other trademarks to be
used in connection with private label merchandise. Such
trademarks are included in other assets and are amortized to
cost of sales, including buying and occupancy costs, over their
useful life, generally from 7 to 10 years.
Goodwill, tradename and trademarks, and the related amortization
if any, are included in the respective operating segment to
which they relate. There is no accumulated impairment related to
our goodwill, tradename or trademarks.
Impairment of Long-Lived Assets, Goodwill and
Tradename: TJX evaluates its long-lived assets and
assets with indefinite lives (other than Goodwill and Tradename)
for indicators of impairment whenever events or changes in
circumstances indicate their carrying amounts may not be
recoverable, and at least annually in the fourth quarter of each
fiscal year. An impairment exists when the undiscounted cash
flow of an asset or asset group is less than the carrying cost
of that asset or asset group. The evaluation for long-lived
assets is performed at the lowest level of identifiable cash
flows, which is generally at the individual store level. If
indicators of impairment are identified, an undiscounted cash
flow analysis is performed to determine if an impairment exists.
The
store-by-store
evaluations did not indicate any recoverability issues (for any
of our continuing operations) during the past three fiscal years.
Goodwill is tested for impairment whenever events or changes in
circumstances indicate that an impairment may have occurred and
at least annually in the fourth quarter of each fiscal year, by
comparing the carrying value of the related reporting unit to
its fair value. An impairment exists when this analysis, using
typical valuation models such as the discounted cash flow
method, shows that the fair value of the reporting unit is less
than the carrying cost of the reporting
F-9
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: TJXs 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 flows is translated at average exchange rates prevailing
during the fiscal year.
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 transferors
continuing involvement in transferred financial assets. This
guidance must be applied as of the beginning of each reporting
entitys 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
F-10
our current estimation of total potential cash liabilities from
pending litigation, proceedings, investigations and other
claims, as well as legal, ongoing monitoring and other costs and
expenses, arising from the Computer Intrusion. As an estimate,
our reserve is subject to uncertainty, and our actual costs may
vary from our current estimate, and such variations may be
material. We may decrease or increase the amount of our reserve
to adjust for developments in the course and resolution of
litigation, claims and investigations and related expenses,
insurance proceeds and changes in our estimates.
|
|
C.
|
Discontinued
Operations
|
Sale of Bobs Stores: In fiscal 2009, TJX
sold Bobs Stores and recorded as a component of
discontinued operations a loss on disposal (including expenses
relating to the sale) of $19.0 million, net of tax benefits
of $13.0 million. The net carrying value of Bobs
Stores assets sold was $33 million, which consisted
primarily of merchandise inventory of $56 million, offset
by merchandise payable of $21 million. The loss on disposal
reflects sales proceeds of $7.2 million as well as expenses
of $5.8 million relating to the sale. TJX remains
contingently liable on 7 of the Bobs Stores leases which
are discussed in Note N to the consolidated financial
statements.
TJX also reclassified the operating results of Bobs Stores
for all periods prior to the sale as a component of discontinued
operations. The following table presents the net sales, segment
profit (loss) and after-tax loss from operations reclassified to
discontinued operations for all periods prior to the sale of
Bobs Stores:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
|
|
Net sales
|
|
$
|
148,040
|
|
|
$
|
310,400
|
|
Segment (loss)
|
|
|
(25,524
|
)
|
|
|
(17,398
|
)
|
After-tax (loss) from operations
|
|
|
(15,314
|
)
|
|
|
(10,682
|
)
|
|
The table below summarizes the pre-tax and after-tax loss from
discontinued operations for fiscal 2009 and fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
|
|
(Loss) from discontinued operations before provision for income
taxes
|
|
$
|
(56,980
|
)
|
|
$
|
(17,398
|
)
|
Tax benefits
|
|
|
22,711
|
|
|
|
6,716
|
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
(34,269
|
)
|
|
$
|
(10,682
|
)
|
|
|
|
D.
|
Long-Term
Debt and Credit Lines
|
The table below presents long-term debt, exclusive of current
installments, as of January 30, 2010 and January 31,
2009. All amounts are net of unamortized debt discounts. Capital
lease obligations are separately presented in Note G.
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2010
|
|
|
2009
|
|
|
|
|
General corporate debt:
|
|
|
|
|
|
|
|
|
4.20% senior unsecured notes, maturing August 15, 2015
(effective interest rate of 4.20% after reduction of unamortized
debt discount of $29 in fiscal 2010)
|
|
$
|
399,971
|
|
|
$
|
|
|
6.95% senior unsecured notes, maturing April 15, 2019
(effective interest rate of 6.98% after reduction of unamortized
debt discount of $646 in fiscal 2010)
|
|
|
374,354
|
|
|
|
|
|
|
Total general corporate debt
|
|
|
774,325
|
|
|
|
|
|
|
Subordinated debt:
|
|
|
|
|
|
|
|
|
Zero coupon convertible subordinated notes (net of reduction of
unamortized debt discount of $99,360 in fiscal 2009)
|
|
|
|
|
|
|
365,583
|
|
|
Total subordinated debt
|
|
|
|
|
|
|
365,583
|
|
|
Long-term debt, exclusive of current installments
|
|
$
|
774,325
|
|
|
$
|
365,583
|
|
|
F-11
The aggregate maturities of long-term debt, exclusive of current
installments at January 30, 2010 are as follows:
|
|
|
|
|
In thousands
|
|
Long-Term Debt
|
|
|
|
|
Fiscal Year
|
|
|
|
|
2012
|
|
$
|
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
Later years
|
|
|
775,000
|
|
Less amount representing unamortized debt discount
|
|
|
(675
|
)
|
|
Aggregate maturities of long-term debt, exclusive of current
installments
|
|
$
|
774,325
|
|
|
In February 2001, TJX issued $517.5 million zero coupon
convertible subordinated notes due in February 2021 and raised
gross proceeds of $347.6 million. The issue price of the
notes represented a yield to maturity of 2% per year. During
fiscal 2010, TJX called for the redemption of these notes at the
original issue price plus accrued original issue discount, and
462,057 of such notes with a carrying value of
$365.1 million were converted into 15.1 million shares
of TJX common stock at a rate of 32.667 shares per note.
TJX paid $2.3 million to redeem the remaining 2,886 notes
outstanding that were not converted. Prior to fiscal 2010, a
total of 52,557 notes were either converted into common shares
of TJX or put back to the Company.
On April 7, 2009, TJX issued $375 million aggregate
principal amount of 6.95% ten-year notes and used the proceeds
from the 6.95% notes offering to repurchase additional
common stock under its stock repurchase program in fiscal 2010.
Also in April 2009, prior to the issuance of the
6.95% notes, TJX entered into a rate-lock agreement to
hedge the underlying treasury rate of those notes. The cost of
this agreement is being amortized to interest expense over the
term of the 6.95% notes and results in an effective fixed
rate of 7.00% on those notes.
On July 23, 2009, TJX issued $400 million aggregate
principal amount of 4.20% six-year notes. TJX used a portion of
the proceeds from the sale of the notes to refinance its
C$235 million term credit facility on August 10, 2009,
prior to its scheduled maturity, and used the remainder,
together with funds from operations, to repay its
$200 million 7.45% notes due December 15, 2009,
at maturity. Also in July 2009, prior to the issuance of the
4.20% notes, TJX entered into a rate-lock agreement to
hedge the underlying treasury rate on $250 million of those
notes. The cost of this agreement is being amortized to interest
expense over the term of the 4.20% notes and results in an
effective fixed rate of 4.19% on the notes.
TJX has a $500 million revolving credit facility maturing
May 2010 and a $500 million revolving credit facility
maturing May 2011. TJX pays six basis points annually on the
committed amounts under each of the credit facilities. These
agreements have no compensating balance requirements and have
various covenants including a requirement of a specified ratio
of debt to earnings. These agreements serve as back up to
TJXs commercial paper program. As of January 30,
2010, there were no outstanding amounts under these credit
facilities. The maximum amount of our U.S. short-term
borrowings outstanding was $165.0 million during fiscal
2010 and $222.0 million in fiscal 2009. The weighted
average interest rate on our U.S. short-term borrowings was
1.01% in fiscal 2010. We did not borrow under these credit
facilities during fiscal 2008.
As of January 30, 2010 and January 31, 2009,
TJXs foreign subsidiaries had uncommitted credit
facilities. TJX Canada had two credit lines, a C$10 million
facility for operating expenses and a C$10 million letter
of credit facility. There were no borrowings under the Canadian
credit line for operating expenses in fiscal 2010 or fiscal
2009. The maximum amount outstanding under our Canadian credit
line for operating expenses was C$5.7 million in fiscal
2008. There were no amounts outstanding on the Canadian credit
line for operating expenses at the end of fiscal 2010 or fiscal
2009. As of January 30, 2010, TJX Europe had a credit line
of £20 million. The maximum amount outstanding under
this U.K. line was £1.9 million in fiscal 2010,
£6.1 million in fiscal 2009 and
£16.4 million in fiscal 2008. There were no
outstanding borrowings on this U.K. credit line at the end of
fiscal 2010 or fiscal 2009.
F-12
TJX enters into financial instruments to manage its cost of
borrowing and to manage its exposure to changes in fuel costs
and foreign currency exchange rates. TJX recognizes all
derivative instruments as either assets or liabilities in the
statements of financial position and measures those instruments
at fair value. Changes to the fair value of derivative contracts
that do not qualify for hedge accounting are reported in
earnings in the period of the change. For derivatives that
qualify for hedge accounting, changes in the fair value of the
derivatives are either recorded in shareholders equity as
a component of other comprehensive income or are recognized
currently in earnings, along with an offsetting adjustment
against the basis of the item being hedged. Effective in the
fourth quarter of fiscal 2009, TJX no longer entered into
contracts to hedge its net investments in foreign subsidiaries
and settled all existing contracts. As a result, there were no
net investment contracts as of January 30, 2010 or
January 31, 2009.
Interest Rate Contracts: During fiscal 2004, TJX
entered into interest rate swaps on $100 million of the
$200 million ten-year notes outstanding at that time,
effectively converting the interest on that portion of the
unsecured notes from fixed to a floating rate of interest
indexed to the six-month LIBOR rate. The interest rate swaps
settled in December 2009. Under these swaps, TJX paid a specific
variable interest rate and received the fixed rate applicable to
the underlying debt. The interest income/expense on the swaps
was accrued as earned and recorded as an adjustment to the
interest expense accrued on the fixed-rate debt. The interest
rate swaps were designated as fair value hedges on the
underlying debt. The fair value of the contracts, excluding the
net interest accrual, amounted to an asset of $1.6 million
as of January 31, 2009 and an asset of $1.2 million at
January 26, 2008. The valuation of the swaps resulted in an
offsetting fair value adjustment to the debt hedged.
Accordingly, current installments of long-term debt was
increased by $1.6 million in fiscal 2009 and by
$1.2 million in fiscal 2008. The average effective interest
rate on $100 million of the 7.45% unsecured notes,
inclusive of the effect of hedging activity, was approximately
4.04% in fiscal 2010, 6.54% in fiscal 2009 and 8.77% in fiscal
2008.
Concurrent with the issuance of the C$235 million
three-year note in fiscal 2006, TJX entered an interest rate
swap on the principal amount of the note effectively converting
the interest on the note from floating to a fixed rate. In
January 2009 this interest rate swap settled, one year before
the maturity date of the underlying debt, which was extended one
year to January 2010 and subsequently repaid in the second
quarter of fiscal 2010 before its scheduled maturity. Under this
swap TJX paid a specified fixed interest rate and received the
floating rate applicable to the underlying debt. The interest
income/expense on the swap was accrued as earned and recorded as
an adjustment to the interest expense accrued on the
floating-rate debt. The interest rate swap was designated as a
cash flow hedge of the underlying debt. The fair value of the
interest rate swap, excluding the net interest accrual, amounted
to an asset of $1.1 million (C$1.1 million) as of
January 26, 2008. The valuation of the swap resulted in an
adjustment to other comprehensive income of a similar amount.
The average effective interest rate on the note, inclusive of
the effect of hedging activity, was approximately 4.50% in both
fiscal 2009 and 2008.
Diesel Fuel Contracts: During fiscal 2010, TJX
entered into agreements to hedge a portion of its notional
diesel requirements for fiscal 2011, based on the diesel fuel
consumed by independent freight carriers transporting the
Companys inventory. These economic hedges relate to 10% of
our notional diesel requirements in the second quarter of fiscal
2011 and 20% of our notional diesel requirements in the third
and fourth quarters of fiscal 2011. These diesel fuel hedge
agreements will settle during the last three quarters of fiscal
2011 and expire in February 2011. During fiscal 2009, TJX
entered into agreements to hedge approximately 30% of its
notional diesel fuel requirements for fiscal 2010, which settled
throughout the year and terminated in February 2010. Independent
freight carriers transporting the Companys inventory
charge TJX a mileage surcharge for diesel fuel price increases
as incurred by the carrier. The hedge agreements are designed to
mitigate the volatility of diesel fuel pricing (and the
resulting per mile surcharges payable by TJX) by setting a fixed
price per gallon for the year. TJX elected not to apply hedge
accounting rules to these contracts. The change in the fair
value of the hedge agreements resulted in a gain of
$4.5 million in fiscal 2010 and a loss of $4.9 million
in fiscal 2009 both of which are reflected in earnings as a
component of cost of sales, including buying and occupancy costs.
F-13
Foreign Currency Contracts: TJX enters into
forward foreign currency exchange contracts to obtain economic
hedges on firm U.S. dollar and Euro denominated merchandise
purchase commitments made by T.K. Maxx (United Kingdom,
Ireland, Germany and Poland), Winners (Canada) and Marmaxx.
These commitments are typically twelve months or less in
duration. The contracts outstanding at January 30, 2010
cover certain commitments for the four quarters of fiscal 2011.
TJX elected not to apply hedge accounting rules to these
contracts in fiscal 2010, fiscal 2009 and fiscal 2008. The
change in the fair value of these contracts resulted in income
of $494,000 in fiscal 2010, a loss of $2.3 million in
fiscal 2009 and income of $6.6 million in fiscal 2008 and
is included in earnings as a component of cost of sales,
including buying and occupancy costs.
Until the fourth quarter of fiscal 2009, TJX entered into
foreign currency forward and swap contracts in both Canadian
dollars and British pound sterling and accounted for them as
hedges of the net investment in and between foreign subsidiaries
or cash flow hedges of Winners long-term intercompany debt. TJX
applied hedge accounting to these hedge contracts of our
investment in foreign subsidiaries, and changes in fair value of
these contracts, as well as gains and losses upon settlement,
were recorded in accumulated other comprehensive income,
offsetting changes in the cumulative foreign translation
adjustments of the foreign subsidiaries. The change in fair
value of the contracts designated as hedges of the investment in
foreign subsidiaries resulted in a gain of $68.8 million,
net of income taxes, in fiscal 2009, and a loss of
$15.8 million, net of income taxes, in fiscal 2008. The
ineffective portion of the net investment hedges resulted in
pre-tax charges to the income statement of $2.2 million in
fiscal 2009 and $9.1 million in fiscal 2008. The change in
the cumulative foreign currency translation adjustment resulted
in a loss of $76.7 million, net of income taxes, in fiscal
2010, a gain of $171.2 million, net of income taxes, in
fiscal 2009, and a gain of $21.0 million, net of income
taxes, in fiscal 2008. Amounts included in other comprehensive
income relating to cash flow hedges were reclassified to
earnings as the underlying exposure on the debt had an impact on
earnings. The net amount reclassified from other comprehensive
income to the income statement in fiscal 2009 related to cash
flow hedges was $677,368, net of income taxes. The net loss
recognized in fiscal 2008 related to cash flow hedges was
$1.1 million, net of income taxes.
TJX also enters into derivative contracts, generally designated
as fair value hedges, to hedge intercompany debt and
intercompany interest payable. The changes in fair value of
these contracts are recorded in selling, general and
administrative expenses and are offset by marking the underlying
item to fair value in the same period. Upon settlement, the
realized gains and losses on these contracts are offset by the
realized gains and losses of the underlying item in selling,
general and administrative expenses. There were no such
contracts outstanding as of January 30, 2010. The net
impact on the income statement of hedging activity related to
these intercompany payables was income of $3.7 million in
fiscal 2010, expense of $1.7 million in fiscal 2009 and
income of $2.6 million in fiscal 2008.
F-14
Following is a summary of TJXs derivative financial
instruments and related fair values outstanding at
January 30, 2010:
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|
|
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|
|
Net Fair
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Value in
|
|
|
|
|
|
|
|
|
|
Blended
|
|
|
Balance
|
|
|
|
|
|
|
|
|
US$ at
|
|
|
|
|
|
|
|
|
|
Contract
|
|
|
Sheet
|
|
|
Asset
|
|
|
(Liability)
|
|
|
January
|
|
In thousands
|
|
Pay
|
|
|
Receive
|
|
|
Rate
|
|
|
Location
|
|
|
US$
|
|
|
US$
|
|
|
30, 2010
|
|
|
|
|
Hedge accounting not elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diesel contracts
|
|
|
Fixed on 260K -
520K gal
per month
|
|
|
|
Float on 260K -
520K gal
per month
|
|
|
|
N/A
|
|
|
|
(Accrued Exp
|
)
|
|
$
|
|
|
|
$
|
(442
|
)
|
|
$
|
(442
|
)
|
Merchandise purchase commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C$
|
220,244
|
|
|
US$
|
210,476
|
|
|
|
0.9556
|
|
|
|
Prepaid Expense
|
|
|
|
4,719
|
|
|
|
|
|
|
|
4,719
|
|
|
|
C$
|
2,264
|
|
|
|
1,450
|
|
|
|
0.6406
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(105
|
)
|
|
|
(105
|
)
|
|
|
£
|
19,000
|
|
|
US$
|
31,307
|
|
|
|
1.6477
|
|
|
|
Prepaid Expense
|
|
|
|
923
|
|
|
|
|
|
|
|
923
|
|
|
|
£
|
16,074
|
|
|
|
17,910
|
|
|
|
1.1142
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(882
|
)
|
|
|
(882
|
)
|
|
|
US$
|
1,175
|
|
|
|
818
|
|
|
|
1.4370
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(42
|
)
|
|
|
(42
|
)
|
|
Total fair value of all financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,171
|
|
|
Following is a summary of TJXs derivative financial
instruments and related fair values outstanding at
January 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value in
|
|
|
|
|
|
|
|
|
|
Blended
|
|
|
Balance
|
|
|
|
|
|
|
|
|
US$ at
|
|
|
|
|
|
|
|
|
|
Contract
|
|
|
Sheet
|
|
|
Asset
|
|
|
(Liability)
|
|
|
January
|
|
In thousands
|
|
Pay
|
|
|
Receive
|
|
|
Rate
|
|
|
Location
|
|
|
US$
|
|
|
US$
|
|
|
31, 2009
|
|
|
|
|
Fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
|
LIBOR + 4.17
|
%
|
|
|
7.45
|
%
|
|
|
N/A
|
|
|
|
Int Rec/
Prepaid Exp
|
|
|
$
|
766
|
|
|
$
|
|
|
|
$
|
766
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
|
LIBOR + 3.42
|
%
|
|
|
7.45
|
%
|
|
|
N/A
|
|
|
|
Int Rec/
Prepaid Exp
|
|
|
|
1,093
|
|
|
|
|
|
|
|
1,093
|
|
Intercompany balance hedges primarily
short-term debt and related interest
|
|
C$
|
37,795
|
|
|
US$
|
33,826
|
|
|
|
0.8950
|
|
|
|
Prepaid Expense/
(Accrued Exp
|
)
|
|
|
3,157
|
|
|
|
(106
|
)
|
|
|
3,051
|
|
|
|
US$
|
114,990
|
|
|
C$
|
143,051
|
|
|
|
0.8038
|
|
|
|
Prepaid Expense/
(Accrued Exp
|
)
|
|
|
1,652
|
|
|
|
(352
|
)
|
|
|
1,300
|
|
|
|
US$
|
39,997
|
|
|
|
30,936
|
|
|
|
1.2929
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(370
|
)
|
|
|
(370
|
)
|
Hedge accounting not elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diesel contracts
|
|
|
Fixed on 750K gal
per month
|
|
|
|
Float on 750K gal
per month
|
|
|
|
N/A
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(4,931
|
)
|
|
|
(4,931
|
)
|
Merchandise purchase commitments
|
|
C$
|
206,109
|
|
|
US$
|
172,500
|
|
|
|
0.8369
|
|
|
|
Prepaid
Expense/
(Accrued Exp
|
)
|
|
|
4,879
|
|
|
|
(42
|
)
|
|
|
4,837
|
|
|
|
C$
|
4,828
|
|
|
|
2,950
|
|
|
|
0.6110
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(149
|
)
|
|
|
(149
|
)
|
|
|
£
|
19,394
|
|
|
US$
|
28,000
|
|
|
|
1.4437
|
|
|
|
Prepaid
Expense/
(Accrued Exp
|
)
|
|
|
160
|
|
|
|
(364
|
)
|
|
|
(204
|
)
|
|
|
£
|
7,273
|
|
|
|
8,000
|
|
|
|
1.1000
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(343
|
)
|
|
|
(343
|
)
|
|
|
US$
|
441
|
|
|
|
327
|
|
|
|
1.3486
|
|
|
|
Prepaid
Expense/
(Accrued Exp
|
)
|
|
|
2
|
|
|
|
(25
|
)
|
|
|
(23
|
)
|
|
Total fair value of all financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,027
|
|
|
F-15
The fair values of the derivatives are classified as assets or
liabilities, current or non-current, based upon valuation
results and settlement dates of the individual contracts.
Following are the balance sheet classifications of the fair
value of TJXs derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2010
|
|
|
2009
|
|
|
|
|
Current assets
|
|
$
|
5,642
|
|
|
$
|
11,772
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
(1,471
|
)
|
|
|
(6,745
|
)
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
Net fair value
|
|
$
|
4,171
|
|
|
$
|
5,027
|
|
|
The impact of derivative financial instruments on statements of
income during fiscal 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain
|
|
|
|
Location of Gain
|
|
(Loss) Recognized
|
|
|
|
(Loss) Recognized in
|
|
in Income by
|
|
In thousands
|
|
Income by Derivative
|
|
Derivative
|
|
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
Fair value hedges
|
|
|
|
|
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
Interest expense, net
|
|
$
|
1,092
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
Interest expense, net
|
|
|
1,422
|
|
Intercompany balances, primarily short-term debt and related
interest
|
|
Selling, general &
administrative
expenses
|
|
|
(9,249
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
Diesel contracts
|
|
Cost of sales, including buying and occupancy costs
|
|
|
4,490
|
|
Merchandise purchase commitments
|
|
Cost of sales, including buying and occupancy costs
|
|
|
494
|
|
|
Gain (loss) recognized in income
|
|
|
|
$
|
(1,751
|
)
|
|
The counterparties to the forward exchange contracts and swap
agreements are major international financial institutions, and
the contracts contain rights of offset, which minimize
TJXs exposure to credit loss in the event of
nonperformance by one of the counterparties. TJX is not required
by counterparties, and TJX does not require that counterparties,
maintain collateral for these contracts. TJX periodically
monitors its position and the credit ratings of the
counterparties and does not anticipate losses resulting from the
nonperformance of these institutions.
|
|
F.
|
Disclosures
about Fair Value of Financial Instruments
|
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date
(exit price). U.S. GAAP classifies the inputs used to measure
fair value into the following hierarchy:
|
|
|
Level 1:
|
|
Unadjusted quoted prices in active markets for identical assets
or liabilities.
|
Level 2:
|
|
Unadjusted quoted prices in active markets for similar assets or
liabilities, or unadjusted quoted prices for identical or
similar assets or liabilities in markets that are not
active, or
inputs other than quoted prices that are observable for the
asset or liability.
|
Level 3:
|
|
Unobservable inputs for the asset or liability.
|
TJX endeavors to utilize the best available information in
measuring fair value and classifies financial assets and
liabilities in their entirety based on the lowest level of input
that is significant to the fair value measurement. TJX has
F-16
determined that its financial assets and liabilities are
generally classified within level 1 or level 2 in the
fair value hierarchy. The following table sets forth TJXs
financial assets and liabilities that are accounted for at fair
value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
|
|
January 31,
|
|
In thousands
|
|
2010
|
|
2009
|
|
|
|
|
Level 1
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Executive savings plan
|
|
$
|
55,404
|
|
$
|
40,636
|
|
Level 2
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
130,636
|
|
$
|
|
|
Foreign currency exchange contracts
|
|
|
5,642
|
|
|
9,534
|
|
Interest rate swaps
|
|
|
|
|
|
1,859
|
|
Liabilities:
|
|
|
|
|
|
|
|
Foreign currency exchange contracts
|
|
$
|
1,029
|
|
$
|
1,435
|
|
Diesel fuel contracts
|
|
|
442
|
|
|
4,931
|
|
|
The fair value of TJXs general corporate debt, including
current installments, was estimated by obtaining market quotes
given the trading levels of other bonds of the same general
issuer type and market perceived credit quality. The fair value
of the zero coupon convertible subordinated notes was estimated
by obtaining market quotes. The fair value of long-term debt at
January 30, 2010 was $862.3 million versus a carrying
value of $774.3 million. The fair value of the current
installments of long-term debt at January 31, 2009 was
$399.9 million versus a carrying value of
$392.9 million. The fair value of the subordinated notes as
of January 31, 2009, was $358.3 million versus a
carrying value of $365.6 million. These estimates do not
necessarily reflect provisions or restrictions in the various
debt agreements that might affect TJXs ability to settle
these obligations.
Our cash equivalents are stated at cost, which approximates fair
value, due to the short maturities of these instruments.
Investments designed to meet obligations under our executive
savings plan are invested in securities traded in active markets
and carried at unadjusted quoted prices.
As a result of its international operating and financing
activities, TJX is exposed to market risks from changes in
interest and foreign currency exchange rates, which may
adversely affect its operating results and financial position.
When deemed appropriate, we minimize risk from interest and
foreign currency exchange rate fluctuations through the use of
derivative financial instruments. Derivative financial
instruments are used to manage risk and are not used for trading
or other speculative purposes and TJX does not use leveraged
derivative financial instruments. The forward foreign currency
exchange contracts and interest rate swaps are valued using
broker quotations which include observable market information.
TJX makes no adjustments to quotes or prices obtained from
brokers or pricing services but does assess the credit risk of
counterparties and will adjust final valuations when
appropriate. Where independent pricing services provide fair
values, TJX obtains an understanding of the methods used in
pricing. As such, these derivative instruments are classified
within level 2.
TJX is committed under long-term leases related to its
continuing operations for the rental of real estate and fixtures
and equipment. Most of our leases are store operating leases
with a ten-year initial term and options to extend for one or
more five-year periods. Certain Marshalls leases, acquired in
fiscal 1996, had then remaining terms ranging up to twenty-five
years. T.K. Maxx leases are generally for ten to twenty-five
years with ten-year kick-out options. Many of our leases contain
escalation clauses and early termination penalties. In addition,
we are generally required to pay insurance, real estate taxes
and other operating expenses including, in some cases, rentals
based on a percentage of sales. These expenses in the aggregate
were approximately one-third of the total minimum rent in fiscal
2010, fiscal 2009 and fiscal 2008.
F-17
Following is a schedule of future minimum lease payments for
continuing operations as of January 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
Operating
|
|
In thousands
|
|
Lease
|
|
|
Leases
|
|
|
|
|
Fiscal Year
|
|
|
|
|
|
|
|
|
2011
|
|
$
|
3,726
|
|
|
$
|
1,005,366
|
|
2012
|
|
|
3,897
|
|
|
|
940,063
|
|
2013
|
|
|
3,912
|
|
|
|
830,992
|
|
2014
|
|
|
3,912
|
|
|
|
721,111
|
|
2015
|
|
|
3,912
|
|
|
|
586,662
|
|
Later years
|
|
|
3,586
|
|
|
|
1,610,867
|
|
|
Total future minimum lease payments
|
|
|
22,945
|
|
|
$
|
5,695,061
|
|
|
Less amount representing interest
|
|
|
4,746
|
|
|
|
|
|
|
Net present value of minimum capital lease payments
|
|
$
|
18,199
|
|
|
|
|
|
|
The capital lease relates to a 283,000-square-foot addition to
TJXs home office facility. Rental payments commenced
June 1, 2001, and we recognized a capital lease asset and
related obligation equal to the present value of the lease
payments of $32.6 million.
Rental expense under operating leases for continuing operations
amounted to $962.0 million for fiscal 2010,
$936.6 million for fiscal 2009 and $875.6 million for
fiscal 2008. Rental expense includes contingent rent and is
reported net of sublease income. Contingent rent paid was
$13.0 million in fiscal 2010, $8.3 million in fiscal
2009 and $9.7 million in fiscal 2008. Sublease income was
$1.3 million in fiscal 2010, $2.1 million in fiscal
2009 and $2.9 million in fiscal 2008. The total net present
value of TJXs minimum operating lease obligations
approximated $4,450.2 million as of January 30, 2010.
TJX had outstanding letters of credit totaling
$37.6 million as of January 30, 2010 and
$32.0 million as of January 31, 2009. Letters of
credit are issued by TJX primarily for the purchase of inventory.
TJX has a stock incentive plan under which options and other
share based awards may be granted to its directors, officers and
key employees. This plan has been approved by TJXs
shareholders, and all stock compensation awards are made under
this plan. The Stock Incentive Plan, as amended with shareholder
approval, provides for the issuance of up to 160.9 million
shares with 22.7 million shares available for future grants
as of January 30, 2010. TJX issues shares from authorized
but unissued common stock.
Total compensation cost related to share-based compensation was
$33.5 million net of income taxes of $21.6 million in
fiscal 2010, $31.2 million net of income taxes of
$20.1 million in fiscal 2009 and $37.0 million net of
income taxes of $20.3 million in fiscal 2008.
As of January 30, 2010, there was $87.2 million of
total unrecognized compensation cost related to nonvested
share-based compensation arrangements granted under the plan.
That cost is expected to be recognized over a weighted-average
period of two years.
Options for the purchase of common stock have been granted at
100% of market price on the grant date and generally vest in
thirds over a three-year period starting one year after the
grant, and have a ten-year term.
F-18
The fair value of options is estimated as of the date of grant
using the Black-Scholes option pricing model with the following
weighted average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Risk-free interest rate
|
|
|
2.49
|
%
|
|
|
2.96
|
%
|
|
|
4.00
|
%
|
Dividend yield
|
|
|
1.3
|
%
|
|
|
1.3
|
%
|
|
|
1.2
|
%
|
Expected volatility factor
|
|
|
37.3
|
%
|
|
|
33.9
|
%
|
|
|
31.0
|
%
|
Expected option life in years
|
|
|
5.0
|
|
|
|
4.8
|
|
|
|
4.5
|
|
Weighted average fair value of options issued
|
|
$
|
12.27
|
|
|
$
|
10.46
|
|
|
$
|
8.38
|
|
|
Expected volatility is based on a combination of implied
volatility from traded options on our stock, and historical
volatility during a term approximating the expected term of the
option granted. We use historical data to estimate option
exercise, employee termination behavior and dividend yield
within the valuation model. Employee groups and option
characteristics are considered separately for valuation purposes
when applicable. No such distinctions existed during the fiscal
years presented. The expected option life represents an estimate
of the period of time options are expected to remain outstanding
based upon historical exercise trends. The risk-free rate is for
periods within the contractual life of the option based on the
U.S. Treasury yield curve in effect at the time of grant.
Stock Options: A summary of the status of
TJXs stock options and related Weighted Average Exercise
Prices (WAEP) is presented below (shares in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30, 2010
|
|
|
Fiscal Year Ended January 31, 2009
|
|
|
January 26, 2008
|
|
|
|
Options
|
|
|
WAEP
|
|
|
Options
|
|
|
WAEP
|
|
|
Options
|
|
|
WAEP
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Outstanding at beginning of year
|
|
|
31,773
|
|
|
$
|
24.83
|
|
|
|
35,153
|
|
|
$
|
22.17
|
|
|
|
37,854
|
|
|
$
|
20.50
|
|
Granted
|
|
|
4,877
|
|
|
|
37.74
|
|
|
|
5,199
|
|
|
|
35.02
|
|
|
|
5,716
|
|
|
|
29.23
|
|
Exercised and repurchased
|
|
|
(8,012
|
)
|
|
|
21.30
|
|
|
|
(7,533
|
)
|
|
|
19.08
|
|
|
|
(7,473
|
)
|
|
|
18.84
|
|
Forfeitures
|
|
|
(663
|
)
|
|
|
31.79
|
|
|
|
(1,046
|
)
|
|
|
27.59
|
|
|
|
(944
|
)
|
|
|
24.25
|
|
|
Outstanding at end of year
|
|
|
27,975
|
|
|
$
|
27.92
|
|
|
|
31,773
|
|
|
$
|
24.83
|
|
|
|
35,153
|
|
|
$
|
22.17
|
|
|
Options exercisable at end of year
|
|
|
18,372
|
|
|
$
|
24.01
|
|
|
|
21,664
|
|
|
$
|
21.56
|
|
|
|
24,243
|
|
|
$
|
19.88
|
|
|
Included in the exercised and repurchased amount in the table
above are approximately 77,000 options that were repurchased
from optionees by TJX during fiscal 2009 and 341,000 options
repurchased during fiscal 2008. There were no such option
repurchases during fiscal 2010. Cash paid for such repurchased
options amounted to $659,305 in fiscal 2009 and
$2.3 million in fiscal 2008. The total intrinsic value of
options exercised was $109.2 million in fiscal 2010,
$108.1 million in fiscal 2009 and $79.7 million in
fiscal 2008.
The following table summarizes information about stock options
outstanding that were expected to vest and stock options
outstanding that were exercisable at January 30, 2010.
Options outstanding expected to vest represents total unvested
options of 9.6 million adjusted for anticipated forfeitures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
|
Aggregate
|
|
|
Remaining
|
|
|
Average
|
|
|
|
|
|
|
Intrinsic
|
|
|
Contract
|
|
|
Exercise
|
|
In thousands except years and per share amounts
|
|
Shares
|
|
|
Value
|
|
|
Life
|
|
|
Price
|
|
|
|
|
Options outstanding expected to vest
|
|
|
8,933
|
|
|
$
|
24,048
|
|
|
|
8.9 years
|
|
|
$
|
35.32
|
|
Options exercisable
|
|
|
18,372
|
|
|
$
|
282,172
|
|
|
|
5.3 years
|
|
|
$
|
24.01
|
|
|
Total outstanding options vested and expected to vest
|
|
|
27,305
|
|
|
$
|
306,220
|
|
|
|
6.5 years
|
|
|
$
|
27.71
|
|
|
Performance-Based Restricted Stock and Other
Awards: TJX has issued performance-based restricted
stock awards under the Stock Incentive Plan which are issued at
no cost to the recipient of the award and have restrictions that
generally lapse over one to four years from date of grant when
and if specified performance criteria are met. The grant date
fair value of the award is charged to income ratably over the
period during which these awards vest. The fair value of
F-19
the awards is determined at date of grant and assumes that
performance goals will be achieved. If such goals are not met,
no compensation cost is recognized and any recognized
compensation cost is reversed.
A summary of the status of our nonvested performance-based
restricted stock and changes during fiscal 2010 is presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
Weighted
|
|
|
|
Based
|
|
|
Average
|
|
|
|
Restricted
|
|
|
Grant Date
|
|
Shares in thousands
|
|
Stock
|
|
|
Fair Value
|
|
|
|
|
Nonvested at beginning of year
|
|
|
442
|
|
|
$
|
28.38
|
|
Granted
|
|
|
470
|
|
|
|
25.91
|
|
Vested
|
|
|
(252
|
)
|
|
|
26.43
|
|
Forfeited
|
|
|
(19
|
)
|
|
|
29.53
|
|
|
Nonvested at end of year
|
|
|
641
|
|
|
$
|
27.30
|
|
|
There were 470,000 shares of performance-based restricted
stock, with a weighted average grant date fair value of $25.91,
granted in fiscal 2010; 173,000 shares with a weighted
average grant date fair value of $33.49 were granted in fiscal
2009 and 200,000 shares with a weighted average grant date
fair value of $28.04 were granted in fiscal 2008. The fair value
of performance-based restricted stock that vested was
$6.7 million in fiscal 2010, $5.9 million in fiscal
2009 and $3.9 million in fiscal 2008.
TJX also awards deferred shares to its outside directors under
the Stock Incentive Plan. The outside directors are awarded two
annual deferred share awards, each representing shares of TJX
common stock valued at $50,000. One award vests immediately and
is payable, with accumulated dividends, in stock at the earlier
of separation from service as a director or change of control.
The second award vests based on service as a director until the
annual meeting that follows the award and is payable, with
accumulated dividends, in stock at vesting date, unless an
irrevocable advance election is made whereby it is payable at
the same time as the first award. As of the end of fiscal 2010,
a total of 174,577 deferred shares were outstanding under the
plan.
|
|
I.
|
Capital
Stock and Earnings Per Share
|
Capital Stock: In December 2009, we completed a
$1 billion stock repurchase program which began in fiscal
2009 and initiated another multi-year $1 billion stock
repurchase program approved in September 2009. We repurchased
and retired 27.0 million shares of our common stock at a
cost of $949.9 million during fiscal 2010. TJX reflects
stock repurchases in its financial statements on a
settlement basis. We had cash expenditures under our
repurchase programs of $944.8 million in fiscal 2010,
$751.1 million in fiscal 2009 and $940.2 million in
fiscal 2008, funded primarily by cash generated from operations.
We repurchased 26.9 million shares in fiscal 2010,
24.3 million shares in fiscal 2009 and 33.0 million
shares in fiscal 2008. As of January 30, 2010, on a
trade date basis, we had repurchased
5.5 million shares of our common stock at a cost of
$205.0 million under the $1 billion stock repurchase
program authorized in September 2009. All shares repurchased
under our stock repurchase programs have been retired.
In February 2010, TJXs Board of Directors approved a new
stock repurchase program that authorizes the repurchase of up to
an additional $1 billion of TJX common stock from time to
time.
TJX has five million shares of authorized but unissued preferred
stock, $1 par value.
F-20
Earnings Per Share: The following
schedule presents the calculation of basic and diluted earnings
per share for income from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
Amounts in thousands
|
|
January 30,
|
|
January 31,
|
|
January 26,
|
except per share amounts
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
(53 weeks)
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1,213,572
|
|
$
|
914,886
|
|
$
|
782,432
|
|
Weighted average common stock outstanding for basic earnings per
share calculation
|
|
|
417,796
|
|
|
419,076
|
|
|
443,050
|
Basic earnings per share
|
|
$
|
2.90
|
|
$
|
2.18
|
|
$
|
1.77
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1,213,572
|
|
$
|
914,886
|
|
$
|
782,432
|
Add back: Interest expense on zero coupon convertible
subordinated notes,
net of income taxes
|
|
|
1,073
|
|
|
4,653
|
|
|
4,716
|
|
Income from continuing operations used for diluted earnings per
share calculation
|
|
$
|
1,214,645
|
|
$
|
919,539
|
|
$
|
787,148
|
|
Weighted average common stock outstanding for basic earnings per
share calculation
|
|
|
417,796
|
|
|
419,076
|
|
|
443,050
|
Assumed conversion/exercise of:
|
|
|
|
|
|
|
|
|
|
Convertible subordinated notes
|
|
|
3,901
|
|
|
16,434
|
|
|
16,905
|
Stock options and awards
|
|
|
5,922
|
|
|
6,745
|
|
|
8,091
|
|
Weighted average common stock outstanding for diluted earnings
per share calculation
|
|
|
427,619
|
|
|
442,255
|
|
|
468,046
|
|
Diluted earnings per share
|
|
$
|
2.84
|
|
$
|
2.08
|
|
$
|
1.68
|
|
In April 2009, TJX called for the redemption of its zero coupon
convertible subordinated notes. There were 462,057 of such notes
with a carrying value of $365.1 million that were converted
into 15.1 million shares of TJX common stock at a
conversion rate of 32.667 shares per note. TJX paid
$2.3 million to redeem the remaining 2,886 notes
outstanding that were not converted.
The weighted average common shares for the diluted earnings per
share calculation exclude the impact of outstanding stock
options if the assumed proceeds per share of the option is in
excess of the related fiscal years average price of
TJXs common stock. Such options are excluded because they
would have an antidilutive effect. Excluded were
9.5 million options at January 30, 2010,
5.2 million at January 31, 2009 and 5.7 million
at January 26, 2008.
|
|
J.
|
Accumulated
Other Comprehensive Income
|
Cumulative foreign currency translation adjustments included in
shareholders equity amounted to a loss of
$76.3 million, net of related tax effect of
$21.6 million, as of January 30, 2010; a loss of
$152.9 million, net of related tax effect of
$2.6 million, as of January 31, 2009; and a gain of
$17.8 million, net of related tax effect of
$23.7 million, as of January 26, 2008. Cumulative
gains and losses on derivatives that hedged our net investment
in foreign operations and deferred gains and losses on cash flow
hedges that have been recorded in accumulated other
comprehensive income amounted to a gain of $27.3 million,
net of related tax effects of $18.2 million at both
January 30, 2010 and January 31, 2009, and a loss of
$42.1 million, net of related tax effects of
$28.1 million at January 26, 2008.
In accordance with U.S. GAAP, TJX is required to recognize
the funded status of its post retirement benefit plans which are
discussed in Note L. Cumulative loss adjustments included
in accumulated other comprehensive income was
$85.2 million, net of related tax effects of
$56.8 million at January 30, 2010, $92.2 million,
net of related tax effects of $61.5 million at
January 31, 2009, and $4.4 million, net of related tax
effects of $3.7 million at January 26, 2008.
F-21
The provision for income taxes includes the following: