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 31, 2009
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 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. [ ]
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 July 26, 2008 was
$13,553,030,893, based on the closing sale price as reported on
the New York Stock Exchange.
There were 412,821,592 shares of the registrants
common stock, $1.00 par value, outstanding as of
January 31, 2009.
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, 2009 (Part III).
Cautionary
Note Regarding Forward-Looking Statements
Our disclosure and analysis in this
Form 10-K
and in our 2008 Annual Report to Shareholders contain
forward-looking statements, within the meaning of
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 2008 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 the outcome of contingencies such as legal
proceedings, and financial results.
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 SEC or otherwise.
2
TABLE OF CONTENTS
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Part I. |
ITEM 1. BUSINESS |
ITEM 1A. RISK FACTORS |
ITEM 1B. UNRESOLVED STAFF COMMENTS |
ITEM 2. PROPERTIES |
ITEM 3. LEGAL PROCEEDINGS |
Part II. |
ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED SECURITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
ITEM 6. SELECTED FINANCIAL DATA |
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. CONTROLS AND PROCEDURES |
ITEM 9B. OTHER INFORMATION |
Part III |
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. EXECUTIVE COMPENSATION |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Part IV |
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
SIGNATURES |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
Ex-10.5 The Letter Agreement dated as of January 31, 2009 with Carol Meyrowitz |
Ex-10.8 The Letter Agreement dated as of January 28, 2009 with Nirmal Tripathy |
Ex-10.9 The Form of 409A Amendment to Employment Agreements for the named executive officers |
Ex-10.10 The TJX Companies, Inc. Management Incentive Plan |
Ex-10.16 The TJX Companies, Inc. Long Range Performance Incentive Plan |
Ex-10.17 The General Deferred Compensation Plan (1998 Restatement) and related First Amendment |
Ex-10.18 The Supplemental Executive Retirement Plan |
Ex-10.19 The Executive Savings Plan, as amended and restated, effective January 1, 2008 |
Ex-21 Subsidiaries |
Ex-23 The Consent of PricewaterhouseCoopers LLP |
Ex-24 Power of Attorney |
Ex-31.1 Section 302 Certification of the Chief Executive Officer |
Ex-31.2 Section 302 Certification of the Chief Financial Officer |
Ex-32.1 Section 906 Certification of the Chief Executive Officer |
Ex-32.2 Section 906 Certification of the Chief Financial Officer |
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 2,600 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 seven off-price retail
concepts in the U.S., Canada and Europe and are known for our
treasure hunt shopping experience and excellent values. The
operating platforms and strategies of all of our retail concepts
are synergistic. Therefore, we capitalize on our off-price
expertise and systems throughout our business, leverage best
practices, initiatives and new ideas across our concepts,
utilize the substantial buying power of our businesses to
leverage our global relationships with vendors, and develop
talent by providing opportunities across our concepts.
In the United States:
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T.J. MAXX and MARSHALLS: T.J. Maxx and Marshalls
are the largest off-price retailers in the United States with
1,680 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 maintain the separate identities of T.J. Maxx
and Marshalls through different 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. The 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
318 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.
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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 135 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 202 stores across Canada is
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 75
stores offering a merchandise mix of home fashions 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 the U.K. and is Europes only major off-price
retailer of apparel and home fashions. With 235 stores, T.K.
Maxx operates in the U.K. and Ireland and expanded to Germany in
2007. T.K. Maxx offers a merchandise mix 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 seven
stores offer a merchandise mix of home fashions in the U.K. like
that 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 the merchandise in our stores more frequently than
traditional retailers, and our stores and distribution centers
are built 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 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 distinguished from
traditional retailers by our opportunistic buying of brand name,
fashionable merchandise. We purchase the majority of the
inventory for our apparel chains and a significant portion of
the inventory for our home fashion chains opportunistically. Our
merchant organization numbers over 600. 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.
Due to the unpredictable nature of supply and consumer demand in
the highly fragmented apparel and home fashions marketplace, we
are able to buy the vast majority of our opportunistic inventory
directly from manufacturers, with some coming from other
retailers and sources. We source from a vendor universe of over
10,000 vendors a year and purchase virtually all of our
inventory at discounts from initial wholesale prices. 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. Pricing and markdown decisions
and store inventory replenishment are determined centrally,
using information provided by specialized computer systems, and
are 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, including
merchandise and non-merchandise procurement. 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.
4
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 1.5 billion units to our stores during fiscal
2009.
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 2010
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Ultimate Number
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Size (square feet)
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Fiscal 2008
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Fiscal 2009
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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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847
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874
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Marshalls
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32,000
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776
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806
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Marmaxx
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1,623
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1,680
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1,697
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2,000
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HomeGoods
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25,000
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289
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318
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322
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550-600
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A.J. Wright
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26,000
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129
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135
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148
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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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191
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202
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211
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230
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HomeSense
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24,000
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71
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75
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79
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80
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In Europe:
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T.K. Maxx
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32,000
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226
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235
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249
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525-575
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HomeSense
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19,000
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7
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10
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100-150
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2,529
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2,652
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2,716
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3,985-4,135
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Represents estimated number of
stores for U.K., Germany and Ireland only.
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In addition, Marshalls opened 2 free-standing ShoeMegaShop by
Marshalls stores in the U.S. in fiscal 2009, which sell
family footwear, and Winners opened 2 StyleSense stores in
Canada in fiscal 2009, which sell family footwear and
accessories. 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.
Revenue Information: The percentages of our
consolidated revenues by geography for the last three fiscal
years were as follows:
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Fiscal 2007
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Fiscal 2008
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Fiscal 2009
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United States
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79%
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77%
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77%
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Northeast
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27%
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26%
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26%
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Midwest
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14%
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13%
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13%
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South (including Puerto Rico)
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25%
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25%
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25%
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West
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13%
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13%
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13%
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Canada
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10%
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11%
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11%
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Europe
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11%
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12%
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12%
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Total
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100%
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100%
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100%
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5
The percentages of our consolidated revenues by major product
category for the last three fiscal years were as follows:
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Fiscal 2007
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Fiscal 2008
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Fiscal 2009
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Clothing including footwear
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63
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%
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62
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%
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62
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%
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Home fashions
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25
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%
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26
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%
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25
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%
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Jewelry and accessories
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12
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%
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12
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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 P to the consolidated financial statements.
6
STORE
LOCATIONS
We operated stores in the following locations as of
January 31, 2009:
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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5
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2
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Arizona
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11
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16
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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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76
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111
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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
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4
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Connecticut
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25
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23
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11
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6
|
|
Delaware
|
|
|
3
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
District of Columbia
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Florida
|
|
|
65
|
|
|
|
70
|
|
|
|
33
|
|
|
|
3
|
|
Georgia
|
|
|
36
|
|
|
|
27
|
|
|
|
10
|
|
|
|
|
|
Idaho
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
Illinois
|
|
|
37
|
|
|
|
40
|
|
|
|
15
|
|
|
|
18
|
|
Indiana
|
|
|
17
|
|
|
|
10
|
|
|
|
2
|
|
|
|
8
|
|
Iowa
|
|
|
6
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Kansas
|
|
|
6
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
Kentucky
|
|
|
9
|
|
|
|
4
|
|
|
|
3
|
|
|
|
2
|
|
Louisiana
|
|
|
8
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Maine
|
|
|
8
|
|
|
|
4
|
|
|
|
3
|
|
|
|
|
|
Maryland
|
|
|
11
|
|
|
|
23
|
|
|
|
7
|
|
|
|
6
|
|
Massachusetts
|
|
|
47
|
|
|
|
48
|
|
|
|
21
|
|
|
|
20
|
|
Michigan
|
|
|
33
|
|
|
|
20
|
|
|
|
11
|
|
|
|
8
|
|
Minnesota
|
|
|
12
|
|
|
|
12
|
|
|
|
8
|
|
|
|
|
|
Mississippi
|
|
|
5
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Missouri
|
|
|
13
|
|
|
|
12
|
|
|
|
6
|
|
|
|
|
|
Montana
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nebraska
|
|
|
4
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Nevada
|
|
|
6
|
|
|
|
7
|
|
|
|
3
|
|
|
|
|
|
New Hampshire
|
|
|
14
|
|
|
|
8
|
|
|
|
5
|
|
|
|
1
|
|
New Jersey
|
|
|
31
|
|
|
|
40
|
|
|
|
22
|
|
|
|
7
|
|
New Mexico
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
New York
|
|
|
47
|
|
|
|
59
|
|
|
|
23
|
|
|
|
19
|
|
North Carolina
|
|
|
28
|
|
|
|
21
|
|
|
|
10
|
|
|
|
|
|
North Dakota
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio
|
|
|
38
|
|
|
|
18
|
|
|
|
9
|
|
|
|
8
|
|
Oklahoma
|
|
|
4
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Oregon
|
|
|
8
|
|
|
|
5
|
|
|
|
3
|
|
|
|
|
|
Pennsylvania
|
|
|
39
|
|
|
|
31
|
|
|
|
12
|
|
|
|
6
|
|
Puerto Rico
|
|
|
|
|
|
|
14
|
|
|
|
6
|
|
|
|
|
|
Rhode Island
|
|
|
5
|
|
|
|
6
|
|
|
|
4
|
|
|
|
2
|
|
South Carolina
|
|
|
19
|
|
|
|
9
|
|
|
|
4
|
|
|
|
|
|
South Dakota
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tennessee
|
|
|
25
|
|
|
|
14
|
|
|
|
6
|
|
|
|
3
|
|
Texas
|
|
|
42
|
|
|
|
66
|
|
|
|
14
|
|
|
|
|
|
Utah
|
|
|
10
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Vermont
|
|
|
4
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
Virginia
|
|
|
31
|
|
|
|
25
|
|
|
|
7
|
|
|
|
8
|
|
Washington
|
|
|
15
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
West Virginia
|
|
|
5
|
|
|
|
2
|
|
|
|
1
|
|
|
|
|
|
Wisconsin
|
|
|
16
|
|
|
|
7
|
|
|
|
6
|
|
|
|
2
|
|
Wyoming
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stores
|
|
|
874
|
|
|
|
806
|
|
|
|
318
|
|
|
|
135
|
|
|
|
|
|
|
*
|
|
Includes T.J. Maxx, Marshalls or
HomeGoods portion of a superstore.
|
7
Stores
Located In Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners*
|
|
|
HomeSense*
|
|
|
|
|
Alberta
|
|
|
23
|
|
|
|
8
|
|
British Columbia
|
|
|
26
|
|
|
|
14
|
|
Manitoba
|
|
|
6
|
|
|
|
1
|
|
New Brunswick
|
|
|
3
|
|
|
|
2
|
|
Newfoundland
|
|
|
2
|
|
|
|
1
|
|
Nova Scotia
|
|
|
6
|
|
|
|
2
|
|
Ontario
|
|
|
95
|
|
|
|
35
|
|
Prince Edward Island
|
|
|
1
|
|
|
|
|
|
Quebec
|
|
|
37
|
|
|
|
11
|
|
Saskatchewan
|
|
|
3
|
|
|
|
1
|
|
|
|
Total Stores
|
|
|
202
|
|
|
|
75
|
|
|
|
|
|
|
*
|
|
Includes Winners or HomeSense
portion of a superstore.
|
Stores
Located In Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
HomeSense
|
|
|
|
|
United Kingdom
|
|
|
211
|
|
|
|
7
|
|
Republic of Ireland
|
|
|
15
|
|
|
|
|
|
Germany
|
|
|
9
|
|
|
|
|
|
|
|
Total Stores
|
|
|
235
|
|
|
|
7
|
|
|
|
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 31, 2009, we had approximately
133,000 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 Securities and Exchange
Commission, or SEC, and any
8
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
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).
The Annual CEO Certification for the fiscal year ended
January 26, 2008, as required by the New York Stock
Exchange, regarding our compliance with the corporate governance
listing standards of the NYSE, was submitted to the NYSE on
June 23, 2008.
Unless otherwise indicated, all store information in this
Item 1 is as of January 31, 2009, and references to
store square footage are to gross square feet. Fiscal 2007 means
the fiscal year ended January 27, 2007, fiscal 2008 means
the fiscal year ended January 26, 2008, fiscal 2009 means
the fiscal year ended January 31, 2009 and fiscal 2010
means the fiscal year ending January 30, 2010.
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.
The
adverse changes in global economic conditions and in financial
and credit markets have adversely affected and could continue to
adversely affect our financial performance.
As widely reported, economies worldwide are in crisis, and
global financial markets have been experiencing extreme
volatility, disruption and credit contraction. The current
volatility and disruption to the capital markets have reached
unprecedented levels and have significantly adversely impacted
global economic conditions and may continue to do so, resulting
in additional significant recessionary pressures and declines in
employment levels, disposable income and actual and perceived
wealth. Adverse economic conditions continue to affect consumer
confidence and discretionary consumer spending and have
adversely affected and may continue to adversely affect our
sales, cash flows and results of operations. Additionally,
adverse conditions in the financial and credit markets could
adversely affect our costs of capital and the sources of
liquidity available to us and have increased and could in the
future increase our pension funding requirements. Finally, the
effects and consequences of the current global economic crisis
may not yet be known, which could potentially have a material
adverse effect on our liquidity and capital resources, or
otherwise negatively affect our business and financial results.
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, the U.K., Ireland and Germany. 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 generally
accepted accounting principles, 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.
9
In addition, changes in foreign exchange rates can increase the
cost of inventory purchases by one of our businesses that are
denominated in a currency other than the local currency of that
business. When these changes occur suddenly, it can be difficult
for us to adjust retail prices accordingly, and gross margin can
be adversely affected. We expect that such changes may
materially affect the gross margins of our Canada segment.
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.
Failure
to execute our opportunistic buying and inventory management
could adversely affect our business.
We purchase the majority of our 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 enables
our buyers to buy at opportune 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. When we open
stores in new markets, we may encounter difficulties in
attracting customers due to a lack of customer familiarity with
our brand, our lack of familiarity with local customer
preferences, and seasonal differences in the market. New stores
may not achieve the same sales or profit levels as our existing
stores and may be adversely affected by the sales and
profitability of existing stores in their market areas. 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 consumer trends
and preferences including contacts with vendors, monitoring
product category and fashion trends and comparison shopping and
actively monitoring fashion trends. Our opportunistic buying
model allows us to buy close to need and in response to consumer
preferences and trends. However, identifying consumer trends and
preferences and successfully meeting customer demand is
challenging, and these steps and our off-price buying may be
insufficient to do so, which could adversely affect our results.
10
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 similar
to the growth rates achieved in recent years 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 analysts 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
and 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 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 effectively execute our marketing,
advertising and promotional programs, and any failure to do so
could have a material adverse effect on our revenue and results
of operations.
Our
actual losses arising from the Computer Intrusion could exceed
our reserve for our estimated probable losses, and our
reputation and business could be materially harmed as a result
of any future data breach.
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,
which was discovered late in fiscal 2007 and in which we believe
that customer data were stolen. As a result we faced and
continue to face litigation, claims and investigations. We have
recorded a reserve that reflects our estimation of probable
losses arising from the Computer Intrusion in accordance with
generally accepted accounting principles. While this reserve
represents our best estimation of total, potential cash
liabilities from litigation, proceedings, investigations and
other claims, as well as legal and other costs and expenses,
arising from the Computer Intrusion, there is no assurance that
our actual losses will not be greater.
Since discovering the Computer Intrusion, 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. Nevertheless, there can be no
assurance that we will not suffer a future data compromise. We
rely on commercially available systems,
11
software, tools and monitoring to provide security for
processing, transmission and storage of confidential customer
information, such as payment card and personal 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. Improper activities by third
parties, advances in computer and software capabilities and
encryption technology, new tools and discoveries and other
events or developments may facilitate or result in a further
compromise or breach of our computer system. Any such further
compromises or breaches could cause interruptions in our
operations, damage to our reputation and customers
willingness to shop in our stores, violation of 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 and a decrease in
sales or margins during the second half of the year could
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 financial
condition and results of operations.
We
experience risks associated with our substantial size and
scale.
We operate seven retail concepts in several countries. Some
aspects of the businesses and operations of the concepts are
conducted with relative autonomy. The large size of our
operations, our multiple businesses and the autonomy afforded to
the concepts 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
concepts 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. Frequent or unusually heavy snow, ice or rain storms,
severe cold or heat or extended periods of unseasonable
temperatures in our markets could adversely affect our sales and
increase markdowns. In addition, natural disasters such as
hurricanes, tornadoes, floods and earthquakes could severely
damage or destroy one or more of our stores or distribution
facilities located in the affected areas or result in the
suspension of business in the affected areas or in areas served
by the affected distribution center, thereby disrupting our
business operations.
We
operate in highly competitive markets, and we may not be able to
compete effectively.
The retail 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 catalogs or media or over the
internet. We compete on the basis of quality, price, value,
merchandise selection and freshness, brand name recognition,
service, reputation and store location. Other competitive
factors that influence the demand for the merchandise we sell
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,
12
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. Changes that adversely impact our ability to attract and
retain quality associates and management personnel could
adversely affect our performance.
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. We may consider opportunities to acquire new
businesses or to 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 expectations or
may expose us to unexpected or greater-than-expected
liabilities. 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 of our business depends on our
information systems, including our ability to operate them
effectively and to successfully select and implement new
technologies, systems, controls and adequate disaster recovery
systems. We must operate and implement these systems and
technologies such that we protect the confidentiality of data of
our Company, our associates, our customers and other third
parties. 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 support new
capital expansion, operations, debt repayment, stock repurchase
program and dividends.
Our business depends upon our operations to generate strong cash
flows and upon the availability of financing sources to support
our capital expansion requirements, general operating
activities, stock repurchase program and dividends and to fund
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 could adversely affect our financial performance or our
earnings per share growth.
General
economic and other factors 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
could include TJX. These factors could adversely affect our
sales and performance if we do not successfully implement
strategies to mitigate them.
Issues
with merchandise quality or safety could damage our reputation,
sales or financial results.
Various governmental authorities regulate the quality and safety
of the merchandise we sell in our stores. Regulations and
standards in this area, including those related to the recently
enacted 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 of merchandise we sell in our stores,
regardless of our fault, or customer concerns about such issues,
could cause damage to our reputation, lost sales, uninsured
product liability claims or losses, merchandise recalls and
increased costs, and regulatory, civil or criminal fines or
penalties, 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,
particularly merchandise imported from the Peoples
Republic of China; 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, transport capacity and costs and other
factors relating to international trade and imported merchandise
could affect the availability and the price of our inventory.
Our
expanding international operations expose us to risks inherent
in foreign operations.
We have a significant retail presence in Canada, the United
Kingdom and Ireland, and have recently expanded into Germany.
Our goal 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. These
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. A continued rise
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.
Changes
in laws and regulations and outcomes of litigation and
proceedings could negatively affect our business operations and
financial performance.
We are subject to federal, state, provincial or local laws,
rules and regulations in the United States and abroad, any of
which may change from time to time in ways which could
materially adversely affect our operations and our financial
results and condition. We are from time to time involved in
litigation and proceedings, the outcomes of which if determined
adversely to us could materially adversely affect our operations
and our financial results and condition. In addition,
U.S. generally accepted accounting principles in accordance
with which we prepare our financial statements may change from
time to time, and these changes could have material effects on
our reported financial results and condition.
We own
and lease for long periods significant amounts of real estate,
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 an existing or future store is not profitable,
and we decide to close it, we may be committed to perform
obligations under the applicable lease, including, among other
things, paying rent and operating expenses for the balance of
the lease term, or exercising rights to terminate, and the
performance of any of these obligations may be expensive. When
we assign or sublease leased property, we can remain liable on
the lease obligations if the assignee or sublessee does not
perform. In
14
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.
|
|
ITEM 1B.
|
UNRESOLVED
STAFF COMMENTS
|
None.
15
ITEM 2. PROPERTIES
We lease virtually all of our over 2,600 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 distribution centers
and primary administrative office locations by segment as of
January 31, 2009. 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
|
|
500,000 s.f.owned
|
|
|
Evansville, Indiana
|
|
983,000 s.f.owned
|
|
|
Las Vegas, Nevada
|
|
713,000 s.f. shared with
|
|
|
|
|
Marshallsowned
|
|
|
Charlotte, North Carolina
|
|
600,000 s.f.owned
|
|
|
Pittston Township, Pennsylvania
|
|
1,017,000 s.f.owned
|
Marshalls
|
|
Decatur, Georgia
|
|
780,000 s.f.owned
|
|
|
Woburn, Massachusetts
|
|
473,000 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
|
Canada
|
|
Brampton, Ontario
|
|
507,000 s.f.leased
|
|
|
Mississauga, Ontario
|
|
669,000 s.f.leased
|
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
|
|
1,254,000 s.f.leased in several buildings
|
Canada
|
|
Mississauga, Ontario
|
|
140,000 s.f.leased
|
Europe
|
|
Watford, England
|
|
61,000 s.f.leased
|
|
|
Dusseldorf, Germany
|
|
14,000 s.f.leased
|
16
ITEM 3. LEGAL
PROCEEDINGS
Putative class actions consolidated in the United States
District Court for the District of Massachusetts, In re TJX
Companies Retail Security Breach Litigation, 07-cv-10162,
were filed against TJX (i) putatively on behalf of
customers in the United States, Puerto Rico and Canada whose
transaction data were allegedly compromised by the Computer
Intrusion (Customer Track)and (ii) putatively
on behalf of financial institutions that received alerts from
MasterCard or Visa related to the Computer Intrusion identifying
payment cards issued by such financial institutions and that
thereafter suffered damages from actual reissuance costs,
monitoring expenses or fraud loss (Financial Institutions
Track). These putative class actions asserted claims for
negligence and related common-law
and/or
statutory causes of action stemming from the Computer Intrusion,
and sought various forms of relief including damages, related
injunctive or equitable remedies, multiple or punitive damages,
and attorneys fees.
|
|
|
|
|
Customer Track. On December 30, 2008, the
District Court judgment in the Customer Track approving the
Amended Settlement Agreement, dated as of November 14,
2007, among TJX, its acquiring bank and the named plaintiffs,
individually and on behalf of the settlement class, became final.
|
|
|
|
Financial Institutions Track. On
October 12, 2007, the District Court dismissed the
plaintiffs claims in the Financial Institutions Track,
other than their claims of negligent misrepresentation and
violation of the Massachusetts consumer protection statute
(Chapter 93A) based on negligent misrepresentation, and denied
the plaintiffs motion for class certification of the
non-dismissed claims. Subsequently, the District Court dismissed
the Financial Institutions Track of the action for lack of
subject matter jurisdiction and ordered the case transferred to
state court in Massachusetts. On March 30, 2009, the United
States Court of Appeals for the First Circuit affirmed the
dismissal of the plaintiffs claims for negligence and
breach of contract, affirmed the denial of the plaintiffs
motion for leave to amend their complaint to add a count for
conversion, and vacated the order transferring the case to state
court in Massachusetts. The First Circuit further upheld the
decision not to dismiss plaintiffs claims for negligent
misrepresentation and for violation of Chapter 93A based on
negligent misrepresentation (but in so doing noted that the
plaintiffs had not appealed from the lower courts denial
of class certification of such claims) and reversed the
dismissal of the plaintiffs claim for breach of
Chapter 93A based on an unfairness theory. Finally, the
First Circuit remanded to the District Court for further
proceedings on those claims that the First Circuit ruled were
not subject to dismissal, noting that during such further
proceedings TJX will have an opportunity to move for summary
judgment on all such claims and to challenge class certification
of the plaintiffs claim for breach of Chapter 93A
based on an unfairness theory.
|
Those financial institutions that (for themselves and, in the
case of MasterCard issuers, on behalf of their affiliated and
their sponsored issuers) accepted the settlement offer under the
Settlement Agreement among TJX, Visa U.S.A. Inc. and Visa Inc.
and TJXs acquiring bank dated as of November 29, 2007
or the Settlement Agreement between TJX and MasterCard
International Incorporated dated as of April 2, 2008,
released and indemnified TJX and its acquiring banks with
respect to any claims of such issuers as Visa issuers or
MasterCard issuers, respectively, with respect to any claims by
reason of any matter, occurrence, or event pertaining to the
Computer Intrusion, including but not limited to claims in the
Financial Institution Track and state court case described
below. In addition, the named plaintiffs in the Financial
Institutions Track other than AmeriFirst Bank previously settled
with TJX.
On January 16, 2008, AmeriFirstBank and an additional
plaintiff filed an action in Massachusetts state court,
AmeriFirstBank et al. v. The TJX Companies, Inc. et
al, Massachusetts Superior Court
08-0229,
raising allegations and claims nearly identical to those
asserted in the Financial Institutions Track of the purported
federal class action. The complaint stated plaintiffs
intention to bring class allegations depending on pre-trial
rulings by the state court. The state court stayed the state
action pending adjudication by the federal court of the appeals
in the Financial Institutions Track. On March 30, 2009, the
First Circuit issued the opinion described above on those
appeals.
17
A multi-state group of 41 state Attorneys General is
investigating whether TJX may have violated their respective
state consumer protection laws with respect to the Computer
Intrusion. TJX has responded to Civil Investigative Demands with
respect to this investigation.
ITEM 4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted to a vote of TJXs security
holders during the fourth quarter of fiscal 2009.
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 2009 and fiscal 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
Quarter
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
|
|
First
|
|
$
|
34.93
|
|
|
$
|
29.44
|
|
|
$
|
29.84
|
|
|
$
|
25.74
|
|
Second
|
|
$
|
36.44
|
|
|
$
|
30.32
|
|
|
$
|
30.19
|
|
|
$
|
26.34
|
|
Third
|
|
$
|
37.52
|
|
|
$
|
23.20
|
|
|
$
|
32.46
|
|
|
$
|
26.29
|
|
Fourth
|
|
$
|
28.01
|
|
|
$
|
17.80
|
|
|
$
|
31.95
|
|
|
$
|
25.49
|
|
|
|
The approximate number of common shareholders at
January 31, 2009 was 54,000.
We declared four quarterly dividends of $0.11 per share for
fiscal 2009 and $0.09 per share for fiscal 2008. While our
dividend policy is subject to periodic review by our Board of
Directors, we currently 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 2009 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
|
|
|
|
|
October 26, 2008 through
November 22, 2008
|
|
|
2,736,300
|
|
|
$
|
23.75
|
|
|
|
2,736,300
|
|
|
$
|
744,893,130
|
|
November 23, 2008 through
December 27, 2008
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
744,893,130
|
|
December 28, 2008 through
January 31, 2009
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
744,893,130
|
|
|
|
Total:
|
|
|
2,736,300
|
|
|
|
|
|
|
|
2,736,300
|
|
|
|
|
|
|
|
|
|
|
(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 fiscal 2009 repurchases
completed the $1 billion stock repurchase program approved
by the Board of Directors and announced in February 2007 and
included the repurchase of 8.9 million shares at a cost of
$255 million under the $1 billion stock repurchase
program approved by the Board of Directors and announced in
February 2008. As of January 31, 2009, $745 million
remained available for purchase under the current
$1 billion program.
|
19
The following table provides certain information as of
January 31, 2009 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
|
|
|
31,772,628
|
|
|
$
|
24.83
|
|
|
|
12,409,505
|
|
Equity compensation plans not approved by security
holders(1)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Total
|
|
|
31,772,628
|
|
|
$
|
24.83
|
|
|
|
12,409,505
|
|
|
|
|
|
|
(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
SELECTED
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
January(1)
|
|
Amounts in thousands except per share amounts
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
(53 Weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income statement and per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
18,999,505
|
|
|
$
|
18,336,726
|
|
|
$
|
17,104,013
|
|
|
$
|
15,667,463
|
|
|
$
|
14,570,189
|
|
Income from continuing operations
|
|
$
|
914,886
|
|
|
$
|
782,432
|
|
|
$
|
787,172
|
|
|
$
|
706,653
|
|
|
$
|
620,838
|
|
Weighted average common shares for diluted earnings per share
calculation
|
|
|
442,255
|
|
|
|
468,046
|
|
|
|
480,045
|
|
|
|
491,500
|
|
|
|
509,661
|
|
Diluted earnings per share from continuing operations
|
|
$
|
2.08
|
|
|
$
|
1.68
|
|
|
$
|
1.65
|
|
|
$
|
1.45
|
|
|
$
|
1.23
|
|
Cash dividends declared per share
|
|
$
|
0.44
|
|
|
$
|
0.36
|
|
|
$
|
0.28
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
453,527
|
|
|
$
|
732,612
|
|
|
$
|
856,669
|
|
|
$
|
465,649
|
|
|
$
|
307,187
|
|
Working capital
|
|
$
|
858,238
|
|
|
$
|
1,231,301
|
|
|
$
|
1,365,833
|
|
|
$
|
888,276
|
|
|
$
|
701,008
|
|
Total assets
|
|
$
|
6,178,242
|
|
|
$
|
6,599,934
|
|
|
$
|
6,085,700
|
|
|
$
|
5,496,305
|
|
|
$
|
5,075,473
|
|
Capital expenditures
|
|
$
|
582,932
|
|
|
$
|
526,987
|
|
|
$
|
378,011
|
|
|
$
|
495,948
|
|
|
$
|
429,133
|
|
Long-term
obligations(2)
|
|
$
|
383,782
|
|
|
$
|
853,460
|
|
|
$
|
808,027
|
|
|
$
|
807,150
|
|
|
$
|
598,540
|
|
Shareholders equity
|
|
$
|
2,134,557
|
|
|
$
|
2,131,245
|
|
|
$
|
2,290,121
|
|
|
$
|
1,892,654
|
|
|
$
|
1,746,556
|
|
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax return (continuing operations) on average
shareholders equity
|
|
|
42.9
|
%
|
|
|
35.4
|
%
|
|
|
37.6
|
%
|
|
|
38.8
|
%
|
|
|
36.8
|
%
|
Total debt as a percentage of total
capitalization(3)
|
|
|
26.7
|
%
|
|
|
28.6
|
%
|
|
|
26.1
|
%
|
|
|
29.9
|
%
|
|
|
28.6
|
%
|
Stores in operation at year-end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
874
|
|
|
|
847
|
|
|
|
821
|
|
|
|
799
|
|
|
|
771
|
|
Marshalls
|
|
|
806
|
|
|
|
776
|
|
|
|
748
|
|
|
|
715
|
|
|
|
697
|
|
HomeGoods
|
|
|
318
|
|
|
|
289
|
|
|
|
270
|
|
|
|
251
|
|
|
|
216
|
|
A.J.
Wright(4)
|
|
|
135
|
|
|
|
129
|
|
|
|
129
|
|
|
|
152
|
|
|
|
130
|
|
In Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
202
|
|
|
|
191
|
|
|
|
184
|
|
|
|
174
|
|
|
|
168
|
|
HomeSense
|
|
|
75
|
|
|
|
71
|
|
|
|
68
|
|
|
|
58
|
|
|
|
40
|
|
In Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
235
|
|
|
|
226
|
|
|
|
210
|
|
|
|
197
|
|
|
|
170
|
|
HomeSense
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,652
|
|
|
|
2,529
|
|
|
|
2,430
|
|
|
|
2,346
|
|
|
|
2,192
|
|
|
|
Selling Square Footage at year-end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
20,543
|
|
|
|
20,025
|
|
|
|
19,390
|
|
|
|
18,781
|
|
|
|
18,033
|
|
Marshalls
|
|
|
20,388
|
|
|
|
19,759
|
|
|
|
19,078
|
|
|
|
18,206
|
|
|
|
17,511
|
|
HomeGoods
|
|
|
6,248
|
|
|
|
5,569
|
|
|
|
5,181
|
|
|
|
4,859
|
|
|
|
4,159
|
|
A.J.
Wright(4)
|
|
|
2,680
|
|
|
|
2,576
|
|
|
|
2,577
|
|
|
|
3,054
|
|
|
|
2,606
|
|
In Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
4,647
|
|
|
|
4,389
|
|
|
|
4,214
|
|
|
|
4,012
|
|
|
|
3,811
|
|
HomeSense
|
|
|
1,437
|
|
|
|
1,358
|
|
|
|
1,280
|
|
|
|
1,100
|
|
|
|
747
|
|
In Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
5,404
|
|
|
|
5,096
|
|
|
|
4,636
|
|
|
|
4,216
|
|
|
|
3,491
|
|
HomeSense
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
61,454
|
|
|
|
58,772
|
|
|
|
56,356
|
|
|
|
54,228
|
|
|
|
50,358
|
|
|
|
|
|
|
(1)
|
|
Fiscal 2008 and prior fiscal years
have been adjusted to reclassify the operating results of
Bobs Stores to discontinued operations. Fiscal 2006 and
prior fiscal years have been adjusted to reclassify the
operating results of the A.J. Wright store closings to
discontinued operations. See Note C to the consolidated
financial statements. Fiscal 2005 has been adjusted to reflect
the effect of adopting Statement of Financial Accounting
Standards No. 123 (R) in fiscal 2006.
|
(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 and prior fiscal years
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 53-week fiscal year
ended January 31, 2009 (fiscal 2009), and the fiscal years
ended January 26, 2008 (fiscal 2008) and
January 27, 2007 (fiscal 2007), each of which included
52 weeks.
Our results reflect two discontinued operations: Bobs
Stores, sold in fiscal 2009 and 34 A.J. Wright stores closed in
fiscal 2007 as part of a repositioning of the chain. See
Note C to the consolidated financial statements. All
references in the following discussion are to continuing
operations unless otherwise indicated.
Our results reflect the costs of the unauthorized intrusion or
intrusions (collectively, the Computer Intrusion)
into portions of our computer system, which was discovered in
late fiscal 2007 and in which we believe customer data were
stolen. See Provision for Computer Intrusion related
costs below.
RESULTS
OF OPERATIONS
Our fiscal 2009 performance was adversely affected in the second
half of the year by two macroeconomic factors: the worldwide
recession which adversely affected consumer spending and retail
sales at TJX and generally and the significant strengthening of
the U.S. dollar against the Canadian dollar and the British
pound, which adversely affected the translation of the operating
results of our Canadian and European businesses. With the
flexibility of our off-price business model, in fiscal 2009 we
increased our inventory turns and maintained the value
proposition of our merchandise by buying closer to need and
operating with leaner-than-usual inventories. We also continued
a focus on tight expense control during fiscal 2009. Despite the
challenging environment, customer traffic in fiscal 2009 was up
across virtually all of our divisions, and merchandise margins
remained strong. Highlights of our financial performance for
fiscal 2009 include the following:
|
|
|
|
|
Net sales for fiscal 2009 were $19.0 billion, a 4% increase
over fiscal 2008. The 53rd week in fiscal 2009 increased
net sales by approximately 1%, which was more than offset by a
2% decline in net sales due to the impact of foreign currency
exchange rates. We continued to grow our business, with both
stores in operation and selling square footage up 5% at the end
of fiscal 2009 compared to last fiscal year end.
|
|
|
|
Same store sales on a 52-week basis for fiscal 2009 increased 1%
over the prior year.
|
|
|
|
Our cost of sales ratio for fiscal 2009 increased
0.3 percentage points, as an increase in merchandise
margins and the benefit of the
53rd week
were more than offset by buying and occupancy expense deleverage
on a 1% same store sales increase. Selling, general and
administrative expenses as a percentage of net sales for fiscal
2009 increased by 0.1 percentage points compared to the
prior year, primarily due to deleverage on the 1% same store
sales increase.
|
|
|
|
Our fiscal 2009 pre-tax margin (the ratio of pre-tax income to
net sales) was 7.6% compared to 6.9% for fiscal 2008. The
comparison of pre-tax margins for fiscal 2009 to fiscal 2008 was
affected by the Provision for Computer Intrusion related costs
in each year. Fiscal 2009 included a $31 million credit
(pre-tax) to the provision, which increased pre-tax margin by
0.2 percentage points, while fiscal 2008 included a pre-tax
charge of $197 million, which reduced the fiscal 2008
pre-tax margin by 1.1 percentage points.
|
|
|
|
Income from continuing operations was $914.9 million, or
$2.08 per diluted share, for fiscal 2009 compared to
$782.4 million, or $1.68 per diluted share, last year. The
fiscal 2009 credit to the Provision for Computer Intrusion
related costs increased fiscal 2009 income from continuing
operations by $18 million, or $0.04 per diluted share,
while the fiscal 2008 charge for the Provision for Computer
Intrusion related costs reduced fiscal 2008 income from
continuing operations by $119 million, or $0.25 per diluted
share.
|
|
|
|
During fiscal 2009, we repurchased 24.0 million shares of
our common stock at a cost of $741 million. Our diluted
earnings per share reflect the benefit of our stock repurchase
program.
|
|
|
|
Consolidated average per store inventories of our continuing
operations, including inventory on hand at our distribution
centers, were down 6% at the end of fiscal 2009 as compared to
an increase of 2% at the prior year
|
22
|
|
|
|
|
end. On a comparable basis, adjusting for currency and a
calendar shift due to the 53rd week in fiscal 2009, average
per store inventories, including inventory on hand at our
distribution centers, were down 4% in fiscal 2009 as compared to
fiscal 2008 and were essentially flat in fiscal 2008 as compared
to fiscal 2007.
|
We have implemented steps to position ourselves for the fiscal
year ending January 30, 2010 (fiscal 2010) in light of
the ongoing worldwide recession including:
|
|
|
|
|
We have planned our consolidated same store sales
conservatively, setting our inventory and expense plans around
negative low single digit comparable store sales.
|
|
|
|
We plan to continue to operate with historically lean
inventories and to buy closer to need than in the past, designed
to increase inventory turns and drive traffic to our stores.
|
|
|
|
We are taking measures designed to reduce expenses in fiscal
2010 by up to $150 million including further savings in
non-merchandise procurement, implementing processes to more
efficiently manage payroll in our store and distribution
centers, reducing marketing expenditures while increasing
penetration, eliminating open positions, eliminating merit pay
increases across the majority of the organization, restructuring
certain areas to improve productivity and efficiency and
offering a voluntary retirement program for certain employees.
|
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 2009
totaled $19.0 billion, a 4% increase over net sales of
$18.3 billion in fiscal 2008. The increase reflected a 4%
increase from new stores, a 1% increase from the 53rd week
and a 1% increase in same store sales, offset by a 2% decline
from the negative impact of foreign currency exchange rates.
Consolidated net sales for fiscal 2008 increased 7% over net
sales of $17.1 billion for fiscal 2007. The increase
reflected increases of 3% from new stores, 2% from same store
sales and a 2% favorable impact due to 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 5% in fiscal 2009 and by 4% in fiscal 2008 over the
respective prior year periods. As a result of economic
conditions, we have planned store openings more conservatively
and expect to add 64 stores (net of store closings) in fiscal
2010, a 2% increase in our consolidated store base and an
increase of 2% in our selling square footage.
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, which was
partially offset by a reduction in the value of the average
transaction. As for merchandise categories, shoes, 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 the
United Kingdom 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.
The 2% increase in same store sales for fiscal 2008 was driven
by a strong performance at our international segments. In the
U.S., sales of dresses, footwear and accessories were strong,
partially offset by softer sales in the balance of the
womens apparel category. At Marmaxx, our largest business,
home categories were also weak. Same store sales increases
benefited from the continued expansion of footwear departments
in Marshalls. During fiscal 2008, we opened expanded footwear
departments in approximately 240 additional Marshalls stores.
Same store sales for fiscal 2008 at our international segments
were above the consolidated average. Within the U. S., the
strongest regions were the West Coast and the Northeast, while
Florida and the Southeast trailed the U.S. average. Overall
transaction volume was slightly down in fiscal 2008, more than
offset by an increase in the value of the average transaction.
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
23
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 are 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, which removes the effect of changes in currency
exchange rates, and we believe it is a more accurate measure of
the divisional operating performance.
The following table sets forth our consolidated operating
results as a percentage of net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Net sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
Cost of sales, including buying and occupancy costs
|
|
|
75.8
|
|
|
|
75.5
|
|
|
|
75.8
|
|
Selling, general and administrative expenses
|
|
|
16.7
|
|
|
|
16.6
|
|
|
|
16.7
|
|
Provision for Computer Intrusion related costs
|
|
|
(0.2
|
)
|
|
|
1.1
|
|
|
|
|
|
Interest (income) expense, net
|
|
|
0.1
|
|
|
|
|
|
|
|
0.1
|
|
|
|
Income from
continuing operations before provision for income
taxes*
|
|
|
7.6
|
%
|
|
|
6.9
|
%
|
|
|
7.4
|
%
|
|
|
|
|
|
*
|
|
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 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 from 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: Additionally, 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 that are
not their local currencies, primarily U.S. dollar
purchases. As we have not elected hedge accounting
as defined by SFAS No. 133 (Accounting for Derivative
Instruments and Hedging Activities), under generally
accepted accounting principles we record a mark-to-market
adjustment on the hedging instruments in our results of
operations at the end of each reporting period, prior to the
currency gain or loss being recorded on the items being hedged.
In subsequent periods, the income statement impact of the hedges
are effectively offset when the related inventory 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, as there were in the third and
fourth quarters of fiscal 2009. Historically, the impact on a
full-year basis has not been material. Since the mark-to-market
adjustment on these hedges has no impact on net sales, it
affects both our operating margins and earnings growth.
Cost of sales, including buying and occupancy
costs: Cost of sales, including buying and occupancy
costs, as a percentage of net sales was 75.8% in fiscal 2009,
75.5% in fiscal 2008 and 75.8% in fiscal 2007. This ratio for
fiscal 2009, as compared to fiscal 2008, increased
0.3 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 (estimated at approximately
0.2 percentage points) as well as an improvement in our
consolidated merchandise margin of 0.2 percentage points.
Throughout fiscal 2009, we solidly executed our off-price
fundamentals, buying close to need, operating with leaner
inventories and taking advantage of opportunities in the market
place.
Cost of sales, including buying and occupancy costs, as a
percentage of net sales for fiscal 2008, as compared to fiscal
2007, reflected an improvement in our consolidated merchandise
margin (0.4 percentage points), due to improved markon and
lower markdowns. Throughout fiscal 2008, we solidly executed our
off-price fundamentals, buying close to need and taking
advantage of opportunities in the market place. This merchandise
margin improvement was
24
partially offset by a slight increase in occupancy costs as a
percentage of net sales. All other buying and occupancy costs
remained relatively flat as compared to the same period in the
prior year.
Selling, general and administrative expenses:
Selling, general and administrative expenses as a percentage of
net sales were 16.7% in fiscal 2009, 16.6% in fiscal 2008 and
16.7% in fiscal 2007. The increase in fiscal 2009 compared to
fiscal 2008 reflects 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 to the prior year.
The fiscal 2008 expense ratio was slightly down compared to the
prior year with a planned increase in advertising costs
(0.1 percentage point) being offset by cost containment
initiatives.
Provision for Computer Intrusion related costs:
From the time of the discovery of the Computer Intrusion late in
fiscal 2007, through the end of fiscal 2009, 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
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 31, 2009, our reserve balance was
$42.2 million, which reflects our current estimation of
remaining probable losses (in accordance with
U.S. generally accepted accounting principles) with respect
to the Computer Intrusion, including litigation, proceedings,
investigations 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 to adjust for
developments in the course and resolution of litigation, claims
and investigations and related expenses and receipt of insurance
proceeds and for other changes.
Interest (income) expense, net: Interest (income)
expense, net amounted to expense of $14.3 million for
fiscal 2009, income of $1.6 million for fiscal 2008 and
expense of $15.6 million for fiscal 2007. The changes from
year to year relate primarily to interest income which totaled
$22.2 million in fiscal 2009, $40.7 million in fiscal
2008 and $23.6 million in fiscal 2007. 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.
Income taxes: Our effective annual income tax rate
was 36.9% in fiscal 2009, 37.9% in fiscal 2008 and 37.7% in
fiscal 2007. The decrease in the tax rate for fiscal 2009 as
compared to fiscal 2008 reflects the favorable impact of a
$19 million reduction in the FIN 48 tax liability,
which reduced the annual effective income tax rate for fiscal
2009 by 1.3 percentage points. This improvement 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 J to the consolidated financial
statements.
The increase in the tax rate for fiscal 2008 as compared to
fiscal 2007 reflects the absence of some fiscal 2007 one-time
benefits as well as an increase due to certain FIN 48 tax
positions, partially offset by the favorable impact of increased
income at our foreign operations and increased foreign tax
credits relating to the tax treatment of our Puerto Rico
subsidiary.
Income from continuing operations: Income from
continuing operations was $914.9 million in fiscal 2009,
$782.4 million in fiscal 2008 and $787.2 million in
fiscal 2007. Income from continuing operations per share was
$2.08 in fiscal 2009, $1.68 in fiscal 2008 and $1.65 in fiscal
2007. Unlike many companies in the retail industry, we did not
have a
53rd week
in fiscal 2007, but did have a
53rd week
in fiscal 2009. We estimate the
53rd week
in fiscal 2009 favorably affected earnings per share by $0.09
per share.
25
The reduction in the Provision for Computer Intrusion related
costs in fiscal 2009 benefited income from continuing operations
by approximately $18 million, after-tax, or $0.04 per
share. The charge relating to the Computer Intrusion related
costs in fiscal 2008, adversely affected income from continuing
operations by approximately $119 million, after tax, or
$0.25 per share.
Changes in foreign currency exchange rates also affected the
comparability of our results. Changes in currency rates reduced
earnings per share by $0.05 per share in fiscal 2009 as compared
to an increase of $0.01 per share in fiscal 2008. Changes in
foreign currency exchange rates increased fiscal 2008 earnings
per share by $0.05 per share in comparison to fiscal 2007.
In addition, our share repurchase program affects the
comparability of earnings per share. We repurchased
24.0 million shares of our stock at a cost of
$741 million in fiscal 2009; we repurchased
33.3 million shares at a cost of $950 million in
fiscal 2008; and we repurchased 22.0 million shares at a
cost of $557 million in fiscal 2007.
Discontinued operations and net income: All
historical income statements have been adjusted to reflect the
sale of Bobs Stores in fiscal 2009 and the closure of 34
A.J. Wright stores in fiscal 2007 as discontinued operations.
Including the impact of discontinued operations, net income was
$880.6 million, or $2.00 per share, for fiscal 2009,
$771.8 million, or $1.66 per share, for fiscal 2008 and
$738.0 million, or $1.55 per share, for fiscal 2007.
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 HomeGoods and
A.J. Wright each is reported as a separate segment.
TJXs stores operated in Canada (Winners and HomeSense) are
reported as the Canadian segment, and TJXs stores operated
in Europe (T.K. Maxx and HomeSense) are reported as the European
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 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:
Marmaxx:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Net sales
|
|
$
|
12,362.1
|
|
|
$
|
11,966.7
|
|
|
$
|
11,531.8
|
|
Segment profit
|
|
$
|
1,155.8
|
|
|
$
|
1,158.2
|
|
|
$
|
1,079.3
|
|
Segment profit as a percentage of net sales
|
|
|
9.3
|
%
|
|
|
9.7
|
%
|
|
|
9.4
|
%
|
Percent increase in same store sales
|
|
|
0
|
%
|
|
|
1
|
%
|
|
|
2
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
874
|
|
|
|
847
|
|
|
|
821
|
|
Marshalls
|
|
|
806
|
|
|
|
776
|
|
|
|
748
|
|
|
|
Total Marmaxx
|
|
|
1,680
|
|
|
|
1,623
|
|
|
|
1,569
|
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
20,543
|
|
|
|
20,025
|
|
|
|
19,390
|
|
Marshalls
|
|
|
20,388
|
|
|
|
19,759
|
|
|
|
19,078
|
|
|
|
Total Marmaxx
|
|
|
40,931
|
|
|
|
39,784
|
|
|
|
38,468
|
|
|
|
Net sales at Marmaxx increased 3% in fiscal 2009 as compared to
fiscal 2008. Same store sales for Marmaxx were flat in fiscal
2009 compared to a 1% same store sales increase in fiscal 2008.
Sales at Marmaxx for fiscal 2009 reflected increased customer
traffic offset by a decrease in the value of the average
transaction. Categories that posted same store sales increases
included footwear and accessories, childrens clothing and
dresses. During fiscal 2009, we added expanded footwear
departments to approximately 220 Marshalls stores, which nearly
completes the expansion of footwear departments at Marshalls.
Home categories at Marmaxx reported same
26
store sales decreases in fiscal 2009. Geographically in fiscal
2009, same store sales in the Northeast, Midwest and
Mid-Atlantic regions were above the chain average, while same
store sales in the West Coast, Florida and the Southeast were
below the chain average.
Segment profit as a percentage of net sales (segment
margin or segment profit 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 31, 2009, average per store inventories, including
inventory on hand at distribution centers, were down 4% compared
to a 2% decrease at the prior year end. The decreases in average
inventories were primarily due to continued focus on maintaining
a liquid inventory position.
Segment margin for fiscal 2008 increased to 9.7% compared to
9.4% in fiscal 2007. Segment margin was favorably impacted by
merchandise margins, which increased 0.4 percentage points
(as a percentage of net sales) due to lower markdowns and a
higher markon, as well as some expense leverage due to our cost
containment measures. These improvements in segment margin were
partly offset by an increase in occupancy costs and a planned
increase in advertising expense.
We expect to open approximately 17 new stores (net of closings)
in fiscal 2010, increasing the Marmaxx store base by 1% and
increasing its selling square footage by 1%.
Canada:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
U.S. Dollars in millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Net sales
|
|
$
|
2,139.4
|
|
|
$
|
2,040.8
|
|
|
$
|
1,740.8
|
|
Segment profit
|
|
$
|
236.1
|
|
|
$
|
235.1
|
|
|
$
|
181.9
|
|
Segment profit as a percentage of net sales
|
|
|
11.0
|
%
|
|
|
11.5
|
%
|
|
|
10.4
|
%
|
Percent increase in same store sales
|
|
|
3
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
202
|
|
|
|
191
|
|
|
|
184
|
|
HomeSense
|
|
|
75
|
|
|
|
71
|
|
|
|
68
|
|
|
|
Total
|
|
|
277
|
|
|
|
262
|
|
|
|
252
|
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
4,647
|
|
|
|
4,389
|
|
|
|
4,214
|
|
HomeSense
|
|
|
1,437
|
|
|
|
1,358
|
|
|
|
1,280
|
|
|
|
Total
|
|
|
6,084
|
|
|
|
5,747
|
|
|
|
5,494
|
|
|
|
Net sales for the Canadian segment 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 a strong increase
of 5% in fiscal 2008. Same store sales of outerwear, footwear,
jewelry and accessories were above the segment average, while
HomeSense same store sales were below the segment average for
fiscal 2009.
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 of the mark-to-market
adjustment of inventory related hedges 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. In the third quarter of
fiscal 2009, Winners opened 2 StyleSense stores, a new concept
that offers family footwear and accessories. We anticipate that
merchandise margins in the Canadian segment will also decline in
fiscal 2010 as a result of foreign
27
currency exchange, due to the high volume of merchandise
purchases by the Canadian segment denominated in
U.S. dollars.
Segment profit margin for fiscal 2008 increased
1.1 percentage points to 11.5% compared to 10.4% for fiscal
2007. This improvement in segment margin was primarily due to
improved expense ratios (leverage from the 5% same store sales
increase as well as cost containment initiatives). Currency
exchange rates increased segment profit by approximately
$24 million for fiscal 2008, as compared to fiscal 2007.
Most of this increase was due to currency translation, and as a
result, it had no impact on segment margin. The increase in
segment profit in fiscal 2008 also included the favorable impact
of a mark-to-market adjustment of inventory hedge contracts,
which increased segment margin by 0.3 percentage points.
The fiscal 2008 segment margin also reflected an increase in
merchandise margin, primarily due to increased markon as well as
the favorable impact of cost containment initiatives and strong
same store sales results on expense ratios.
We expect to add a net of 13 stores in Canada in fiscal 2010,
which is an increase of 5% and will increase selling square
footage by 5%.
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
U.S. Dollars in millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Net sales
|
|
$
|
2,242.1
|
|
|
$
|
2,216.2
|
|
|
$
|
1,864.5
|
|
Segment profit
|
|
$
|
137.6
|
|
|
$
|
127.2
|
|
|
$
|
109.3
|
|
Segment profit as a percentage of net sales
|
|
|
6.1
|
%
|
|
|
5.7
|
%
|
|
|
5.9
|
%
|
Percent increase in same store sales
|
|
|
4
|
%
|
|
|
6
|
%
|
|
|
9
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
235
|
|
|
|
226
|
|
|
|
210
|
|
HomeSense
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
242
|
|
|
|
226
|
|
|
|
210
|
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
5,404
|
|
|
|
5,096
|
|
|
|
4,636
|
|
HomeSense
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,511
|
|
|
|
5,096
|
|
|
|
4,636
|
|
|
|
European net sales for fiscal 2009 increased 1% to
$2.2 billion compared to fiscal 2008. Currency exchange
rate translation negatively affected fiscal 2009 sales by
approximately $282 million. Same store sales increased 4%
for fiscal 2009 compared to a 6% increase last year. Same store
sales for footwear and accessories and most other womens
apparel categories performed above the chain average, while home
fashions were below the chain average.
Segment profit for fiscal 2009 increased 8% to
$137.6 million, and segment margin increased
0.4 percentage points to 6.1% compared to last year.
Currency exchange rate translation negatively affected segment
profit by approximately $26 million in fiscal 2009. The
increase in segment margin reflects improved merchandise
margins, partially offset by an increase in occupancy costs as a
percentage of sales and the cost of operations in Germany. We
are encouraged by the performance of our German stores but as
they are new stores, they reduce the segment margin generated by
the more established stores in the U.K. and Ireland. 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.
T.K. Maxx also introduced the HomeSense concept into the U.K.
with 7 new stores.
Segment profit for fiscal 2008 increased 16% to
$127.2 million, while segment margin decreased slightly to
5.7% compared to fiscal 2007. Currency exchange rate translation
favorably impacted segment profit by approximately
$10 million in fiscal 2008, but did not impact the segment
profit margin. The opening of 5 stores in Germany reduced
segment profit for fiscal 2008 by $11 million and reduced
the fiscal 2008 segment margin by 0.6 percentage points,
offsetting the slightly improved merchandise margin in the
remainder of the segment, as well as the favorable impact of
same store sales growth on expense ratios and the segments
cost containment initiatives.
28
In fiscal 2010, we plan to open a net of 17 T.K. Maxx stores,
including 10 in Germany and 3 HomeSense stores in the U.K. and
to expand selling square footage by 8%.
HomeGoods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Net sales
|
|
$
|
1,578.3
|
|
|
$
|
1,480.4
|
|
|
$
|
1,365.1
|
|
Segment profit
|
|
$
|
42.4
|
|
|
$
|
76.2
|
|
|
$
|
60.9
|
|
Segment profit as a percentage of net sales
|
|
|
2.7
|
%
|
|
|
5.1
|
%
|
|
|
4.5
|
%
|
Percent (decrease) increase in same store sales
|
|
|
(3
|
)%
|
|
|
3
|
%
|
|
|
4
|
%
|
Stores in operation at end of period
|
|
|
318
|
|
|
|
289
|
|
|
|
270
|
|
Selling square footage at end of period (in thousands)
|
|
|
6,248
|
|
|
|
5,569
|
|
|
|
5,181
|
|
|
|
HomeGoods net sales for fiscal 2009 increased 7% compared
to fiscal 2008, and same store sales decreased 3% in fiscal
2009. Sales of home fashions have been particularly impacted by
the weak housing market and recession. Segment margin of 2.7%
was down from 5.1% for fiscal 2008. Merchandise margins declined
in fiscal 2009, primarily due to increased markdowns. In
addition, HomeGoods experienced deleverage on operating costs as
a result of the decline in same store sales. We are seeking to
address the difficult home environment by operating with very
lean inventories and focusing on merchandise categories that we
believe will resonate with consumers in these difficult times.
HomeGoods net sales for fiscal 2008 increased 8% compared
to fiscal 2007, and same store sales increased 3% in fiscal
2008. Segment margin of 5.1% for fiscal 2008 improved over
fiscal 2007, primarily due to improved merchandise margins and
the leveraging of expenses, particularly occupancy costs. These
segment margin improvements were offset in part by an increase
in advertising expenses as a percentage of net sales.
In fiscal 2010, we plan to add a net of 4 HomeGoods stores and
increase selling square footage by 1%.
A.J.
Wright:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Net sales
|
|
$
|
677.6
|
|
|
$
|
632.7
|
|
|
$
|
601.8
|
|
Segment profit (loss)
|
|
$
|
2.9
|
|
|
$
|
(1.8
|
)
|
|
$
|
(10.3
|
)
|
Segment profit (loss) as a percentage of net sales
|
|
|
0.4
|
%
|
|
|
(0.3
|
)%
|
|
|
(1.7
|
)%
|
Percent increase in same store sales
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
Stores in operation at end of period
|
|
|
135
|
|
|
|
129
|
|
|
|
129
|
|
Selling square footage at end of period (in thousands)
|
|
|
2,680
|
|
|
|
2,576
|
|
|
|
2,577
|
|
|
|
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. We believe A.J.
Wright has improved its results through better merchandising and
advertising effectiveness, as a result of our improved
understanding of A.J. Wrights customer tastes and spending
habits.
A.J. Wrights net sales increased 5% for fiscal 2008
compared to fiscal 2007. A.J. Wrights same store sales
increased 2% for fiscal 2008, and segment loss for fiscal 2008
was $1.8 million compared to $10.3 million for fiscal
2007. This improvement was primarily due to stronger merchandise
margin, a reduction in occupancy costs as a percentage of net
sales and the impact of cost containment initiatives.
As a result of A.J. Wrights improved results, we plan to
increase the rate of store openings for this chain for fiscal
2010, currently planning to add a net of 13 A.J. Wright stores
and increase selling square footage by 10%.
29
General
Corporate Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
General corporate expense
|
|
$
|
140.0
|
|
|
$
|
139.4
|
|
|
$
|
136.4
|
|
|
|
General corporate expense for segment reporting purposes is
those costs not specifically related to the operations of our
business segments and is included in selling, general and
administrative expenses.
General corporate expense in fiscal 2009 versus fiscal 2008 was
virtually flat.
The comparison of general corporate expense in fiscal 2008
versus fiscal 2007 reflected an increase in corporate support
costs in fiscal 2008 and a $5 million charge in fiscal 2007
relating to the cost of a workforce reduction and other
termination benefits at the corporate level.
LIQUIDITY
AND CAPITAL RESOURCES
Operating
Activities:
Net cash provided by operating activities was
$1,155 million in fiscal 2009, $1,375 million in
fiscal 2008, and $1,213 million in fiscal 2007. The cash
generated from operating activities in each of these fiscal
years was largely due to operating earnings.
Operating cash flows for fiscal 2009 decreased by
$220 million as compared to the prior year. Net income,
after adjusting for 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 last year. 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 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. Last year, 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 the 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.
Operating cash flows for fiscal 2008 increased by
$162 million over the prior year. Net income, after
adjusting for the non-cash impact of depreciation, for fiscal
2008 increased $50 million. The change in inventory, net of
accounts payable, from prior year-end levels was a significant
component of operating cash flows. In fiscal 2008, the change in
merchandise inventory, net of the related change in accounts
payable, favorably impacted operating cash flows by
$5 million compared to a use of cash of $151 million
in fiscal 2007. Additionally, fiscal 2008 operating cash flows
were favorably impacted by the change in income taxes payable.
These increases in fiscal 2008 operating cash flows as compared
to fiscal 2007 were offset by the unfavorable cash flow impact
of the deferred income tax provision, changes in accrued
expenses and other liabilities and changes in accounts
receivable.
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 as well as leases of former TJX
businesses. In fiscal 2009, we reserved an additional
$3 million for 2 Bobs Stores locations, which the
buyer of Bobs
30
Stores has the right to put back to us and which we consider
probable. This was offset by a comparable amount due to
favorable settlements on several A.J. Wright locations. The
balance in the reserve and the activity for the last three
fiscal years is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Balance at beginning of year
|
|
$
|
46,076
|
|
|
$
|
57,677
|
|
|
$
|
14,981
|
|
Additions to the reserve charged to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
A.J. Wright store closings
|
|
|
(2,908
|
)
|
|
|
|
|
|
|
61,968
|
|
Other lease related obligations
|
|
|
2,908
|
|
|
|
|
|
|
|
1,555
|
|
Interest accretion
|
|
|
1,820
|
|
|
|
1,820
|
|
|
|
400
|
|
Charges against the reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease related obligations
|
|
|
(7,323
|
)
|
|
|
(11,214
|
)
|
|
|
(1,696
|
)
|
Fixed asset write-off (non-cash)
|
|
|
|
|
|
|
|
|
|
|
(18,732
|
)
|
Termination benefits and all other
|
|
|
(9
|
)
|
|
|
(2,207
|
)
|
|
|
(799
|
)
|
|
|
Balance at end of year
|
|
$
|
40,564
|
|
|
$
|
46,076
|
|
|
$
|
57,677
|
|
|
|
We added $62 million in fiscal 2007 for the exit costs
related to the closing of 34 A.J. Wright stores (see Note C
to our consolidated financial statements). The additions to the
reserve for other lease related obligations in fiscal 2007 were
the result of periodic adjustments to the estimated lease
obligations of our former businesses and were offset by income
from creditor recoveries of a similar amount. The lease related
charges against the reserve during fiscal 2007 related primarily
to our former businesses. The fixed asset write-offs and other
charges against the reserve for fiscal 2007 and all of the
charges against the reserve in fiscal 2008 and fiscal 2009,
related primarily to the 34 A.J. Wright closed stores.
Approximately $25 million of the fiscal 2009 reserve
balance relates to the A.J. Wright store closings, primarily our
estimation of lease costs, net of estimated subtenant income.
Approximately $3 million of the reserve at fiscal 2009
relates to 2 Bobs Stores locations which are considered
probable for being put back to TJX by the buyer. 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. At
January 31, 2009, substantially all the leases of former
businesses that were rejected in bankruptcy and for which the
landlords asserted liability against us had been resolved. The
actual net cost of these lease obligations may differ from our
original estimate. Although our actual costs with respect to the
lease obligations of former businesses may exceed amounts
estimated in our reserve, and we may incur costs for leases from
these former businesses that were not terminated or had not
expired, 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, a former TJX business, and 8
additional Bobs Stores leases. Our reserve for
discontinued operations does not reflect these leases because we
do not believe that the likelihood of any future liability to us
is 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 discussed above, 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 effect 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 does not fulfill their obligations related to
one or more of these leases.
31
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 $100 million as of
January 31, 2009. 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.
Investing
Activities:
Our cash flows for investing activities include capital
expenditures for the last three years as set forth in the table
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In millions
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
New stores
|
|
$
|
147.6
|
|
|
$
|
120.7
|
|
|
$
|
123.0
|
|
Store renovations and improvements
|
|
|
264.3
|
|
|
|
269.8
|
|
|
|
190.2
|
|
Office and distribution centers
|
|
|
171.0
|
|
|
|
136.5
|
|
|
|
64.8
|
|
|
|
Capital expenditures
|
|
$
|
582.9
|
|
|
$
|
527.0
|
|
|
$
|
378.0
|
|
|
|
We expect that capital expenditures will approximate
$450 million for fiscal 2010, which we expect to fund
through internally generated funds. This includes
$153 million for new stores, $182 million for store
renovations, expansions and improvements and $115 million
for our office and distribution centers. The planned decrease in
capital expenditures is attributable to fewer planned store
openings and reduced spending on renovations and improvements to
existing stores.
Investing activities 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 and $17.7 million in
fiscal 2007.
Financing
Activities:
Cash flows from financing activities resulted in net cash
outflows of $769 million in fiscal 2009, $953 million
in fiscal 2008 and $418 million in fiscal 2007. The
majority of this outflow relates to our share repurchase program.
We spent $741 million in fiscal 2009, $950 million in
fiscal 2008 and $557 million in fiscal 2007 under our stock
repurchase programs. We repurchased 24.0 million shares in
fiscal 2009, 33.3 million shares in fiscal 2008 and
22.0 million shares in fiscal 2007. 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. Our fiscal 2009 repurchases completed the
$1 billion stock repurchase program approved by the Board
of Directors in January 2007 and included the repurchase of
8.9 million shares at a cost of $255 million under the
$1 billion stock repurchase program approved by the Board
of Directors in February 2008. As of January 31, 2009,
$745 million remained available for purchase under the
current program. The timing of purchases under this program is
determined by TJX from time to time based on its assessment of
various factors including excess cash flow, liquidity and market
conditions. We are taking a more conservative approach to our
stock repurchase program and currently plan to repurchase up to
approximately $250 million of our stock in fiscal 2010.
This timing and amount of these purchases are subject to change
depending upon the economic environment and other factors.
The $464.9 million aggregate principal amount outstanding
of our zero coupon convertible subordinated notes (which are due
in February 2021) are convertible into 15.2 million
shares of common stock under certain conditions,
32
including if the closing sale price of our common stock reaches
specified trigger prices. The trigger price was met during a
portion of fiscal 2009 and 52,552 notes were converted during
fiscal 2009, resulting in the issuance of 1.7 million
shares of common stock. The notes were not convertible during
the fourth quarter of fiscal 2009 because our stock price did
not meet the trigger prices during relevant periods. The trigger
prices will have to be met during applicable future periods for
the notes to be convertible in future quarters.
We declared quarterly dividends on our common stock which
totaled $0.44 per share in fiscal 2009, $0.36 per share in
fiscal 2008 and $0.28 per share in fiscal 2007. Cash payments
for dividends on our common stock totaled $177 million in
fiscal 2009, $151 million in fiscal 2008 and
$123 million in fiscal 2007. Financing activities also
included proceeds of $142 million in fiscal 2009,
$134 million in fiscal 2008 and $260 million in fiscal
2007 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. 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 31, 2009 there were no outstanding amounts under
our credit facilities. The maximum amount of our
U.S. short-term borrowings outstanding was
$222 million during fiscal 2009. The weighted average
interest rate on our U.S. short-term borrowings was 3.92%
in fiscal 2009. There were no borrowings on our credit
facilities during fiscal 2008.
As of January 31, 2009 and January 26, 2008, Winners
had two credit lines, one for C$10 million for operating
expenses and one C$10 million letter of credit facility.
Winners did not borrow under the credit line for operating
expenses in fiscal 2009. The maximum amount outstanding under
our Canadian credit line for operating expenses was
C$5.7 million in fiscal 2008 and C$3.8 million in
fiscal 2007. There were no amounts outstanding on this line at
the end of fiscal 2009 or fiscal 2008. As of January 31,
2009, T.K. Maxx had a credit line of £20 million. The
maximum amount outstanding was £6.1 million in fiscal
2009 and £16.4 million in fiscal 2008. There were no
outstanding borrowings on this credit line at the end of fiscal
2009 or fiscal 2008.
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 31,
2009, 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
|
|
$
|
806,654
|
|
|
$
|
410,125
|
|
|
$
|
|
|
|
$
|
396,529
|
|
|
$
|
|
|
Operating lease commitments
|
|
|
5,071,283
|
|
|
|
913,446
|
|
|
|
1,582,397
|
|
|
|
1,137,941
|
|
|
|
1,437,499
|
|
Capital lease obligation
|
|
|
26,671
|
|
|
|
3,726
|
|
|
|
7,623
|
|
|
|
7,824
|
|
|
|
7,498
|
|
Purchase obligations
|
|
|
1,922,537
|
|
|
|
1,803,500
|
|
|
|
112,204
|
|
|
|
4,635
|
|
|
|
2,198
|
|
|
|
Total Obligations
|
|
$
|
7,827,145
|
|
|
$
|
3,130,797
|
|
|
$
|
1,702,224
|
|
|
$
|
1,546,929
|
|
|
$
|
1,447,195
|
|
|
|
The long-term debt obligations above include estimated interest
costs and assume that all holders of the zero coupon convertible
subordinated notes exercise their put options in fiscal 2014. If
none of the put options are exercised and the notes are not
redeemed or converted, the notes will mature in fiscal 2022. The
effect of the interest rate swap agreements was estimated based
on their values as of January 31, 2009.
33
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, which together were approximately one-third
of the total minimum rent for the fiscal year ended
January 31, 2009.
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 excluded long-term
agreements for services and operating needs that can be
cancelled without penalty.
We also have long-term liabilities which include
$272.9 million for employee compensation and benefits, the
majority of which will come due beyond five years,
$137.9 million for accrued rent, the cash flow requirements
of which are included in the lease commitments in the above
table and $240.6 million for uncertain tax positions for
which it is not reasonably possible to predict when it may be
paid.
CRITICAL
ACCOUNTING POLICIES
We must evaluate and select applicable accounting policies. We
consider our most critical accounting policies, involving
management estimates and judgments, to be those relating to the
areas described below. We believe that we have selected the most
appropriate assumptions in each of the following areas and that
the results we would have obtained, had alternative assumptions
been selected, would not be materially different from the
results we have reported.
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 the
inventory valuation when the price of an item is changed. We
believe the retail method results in a more conservative
inventory valuation than other 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 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 a 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 the inventory. Our off-price
businesses have historically not entered into such arrangements
with our vendors.
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 their carrying amounts are not recoverable.
Significant judgments are involved in projecting the cash flows
of individual stores and our business units and involve a number
of factors including historical trends, recent performance and
general economic assumptions. If it is determined that an
impairment of long-lived assets has occurred, we record an
impairment charge equal to the excess of the carrying value of
the assets over the estimated fair value of the assets.
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
34
unfunded status of our qualified plan increased significantly.
Despite this we were not required to fund our plan during fiscal
2009, primarily due to voluntary funding in prior years. As of
the date of this report we have funded $50 million into the
qualified pension plan and may make additional voluntary
contributions during fiscal 2010.
Share based compensation: In accordance with
SFAS No. 123 (revised 2004) Share-Based
Payment (SFAS No. 123R) 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 stock compensation cost over
the vesting periods during which the recipients are required to
provide service. We use the Black Scholes method 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.
Casualty insurance: In July 2007, we entered into
a fixed premium program for our casualty insurance. Our casualty
insurance program prior to 2007 required us to estimate the
total claims we will 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. If our estimate for the claims component of our
casualty insurance expense for fiscal 2009 were to change by
10%, the fiscal 2009 pre-tax cost would increase or decrease by
approximately $2 million. 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
$20.8 million for the unfunded portion of our casualty
insurance program as of January 31, 2009.
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 generally
accepted accounting principles, we evaluate uncertain tax
positions based on our evaluation of the facts, circumstances
and information available at the reporting date and we accrue
for exposures 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 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.
Reserves for Computer Intrusion related costs and for
discontinued operations: As discussed in Note B and
Note M to the consolidated financial statements and
elsewhere in the Managements Discussion and Analysis, we
have reserves established 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 investigation and 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 a particular lease the extent to which an assignee or
subtenant will assume our obligations under the leases, amounts
of subtenant income, how a particular obligation may ultimately
be settled and what mitigating factors, including
indemnification, may exist to any liability. 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 current reserves are
a reasonable estimate of the most likely outcomes 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.
35
Loss contingencies: Certain conditions may exist
as of the date the financial statements are issued, which may
result in a loss to us but which 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 assessment
inherently involves an exercise of judgment. In assessing loss
contingencies related to legal proceedings that are pending
against us or claims that may result in such proceedings, our
legal counsel assists us in evaluating the perceived merits of
any legal proceedings or claims as well as the perceived merits
of the relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would
be accrued in the financial statements. If the assessment
indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot
be 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 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 (Winners and HomeSense) and European
(T.K. Maxx and HomeSense) operations and on the translation of
these foreign operations into the U. S. dollar. As more fully
described in Notes A and E to the consolidated financial
statements to the Annual Report on
Form 10-K
for the fiscal year ended January 31, 2009, we hedge a
significant 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 31, 2009, 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 2009 by
approximately $37 million.
INTEREST
RATE RISK
Our cash equivalents and 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 occasionally 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. As of
January 31, 2009, 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.
36
EQUITY
PRICE RISK
The assets of our qualified pension plan, a large portion of
which is invested in equity securities, are subject to the risks
and uncertainties of the public stock market. We allocate the
pension assets in a manner that attempts to minimize and control
our exposure to these market uncertainties. Investments, in
general, are exposed to various risks, such as interest rate,
credit, and overall market volatility. As a result of the
significant decline in the capital markets in 2009 the value of
our pension plan assets decreased substantially increasing the
unfunded status of our plan and reducing shareholders
equity on our balance sheet.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item may be found on pages F-1
through F-34 of this Annual Report on
Form 10-K.
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
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 2009
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
generally accepted accounting principles and includes those
policies and procedures that:
|
|
|
|
|
Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions
of the assets of TJX;
|
37
|
|
|
|
|
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 TJX are being made only in
accordance with authorizations of management and directors of
TJX; and
|
|
|
|
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 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 31, 2009 based on the framework in Internal
Control - Integrated 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 31, 2009.
(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 31, 2009, and has issued an attestation
report on the effectiveness of our internal control over
financial reporting included herein.
ITEM 9B. OTHER
INFORMATION
None.
38
Part III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following are the Executive Officers of TJX as of
March 31, 2009:
|
|
|
|
|
Name
|
|
Age
|
|
Office and Employment During Last Five Years
|
|
|
Bernard Cammarata
|
|
69
|
|
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.
|
Donald G. Campbell
|
|
57
|
|
Vice Chairman since September 2006, Senior Executive Vice
President, Chief Administrative and Business Development Officer
from March 2004 to September 2006. Executive Vice
PresidentFinance from 1996 to 2004 and Chief Financial
Officer of TJX from 1989 to 2004. Senior Vice
PresidentFinance, from 1989 to 1996. Various financial
positions with TJX and its predecessors since joining in 1973.
|
Ernie Herrman
|
|
48
|
|
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
|
|
55
|
|
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
|
|
50
|
|
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
|
|
65
|
|
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
|
|
44
|
|
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 2009 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 31, 2009 (the 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 Section 16(a) Beneficial
Ownership Reporting Compliance in our Proxy Statement,
which sections are incorporated in this item by reference.
39
TJX has a Code of Ethics for TJX Executives governing its
Chairman, Vice Chairman, Chief Executive Officer, President,
Chief Administrative Officer, Chief Financial 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 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 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.
40
Part IV
|
|
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.
Schedule IIValuation and Qualifying Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 31, 2009
|
|
$
|
15,298
|
|
|
$
|
866,757
|
|
|
$
|
868,049
|
|
|
$
|
14,006
|
|
|
|
Fiscal Year Ended January 26, 2008
|
|
$
|
14,182
|
|
|
$
|
841,687
|
|
|
$
|
840,571
|
|
|
$
|
15,298
|
|
|
|
Fiscal Year Ended January 27, 2007
|
|
$
|
14,101
|
|
|
$
|
795,941
|
|
|
$
|
795,860
|
|
|
$
|
14,182
|
|
|
|
Discontinued Operations Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
Fiscal Year Ended January 27, 2007
|
|
$
|
14,981
|
|
|
$
|
63,923
|
|
|
$
|
21,227
|
|
|
$
|
57,677
|
|
|
|
Casualty Insurance Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
Fiscal Year Ended January 27, 2007
|
|
$
|
34,707
|
|
|
$
|
54,429
|
|
|
$
|
57,693
|
|
|
$
|
31,443
|
|
|
|
Computer Intrusion Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
41
(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 December 8, 2008.
|
4.1
|
|
Indenture between TJX and The Bank of New York dated as of
February 13, 2001, incorporated by reference to
Exhibit 4.1 of the Registration Statement on
Form S-3
filed on May 9, 2001.
|
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 6, 2006 between
Bernard Cammarata and TJX is incorporated herein by reference to
Exhibit 10.1 to the
Form 8-K filed
June 9,
2006.*
|
10.4
|
|
The Employment Agreement dated as of June 6, 2008 with
Donald G. Campbell is incorporated herein by reference to
Exhibit 10.1 to
Form 8-K filed on
June 6,
2008.*
|
10.5
|
|
The Employment Agreement dated as of January 28, 2007 with
Carol Meyrowitz is incorporated herein by reference to
Exhibit 10.1 to the
Form 8-K filed on
April 10, 2007. The Letter Agreement dated as of
January 31, 2009 with Carol Meyrowitz is filed
herewith.*
|
10.6
|
|
The Employment Agreement dated as of April 5, 2008 with
Jeffrey Naylor is incorporated herein by reference to
Exhibit 10.1 to the
Form 8-K filed on
April 7,
2008.*
|
10.7
|
|
The Employment Agreement dated as of September 8, 2006 with
Ernie Herrman is incorporated herein by reference to
Exhibit 10.9 to the
Form 10-K for the
fiscal year ended January 26,
2008.*
|
10.8
|
|
The Employment Agreement dated as of June 11, 2007 with
Nirmal Tripathy is incorporated herein by reference to Exhibit
10.1 to the Form 8-K filed on June 15, 2007. The
Letter Agreement dated as of January 28, 2009 with Nirmal
Tripathy is filed
herewith.*
|
10.9
|
|
The Form of 409A Amendment to Employment Agreements for the
named executive officers is filed
herewith.*
|
10.10
|
|
The TJX Companies, Inc. Management Incentive Plan, as amended,
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 filed
herewith.*
|
10.11
|
|
The Stock Incentive Plan, as amended and restated through
June 1, 2004, is incorporated herein by reference to
Exhibit 10.1 to the
Form 10-Q filed
for the quarter ended July 31, 2004. The related First
Amendment to the Stock Incentive Plan is incorporated herein by
reference to Exhibit 10.11 to the
Form 10-K filed
for the fiscal year ended January 28, 2006. The Stock
Incentive Plan, as amended through June 5, 2006, is
incorporated herein by reference to Exhibit 10.1 to the
Form 10-Q filed
for the quarter ended July 29,
2006.*
|
10.12
|
|
The Form of a Non-Qualified Stock Option Certificate Granted
Under the Stock Incentive Plan is incorporated herein by
reference to Exhibit 10.2 to the
Form 10-Q filed
for the quarter ended July 31,
2004.*
|
42
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
10.13
|
|
The Form of a Performance-Based Restricted Stock Award Granted
Under Stock Incentive Plan is incorporated herein by reference
to Exhibit 10.3 to the
Form 10-Q filed
for the quarter ended July 31,
2004*
|
10.14
|
|
The Form of a Performance-Based Restricted Stock Award Granted
Under Stock Incentive Plan is incorporated herein by reference
to Exhibit 10.2 to the
Form 8-K filed
November 17,
2005.*
|
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 TJX Companies, Inc. Long Range Performance Incentive Plan,
as amended, is incorporated herein by reference to
Exhibit 10.3 to the
Form 10-Q filed
for the quarter ended July 26, 1997. The Amendment to The
Long Range Performance Incentive Plan adopted on
September 7, 2005 is incorporated herein by reference to
Exhibit 10.2 to the
Form 10-Q filed
for the fiscal quarter ended April 28, 2007. The 409A
Amendment to the Long Range Performance Incentive Plan,
effective as of January 1, 2008 is filed
herewith.*
|
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 filed
herewith.*
|
10.18
|
|
The Supplemental Executive Retirement Plan, as amended, is
incorporated herein by reference to Exhibit 10(l) to the
Form 10-K filed
for the fiscal year ended January 25, 1992. The 2005
Restatement to the Supplemental Executive Retirement Plan is
incorporated herein by reference to Exhibit 10.18 to the
Form 10-K for the
fiscal year ended January 28, 2006. The 2008 Restatement to
the Supplemental Executive Retirement Plan is filed
herewith.*
|
10.19
|
|
The Executive Savings Plan, as amended and restated, effective
January 1, 2008, is filed
herewith.*
|
10.20
|
|
The Restoration Agreement and related letter agreement regarding
conditional reimbursement dated December 31, 2002 between
TJX and Bernard Cammarata are incorporated herein by reference
to Exhibit 10.17 to the
Form 10-K filed
for the fiscal year ended January 25,
2003.*
|
10.21
|
|
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.*
|
10.22
|
|
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.*
|
10.23
|
|
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.*
|
10.24
|
|
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.*
|
10.25
|
|
The Distribution Agreement dated as of May 1, 1989 between
TJX and HomeBase, Inc. (formerly Waban Inc.) is incorporated
herein by reference to Exhibit 3 to TJXs Current
Report on
Form 8-K
dated June 21, 1989. The First Amendment to Distribution
Agreement dated as of April 18, 1997 between TJX and
HomeBase, Inc. (formerly Waban Inc.) is incorporated herein by
reference to Exhibit 10.22 to the
Form 10-K
filed for the fiscal year ended January 25, 1997.
|
10.26
|
|
The Indemnification Agreement dated as of April 18, 1997 by
and between TJX and BJs Wholesale Club, Inc. is
incorporated herein by reference to Exhibit 10.23 to the
Form 10-K
filed for the fiscal year ended January 25, 1997.
|
43
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
10.27
|
|
The Amended Settlement Agreement, dated as of November 14,
2007, by and among the named plaintiffs, individually and on
behalf of the Settlement Class, The TJX Companies, Inc. and
Fifth Third Bancorp is incorporated herein by reference to
Exhibit 10.1 to the
Form 10-Q
filed for the quarter ended October 27, 2007.
|
10.28
|
|
The Settlement Agreement among The TJX Companies, Inc., Visa
U.S.A. Inc. and Visa Inc. and Fifth Third Bank, dated
November 29, 2007 is incorporated herein by reference to
Exhibit 10.1 to the
Form 8-K
filed on November 30, 2007.
|
21
|
|
Subsidiaries:
|
|
|
A list of the Registrants subsidiaries is filed herewith.
|
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.
|
44
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, Chief Financial and Administrative Officer,
on behalf of The TJX Companies, Inc.
Dated: March 31, 2009
45
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
Accounting 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 31, 2009
46
The TJX
Companies, Inc.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
For Fiscal
Years Ended January 31, 2009, January 26, 2008 and
January 27, 2007
|
|
|
|
|
F-2
|
Consolidated Financial Statements:
|
|
|
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
|
F-7
|
Financial Statement
Schedules:
|
|
|
|
|
41
|
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 31,
2009 and January 26, 2008, and the results of their
operations and their cash flows for each of the three years in
the period ended January 31, 2009 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 31, 2009, 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 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 defined benefit pension and other post retirement
obligations as of January 27, 2007. In addition, as
discussed in Note J 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 31, 2009
F-2
The TJX
Companies, Inc.
Consolidated
Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
Amounts in thousands
|
|
January 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
except per share amounts
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
18,999,505
|
|
|
$
|
18,336,726
|
|
|
$
|
17,104,013
|
|
|
|
Cost of sales, including buying and occupancy costs
|
|
|
14,394,756
|
|
|
|
13,841,695
|
|
|
|
12,969,996
|
|
Selling, general and administrative expenses
|
|
|
3,170,018
|
|
|
|
3,039,520
|
|
|
|
2,849,283
|
|
Provision for Computer Intrusion related costs
|
|
|
(30,500
|
)
|
|
|
197,022
|
|
|
|
4,960
|
|
Interest (income) expense, net
|
|
|
14,291
|
|
|
|
(1,598
|
)
|
|
|
15,566
|
|
|
|
Income from continuing operations before provision for income
taxes
|
|
|
1,450,940
|
|
|
|
1,260,087
|
|
|
|
1,264,208
|
|
Provision for income taxes
|
|
|
536,054
|
|
|
|
477,655
|
|
|
|
477,036
|
|
|
|
Income from continuing operations
|
|
|
914,886
|
|
|
|
782,432
|
|
|
|
787,172
|
|
(Loss) from discontinued operations, net of income taxes
|
|
|
(34,269
|
)
|
|
|
(10,682
|
)
|
|
|
(49,133
|
)
|
|
|
Net income
|
|
$
|
880,617
|
|
|
$
|
771,750
|
|
|
$
|
738,039
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
2.18
|
|
|
$
|
1.77
|
|
|
$
|
1.73
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.10
|
)
|
Net income
|
|
$
|
2.10
|
|
|
$
|
1.74
|
|
|
$
|
1.63
|
|
Weighted average common sharesbasic
|
|
|
419,076
|
|
|
|
443,050
|
|
|
|
454,044
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
2.08
|
|
|
$
|
1.68
|
|
|
$
|
1.65
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.10
|
)
|
Net income
|
|
$
|
2.00
|
|
|
$
|
1.66
|
|
|
$
|
1.55
|
|
Weighted average common sharesdiluted
|
|
|
442,255
|
|
|
|
468,046
|
|
|
|
480,045
|
|
Cash dividends declared per share
|
|
$
|
0.44
|
|
|
$
|
0.36
|
|
|
$
|
0.28
|
|
The accompanying notes are an integral part of the financial
statements.
F-3
The TJX
Companies, Inc.
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
453,527
|
|
|
$
|
732,612
|
|
Accounts receivable, net
|
|
|
143,500
|
|
|
|
143,289
|
|
Merchandise inventories
|
|
|
2,619,336
|
|
|
|
2,737,378
|
|
Prepaid expenses and other current assets
|
|
|
274,091
|
|
|
|
215,550
|
|
Current deferred income taxes, net
|
|
|
135,675
|
|
|
|
163,465
|
|
|
|
Total current assets
|
|
|
3,626,129
|
|
|
|
3,992,294
|
|
|
|
Property at cost:
|
|
|
|
|
|
|
|
|
Land and buildings
|
|
|
280,278
|
|
|
|
277,988
|
|
Leasehold costs and improvements
|
|
|
1,728,362
|
|
|
|
1,785,429
|
|
Furniture, fixtures and equipment
|
|
|
2,784,316
|
|
|
|
2,675,009
|
|
|
|
Total property at cost
|
|
|
4,792,956
|
|
|
|
4,738,426
|
|
Less accumulated depreciation and amortization
|
|
|
2,607,200
|
|
|
|
2,520,973
|
|
|
|
Net property at cost
|
|
|
2,185,756
|
|
|
|
2,217,453
|
|
|
|
Property under capital lease, net of accumulated amortization of
$17,124 and $14,890, respectively
|
|
|
15,448
|
|
|
|
17,682
|
|
Other assets
|
|
|
171,381
|
|
|
|
190,981
|
|
Goodwill and tradename, net of amortization
|
|
|
179,528
|
|
|
|
181,524
|
|
|
|
TOTAL ASSETS
|
|
$
|
6,178,242
|
|
|
$
|
6,599,934
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
|
$
|
392,852
|
|
|
$
|
|
|
Obligation under capital lease due within one year
|
|
|
2,175
|
|
|
|
2,008
|
|
Accounts payable
|
|
|
1,276,098
|
|
|
|
1,516,754
|
|
Accrued expenses and other current liabilities
|
|
|
1,096,766
|
|
|
|
1,213,987
|
|
Federal, foreign and state income taxes payable
|
|
|
|
|
|
|
28,244
|
|
|
|
Total current liabilities
|
|
|
2,767,891
|
|
|
|
2,760,993
|
|
|
|
Other long-term liabilities
|
|
|
765,004
|
|
|
|
811,333
|
|
Non-current deferred income taxes, net
|
|
|
127,008
|
|
|
|
42,903
|
|
Obligation under capital lease, less portion due within one year
|
|
|
18,199
|
|
|
|
20,374
|
|
Long-term debt, exclusive of current installments
|
|
|
365,583
|
|
|
|
833,086
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Common stock, authorized 1,200,000,000 shares, par value
$1, issued and outstanding 412,821,592 and 427,949,533,
respectively
|
|
|
412,822
|
|
|
|
427,950
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(217,781
|
)
|
|
|
(28,685
|
)
|
Retained earnings
|
|
|
1,939,516
|
|
|
|
1,731,980
|
|
|
|
Total shareholders equity
|
|
|
2,134,557
|
|
|
|
2,131,245
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
|
|
$
|
6,178,242
|
|
|
$
|
6,599,934
|
|
|
|
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 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
880,617
|
|
|
$
|
771,750
|
|
|
$
|
738,039
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
401,707
|
|
|
|
369,396
|
|
|
|
353,110
|
|
Assets of discontinued operation sold
|
|
|
31,328
|
|
|
|
|
|
|
|
|
|
Loss on property disposals and impairment charges
|
|
|
23,903
|
|
|
|
25,944
|
|
|
|
32,743
|
|
Amortization of share based compensation expense
|
|
|
51,229
|
|
|
|
57,370
|
|
|
|
69,804
|
|
Excess tax benefits from stock compensation expense
|
|
|
(18,879
|
)
|
|
|
(6,756
|
)
|
|
|
(3,632
|
)
|
Deferred income tax (benefit) provision
|
|
|
132,480
|
|
|
|
(101,799
|
)
|
|
|
6,286
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
|
(8,245
|
)
|
|
|
(25,516
|
)
|
|
|
26,397
|
|
(Increase) in merchandise inventories
|
|
|
(68,489
|
)
|
|
|
(112,411
|
)
|
|
|
(201,413
|
)
|
(Increase) decrease in prepaid expenses and other current assets
|
|
|
(118,830
|
)
|
|
|
2,144
|
|
|
|
(23,179
|
)
|
Increase (decrease) in accounts payable
|
|
|
(141,580
|
)
|
|
|
117,304
|
|
|
|
50,165
|
|
Increase (decrease) in accrued expenses and other liabilities
|
|
|
(34,525
|
)
|
|
|
202,893
|
|
|
|
170,592
|
|
Increase (decrease) in income taxes payable
|
|
|
(10,488
|
)
|
|
|
37,909
|
|
|
|
(42,558
|
)
|
Other, net
|
|
|
34,344
|
|
|
|
36,546
|
|
|
|
36,392
|
|
|
|
Net cash provided by operating activities
|
|
|
1,154,572
|
|
|
|
1,374,774
|
|
|
|
1,212,746
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property additions
|
|
|
(582,932
|
)
|
|
|
(526,987
|
)
|
|
|
(378,011
|
)
|
Proceeds (payments) to settle net investment hedges
|
|
|
14,379
|
|
|
|
(13,667
|
)
|
|
|
(17,713
|
)
|
Other
|
|
|
(34
|
)
|
|
|
753
|
|
|
|
700
|
|
|
|
Net cash (used in) investing activities
|
|
|
(568,587
|
)
|
|
|
(539,901
|
)
|
|
|
(395,024
|
)
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on capital lease obligation
|
|
|
(2,008
|
)
|
|
|
(1,854
|
)
|
|
|
(1,712
|
)
|
Proceeds from sale and issuance of common stock
|
|
|
142,154
|
|
|
|
134,109
|
|
|
|
260,197
|
|
Cash payments for repurchase of common stock
|
|
|
(751,097
|
)
|
|
|
(940,208
|
)
|
|
|
(557,234
|
)
|
Excess tax benefits from stock compensation expense
|
|
|
18,879
|
|
|
|
6,756
|
|
|
|
3,632
|
|
Cash dividends paid
|
|
|
(176,749
|
)
|
|
|
(151,492
|
)
|
|
|
(122,927
|
)
|
|
|
Net cash (used in) financing activities
|
|
|
(768,821
|
)
|
|
|
(952,689
|
)
|
|
|
(418,044
|
)
|
|
|
Effect of exchange rate changes on cash
|
|
|
(96,249
|
)
|
|
|
(6,241
|
)
|
|
|
(8,658
|
)
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(279,085
|
)
|
|
|
(124,057
|
)
|
|
|
391,020
|
|
Cash and cash equivalents at beginning of year
|
|
|
732,612
|
|
|
|
856,669
|
|
|
|
465,649
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
453,527
|
|
|
$
|
732,612
|
|
|
$
|
856,669
|
|
|
|
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 28, 2006
|
|
|
460,967
|
|
|
|
460,967
|
|
|
|
|
|
|
|
(44,296
|
)
|
|
|
1,475,983
|
|
|
|
1,892,654
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
738,039
|
|
|
|
738,039
|
|
Gain due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,433
|
|
|
|
|
|
|
|
20,433
|
|
(Loss) on net investment hedge contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,626
|
)
|
|
|
|
|
|
|
(5,626
|
)
|
(Loss) on cash flow hedge contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,950
|
)
|
|
|
|
|
|
|
(3,950
|
)
|
Amount of cash flow hedge reclassified from other comprehensive
income to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,011
|
|
|
|
|
|
|
|
5,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
753,907
|
|
Recognition of unfunded post retirement liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,561
|
)
|
|
|
|
|
|
|
(5,561
|
)
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(127,024
|
)
|
|
|
(127,024
|
)
|
Performance based restricted stock awards granted
|
|
|
236
|
|
|
|
236
|
|
|
|
(236
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock compensation expense
|
|
|
|
|
|
|
|
|
|
|
69,804
|
|
|
|
|
|
|
|
|
|
|
|
69,804
|
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
14,453
|
|
|
|
14,453
|
|
|
|
249,122
|
|
|
|
|
|
|
|
|
|
|
|
263,575
|
|
Common stock repurchased
|
|
|
(22,006
|
)
|
|
|
(22,006
|
)
|
|
|
(318,690
|
)
|
|
|
|
|
|
|
(216,538
|
)
|
|
|
(557,234
|
)
|
|
|
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 FIN 48 (see note J)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,178
|
)
|
|
|
(27,178
|
)
|
Implementation of SFAS No. 158 measurement provisions
(see note K)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(167
|
)
|
|
|
(1,641
|
)
|
|
|
(1,808
|
)
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(158,202
|
)
|
|
|
(158,202
|
)
|
Performance based restricted stock and other stock awards issued
|
|
|
285
|
|
|
|
285
|
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock 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
|
|
|
6,968
|
|
|
|
6,968
|
|
|
|
130,227
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
Performance based restricted stock and other stock awards issued
|
|
|
170
|
|
|
|
170
|
|
|
|
(170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock 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
|
|
|
7,269
|
|
|
|
7,269
|
|
|
|
148,028
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
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 TJXs activities are conducted within
TJX or its subsidiaries and are consolidated in these financial
statements. All intercompany transactions have been eliminated
in consolidation.
Fiscal Year: TJXs fiscal year ends on the
last Saturday in January. The fiscal year ended January 31,
2009 (fiscal 2009) included 53 weeks, while the
fiscal years ended January 26, 2008 (fiscal
2008) and January 27, 2007 (fiscal 2007)
each 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, 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 the more significant accounting
policies that involve management estimates and judgments to be
those relating to inventory valuation, impairments of long-lived
assets, retirement obligations, share based compensation,
casualty insurance, accounting for taxes, reserves for Computer
Intrusion related costs and for discontinued operations, and
loss contingencies. 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 (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 $10.7 million in fiscal 2009,
$10.1 million in fiscal 2008 and $7.6 million in
fiscal 2007.
Consolidated Statements of Income Classifications:
Cost of sales, including buying and occupancy costs, include 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. Our
investments are primarily high-grade commercial paper,
institutional money market funds and time deposits with major
banks.
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.
F-7
At January 31, 2009 and January 26, 2008, in-transit
inventory included in merchandise inventories was
$329.9 million and $362.9 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.
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 benefit greater than the deferred tax asset created at the
time of expensing the option is credited to APIC; any
deficiencies in the tax benefit is 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. The excess income tax benefits, if any, 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 award is
amortized into earnings over the related vesting period.
Share Based Compensation: TJX accounts for share
based compensation under the provisions of Statement of
Financial Accounting Standards No. 123 (revised
2004) Share-Based Payment
(SFAS No. 123(R)). For purposes of applying the
provisions of SFAS No. 123(R), the fair value of each
option granted is estimated 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 (income) expense,
net was expense of $14.3 million in fiscal 2009, income of
$1.6 million in fiscal 2008 and expense of
$15.6 million in fiscal 2007. Interest (income) expense is
presented as a net amount. TJX had gross interest income of
$22.2 million, $40.7 million and $23.6 million in
fiscal 2009, 2008 and 2007, respectively. We capitalize interest
during the active construction period of major capital projects.
Capitalized interest is added to the cost of the related assets.
TJX capitalized interest of $1.6 million in fiscal 2009 and
$799,000 in fiscal 2008. No interest was capitalized in fiscal
2007. Debt discount and related issue expenses are amortized to
interest expense using the effective interest method over the
lives of the related debt issues or to the first date the
holders of the debt may require TJX to repurchase such debt.
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 $398.0 million for fiscal 2009,
$364.2 million for fiscal 2008 and $347.0 million for
fiscal 2007. Amortization expense for property held under a
capital lease was $2.2 million in fiscal 2009, 2008 and
2007. 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 net income. Pre-opening costs, including
rent, are expensed as incurred.
Lease Accounting: TJX records rent expense when it
takes possession of a store, which occurs before the
commencement of the lease term, as specified in the lease, and
generally 30 to 60 days prior to the opening of the store.
This results in an acceleration of the commencement of rent
expense for each lease, as we record rent expense during the
pre-opening period, but a reduction in monthly rent expense, as
the total rent due under the lease is amortized over a greater
number of months.
F-8
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, which is included in the Marmaxx segment in all
periods presented. 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 $71.8 million as of January 31, 2009,
$72.2 million as of January 26, 2008 and
$71.9 million as of January 27, 2007. 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. Trademarks and
the related amortization are included in the operating segment
for which they were acquired.
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 a
fiscal year. 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. 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.
Goodwill is tested for impairment whenever events or changes in
circumstances indicate that the carrying amount of Goodwill may
exceed its fair value and at least annually in the fourth
quarter of a fiscal year, by comparing the carrying value of the
related reporting unit to its fair value. An impairment exists
when this analysis shows that the fair value is less than its
carrying cost. 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 a 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 $254.0 million,
$255.0 million and $221.0 million for fiscal 2009,
2008 and 2007, respectively.
Accumulated Other Comprehensive Income (Loss):
TJXs foreign assets and liabilities are translated at the
fiscal year end exchange rate. Activity of the foreign
operations that affects the statements of income and cash flows
is translated at the average exchange rates prevailing during
the fiscal year. The translation adjustments associated with the
foreign operations are included in shareholders equity as
a component of accumulated other comprehensive income.
Cumulative foreign currency translation adjustments included in
shareholders equity amounted to a loss of
$152.9 million, net of related tax effect of
$2.6 million, as of January 31, 2009; a gain of
$17.8 million, net of related tax effect of
$23.7 million, as of January 26, 2008; and a loss of
$3.2 million, net of related tax effect of
$15.8 million, as of January 27, 2007.
F-9
TJX enters into financial instruments to manage our cost of
borrowing and to manage our exposure to changes in 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. 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 other comprehensive income amounted to a gain of
$27.3 million, net of related tax effects of
$18.2 million at January 31, 2009; a loss of
$42.1 million, net of related tax effects of
$28.1 million at January 26, 2008; and a loss of
$25.2 million, net of related tax effects of
$16.8 million at January 27, 2007.
The requirement to recognize the funded status of TJXs
post retirement benefit plans in accordance with
SFAS No. 158 (discussed in Note K) resulted
in a loss adjustment to accumulated other comprehensive income
of $92.2 million, net of related tax effects of
$61.5 million at January 31, 2009. The cumulative loss
adjustment at January 26, 2008 was $4.4 million, net
of related tax effects of $3.7 million and was
$5.6 million, net of related tax effects of
$3.7 million at January 27, 2007.
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 December 2008, the
Financial Accounting Standards Board, or FASB, issued FASB Staff
Position (FSP) No. FAS 132(R)-1 Employers
Disclosures about Postretirement Benefit Plan Assets which is
effective for fiscal years ending after December 15, 2009.
This FSP requires additional disclosures such as the investment
allocation decision making process; the fair value of each major
category of plan assets; inputs and valuation techniques used to
measure the fair value of plan assets and significant
concentrations of risk within plan assets. We are in the process
of assessing the impact of FSP No. FAS 132(R)-1 on our
financial statement disclosures.
In December 2007, the FASB issued SFAS No. 141
(revised 2007) Business Combinations
(SFAS 141R). SFAS 141R establishes principles and
requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree. SFAS 141R also provides guidance
for recognizing and measuring the goodwill acquired in business
combinations and what information to disclose to enable users of
the financial statements to evaluate the nature and financial
effects of the business combination. SFAS 141R is effective
for financial statements issued for fiscal years beginning after
December 15, 2008 and is to be applied prospectively. TJX
will consider the potential impact, if any, of the adoption of
SFAS 141R on its future business combinations.
In April 2008, the FASB issued
FSP 142-3,
which amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful
life of a recognized intangible.
FSP 142-3
is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods
within those fiscal years. As this guidance applies only to
assets we may acquire in the future, we are not able to predict
its impact, if any, on our consolidated financial statements.
At its June 2008 meeting the FASB ratified Emerging Issues Task
Force (EITF) issue
08-03:
Accounting by Lessees for Maintenance Deposits, which clarifies
how a lessee shall account for a maintenance deposit under an
arrangement accounted for as a lease.
EITF 08-03
is effective for us in the first quarter of fiscal 2010. We are
in the process of assessing the impact of
EITF 08-03
and do not believe it will have a material impact on our results
of operations or financial condition.
In March 2008, the FASB issued SFAS 161, which requires
disclosures of how and why an entity uses derivative
instruments, how derivative instruments and related hedged items
are accounted for and how derivative instruments
F-10
and related hedged items affect an entitys financial
position, financial performance, and cash flows. SFAS 161
is effective for TJX in the first quarter of fiscal 2010. We are
in the process of assessing the impact of SFAS 161 on our
financial statement disclosures.
Reclassifications: For comparative purposes we
reclassified activity on the Consolidated Statements of Cash
Flows in fiscal 2008 and 2007 for Proceeds (payments) to
settle net investment hedges from operating activities to
investing activities. This reclassification had no impact on net
income or total cash flows as previously reported.
|
|
B.
|
Provision
for Computer Intrusion related costs
|
TJX has 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 generally
accepted accounting principles 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
$42.2 million at January 31, 2009 includes 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
relating to the sale of $5.8 million. TJX remains
contingently liable on several of the Bobs Stores leases
which are discussed in Note M 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
|
|
|
2007
|
|
|
|
|
Net sales
|
|
$
|
148,040
|
|
|
$
|
310,400
|
|
|
$
|
300,624
|
|
Segment profit (loss)
|
|
|
(25,524
|
)
|
|
|
(17,398
|
)
|
|
|
(17,360
|
)
|
After-tax loss from operations
|
|
|
(15,314
|
)
|
|
|
(10,682
|
)
|
|
|
(10,416
|
)
|
|
|
A.J. Wright Store Closings: During the fourth
quarter of fiscal 2007, management developed a plan to close
34 underperforming A.J. Wright stores. The plan was
approved by the Executive Committee of the Board of Directors on
November 27, 2006, and virtually all of the stores were
closed as of the end of fiscal 2007. The after-tax cost of the
store closings of $38.1 million, or $0.08 per share, was
recorded as a loss on disposal of discontinued operations in the
fourth quarter of fiscal 2007.
TJX also classified the operating income (loss) of the 34 closed
stores for fiscal 2007, as well as all prior periods, as a
component of discontinued operations. The operating loss of the
closed stores for fiscal 2007 included in discontinued
operations was $1.0 million.
F-11
The table below summarizes the pre-tax and after-tax loss from
all discontinued operations for the last three fiscal years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
(Loss) from discontinued operations before provision for income
taxes
|
|
$
|
(56,980
|
)
|
|
$
|
(17,398
|
)
|
|
$
|
(81,888
|
)
|
Tax benefits
|
|
|
22,711
|
|
|
|
6,716
|
|
|
|
32,755
|
|
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
(34,269
|
)
|
|
$
|
(10,682
|
)
|
|
$
|
(49,133
|
)
|
|
|
|
|
D.
|
Long-Term
Debt and Credit Lines
|
The table below presents long-term debt, exclusive of current
installments, as of January 31, 2009 and January 26,
2008. All amounts are net of unamortized debt discounts. Capital
lease obligations are separately presented in Note G.
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
January 26,
|
In thousands
|
|
2009
|
|
2008
|
|
|
General corporate debt:
|
|
|
|
|
|
|
7.45% unsecured notes, maturing December 15, 2009
(effective interest rate of 7.50% after reduction of unamortized
debt discount of $119 in fiscal 2008)
|
|
$
|
|
|
$
|
199,881
|
Market value adjustment to debt hedged with interest rate swap
|
|
|
|
|
|
1,215
|
C$235 term credit facility due January 11, 2010 (interest
rate Canadian Dollar Bankers Acceptance rate plus 0.35%)
|
|
|
|
|
|
233,120
|
|
|
Total general corporate debt
|
|
|
|
|
|
434,216
|
|
|
Subordinated debt:
|
|
|
|
|
|
|
Zero coupon convertible subordinated notes due February 13,
2021 (net of reduction of unamortized debt discount of $99,360
and $118,625 in fiscal 2009 and 2008, respectively)
|
|
|
365,583
|
|
|
398,870
|
|
|
Total subordinated debt
|
|
|
365,583
|
|
|
398,870
|
|
|
Long-term debt, exclusive of current installments
|
|
$
|
365,583
|
|
$
|
833,086
|
|
|
The aggregate maturities of long-term debt, exclusive of current
installments at January 31, 2009 are as follows:
|
|
|
|
|
In thousands
|
|
Long-Term Debt
|
|
|
|
|
Fiscal Year
|
|
|
|
|
2011
|
|
$
|
|
|
2012
|
|
|
|
|
2013
|
|
|
|
|
2014
|
|
|
396,529
|
|
Later years
|
|
|
|
|
Less amount representing unamortized debt discount
|
|
|
(30,946
|
)
|
|
|
Aggregate maturities of long-term debt, exclusive of current
installments
|
|
$
|
365,583
|
|
|
|
The above maturity table assumes that all holders of the zero
coupon convertible subordinated notes exercise their put options
in fiscal 2014. Any of the notes on which put options are not
exercised, redeemed or converted will mature in fiscal 2022.
In January 2006, TJX entered into a C$235.0 million term
credit facility (through our Canadian subsidiary, Winners) due
in January 2010. This debt is guaranteed by TJX. Interest is
payable on borrowings under this facility at rates equal to or
less than Canadian prime rate. The variable rate on this
facility was 1.69% at January 31, 2009. The proceeds were
used to fund the repatriation of earnings from Winners as well
as other general corporate purposes of Winners.
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. Due to the
first put option on February 13, 2002, we amortized the
debt discount assuming a 1.5% yield for fiscal 2002.
F-12
The notes are subordinated to all existing and future senior
indebtedness of TJX. The outstanding notes are convertible into
15.2 million shares of common stock of TJX if the sale
price of our common stock reaches specified thresholds, if the
credit rating of the notes is below investment grade, if the
notes are called for redemption or if certain specified
corporate transactions occur. Each holder of the notes has the
right to require us to purchase the notes on February 13,
2013 at original purchase price plus accrued original issue
discount for a total of $396.5 million for all notes. We
may pay the purchase price in cash, TJX stock or a combination
of the two. If the holders exercise their put options, we expect
to fund the payment with cash, financing from our short-term
credit facility, new long-term borrowings or a combination
thereof. A total of 52,552 notes were converted into common
shares in fiscal 2009. There were two notes put to TJX on
February 13, 2007 and three on February 13, 2004. In
addition, if a change in control of TJX occurs on or before
February 13, 2013, each holder may require TJX to purchase
for cash all or a portion of such holders notes. As of
February 13, 2007 TJX can redeem for cash all, or a portion
of, the notes at any time for the original purchase price plus
accrued original issue discount.
Included in current installments of long-term debt are the fair
value of interest rate swaps of $1.6 million;
$199.9 million of 7.45% unsecured notes (net of debt
discount of $55,000) which mature in December 2009 and a term
credit facility of $191.3 million (C$235.0 million)
which matures in January 2010.
TJX has a $500 million revolving credit facility maturing
May 2010 and a $500 million revolving credit facility
maturing May 2011. 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 31, 2009, there were no outstanding amounts under
our credit facilities, and the maximum amount of our
U.S. short-term borrowings outstanding was
$222.0 million during fiscal 2009. The weighted average
interest rate on our U.S. short-term borrowings was 3.92%
in fiscal 2009. We did not borrow under these credit facilities
during fiscal 2008, and the maximum amount of our
U.S. short-term borrowings outstanding was
$204.5 million during fiscal 2007.
As of January 31, 2009 and January 26, 2008, Winners
had two credit lines, one for C$10 million for operating
expenses and one C$10 million letter of credit facility.
Winners did not borrow under the credit line for operating
expenses in fiscal 2009. The maximum amount outstanding under
Winners Canadian credit line for operating expenses was
C$5.7 million in fiscal 2008 and C$3.8 million in
fiscal 2007. There were no amounts outstanding on this line at
the end of fiscal 2009 or fiscal 2008. As of January 31,
2009, T.K. Maxx had a credit line of £20 million. The
maximum amount outstanding under this line was
£6.1 million in fiscal 2009 and
£16.4 million in fiscal 2008. There were no
outstanding borrowings on this credit line at the end of fiscal
2009 or fiscal 2008.
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.
Interest Rate Contracts: In December 1999, prior
to the issuance of $200 million ten-year notes, TJX entered
into a rate-lock agreement to hedge the underlying treasury rate
of the notes. The cost of this agreement is being amortized to
interest expense over the term of the notes and results in an
effective fixed rate of 7.60% on these notes. During fiscal
2004, TJX entered into interest rate swaps on $100 million
of the $200 million ten-year notes 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 maturity dates of the interest rate swaps are the same
as the maturity date of the underlying debt. Under these swaps,
TJX pays a specified variable interest rate and receives the
fixed rate applicable to the underlying debt. The interest
income/expense on the swaps is accrued as earned and recorded as
an adjustment to the interest expense accrued on the fixed-rate
debt. The interest rate swaps are designated as fair value
hedges of 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, an asset of
$1.2 million at January 26, 2008, and a liability of
$4.4 million, as of January 27, 2007. The valuation of
the swaps results in an offsetting fair value adjustment to the
debt hedged. Accordingly, current installments of long-term debt
has been increased by $1.6 million in fiscal 2009. The
long-term debt has been increased by $1.2 million in fiscal
2008 and reduced by $4.4 million in fiscal 2007. The
average effective interest rate on
F-13
$100 million of the 7.45% unsecured notes, inclusive of the
effect of hedging activity, was approximately 6.54% in fiscal
2009, 8.77% in fiscal 2008 and 9.42% in fiscal 2007.
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. 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 and an asset of
$699,000 (C$825,000) as of January 27, 2007. 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 2009, TJX
entered into three agreements to hedge approximately 30% of its
notional diesel fuel requirements for fiscal 2010, based on the
diesel fuel consumed by independent freight carriers
transporting the Companys inventory. These carriers charge
TJX a mileage surcharge for diesel fuel price increases as
incurred by the freight 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
market value of the hedge agreements resulted in a
$4.9 million loss in fiscal 2009, which is reflected in
cost of sales, including buying and occupancy costs. All of the
diesel fuel hedge agreements expire in February 2010.
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 its foreign subsidiaries, T.K. Maxx
(United Kingdom, Ireland and Germany) and Winners (Canada).
These commitments are typically six months or less in duration.
The contracts outstanding at January 31, 2009 covered
certain commitments for the first quarter of fiscal 2010. TJX
elected not to apply hedge accounting rules to these contracts.
The change in the fair value of these contracts resulted in a
loss of $2.3 million in fiscal 2009, income of
$6.6 million in fiscal 2008 and income of $1.2 million
in fiscal 2007 and is included in earnings as a component of
cost of sales, including buying and occupancy costs.
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 31,
2009. 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, a loss of
$15.8 million, net of income taxes, in fiscal 2008, and a
loss of $5.6 million, net of income taxes, in fiscal 2007.
The change in the cumulative foreign currency translation
adjustment resulted in a gain of $171.2 million, net of
income taxes, in fiscal 2009, a gain of $21.0 million, net
of income taxes, in fiscal 2008, and a gain of
$20.4 million, net of income taxes, in fiscal 2007. 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. The net loss recognized in fiscal 2007 related to
F-14
cash flow hedges was $5.0 million, net of income taxes,
which was offset by a non-taxable gain of $4.6 million,
related to the underlying exposure.
On July 20, 2006 TJX determined that the C$355 million
intercompany loan, due from Winners to TJX, would not be payable
in the foreseeable future due to the capital and cash flow needs
of Winners. As a result, that intercompany loan and the related
currency swap that had been designated as a cash flow hedge of
long-term intercompany debt were re-designated as a net
investment in a foreign operation. Accordingly, foreign currency
gains or losses on the intercompany loan and gains or losses on
the related currency swap from re-designation date to date of
settlement in the fourth quarter of fiscal 2009, to the extent
effective, have been recorded in other comprehensive income. The
ineffective portion of the currency swap resulted in pre-tax
charges to the income statement of $2.2 million in fiscal
2009, $9.1 million in fiscal 2008 and $2.9 million in
fiscal 2007.
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 the statements of income 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 the statement of income. The net impact on
the income statement of hedging activity related to these
intercompany payables was immaterial.
The value of foreign currency exchange contracts relating to
inventory commitments is reported in earnings as a component of
cost of sales, including buying and occupancy costs. The income
statement impact of all other foreign currency derivative
contracts and underlying exposures is reported as a component of
selling, general and administrative expenses.
Following is a summary of TJXs derivative financial
instruments and related fair values outstanding at
January 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blended
|
|
Fair Value Asset
|
|
Currency amounts in thousands
|
|
Pay
|
|
|
Receive
|
|
|
Contract Rate
|
|
(Liability)
|
|
|
|
|
Fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
|
LIBOR + 4.17%
|
|
|
|
7.45%
|
|
|
|
N/A
|
|
US$
|
766
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
|
LIBOR + 3.42%
|
|
|
|
7.45%
|
|
|
|
N/A
|
|
US$
|
1,093
|
|
Intercompany balance hedges, primarily short-term debt and
related interest
|
|
C$
|
37,795
|
|
|
US$
|
33,826
|
|
|
|
0.8950
|
|
US$
|
3,051
|
|
|
|
US$
|
114,990
|
|
|
C$
|
143,051
|
|
|
|
0.8038
|
|
US$
|
1,300
|
|
|
|
US$
|
39,997
|
|
|
|
30,936
|
|
|
|
1.2929
|
|
US$
|
(370
|
)
|
Hedge accounting not elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diesel contract hedges
|
|
|
Fixed on 750K gal
|
|
|
|
Float on 750K gal
|
|
|
|
N/A
|
|
US$
|
(4,931
|
)
|
Merchandise purchase commitment hedges
|
|
C$
|
206,109
|
|
|
US$
|
172,500
|
|
|
|
0.8369
|
|
US$
|
4,837
|
|
|
|
C$
|
4,828
|
|
|
|
2,950
|
|
|
|
0.6110
|
|
US$
|
(149
|
)
|
|
|
£
|
19,394
|
|
|
US$
|
28,000
|
|
|
|
1.4437
|
|
US$
|
(204
|
)
|
|
|
£
|
7,273
|
|
|
|
8,000
|
|
|
|
1.1000
|
|
US$
|
(343
|
)
|
|
|
US$
|
441
|
|
|
|
327
|
|
|
|
1.3486
|
|
US$
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US$
|
5,027
|
|
|
|
F-15
The fair value of the derivatives is 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 our derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
|
|
Current assets
|
|
$
|
11,772
|
|
|
$
|
53,094
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
(6,745
|
)
|
|
|
(1,267
|
)
|
Non-current liabilities
|
|
|
|
|
|
|
(143,091
|
)
|
|
|
Net fair value asset (liability)
|
|
$
|
5,027
|
|
|
$
|
(91,264
|
)
|
|
|
TJXs forward foreign currency exchange and swap contracts
require TJX to make payments of certain foreign currencies or
U.S. dollars for receipt of Canadian dollars,
U.S. dollars or Euros. All of the contracts outstanding at
January 31, 2009 mature during fiscal 2010.
The counterparties to the forward exchange contracts and swap
agreements are major international financial institutions and
the contracts contain rights of offset, which minimize our
exposure to credit loss in the event of nonperformance by one of
the counterparties. We do not require counterparties to maintain
collateral for these contracts. We periodically monitor our
position and the credit ratings of the counterparties and do not
anticipate losses resulting from the nonperformance of these
institutions.
|
|
F.
|
Disclosures
about Fair Value of Financial Instruments
|
In September 2006, the FASB issued Statement of Financial
Accounting Standard No. 157, Fair Value
Measurements (SFAS 157). SFAS 157 establishes a
common definition for fair value to be applied to U.S. GAAP
requiring use of fair value, establishes a framework for
measuring fair value, and expands disclosure about such fair
value measurements. SFAS 157 was effective for financial
assets and financial liabilities for fiscal years beginning
after November 15, 2007. Issued in February 2008,
FSP 157-1
Application of FASB Statement No. 157 to FASB
Statement No. 13 and Other Accounting Pronouncements That
Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13 removed
leasing transactions accounted for under FASB Statement
No. 13 and related guidance from the scope of
SFAS 157.
FSP 157-2
Partial Deferral of the Effective Date of Statement
157, deferred the effective date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities except for
those that are recognized or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning
after November 15, 2008.
The implementation of SFAS 157 for financial assets and
financial liabilities, effective January 27, 2008 for TJX,
did not have a material impact on its consolidated financial
position and results of operations. TJX is currently assessing
the impact of SFAS 157 for nonfinancial assets and
nonfinancial liabilities on its consolidated financial position
and results of operations.
SFAS 157 defines fair value 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). SFAS 157 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.
Financial assets and liabilities are classified in their
entirety based on the lowest level of input that is significant
to the fair value measurement. TJX has determined that its
financial assets and liabilities at January 31, 2009 were
generally
F-16
classified within level 1 or level 2 in the fair value
hierarchy. The following table sets forth TJXs financial
assets and liabilities that were accounted for at fair value on
a recurring basis:
|
|
|
|
|
|
|
As of
|
|
|
January 31,
|
In thousands
|
|
2009
|
|
|
Level 1
|
|
|
|
Assets:
|
|
|
|
Cash equivalents
|
|
$
|
161,592
|
Executive savings plan assets
|
|
|
40,636
|
Level 2
|
|
|
|
Assets:
|
|
|
|
Foreign currency exchange contract hedges
|
|
$
|
9,534
|
Interest rate swaps
|
|
|
1,859
|
Liabilities:
|
|
|
|
Foreign currency exchange contract hedges
|
|
$
|
1,435
|
Diesel fuel contract hedges
|
|
|
4,931
|
The fair value of our general corporate debt, including current
installments, is estimated by obtaining market value 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 is estimated
by obtaining market quotes. The fair value of the current
installments of long-term debt at January 31, 2009 is
$399.9 million versus a carrying value of
$392.9 million. The fair value of the zero coupon
convertible subordinated notes as of January 31, 2009, is
$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 our ability to settle these obligations.
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 it deems appropriate, TJX minimizes risks 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 obtained an understanding of the methods used in
pricing. As such, these derivative instruments are classified
within level 2.
In February 2007, the FASB issued SFAS 159, The Fair
Value Option for Financial Assets and Financial
Liabilitiesincluding an amendment of FASB Statement
No. 115 (SFAS 159). SFAS 159 provides
companies with an option to report selected financial assets and
liabilities at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons
between companies that choose different fair value measurement
attributes for similar types of assets and liabilities.
SFAS 159 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those years
and was adopted by TJX in the first quarter of fiscal 2009. Upon
adoption, TJX elected not to adjust any financial assets or
liabilities not previously recorded at fair value and therefore,
the adoption of SFAS 159 did not have an impact on
TJXs consolidated balance sheet or statement of operations.
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 fifteen 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
F-17
sales. These expenses in the aggregate were approximately
one-third of the total minimum rent for the fiscal year ended
January 31, 2009, the fiscal year ended January 26,
2008 and the fiscal year ended January 27, 2007.
Following is a schedule of future minimum lease payments for
continuing operations as of January 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
Operating
|
|
In thousands
|
|
Lease
|
|
|
Leases
|
|
|
|
|
Fiscal Year
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
3,726
|
|
|
$
|
913,446
|
|
2011
|
|
|
3,726
|
|
|
|
840,457
|
|
2012
|
|
|
3,897
|
|
|
|
741,940
|
|
2013
|
|
|
3,912
|
|
|
|
624,872
|
|
2014
|
|
|
3,912
|
|
|
|
513,069
|
|
Later years
|
|
|
7,498
|
|
|
|
1,437,499
|
|
|
|
Total future minimum lease payments
|
|
|
26,671
|
|
|
$
|
5,071,283
|
|
|
|
Less amount representing interest
|
|
|
6,297
|
|
|
|
|
|
|
|
Net present value of minimum capital lease payments
|
|
$
|
20,374
|
|
|
|
|
|
|
|
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 $936.6 million for fiscal 2009,
$875.6 million for fiscal 2008 and $816.4 million for
fiscal 2007. Rental expense includes contingent rent and is
reported net of sublease income. Contingent rent paid was
$8.3 million in fiscal 2009, $9.7 million in fiscal
2008 and $9.0 million in fiscal 2007. Sublease income was
$2.1 million in fiscal 2009, $2.9 million in fiscal
2008, and $3.0 million in fiscal 2007. The total net
present value of TJXs minimum operating lease obligations
approximated $3,962.2 million as of January 31, 2009.
TJX had outstanding letters of credit totaling
$32.0 million as of January 31, 2009 and
$32.7 million as of January 26, 2008. Letters of
credit are issued by TJX primarily for the purchase of inventory.
Total compensation cost related to share based compensation was
$31.2 million net of income taxes of $20.1 million in
fiscal 2009, $37.0 million net of income taxes of
$20.3 million in fiscal 2008 and $45.1 million net of
income taxes of $24.7 million in fiscal 2007.
As of January 31, 2009, there was $77.5 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 2.0 years.
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 145.3 million
shares with 12.4 million shares available for future grants
as of January 31, 2009. TJX issues shares from authorized
but unissued common stock.
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. For purposes
F-18
of applying the provisions of SFAS No. 123(R), 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 Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Risk free interest rate
|
|
|
2.96
|
%
|
|
|
4.00
|
%
|
|
|
4.75
|
%
|
Dividend yield
|
|
|
1.3
|
%
|
|
|
1.2
|
%
|
|
|
1.1
|
%
|
Expected volatility factor
|
|
|
33.9
|
%
|
|
|
31.0
|
%
|
|
|
32.0
|
%
|
Expected option life in years
|
|
|
4.8
|
|
|
|
4.5
|
|
|
|
4.5
|
|
Weighted average fair value of options issued
|
|
$
|
10.46
|
|
|
$
|
8.38
|
|
|
$
|
8.35
|
|
|
|
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. Separate 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 the
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):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 31, 2009
|
|
|
January 26, 2008
|
|
|
January 27, 2007
|
|
|
|
Options
|
|
|
WAEP
|
|
|
Options
|
|
|
WAEP
|
|
|
Options
|
|
|
WAEP
|
|
|
|
|
Outstanding at beginning of year
|
|
|
35,153
|
|
|
$
|
22.17
|
|
|
|
37,854
|
|
|
$
|
20.50
|
|
|
|
47,902
|
|
|
$
|
18.97
|
|
Granted
|
|
|
5,199
|
|
|
|
35.02
|
|
|
|
5,716
|
|
|
|
29.23
|
|
|
|
5,788
|
|
|
|
27.03
|
|
Exercised and repurchased
|
|
|
(7,533
|
)
|
|
|
19.08
|
|
|
|
(7,473
|
)
|
|
|
18.84
|
|
|
|
(14,524
|
)
|
|
|
17.92
|
|
Forfeitures
|
|
|
(1,046
|
)
|
|
|
27.59
|
|
|
|
(944
|
)
|
|
|
24.25
|
|
|
|
(1,312
|
)
|
|
|
21.93
|
|
|
|
Outstanding at end of year
|
|
|
31,773
|
|
|
$
|
24.83
|
|
|
|
35,153
|
|
|
$
|
22.17
|
|
|
|
37,854
|
|
|
$
|
20.50
|
|
|
|
Options exercisable at end of year
|
|
|
21,664
|
|
|
$
|
21.56
|
|
|
|
24,243
|
|
|
$
|
19.88
|
|
|
|
24,848
|
|
|
$
|
18.69
|
|
|
|
Included in the exercised and repurchased amount in the table
above are approximately 77,000 options repurchased from
optionees by TJX during fiscal 2009 and 341,000 options
repurchased during fiscal 2008. 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 $108.1 million in fiscal 2009,
$79.7 million in fiscal 2008 and $131.6 million in
fiscal 2007.
The following table summarizes information about stock options
outstanding that are expected to vest and stock options
outstanding that are exercisable at January 31, 2009.
Options outstanding expected to vest represents total unvested
options of 10.1 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
|
|
|
9,396
|
|
|
$
|
0
|
|
|
|
8.9 years
|
|
|
$
|
31.71
|
|
Options exercisable
|
|
|
21,664
|
|
|
$
|
0
|
|
|
|
5.4 years
|
|
|
$
|
21.56
|
|
|
|
Total outstanding options vested and expected to vest
|
|
|
31,060
|
|
|
$
|
0
|
|
|
|
6.5 years
|
|
|
$
|
24.63
|
|
|
|
Performance Based Restricted Stock and Other
Awards: TJX has issued performance-based restricted
stock awards under the Stock Incentive Plan. Performance-based
restricted stock awards 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
F-19
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 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 2009 is presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
Weighted
|
|
|
|
Based
|
|
|
Average
|
|
|
|
Restricted
|
|
|
Grant Date
|
|
Shares in thousands
|
|
Stock
|
|
|
Fair Value
|
|
|
|
|
Nonvested at beginning of year
|
|
|
593
|
|
|
$
|
24.82
|
|
Granted
|
|
|
173
|
|
|
|
33.49
|
|
Vested
|
|
|
(251
|
)
|
|
|
23.49
|
|
Forfeited
|
|
|
(73
|
)
|
|
|
28.35
|
|
|
|
Nonvested at end of year
|
|
|
442
|
|
|
$
|
28.37
|
|
|
|
There were 173,000 shares of performance-based restricted
stock, with a weighted average grant date fair value of $33.49,
granted in fiscal 2009; 200,000 shares with a weighted
average grant date fair value of $28.04 were granted in fiscal
2008 and 236,000 shares with a weighted average grant date fair
value of $27.16 were granted in fiscal 2007. The fair value of
performance-based restricted stock that vested was
$5.9 million in fiscal 2009, $3.9 million in fiscal
2008 and $4.9 million in fiscal 2007.
In November 2005, TJX issued a market-based deferred share award
for up to 94,000 shares to its acting chief executive
officer which was indexed to TJXs stock price for the
sixty-day
period beginning February 22, 2007 (measurement
period). The weighted average grant date fair value of
this award was $9.90 per share. In June 2007, 58,750 shares
were issued under this award. In September 2007, this officer
received a special award of 25,000 shares of common stock.
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 next following 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 2009,
a total of 144,588 deferred shares were outstanding under the
plan.
|
|
I.
|
Capital
Stock and Earnings Per Share
|
Capital Stock: In August 2008, we completed a
$1 billion stock repurchase program begun in fiscal 2007
and initiated another multi-year $1 billion stock
repurchase program that had been approved in February 2008. We
repurchased and retired 24.0 million shares of our common
stock at a cost of $741.1 million during fiscal 2009. TJX
reflects stock repurchases in its financial statements on a
settlement basis. We had cash expenditures under our
repurchase programs of $751.1 million in fiscal 2009,
$940.2 million in fiscal 2008 and $557.2 million in
fiscal 2007, funded primarily by cash generated from operations.
The total common shares repurchased amounted to
24.3 million shares in fiscal 2009, 33.0 million
shares in fiscal 2008 and 22.0 million shares in fiscal
2007. As of January 31, 2009, we had repurchased
8.9 million shares of our common stock at a cost of
$255.1 million under the current $1 billion stock
repurchase program. All shares repurchased under our stock
repurchase programs have been retired.
TJX has 5 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 31,
|
|
January 26,
|
|
January 27,
|
except per share amounts
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
(53 weeks)
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
914,886
|
|
$
|
782,432
|
|
$
|
787,172
|
|
|
Weighted average common stock outstanding for basic earnings per
share calculation
|
|
|
419,076
|
|
|
443,050
|
|
|
454,044
|
Basic earnings per share
|
|
$
|
2.18
|
|
$
|
1.77
|
|
$
|
1.73
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
914,886
|
|
$
|
782,432
|
|
$
|
787,172
|
Add back: Interest expense on zero coupon convertible
subordinated notes, net of income taxes
|
|
|
4,653
|
|
|
4,716
|
|
|
4,623
|
|
|
Income from continuing operations used for diluted earnings per
share calculation
|
|
$
|
919,539
|
|
$
|
787,148
|
|
$
|
791,795
|
|
|
Weighted average common stock outstanding for basic earnings per
share calculation
|
|
|
419,076
|
|
|
443,050
|
|
|
454,044
|
Assumed conversion/exercise of:
|
|
|
|
|
|
|
|
|
|
Convertible subordinated notes
|
|
|
16,434
|
|
|
16,905
|
|
|
16,905
|
Stock options and awards
|
|
|
6,745
|
|
|
8,091
|
|
|
9,096
|
|
|
Weighted average common stock outstanding for diluted earnings
per share calculation
|
|
|
442,255
|
|
|
468,046
|
|
|
480,045
|
|
|
Diluted earnings per share
|
|
$
|
2.08
|
|
$
|
1.68
|
|
$
|
1.65
|
|
|
The weighted average common shares for the diluted earnings per
share calculation exclude the incremental effect related to
outstanding stock options, the exercise price of which 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. There were 5.2 million
such options excluded as of January 31, 2009 and
5.7 million excluded at both January 26, 2008 and
January 27, 2007.
The provision for income taxes includes the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
259,857
|
|
|
$
|
375,799
|
|
|
$
|
327,716
|
|
State
|
|
|
27,376
|
|
|
|
94,727
|
|
|
|
58,170
|
|
Foreign
|
|
|
97,976
|
|
|
|
87,260
|
|
|
|
60,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
126,816
|
|
|
|
(64,363
|
)
|
|
|
28,923
|
|
State
|
|
|
23,955
|
|
|
|
(15,698
|
)
|
|
|
397
|
|
Foreign
|
|
|
74
|
|
|
|
(70
|
)
|
|
|
1,681
|
|
|
|
Provision for income taxes
|
|
$
|
536,054
|
|
|
$
|
477,655
|
|
|
$
|
477,036
|
|
|
|
F-21
TJX had net deferred tax assets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Foreign tax credit carryforward
|
|
$
|
37,611
|
|
|
$
|
12,409
|
|
Reserve for discontinued operations
|
|
|
14,859
|
|
|
|
20,264
|
|
Pension, stock compensation, postretirement and employee benefits
|
|
|
238,557
|
|
|
|
189,619
|
|
Leases
|
|
|
38,889
|
|
|
|
39,373
|
|
Foreign currency hedges
|
|
|
4,571
|
|
|
|
36,654
|
|
Computer Intrusion reserve
|
|
|
16,749
|
|
|
|
46,531
|
|
Other
|
|
|
83,483
|
|
|
|
85,199
|
|
|
|
Total deferred tax assets
|
|
$
|
434,719
|
|
|
$
|
430,049
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
203,829
|
|
|
$
|
139,396
|
|
Safe harbor leases
|
|
|
6,521
|
|
|
|
7,548
|
|
Tradename
|
|
|
42,873
|
|
|
|
40,761
|
|
Undistributed foreign earnings
|
|
|
111,506
|
|
|
|
77,198
|
|
Other
|
|
|
61,323
|
|
|
|
44,584
|
|
|
|
Total deferred tax liabilities
|
|
|
426,052
|
|
|
|
309,487
|
|
|
|
Net deferred tax asset
|
|
$
|
8,667
|
|
|
$
|
120,562
|
|
|
|
The fiscal 2009 net deferred tax asset is presented on the
balance sheet as a current asset of $135.7 million and a
non-current liability of $127.0 million. For fiscal 2008,
the net deferred tax asset is presented on the balance sheet as
a current asset of $163.5 million and a non-current
liability of $42.9 million. TJX changed its assertion
during fiscal 2008 regarding the undistributed earnings of its
Marshalls Puerto Rico subsidiary and therefore the earnings of
this subsidiary are no longer considered indefinitely
reinvested. As a result, TJX recognized a $5.5 million tax
benefit in fiscal 2008 after providing for deferred
U.S. taxes for this subsidiary. TJX has provided for
deferred U.S. taxes on all undistributed earnings from its
Winners Canadian subsidiary and its Marshalls Puerto Rico
subsidiary through January 31, 2009. All earnings of
TJXs other foreign subsidiaries are considered
indefinitely reinvested and no U.S. deferred taxes have
been provided on those earnings. The net deferred tax asset
summarized above includes deferred taxes relating to temporary
differences at our foreign operations and amounted to a
$19.9 million net liability as of January 31, 2009 and
a $26.7 million net liability as of January 26, 2008.
In fiscal 2009, TJXs HomeGoods subsidiary utilized a
Puerto Rico net operating loss carryforward of approximately
$1.1 million which had not been previously recognized.
There are no further Puerto Rico net operating losses as of the
fiscal year ended January 31, 2009. TJXs German
subsidiary, which is treated as a branch for U.S. tax
purposes, incurred net operating losses of $15.0 million in
fiscal 2009 and $14.4 million in fiscal 2008 for tax and
financial reporting purposes. The losses were fully utilized in
each year to reduce TJXs current U.S. taxable income.
Any future utilization of the losses in Germany will result in a
corresponding amount of taxable income for U.S. tax
purposes.
TJX established valuation allowances against certain deferred
tax assets which may not be realized in future years. The amount
of the valuation allowances was $6.2 million as of
January 31, 2009 and $4.0 million as of
January 26, 2008.
F-22
TJXs worldwide effective income tax rate was 36.9% for
fiscal 2009, 37.9% for fiscal 2008 and 37.7% for fiscal 2007.
The difference between the U.S. federal statutory income
tax rate and TJXs worldwide effective income tax rate is
reconciled below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
U.S. federal statutory income tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
Effective state income tax rate
|
|
|
2.8
|
|
|
|
4.1
|
|
|
|
4.0
|
|
Impact of foreign operations
|
|
|
(0.1
|
)
|
|
|
(0.6
|
)
|
|
|
(0.4
|
)
|
Impact of repatriation of foreign earnings
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
Impact of tax free currency (gains) losses on intercompany loans
|
|
|
0.1
|
|
|
|
(0.1
|
)
|
|
|
(0.2
|
)
|
All other
|
|
|
(0.9
|
)
|
|
|
(0.1
|
)
|
|
|
(0.7
|
)
|
|
|
Worldwide effective income tax rate
|
|
|
36.9
|
%
|
|
|
37.9
|
%
|
|
|
37.7
|
%
|
|
|
The decrease in TJXs effective state income tax rate for
fiscal 2009 as compared to fiscal 2008 is primarily attributed
to the settlement of several state tax audits and the resulting
reduction to FIN 48 reserves for uncertain tax positions.
TJX adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes
(FIN 48), in the first quarter of fiscal 2008. FIN 48
clarifies the accounting for income taxes by prescribing a
minimum threshold for benefit recognition of a tax position for
financial statement purposes. FIN 48 also establishes tax
accounting rules for measurement, classification, interest and
penalties, disclosure and interim period accounting. As a result
of the implementation, TJX recognized a charge of approximately
$27.2 million to its retained earnings balance at the
beginning of fiscal 2008. TJX had net unrecognized tax benefits
of $129.9 million as of January 31, 2009,
$140.7 million as of January 26, 2008 and
$124.4 million as of January 28, 2007.
A reconciliation of the beginning and ending gross amount of
unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
|
|
Balance at beginning of year or date of implementation
|
|
$
|
232,859
|
|
|
$
|
188,671
|
|
Additions for uncertain tax positions taken in current year
|
|
|
59,807
|
|
|
|
30,811
|
|
Additions for uncertain tax positions taken in prior years
|
|
|
1,848
|
|
|
|
52,328
|
|
Reductions for uncertain tax positions taken in prior years
|
|
|
(80,959
|
)
|
|
|
(36,474
|
)
|
Reductions resulting from lapse of statute of limitation
|
|
|
(2,002
|
)
|
|
|
(307
|
)
|
Settlements with tax authorities
|
|
|
(9,010
|
)
|
|
|
(2,170
|
)
|
|
|
Balance at end of year
|
|
$
|
202,543
|
|
|
$
|
232,859
|
|
|
|
Included in the gross amount of unrecognized tax benefits are
items that will not impact future effective tax rates upon
recognition. These items amount to $49.3 million as of
January 31, 2009 and $67.8 million as of
January 26, 2008.
TJX is subject to U.S. federal income tax as well as income
tax in multiple state, local and foreign jurisdictions. In
nearly all jurisdictions, the tax years through fiscal 2001 are
no longer subject to examination.
TJXs accounting policy is to classify interest and
penalties related to income tax matters as part of income tax
expense. The amount of interest and penalties expensed was
$15.3 million for the year ended January 31, 2009 and
$16.2 million for the year ended January 26, 2008. The
accrued amounts for interest and penalties are
$51.1 million as of January 31, 2009 and
$52.5 million as of January 26, 2008.
Based on the outcome of tax examinations, judicial proceedings
or as a result of the expiration of statute of limitations in
specific jurisdictions, it is reasonably possible that
unrecognized tax benefits for certain tax positions taken on
previously filed tax returns may change materially from those
represented on the financial statements as of January 31,
2009. During the next 12 months, it is reasonably possible
that such circumstances may occur that would have a material
effect on previously unrecognized tax benefits. As a result, the
total net amount of unrecognized tax
F-23
benefits may decrease, which would reduce the provision for
taxes on earnings by a range estimated at $2.0 million to
$70.0 million.
|
|
K.
|
Pension
Plans and Other Retirement Benefits
|
Pension: TJX has a funded defined benefit
retirement plan covering the majority of its full-time
U.S. employees. Employees who have attained twenty-one
years of age and have completed one year of service are covered
under the plan. No employee contributions are required and
benefits are based on compensation earned in each year of
service. As a result of an amendment to the plan, employees
hired after February 1, 2006 do not participate in this
plan but are eligible to receive enhanced employer contributions
to their 401(k) plans. This plan amendment did not have a
material impact on pension expense for the last three fiscal
years, but is expected to gradually reduce net periodic pension
costs in subsequent years due to a reduction in participants.
Our funded defined benefit retirement plan assets are invested
in domestic and international equity and fixed income
securities, both directly and through investment funds. The plan
does not invest in the securities of TJX. TJX also has an
unfunded supplemental retirement plan which covers key employees
and provides for additional retirement benefits based on average
compensation for certain employees.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement
PlansAn amendment of FASB Statements No. 87, 88, 106
and 132(R) (SFAS No. 158).
SFAS No. 158 requires the recognition of the funded
status of a benefit plan in the balance sheet; the recognition
in other comprehensive income of gains or losses and prior
service costs or credits arising during the period but which are
not included as components of periodic benefit cost; the
measurement of defined benefit plan assets and obligations as of
the balance sheet date (the measurement provisions); and
disclosure of additional information about the effects on
periodic benefit cost for the following fiscal year arising from
delayed recognition in the current period. The recognition of
the funded status of plans on the balance sheet was required for
our fiscal year ended January 27, 2007. The adjustment to
accumulated other comprehensive income of initially applying the
recognition provisions of SFAS No. 158 for our pension
and postretirement plans was a reduction, net of taxes, of
$5.6 million in fiscal 2007.
TJX deferred the implementation of the measurement provisions of
SFAS No. 158 until fiscal 2008. The impact of adopting
the measurement provisions was to increase our post retirement
liabilities by $2.7 million and an adjustment to retained
earnings of $1.6 million, net of income taxes of
$1.1 million, which represents the net benefit cost from
January 1, 2007 to January 27, 2007. The valuation
date for both plans in fiscal 2007 was as of December 31,
2006.
Presented below is financial information relating to TJXs
funded defined benefit retirement plan (funded plan) and its
unfunded supplemental pension plan (unfunded plan) for the
fiscal years indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Plan
|
|
|
Unfunded Plan
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of year
|
|
$
|
447,684
|
|
|
$
|
417,436
|
|
|
$
|
51,588
|
|
|
$
|
53,109
|
|
Effect of change in measurement date
|
|
|
|
|
|
|
4,395
|
|
|
|
|
|
|
|
152
|
|
Service cost
|
|
|
30,406
|
|
|
|
34,704
|
|
|
|
1,069
|
|
|
|
992
|
|
Interest cost
|
|
|
28,711
|
|
|
|
24,632
|
|
|
|
3,366
|
|
|
|
2,867
|
|
Actuarial (gains) losses
|
|
|
(1,411
|
)
|
|
|
(21,673
|
)
|
|
|
2,252
|
|
|
|
(3,420
|
)
|
Settlements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special termination benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168
|
|
Benefits paid
|
|
|
(10,713
|
)
|
|
|
(9,586
|
)
|
|
|
(2,812
|
)
|
|
|
(2,280
|
)
|
Expenses paid
|
|
|
(2,264
|
)
|
|
|
(2,224
|
)
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at end of year
|
|
$
|
492,413
|
|
|
$
|
447,684
|
|
|
$
|
55,463
|
|
|
$
|
51,588
|
|
|
|
Accumulated benefit obligation at end of year
|
|
$
|
451,260
|
|
|
$
|
408,437
|
|
|
$
|
42,560
|
|
|
$
|
46,023
|
|
|
|
F-24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Plan
|
|
|
Unfunded Plan
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 31,
|
|
|
January 26,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
436,416
|
|
|
$
|
410,318
|
|
|
$
|
|
|
|
$
|
|
|
Effect of change in measurement date
|
|
|
|
|
|
|
1,840
|
|
|
|
|
|
|
|
(175
|
)
|
Actual return on plan assets
|
|
|
(109,227
|
)
|
|
|
11,068
|
|
|
|
|
|
|
|
|
|
Employer contribution
|
|
|
|
|
|
|
25,000
|
|
|
|
2,812
|
|
|
|
2,455
|
|
Benefits paid
|
|
|
(10,713
|
)
|
|
|
(9,586
|
)
|
|
|
(2,812
|
)
|
|
|
(2,280
|
)
|
Expenses paid
|
|
|
(2,264
|
)
|
|
|
(2,224
|
)
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
314,212
|
|
|
$
|
436,416
|
|
|
$
|
|
|
|
$
|
|
|
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at end of year
|
|
$
|
492,413
|
|
|
$
|
447,684
|
|
|
$
|
55,463
|
|
|
$
|
51,588
|
|
Fair value of plan assets at end of year
|
|
|
314,212
|
|
|
|
436,416
|
|
|
|
|
|
|
|
|
|
|
|
Funded statusexcess obligation
|
|
|
178,201
|
|
|
|
11,268
|
|
|
|
55,463
|
|
|
|
51,588
|
|
Employer contributions after measurement date, and on or before
fiscal year end
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized prior service (cost)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized actuarial (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liability recognized on consolidated balance sheets
|
|
$
|
178,201
|
|
|
$
|
11,268
|
|
|
$
|
55,463
|
|
|
$
|
51,588
|
|
|
|
Amounts not yet reflected in net periodic benefit cost and
included in accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
15
|
|
|
$
|
59
|
|
|
$
|
218
|
|
|
$
|
342
|
|
Accumulated actuarial losses
|
|
|
176,274
|
|
|
|
34,088
|
|
|
|
8,958
|
|
|
|
7,976
|
|
|
|
Amounts included in accumulated other comprehensive income (loss)
|
|
$
|
176,289
|
|
|
$
|
34,147
|
|
|
$
|
9,176
|
|
|
$
|
8,318
|
|
|
|
The consolidated balance sheets reflect the funded status of the
plans with any unrecognized prior service cost and actuarial
gains and losses recorded in accumulated other comprehensive
income (loss). The combined net accrued liability of
$233.7 million at January 31, 2009 is reflected on the
balance sheet as of that date as a current liability of
$13.1 million and a long-term liability of
$220.6 million.
The combined net accrued liability of $62.9 million at
January 26, 2008 is reflected on the balance sheet as of
that date as a current liability of $2.7 million and a
long-term liability of $60.2 million.
The estimated prior service cost that will be amortized from
accumulated other comprehensive income (loss) into net periodic
benefit cost in fiscal 2010 is $15,354 for the funded plan and
$124,652 for the unfunded plan. The estimated net actuarial loss
that will be amortized from accumulated other comprehensive
income (loss) into net periodic benefit cost in fiscal 2010 is
$13.6 million for the funded plan and $861,926 for the
unfunded plan.
Weighted average assumptions for measurement purposes for
determining the obligation at measurement date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Plan
|
|
|
Unfunded Plan
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 31,
|
|
|
January 26,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Discount rate
|
|
|
6.50%
|
|
|
|
6.50%
|
|
|
|
6.50%
|
|
|
|
6.25%
|
|
Expected return on plan assets
|
|
|
8.00%
|
|
|
|
8.00%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Rate of compensation increase
|
|
|
4.00%
|
|
|
|
4.00%
|
|
|
|
6.00%
|
|
|
|
6.00%
|
|
|
|
F-25
TJX selects the assumed discount rate using the Citigroup
Pension Liability Index. TJX develops its long-term rate of
return assumption by evaluating input from professional advisors
taking into account the asset allocation of the portfolio and
long-term asset class return expectations, as well as long-term
inflation assumptions.
TJX made aggregate cash contributions of $2.8 million in
fiscal 2009, $27.5 million in fiscal 2008 and
$7.4 million in fiscal 2007 to the defined benefit
retirement plan and to fund current benefit and expense payments
under the unfunded supplemental retirement plan. The cash
contributions made in fiscal 2009 and 2007 were solely to fund
current benefit and expense payments under the unfunded
supplemental retirement plan. Through fiscal 2008 our funding
policy for the funded plan was to fund any required contribution
to the plan at the full funding limitation and generally to fund
contributions in excess of any required contribution so as to
fully fund the accumulated benefit obligation to the extent such
contribution is allowed for tax purposes. As a result of
voluntary funding contributions made in prior years, there was
no required funding during the last three fiscal years. In
fiscal 2009 the Pension Protection Act (PPA) became effective
and TJXs policy will be to fund, at a minimum, the amount
required to maintain a funded status of 75% to 80% of the
pension liability as defined by the PPA. As of the date of this
report, TJX had contributed $50 million to the funded plan
and may make additional voluntary contributions during fiscal
2010. We anticipate making contributions of $13.1 million
to fund current benefit and expense payments under the unfunded
supplemental retirement plan in fiscal 2010. The following is a
summary of our target allocation for plan assets along with the
actual allocation of plan assets as of the valuation date for
the fiscal years presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Allocation for
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
Target
|
|
|
January 31,
|
|
|
January 26,
|
|
|
|
Allocation
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Equity securities
|
|
|
60%
|
|
|
|
48%
|
|
|
|
53%
|
|
Fixed income
|
|
|
40%
|
|
|
|
50%
|
|
|
|
40%
|
|
All otherprimarily cash
|
|
|
|
|
|
|
2%
|
|
|
|
7%
|
|
|
|
We employ a total return investment approach whereby a mix of
equities and fixed income investments is used to seek to
maximize the long-term return on plan assets with a prudent
level of risk. Risks are mitigated through asset diversification
and the use of multiple investment managers. Investment risk is
measured and monitored on an ongoing basis through quarterly
investment portfolio reviews, annual liability measurements and
periodic asset/liability studies.
F-26
Following are the components of net periodic benefit cost and
other amounts recognized in other comprehensive income related
to our pension plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Plan
|
|
|
Unfunded Plan
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
|
January 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
Dollars in thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Net Periodic Pension Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
30,406
|
|
|
$
|
34,704
|
|
|
$
|
37,528
|
|
|
$
|
1,069
|
|
|
$
|
992
|
|
|
$
|
1,043
|
|
Interest cost
|
|
|
28,711
|
|
|
|
24,632
|
|
|
|
21,982
|
|
|
|
3,366
|
|
|
|
2,867
|
|
|
|
2,929
|
|
Expected return on plan assets
|
|
|
(34,369
|
)
|
|
|
(32,259
|
)
|
|
|
(29,395
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of transition obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168
|
|
|
|
1,421
|
|
Amortization of prior service costs
|
|
|
43
|
|
|
|
57
|
|
|
|
57
|
|
|
|
124
|
|
|
|
125
|
|
|
|
124
|
|
Recognized actuarial losses
|
|
|
|
|
|
|
|
|
|
|
5,656
|
|
|
|
1,270
|
|
|
|
789
|
|
|
|
1,686
|
|
|
|
Net periodic pension cost
|
|
$
|
24,791
|
|
|
$
|
27,134
|
|
|
$
|
35,828
|
|
|
$
|
5,829
|
|
|
$
|
4,941
|
|
|
$
|
7,203
|
|
|
|
Other Changes in Plan Assets and Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations Recognized in Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (gain) loss
|
|
$
|
142,186
|
|
|
$
|
(482
|
)
|
|
$
|
40,226
|
|
|
$
|
2,252
|
|
|
$
|
(3,420
|
)
|
|
$
|
13,976
|
|
Prior service cost (credit)
|
|
|
|
|
|
|
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
602
|
|
Amortization of recognized loss
|
|
|
|
|
|
|
|
|
|
|
(5,656
|
)
|
|
|
(1,270
|
)
|
|
|
(893
|
)
|
|
|
(1,686
|
)
|
Amortization of prior service cost
|
|
|
(44
|
)
|
|
|
(62
|
)
|
|
|
(57
|
)
|
|
|
(125
|
)
|
|
|
(135
|
)
|
|
|
(125
|
)
|
|
|
Total recognized in other comprehensive income
|
|
$
|
142,142
|
|
|
$
|
(544
|
)
|
|
$
|
34,691
|
|
|
$
|
857
|
|
|
$
|
(4,448
|
)
|
|
$
|
12,767
|
|
|
|
Total recognized in net periodic benefit cost and other
comprehensive income
|
|
$
|
166,933
|
|
|
$
|
26,590
|
|
|
$
|
70,519
|
|
|
$
|
6,686
|
|
|
$
|
493
|
|
|
$
|
19,970
|
|
|
|
Weighted average assumptions for expense purposes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
6.50%
|
|
|
|
6.00%
|
|
|
|
5.50%
|
|
|
|
6.25%
|
|
|
|
5.75%
|
|
|
|
5.50%
|
|
Expected rate of return on plan assets
|
|
|
8.00%
|
|
|
|
8.00%
|
|
|
|
8.00%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Rate of compensation increase
|
|
|
4.00%
|
|
|
|
4.00%
|
|
|
|
4.00%
|
|
|
|
6.00%
|
|
|
|
6.00%
|
|
|
|
6.00%
|
|
|
|
The unrecognized gains and losses in excess of 10% of the
projected benefit obligation are amortized over the average
remaining service life of participants. In addition, for the
unfunded plan, unrecognized actuarial gains and losses that
exceed 30% of the projected benefit obligation are fully
recognized in net periodic pension cost.
Following is a schedule of the benefits expected to be paid in
each of the next five fiscal years and in the aggregate for the
five fiscal years thereafter:
|
|
|
|
|
|
|
|
|
|
Funded Plan
|
|
Unfunded Plan
|
In thousands
|
|
Expected Benefit Payments
|
|
Expected Benefit Payments
|
|
|
Fiscal Year
|
|
|
|
|
|
|
2010
|
|
$
|
14,511
|
|
$
|
13,059
|
2011
|
|
|
16,149
|
|
|
3,613
|
2012
|
|
|
17,968
|
|
|
3,633
|
2013
|
|
|
20,438
|
|
|
3,301
|
2014
|
|
|
22,994
|
|
|
3,369
|
2015 through 2019
|
|
|
161,363
|
|
|
20,242
|
|
|
TJX also sponsors an employee savings plan under
Section 401(k) of the Internal Revenue Code for all
eligible U.S. employees. Assets under the plan totaled
$529.5 million as of December 31, 2008 and
$688.3 million as of December 31, 2007 and are
invested in a variety of funds. Employees may contribute up to
50% of eligible pay, subject to limitation. TJX matches employee
contributions, up to 5% of eligible pay, at rates ranging from
25% to
F-27
50%, based upon TJXs performance. Employees hired after
February 1, 2006 are eligible for participation in the
401(k) plan with an enhanced matching formula beginning five
years after hire date. TJX contributed $8.6 million in
fiscal 2009, $10.2 million in fiscal 2008 and
$11.4 million in fiscal 2007 to the 401(k) plan. Employees
cannot invest their contributions in the TJX stock fund option
in the 401(k) plan, and may elect to invest up to only 50% of
TJXs contribution in the TJX stock fund. The TJX stock
fund has no other trading restrictions. The TJX stock fund
represents 3.3% of plan investments at December 31, 2008,
3.5% at December 31, 2007 and 3.8% at December 31,
2006.
TJX also has a nonqualified savings plan for certain
U.S. employees. TJX matches employee contributions at
various rates which amounted to $425,432 in fiscal 2009,
$1.2 million in fiscal 2008 and $1.2 million in fiscal
2007. TJX transfers employee withholdings and the related
company match to a separate trust designated to fund the future
obligations. The trust assets, which are invested in a variety
of mutual funds, are included in other assets on the balance
sheets.
In addition to the plans described above, we also maintain
retirement/deferred savings plans for all eligible associates at
our foreign subsidiaries. We contributed $4.2 million for
these plans in fiscal 2009, $4.1 million in fiscal 2008 and
$3.6 million in fiscal 2007.
Postretirement Medical: TJX has an unfunded
postretirement medical plan that provides limited postretirement
medical and life insurance benefits to employees who participate
in its retirement plan and who retired at age 55 or older
with ten or more years of service. During the fourth quarter of
fiscal 2006, TJX eliminated this benefit for all active
associates and modified the benefit to current retirees enrolled
in the plan. The plan amendment replaces the previous medical
benefits with a defined amount (up to $35.00 per month) that
approximates the cost of enrollment in the Medicare Plan for
retirees enrolled in the plan at the time of modification.
The company paid $262,000 of benefits in fiscal 2009 and will
pay similar amounts over the next several years. The post
retirement medical liability as of January 31, 2009 is
estimated at $2.3 million, of which $2.0 million is
included in non-current liabilities on the balance sheet.
The amendment to plan benefits in fiscal 2006 resulted in a
negative plan amendment of $46.8 million which is being
amortized into income over the average remaining life of the
active plan participants. The unamortized balance of
$29.8 million as of January 31, 2009 is included in
accumulated other comprehensive income (loss) of which
$3.8 million will be amortized into income in fiscal 2010.
During fiscal 2009 there was a pre-tax net benefit of
$3.4 million reflected in the income statement as it
relates to this post retirement medical plan.
|
|
L.
|
Accrued
Expenses and Other Liabilities, Current and Long-Term
|
The major components of accrued expenses and other current
liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
January 31,
|
|
January 26,
|
In thousands
|
|
2009
|
|
2008
|
|
|
Employee compensation and benefits, current
|
|
$
|
300,366
|
|
$
|
335,180
|
Computer Intrusion
|
|
|
42,211
|
|
|
117,266
|
Rent, utilities and occupancy, including real estate taxes
|
|
|
151,273
|
|
|
158,870
|
Merchandise credits and gift certificates
|
|
|
133,104
|
|
|
141,528
|
Insurance
|
|
|
40,428
|
|
|
48,954
|
Sales tax collections and V.A.T. taxes
|
|
|
88,528
|
|
|
117,585
|
All other current liabilities
|
|
|
340,856
|
|
|
294,604
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
1,096,766
|
|
$
|
1,213,987
|
|
|
All other current liabilities include accruals for outstanding
checks, advertising, property additions, dividends, freight,
reserve for sales returns, purchased services, and other items,
each of which are individually less than 5% of current
liabilities.
F-28
The major components of other long-term liabilities are as
follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
January 31,
|
|
January 26,
|
In thousands
|
|
2009
|
|
2008
|
|
|
Employee compensation and benefits, long-term
|
|
$
|
272,881
|
|
$
|
125,421
|
Reserve related to discontinued operations
|
|
|
40,564
|
|
|
46,076
|
Accrued rent
|
|
|
137,876
|
|
|
150,530
|
Landlord allowances
|
|
|
53,761
|
|
|
58,797
|
Fair value of derivatives
|
|
|
|
|
|
143,091
|
Tax reserve, long-term
|
|
|
240,582
|
|
|
269,157
|
Long-term liabilitiesother
|
|
|
19,340
|
|
|
18,261
|
|
|
Other long-term liabilities
|
|
$
|
765,004
|
|
$
|
811,333
|
|
|
|
|
M.
|
Discontinued
Operations Reserve and Related Contingent Liabilities
|
TJX has a reserve for future obligations of discontinued
operations that relates primarily to real estate leases
associated with our 34 discontinued A.J. Wright stores (see
Note C) as well as 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 31,
|
|
|
January 26,
|
|
|
January 27,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Balance at beginning of year
|
|
$
|
46,076
|
|
|
$
|
57,677
|
|
|
$
|
14,981
|
|
Additions (reductions) to the reserve charged to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
A.J. Wright store closings
|
|
|
(2,908
|
)
|
|
|
|
|
|
|
61,968
|
|
Other lease related obligations
|
|
|
2,908
|
|
|
|
|
|
|
|
1,555
|
|
Interest accretion
|
|
|
1,820
|
|
|
|
1,820
|
|
|
|
400
|
|
Charges against the reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease related obligations
|
|
|
(7,323
|
)
|
|
|
(11,214
|
)
|
|
|
(1,696
|
)
|
Fixed asset write-offs
|
|
|
|
|
|
|
|
|
|
|
(18,732
|
)
|
Termination benefits and all other
|
|
|
(9
|
)
|
|
|
(2,207
|
)
|
|
|
(799
|
)
|
|
|
Balance at end of year
|
|
$
|
40,564
|
|
|
$
|
46,076
|
|
|
$
|
57,677
|
|
|
|
The exit costs related to our 34 discontinued A.J. Wright stores
(see Note C) resulted in an addition to the reserve of
$62 million in fiscal 2007. The other additions to the
reserve for lease related obligations in fiscal 2007 were the
result of periodic adjustments to our estimated lease
obligations of our former businesses and were offset by income
from creditor recoveries of a similar amount. The lease related
charges against the reserve during fiscal 2007 relate primarily
to our former businesses. The fixed asset write-offs and other
charges against the reserve for fiscal 2007 and all of the
charges against the reserve in fiscal 2008 and fiscal 2009,
relate primarily to the 34 A.J. Wright closed stores.
Of the reserve balance, approximately $25 million at fiscal
2009 year end, $32 million at fiscal 2008 year
end and $43 million at fiscal 2007 year end relate to
the A.J. Wright store closings, primarily our estimation of
lease costs, net of estimated subtenant income. Approximately
$3 million of the reserve at fiscal 2009 relates to 2
Bobs Stores locations which are considered probable for
being put back to TJX by the buyer. 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 TJX for liability as an original lessee or guarantor of
the leases of former businesses, after mitigation of the number
and cost of lease obligations. At January 31, 2009,
substantially all the leases of the former businesses that were
rejected in bankruptcy and for which the landlords asserted
liability against TJX had been resolved. The actual net cost of
the various lease obligations included in the reserve may differ
from our initial estimate. Although TJXs actual costs with
respect to these lease obligations may exceed amounts estimated,
and TJX may incur costs for other leases from discontinued
operations, TJX does 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
F-29
the next three to five years. The actual timing of cash outflows
will vary depending on how the remaining lease obligations are
actually settled.
TJX may also be contingently liable on up to 15 leases of
BJs Wholesale Club, another former TJX business for which
BJs Wholesale Club is primarily liable, and on 8
additional Bobs Stores leases. Our reserve for
discontinued operations does not reflect these leases, because
we currently believe that the likelihood of any future liability
to TJX with respect to these leases is not probable.
|
|
N.
|
Guarantees
and Contingent Obligations
|
TJX has contingent obligations on leases, for which it was a
lessee or guarantor, which were assigned to third parties
without our 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 discontinued operations discussed
above, 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
does not fulfill their obligations related to one or more of
these leases.
TJX also has contingent obligations in connection with some
assigned or sublet properties that TJX is 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
in Note M) and properties of our discontinued
operations that we have sublet, if the subtenants did not
fulfill their obligations, is approximately $100 million as
of January 31, 2009. We believe that most or all of these
contingent obligations will not revert to TJX and, to the extent
they do, will be resolved for substantially less due to
mitigating factors.
TJX is a party to various agreements under which we may be
obligated to indemnify the other party 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.
|
|
O.
|
Supplemental
Cash Flows Information
|
The cash flows required to satisfy contingent obligations of the
discontinued operations as discussed in Note M, are
classified as a reduction in cash provided by continuing
operations. There are no remaining operating activities relating
to these operations.
TJXs cash payments for interest and income taxes and
non-cash investing and financing activities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26,
|
|
January 27,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
2007
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
Interest on debt
|
|
$
|
28,269
|
|
|
$
|
31,190
|
|
$
|
31,489
|
|
Income taxes
|
|
|
449,916
|
|
|
|
463,835
|
|
|
510,274
|
|
Changes in accrued expenses due to:
|
|
|
|
|
|
|
|
|
|
|
|
Dividends payable
|
|
|
6,945
|
|
|
|
6,710
|
|
|
4,097
|
|
Property additions
|
|
|
(19,829
|
)
|
|
|
23,557
|
|
|
(6,149
|
)
|
|
|
There were no non-cash financing or investing activities during
fiscal 2009, 2008 or 2007.
TJX operates five business segments, three in the United States
and one each in Canada and Europe. Each of our segments has its
own administrative, buying and distribution network. Of our
U.S. based store chains, T.J. Maxx and Marshalls, referred
to as Marmaxx, are managed together and reported as a single
segment and A.J. Wright and
F-30
HomeGoods each is reported as a separate segment. Outside the
U.S., our store chains in Canada (Winners and HomeSense) are
under common management and reported as our Canadian segment and
our store chains in Europe (T.K. Maxx and HomeSense) are also
under common management and reported as our European segment.
For fiscal 2009, our Canadian and European segments accounted
for 23% of TJXs net sales, 24% of segment profit and 21%
of all consolidated assets. All of our stores, with the
exception of HomeGoods and HomeSense, sell apparel for the
entire family, including footwear, jewelry and accessories and a
limited offering of giftware and home fashions. The HomeGoods
and HomeSense stores offer exclusively home fashions and home
furnishings. By merchandise category, we derived approximately
62% of our sales from clothing (including footwear), 25% from
home fashions and 13% from jewelry and accessories in fiscal
2009.
TJX evaluates the performance of its segments based on
segment profit or loss, which it defines as pre-tax
income before general corporate expense, Provision for Computer
Intrusion related costs and interest. Segment profit or
loss, as defined by TJX, 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 operating
activities as an indicator of our performance or as a measure of
liquidity.
F-31
Presented below is selected financial information related to our
business segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 31,
|
|
|
January 26
|
|
|
January 27,
|
|
In thousands
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Net
sales:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
12,362,122
|
|
|
$
|
11,966,651
|
|
|
$
|
11,531,785
|
|
Canada
|
|
|
2,139,443
|
|
|
|
2,040,814
|
|
|
|
1,740,796
|
|
Europe
|
|
|
2,242,057
|
|
|
|
2,216,218
|
|
|
|
1,864,502
|
|
HomeGoods
|
|
|
1,578,286
|
|
|
|
1,480,382
|
|
|
|
1,365,103
|
|
A.J. Wright
|
|
|
677,597
|
|
|
|
632,661
|
|
|
|
601,827
|
|
|
|
|
|
$
|
18,999,505
|
|
|
$
|
18,336,726
|
|
|
$
|
17,104,013
|
|
|
|
Segment profit
(loss):(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
1,155,838
|
|
|
$
|
1,158,179
|
|
|
$
|
1,079,275
|
|
Canada
|
|
|
236,086
|
|
|
|
235,128
|
|
|
|
181,863
|
|
Europe
|
|
|
137,612
|
|
|
|
127,218
|
|
|
|
109,305
|
|
HomeGoods
|
|
|
42,370
|
|
|
|
76,224
|
|
|
|
60,938
|
|
A.J. Wright
|
|
|
2,862
|
|
|
|
(1,801
|
)
|
|
|
(10,250
|
)
|
|
|
|
|
|
1,574,768
|
|
|
|
1,594,948
|
|
|
|
1,421,131
|
|
General corporate expense
|
|
|
140,037
|
|
|
|
139,437
|
|
|
|
136,397
|
|
Provision for Computer Intrusion related
costs(2)
|
|
|
(30,500
|
)
|
|
|
197,022
|
|
|
|
4,960
|
|
Interest (income) expense, net
|
|
|
14,291
|
|
|
|
(1,598
|
)
|
|
|
15,566
|
|
|
|
Income from continuing operations before provision for income
taxes
|
|
$
|
1,450,940
|
|
|
$
|
1,260,087
|
|
|
$
|
1,264,208
|
|
|
|
Identifiable assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
3,538,663
|
|
|
$
|
3,407,240
|
|
|
$
|
3,257,019
|
|
Canada
|
|
|
609,363
|
|
|
|
659,004
|
|
|
|
483,505
|
|
Europe
|
|
|
675,283
|
|
|
|
847,107
|
|
|
|
694,071
|
|
HomeGoods
|
|
|
455,045
|
|
|
|
435,605
|
|
|
|
377,692
|
|
A.J. Wright
|
|
|
242,657
|
|
|
|
204,808
|
|
|
|
193,619
|
|
Discontinued
operations(1)
|
|
|
|
|
|
|
87,291
|
|
|
|
99,459
|
|
Corporate(3)
|
|
|
657,231
|
|
|
|
958,879
|
|
|
|
980,335
|
|
|
|
|
|
$
|
6,178,242
|
|
|
$
|
6,599,934
|
|
|
$
|
6,085,700
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
328,965
|
|
|
$
|
287,558
|
|
|
$
|
221,158
|
|
Canada
|
|
|
61,486
|
|
|
|
40,928
|
|
|
|
43,879
|
|
Europe
|
|
|
122,902
|
|
|
|
127,646
|
|
|
|
72,656
|
|
HomeGoods
|
|
|
47,519
|
|
|
|
50,062
|
|
|
|
25,888
|
|
A.J. Wright
|
|
|
19,098
|
|
|
|
15,425
|
|
|
|
10,838
|
|
Discontinued
operations(1)
|
|
|
2,962
|
|
|
|
5,368
|
|
|
|
3,592
|
|
|
|
|
|
$
|
582,932
|
|
|
$
|
526,987
|
|
|
$
|
378,011
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
241,940
|
|
|
$
|
215,439
|
|
|
$
|
201,504
|
|
Canada
|
|
|
43,527
|
|
|
|
42,418
|
|
|
|
36,743
|
|
Europe
|
|
|
59,949
|
|
|
|
56,163
|
|
|
|
56,909
|
|
HomeGoods
|
|
|
28,892
|
|
|
|
24,261
|
|
|
|
22,825
|
|
A.J. Wright
|
|
|
16,298
|
|
|
|
15,296
|
|
|
|
18,400
|
|
Discontinued
operations(1)
|
|
|
2,610
|
|
|
|
7,361
|
|
|
|
8,411
|
|
Corporate(4)
|
|
|
8,491
|
|
|
|
8,458
|
|
|
|
8,318
|
|
|
|
|
|
$
|
401,707
|
|
|
$
|
369,396
|
|
|
$
|
353,110
|
|
|
|
|
|
|
(1)
|
|
Adjusted to reclassify the results
of operations from Bobs Stores through the date of sale to
discontinued operations.
|
(2)
|
|
TJX has incurred losses as a result
of the Computer Intrusion. In the second quarter of fiscal 2008,
TJX established a pre-tax reserve of $178.1 million to
reflect its estimation of probable losses. In fiscal 2009 and
2008, TJX reduced our reserve by $30.5 million and
$18.9 million, respectively.
|
(3)
|
|
Corporate identifiable assets
consist primarily of cash, receivables, prepaid insurance,
prepaid pension expense, a note receivable, and reflects the
decrease in cash from fiscal 2008 to fiscal 2009.
|
(4)
|
|
Includes debt discount and debt
expense amortization.
|
F-32
|
|
Q.
|
Selected
Quarterly Financial Data (Unaudited)
|
Presented below is selected quarterly consolidated financial
data for fiscal 2009 and 2008 which was prepared on the same
basis as the audited consolidated financial statements and
includes all adjustments necessary to present fairly, in all
material respects, the information set forth therein on a
consistent basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
except per share amounts
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter(4)
|
|
|
Fiscal Year Ended January 31, 2009 (53 weeks)As
Adjusted(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
4,303,555
|
|
|
$
|
4,554,395
|
|
|
$
|
4,761,530
|
|
|
$
|
5,380,025
|
Gross
earnings(2)
|
|
|
1,037,434
|
|
|
|
1,114,481
|
|
|
|
1,233,521
|
|
|
|
1,219,313
|
Income from continuing
operations(3)
|
|
|
198,000
|
|
|
|
212,073
|
|
|
|
254,117
|
|
|
|
250,696
|
Net
income(3)
|
|
|
193,849
|
|
|
|
200,223
|
|
|
|
235,849
|
|
|
|
250,696
|
Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.47
|
|
|
|
0.50
|
|
|
|
0.61
|
|
|
|
0.61
|
Diluted earnings per share
|
|
|
0.44
|
|
|
|
0.48
|
|
|
|
0.58
|
|
|
|
0.58
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.46
|
|
|
|
0.48
|
|
|
|
0.57
|
|
|
|
0.61
|
Diluted earnings per share
|
|
|
0.43
|
|
|
|
0.45
|
|
|
|
0.54
|
|
|
|
0.58
|
Fiscal Year Ended January 31, 2009 (53 weeks)As
Reported
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
4,364,125
|
|
|
$
|
4,621,292
|
|
|
$
|
4,761,530
|
|
|
$
|
5,380,025
|
Gross
earnings(2)
|
|
|
1,048,390
|
|
|
|
1,128,477
|
|
|
|
1,233,521
|
|
|
|
1,219,313
|
Income from continuing
operations(3)
|
|
|
193,849
|
|
|
|
200,223
|
|
|
|
254,117
|
|
|
|
250,696
|
Net
income(3)
|
|
|
193,849
|
|
|
|
200,223
|
|
|
|
235,849
|
|
|
|
250,696
|
Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.46
|
|
|
|
0.48
|
|
|
|
0.61
|
|
|
|
0.61
|
Diluted earnings per share
|
|
|
0.43
|
|
|
|
0.45
|
|
|
|
0.58
|
|
|
|
0.58
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.46
|
|
|
|
0.48
|
|
|
|
0.57
|
|
|
|
0.61
|
Diluted earnings per share
|
|
|
0.43
|
|
|
|
0.45
|
|
|
|
0.54
|
|
|
|
0.58
|
Fiscal Year Ended January 26, 2008As
Adjusted(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
4,044,073
|
|
|
$
|
4,242,059
|
|
|
$
|
4,658,718
|
|
|
$
|
5,391,876
|
Gross
earnings(2)
|
|
|
977,311
|
|
|
|
1,020,530
|
|
|
|
1,178,111
|
|
|
|
1,319,079
|
Income from continuing
operations(3)
|
|
|
166,141
|
|
|
|
61,167
|
|
|
|
251,261
|
|
|
|
303,863
|
Net
income(3)
|
|
|
162,108
|
|
|
|
59,032
|
|
|
|
249,461
|
|
|
|
301,149
|
Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.37
|
|
|
|
0.14
|
|
|
|
0.57
|
|
|
|
0.70
|
Diluted earnings per share
|
|
|
0.35
|
|
|
|
0.13
|
|
|
|
0.54
|
|
|
|
0.67
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.36
|
|
|
|
0.13
|
|
|
|
0.57
|
|
|
|
0.70
|
Diluted earnings per share
|
|
|
0.34
|
|
|
|
0.13
|
|
|
|
0.54
|
|
|
|
0.66
|
Fiscal Year Ended January 26, 2008As Reported
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
4,108,081
|
|
|
$
|
4,313,298
|
|
|
$
|
4,737,491
|
|
|
$
|
5,488,256
|
Gross
earnings(2)
|
|
|
990,866
|
|
|
|
1,035,601
|
|
|
|
1,195,993
|
|
|
|
1,342,218
|
Income from continuing
operations(3)
|
|
|
162,108
|
|
|
|
59,032
|
|
|
|
249,461
|
|
|
|
301,149
|
Net
income(3)
|
|
|
162,108
|
|
|
|
59,032
|
|
|
|
249,461
|
|
|
|
301,149
|
Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.36
|
|
|
|
0.13
|
|
|
|
0.57
|
|
|
|
0.70
|
Diluted earnings per share
|
|
|
0.34
|
|
|
|
0.13
|
|
|
|
0.54
|
|
|
|
0.66
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.36
|
|
|
|
0.13
|
|
|
|
0.57
|
|
|
|
0.70
|
Diluted earnings per share
|
|
|
0.34
|
|
|
|
0.13
|
|
|
|
0.54
|
|
|
|
0.66
|
|
|
F-33
|
|
|
(1)
|
|
Adjusted to reclassify the results
of operations from Bobs Stores to discontinued
operationsSee Note C.
|
|
|
|
The following table summarizes the
quarterly amounts of net income that have been reclassified from
continuing operations to discontinued operations as a result of
the sale of the Bobs Stores chain:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
|
|
Income (loss) of
|
|
|
|
|
|
Income (loss) of
|
|
|
|
|
|
|
discontinued
|
|
|
Amount per
|
|
|
discontinued
|
|
|
Amount per
|
|
In millions except per share amounts
|
|
operations
|
|
|
share
|
|
|
operations
|
|
|
share
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
$
|
(4.2
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(4.0
|
)
|
|
$
|
(0.01
|
)
|
Second
|
|
|
(11.8
|
)
|
|
|
(0.03
|
)
|
|
|
(2.1
|
)
|
|
|
|
|
Third
|
|
|
0.7
|
|
|
|
|
|
|
|
(1.8
|
)
|
|
|
|
|
Fourth
|
|
|
|
|
|
|
N/A
|
|
|
|
(2.8
|
)
|
|
|
(0.01
|
)
|
|
|
Full Year
|
|
$
|
(15.3
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
The Bobs Stores chain was
sold in the third quarter of fiscal 2009. TJX incurred a loss on
disposal of $19.0 million, net of taxes, or $0.04 per share.
|
|
(2)
|
|
Gross earnings equal net sales less
cost of sales, including buying and occupancy costs.
|
|
(3)
|
|
The following table summarizes the
quarterly net of tax amounts charged to net income relating to
costs incurred in connection with the Computer
IntrusionSee Note B.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
|
|
Charge (benefit)
|
|
|
Amount per
|
|
|
Charge (benefit)
|
|
|
Amount per
|
|
In millions except per share amounts
|
|
to net income
|
|
|
share
|
|
|
to net income
|
|
|
share
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
$
|
|
|
|
$
|
|
|
|
$
|
12
|
|
|
$
|
0.03
|
|
Second
|
|
|
|
|
|
|
|
|
|
|
118
|
|
|
|
0.25
|
|
Third
|
|
|
(4
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Fourth
|
|
|
(14
|
)
|
|
|
(0.03
|
)
|
|
|
(11
|
)
|
|
|
(0.02
|
)
|
|
|
Full Year
|
|
$
|
(18
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
119
|
|
|
$
|
0.25
|
|
|
|
Note: Due to rounding individual
items may not foot.
|
|
|
(4)
|
|
The fourth quarter of fiscal 2009
includes 14 weeks.
|
F-34
exv10w5
Exhibit 10.5
The TJX Companies, Inc.
January 31, 2009
Ms. Carol Meyrowitz
The TJX Companies, Inc.
770 Cochituate Road
Framingham, MA 01701
Re: Modification of Employment Agreement
Dear Carol:
Reference is made to the Employment Agreement dated as of January 28, 2007 (as subsequently
amended and in effect on the date hereof, the Existing Agreement) between you and The TJX
Companies, Inc. (the Company). The Existing Agreement and the period of your employment by the
Company under the Existing Agreement are scheduled to expire on January 31, 2009 (the End Date)
except as otherwise mutually agreed by you and the Company. The Company and you are presently
engaged in a discussion of a new or extended employment agreement. As a result, we both agree that
Section 1 of the Existing Agreement shall be amended so that End Date shall mean April 1, 2009.
If you agree with the foregoing, please so indicate by signing the enclosed copy of this
letter agreement and returning it to Mr. Greg Flores, whereupon this letter agreement will take
immediate effect as of the date first set forth above. This letter agreement shall constitute an
agreement under seal.
|
|
|
|
|
|
The TJX Companies, Inc.
|
|
|
By: |
/S/ David Brandon
|
|
|
|
Title: |
|
|
|
|
|
|
Agreed:
/S/ Carol Meyrowitz
Carol Meyrowitz
Date: January 31, 2009
exv10w8
Exhibit 10.8
January 28, 2009
Mr. Jeffrey G. Naylor
The TJX Companies, Inc.
770 Cochituate Road
Framingham, MA 01701
Re: Resignation
Dear Jeff:
By this letter (this Resignation Letter) I hereby confirm my resignation as Executive Vice
President and Chief Financial Officer of The TJX Companies, Inc. (the Company), effective as of
the close of business on January 31, 2009 (the Resignation Effective Time). I also hereby resign,
effective as of the Resignation Effective Time, from all offices and other positions, including as
a member of fiduciary and other committees, with the Company, the Companys subsidiaries, the
Companys benefit plans and trusts and The TJX Foundation, Inc. I acknowledge that under
Section 6(a) of my employment agreement with the Company dated as of June 11, 2007, as amended, (my
Employment Agreement), I would not be entitled to any benefits or payments under my Employment
Agreement by reason of my resignation except those expressly set forth in Section 6(a) of my
Employment Agreement, and I agree that the Company shall not have any obligation to provide such
payment and benefits. The Company nevertheless hereby agrees, subject to the terms and conditions
of this Resignation Letter, to provide me the benefits and payments described in Section 5(a) of my
Employment Agreement as amended by this Resignation Letter (the Section 5(a) Benefits) (but not
those described in Section 6(a) of my Employment Agreement) as though my employment had been
terminated by the Company other than for Cause effective as of the Resignation Effective Time.
Except as provided in this Resignation Letter, the terms of my Employment Agreement shall continue
in full force and effect. Without limiting the generality of the foregoing, I hereby acknowledge
that any right that I have to the receipt or retention of any of the Section 5(a) Benefits shall be
subject to the provisions of Section 8 of my Employment Agreement as though paid pursuant to
Section 5 of my Employment Agreement, and that for this purpose the payment described in
subparagraph (d) of the following paragraph shall be treated as a Section 5(a) benefit. I also
agree that I will not disparage the Company or any of its employees, officers, directors or agents
in communications with third parties.
My entitlement to any payments or benefits by reason of my resignation shall be subject to the
following additional terms and conditions:
(a) For the avoidance of doubt, as provided in my Employment Agreement, the Section
5(a) Benefits described in Section 5(a)(i), (ii) and (viii) of my Employment Agreement that
would otherwise have been paid within the first six months after the date of my separation
from service shall be accumulated and paid six months and one day after the date of my
separation from service, with the balance paid thereafter in accordance with the terms of my
Employment Agreement.
(b) The Section 5(a) Benefits described in Section 5(a)(iii) of my Employment
Agreement shall include and be limited to payment of my MIP award for the Companys fiscal
year ended January 31, 2009 and of my LRPIP award for the cycle ended January 31, 2009, in
each case based on actual Company performance as certified by the ECC, awards to which I am
entitled by virtue of my employment with the Company through the Resignation Effective Time.
The award payments described in the immediately preceding sentence shall be paid at the
same time as MIP and LRPIP awards to other executives for the performance period ending
January 31, 2009 are paid.
(c) I shall not be paid any Section 5(a) Benefits described in Section 5(a)(iv) of my
Employment Agreement in respect of MIP for the fiscal year ended January 31, 2009 or in
respect of LRPIP for the cycle ended January 31, 2009.
(d) The Section 5(a) Benefits described in Section 5(a)(iv) that consist of prorated
LRPIP target award payments for each of the fiscal year 2008-2010 cycle and the fiscal year
2009-2011 cycle shall be paid as soon as practicable after the close of the last fiscal year
in the relevant cycle but in all events by the 15th day of the third month following the end
of such fiscal year.
(e) None of the payments or benefits referenced in (a) or (d) above shall be payable
unless I execute the general release attached hereto as Exhibit A (the Release), and
deliver the same to Mr. Greg Flores, during the twenty-one (21) day period following the
Resignation Effective Time and do not revoke the Release within the seven-day revocation
period specified in such Release.
(f) If I execute the Release and deliver the same to Mr. Greg Flores, during the
twenty-one (21) day period following the Resignation Effective Time and do not revoke such
release within the seven-day revocation period specified in such Release, the Company shall
pay me, upon the expiration of such seven-day revocation period, the additional sum of
$62,000 .
(g) All shares of restricted stock of the Company (totaling 34,667 shares) that I hold
shall be forfeited to the Company as of the Resignation Effective Time without the
requirement of any further action or any payment by the Company.
(h) All of my options to acquire stock of the Company that are currently unvested
(totaling options to acquire 45,671 shares) shall be forfeited to the Company as of the
Resignation Effective Time without the requirement of any further action or any payment by
the Company, and all of my options to acquire stock of the Company that are currently vested
(totaling options to acquire 10,000 shares) shall survive my resignation and remain
exercisable in accordance with the terms of those options and of the Companys Stock
Incentive Plan under which they were issued.
I understand that all payments made to me shall be subject to applicable tax withholding and that
the Company will not be liable for any additional taxes, or any penalties or interest, with respect
to any amounts that may be payable to me.
Although I will cease to be employed by the Company as of the Resignation Effective Time, I would
be happy to arrange to consult with the Company, consistent with my availability and other
commitments, to promote a smooth transition of my duties.
If the Company agrees to these terms, please so indicate by executing this letter agreement in the
space indicated below, whereupon my resignation will take effect on the terms indicated above.
|
|
|
|
|
|
|
|
|
/s/ Nirmal K. Tripathy
|
|
|
Nirmal K. Tripathy |
|
|
|
|
|
The Company agrees to the terms
hereinabove specified, effective as of
the date of this letter agreement.
THE TJX COMPANIES, INC.
BY: /s/ Jeffrey G. Naylor
Jeffrey G. Naylor
Exhibit A
RELEASE OF CLAIMS
FOR AND IN CONSIDERATION OF the payments to be made to me in connection with the termination
of my employment as described in the letter agreement between me and The TJX Companies, Inc. (the
Company) dated January 23, 2009 (the Resignation Letter), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, I, Nirmal Tripathy, on
my own behalf and on behalf of my heirs, executors, administrators, personal representatives, and
assigns and all others connected with or claiming through me, hereby remise, release and forever
discharge the Company, together with its affiliates, its predecessors and successors, each of its
past, present and future officers, directors, employees, representatives, attorneys, insurers,
agents and assigns, individually and in their official capacities (individually and collectively,
the Releasees), from any and all causes of action, rights and claims of any type or description,
known or unknown, which I have had in the past, now have, or might now have, through the date of my
signing of this Release of Claims, including without limitation any causes of action, rights or
claims in any way resulting from, arising out of or connected with my employment by the Company or
the termination of that employment or pursuant to any federal, state or local law, regulation or
other requirement (including without limitation Title VII of the Civil Rights Act of 1964, the
Employee Retirement Income Security Act, the Age Discrimination in Employment Act, the Americans
with Disabilities Act, and the fair employment practices laws of the state or states in which I
have been employed by the Company, each as amended from time to time), together with any claims to
equity, options acceleration or compensation of any kind other than as set forth in the Resignation
Letter. This Release of Claims does not affect my vested rights under any employee pension plan or
release any claim arising after the effective date of the Resignation Letter.
In signing this Release of Claims, I acknowledge that I have read and understand each of its
provisions; that my signing of this Release of Claims is knowing and voluntary; that I have been
afforded an opportunity of at least twenty-one (21) days to consider its terms; that I was
encouraged by the Company to consult with an attorney prior to executing this Release of Claims and
that I have, in fact, consulted with an attorney prior to signing this Release of Claims; and that,
in signing this Release of Claims, I have not relied on any promises or representations, express or
implied, that are not set forth expressly in the Resignation Letter.
I understand that I may revoke this Release of Claims at any time within seven (7) days of the
date of my signing by written notice to the Company and that this Release of Claims will take
effect only upon the expiration of such seven-day revocation period and only if I have not timely
revoked it.
Intending to be legally bound, I have set my hand and seal on the date written below.
Signature: /s/ Nirmal K. Tripathy
Dated: January 28, 2009
exv10w9
Exhibit 10.9
FORM OF 409A AMENDMENT
[TJX Companies, Inc. Letterhead]
December ___, 2008
The TJX Companies, Inc.
770 Cochituate Road
Framingham, MA 01701
|
|
|
Re: |
|
Amendment to Employment Agreement |
Dear:
Reference is made to the employment agreement between you and The TJX Companies, Inc. (TJX)
dated as of ___ (the Agreement). In order that the Agreement comply in form with
applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended, the
following changes to the Agreement are hereby proposed:
1. In Section 1, add the following sentence: This Agreement is intended to comply with the
applicable requirements of Section 409A and shall be construed accordingly.
2. In Section 4, revise subsection (b) to read as follows: Executives employment shall
terminate upon written notice by the Company to Executive (or, if earlier, to the extent consistent
with the requirements of Section 409A, upon the expiration of the twenty-nine (29)-month period
commencing upon Executives absence from work) if, by reason of Disability, Executive is unable to
perform his duties for at least six continuous months. Any termination pursuant to this Section
4(b) shall be treated for purposes of Section 5 and the definition of Change of Control
Termination at subsection (f) of Exhibit A as a termination by reason of Disability.
3. In Section 5, revise the first sentence of subsection (a) to read as follows: If the
Employment Period shall have terminated prior to the End Date by reason of (i) the death or
Disability of Executive, (ii) termination by the Company for any reason other than Cause or (iii)
termination by Executive in the event that Executive is relocated more than forty (40) miles from
the current corporate headquarters of the Company without his prior written consent, then all
compensation and benefits for Executive shall be as follows:.
4. In Section 5(a), revise clause (i) to read in its entirety as follows:
(i) For a period of ___months after the Date of Termination (the
termination period), the Company will pay to Executive or his legal representative,
without reduction for compensation earned from other employment or self employment,
continued Base Salary at the rate in effect at termination of employment in accordance with
its regular payroll practices for executive employees of the Company (but not less
frequently than monthly); provided, that if Executive is a Specified Employee at the
relevant time, the Base Salary that would otherwise be payable during the six-month period
beginning on the date of Executives termination shall instead be accumulated and paid,
without interest, in a lump sum on the date that is six (6) months and one day after such
date (or, if earlier, the date of Executives death);
and further provided, that if Executive is eligible for long-term disability compensation
benefits under the Companys long-term disability plan, the amount payable under this clause
shall be paid at a rate equal to the excess of (a) the rate of Base Salary in effect at
termination of employment, over (b) the long-term disability compensation benefits for which
Executive is approved under such plan.
5. In Section 5(a)(iv), revise the first sentence by replacing death, Disability or
Incapacity with death or Disability, and revise the second and third sentences to read in their
entirety as follows:
The amount, if any, described in clause (a)(iv)(A) above will be paid as soon as
practicable after (and not before) the close of the companys fiscal year in which
termination occurs but in no event later than by the 15th day of the third month
following the close of such year. The amount, if any, described in clause (a)(iv)(B) above,
to the extent measured by the LRPIP Target Award for any cycle, will be paid as soon as
practicable after (and not before) the close of the last of the companys fiscal years in
such cycle but in no event later than by the 15th day of the third month
following the close of such year; provided, that if Executive is a Specified Employee at the
relevant time, the amounts described in this sentence and the preceding sentence shall be
paid not sooner than six (6) months and one day after termination.
6. In Section 5(a), revise clause (vi) by deleting the words Incapacity or in the first
line.
7. In Section 5(a), revise clause (vii) to read in its entirety as follows:
(vii) If termination occurs by reason of death or Disability, Executive shall also be
entitled to an amount equal to Executives MIP Target Award for the year of termination,
without proration. This amount will be paid at the same time as the amount payable under
Section 5(a)(iv)(A) above.
8. Revise Section 5(a)(viii) by adding at the end thereof the following language: which shall
be added to the amounts otherwise payable under Section 5(a)(i) above during the continuation of
such coverage but not beyond the end of the termination period.
9. Revise Section 7 by adding at the end thereof the following language: ; provided, for the
avoidance of doubt, that the provisions of Section 12 of this Agreement shall also apply to the
determination and payment of any payments or benefits pursuant to Exhibit C.
10. In Section 12, (i) revise subsection (b) to read as follows: to the extent any payment
hereunder that is payable by reason of termination of Executives employment constitutes
nonqualified deferred compensation subject to Section 409A and would otherwise have been required
to be paid during the six (6)-month period following such termination of employment, it shall
instead (unless at the relevant time Executive is no longer a Specified Employee) be delayed and
paid, without interest, in a lump sum on the date that is six (6) months and one day after
Executives termination (or, if earlier, the date of Executives death)., and (ii) revise the last
sentence to read as follows: The parties hereto acknowledge that in addition to any delay required
under Section 12(b), it may be desirable, in view of regulations or other guidance issued under
Section 409A, to amend provisions of this Agreement to avoid the acceleration of tax or the
imposition of additional tax under Section 409A and that the Company will not unreasonably withhold
its consent to any such amendments which in its determination are (i) feasible and necessary to
avoid adverse tax consequences under Section 409A for Executive, and (ii) not adverse to the
interests of the Company..
11. Renumber existing Section 15 as Section 16 and insert a new Section 15 to read in its
entirety as follows:
15. TERMINATION OF EMPLOYMENT AND SEPARATION FROM SERVICE. All references in the Agreement to
termination of employment, a termination of the Employment Period, or separation from service, and
correlative terms, that result in the payment or vesting of any amounts or benefits that constitute
nonqualified deferred compensation within the meaning of Section 409A shall be construed to
require a Separation from Service, and the Date of Termination in any such case shall be construed
to mean the date of the Separation from Service.
12. In Exhibit A, revise the last paragraph of subsection (c) by adding to the end thereof the
following sentence: The Company shall exercise its discretion under this paragraph consistent with
the requirements of Section 409A.
13. In Exhibit A, redesignate subsections (e) et seq. as subsections (f) et seq. and insert a
new subsection (e) to read in its entirety as follows:
(e) Change in Control Event means a change in control event (as that term is defined in
section 1.409A-3(i)(5) of the Treasury Regulations under Section 409A) with respect to the
Company.
14. In Exhibit A, revise subsection (j) (as previously redesignated pursuant to paragraph 13
above) to read as follows:
(j) Disabled/Disability means a medically determinable physical or mental impairment that
(i) can be expected either to result in death or to last for a continuous period of not less than
six months and (ii) causes Executive to be unable to perform the duties of his position of
employment or any substantially similar position of employment to the reasonable satisfaction of
the Committee.
15. In Exhibit A, redesignate subsections (r) et seq. (as previously redesignated pursuant to
paragraph 12 above) as subsections (s) et seq. and insert a new subsection (r) to read in its
entirety as follows:
(r) Separation from Service shall mean a separation from service (as that term is defined
at Section 1.409A-1(h) of the Treasury Regulations under Section 409A) from the Company and from
all other corporations and trades or businesses, if any, that would be treated as a single service
recipient with the Company under Section 1.409A-1(h)(3) of such Treasury Regulations. The
Committee may, but need not, elect in writing, subject to the applicable limitations under Section
409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury
Regulations for purposes of determining whether a separation from service has occurred. Any such
written election shall be deemed part of the Agreement.
16. In Exhibit A, redesignate subsections (t) et seq. (as previously redesignated pursuant to
paragraphs 13 and 15 above) as subsections (u) et seq. and insert a new subsection (t) to read in
its entirety as follows:
(t) Specified Employee shall mean an individual determined by the Committee or its delegate
to be a specified employee as defined in subsection (a)(2)(B)(i) of Section 409A. The Committee
may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any
of the special elective rules prescribed in Section 1.409A-1(i) of the Treasury Regulations for
purposes of determining specified employee status. Any such written election shall be deemed
part of the Agreement.
17. In Exhibit C, revise the portion of subsection (a) of Section C.1 that precedes clause
(ii)(A) to read as follows:
(a) The Company shall pay to Executive following a Change of Control Termination:
(i)(A) as hereinafter provided, an amount equal to two times his Base Salary for one
year at the rate in effect immediately prior to the Date of Termination or the Change of
Control, whichever is higher, plus (B) within thirty (30) days following the Change in
Control Termination, the accrued and unpaid portion of his Base Salary through the Date of
Termination, subject to the following. If Executive is eligible for long-term disability
compensation benefits under the Companys long-term disability plan, the amount payable
under (A) shall be reduced by the annual long-term disability compensation benefit for which
Executive is eligible under such plan for the two-year period over which the amount payable
under (A) is measured. If for any period Executive receives long-term disability
compensation payments under a long-term disability plan of the Company as well as payments
under the first sentence of this subsection (a), and if the sum of such payments (the
combined Change of Control/disability benefit) exceeds the payment for such period to
which Executive is entitled under the first sentence of this subsection (a) (determined
without regard to the second sentence of this subsection (a)), he shall promptly pay such
excess in reimbursement to the Company; provided, that in no event shall application of this
sentence result in reduction of Executives combined Change of Control/disability benefit
below the level of long-term disability compensation payments to which Executive is entitled
under the long-term disability plan or plans of the Company
(ii) as hereinafter provided, and in lieu of any other benefits under SERP, an amount
equal to the present value of the payments that Executive would have been entitled to
receive under SERP as a Category B or C participant, whichever is greater, applying the
following rules and assumptions:
18. In Exhibit C, revise subsection (a) of Section C.1 by adding the following new text at the
end of the subsection:
If the Change of Control Termination occurs in connection with a Change of Control that is
also a Change in Control Event, the amounts described in clause (i)(A) and clause (ii) of
this Section C.1.(a) shall be paid in a lump sum on the date that is six (6) months and one
day following the date of the Change of Control Termination (or, if earlier, the date of
Executives death), unless the Executive is not a Specified Employee on the relevant date,
in which case the amount described in this subsection (a) shall instead be paid thirty (30)
days following the date of the Change of Control Termination. If the Change of Control
Termination occurs in connection with a Change of Control that is not a Change in Control
Event, the amounts described in clause (i)(A) and clause (ii) of this Section C.1.(a) shall
be paid, except as otherwise required by Section 12 of the Agreement, in the same manner as
they would have been paid in the case of a termination by the Company other than for Cause
under Section 5(a).
19. In Exhibit C, revise subsection (c) of Section C.1 to read in its entirety as follows:
(c) On the date that is six (6) months and one day following the date of the Change of
Control Termination (or, if earlier, the date of Executives death), the Company shall pay
to Executive or his estate, in lieu of any automobile allowance, the present value of the
automobile allowance (at the rate in effect prior to the Change of Control (or immediately
prior to the Date of Termination if greater)) it would have paid for the two years following
the Change of Control Termination (or
until the earlier date of Executives death, if Executive dies prior to the date of the
payment under this Section C.1(c)); provided, that if the Change of Control is not a Change
of Control Event, such amount shall instead be paid in the same manner as Executives
automobile allowance would have been paid in the case of a termination by the Company other
than for Cause under Section 5(a); and further provided, that if Executive is not a
Specified Employee on the relevant date, any lump sum payable under this Section C.1(c)
shall instead by paid within thirty (30) days following the Change of Control Termination.
20. In Exhibit C, revise Section C.2 by inserting that is also a Change of Control Event
after Within thirty (30) days following a Change of Control.
21. In Exhibit C, revise Section C.3 by (i) adding at the beginning thereof the following
language: In the event that a gross-up payment is payable to Executive under this Section C.3, the
Company will provide Executive with such payment, if it is feasible to do so, contemporaneously
with the underlying payment or benefit giving rise to the gross-up, or otherwise as soon as
practicable thereafter; provided, that in no event shall such payment be made later than by the end
of the calendar year following the calendar year in which the Excise Tax is paid.; and (ii)
removing the following language from the second sentence of such Section: ; provided, that to the
extent any gross-up payment would be considered deferred compensation for purposes of Section
409A of the Code, the manner and time of payment, and the provisions of this Section C.3, shall be
adjusted to the extent necessary (but only to the extent necessary) to comply with the requirements
of Section 409A with respect to such payment so that the payment does not give rise to the interest
or additional tax amounts described at Section 409A(a)(1)(B) or Section 409A(b)(4) of the Code (the
Section 409A penalties); and further provided, that if, notwithstanding the immediately preceding
proviso, the gross-up payment cannot be made to conform to the requirements of Section 409A of the
Code, the amount of the gross-up payment shall be determined without regard to any gross-up for the
Section 409A penalties
22. In Exhibit C, revise subsection (c) of Section C.5 by adding the following sentence to the
end thereof: All payments and reimbursements under this Section shall be made consistent with the
applicable requirements of Section 409A.
If the foregoing proposed changes to the Agreement are acceptable to you, please so indicate
in the space indicated below, whereupon the Agreement shall be so amended effective as of January
1, 2008.
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THE TJX COMPANIES, INC. |
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Agreed:
NOTE: This Form of 409A Amendment to employment agreements with named executive officers and other
executives is modified as required to reflect the terms of each individuals benefit entitlements
under his or her existing Employment Agreement with the Company, including, but not limited to,
entitlement to benefits under the Companys Supplemental Executive Retirement Plan as a Category B
Participant.
exv10w10
Exhibit 10.10
THE TJX COMPANIES, INC.
MANAGEMENT INCENTIVE PLAN
409A Amendment
Pursuant to Section 17 of The TJX Companies, Inc. Management Incentive Plan (as amended, the
Plan), the Plan is hereby amended effective January 1, 2008 as follows:
1. A new Section 2(j) is hereby added to read in its entirety as follows:
Section 409A shall mean Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
2. A new sentence is hereby inserted between the first and second sentences of the second paragraph
of Section 7(c), which sentence shall read in its entirety as follows:
Notwithstanding the foregoing, no participant will be deemed to have a nonforfeitable right to
payment of any prorated Award until the end of such Performance Period, and then only to the extent
provided under the terms of such award.
3. A new sentence is hereby added to the end of second paragraph of Section 7(d), which sentence
shall read in its entirety as follows:
Notwithstanding the foregoing, no participant will be deemed to have a nonforfeitable right to
payment of any prorated Award until the end of such Performance Period, and then only to the extent
provided under the terms of such award.
4. Section 8 is hereby amended to read in its entirety as follows:
As soon as practicable after the end of each Performance Period and the valuation of the award for
such Performance Period, but in no event later than two and one-half (21/2) months after the later of
the end of the calendar year or the fiscal year of the Company in which such Performance Period
ends, payment (including, for the avoidance of doubt, any prorated payment made pursuant to
Sections 7(c) and 7(d)) shall be made in cash with respect to the award earned by each Participant
for such Performance Period. Any such payment shall be subject to applicable withholding as set
forth in Section 16 below. Payments hereunder are intended to constitute short-term deferrals
exempt from Section 409A and shall be construed and administered accordingly.
5. Section 9 is hereby amended to read in its entirety as follows:
Participants who are designated by the E.C.C. as being eligible to participate in the TJX General
Deferred Compensation Plan or the Executive Savings Plan may elect under such plan to defer all or
a portion of their awards solely to the extent (1) permitted under the terms of the General
Deferred Compensation Plan and the Executive Savings Plan at the time a deferral election with
respect to amounts otherwise payable hereunder is required to be irrevocably made under the terms
of such plans, and (2) consistent with the requirements of Section 409A. If a Participant has an
effective salary reduction agreement in place under the Companys General Savings/Profit Sharing
Plan, any similar U.S. tax-qualified pension plan, or any pension or retirement plan maintained
outside the U.S. for the benefit of any employees of the Company, amounts will be withheld from any
payment made hereunder to the extent, and solely to the extent, provided in such plan and
consistent with the requirements, to the extent applicable, of Section 409A.
IN WITNESS WHEREOF, The TJX Companies, Inc. has caused this Amendment to be executed in its name
and behalf by its officer thereunto duly authorized.
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THE TJX COMPANIES, INC. |
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/s/ Jeffrey G. Naylor |
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Dated:
December 19, 2008
exv10w16
Exhibit 10.16
THE TJX COMPANIES, INC.
LONG RANGE PERFORMANCE INCENTIVE PLAN
409A Amendment
Pursuant to Section 12 of The TJX Companies, Inc. Long Range Performance Incentive Plan (as
amended, the Plan), the Plan is hereby amended effective January 1, 2008 as follows:
1. A new sentence is hereby inserted between the first and second sentences of the second paragraph
of Section 7(c), which sentence shall read in its entirety as follows:
Notwithstanding the foregoing, no participant will be deemed to have a nonforfeitable right to
payment of any prorated Award until the end of such Performance Cycle, and then only to the extent
provided under the terms of such Award.
2. A new sentence is hereby added to the end of second paragraph of Section 7(d), which sentence
shall read in its entirety as follows:
Notwithstanding the foregoing, no participant will be deemed to have a nonforfeitable right to
payment of any prorated Award until the end of such Performance Cycle, and then only to the extent
provided under the terms of such Award.
3. A new sentence is hereby inserted between the first and second sentences of Section 8, which
sentence shall read in its entirety as follows:
Notwithstanding the foregoing, no participant will be deemed to have a nonforfeitable right to
payment of any prorated Award until the end of such Performance Cycle, and then only to the extent
provided under the terms of such Award.
4. A new Section 8A is hereby added to read in its entirety as follows:
8A. Payment
As soon as practicable after the end of each Performance Cycle and the valuation of the award for
such Performance Cycle, but in no event later than two and one-half (21/2) months after the later of
the end of the calendar year or the fiscal year of the Company in which such Performance Period
ends, payment (including, for the avoidance of doubt, any prorated payment made pursuant to
Sections 7(c) and 7(d) and Section 8) shall be made in cash with respect to the award earned by
each Participant for such Performance Cycle. Any such payment shall be subject to applicable
withholding as set forth in Section 16 below. Payments hereunder are intended to constitute
short-term deferrals exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder and shall be construed and administered accordingly.
IN WITNESS WHEREOF, The TJX Companies, Inc. has caused this Amendment to be executed in its name
and behalf by its officer thereunto duly authorized.
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THE TJX COMPANIES, INC. |
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/s/ Jeffrey G. Naylor |
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Chief Administrative Officer |
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Dated:
December 19, 2008
exv10w17
Exhibit 10.17
THE TJX COMPANIES, INC.
GENERAL DEFERRED COMPENSATION PLAN
Fifth Amendment
Pursuant to Section 7(E) of The TJX Companies, Inc. General Deferred Compensation Plan (1998
Restatement) (the Plan), The TJX Companies, Inc. hereby amends the Plan as follows:
1. Section 1 is hereby amended to add the following language to the end of such Section:
The Plan was previously divided into two plans: the legacy The TJX Companies, Inc. General
Deferred Compensation Plan (1998 Restatement) as in effect on October 3, 2004 (the Grandfathered
Plan) and The TJX Companies, Inc. 409A General Deferred Compensation Plan (the 409A Plan).
All benefits accrued and vested as of December 31, 2004 and not materially modified after
October 3, 2004, plus notional earnings thereon (the Grandfathered Benefit Amount) shall be
grandfathered for purposes of Code Section 409A and shall be governed by The TJX Companies, Inc.
General Deferred Compensation Plan as it was in effect on October 3, 2004. The Grandfathered Plan
is frozen as of December 31, 2004. No additional benefit shall accrue after December 31, 2004
under the Grandfathered Plan (except, for the avoidance of doubt, the continued deferral of any
previously deferred Grandfathered Benefit Amounts) and no individual not a Participant as of
December 31, 2004 shall thereafter become a Participant in the Grandfathered Plan. The
Grandfathered Plan has not been materially modified after October 3, 2004.
For purposes of administering accounts attributable to deferrals under the 409A Plan, to the
extent such deferrals and related interest credits have not been distributed prior to January 1,
2009, the rules of The TJX Companies, Inc. Executive Savings Plan (as amended to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended, (including the
regulations and other applicable guidance thereunder, the Code)) (ESP), including, for the
avoidance of doubt, the time and form of payment rules of Articles 5 and 6 of the ESP, shall apply
as though such deferrals had been credited to a Basic Deferral Account under the ESP; provided,
that the portion of any such account attributable to deferrals under the 409A Plan shall continue
to be credited with notional interest (as from time to time adjusted) in accordance with the same
rules as those that apply under Section 5(B) of the Grandfathered Plan instead of being
adjusted for notional investment experience pursuant to Article 4 of the ESP; and further provided,
that no such amount shall be treated as an Eligible Deferral under the ESP and no Employer
Credits shall be credited with respect to any such amount under the ESP.
Participation in the 409A Plan was frozen effective December 31, 2007 and no new deferrals of
any Eligible Compensation shall be permitted under the 409A Plan (except, for the avoidance of
doubt, the continued deferral of any previously deferred amounts consistent with Code Section 409A)
after April 30, 2008.
IN WITNESS WHEREOF, The TJX Companies, Inc. has caused this instrument of amendment to be
executed in its name and on its behalf by its duly authorized officer
this 18th day of December, 2008.
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THE TJX COMPANIES, INC. |
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By: |
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/s/ Gregory R. Flores |
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By: |
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/s/ Jeffrey G. Naylor |
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exv10w18
Exhibit 10.18
THE TJX COMPANIES, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(2008 Restatement)
Article 1. Introduction
1.1. In General. The Supplemental Executive Retirement Plan, established in 1981, was
amended and restated in 1984 and 1992 and was subsequently further amended and restated in 2005
inter alia to conform the Plan to the requirements of Section 409A, including the transition rules
and exemptive relief provisions thereunder. The amendment and restatement of the Plan set forth
herein is effective as of January 1, 2008 and is intended inter alia to conform the Plan to the
final regulations issued under Section 409A and shall be construed consistent with that intent.
The terms of the Plan as so amended and restated shall apply to all benefits that become payable to
a Key Employee under the Plan on or after January 1, 2008. Benefits that became payable to an Key
Employee under the Plan on or after January 1, 2005 and on or before December 31, 2007 shall be
determined and administered consistent with the provisions of the Plan as amended and restated in
2005, consistent with a good faith, reasonable interpretation of Section 409A, its legislative
history and then-existing guidance. Notwithstanding the foregoing, neither the Company nor any of
its officers or directors, nor any other person charged with administrative responsibilities under
the Plan, shall be liable to any employee or former employee of the Company, or to any spouse or
other beneficiary of any such employee or former employee, by reason of the failure of any benefit
hereunder to comply with the requirements of Section 409A.
For the avoidance of doubt, in the case of any Key Employee who as of December 31, 2008 is
party to an employment agreement with the Company or any subsidiary thereof that provides for the
payment of such Key Executives vested benefit in the form of a lump sum following a separation
from service following a separation from service following a change in control, payment of the Key
Employees vested benefit in such circumstances shall be so
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determined and paid (whether or not the employment agreement remains in effect) unless the
form and timing thereof is changed consistent with the rules prescribed under Section 409A of the
Code.
1.2. Purpose. The purpose of the amended and restated Plan set forth herein is to
provide certain designated employees with retirement benefits supplemental to those payable under
the Companys tax-qualified retirement plans.
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Article 2. Definitions
2.1. Average Compensation shall mean the average of the Key Employees Compensation over the
five (5) full calendar years yielding the highest such average and occurring during the last ten
(10) calendar years prior to the earlier of the Key Employees attainment of age 65 or separation
from service with the Company. In the case of a Key Employee who becomes disabled as defined in
the Companys long-term disability plan, Average Compensation shall be determined on the basis of
the five (5) full calendar years yielding the highest such average and occurring during the last
ten (10) calendar years of the Key Employees employment with the Company prior to commencement of
benefits under the Companys long-term disability plan. If the Key Employee has not completed five
full calendar years of employment prior to the commencement of benefits under the Companys
long-term disability plan, Average Compensation shall be based on the number of full calendar years
he or she was employed by the Company prior to the commencement of such benefits.
2.2. Beneficiary shall mean a beneficiary entitled to receive certain death benefits under
the Plan who has been designated as such by the Key Employee in writing in a form and manner
acceptable to the Committee.
2.3. Code shall mean the Internal Revenue Code of 1986, as the same presently exists and as
the same may hereafter be amended, or any successor statute of similar purpose. References to
specific sections of the Code shall be considered references to identifiable similar provisions of
successor statutes.
2.4. Committee shall mean the Executive Compensation Committee of the Board of Directors of
The TJX Companies, Inc.
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2.5. Company shall mean The TJX Companies, Inc. and any wholly-owned subsidiaries; provided,
in determining whether an individual has separated from the service of the Company, Company shall
include The TJX Companies, Inc. and all other corporations and trades or businesses, if any, that
would be treated as a single service recipient with the Company under Section 1.409A-1(h)(3) of
such Treasury Regulations and separation from service shall mean a separation from service (as
that term is defined at Section 1.409A-1(h) of the Treasury Regulations under Section 409A). The
Committee may, but need not, elect in writing, subject to the applicable limitations under Section
409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury
Regulations for purposes of determining whether a separation from service has occurred. Any such
written election shall be deemed part of the Plan.
2.6. Compensation shall mean, for any calendar year, a Key Employees actual base salary
earned and any short-term incentives awarded during the calendar year (before taking into account
any reduction in base salary or short-term incentives pursuant to a salary reduction agreement
under Section 401(k) or Section 125 of the Code). Any base salary or short-term incentives that
are deferred under The TJX Companies, Inc. General Deferred Compensation Plan or The TJX Companies,
Inc. Executive Savings Plan shall be included as Compensation for the calendar year in which the
salary is earned or short-term incentives are awarded but not included for the calendar year in
which such deferred compensation is paid. By way of example and not by way of limitation,
Compensation shall not include employer contributions to The TJX Companies, Inc. Retirement Plan,
Matching Contributions under The TJX Companies, Inc. General Savings/Profit Sharing Plan, or any
amounts credited to the Employer Credit Account under The TJX Companies, Inc. Executive Savings
Plan; income or gains resulting from the
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receipt, sale, exchange, exercise or other disposition of stock or stock options, awards and
benefits, including stock appreciation rights, under The TJX Companies, Inc. Stock Incentive Plan
or any other long-term incentive plan of the Company; expense reimbursements or payments in lieu of
expense reimbursement; auto allowances, financial counseling fees, tuition reimbursements or the
value of other fringe benefits provided by the Company or any other employer (even if wholly or
partially currently taxable as income to the Key Employee); or employer contributions to Social
Security made by the Company or another employer on behalf of the Key Employee.
2.7. Deferred Compensation Amount shall mean any income deferred under The TJX Companies,
Inc. General Deferred Compensation Plan or the TJX Companies, Inc. Executive Savings Plan which (i)
but for the deferral would be included in the definition of Compensation under The TJX Companies,
Inc. Retirement Plan (without regard to the limitations described in Code Section 401(a) (17)) and
(ii) is paid to the Key Employee after he or she retires or terminates. For the avoidance of
doubt, Deferred Compensation Amounts shall be disregarded to the extent (as determined by the
Committee in its sole discretion) the reduction in the Article 7 formula benefit under The TJX
Companies, Inc. Retirement Plan attributable to the non-inclusion in Compensation described in
clause (i) above of such Amounts is offset by any benefit under The TJX Companies, Inc. Retirement
Plan that is supplemental to the formula benefit described in Article 7 thereof.
2.8. Disability means a medically determinable physical or mental impairment that (i) can be
expected either to result in death or to last for a continuous period of not less than six months
and (ii) causes a Key Employee to be unable to perform the duties of his or her position
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of employment or any substantially similar position of employment to the reasonable
satisfaction of the Committee.
2.9. Executive Savings Plan Benefit shall mean an annual benefit computed by converting the
value of the Key Employees Employer Credit Account under The TJX Companies, Inc. Executive Savings
Plan to a life annuity commencing at age 65. The Committee shall determine the actuarial factors
used in converting the Employer Credit Account to a life annuity.
2.10. Interest Rate shall mean the Interest Rate as in effect at the relevant time under
The TJX Companies, Inc. General Deferred Compensation Plan (or, if at such time there is no such
rate in effect under The TJX Companies, Inc. General Deferred Compensation Plan, the rate then used
under The TJX Companies, Inc. Retirement Plan for determining lump-sum actuarial equivalency). If
at the relevant determination date The TJX Companies, Inc. Retirement Plan no longer exists or no
longer provides for lump sum actuarial equivalency determinations, the Committee shall apply a
reasonable interest rate consistent with Section 1-409A-1(o) of the Treasury Regulations.
2.11. Key Employee shall mean a Category A Key Employee, Category B Key Employee or Category
C Key Employee as determined pursuant to Article 3.
2.12. Plan shall mean The TJX Companies, Inc. Supplemental Executive Retirement Plan (2008
Restatement) as set forth in this document, including any and all amendments hereto and
restatements hereof.
2.13. Primary Social Security Benefit shall mean the annual primary insurance amount to
which the Key Employee is entitled or would, upon application therefor, become entitled at age 65
under the provisions of the Federal Social Security Act as in effect on the Key
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Employees termination date assuming that the Key Employee will have no income after
termination which would be treated as wages for purposes of the Social Security Act.
2.14. Retirement Agreement shall mean an individual agreement between a Category A Key
Employee and the Company providing for supplemental executive retirement benefits.
2.15. Retirement Plan Benefit shall mean the annual benefit payable at age 65 under The TJX
Companies, Inc. Retirement Plan on a life annuity basis.
2.16. Savings/Profit Sharing Plan Benefit shall mean an annual benefit computed by
converting the value of the Key Employees Matching Contribution Account payable under The TJX
Companies, Inc. General Savings/Profit Sharing Plan to a life annuity commencing at age 65. The
Committee shall determine the actuarial factors used in converting the Matching Contribution
Account to a life annuity.
2.17. Section 409A shall mean Section 409A of the Code.
2.18. Years of Service shall mean the total completed years and months of a Key Employees
uninterrupted service with the Company from the date that the Key Employees commences employment
with the Company until the earliest of termination of employment, retirement or age 65. A leave of
absence approved by the Company shall not constitute an interruption of service but the period of
such absence shall be excluded from Years of Service for all purposes under the Plan.
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Article 3. Key Employees
3.1. Designation of Key Employees. An employee or retired former employee of the
Company shall be a Key Employee if, and only if, designated as such by the Committee, except that
designation as a Category C Key Employee shall be automatic (based on the application of specified
limits as described in Section 3.4 below) except as the Committee may limit eligibility for such
benefits. Subject to Section 409A, the most recent Category to which such Key Employee is
assigned determines the nature of the benefits to which he or she may become entitled under this
Plan.
3.2. Category A Key Employee. Only the following shall be treated as having been
designated as Category A Key Employees: (i) an executive employee of the Company who has a
Retirement Agreement that refers directly to benefits payable under this Plan, or (ii) any other
employee with a Retirement Agreement who is designated as a Category A Key Employee. For the
avoidance of doubt, as of January 1, 2008, the Company did not have, and during calendar 2008 the
Company did not become a party to, any Retirement Agreements with any employees, except insofar as
the Companys employment agreements with key officers (each, an Employment Agreement) could be
construed as Retirement Agreements. For the avoidance of doubt, any executive employee of the
Company who has an Employment Agreement with the Company and who is eligible for benefits under
this Plan shall be considered a Category B Key Employee or a Category C Key Employee, as
applicable, except as otherwise expressly provided in such Employment Agreement.
3.3. Category B Key Employee. A Category B Key Employee is a key employee of the
Company who has been designated by the Committee as eligible to receive the benefits provided under
Article 5 of this Plan. If, however, at the time a Category B Key Employee
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retires or otherwise terminates employment, the benefit under Article 6 of this Plan would
provide a greater benefit to such Key Employee than the benefit provided under Article 5 of this
plan, then such Key Employee will be deemed designated a Category C Key Employee and will receive
the benefit provided under Article 6 in lieu of that provided under Article 5.
3.4. Category C Key Employee. A Category C Key Employee is an employee of the Company
with a fully vested right to benefits under The TJX Companies, Inc. Retirement Plan whose benefits
under that plan are limited by reason of (i) the operation of the limitation provisions of Section
401(a) (17) or Section 415 of the Code, and/or (ii) the deferral of certain income which, but for
the deferral, would be included in the definition of Compensation under The TJX Companies, Inc.
Retirement Plan.
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Article 4. Category A Key Employee Benefit
4.1. Category A Key Employee Benefit. Each present or future Category A Key Employee
(and, where so provided in the individual Retirement Agreements between the Company and such Key
Employee, the surviving spouse or other beneficiary(ies) of such Key Employee) shall receive the
benefit provided under the Retirement Agreement with such Key Employee under the terms and subject
to the limitations set forth in said Retirement Agreement, which, to the extent consistent with
Section 409A, is incorporated herein by reference.
-11-
Article 5. Category B Key Employee Benefit
5.1. Requirement for a Benefit. Each Category B Key Employee retiring at or after age
55 with 10 or more Years of Service shall be entitled to receive a supplemental retirement benefit
under this Article 5.
5.2. Benefit Formula. The benefit payable at age 65 to a Category B Key Employee who
qualifies for a benefit under Sections 5.1 and who separates from the service of the Company at or
prior to attaining age 65, when expressed as a monthly benefit payable as a life annuity for the
life of the Category B Key Employee commencing at age 65 (the tentative life annuity), shall be
one-twelfth (1/12) of the product of (a) and (b), such product offset (reduced) by the sum of (c),
(d) , (e) and (f), where:
|
(a) |
|
is two and one-half percent (21/2%) of the Key Employees Average
Compensation, |
|
|
(b) |
|
is the number of Years of Service completed by the Key
Employee, up to a maximum of twenty (20) such Years, |
|
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(c) |
|
is the Key Employees annual Retirement Plan Benefit, |
|
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(d) |
|
is the Key Employees annual Savings/Profit Sharing Plan
Benefit, |
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(e) |
|
is the Key Employees annual Executive Savings Plan Benefit,
and |
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|
(f) |
|
is the Key Employees annual Primary Social Security Benefit. |
The lump-sum actuarial equivalent of such tentative life annuity (the tentative lump sum amount),
determined in accordance with the rules prescribed in Section 7.2(c) as of the date the Category B
Key Employee separates from service, shall be increased for six months worth of interest at the
Interest Rate in effect at separation from service and thereafter, if payment is delayed pursuant
to Section 5.3 or pursuant to Section 7.2(b)(iii) by reason of a change in
-12-
payment election under Section 7.2(b)(ii), at the rate from time to time in effect until the
applicable determination date for the benefit payable to the Category B Key Employee.
5.3. Separation From Service After Age 65. In the case of each Category B Key
Employee who at age 65 has not yet separated from service with the Company, there shall be
determined (consistent with the rules set forth in Section 7.2(c)), as of the date the Category B
Key Employee attains age 65, an opening lump sum balance equal to the tentative lump sum amount
that would have been determined under Section 5.2 had such Category B Key Employee separated from
service at age 65. Between the date such Category B Key Employee attains age 65 and the date that
follows the Category B Key Employees later separation from service by six (6) months (or any later
payment date determined under Section 7.2(b)(iii)), the opening lump sum balance shall be adjusted
for interest at the Interest Rate from time to time in effect during such period. The actuarial
equivalent of such adjusted lump sum amount, expressed in the applicable form of payment, shall be
paid as determined in accordance with Article 7.
5.4. Death Benefit. Death benefits shall be payable only to the extent provided in
this Section 5.4:
|
(i) |
|
If a Category B Key Employee dies after having become entitled
to a benefit as set forth in Section 5.1 and after separating from service, but
prior to the payment or commencement of such benefit, there shall be paid to
the Category B Key Employees Beneficiary, or if there is no Beneficiary
surviving, to the Category B Key Employees surviving spouse, if any, or
otherwise to the Category B Key Employees estate, in each case at or as soon
as practicable after the decedents death, a lump sum equal to the lump sum
benefit that would then have been payable to |
-13-
|
|
|
the Category B Key Employee had the Category B Key Employee been entitled to
payment on such date. |
|
(ii) |
|
If a Category B Key Employee dies after having satisfied the
age and service requirements set forth in Section 5.1 but before separating
from service, his or her surviving spouse, if any, will be entitled to receive,
as soon as practicable following the Category B Key Employees death, a lump
sum payment that is the actuarial equivalent of the survivor benefit that would
have been payable to the spouse on account of the Key Employees death if the
Key Employee had separated from service and commenced receiving benefits on the
day six months following his or her death in a 50% joint and survivor annuity
form (that is, in a form under which the Key Employee would have received a
reduced pension upon retirement and upon such Key Employees death one-half of
such reduced benefit would have been payable to the Key Employees spouse).
Actuarial equivalency for this purpose shall be determined using an interest
assumption equal to the Interest Rate in effect at the time of the Category B
Key Employees death and the same mortality assumption as is then used under
The TJX Companies, Inc. Retirement Plan. If at the relevant determination date
The TJX Companies, Inc. Retirement Plan no longer exists or no longer provides
for lump sum actuarial equivalency determinations, the Committee shall apply
reasonable actuarial assumptions consistent with Section 1-409A-1(o) of the
Treasury Regulations. |
-14-
|
(iii) |
|
If the Category B Key Employee survives until the commencement
of benefit payments hereunder but dies before the completion of such payments,
then (A) if the benefit was payable in five (5) annual installments, the
Category B Key Employees Beneficiary, or if there is no Beneficiary surviving,
the Category B Key Employees surviving spouse, if any, or otherwise the
Category B Key Employees estate shall be paid, as soon as practicable
following the Category B Key Employees death, a single lump sum equal to the
present value (determined using the Interest Rate then in effect) of the
remaining installments, and (B) if the benefit was payable as a joint and
survivor annuity under which the Category B Key Employees spouse was the
survivor annuitant, the Category B Key Employees surviving spouse, if any and
if the same as the person to whom the Category B Key Employee was married at
the time such annuity was determined, shall be paid, as soon as practicable
following the Category B Key Employees death, a lump sum payment that is the
actuarial equivalent of the survivor portion of such annuity. Actuarial
equivalency for this purpose shall be determined using an interest assumption
equal to the Interest Rate in effect at the time of the Category B Key
Employees death and the same mortality assumption as is then used under The
TJX Companies, Inc. Retirement Plan. If at the relevant determination date The
TJX Companies, Inc. Retirement Plan no longer exists or no longer provides for
lump sum actuarial equivalency determinations, the Committee shall apply
reasonable actuarial |
-15-
|
|
|
assumptions consistent with Section 1-409A-1(o) of the Treasury Regulations. |
|
(iv) |
|
No death benefit shall be payable under the Plan in any
circumstances other than those described in Section 5.4(i), (ii) or (iii)
above. |
5.5. Benefits in the Event of Disability. If a Category B Key Employee should become
disabled as defined by the Companys long-term disability plan, the Key Employee will be credited
with Year(s) of Service for the period in which he or she receives such disability payments for
purposes of Sections 5.1 and 5.2. For purposes of meeting the minimum requirements of Section 5.1,
the Key Employee will be deemed to be actively employed while receiving long-term disability
benefits. Long-term disability payments, however, will not be included in determining
Compensation. A Category B Key Employee who is disabled shall be entitled to benefits only upon
his or her separation from service in accordance with this Section 5.5 and shall not, for the
avoidance of doubt, be entitled to benefits solely by reason of becoming disabled. For purposes of
this Section 5.5, a Category B Key Employee shall be deemed to have Separated from Service by
reason of Disability upon the earlier of the Category B Key Employees termination of employment or
the expiration of the twenty-nine (29)-month period commencing upon such Category B Key Employees
absence from work.
-16-
Article 6. Category C Key Employee Benefit
6.1. Category C Key Employee Benefits. Each Category C Key Employee who has a fully
vested right to benefits under The TJX Companies, Inc. Retirement Plan shall be entitled to receive
a benefit under this Plan equal to the difference between (a) and (b) below, where
|
(a) |
|
is the benefit the Key Employee would have received under The
TJX Companies, Inc. Retirement Plan on a life annuity basis, if (1) neither the
limitations of Code Sections 415(b) or 415(e), whichever is applicable, nor the
limitations of Code Section 401(a)(17) existed and/or (2) the Key Employee did
not have any Deferred Compensation Amounts; and |
|
|
(b) |
|
is the benefit which the Key Employee is actually entitled to
receive under The TJX Companies, Inc. Retirement Plan on a life annuity basis. |
The lump-sum actuarial equivalent of such tentative life annuity (the tentative lump sum
amount), determined in accordance with the rules prescribed in Article 7.3(b) as of the date the
Category C Key Employee separates from service, shall be increased for six months worth of
interest at the Interest Rate then in effect, and thereafter (if necessary because in a delay in
payment pursuant to Section 7.2(b)(iii) by reason of a change in payment election under Section
7.2(b)(ii)) at the Interest Rate from time to time in effect, and the actuarial equivalent of such
adjusted lump sum amount, expressed in the applicable form of payment determined in accordance with
Article 7, shall be paid or commence to be paid six months and one day following the Category C Key
Employees separation from service or later as provided in Section 7.2(b)(iii).
-17-
Article 7. Methods of Benefit Payment
7.1. Category A Key Employees. Benefits payable to Category A Key Employees shall be
paid in the manner prescribed in the Retirement Agreement providing for such benefits, consistent
with the requirements of Section 409A. If the Retirement Agreement to which reference is made does
not specify the manner in which such benefits are to be paid, such benefits shall instead be
distributed in the same manner as benefits payable to a Category B Key Employee.
7.2. Category B Key Employees.
|
(a) |
|
Available Forms of Payment. The benefit payable
hereunder to a Category B Key Employee shall be paid in one of the following
forms: |
|
(i) |
|
either five (5) or ten (10) substantially equal
installments commencing (except as provided at Section 7.2(b)(iii)
below) six months and one day following the date on which the Category
B Key Employee separates from service with the Company; |
|
|
(ii) |
|
a single lump-sum payment payable (except as
provided at Section 7.2(b)(iii) below) six months and one day following
the date on which the Category B Key Employee separates from service
with the Company; or |
|
|
(iii) |
|
an annuity payable in a form generally
available under The TJX Companies, Inc. Retirement Plan as of the date
the Category B Key Employee selects such form of payment hereunder
(whether or not the Category B Key Employee participates in The TJX
Companies, Inc. Retirement Plan and whether or not such form is |
-18-
|
|
|
available under The TJX Companies, Inc. Retirement Plan as of the
date the Category B Key Employees benefit hereunder commences), such
annuity to be paid commencing (except as provided at Section
7.2(b)(iii) below) six months and one day following the date on which
the Category B Key Employee separates from service with the Company. |
The form and manner of payment of a Category B Key Employees benefit shall
be determined, from among these alternatives, in accordance with (b) below.
|
(b) |
|
Election Provisions. The form in which a Category B
Key Employees benefit hereunder is paid shall be determined as follows: |
|
(i) |
|
Except as otherwise elected in accordance with
this Section 7.2(b), each Category B Key Employees benefit hereunder
shall be paid in five (5) annual installments as determined under
(a)(i) above. |
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|
(ii) |
|
Each Category B Key Employee may elect to have
his or her benefit hereunder paid in another form described in Section
7.2(a) above, but only if such election is made (A) in writing in a
form and manner acceptable to the Committee, and (B) at least twelve
(12) months prior to the date the Category B Key Employee separates
from service with the Company. No election made under this Section
7.2(b)(ii) shall take effect until twelve (12) months after it is made.
Any change election made in accordance with this Section 7.2(b)(ii)
shall be binding on the Category B Key |
-19-
|
|
|
Employee when made and may be altered only by a subsequent change
election that complies with the requirements of this Section
7.2(b)(ii). |
|
(iii) |
|
Except as provided in Section 7.2(b)(iv) or
Section 7.2(b)(v) below, if a Category B Key Employee elects a change
in payment form pursuant to Section 7.2(b)(ii) above, payment (or, in
the case of installments or an annuity, commencement of payment) of the
benefit payable under the new form of payment shall be delayed by five
years and one day measured from the date on which the pre-change form
of payment would have been made or would have commenced to be made.
For example, (A) under a valid change in payment form from lump sum to
installments or to a life annuity, the first installment payment or the
first annuity payment, as the case may be, shall be made five years and
one day after the date the lump sum would otherwise have been paid, and
(B) under a valid change from an installment or annuity form of payment
to a lump sum payment, the lump sum shall be paid five years and one
day after the first installment or annuity payment would have been
made. In any case in which a delay in payment or commencement of
payment is required under this Section 7.2(b)(iii), the lump sum amount
used to calculate the actuarially equivalent payment to the Category B
Key Employee shall continue to be credited with |
-20-
|
|
|
interest as described in Section 5 until payment is made or
commences. |
|
(iv) |
|
Notwithstanding Section 7.2(b)(ii) and Section
7.2(b)(iii) above, a Category B Key Employee as to whom the applicable
form of payment (pursuant to a prior election under Section 7.2(b)(ii))
is a life annuity described in Treas. Regs. § 1.409A-2(b)(2)(ii) may,
to the extent consistent with Section 409A, elect in writing, in a form
and manner acceptable to the Committee, to have his or her benefit
hereunder payable in another such life annuity form that is available
under Section 7.2(a), without regard to whether such election is made
at least twelve (12) months in advance and without any required delay
in the commencement of such payment under Section 7.2(b)(iii) above,
provided that no such change election shall be effective if made on or
after the date the first annuity payment is made. |
|
|
(v) |
|
The Committee may, to the extent consistent
with Section 409A and the transition rules and during the transition
period provided thereunder, permit a Category B Key Employee or former
Category B Key Employee to elect an alternative form of payment from
among those available under Section 7.2(a) without regard to the
limitations of Section 7.2(b)(ii) or Section 7.2(b)(iii) above if (A)
such election is in writing and made in a form and manner acceptable to
the Committee and (B) is made not later than six |
-21-
|
|
|
months prior to the later of separation from service or the date the
benefit would have commenced to be paid absent such election. |
|
(vi) |
|
Notwithstanding Sections 7.2(b)(i), (ii),
(iii), (iv) and (v) above, a Category B Key Employee who commenced
receiving a benefit under the Plan (as in effect prior to this
amendment and restatement) prior to January 1, 2005 shall continue to
receive his or her benefit in accordance with the payment terms then in
effect. It is the intent of this restatement that nothing herein shall
be construed as subjecting to the requirements of Section 409A any
benefit payable pursuant to the preceding sentence. In the case of a
Category B Key Employee not described in the preceding sentence who
separated from service prior to December 1, 2005, benefits under the
Plan shall be paid, notwithstanding Sections 7.2(b)(i), (ii), (iii),
and (iv) but subject to Section 7.2(b)(v) above, in accordance with
the payment terms determined in connection with such termination, to
the extent such payment terms are consistent with Section 409A (as
applicable). |
|
(c) |
|
The amounts payable to a Category B Key Employee under the
applicable payment shall be determined as follows: |
|
(i) |
|
First, there shall be determined the tentative
lump sum amount referred to in Section 5.2. The tentative lump sum
amount shall equal the actuarial equivalent present value of the
annuity described in Section 5.2, determined as of the date of the |
-22-
|
|
|
Category B Key Employees separation from service (or attainment of age 65 if
earlier) using an interest assumption equal to the Interest Rate then
in effect and the same mortality assumption as is then used under The
TJX Companies, Inc. Retirement Plan. If at the relevant
determination date The TJX Companies, Inc. Retirement Plan no longer
exists or no longer provides for lump sum actuarial equivalency
determinations, the Committee shall apply reasonable actuarial
assumptions consistent with Section 1-409A-1(o) of the Treasury
Regulations. |
|
(ii) |
|
Second, the tentative lump sum amount
determined under Section 7.2(c)(i) above shall be increased by the
interest factor as described in Section 5.2 or Section 5.3, as
applicable. |
|
|
(iii) |
|
If the benefit payable hereunder is payable as
a lump sum, the amount of the payment shall equal the adjusted lump sum
amount determined under Section 7.2(c)(ii) above. |
|
|
(iv) |
|
If the benefit is payable in five (5) annual
installments, each installment shall equal the level annual payment
amount which, if payable in five successive annual installments, would
have the same present value (using the same interest assumption as
would be used under Section 7.2(c)(i) above if the determination under
Section 7.2(c)(i) were made as of the date of the first annual
installment) as the adjusted lump sum value determined under Section
7.2(c)(ii) above. |
-23-
|
(v) |
|
If the benefit is payable as an annuity, the
annuity shall have an actuarially equivalent value, determined using
the same actuarial assumptions as would be used under Section 7.2(c)(i)
above if the determination were made as of the date of the first
annuity payment, equal to the adjusted lump sum value determined under
Section 7.2(c)(ii) above. |
7.3. Category C Key Employees.
|
(a) |
|
Available Forms of Payment; Election Provisions. The
form and manner of payment of a Category C Key Employees benefit shall be
determined from among the alternatives set forth in Section 7.2(a) in
accordance with Section 7.2(b), with each reference in such Sections to a
Category B Employee to be deemed to refer to a Category C Key Employee for
purposes of this Section 7.3(a). |
|
|
(b) |
|
The amounts payable to a Category C Key Employee under the
applicable payment shall be determined as follows: |
|
(i) |
|
First, there shall be determined the tentative
lump sum amount referred to in Section 6.1. The tentative lump sum
amount shall equal the actuarial equivalent present value of the
annuity described in Section 6.1, determined as of the date of the
Category C Key Employees separation from service using an interest
assumption equal to the Interest Rate then in effect and the same
mortality assumption as is then used under The TJX Companies, Inc.
Retirement Plan. If at the date of the Category C Key |
-24-
|
|
|
Employees separation from service The TJX Companies, Inc. Retirement
Plan no longer provides for lump sum actuarial equivalency
determinations, the Committee shall apply reasonable actuarial
assumptions consistent with Section 1-409A-1(o) of the Treasury
Regulations. |
|
(ii) |
|
Second, the tentative lump sum amount
determined under Section 7.3(b)(i) above shall be increased by the
interest factor as described in Section 6.1. |
|
|
(iii) |
|
If the benefit payable hereunder is payable as
a lump sum, the amount of the payment shall equal the adjusted lump sum
amount determined under Section 7.3(b)(i) above. |
|
|
(iv) |
|
If the benefit is payable in five (5) annual
installments, each installment shall equal the level annual payment
amount which, if payable in five successive annual installments, would
have the same present value (using the same interest assumption as
would be used under Section 7.3(b)(i) above if the determination under
Section 7.3(b)(i) were made as of the date of the first annual
installment) as the adjusted lump sum value determined under Section
7.3(b)(i) above. |
|
|
(v) |
|
If the benefit is payable as an annuity, the
annuity shall have an actuarially equivalent value, determined using
the same actuarial assumptions as would be used under Section 7.3(b)(i)
above if the determination were made as of the date of the first
annuity |
-25-
|
|
|
payment, equal to the adjusted lump sum value determined under
Section 7.3(b)(i) above. |
|
(c) |
|
Notwithstanding any other provision of the Plan to the contrary
and at the sole discretion of the Company, if at the time a Category C Key
Employees benefits are scheduled to commence in an installment or annuity form
of payment (the determination date), the present value of the benefit payable
hereunder (including any amounts payable to a Category C Key Employee pursuant
to another nonaccount balance plan (as defined in Section
1.409A-1(c)(2)(i)(C) of the Treasury Regulations) with which the Plan is
required to be aggregated under Section 1.409A-1(c)(2) of the Treasury
Regulations) is less than the applicable dollar amount under Section
402(g)(1)(B) of the Code, the benefit may be distributed (consistent with the
cashout rules under Section 409A) in the form of a single lump sum equal to
such present value as soon as administratively practicable, but in no event
later than ninety (90) days after the determination date. |
-26-
Article 8. Divestiture
8.1. Divestiture of Category A Key Employee. Category A Key Employees shall be
subject to divestiture of benefits to the extent that the Retirement Agreement(s) pursuant to which
such benefits are included in the Plan so provide.
8.2. Competition. The Committee shall have the authority to divest the benefits under
this Plan for any Category B or C Key Employee who separates from service voluntarily at any time,
including by reason of retirement or disability, and who within two years following such
separation, directly or indirectly, is a partner or investor in or engages in any employment,
consulting, or fees-for-services arrangement with any business which is a competitor of The TJX
Companies, Inc. and its subsidiaries, or undertakes any planning to engage in any such business. A
business shall be deemed a competitor of The TJX Companies, Inc. and its subsidiaries if and only
if (i) it shall then be so regarded by retailers generally, or (ii) it shall operate an off-price
apparel, off-price footwear, off-price jewelry, off-price accessories, off-price home furnishings
and/or off-price home fashions business, including any such business that is store-based,
catalogue-based, or an on-line, e-commerce or other off-price internet-based business; provided,
that the mere application for employment with a competitive business shall not be treated as
prohibited planning to engage in such business. A Category B Key Employee or Category C Key
Employee will not be deemed to have violated the provisions of this Section 8.2 merely by reason of
being engaged in an employment, consulting or other fees-for-services arrangement with an entity
that manages a private equity, venture capital or leveraged buyout fund that in turn invests in one
or more businesses deemed competitors of the Company and its Subsidiaries under this Section 8.2,
provided that (A) such fund is not intended to, and does not in fact, invest primarily in such
businesses, and (B) the Category B Key Employee or Category C
-27-
Key Employee demonstrates to the reasonable satisfaction of the Company that his or her
arrangement with such entity will not involve the provision of employment, consulting or other
services, directly or indirectly, to any such business or to the fund with respect to its
investment or proposed investment in any such business and that he or she will not participate in
any meetings, discussions, or interactions in which any such business or any such proposed
investment is proposed to be or is likely to be discussed. Each Category B Key Employee and
Category C Key Employee by participating in the Plan agrees that if, at any time, pursuant to
action of any court, administrative or governmental body or other arbitral tribunal, the operation
of any part of this Section 8.2 shall be determined to be unlawful or otherwise unenforceable, then
the coverage of this paragraph shall be deemed to be restricted as to duration, geographical scope
or otherwise, as the case may be, to the extent, and only to the extent, necessary to make this
paragraph lawful and enforceable in the particular jurisdiction in which such determination is
made.
A Key Employee shall notify the Company immediately upon his or her securing employment or
becoming self-employed during the two years following voluntary termination of employment, and
shall furnish to the Committee written evidence of his or her compensation earned from any such
employment or self-employment, in each case promptly following any request therefor by the
Committee.
Any Key Employee may inquire of the Committee in writing whether any proposed act shall be
considered competition under this section 8.2 and the Committee shall provide a prompt reply.
If any Key Employee covered under this Section 8.2 engages in a business determined by the
Committee to be a competitor, the Committee shall give notice in writing to the Key
-28-
Employee that unless a written appeal is submitted by the Key Employee to the Committee within
thirty (30) days, his or her benefits under this Plan will be forfeited. The Committee in its
discretion may also provide that if the Key Employee ceases to engage in such business his or her
benefits under this Plan will not be forfeited. Upon receipt of the Committees notice, the Key
Employee shall have 30 days to submit a written appeal of the Committees decision. The Committee
shall review the Key Employees appeal and notify the Key Employee of its decision within 30 days
from receipt of his or her appeal. If the Key Employee fails to submit an appeal within 30 days,
his or her benefits will be forfeited at the expiration of. the 30-day period; provided,
that if the Committee has determined that such benefits will not be forfeited if the Key Employee
ceases to engage in the competitor business within a specified period, such benefits will be
forfeited only if the Key Employee continues to engage in such business after the expiration of
such specified period.
The provisions of this Section 8.2 shall cease to have effect upon the occurrence of a Change
of Control as defined in the Companys Stock Incentive Plan or successor plan, as from time to time
amended. The provisions of this section 8.2 shall not apply to a Key Employee who voluntarily
terminates employment at a time when he or she has entered into an employment agreement with The
TJX Companies, Inc. or a related company containing an express non-competition provision; instead,
a violation by the Key Employee of such provision shall result in the automatic forfeiture of
benefits under this Plan for such Key Employee.
If, at any time, pursuant to action of any court, administrative or governmental body or other
arbitral tribunal, the operation of any part of this Section 8.2 shall be determined to be unlawful
or otherwise unenforceable, then the coverage of this Section 8.2 shall be deemed to be
-29-
restricted as to duration, geographical scope or otherwise, as the case may be, to the extent,
and only to the extant, enforceable in the particular jurisdiction in which such determination is
made.
8.3. Termination for Cause. Notwithstanding anything to the contrary contained
herein, if a Key Employees employment is terminated for cause, all benefits otherwise payable
under this Plan shall be forfeited. For this purpose, termination for cause shall mean termination
of employment by reason of the Key Employees dishonesty, conviction of a felony, gross neglect of
duties, or conflict of interest. If, subsequent to termination of employment for other reasons,
and prior to the payment of all benefits hereunder, it is discovered that a Key Employee engaged in
acts or conduct which, had they been discovered, would have resulted in termination of employment
for cause, his or her employment will be deemed to have been terminated for cause, and all unpaid
benefits hereunder shall be forfeited.
-30-
Article 9. Funding and Administration
9.1. Source of Funds. All payments of benefits hereunder and all costs of
administration of this Plan shall be paid in cash from the general funds of the Company, and no
special or separate fund shall be required to be established or other segregation of assets
required to be made to assure such payments. However, the Company may, in its discretion,
establish a bookkeeping account or reserve to meet its obligations hereunder-and may establish a
so-called rabbi trust or similar grantor trust, and may fund such trust, for the purpose of
providing benefits hereunder, except that no such use of a trust shall violate the requirements of
Section 409A(b). Except as provided in the preceding sentence, nothing contained in the Plan and
no action taken pursuant to the provisions of this Plan shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company or the Committee and any
employee or other person. To the extent that any person acquires a right to receive payments under
the Plan, such right shall be no greater than the right of any unsecured general creditor of that
persons employer or former employer.
9.2. Administration of Plan. The Plan shall be administered by the Committee, which
shall have the full power, discretion and authority to interpret, construe and administer the Plan
and any part thereof. The Committee may delegate such administrative responsibilities as it deems
appropriate to officers or employees of the Company or to others (in which case, to the extent of
such delegation, references herein to the Committee shall be deemed to include a reference to the
person(s) to whom such responsibilities have been delegated) and may employ legal counsel,
consultants, actuaries and agents as it deems desirable in the administration of the Plan and may
rely on the opinions of such counsel, the advice of such consultants, and the computations o£ such
actuaries. No member of the Committee shall be eligible for a benefit
-31-
under this Plan unless approved by the Board of Directors of The TJX Companies, Inc. The
Committee shall establish claims procedures under the Plan consistent with the requirements of
Section 503 of the Employee Retirement Income Security Act of 1974, as amended.
-32-
Article 10. Amendment, Suspension, Termination or Assignment.
10.1. Amendment, Suspension and Termination. The Plan may be amended, suspended, or
terminated in whole or in part at any time and from time to time by the Committee. No such
amendment, suspension or termination shall retroactively impair or otherwise adversely affect the
rights of any person to benefits under this Plan that have accrued prior to the date of such
amendment, suspension or termination as determined by the Committee, unless such reduction is by
reason of an amendment required by law or regulation of an administrative agency; provided,
however, that the Committee may amend the Interest Rate without regard to whether such amendment
has the effect of decreasing the lump sum value of the participating Key Employees benefit.
10.2. Assignment. The rights and obligations of The TJX Companies, Inc. shall enure
to the benefit of and shall be binding upon the successors and assigns of The TJX Companies, Inc.
-33-
Article 11. Miscellaneous
11.1. Notices. Each Key Employee shall be responsible for furnishing the Committee
with the current and proper address for the mailing of notices, reports and benefit payments. Any
notice required or permitted to be given shall be deemed given if directed to the person to whom
addressed at such address and mailed by regular United States mail, first-class and prepaid. If
any check mailed to such address is returned as undeliverable to the addressee, the mailing of
checks will be suspended until the Key Employee or beneficiary furnishes the proper address.
11.2. Lost Distributees. A benefit shall be deemed forfeited if, after diligent
effort, the Committee is unable to locate the Key Employee or beneficiary to whom payment is due;
provided, however, that the Committee shall have the authority (but not the obligation) to
reinstate such benefit upon the later discovery of a proper payee for such benefit. Mailing of a
notice in writing, by certified or registered mail, to the last known address of the Key Employee
and to the beneficiaries of such Key Employee (if the addresses of such beneficiaries are known to
the Committee) shall be considered a diligent effort for this purpose.
11.3. Nonalienation of Benefits. None of the payments, benefits or rights of any Key
Employee or beneficiary shall be subject to any claim of any creditor, and, in particular, to the
fullest extent permitted by law, all such payments, benefits and rights shall be free from
attachment, garnishment, trustees process, or any other legal or equitable process available to
any creditor of such Key Employee or beneficiary. No Key Employee or beneficiary shall have the
right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments
which he or she may expect to receive, contingently or otherwise, under this Plan, except the right
to designate a beneficiary or beneficiaries as hereinabove provided.
-34-
11.4. Reliance on Data. The Company, the Committee and all other persons associated
with the Plans operation shall have the right to rely on the veracity and accuracy of any data
provided by the Key Employee or by any beneficiary, including representations as to age, health and
marital status. Such representations are binding upon any party seeking to claim a benefit through
a Key Employee. The Company, the Committee and all other persons associated with the Plans
operation are absolved completely from inquiring into the accuracy or veracity of any
representation made at any time by a Key Employee or beneficiary.
11.5. No Contract of Employment. Neither the establishment of the Plan, nor any
modification thereof, nor the creation of any fund, trust or account, nor the payment of any
benefits shall be construed as giving any Key Employee, or any person whomsoever, the right to be
retained in the service of the Company, and all Key Employees and other persons shall remain
subject to discharge to the same extent as if the Plan had never been adopted.
11.6. Severability of Provision. If any provision of this Plan shall be held invalid
or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof,
and this Plan shall be construed and enforced as if such provision had not been included.
11.7. Heirs, Assigns and Personal Representative. This Plan shall be binding upon the
heirs, executors, administrators, successors and assigns of the parties, including each Key
Employee and beneficiary, present and future.
11.8. Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor,
an incompetent person or other person incapable of receipting thereof shall be deemed paid when
paid to such persons guardian or to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the Company, the Committee and all
other parties with respect thereto.
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11.9. Effect on other Plans. Any benefit payable under the Plan shall not be deemed
salary or other compensation for the purpose of computing benefits under any employee benefit Plan
or other arrangement of the Company for the benefit of its employees.
11.10. Government Regulations. It is intended that this Plan will comply with all
applicable laws and government regulations, and the Company shall not be obligated to perform an
obligation hereunder in any case where, in the opinion of the Companys counsel, such performance
would result in violation of any law or regulation.
11.11. Certain Benefits. In any case in which a Key Employee has earned benefits
under a plan or arrangement other than the plans and arrangements maintained by the Company for its
U.S. employees, to the extent permitted by Section 409A, the offsets under the Plan for other
benefits (e.g., under Section 5.2) shall be adjusted to include, to the extent determined by the
Committee, offsets for such other benefits.
11.12. Heading and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and shall not be employed
in the construction of the Plan.
11.13. Singular Includes Plural. Except where otherwise clearly indicated by context,
the singular shall include the plural, and vice-versa.
11.14. Controlling Law. This Plan shall be construed and enforced according to the
laws of the Commonwealth of Massachusetts, to the extent not preempted by Federal law, which shall
otherwise control.
-36-
exv10w19
Exhibit 10.19
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
Effective as of January 1, 2008
TABLE OF CONTENTS
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PAGE |
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ARTICLE |
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PURPOSE; BACKGROUND |
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1 |
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PART A: 409A PLAN
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ARTICLE 1. DEFINITIONS |
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3 |
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1.1. Account |
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3 |
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1.2. Administrator |
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3 |
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1.3. Basic Deferral Account |
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3 |
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1.4. Bonus Deferral Account |
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3 |
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1.5. Beneficiary |
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3 |
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1.6. Change of Control |
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3 |
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1.7. Company |
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3 |
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1.8. Code |
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3 |
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1.9. Director |
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3 |
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1.10. Disability |
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3 |
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1.11. Effective Date |
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3 |
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1.12. Elective Deferral |
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3 |
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1.13. Eligible Basic Compensation |
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4 |
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1.14. Eligible Bonus |
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4 |
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1.15. Eligible Deferrals |
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4 |
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1.16. Eligible Individual |
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4 |
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1.17. Employee |
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5 |
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1.18. Employer |
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5 |
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1.19. Employer Credit Account |
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5 |
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1.20. ERISA |
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5 |
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1.21. MIP (Corporate) |
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5 |
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1.22. Participant |
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5 |
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1.23. Performance Goal |
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5 |
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1.24. Period of Participation |
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5 |
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1.25. Plan |
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5 |
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PAGE |
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1.26. Plan Year |
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5 |
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1.27. Separation from Service |
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5 |
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1.28. Specified Employee |
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6 |
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1.29. Unforeseeable Emergency |
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6 |
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ARTICLE 2. ELIGIBILITY AND PARTICIPATION |
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7 |
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2.1. Eligibility to Participate |
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7 |
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2.2. Termination of Eligibility |
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7 |
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ARTICLE 3. CREDITS |
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8 |
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3.1. Timing and Form of Compensation Deferrals. |
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8 |
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3.2. Limit on Elective Deferrals |
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9 |
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3.3. Employer Credits |
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10 |
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3.4. Vesting of Employer Credit Accounts |
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13 |
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ARTICLE 4. ADJUSTMENTS TO ACCOUNTS DEEMED INVESTMENTS |
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15 |
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4.1. Deemed Investment Experience |
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15 |
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4.2. Distributions and Withdrawals |
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15 |
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4.3. Notional Investment of Accounts |
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15 |
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4.4. Expenses |
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16 |
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ARTICLE 5. ENTITLEMENT TO AND TIMING OF DISTRIBUTIONS |
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17 |
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5.1. Timing of Distributions as a result of Separation from Service, Death. |
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17 |
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5.2. Unforeseeable Emergency |
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19 |
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ARTICLE 6. AMOUNT AND FORM OF DISTRIBUTIONS |
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20 |
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6.1. Amount of Distributions. |
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20 |
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6.2. Form of Payment. |
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21 |
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6.3. Death Benefits |
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22 |
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ARTICLE 7. BENEFICIARIES; PARTICIPANT DATA |
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23 |
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7.1. Designation of Beneficiaries |
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7.2. Available Information; Missing Persons |
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23 |
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ARTICLE 8. ADMINISTRATION |
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24 |
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8.1. Administrative Authority |
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24 |
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8.2. Litigation |
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24 |
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-ii-
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PAGE |
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8.3. Claims Procedure |
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24 |
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ARTICLE 9. AMENDMENT |
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25 |
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9.1. Right to Amend |
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25 |
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9.2. Amendments to Ensure Proper Characterization of Plan |
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25 |
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ARTICLE 10. TERMINATION |
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26 |
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10.1. Right of the Company to Terminate or Suspend Plan |
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26 |
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10.2. Allocation and Distribution |
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26 |
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ARTICLE 11. MISCELLANEOUS |
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27 |
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11.1. Limitation on Liability of Employer |
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27 |
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11.2. Construction |
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27 |
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11.3. Taxes |
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27 |
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11.4. Section 409A Transition Relief |
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28 |
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11.5. Spendthrift Provision |
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28 |
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EXHIBIT A: DEFINITION OF CHANGE OF CONTROL |
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30 |
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PART B: GRANDFATHERED PLAN
-iii-
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
PURPOSE; BACKGROUND
The TJX Companies, Inc. Executive Savings Plan (the Plan) is intended to provide a means
whereby eligible employees and directors may defer compensation that would otherwise be received on
a current basis and the Employer may credit certain additional amounts on a deferred basis for the
benefit of participating Employees. The Plan, as it applies to Employees, is intended to be an
unfunded top-hat plan under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The Plan consists
of two parts: The TJX Companies, Inc. 409A Executive Savings Plan (the 409A Plan) and The TJX
Companies, Inc. Executive Savings Plan as restated effective October 1, 1998 and as in effect on
October 3, 2004 (the Grandfathered Plan). The effective date of this restated Plan is January 1,
2008.
The 409A Plan is intended to comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the Code) and guidance issued thereunder and shall be
interpreted and administered in a manner consistent with such requirements. For the avoidance of
doubt, the terms of the 409A Plan shall apply to benefits accrued on or after January 1, 2005 and
benefits accrued but not vested as of December 31, 2004 under the Grandfathered Plan. The terms of
the 409A Plan are set forth as Part A below.
All benefits accrued and vested as of December 31, 2004 and not materially modified after
October 3, 2004, plus notional earnings thereon (the Grandfathered Benefit Amount) shall be
grandfathered for purposes of Code Section 409A and shall be governed by The TJX Companies, Inc.
Executive Savings Plan as it was in effect on October 3, 2004. The Grandfathered Plan is frozen as
of December 31, 2004. No additional benefit shall accrue after December 31, 2004 under the
Grandfathered Plan (except, for the avoidance of doubt, the continued deferral of any previously
deferred Grandfathered Benefit Amounts) and no individual not a Participant as of December 31, 2004
shall thereafter become a Participant in the Grandfathered Plan. The Grandfathered Plan has not
been materially modified after October 3, 2004, and a copy of the Grandfathered Plan as it was in
effect immediately prior to the Effective Date is attached as Part B. Part B memorializes the
methodology for calculating, in accordance
with applicable provisions of the Grandfathered Plan, the Grandfathered Benefit Amount
credited to each Participant under the Grandfathered Plan.
-2-
PART A
THE TJX COMPANIES, INC. 409A EXECUTIVE SAVINGS PLAN
Article 1. Definitions
1.1. Account means any or all, as the context requires, of a Participants or Beneficiarys Basic
Deferral Account, Bonus Deferral Account and/or Employer Credit Account.
1.2. Administrator means the Executive Compensation Committee of the Board of Directors of the
Company. The Executive Compensation Committee may delegate to one or more Employees, including a
committee, such powers and responsibilities hereunder as it deems appropriate, in which case the
term Administrator shall include the person or persons to whom such delegation has been made, in
each case during the continuation of and to the extent of such delegation.
1.3. Basic Deferral Account means the unfunded book-entry account maintained by the Administrator
to reflect that portion of a Participants balance under the Plan which is attributable to his or
her Elective Deferrals attributable to deferred Eligible Basic Compensation.
1.4. Bonus Deferral Account means the unfunded book-entry account maintained by the Administrator
to reflect that portion of a Participants balance under the Plan which is attributable to his or
her Elective Deferrals attributable to deferred Eligible Bonuses.
1.5. Beneficiary means a Participants beneficiary determined in accordance with the provisions
of Article 7.
1.6. Change of Control means a Change of Control as defined in Exhibit A hereto.
1.7. Company means The TJX Companies, Inc.
1.8. Code means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from
time to time.
1.9. Director means a member of the Board of Directors of the Company.
1.10. Disability means the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than twelve (12) months, all within the
meaning of Section 409A.
1.11. Effective Date means January 1, 2008.
1.12. Elective Deferral is defined in Section 3.1.
-3-
1.13. Eligible Basic Compensation means, with respect to any Plan Year: (i) the base salary
payable by the Employer to an Employee Participant during the Plan Year in respect of services
performed during the Plan Year, determined before reduction for deferrals under any qualified or
nonqualified plan (including, without limitation, the Plan); (ii) in the case of Directors, annual
retainers and/or meeting fees payable in the Plan Year in respect of services performed during the
Plan Year; and (iii) to the extent provided by the Administrator, other cash compensation payable
in the Plan Year in respect of services performed during the Plan Year.
1.14. Eligible Bonus means a cash bonus payable on or after January 1, 2009 pursuant to one or
more of the Companys annual and long-term incentive bonus plans, subject to such exceptions as the
Administrator may determine prior to the deadline for any Elective Deferral that might be affected
by such determination.
1.15. Eligible Deferrals means (a) in the case of any Participant who is an Employee, who is a
Vice President or higher, Elective Deferrals attributable to Eligible Basic Compensation with
respect to a Plan Year not in excess of ten percent (10%) of the Participants Eligible Basic
Compensation, and (b) in the case of any Participant who is an Employee with a title of Assistant
Vice President or Buyer III, and any Participant who is an Employee with a title below Assistant
Vice President or Buyer III who previously held the title of Assistant Vice President or Buyer III
and has been selected by the Administrator (in its sole discretion) for eligibility for Employer
Credits under the Plan, Elective Deferrals with respect to a Plan Year not in excess of five
percent (5%) of the Participants Eligible Basic Compensation. Notwithstanding the preceding, in
the case of any Participant who is a Director, any Participant who is an Employee and who is
eligible for Category A Key Employee Benefits or Category B Key Employee Benefits under the
Companys Supplemental Executive Retirement Plan, as from time to time in effect, and any
Participant who is an Employee with a title below Assistant Vice President or Buyer III who is
eligible to participate in the Plan but not described in subclause (b) above, none of the Elective
Deferrals deferred under the Plan shall constitute Eligible Deferrals. For the avoidance of doubt,
no Elective Deferral shall constitute an Eligible Deferral to the extent it relates to remuneration
other than Eligible Basic Compensation.
1.16. Eligible Individual means, for any Plan Year (or applicable portion thereof) commencing on
or after the Effective Date, an Employee or a Director who is determined by the
-4-
Administrator to be eligible to participate in the Plan consistent with the intended purpose
of the Plan as set forth in the RECITALS above.
1.17. Employee means an employee of an Employer.
1.18. Employer means The TJX Companies, Inc. and its subsidiaries.
1.19. Employer Credit Account means the unfunded book-entry account maintained by the
Administrator to reflect that portion, if any, of a Participants balance under the Plan which is
attributable to Employer Credits allocable to the Participant.
1.20. ERISA means the Employee Retirement Income Security Act of 1974, as amended.
1.21. MIP (Corporate) means the Management Incentive Plan award program for a fiscal year of the
Company as applied to Employees (other than those subject to Section 162(m) of the Code) whose
performance is measured by corporate-level performance of the Company and its subsidiaries.
1.22. Participant means any Eligible Individual who participates in the Plan.
1.23. Performance Goal means the performance goal applicable under the Companys Management
Incentive Plan for corporate division associates with respect to a fiscal year of the Company in
which a Plan Year ends, or such other performance goal as determined by the Administrator from time
to time.
1.24. Period of Participation means, with respect to any Participant, the period commencing with
the commencement of participation in the Plan and ending on the earlier of (A) the date on which
the Participant ceases to be employed by the Employer or to serve as a Director, as the case may
be, or (B) the date on which the Participants Accounts have been completely distributed, withdrawn
or forfeited. For the avoidance of doubt, Period of Participation will commence on the date that
amounts are first credited to the Account of a Participant, and can include periods before or after
the Effective Date.
1.25. Plan means The TJX Companies, Inc. Executive Savings Plan as set forth herein and as the
same may be amended from time to time.
1.26. Plan Year means the calendar year.
1.27. Separation from Service and correlative terms mean a separation from service from the
Employer, determined in accordance with Treas. Regs. § 1.409A-1(h). The Administrator may, but
need not, elect in writing, subject to the applicable limitations under
-5-
Section 409A of the Code, any of the special elective rules prescribed in Treas. Regs. §
1.409A-1(h) for purposes of determining whether a separation from service has occurred. Any such
written election shall be deemed part of the Plan.
1.28. Specified Employee means an individual determined by the Administrator or its delegate to be
a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code. The Administrator may, but
need not, elect in writing, subject to the applicable limitations under Section 409A of the Code,
any of the special elective rules prescribed in Treas. Regs. § 1.409A-1(i) for purposes of
determining specified employee status. Any such written election shall be deemed part of the
Plan.
1.29. Unforeseeable Emergency shall mean an unforeseeable emergency as defined in Section
409A(a)(2)(B)(ii) of the Code, including a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant s spouse, or a dependent (as
defined in Section 152(a) of the Code) of the Participant, loss of the Participant s property due
to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.
-6-
Article 2. Eligibility and Participation
2.1. Eligibility to Participate. Each Employee or Director who is an Eligible
Individual may participate in the Plan.
2.2. Termination of Eligibility. An individual shall cease to be eligible to
participate in the Plan when he or she is no longer an Eligible Individual (whether by reason of a
Separation from Service or by reason of a change in job classification or otherwise) but shall
again become eligible to participate if he or she again becomes an Eligible Individual. No
termination of eligibility shall affect Elective Deferrals for which the applicable election
deadline has passed.
-7-
Article 3. Credits
3.1.
Timing and Form of Compensation Deferrals.
(a) In General. A Participant may elect to defer Eligible Basic Compensation
and Eligible Bonuses (any such deferral accomplished in accordance with this Section 3.1, an
Elective Deferral) by making a timely election in accordance with this Section 3.1. Each
such election shall become irrevocable not later than the applicable election deadline. The
applicable election deadline for a deferral election is such deadline as the Administrator
shall establish, which deadline shall in no event be later than (except as provided at
Section 3.1(b) below) the following:
(i) with respect to Eligible Basic Compensation or Eligible Bonuses other than
those described in subsection (ii) below, the last day of the calendar year
preceding the calendar year in which the services relating to the deferred Eligible
Basic Compensation or deferred Eligible Bonuses, as the case may be, are to be
performed; and
(ii) with respect to an Eligible Bonus, if in the Administrators judgment the
Eligible Bonus will qualify under Section 409A as performance-based compensation
that has not yet become readily ascertainable, the date that is six (6) months
before the end of the performance period, but only if the Participant has been in
continuous employment with the Employer since the later of the beginning of the
performance period or the date the performance criteria are established.
In order to participate in the Plan for any Plan Year, an Eligible Individual must make an
affirmative election pursuant to this Section 3.1(a) (or Section 3.1(b), if applicable) in
respect of such Plan Year by the applicable election deadline for such Plan Year.
(b) Special Election for Certain Newly Eligible Individuals. Notwithstanding
Section 3.1(a) above, an individual who first becomes an Eligible Individual after the
beginning of a calendar year by reason of (i) the commencement of employment by the Company,
(ii) the promotion to a position that results in the individual becoming an Eligible
Individual or (iii) an election or appointment to the Board of Directors, may, if permitted
by the Administrator, become a Participant for the remainder of such calendar
-8-
year by executing an irrevocable deferral election (on a form prescribed by the
Administrator) with respect to his or her Eligible Basic Compensation and Eligible Bonuses
in respect of services to be performed during the remainder of the calendar year following
such election, provided that such election is submitted to the Administrator within thirty
(30) days of the date that he or she becomes an Eligible Individual. The amount that a
Participant may defer under this Section 3.1(b) with respect to Eligible Bonuses based on a
specified performance period may not exceed an amount equal to the total amount of the
Eligible Bonuses for the applicable performance period multiplied by the ratio of the number
of days remaining in the performance period after the effective date of the election over
the total number of days in the performance period applicable to the Eligible Bonuses. An
individual who already participates or is eligible to participate in (including, except to
the extent otherwise provided in Section 1.409A-2(a)(7) of the Treasury Regulations, an
individual who has any entitlement, vested or unvested, to payments under) any other
nonqualified deferred compensation plan that would be required to be aggregated with the
Plan for purposes of Section 1.409A-1(c)(2) of the Treasury Regulations shall not be treated
as eligible for the mid-year election rules of this Section 3.1(b) with respect to the Plan,
even if he or she had never previously been eligible to participate in the Plan itself.
3.2. Limit on Elective Deferrals. With respect to an Employee, no more than twenty
percent (20%) of a Participants Eligible Basic Compensation for any pay period may be deferred
pursuant to an election under Section 3.1. A Director who participates in the Plan may elect to
defer up to one hundred percent (100%) of his or her Eligible Basic Compensation. Subject to the
foregoing, a Participants deferral election in respect of Eligible Basic Compensation may specify
different deferral percentages for different pay periods. Up to one hundred percent (100%) of a
Participants Eligible Bonuses may be deferred pursuant to an election under Section 3.1. The
Administrator shall establish and maintain a Basic Deferral Account and Bonus Deferral Account in
the name of each Participant to which shall be credited amounts equal to the Participants Elective
Deferrals attributable to deferred Eligible Basic Compensation and deferred Eligible Bonuses,
respectively, and which shall be further adjusted as provided in Article 4 to reflect any
withdrawals or distributions and any deemed earnings, losses or other charges allocable to such
Account. Elective Deferrals shall be credited to a Participants Compensation
-9-
Deferral Account or Bonus Deferral Account as soon as practicable following the date the
related Eligible Basic Compensation or Eligible Bonuses, as the case may be, would have been
payable absent deferral. A Participant shall at all times be 100% vested in his or her Basic
Deferral Account and Bonus Deferral Account, subject to adjustment pursuant to Article 4.
3.3. Employer Credits. The Administrator shall establish and maintain a separate
Employer Credit Account in the name of each Participant to which shall be credited amounts equal to
the Employer Credits, if any, allocable to the Participant and which shall be further adjusted as
provided in Article 4 to reflect any withdrawals, distributions or forfeitures and any deemed
earnings, losses or other charges allocable to the Employer Credit Account. The Employer Credits
allocable to a Participant shall be determined as follows:
(a) Non-Performance-Based Employer Credits. For each Plan Year, for each
Participant who is an Assistant Vice President, Buyer III or Vice President, or who is a
Senior Vice President or above under age fifty (50), the Administrator shall credit to the
Participants Employer Credit Account an amount equal to ten percent (10%) of the
Participants Eligible Deferrals for the Plan Year. Subject to the following sentence, for
each Plan Year, for each Participant who is: (i) a Senior Vice President or above, and (ii)
age fifty (50) or older, the Administrator shall credit to the Participants Employer Credit
Account an amount equal to the following percentage of the Participants Eligible Deferrals
for the Plan Year, based on the Participants title as of the effective time of such credit:
|
|
|
|
|
Title |
|
Percentage of Eligible Deferrals |
Senior Executive Vice
President, Division
President and above |
|
|
25 |
% |
Executive Vice President |
|
|
20 |
% |
Senior Vice President |
|
|
15 |
% |
The maximum number of Plan Years in respect of which any Participant shall be entitled to
the enhanced matching credits set forth in the immediately preceding sentence shall be
fifteen (15). For each Plan Year after the fifteenth Plan Year for which any Participant
has received such matching credits, the Administrator shall credit to the Participants
Employer Credit Account an amount equal to ten percent (10%) of the Participants Eligible
Deferrals for the Plan Year. The non-performance-based matching credits
-10-
described in this subsection (a) shall be credited to the Participants Employer Credit
Account as of the same dates as the Eligible Deferrals to which such matching credits relate
and based on the age and title (to the extent applicable) of the Participant as of such
date.
(b) Performance-Based Employer Credits at 90% or Greater of Performance Goals.
(i) In General. For each Plan Year ending within a fiscal year of the
Company for which corporate performance produces a payout at or above target under
MIP (Corporate) awards as determined by the Administrator, the Administrator shall
credit to the Employer Credit Account of each eligible Participant with a title of
Assistant Vice President or Buyer III or above an amount (in addition to the credit
described at Section 3.3(a) above) equal to the following percentage of the
Participants Eligible Deferrals for the Plan Year, in each case based on the age
and title (to the extent applicable) of the Participant as of the date the Eligible
Deferrals to which such matching credits relate were credited pursuant to Section
3.2 above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Eligible Deferrals |
|
|
|
|
|
|
(based on MIP (Corporate) Performance |
|
|
|
|
|
|
as a Percentage of Target) |
Title |
|
Age |
|
90% MIP |
|
100% MIP |
|
125% MIP |
Senior Executive Vice
President, Division
President and above |
|
50 or older |
|
|
25 |
% |
|
|
50 |
% |
|
|
75 |
% |
|
|
Under 50 |
|
|
7.5 |
% |
|
|
15 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President |
|
50 or older |
|
|
15 |
% |
|
|
30 |
% |
|
|
50 |
% |
|
|
Under 50 |
|
|
7.5 |
% |
|
|
15 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President |
|
50 or older |
|
|
12.5 |
% |
|
|
25 |
% |
|
|
40 |
% |
|
|
Under 50 |
|
|
7.5 |
% |
|
|
15 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President |
|
50 or older |
|
|
10 |
% |
|
|
20 |
% |
|
|
35 |
% |
|
|
Under 50 |
|
|
7.5 |
% |
|
|
15 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assistant Vice
President or Buyer III |
|
50 or older |
|
|
7.5 |
% |
|
|
15 |
% |
|
|
20 |
% |
|
|
Under 50 |
|
|
7.5 |
% |
|
|
15 |
% |
|
|
15 |
% |
-11-
The maximum number of Plan Years in respect of which any Participant with a title of
Assistant Vice President or Buyer III or above shall be entitled to an enhanced
matching credit pursuant to the immediately preceding sentence as a result of having
attained age 50 shall be fifteen (15). For each Plan Year after the fifteenth Plan
Year for which any Participant has received such enhanced matching credits, the
Administrator shall credit to the Participants Employer Credit Account an amount
equal to the percentage of the Participants Eligible Deferrals for the Plan Year
indicated in the table above for a Participant with the same title as such
individual and an age under 50.
(ii) Pro-ration. If corporate performance produces a MIP (Corporate)
payout between ninety percent (90%) and one hundred percent (100%) of target, the
Employer Credit described in this Section 3.2(b) shall be an amount equal to: (A)
the percentage of the Participants Eligible Deferrals specified in the table under
subsection (i) above for achievement of ninety percent (90%) of MIP (Corporate)
target; plus (B) an additional amount equal to the Participants Eligible Deferrals,
multiplied by the product of (1) a number equal to the difference between the
percentage specified in such table above for achievement of one hundred percent
(100%) of MIP (Corporate) target over the percentage specified for achievement of
ninety percent (90%) of target, (2) the percentage-point excess of MIP (Corporate)
performance over ninety percent (90%) of target, and (3) ten (10). For example, if
corporate performance is such to produce MIP (Corporate) payouts equal to
ninety-five percent (95%) of target, the performance-based Employer credit described
in this Section 3.3(b) for a Participant under age fifty (50) shall be equal to the
Participants Eligible Deferrals multiplied by 11.25% (7.5%, plus 7.5 (15 less 7.5),
multiplied by 5% (95% less 90%), multiplied by 10).
If corporate performance produces a MIP (Corporate) payout between one hundred
percent (100%) and one hundred twenty-five percent (125%) of target, the Employer
Credit described in this Section 3.2(b) shall be an amount equal to: (A) the
percentage of the Participants Eligible Deferrals specified in the table under
subsection (i) above for achievement of one hundred percent (100%) of
-12-
MIP (Corporate) target; plus (B) an additional amount equal to the
Participants Eligible Deferrals, multiplied by the product of (1) a number equal to
the difference between the percentage specified in such table above for achievement
of one hundred twenty-five percent (125%) of MIP (Corporate) target over the
percentage specified for achievement of one hundred percent (100%) of target, (2)
the percentage-point excess of MIP (Corporate) performance over one hundred percent
(100%) of target, and (3) four (4). For example, if corporate performance is such
to produce MIP (Corporate) payouts equal to one hundred twenty percent (120%) of
target, the performance-based Employer credit described in this Section 3.3(b) for a
Participant under age fifty (50) with a title of vice president or above shall be
equal to the Participants Eligible Deferrals multiplied by 27% (15%, plus 15 (30
less 15) multiplied by 20% (120% less 100%), multiplied by 4).
(iii) Timing of Performance-Based Employer Credits. The
performance-based Employer Credit described in this Section 3.3(b) shall be credited
as soon as practicable following the close of the fiscal year and only to the
Employer Credit Accounts of those Participants who were employed by the Employer on
the last day of such fiscal year.
3.4. Vesting of Employer Credit Accounts. A Participant shall become vested in the
balance of his or her Employer Credit Account, subject to adjustment pursuant to Article 4, in
accordance with the following vesting schedule:
|
|
|
|
|
Completed Period of Participation |
|
Vested Percentage |
Fewer than five years |
|
|
0 |
% |
Five years or more,
but fewer than ten years |
|
|
50 |
% |
Ten or more years |
|
|
100 |
% |
Notwithstanding the foregoing, if a Participant who is 50% but not 100% vested in his or her
Employer Credit Account takes an in-service withdrawal under Section 5.2, the Participants vested
interest in his or her Employer Credit Account as of any subsequent date prior to full vesting (the
determination date) shall be
1/2(AB+W)
- - W
-13-
where AB is the balance of the Employer Credit Account as of the determination date and W
is that portion of the withdrawal (or withdrawals, if more than one) under Section 5.2 that was
attributable to the Employer Credit Account.
In addition, a Participant will become immediately vested in his or her Employer Credit
Account, subject to adjustment pursuant to Article 4, upon attainment by the Participant of age
fifty-five (55), upon Separation from Service by reason of Disability or death, or upon the earlier
occurrence of a Change of Control. For purposes of this Section 3.4 and for all other purposes
under the Plan, a Participant shall be deemed to have Separated from Service by reason of
Disability upon the earlier of the Participants termination of employment or the expiration of the
twenty-nine (29)-month period commencing upon such Participants absence from work.
-14-
Article 4. Adjustments to Accounts Deemed Investments
4.1. Deemed Investment Experience. Each Account shall be adjusted on such periodic
basis and subject to such rules as the Administrator may prescribe to reflect the investment
performance of the notional investments in which the Account is deemed invested pursuant to Section
4.3, including without limitation any interest, dividends or other distributions deemed to have
been received with respect to such notional investments.
4.2. Distributions and Withdrawals. As of the date of any distribution or withdrawal
hereunder, the Administrator shall reduce the affected Participants Accounts to reflect such
distribution or withdrawal. Any such adjustment shall reduce ratably each affected Accounts share
of each of the notional investments in which the Account is deemed to be invested, except as the
Administrator may otherwise determine.
4.3. Notional Investment of Accounts. The Administrator shall from time to time
specify one or more mutual funds or other investment alternatives that shall be available as
measures of notional investment return for Accounts under the Plan (each such specified
alternative, a measuring investment option). Subject to such rules and limitations as the
Administrator may from time to time prescribe, each Participant shall have the right to have the
balance of his or her Accounts treated for all purposes of the Plan as having been notionally
invested in one or more measuring investment options and to change the notional investment of his
or her Accounts from time to time. The Administrator shall have complete discretion at any time
and from time to time to eliminate or add a measuring investment option. The Administrator may
designate one or more measuring investment options as the default in which a Participants Accounts
shall be deemed to be invested to the extent the Participant does not affirmatively, timely and
properly provide other notional investment directions.
Nothing in this Section 4.3 shall be construed as giving any Participant the right to cause
the Administrator, the Employer or any other person to acquire or dispose of any investment, to set
aside (in trust or otherwise) money or property to meet the Employers obligations under the Plan,
or in any other way to fund the Employers obligations under the Plan. The sole function of the
notional investment provisions of this Section 4.3 is to provide a computational mechanism for
measuring the Employers unfunded contractual deferred compensation obligation to Participants.
Consistent with the foregoing, the Employer may (although it shall
-15-
not be obligated to do any of the following): (i) establish and fund a so-called rabbi
trust or similar trust or account to hold and invest amounts to help the Employer meet its
obligations under the Plan; and (ii) if it establishes and funds such a trust or account, cause the
trustee or other person holding the assets in such trust or account to invest them in a manner that
is consistent with the notional investment directions of Participants under the Plan.
Each reference in this Section 4.3 to a Participant shall be deemed to include, where
applicable, a reference to a Beneficiary.
4.4. Expenses. All expenses associated with the Plan shall be paid by the Employer;
but if a trust or account is established as described at Section 4.3 above, the Employer may
provide that expenses associated with that trust or account shall be paid out of the assets held
therein.
-16-
Article 5. Entitlement to and Timing of Distributions
5.1. Timing of Distributions as a result of Separation from Service, Death.
(a) Basic Deferral Account and Bonus Deferral Account. A Participants Basic
Deferral Account and Bonus Deferral Account will be distributed, in the form and amount
specified in Article 6, upon the earlier to occur of (i) the date specified by the
Participant pursuant to a distribution election made under this Section 5.1, or (ii) the
Participants Separation from Service for any reason. When the Participant makes a deferral
election in respect of Eligible Basic Compensation for a Plan Year beginning on or after
January 1, 2008 or Eligible Bonuses payable on or after January 1, 2009 under Sections 3.1
and 3.2, he or she shall also elect the time at which payment of the amounts credited to the
Basic Deferral Account and Bonus Deferral Account, respectively, established in respect of
such Plan Year shall commence. The earliest time a Participant may elect to have payment
commence in respect of any such amounts credited to the Participants Basic Deferral Account
or Bonus Deferral Account shall be January 1st of the second calendar year commencing after
the date such amounts were credited to such Accounts. A Participant may subsequently elect
to change his or her prior election of the date of commencement of payments from his or her
Basic Deferral Account or Bonus Deferral Account, as the case may be, but only if such
change (i) shall not take effect for at least twelve (12) months after the date on which the
subsequent election is made; (ii) is made at least twelve (12) months prior to the date on
which the first payment was scheduled to be made (prior election payment date); and (iii)
results in a new payment date that is delayed by at least five (5) years, as measured from
the prior election payment date. Any such change of the time of commencement of payment
shall be made in the manner specified by the Administrator. In the absence of a timely and
proper election as to the time of distribution pursuant to this Section 5.1(a) on a form
acceptable to the Administrator, the Participant shall be deemed to have elected
distribution under this Section 5.1(a) upon Separation from Service. Distribution of the
Participants Basic Deferral Account and Bonus Deferral Account shall be made (or commence,
if installments have been properly elected under Section 6.2(b)(ii) below) upon the date
specified, or deemed to have been specified, in this Section 5.1(a), subject to the last
-17-
sentence of this Section 5.1 in the case of a Specified Employee. With respect to
amounts credited to a Participants Basic Deferral Account for Plan Years commencing on or
after January 1, 2005 and before January 1, 2008, the Administrator may, in its sole
discretion, provide an opportunity to elect distribution upon a date specified by the
Participant, to the extent that such date occurs prior to the Participants Separation from
Service, pursuant to an election permitted under applicable transition relief rules
promulgated by the Internal Revenue Service under Section 409A of the Code. Any such
election shall be made, if at all, by the deadline and on the form prescribed by the
Administrator.
(b) Employer Credit Account. A Participants vested Employer Credit Account
will be valued and paid in accordance with the provisions of Article 6 upon the earliest to
occur of (i) the Participants death, (ii) the Participants Separation from Service by
reason of Disability (as determined under Section 3.4), or (iii) the later of (A) the
Participants Separation from Service for any reason, and (B) the Participants attainment
of age 55; provided, that if the Participants Separation from Service is for cause (as
determined by the Administrator), no portion of the Participants Employer Credit Account
shall be paid and the entirety of the Employer Credit Account shall instead be immediately
forfeited. Distribution of the Participants vested Employer Credit Account shall be made
(or commence, if installments have been properly elected under Section 6.2(b)(ii) below)
upon the date specified in Section 5.1(b), subject to the last sentence of this Section 5.1
in the case of a Specified Employee.
Notwithstanding any provision of this Section 5.1 or any other provision of the Plan to the
contrary, in the case of a Participant who is an individual determined by the Administrator or its
delegate to be a Specified Employee, payment of such Participants benefit as a result of a
Separation from Service (other than by reason of death) shall not commence until the date which is
six (6) months and one (1) day after the date of such Separation from Service or, if earlier than
the end of such period, the date of death of such Participant.
Notwithstanding any provision of this Section 5.1 or any other provision of the Plan to the
contrary, the Company may delay distributions to any Participant under the Plan to the extent
permitted under Treas. Regs. §1.409A-2(b)(7)(i) to the extent that the Company reasonably
anticipates that if the distribution were made at the time specified in Section 5.1(a) above, the
-18-
Companys deduction with respect to such distribution would not be permitted due to the
application of Section 162(m) of the Code, provided that the distribution is made either during the
Participants first taxable year in which the Company reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year, the deduction of such payment will not be
barred by application of Section 162(m) of the Code or during the period beginning with the date of
the Participants Separation from Service (or such later date as required under Treas. Regs.
§1.409A-2(b)(7)(i)) and ending on the later of the last day of the taxable year of the Company in
which such date occurs or the 15th day of the third month following such date. For the avoidance
of doubt, the Participant shall have no election with respect to the timing of the payment under
this paragraph.
5.2. Unforeseeable Emergency. In the event of an Unforeseeable Emergency, the
Participant may apply to the Administrator for the distribution of all or any part of his or her
vested Account. The Administrator shall consider the circumstances of each case and shall have the
right, in its sole discretion, subject to compliance with Section 409A of the Code, to allow or
disallow the application in whole or in part. The Administrator shall have the right to require
such Participant to submit such documentation as it deems appropriate for the purpose of
determining the existence of an Unforeseeable Emergency, the amount reasonably necessary to satisfy
the emergency need, and other related matters. Distributions under this Section 5.2 in connection
with the occurrence of an Unforeseeable Emergency shall be made as soon as practicable after the
Administrators determination under this Section 5.2, which shall be made in accordance with the
rules of Section 1.409A-3(i)(3) of the Treasury Regulations.
-19-
Article 6. Amount and Form of Distributions
6.1. Amount of Distributions.
(a) Basic Deferral Account. The amount distributable to the Participant under
Section 5.1(a) in respect of his or her Basic Deferral Account shall be the balance of the
Participants Basic Deferral Account determined as of the date of distribution, unless a
timely installment election has been submitted pursuant to Section 6.2 below in which case
the amount of each installment shall be calculated in accordance with Section 6.2 below.
(b) Bonus Deferral Account. The amount distributable to the Participant under
Section 5.1(a) in respect of his or her Bonus Deferral Account shall be the balance of the
Participants Bonus Deferral Account determined as of the date of distribution, unless a
timely installment election has been submitted pursuant to Section 6.2 below in which case
the amount of each installment shall be calculated in accordance with Section 6.2 below.
(c) Employer Credit Account. The amount distributable to the Participant under
Section 5.1(b) in respect of his or her Employer Credit Account shall be the balance of the
Participants Employer Credit Account determined as of the date of distribution, unless a
timely installment election has been submitted pursuant to Section 6.2 below in which case
the amount of each installment shall be calculated in accordance with Section 6.2 below.
(d) Distributions upon Unforeseeable Emergency. The amount of a distribution
to the Participant under Section 5.2 shall be determined by the Administrator, provided that
in no event shall the aggregate amount of any distribution under Section 5.2 exceed the
lesser of the vested portion of the Participants Account or the amount determined by the
Administrator to be necessary to alleviate the Participants Unforeseeable Emergency
(including any taxes or penalties reasonably anticipated to result from the distribution)
and which is not reasonably available from other resources of the Participant. A withdrawal
under Section 5.2 shall be allocated between the Participants Basic Deferral Account, Bonus
Deferral Account and the vested portion of
-20-
the Participants Employer Credit Account pro rata based on the balance credited to the
vested portion of each such Account immediately prior to the hardship distribution.
6.2. Form of Payment.
(a) Cash Payment. All payments under the Plan shall be made in cash.
(b) Lump sums; installments.
(i) Except as provided at (ii) immediately below, all distributions under the
Plan shall be made in the form of a lump sum payment.
(ii) A Participant who Separates from Service (other than by reason of death or
for cause (as determined by the Administrator)) upon or after attaining age 55 may
elect, in accordance with this Section 6.2(b)(ii), to have amounts distributable
under Section 6.1 paid either as a lump sum or in annual installments over a period
of not more than ten years. In the absence of a proper advance election to have
such amounts paid in installments, amounts distributable under Section 6.1 shall be
paid as a lump sum. With respect to amounts deferred for any Plan Year beginning on
or after January 1, 2005 and prior to January 1, 2009, any election by a Participant
to have amounts distributable under Section 6.1 paid in installments (an
installment election) must be delivered to the Administrator, in a form acceptable
to the Administrator, not later than the earlier of the date prescribed by the
Administrator or the latest date permissible under transition relief promulgated by
the Internal Revenue Service under Section 409A. With respect to amounts deferred
for any Plan Year beginning on or after January 1, 2009, any election by a
Participant to have amounts distributable under Section 6.1 paid in installments (an
installment election) must be delivered to the Administrator, in a form acceptable
to the Administrator, not later than the applicable election deadline for such
Plan Year (as defined in Section 3.1). A Participant may subsequently elect to
change his or her prior election to have amounts distributable under Section 6.1
paid in a lump sum or in annual installments, as the case may be, but only if such
change (i) shall not take effect for at least twelve (12) months after the date on
which the subsequent election is made; (ii) is made at least twelve (12) months
prior to the date on which the first payment was scheduled to be made (prior
election payment date); and (iii)
-21-
results in a new payment date that is delayed by at least five (5) years, as
measured from the prior election payment date. Any such change of the time of
commencement of payment shall be made in the manner specified by the Administrator.
(iii) Where an Account is payable in installments, the amount of each
installment shall be determined by dividing the vested portion of the Account (as
adjusted through the date of such installment distribution) by the number of
installments remaining to be paid. The Administrator may, in its sole discretion,
require that, at the time payment of a Participants Account for which an
installment election is made is scheduled to commence under Article 5, the total
balance in all such Participants Accounts must exceed, together with any other
amounts payable to a Participant pursuant to any other nonqualified deferred
compensation plan of the Company (and all other all other corporations and trades or
businesses, if any, that would be treated as a single service recipient with the
Company under Treas. Regs. § 1.409A-1(h)(3)) that is an account balance plan
described in Treas. Regs. § 1.409A-1(c)(2)(i)(A) or § 1.409A-1(c)(2)(i)(B), the
dollar amount in effect under Code section 402(g)(1)(B). For the avoidance of
doubt, any installments payable hereunder shall be treated as a single payment
pursuant to Treas. Regs. § 1.409A-2(b)(2)(iii).
(c) Employers Obligation. All payments under the Plan not made from a trust
or account described in Section 4.3 above shall be made by the Employer.
6.3. Death Benefits. Notwithstanding any other provision of the Plan, if a
Participant dies before distribution of his or her Account has occurred or (if payable in
installments) has been completed, the entire value of the Participants vested Account shall be
paid, as soon as practicable following the Participants death, in a lump sum to the Participants
Beneficiary or Beneficiaries.
-22-
Article 7. Beneficiaries; Participant Data
7.1. Designation of Beneficiaries. Subject to such rules and limitations as the
Administrator may prescribe, each Participant from time to time may designate one or more persons
(including a trust) to receive benefits payable with respect to the Participant under the Plan upon
or after the Participants death, and may change such designation at any time. Each designation
will revoke all prior designations by the same Participant, shall be in a form prescribed by the
Administrator, and will be effective only when filed in writing with the Administrator during the
Participants lifetime.
In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is
due to a Beneficiary there is no living Beneficiary validly named by the Participant, the
Administrator shall cause such benefit to be paid to the Participants estate. In determining the
existence or identity of anyone entitled to a benefit payment, the Administrator may rely
conclusively upon information supplied by the Participants personal representative, executor or
administrator.
7.2. Available Information; Missing Persons. Any communication, statement or notice
addressed to a Participant or to a Beneficiary at his or her last post office address as shown on
the Administrators records shall be binding on the Participant or Beneficiary for all purposes of
the Plan. A benefit shall be deemed forfeited if, after diligent effort, the Administrator is
unable to locate the Participant or Beneficiary to whom payment is due; provided, however, that the
Administrator shall have the authority (but not the obligation) to reinstate such benefit upon the
later discovery of a proper payee for such benefit, but solely to the extent permitted under
Section 409A. Mailing of a notice in writing, by certified or registered mail, to the last known
address of the Participant and the Beneficiaries (if the addresses of such Beneficiaries are known
to the Administrator) shall be considered a diligent effort for this purpose. The Administrator
shall not be obliged to search for any Participant or Beneficiary beyond the sending of a
registered letter to such last known address. If a benefit payable to an un-located Participant or
Beneficiary is subject to escheat pursuant to applicable state law, neither the Administrator, the
Company, nor the Employer shall be liable to any person for any payment made in accordance with
such law.
-23-
Article 8. Administration
8.1. Administrative Authority. Except as otherwise specifically provided herein, the
Plan shall be administered by the Administrator. The Administrator shall have full discretionary
authority to construe and administer the terms of the Plan and its actions under the Plan shall be
binding on all persons. Without limiting the foregoing, the Administrator shall have full
discretionary authority, consistent with the requirements of Section 409A of the Code, to:
(a) Resolve and determine all disputes or questions arising under the Plan, and to
remedy any ambiguities, inconsistencies or omissions in the Plan.
(b) Adopt such rules of procedure and regulations as in its opinion may be necessary
for the proper and efficient administration of the Plan and as are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules and regulations
adopted as above.
(d) Make determinations with respect to the eligibility of any person to participate in
the Plan or derive benefits hereunder and make determinations concerning the crediting and
adjustment of Accounts.
(e) Appoint such persons or firms, or otherwise act to obtain such advice or
assistance, as it deems necessary or desirable in connection with the administration and
operation of the Plan, and the Administrator shall be entitled to rely conclusively upon,
and shall be fully protected in any action or omission taken by it in good faith reliance
upon, the advice or opinion of such firms or persons.
8.2. Litigation. Except as may be otherwise required by law, in any action or
judicial proceeding affecting the Plan, no Participant or Beneficiary shall be entitled to any
notice or service of process, and any final judgment entered in such action shall be binding on all
persons interested in, or claiming under, the Plan.
8.3. Claims Procedure. The Administrator shall establish claims procedures under the
Plan consistent with the requirements of Section 503 of ERISA.
-24-
Article 9. Amendment
9.1. Right to Amend. The Administrator, by written instrument executed by a duly
authorized representative, shall have the right to amend the Plan, at any time and with respect to
any provisions hereof; provided, however, that no such amendment shall materially or adversely
affect the rights of any Participant with respect to Elective Deferrals and Employer Credits
already made under the Plan as of the date of such amendment, except as permitted under Section
409A.
9.2. Amendments to Ensure Proper Characterization of Plan. The Plan, as it applies to
Employees, is intended to be an unfunded top-hat plan under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA and therefore participation in the Plan by Employees shall be limited to
Employees who (i) qualify for inclusion in a select group of management or highly compensated
employees within the meaning of sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA and
(ii) are designated by the Company as being eligible to participate. If the Administrator
determines that a Participant no longer qualifies as being a member of a select group of management
or highly compensated employees, then the compensation deferral elections made by such Participant
in accordance with the provisions of the Plan will continue for the remainder of the Plan Year.
However, no additional amounts shall be deferred and credited to the Account of such individual
under the Plan for any future Plan Year until such time as the individual is again determined to be
eligible to participate in the Plan and makes a new election under the provisions of the Plan;
except that all prior amounts credited to the Account of such individual shall continue to be
adjusted for earnings or losses pursuant to the other provisions of the Plan until fully
distributed.
-25-
Article 10. Termination
10.1. Right of the Company to Terminate or Suspend Plan. The Company reserves the
right at any time to terminate the Plan or to suspend the operation of the Plan for a fixed or
indeterminate period of time, by action of the Administrator. In the event of a suspension of the
Plan, the Administrator shall continue all aspects of the Plan, other than any elections to make
Elective Deferrals that have not yet become irrevocable pursuant to Section 3.1(a) and Employer
Credits, during the period of the suspension, in which event accounts as they then exist shall
continue to be credited in accordance with respect to Article 3 and payments hereunder will
continue to be made during the period of the suspension in accordance with Articles 5 and 6.
10.2. Allocation and Distribution. This Section 10.2 shall become operative on a
complete termination of the Plan. The provisions of this Section 10.2 shall also become operative
in the event of a partial termination of the Plan, as determined by the Administrator, but only
with respect to that portion of the Plan attributable to the Participants to whom the partial
termination is applicable. Upon the effective date of any such event, notwithstanding any other
provisions of the Plan, no persons who were not theretofore Participants shall be eligible to
become Participants. Each Participants Accounts as they then exist will be maintained, credited
and paid pursuant to the provisions of this Plan and the Participants elections. Notwithstanding
the foregoing, the Company may provide for the accelerated distribution of all accounts upon
termination of the Plan as a whole or with respect to any Participant or group of Participants, but
only to the extent the Company determines this to be permissible under Section 409A.
-26-
Article 11. Miscellaneous
11.1. Limitation on Liability of Employer. The Employers sole liability under the
Plan shall be to pay benefits under the Plan as expressly set forth herein and subject to the terms
hereof. Subject to the preceding sentence, neither the establishment or administration of the
Plan, nor any modification nor the termination or suspension of the Plan, nor the creation of any
account under the Plan, nor the payment of any benefits under the Plan, nor any other action taken
by the Employer or the Administrator with respect to the Plan shall be construed as giving to any
Participant, any Beneficiary or any other person any legal or equitable right against the
Administrator, the Employer, or any officer or employer thereof. Without limiting the foregoing,
neither the Administrator nor the Employer in any way guarantees any Participants or Beneficiarys
Account from loss or decline for any reason.
11.2. Construction. If any provision of the Plan is held to be illegal or void, such
illegality or invalidity shall not affect the remaining provisions of the Plan, but the illegal or
void provision shall be fully severable and the Plan shall be construed and enforced as if said
illegal or void provision had never been inserted herein. For all purposes of the Plan, where the
context admits, the singular shall include the plural, and the plural shall include the singular.
Headings of Articles and Sections herein are inserted only for convenience of reference and are not
to be considered in the construction of the Plan. The laws of the Commonwealth of Massachusetts
shall govern, control and determine all questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions, except where those laws are preempted by
the laws of the United States. Participation under the Plan will not give any Participant the
right to be retained in the service of the Employer, nor shall any loss or claimed loss of present
or future benefits, whether accrued or unaccrued, constitute an element of damages in any claim
brought in connection with a Participants Separation from Service.
No provision of the Plan shall be interpreted so as to give any individual any right in any
assets of the Employer which right is greater than the rights of a general unsecured creditor of
the Employer.
11.3. Taxes. Notwithstanding any other provision of the Plan, all distributions and
withdrawals hereunder shall be subject to reduction for applicable income tax withholding and other
legally or contractually required withholdings. To the extent amounts credited under the
-27-
Plan are includible in wages for purposes of Chapter 21 of the Code, or are otherwise
includible in taxable income, prior to distribution or withdrawal the Employer may deduct the
required withholding with respect to such wages or income from compensation currently payable to
the Participant or the Administrator may reduce the Participants Accounts hereunder or require the
Participant to make other arrangements satisfactory to the Administrator for the satisfaction of
the Employers withholding obligations. If at any time this Plan is found to fail to meet the
requirements of Section 409A, the Administrator may distribute the amount required to be included
in the Participants income as a result of such failure. Any amount distributed under the
immediately preceding sentence will be charged against amounts owed to the Participant hereunder
and offset against future payments hereunder. For the avoidance of doubt, the Participant will
have no discretion, and will have no direct or indirect election, as to whether a payment will be
accelerated under this Section 11.3.
11.4. Section 409A Transition Relief. The Company may, by action of the
Administrator, authorize changes to time and form of payment elections made under the Plan to the
extent consistent with the transition rules, and during the transition relief period, provided
under Section 409A and guidance issued thereunder by the Internal Revenue Service.
11.5. Spendthrift Provision. No amount payable to a Participant or a Beneficiary
under the Plan will, except as otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in
equity), levy, execution, pledge, encumbrance, charge or any other legal or equitable process, and
any attempt to do so will be void; nor will any benefit be in any manner liable for or subject to
the debts, contracts, liabilities, engagements or torts of the person entitled thereto. Nothing
herein shall be construed as limiting the Employers right to cause its obligations hereunder to be
assumed by a successor to all or a portion of its business or assets.
-28-
IN WITNESS WHEREOF, the Employer has caused the Plan to be executed and its seal to be affixed
hereto, effective as of the 1st day of January, 2008.
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ATTEST/WITNESS |
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/s/ Camillo Davis |
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THE TJX COMPANIES, INC |
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Print Name:
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Camillo Davis |
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By: |
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/s/ Gregory R. Flores |
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(SEAL) |
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Print Name: Gregory R.
Flores |
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Date: |
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December 18, 2008 |
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By: |
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/s/ Jeffrey G.
Naylor |
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Print Name: Jeffrey G.
Naylor |
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Date: |
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December 18, 2008 |
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-29-
EXHIBIT A
Definition of Change of Control
Change of Control shall mean the occurrence of any one of the following events:
(a) there occurs a change of control of the Company of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (the Exchange Act) or in any other filing under the
Exchange Act; provided, however, that if the Participant or a Participant Related Party is the
Person or a member of a group constituting the Person acquiring control, a transaction shall not be
deemed to be a Change of Control as to a Participant unless the Committee shall otherwise determine
prior to such occurrence; or
(b) any Person other than the Company, any wholly-owned subsidiary of the Company, or any
employee benefit plan of the Company or such a subsidiary becomes the owner of 20% or more of the
Companys Common Stock and thereafter individuals who were not directors of the Company prior to
the date such Person became a 20% owner are elected as directors pursuant to an arrangement or
understanding with, or upon the request of or nomination by, such Person and constitute at least
1/4 of the Companys Board of Directors; provided, however, that unless the Committee shall
otherwise determine prior to the acquisition of such 20% ownership, such acquisition of ownership
shall not constitute a Change of Control as to a Participant if the Participant or a Participant
Related Party is the Person or a member of a group constituting the Person acquiring such
ownership; or
(c) there occurs any solicitation or series of solicitations of proxies by or on behalf of
any Person other than the Companys Board of Directors and thereafter individuals who were not
directors of the Company prior to the commencement of such solicitation or series of solicitations
are elected as directors pursuant to an arrangement or understanding with, or upon the request of
or nomination by, such Person and constitute at least 1/4 of the Companys Board of Directors; or
(d) the Company executes an agreement of acquisition, merger or consolidation which
contemplates that (i) after the effective date provided for in such agreement, all or substantially
all of the business and/or assets of the Company shall be owned, leased or otherwise controlled by
another Person and (ii) individuals who are directors of the Company when such agreement is
executed shall not constitute a majority of the board of directors of the survivor or successor
entity immediately after the effective date provided for in such agreement; provided, however, that
unless otherwise determined by the Committee, no transaction shall constitute a Change of Control
as to a Participant if, immediately after such transaction, the Participant or any Participant
Related Party shall own equity securities of any surviving corporation (Surviving Entity) having
a fair value as a percentage of the fair value of the equity securities of such Surviving Entity
greater than 125% of the fair value of the equity securities of the Company owned by the
Participant and any Participant Related Party immediately prior to such transaction, expressed as a
percentage of the fair value of all equity securities of the Company
-30-
immediately prior to such transaction (for purposes of this paragraph ownership of equity
securities shall be determined in the same manner as ownership of Common Stock); and provided,
further, that, for purposes of this paragraph (d), if such agreement requires as a condition
precedent approval by the Companys shareholders of the agreement or transaction, a Change of
Control shall not be deemed to have taken place unless and until such approval is secured (but upon
any such approval, a Change of Control shall be deemed to have occurred on the date of execution of
such agreement).
In addition, for purposes of this Exhibit A the following terms have the meanings set forth below:
Common Stock shall mean the then outstanding Common Stock of the Company plus, for purposes
of determining the stock ownership of any Person, the number of unissued shares of Common Stock
which such Person has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall not include
shares of Preferred Stock or convertible debt or options or warrants to acquire shares of Common
Stock (including any shares of Common Stock issued or issuable upon the conversion or exercise
thereof) to the extent that the Board of Directors of the Company shall expressly so determine in
any future transaction or transactions.
A Person shall be deemed to be the owner of any Common Stock:
(i) of which such Person would be the beneficial owner, as such term is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission (the Commission) under
the Exchange Act, as in effect on March 1, 1989; or
(ii) of which such Person would be the beneficial owner for purposes of Section 16 of
the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on
March 1, 1989; or
(iii) which such Person or any of its affiliates or associates (as such terms are
defined in Rule 12b-2 promulgated by the Commission under the Exchange Act, as in effect on
March 1, 1989) has the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options or otherwise.
Person shall have the meaning used in Section 13(d) of the Exchange Act, as in effect on
March 1, 1989.
A Participant Related Party shall mean, with respect to a Participant, any affiliate or associate
of the Participant other than the Company or a Subsidiary of the Company. The terms affiliate
and associate shall have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the
term registrant in the definition of associate meaning, in this case, the Company).
Subsidiary shall mean any corporation or other entity (other than the Company) in an
unbroken chain beginning with the Company if each of the entities (other than the last entity in
-31-
the unbroken chain) owns stock or other interests possessing 50% or more of the total combined
voting power of all classes of stock or other interests in one of the other corporations or other
entities in the chain.
Committee shall mean the Executive Compensation Committee of the Board of Directors of the
Company.
Company shall mean The TJX Companies, Inc.
Initially capitalized terms not defined above shall have the meanings assigned to those terms
in Article I of the Plan.
-32-
exv21
Exhibit 21
SUBSIDIARIES
All of the following subsidiaries are either directly or indirectly owned by The TJX Companies,
Inc.
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State or Jurisdiction |
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Name Under Which |
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of Incorporation |
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Does Business |
Operating Subsidiaries |
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or Organization |
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(if Different) |
NBC Attire Inc. |
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Massachusetts |
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Newton Buying Corp.
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Delaware |
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NBC Distributors Inc.
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Massachusetts |
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NBC Merchants, Inc.
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Indiana |
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NBC Charlotte Merchants, Inc.
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North Carolina |
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NBC Nevada Merchants, Inc.
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Nevada |
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NBC Philadelphia Merchants, Inc.
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Pennsylvania |
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NBC Pittston Merchants, Inc.
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Pennsylvania |
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NBC Houston Merchants, Inc.
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Texas |
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NBC Manteca Merchants, Inc.
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California |
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TJX Incentive Sales, Inc.
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Virginia |
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Marmaxx Operating Corp.
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Delaware
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T.J.Maxx/Marshalls |
Marshalls Atlanta Merchants, Inc.
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Georgia |
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Marshalls Bridgewater Merchants, Inc.
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Virginia |
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Marshalls Woburn Merchants, Inc.
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Massachusetts |
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Marshalls of MA, Inc.
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Massachusetts |
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New York Department Stores
de Puerto Rico, Inc.
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Puerto Rico
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Marshalls |
Marshalls of Richfield, MN, Inc.
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Minnesota |
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Marshalls of Glen Burnie, MD, Inc.
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Maryland |
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Marshalls of Beacon, VA, Inc.
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Virginia |
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Marshalls of Laredo, TX, Inc.
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Texas |
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Marshalls of Calumet City, IL, Inc.
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Illinois |
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Marshalls of Chicago-Clark, IL, Inc.
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Illinois |
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Marshalls of Matteson, IL, Inc.
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Illinois |
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Marshalls of Elizabeth, NJ, Inc.
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New Jersey |
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Marshalls of Nevada, Inc.
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Nevada |
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Newton Buying Company of CA, Inc.
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Delaware
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Marshalls |
Strathmex Corp.
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Delaware |
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HomeGoods, Inc.
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Delaware |
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H.G. Indiana Distributors, Inc.
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Indiana |
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H. G. Conn. Merchants, Inc.
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Connecticut |
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H. G. Beverage, LLC
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Massachusetts |
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HomeGoods of Puerto Rico, Inc.
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Puerto Rico |
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NBC Apparel, Inc.
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Delaware |
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NBC Apparel
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United Kingdom
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T.K. Maxx |
TJX Europe Limited
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United Kingdom |
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TJX UK
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United Kingdom
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T.K. Maxx |
TK Maxx Limited
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United Kingdom |
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State or Jurisdiction |
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Name Under Which |
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of Incorporation |
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Does Business |
Operating Subsidiaries |
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or Organization |
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(if Different) |
T.K. Maxx Holding GmbH
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Germany |
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T.K. Maxx Management GmbH
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Germany |
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T.K. Maxx GmbH & Co. KG
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Germany
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T.K. Maxx |
TJX Ireland
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Ireland
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T.K. Maxx |
Concord Buying Group, Inc.
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New Hampshire
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A.J. Wright |
AJW Merchants Inc.
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Massachusetts
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A.J. Wright |
NBC Manager, LLC
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Delaware |
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NBC Trust
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Massachusetts |
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NBC Operating, LP
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Delaware |
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NBC GP, LLC
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Delaware |
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T.J. Maxx of CA, LLC
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Delaware |
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T.J. Maxx of IL, LLC
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Delaware |
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Marshalls of CA, LLC
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Delaware |
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Marshalls of IL, LLC
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Delaware |
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NYDS, LLC
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Delaware |
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AJW South Bend Merchants, Inc.
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Indiana |
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WMI-1 Holding Company
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Nova Scotia, Canada |
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WMI-99 Holding Company
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Nova Scotia, Canada |
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Winners Merchants International, L.P.
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Ontario, Canada |
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NBC Holding, Inc.
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Delaware |
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NBC Hong Kong Merchants Limited
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Hong Kong |
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Leasing Subsidiaries |
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Cochituate Realty, Inc.
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Massachusetts |
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NBC First Realty Corp.
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Indiana |
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NBC Second Realty Corp.
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Massachusetts |
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NBC Fourth Realty Corp.
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Nevada |
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NBC Fifth Realty Corp.
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Illinois |
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NBC Sixth Realty Corp.
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North Carolina |
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NBC Seventh Realty Corp.
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Pennsylvania |
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AJW Realty of Fall River, Inc.
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Massachusetts |
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H.G. Brownsburg Realty Corp.
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Indiana |
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H.G. Conn. Realty Corp.
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Delaware |
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AJW South Bend Realty Corp.
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Indiana |
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Progress Lane Realty Corp
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Connecticut |
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-2-
exv23
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No.
333-60540) and on Form S-8 (Nos. 333-116277, 333-86966,
333-63293, and 333-35073) of The TJX Companies, Inc. of our report
dated March 31, 2009 relating to the financial
statements, financial statement schedule and the effectiveness of internal control over financial
reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 31, 2009
exv24
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Carol Meyrowitz and Jeffrey G. Naylor and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign the form 10-K to be
filed by The TJX Companies, Inc. for the fiscal year ended January 31, 2009 and any or all
amendments thereto and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
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Carol Meyrowitz, Chief Executive
Officer, President and Director
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Jeffrey G. Naylor, Chief Financial
and Administrative Officer |
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/s/ José B. Alvarez |
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/s/ Amy B. Lane |
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José B. Alvarez, Director
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Amy B. Lane, Director |
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/s/ Alan M. Bennett |
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/s/ John F. OBrien |
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Alan M. Bennett, Director
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John F. OBrien, Director |
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/s/ David A. Brandon |
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/s/ Robert F. Shapiro |
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David A. Brandon, Director
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Robert F. Shapiro, Director |
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/s/ Bernard Cammarata |
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/s/ Willow B. Shire |
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Bernard Cammarata, Chairman of the
Board of Directors
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Willow B. Shire, Director |
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/s/ David T. Ching |
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/s/ Fletcher H. Wiley |
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David T. Ching, Director
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Fletcher H. Wiley, Director |
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/s/ Michael F. Hines |
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Michael F. Hines, Director |
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Dated: February
1, 2009
exv31w1
Exhibit 31.1
Section 302 Certification
CERTIFICATION
I, Carol Meyrowitz, certify that:
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I have reviewed this annual report on Form 10-K of The TJX Companies, Inc.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
|
Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared; |
|
|
(b) |
|
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, 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; |
|
|
(c) |
|
Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and |
|
|
(d) |
|
Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and |
5. |
|
The registrants other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions): |
|
(a) |
|
All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and |
|
|
(b) |
|
Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting. |
|
|
|
|
|
|
|
|
Date: March 31, 2009 |
/s/ Carol Meyrowitz
|
|
|
Name: |
Carol Meyrowitz |
|
|
Title: |
President and Chief Executive Officer |
|
|
exv31w2
Exhibit 31.2
Section 302 Certification
CERTIFICATION
I, Jeffrey G. Naylor, certify that:
1. |
|
I have reviewed this annual report on Form 10-K of The TJX Companies, Inc.; |
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
|
3. |
|
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
|
Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared; |
|
|
(b) |
|
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, 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; |
|
|
(c) |
|
Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and |
|
|
(d) |
|
Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and |
5. |
|
The registrants other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions): |
|
(a) |
|
All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and |
|
|
(b) |
|
Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting. |
|
|
|
|
|
|
|
|
Date: March 31, 2009 |
/s/ Jeffrey G. Naylor
|
|
|
Name: |
Jeffrey G. Naylor |
|
|
Title: |
Senior Executive Vice President
and |
|
|
Chief Financial and Administrative Officer |
|
|
exv32w1
Exhibit 32.1
CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of The
TJX Companies, Inc. (the Company), does hereby certify that to my knowledge:
|
1. |
|
the Companys Form 10-K for the fiscal year ended January 31, 2009 fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
2. |
|
the information contained in the Companys Form 10-K for the fiscal year ended January
31, 2009 fairly presents, in all material respects, the financial condition and results of
operations of the Company. |
|
|
|
|
|
|
|
|
|
/s/ Carol Meyrowitz
|
|
|
Name: |
Carol Meyrowitz |
|
|
Title: |
President and Chief Executive Officer |
|
|
Dated:
March 31, 2009
exv32w2
Exhibit 32.2
CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Senior Executive Vice President
and Chief Financial and Administrative Officer of The TJX Companies, Inc. (the Company), does
hereby certify that to my knowledge:
|
1. |
|
the Companys Form 10-K for the fiscal year ended January 31, 2009 fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
2. |
|
the information contained in the Companys Form 10-K for the fiscal year ended January
31, 2009 fairly presents, in all material respects, the financial condition and results of
operations of the Company. |
|
|
|
|
|
|
|
|
|
/s/ Jeffrey G. Naylor |
|
|
|
|
|
|
|
|
|
Name:
|
|
Jeffrey G. Naylor |
|
|
|
|
Title:
|
|
Senior Executive Vice President and
Chief Financial and Administrative Officer |
|
|
Dated:
March 31, 2009