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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 October 29, 1994
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
November 26, 1994: 72,409,202
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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
October 29, October 30,
1994 1993
Net sales $1,011,879 $959,683
Cost of sales, including buying and
occupancy costs 750,927 697,341
Selling, general and administrative expenses 197,199 177,143
Interest on debt and capital leases 7,665 6,190
Income before income taxes 56,088 79,009
Provision for income taxes 23,300 31,288
Net income 32,788 47,721
Preferred stock dividends 1,789 1,789
Net income available to common shareholders $ 30,999 $ 45,932
Primary and fully diluted earnings per common share:
Net income $ .42 $ .61
Cash dividends per common share $ .14 $ .125
The accompanying notes are an integral part of the financial statements.
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PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
Thirty-Nine Weeks Ended
October 29, October 30,
1994 1993
Net sales $2,730,304 $2,586,374
Cost of sales, including buying and
occupancy costs 2,043,230 1,919,251
Selling, general and administrative expenses 546,813 491,162
Interest on debt and capital leases 18,868 15,971
Income before income taxes and cumulative
effect of accounting changes 121,393 159,990
Provision for income taxes 50,440 63,627
Income before cumulative effect of
accounting changes 70,953 96,363
Cumulative effect of accounting changes - (2,667)
Net income 70,953 93,696
Preferred stock dividends 5,367 5,367
Net income available to common
shareholders $ 65,586 $ 88,329
Primary and fully diluted earnings per common share:
Income before cumulative effect of
accounting changes $ .89 $1.23
Cumulative effect of accounting changes - (.04)
Net income $ .89 $1.19
Cash dividends per common share $ .42 $.375
The accompanying notes are an integral part of the financial statements.
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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS
ASSETS October 29, January 29, October 30,
1994 1994 1993
Current assets:
Cash and cash equivalents $ 26,247 $ 58,102 $ 47,184
Accounts receivable 68,552 30,639 50,847
Merchandise inventories 1,081,291 772,324 958,681
Prepaid expenses 24,980 20,791 28,751
Total current assets 1,201,070 881,856 1,085,463
Property, at cost:
Land and buildings 114,423 110,793 106,993
Leasehold costs and improvements 292,954 256,929 247,670
Furniture, fixtures and equipment 440,568 398,106 376,449
847,945 765,828 731,112
Less accumulated depreciation 371,192 326,685 311,251
476,753 439,143 419,861
Other assets 16,607 13,744 17,152
Goodwill, net of amortization 90,624 92,627 93,286
TOTAL ASSETS $1,785,054 $1,427,370 $1,615,762
LIABILITIES
Current liabilities:
Short-term debt $ 118,970 $ - $ 105,000
Current installments of
long-term debt 6,175 5,936 5,458
Accounts payable 494,184 340,578 421,286
Accrued expenses and other
current liabilities 284,543 239,733 247,569
Federal and state income taxes
payable 20,456 5,406 19,413
Total current liabilities 924,328 591,653 798,726
Long-term debt exclusive of current
installments:
Real estate mortgages 39,614 42,823 44,320
Equipment notes 5,244 6,031 6,642
General corporate debt 182,330 162,000 162,000
Deferred income taxes 27,993 33,963 36,135
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, par value $1, authorized
150,000,000 shares, issued and
outstanding 72,409,433, 73,430,615
and 73,411,697 shares 72,409 73,431 73,412
Additional paid-in capital 266,412 284,744 281,534
Retained earnings 159,224 125,225 105,493
Total shareholders' equity 605,545 590,900 567,939
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,785,054 $1,427,370 $1,615,762
The accompanying notes are an integral part of the financial statements.
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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
Thirty-Nine Weeks Ended
October 29, October 30,
1994 1993
Cash flows from operating activities:
Income before cumulative effect of
accounting changes $ 70,953 $ 96,363
Adjustments to reconcile income before
cumulative effect of accounting changes
to net cash (used in) operating activities:
Depreciation and amortization 56,240 49,673
Loss on property disposals 3,276 1,487
Other (2,660) (6,026)
Changes in assets and liabilities:
(Increase) in accounts receivable (37,913) (26,726)
(Increase) in merchandise inventories (308,967) (286,327)
(Increase) in prepaid expenses (4,189) (10,858)
Increase in accounts payable 153,606 95,508
Increase in accrued expenses and
other current liabilities 43,153 5,374
Increase in income taxes payable 15,050 2,476
(Decrease) in deferred income taxes (5,970) (828)
Net cash (used in) operating activities (17,421) (79,884)
Cash flows from investing activities:
Property additions (94,482) (89,334)
Cash flows from financing activities:
Proceeds from borrowings of short-term debt 118,970 105,000
Proceeds from borrowings of long-term debt 20,500 37,000
Principal payments on long-term debt (3,927) (2,571)
Proceeds from sale and issuance of common
stock, net 720 3,147
Common stock repurchased (19,261) -
Cash dividends (36,954) (32,865)
Net cash provided by financing activities 80,048 109,711
Net (decrease) in cash and cash equivalents (31,855) (59,507)
Cash and cash equivalents at beginning of year 58,102 106,691
Cash and cash equivalents at end of period $ 26,247 $ 47,184
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 (Third Quarter) and Thirty-Nine Weeks Ended October 29, 1994
Versus Thirteen Weeks and Thirty-Nine Weeks Ended October 30, 1993
Net sales for the third quarter increased 5% to $1,011.9 million up from
$959.7 million last year. For the nine months, net sales increased 6% to
$2,730.3 million up from $2,586.4 million for the same period last year.
The increase in sales for both periods is primarily attributable to new
stores. Same store sales for the third quarter decreased by 1% and 10% for
T.J. Maxx and Hit or Miss, respectively, and increased by 11% for Winners.
For the nine months, same store sales were flat for T.J. Maxx, decreased 6%
for Hit or Miss and increased 11% for Winners. In general, sales
comparisons were impacted by unseasonably warm weather during the third
quarter and by a general softness, industrywide, in apparel sales during
both periods. Chadwick's sales increased by 8% and 1% for the third
quarter and nine months, respectively. During the third quarter,
Chadwick's experienced strong demand for its winter catalogs, however,
year-to-date results reflect a poor performance by the spring catalog as
well as a reduction in fulfillment rates on certain items from the summer
catalog.
Net income for the third quarter was $32.8 million, or $.42 per common
share versus last year's $47.7 million, or $.61 per common share. For the
nine months, net income was $71.0 million, or $.89 per common share versus
$96.4 million, or $1.23 per common share before the cumulative effect of
accounting changes of $2.7 million recorded in that period. Net income in
the prior period, after the one-time charge for accounting changes, was
$93.7 million, or $1.19 per common share.
The following table sets forth operating results expressed as a percentage
of net sales:
Percentage of Net Sales
13 Weeks Ended 39 Weeks Ended
10/29/94 10/30/93 10/29/94 10/30/93
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales, including
buying and occupancy costs 74.2 72.7 74.8 74.2
Selling, general and
administrative expenses 19.5 18.5 20.0 19.0
Interest on debt and capital
leases .8 .6 .7 .6
Income before income taxes
and cumulative effect of
accounting changes 5.5% 8.2% 4.5% 6.2%
Consolidated cost of sales, including buying and occupancy costs, as a
percentage of net sales increased in both periods as compared to last year
due to weak sales performance of apparel in the U.S. divisions. In
addition, during the third quarter T.J. Maxx recorded increased markdowns
versus the prior year.
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Selling, general and administrative expenses as a percentage of net sales
increased in both periods, which reflects the weak sales performance. In
addition, this percentage is impacted by the net operating results of T.K.
Maxx, the Company's start-up United Kingdom venture.
The following table sets forth the operating results of the Company's major
business segments: (unaudited)
(In Thousands)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
1994 1993 1994 1993
Net sales:
Off-price family
apparel stores $ 803,653 $752,953 $2,146,930 $1,996,116
Off-price women's
specialty stores 87,273 94,939 268,198 279,728
Off-price catalog
operation 120,953 111,791 315,176 310,530
$1,011,879 $959,683 $2,730,304 $2,586,374
Operating income (loss):
Off-price family
apparel stores $ 71,377 $ 86,577 $ 164,980 $ 174,775
Off-price women's
specialty stores (2,383) 3,068 (3,311) 6,794
Off-price catalog
operation 3,798 5,141 8,881 18,736
72,792 94,786 170,550 200,305
General corporate
expense* 8,386 8,933 28,329 22,381
Goodwill amortization 653 654 1,960 1,963
Interest expense 7,665 6,190 18,868 15,971
Income before income
taxes and cumulative
effect of accounting
changes $ 56,088 $ 79,009 $ 121,393 $ 159,990
* The periods ended October 30, 1993 include the net operating results of
HomeGoods and Value Mart. The periods ended October 29, 1994 include the
operating results of HomeGoods and T.K. Maxx. In addition, the 39 weeks
ended October 29, 1994 include a reserve for the closing of the Value
Mart operation.
The off-price family apparel stores segment recorded a decrease of 18% and
6% in operating profit in the third quarter and nine months, respectively.
T.J. Maxx's performance was adversely affected by a continuing industrywide
softness in U.S. apparel sales and by unseasonably warm weather in the
third quarter, while in Canada, Winners had a strong performance in both
periods. Hit or Miss, which has a narrower merchandise mix, was more
directly impacted by the softness in U.S. apparel sales and recorded a
decrease
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in operating profit in both periods.
Chadwick's of Boston experienced a decrease in operating income for both
periods. During the third quarter, Chadwick's experienced strong demand
for its winter catalogs, however, due to a tightened labor market, it
experienced difficulties in gearing shipping levels to meet the increased
demand. Year-to-date results were also impacted by a poor performance of
the spring catalog as well as a reduction in fulfillment rates on certain
items from the summer catalog.
Stores in operation at the end of the period are as follows:
October 29, 1994 October 30, 1993
T.J. Maxx 539 502
Hit or Miss 508 500
Winners 34 27
HomeGoods 12 10
T.K. Maxx 4 -
Financial Condition
Cash flows from operating and financing activities for the nine months
reflect increases in inventory, accounts payable, and short-term
borrowings, which are primarily due to normal seasonal requirements. In
addition, cash flows for the period ended October 30, 1993, reflect higher
spending against the Ames reserve as well as an increase in income taxes
paid due to the Ames cash settlement received in December 1992.
On August 16, 1994, the Company announced a stock repurchase program of up
to $100 million of the Company's common stock. During the third quarter,
the Company purchased slightly more than 1 million of its common shares,
representing approximately 1.5% of the Company's outstanding common shares.
It is the Company's intention to repurchase additional shares over time
through open market purchases and through other transactions.
On September 12, 1994, the Company placed two series of notes totalling
$20.5 million under its Medium Term Notes (MTN) program.
A summary of the notes issued is as follows:
Principal Term Interest Rate
Series 4 $15.5 Million 3 Years 6.97%
Series 5 5.0 Million 10 Years 7.97%
The borrowings under this program are to support the Company's
international and domestic new business development and capital
expenditures. The Company simultaneously entered into foreign currency
swap agreements in both Canadian dollars and British pounds sterling, in
amounts equivalent to the MTN borrowings.
During the second quarter, the Company increased its unsecured committed
short-term credit lines to $300 million. These lines, when needed, are
PAGE 9
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.
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.
PAGE 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results for the first nine 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 are as
follows: (in thousands)
Thirty-Nine Weeks Ended
October 29, October 30,
1994 1993
Cash paid for:
Interest on debt and capital leases $14,242 $11,763
Income taxes 43,841 61,988
5. Effective January 31, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS No. 109). SFAS No. 109 requires the adjustment of
deferred tax assets and liabilities to reflect the effect of enacted
changes in tax laws or rates. In connection with the adoption of SFAS
No. 109, the Company recorded as a cumulative effect of an accounting
change, a gain of $3,478,000, or $.05 per share, which represents the
net decrease to the net deferred tax liability as of January 31, 1993.
6. Effective January 31, 1993, the Company also adopted the Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This standard requires
accrual for the cost of postretirement health care and life insurance
benefits during the years that an employee provides services to the
Company. The Company has elected to recognize the transition obligation
in full as of January 31, 1993, and accordingly has recorded a one-time
implementation charge of $6,145,000, net of a tax benefit of $3,937,000,
as a cumulative effect of an accounting change. The Company's cash
flows are not impacted by the new accounting.
7. On August 16, 1994, the Company authorized the repurchase of up to $100
million of TJX common stock. During the third quarter, the Company
PAGE 11
purchased slightly more than 1 million of its common shares,
representing approximately 1.5% of the Company's outstanding common
shares. It is the Company's intention to repurchase additional shares
over time through open market purchases or through other transactions.
8. On September 12, 1994, the Company placed two series of notes totalling
$20.5 million under its Medium Term Notes (MTN) program.
A summary of the notes issued is as follows:
Principal Term Interest Rate
Series 4 $15.5 Million 3 Years 6.97%
Series 5 5.0 Million 10 Years 7.97%
The borrowings under this program are to support the Company's
international and domestic new business development and capital
expenditures. The Company simultaneously entered into foreign currency
swap agreements in both Canadian dollars and British pounds sterling, in
amounts equivalent to the MTN borrowings.
Since the swap agreements are accounted for as a hedge against the
Company's investment in foreign subsidiaries, foreign exchange gains and
losses on the agreements are recognized in shareholders' equity,
offsetting translation adjustments associated with the Company's
investment in foreign operations. The swap agreements contain rights of
offset designed to reduce the Company's exposure to credit loss in the
event of nonperformance by one of the counterparties. The
counterparties to these agreements consist of a limited number of
credit-worthy international financial institutions.
PAGE 12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Statement re Computation of Per Share Earnings
(b) The Company did not file any reports on Form 8-K with the
Securities and Exchange Commission during the quarter ended
October 29, 1994.
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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: December 9, 1994
/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 Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
1994 1993 1994 1993
The computation of net
income available and
adjusted shares
outstanding follows:
Net income $32,788 $47,721 $70,953 $93,696
Less:
Preferred stock dividends - - (5,367) (5,367)
Net income used for primary
and fully diluted
computation $32,788 $47,721 $65,586 $88,329
Weighted average number
of common shares 73,237,536 73,413,791 73,395,797 73,419,356
outstanding
Add (where dilutive):
Assumed exercise of those
options that are common
stock equivalents, net of
treasury shares deemed to
have been repurchased 256,765 743,864 420,975 743,862
Assumed exercise of
convertible preferred
stock 4,371,199 4,371,199 - -
Adjusted shares out-
standing, used for
primary and fully
diluted computation 77,865,500 78,528,854 73,816,772 74,163,218