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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
/X/ Quarterly Report Under Section 13 and 15(d)
of the Securities Exchange Act of 1934
or
/ / Transition Report Pursuant to Section 13 and 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended July 29, 1995
Commission file number 1-4908
The TJX Companies, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2207613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
770 Cochituate Road
Framingham, Massachusetts 01701
(Address of principal executive offices) (Zip Code)
(508)390-1000
(Registrant's telephone number, including area code)
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 .
The number of shares of Registrant's common stock outstanding as of
August 26, 1995: 72,407,871
PAGE 2
PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
Thirteen Weeks Ended
July 29, July 30,
1995 1994
Net sales $848,945 $775,240
Cost of sales, including buying and
occupancy costs 657,682 583,386
Selling, general and administrative expenses 166,933 152,483
Interest on debt and capital leases 9,813 5,400
Income from continuing operations before
income taxes 14,517 33,971
Provision for income taxes 6,804 14,176
Income from continuing operations 7,713 19,795
Discontinued operations:
(Loss) from discontinued operations,
net of income taxes (855) (999)
(Loss) on the disposal of discontinued
operations, net of income taxes (31,700) -
Net income (loss) (24,842) 18,796
Preferred stock dividends 1,789 1,789
Net income (loss) available (attributable) to
common shareholders $(26,631) $ 17,007
Primary and fully diluted earnings per
common share:
Continuing operations $ .08 $ .24
Discontinued operations (.45) (.01)
Net income (loss) $ (.37) $ .23
Cash dividends per common share $ .14 $ .14
The accompanying notes are an integral part of the financial statements.
PAGE 3
PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
Twenty-Six Weeks Ended
July 29, July 30,
1995 1994
Net sales $1,679,375 $1,537,500
Cost of sales, including buying and
occupancy costs 1,292,119 1,149,434
Selling, general and administrative
expenses 337,129 310,428
Interest on debt and capital leases 18,312 10,574
Income from continuing operations before
income taxes 31,815 67,064
Provision for income taxes 14,592 27,801
Income from continuing operations 17,223 39,263
Discontinued operations:
(Loss) from discontinued operations,
net of income taxes (2,300) (1,098)
(Loss) on the disposal of discontinued
operations, net of income taxes (31,700) -
Net income (loss) (16,777) 38,165
Preferred stock dividends 3,578 3,578
Net income (loss) available (attributable)
to common shareholders $ (20,355) $ 34,587
Primary and fully diluted earnings per
common share:
Continuing operations $ .19 $ .48
Discontinued operations (.47) (.01)
Net income (loss) $ (.28) $ .47
Cash dividends per common share $ .28 $ .28
The accompanying notes are an integral part of the financial statements.
PAGE 4
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS
ASSETS July 29, January 28, July 30,
1995 1995 1994
Current assets:
Cash and cash equivalents $ 19,752 $ 41,569 $ 20,605
Accounts receivable 48,595 41,749 36,284
Merchandise inventories 1,092,143 890,593 912,972
Prepaid expenses 29,438 22,881 21,840
Net current assets of discontinued
operations 11,937 10,731 6,293
Total current assets 1,201,865 1,007,523 997,994
Property, at cost:
Land and buildings 114,899 114,736 113,774
Leasehold costs and improvements 277,197 251,387 226,989
Furniture, fixtures and equipment 408,049 380,806 355,717
800,145 746,929 696,480
Less accumulated depreciation 328,634 297,019 278,580
471,511 449,910 417,900
Other assets 16,354 14,244 13,797
Goodwill, net of amortization 88,639 89,877 91,224
Net noncurrent assets of discontinued
operations 32,528 37,990 40,140
TOTAL ASSETS $1,810,897 $1,599,544 $1,561,055
LIABILITIES
Current liabilities:
Short-term debt $ 65,749 $ 20,000 $ 94,000
Current installments of
long-term debt 33,987 31,306 6,119
Accounts payable 396,133 415,861 392,948
Accrued expenses and other
current liabilities 299,870 252,424 225,491
Total current liabilities 795,739 719,591 718,558
Long-term debt exclusive of current
installments:
Real estate mortgages 72,462 77,550 40,446
Equipment notes 3,897 4,598 5,303
General corporate debt 357,193 157,330 161,830
Deferred income taxes 15,716 33,523 29,985
SHAREHOLDERS' EQUITY
Preferred stock at face value,
authorized 5,000,000 shares, par
value $1, issued and outstanding
cumulative convertible stock of:
250,000 shares of 8% Series A 25,000 25,000 25,000
1,650,000 shares of 6.25% Series C 82,500 82,500 82,500
Common stock, authorized 150,000,000
shares, par value $1, issued and
outstanding 72,406,751, 72,401,254
and 73,459,528 shares 72,407 72,401 73,460
Additional paid-in capital 267,496 267,937 285,463
Retained earnings 118,487 159,114 138,510
Total shareholders' equity 565,890 606,952 604,933
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,810,897 $1,599,544 $1,561,055
The accompanying notes are an integral part of the financial statements.
PAGE 5
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
Twenty-Six Weeks Ended
July 29, July 30,
1995 1994
Cash flows from operating activities:
Net income (loss) $(16,777) $ 38,165
Adjustments to reconcile net income (loss) to
net cash (used in) operating activities:
Depreciation and amortization 37,589 31,584
Loss from discontinued operations 2,300 1,098
Loss on disposal of discontinued operations 31,700 -
Loss on property disposals 297 2,779
Other (3,356) (192)
Changes in assets and liabilities:
(Increase) in accounts receivable (6,846) (7,645)
(Increase) in merchandise inventories (201,550) (192,730)
(Increase) in prepaid expenses (6,557) (1,878)
Increase (decrease) in accounts payable (19,728) 84,283
(Decrease) in accrued expenses and
other current liabilities (4,070) (1,406)
Increase (decrease) in deferred income taxes 1,950 (3,978)
Net cash (used in) operating activities (185,048) (49,920)
Cash flows from investing activities:
Property additions (57,518) (52,876)
Cash flows from financing activities:
Proceeds from borrowings of short-term debt 45,749 94,000
Proceeds from borrowings of long-term debt 199,861 -
Principal payments on long-term debt (3,108) (3,092)
Proceeds from sale and issuance of common
stock, net 82 551
Cash dividends (23,850) (24,880)
Net cash provided by financing activities 218,734 66,579
Net cash (used in) continuing operations (23,832) (36,217)
Net cash provided by (used in) discontinued
operations 2,015 (1,280)
Net (decrease) in cash and cash equivalents (21,817) (37,497)
Cash and cash equivalents at beginning of year 41,569 58,102
Cash and cash equivalents at end of period $ 19,752 $ 20,605
The accompanying notes are an integral part of the financial statements.
PAGE 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Thirteen Weeks (Second Quarter) and Twenty-Six Weeks Ended July 29, 1995
Versus Thirteen Weeks and Twenty-Six Weeks Ended July 30, 1994
On August 14, 1995, the Company signed an agreement to sell its women's
specialty division, Hit or Miss, to an entity owned by a group of outside
investors and management of that division. As a result of this
transaction, the operating results of Hit or Miss for the current period
and all prior periods are presented as discontinued operations for
comparative purposes. The impact of the sale of the division, estimated to
be an after-tax loss of $31.7 million (net of tax benefits of $19.8
million), is reflected as loss on disposal of discontinued operations. The
loss on disposal includes an estimate of operating results of Hit or Miss
from July 30, 1995 through the anticipated closing date of the transaction.
Net sales from continuing operations for the second quarter were $848.9
million, up 10% from $775.2 million last year. For the six months, net
sales from continuing operations were $1,679.4 million, up 9% from $1,537.5
million for the same period last year. The sales increase is primarily
attributable to new stores and, to a lesser extent, the inclusion of
HomeGoods in this year's consolidated net sales. Same store sales for the
quarter decreased 2% for T.J. Maxx and increased 18% for Winners. For the
six months, same store sales decreased 2% for T.J. Maxx and increased 11%
for Winners. Chadwick's experienced an increase in sales of 3% and 5% for
the quarter and six months, respectively. In general, sales were impacted
in both periods by the continuing general softness, industrywide, in U.S.
apparel sales, continued promotional activity of other retailers and
unusual weather in the second quarter.
Income from continuing operations for the second quarter was $7.7 million,
or $.08 per common share, versus last year's $19.8 million, or $.24 per
common share. The net loss for the second quarter after reflecting Hit or
Miss as discontinued operations, was $24.8 million, or $.37 per common
share, versus net income of $18.8 million, or $.23 per common share, last
year. For the six months, income from continuing operations was $17.2
million, or $.19 per common share versus $39.3 million, or $.48 per common
share. The net loss for the six months after reflecting Hit or Miss as
discontinued operations was $16.8 million, or $.28 per common share, versus
net income of $38.2 million, or $.47 per common share, for the same period
last year.
PAGE 7
The following table sets forth operating results expressed as a percentage
of net sales:
Percentage of Net Sales
13 Weeks Ended 26 Weeks Ended
7/29/95 7/30/94 7/29/95 7/30/94
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales, including buying
and occupancy costs 77.5 75.2 76.9 74.7
Selling, general and administrative
expenses 19.7 19.7 20.1 20.2
Interest on debt and capital leases 1.1 .7 1.1 .7
Income from continuing operations
before income taxes 1.7% 4.4% 1.9% 4.4%
Consolidated cost of sales, including buying and occupancy costs, as a
percentage of net sales increased in both periods over last year due to
higher markdowns taken at T.J. Maxx.
Interest on debt and capital leases increased in both periods over the
prior year due to additional long-term borrowings under the Company's
medium term note program in September 1994, a $45 million real estate
mortgage placed on the Chadwick's fulfillment center in December 1994, and
$200 million of long-term notes issued in June 1995. In addition, interest
expense reflects an increase in short-term borrowings, prior to receipt of
the $200 million borrowed in June.
The increase in the effective income tax rate in both periods reflects the
impact of foreign operating losses for which tax benefits have not been
recognized.
PAGE 8
The following table sets forth the operating results of the Company's major
business segments: (unaudited)
(In Thousands)
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
Net sales:
Off-price family
apparel stores $742,032 $689,849 $1,442,746 $1,343,277
Off-price catalog
operation 87,602 85,391 204,213 194,223
Off-price home fashion
stores 19,311 - 32,416 -
$848,945 $775,240 $1,679,375 $1,537,500
Operating income (loss):
Off-price family
apparel stores $ 37,229 $ 46,924 $ 70,140 $ 93,603
Off-price catalog
operation (1,128) 4,111 4,133 5,083
Off-price home fashion
stores (2,327) - (3,856) -
33,774 51,035 70,417 98,686
General corporate expense* 8,790 11,010 18,983 19,741
Goodwill amortization 654 654 1,307 1,307
Interest expense 9,813 5,400 18,312 10,574
Income from continuing
operations before income
taxes $ 14,517 $ 33,971 $ 31,815 $ 67,064
* General corporate expense for the periods ended July 29, 1995 include
the net operating results of T.K. Maxx and the Cosmopolitan catalog.
General corporate expense for the periods ended July 30, 1994 include
the net operating results of HomeGoods and T.K. Maxx.
The off-price family apparel stores segment, T.J. Maxx and Winners,
recorded a decrease in operating profit of 21% and 25% for the second
quarter and six months, respectively. This is attributable to weak apparel
sales and increased markdowns at T.J. Maxx. Winners operating income
increased in both periods. Chadwick's recorded a decrease in operating
income in both periods due to a weak response to the summer catalog.
Despite the weak sales performance, this division has made operational
improvements leading to improved customer service.
PAGE 9
Stores in operation at the end of the period are as follows:
July 29, 1995 July 30, 1994
T.J. Maxx 565 520
Winners 42 29
HomeGoods 22 10
T.K. Maxx 6 2
Financial Condition
Cash flows from operating and financing activities for the six months
reflect increases in inventory and short-term borrowings, which are
primarily due to normal seasonal requirements and an increase in
opportunistic purchases at T.J. Maxx for the fall selling season versus
that of the prior year. An increase in long-term debt is due to the
Company's borrowing of $100 million of 5 year notes at 6 5/8% and $100
million of 10 year notes at 7%. Proceeds of these two notes initially used
in part to reduce short-term borrowings will be used for the repayment of
scheduled maturities of outstanding long-term debt, for new store and other
capital expenditures and for general corporate purposes. Overall borrowing
levels have increased primarily due to lower than anticipated earnings in
fiscal 1995 and the first half of fiscal 1996.
As of July 29, 1995, the Company has unsecured committed short-term credit
lines totalling $330 million and unsecured uncommitted short-term credit
lines of $105 million. These lines, when needed, are drawn upon or used as
backup to the Company's commercial paper program. The Company believes
that internally generated funds along with its ability to access external
financing sources, will meet its needs.
PAGE 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results for the first six months are not necessarily indicative of
results for the full fiscal year, because the Company's business, in
common with the businesses of retailers generally, is subject to
seasonal influences, with higher levels of sales and income generally
realized in the second half of the year.
2. The preceding data are unaudited and reflect all normal recurring
adjustments, the use of retail statistics, and accruals and deferrals
among periods required to match costs properly with the related revenue
or activity, considered necessary by the Company for a fair presentation
of its financial statements for the periods reported, all in accordance
with generally accepted accounting principles and practices consistently
applied.
3. The Company has available reserves for lease and other contingent
liabilities associated with the 1988 sale of the Company's former Zayre
Stores division to Ames Department Stores, Inc. and the Company believes
that these reserves should be adequate to cover all reasonably expected
liabilities that it may incur as a result of the Ames bankruptcy. On
December 30, 1992, Ames emerged from bankruptcy pursuant to a plan of
reorganization.
4. The Company's cash payments for interest expense and income taxes,
including discontinued operations, are as follows: (in thousands)
Twenty-Six Weeks Ended
July 29, July 30,
1995 1994
Cash paid for:
Interest on debt and capital leases $17,718 $11,229
Income taxes 5,568 33,882
5. On August 14, 1995, the Company signed an agreement to sell the Hit or
Miss division to members of Hit or Miss management and outside
investors. Under the agreement, the Company will be responsible for the
cost of closing 69 stores. The Company will receive $3 million in cash
and a seven-year, $10 million Note with interest at 10%. The parties
expect to complete the transaction during September, 1995.
As a result of this transaction, the operating results of Hit or Miss,
as well as the loss on the sale of the division, are presented as
discontinued operations. The Company's results for the second quarter
and first six months include an after-tax loss from discontinued
operations of $.9 million and $2.3 million, respectively. The operating
results of Hit or Miss for all prior periods have been reclassified as
"Income (loss) from discontinued operations" for comparative purposes.
The impact of the sale of the division, estimated to be an after-tax
loss of $31.7 million (net of tax benefits of $19.8 million), is
reflected as "Loss on disposal of discontinued operations." The loss on
disposal includes an estimate of operating results of Hit or Miss
through the anticipated closing date of the transaction.
PAGE 11
6. In June 1995, the Company filed a shelf registration statement with the
Securities and Exchange Commission which provides for the issuance of up
to $250,000,000 of long-term debt. Upon completion of the filing, the
Company then issued $200 million of long-term notes. A summary of the
notes issued is as follows:
Principal Term Interest Rate
Note A $100 Million 5 Years 6 5/8%
Note B 100 Million 10 Years 7%
The proceeds, initially used in part to repay short-term borrowings,
will be used by the Company for the repayment of scheduled maturities of
outstanding long-term debt, for new store and other capital expenditures
and for general corporate purposes.
PAGE 12
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Information with respect to matters voted on at the Company's
Annual Meeting of Stockholders on June 6, 1995 (during the
period covered by this report) was provided in the Company's
Quarterly Report on Form 10-Q for the quarter ended April 29,
1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Statement re Computation of Per Share Earnings
(b) On June 20, the Company filed a report on Form 8-K under
which it filed a copy of its bylaws as amended on June 6,
1995. In addition, under the Form 8-K, a form of
Underwriting Agreement was filed which related to the
Company's issuance of $200 million of long-term notes.
PAGE 13
SIGNATURE
Pursuant to the requirements 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.
(Registrant)
Date: September 12, 1995
/s/ Donald G. Campbell
Donald G. Campbell, Senior Vice
President - Finance, on behalf
of The TJX Companies, Inc. and as
Principal Financial and Accounting
Officer of The TJX Companies, Inc.
EXHIBIT 11
PAGE 1
COMPUTATION OF NET INCOME PER COMMON SHARE
(UNAUDITED)
DOLLARS IN THOUSANDS
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
The computation of net income
(loss) available and adjusted
shares outstanding follows:
Net income (loss) $(24,842) $18,796 $(16,777) $38,165
Less:
Preferred stock dividends (1,789) (1,789) (3,578) (3,578)
Net income (loss) used for
primary and fully diluted
computation $(26,631) $17,007 $(20,355) $34,587
Weighted average number of
common shares outstanding 72,406,751 73,459,548 72,407,447 73,462,483
Add (where dilutive):
Assumed exercise of those
options that are common
stock equivalents, net of
treasury shares deemed to
have been repurchased 82,238 404,980 82,238 497,179
Adjusted shares outstanding,
used for primary and
fully diluted computation 72,488,989 73,864,528 72,489,685 73,959,662