1
PAGE 1
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 26, 1997
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 23,
1997: 163,267,591.
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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 26, July 27,
1997 1996
---------- ----------
Net sales $1,698,372 $1,548,259
---------- ----------
Cost of sales, including buying and
occupancy costs 1,323,261 1,222,190
Selling, general and administrative expenses 283,788 257,914
Interest expense, net 1,545 10,968
---------- ----------
Income from continuing operations before
income taxes 89,778 57,187
Provision for income taxes 37,200 23,497
---------- ----------
Income from continuing operations 52,578 33,690
Income from discontinued operations,
net of income taxes -- 2,364
---------- ----------
Net income 52,578 36,054
Preferred stock dividends 4,601 4,260
---------- ----------
Net income attributable to common shareholders $ 47,977 $ 31,794
========== ==========
Primary and fully diluted earnings
per common share:
Continuing operations $ .29 $ .19
Net income $ .29 $ .20
Cash dividends per common share $ .05 $ .035
The accompanying notes are an integral part of the financial statements.
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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 26, July 27,
1997 1996
---------- ----------
Net sales $3,258,522 $3,020,506
---------- ----------
Cost of sales, including buying and
occupancy costs 2,525,880 2,389,549
Selling, general and administrative expenses 557,526 509,065
Interest expense, net 2,400 25,330
---------- ----------
Income from continuing operations before
income taxes 172,716 96,562
Provision for income taxes 71,677 39,848
---------- ----------
Income from continuing operations 101,039 56,714
Income from discontinued operations,
net of income taxes -- 9,426
---------- ----------
Net income 101,039 66,140
Preferred stock dividends 7,226 8,788
---------- ----------
Net income attributable to common shareholders $ 93,813 $ 57,352
========== ==========
Primary and fully diluted earnings
per common share:
Continuing operations $ .56 $ .31
Net income $ .56 $ .37
Cash dividends per common share $ .10 $ .07
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
July 26, January 25, July 27,
1997 1997 1996
---------- ---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 138,232 $ 474,732 $ 245,342
Accounts receivable and
income taxes recoverable 75,691 57,275 77,049
Merchandise inventories 1,421,529 1,059,505 1,328,039
Prepaid expenses 17,208 16,379 18,461
Net current assets of
discontinued operations -- 54,451 82,764
---------- ---------- ----------
Total current assets 1,652,660 1,662,342 1,751,655
---------- ---------- ----------
Property, at cost:
Land and buildings 103,542 103,067 110,437
Leasehold costs and improvements 456,091 428,836 437,911
Furniture, fixtures and equipment 572,360 527,710 566,882
---------- ---------- ----------
1,131,993 1,059,613 1,115,230
Less accumulated depreciation
and amortization 471,070 419,129 393,403
---------- ---------- ----------
660,923 640,484 721,827
Other assets 47,330 42,259 35,680
Goodwill and tradename,
net of amortization 213,079 216,127 232,879
Net noncurrent assets of
discontinued operations -- -- 49,801
---------- ---------- ----------
TOTAL ASSETS $2,573,992 $2,561,212 $2,791,842
========== ========== ==========
LIABILITIES
Current liabilities:
Short-term debt $ 7,966 $ -- $ 403
Current installments of
long-term debt 17,716 27,140 103,211
Accounts payable 576,964 533,945 579,616
Accrued expenses and other
current liabilities 542,631 577,046 608,561
Federal and state income taxes
payable 4,020 44,165 --
---------- ---------- ----------
Total current liabilities 1,149,297 1,182,296 1,291,791
---------- ---------- ----------
Long-term debt exclusive of current
installments:
Real estate mortgages 21,827 22,391 24,402
Equipment notes 1,544 2,135 2,662
General corporate debt 219,891 219,884 635,807
Deferred income taxes 12,541 7,320 21,478
5
SHAREHOLDERS' EQUITY
- --------------------
Preferred stock at face value,
authorized 5,000,000 shares, par
value $1, issued and outstanding
cumulative convertible stock of:
1,650,000 shares of 6.25% Series C -- -- 82,500
250,000 shares of 1.81% Series D -- -- 25,000
1,204,100 shares of 7% Series E 120,410 150,000 150,000
Common stock, authorized 300,000,000
shares, par value $1, issued and
outstanding 161,218,420; 79,576,438
and 74,132,470 shares 161,218 79,576 74,132
Additional paid-in capital 340,920 429,017 296,496
Retained earnings 546,344 468,593 187,574
---------- ---------- ----------
Total shareholders' equity 1,168,892 1,127,186 815,702
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,573,992 $2,561,212 $2,791,842
========== ========== ==========
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
Twenty-Six Weeks Ended
--------------------------
July 26, July 27,
1997 1996
--------- ---------
Cash flows from operating activities:
Net income $ 101,039 $ 66,140
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 60,633 61,821
(Income) from discontinued operations -- (9,426)
Property disposals 5,036 4,346
Other (100) --
Changes in assets and liabilities:
(Increase) in accounts receivable and
income taxes recoverable (18,416) (6,735)
(Increase) in merchandise inventories (362,024) (69,551)
(Increase) in prepaid expenses (829) (2,055)
Increase in accounts payable 43,019 142,982
(Decrease) in accrued expenses and other
current liabilities (5,610) (50,703)
(Decrease) in income taxes payable (40,145) (2,548)
Increase in deferred income taxes 2,730 8,814
--------- ---------
Net cash provided by (used in) operating activities (214,667) 143,085
--------- ---------
Cash flows from investing activities:
Property additions (80,966) (49,083)
Contingent payment for acquisition of Marshalls -- (49,327)
Proceeds adjustment for sale of Chadwick's (28,805) --
--------- ---------
Net cash (used in) investing activities (109,771) (98,410)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings of short-term debt 7,966 403
Principal payments on long-term debt (10,579) (3,305)
Stock repurchase (45,580) --
Proceeds from sale and issuance of common
stock, net 4,469 7,952
Cash dividends (22,789) (19,055)
--------- ---------
Net cash (used in) financing activities (66,513) (14,005)
--------- ---------
Net cash provided by (used in) continuing operations (390,951) 30,670
Net cash provided by discontinued operations 54,451 5,446
--------- ---------
Net increase (decrease) in cash and cash
equivalents (336,500) 36,116
Cash and cash equivalents at beginning of year 474,732 209,226
--------- ---------
Cash and cash equivalents at end of period $ 138,232 $ 245,342
========= =========
The accompanying notes are an integral part of the financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
-------------------------------------
Thirteen Weeks (Second Quarter) and Twenty-Six Weeks Ended July 26, 1997
Versus Thirteen Weeks and Twenty-Six Weeks Ended July 27, 1996
--------------------------------------------------------------
Effective December 7, 1996, the Company sold its Chadwick's of Boston mail order
operation to Brylane, L.P. This transaction was accounted for in the Company's
fourth quarter for the fiscal year ended January 25, 1997. The operating results
for Chadwick's for all periods prior to the sale have been presented as
discontinued operations.
Net sales from continuing operations for the second quarter were $1,698.4
million, up 10% from $1,548.3 million last year. For the six months, net sales
from continuing operations were $3,258.5 million, up 8% from $3,020.5 million
for the same period last year. The increase in sales is primarily attributable
to an increase in same store sales. Same store sales for the second quarter
increased by 7% at T.J. Maxx, 8% at Marshalls, 15% at Winners, 14% at HomeGoods
and 15% at T.K. Maxx. Same store sales for the six months increased by 5% at
T.J. Maxx, 8% at Marshalls, 17% at Winners, 12% at HomeGoods and 19% at T.K.
Maxx.
Income from continuing operations for the second quarter was $52.6 million, or
$.29 per common share versus $33.7 million, or $.19 per common share. For the
six months, income from continuing operations was $101 million, or $.56 per
common share versus $56.7 million, or $.31 per common share. For the periods
ended July 27, 1996, the Company recorded net income of $36.1 million, or $.20
per common share, and $66.1 million, or $.37 per common share, including the
results of its discontinued operation Chadwick's of Boston, for the second
quarter and six months, respectively.
The following table sets forth operating results expressed as a percentage of
net sales (continuing operations):
Percentage of Net Sales
------------------------------------------
13 Weeks Ended 26 Weeks Ended
------------------ -------------------
7/26/97 7/27/96 7/26/97 7/27/96
------- ------- ------- -------
Net sales 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Cost of sales, including buying
and occupancy costs 77.9 78.9 77.5 79.1
Selling, general and administrative
expenses 16.7 16.7 17.1 16.9
Interest expense, net .1 .7 .1 .8
----- ----- ----- -----
Income from continuing operations
before income taxes 5.3% 3.7% 5.3% 3.2%
===== ===== ===== =====
Cost of sales, including buying and occupancy costs as a percent of net sales,
decreased in both periods from the prior year. This improvement reflects the
benefits of the Marshalls acquisition. Enhanced purchasing power has allowed the
Company to pass on better values to its customers and has improved merchandise
margins. The improvement in the quarter is less significant as the prior year
results also reflect the trend of margin enhancement associated with the
Marshalls acquisition.
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Selling, general and administrative expenses, as a percentage of net sales, was
flat for the second quarter and increased for the six months. Selling, general
and administrative expenses include a charge of $10 million for the six months
in connection with a deferred shares award granted under a new five year
employment contract with the Company's Chief Executive Officer. For the second
quarter and six months, an additional charge of $3 million was recorded as
compensation expense associated with the increase in market value associated
with the deferred shares award described above. In addition, the second quarter
and the six months included a charge of $5.0 million for the estimated cost of
closing certain HomeGoods stores. These charges more than offset additional
expense savings the Company had realized through the consolidation of certain
administrative functions as a result of the Marshalls acquisition. Selling,
general and administrative expenses, as a percent of net sales, excluding the
above items, would have been 16.2% for the quarter ended July 1997 versus 16.7%
last year and 16.5% for the six months ended July 1997 versus 16.9% last year.
Interest expense, net, decreased in the second quarter and six months. The
decrease is the result of the Company's prepayments on its 9 1/2% sinking fund
debentures during the third quarter of fiscal 1997 and the $375 million term
loan, incurred for the acquisition of Marshalls, during the fourth quarter of
fiscal 1997. In addition, as a result of the Company's strong cash position,
interest expense, net includes interest income of $5.3 million and $11.4 million
versus $3.9 and $4.6 million last year for the second quarter and six months,
respectively.
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 26, July 27, July 26, July 27,
1997 1996 1997 1996
---------- ---------- ---------- ----------
Net sales:
Off-price family
apparel stores $1,677,034 $1,528,177 $3,216,791 $2,981,041
Off-price home fashion stores 21,338 20,082 41,731 39,465
---------- ---------- ---------- ----------
$1,698,372 $1,548,259 $3,258,522 $3,020,506
========== ========== ========== ==========
Operating income (loss):
Off-price family
apparel stores $ 110,369 $ 82,197 $ 216,572 $ 149,254
Off-price home fashion stores (3,706) (3,056) (6,539) (5,626)
---------- ---------- ---------- ----------
106,663 79,141 210,033 143,628
General corporate expense 14,686 10,332 33,610 20,429
Goodwill amortization 654 654 1,307 1,307
Interest expense, net 1,545 10,968 2,400 25,330
---------- ---------- ---------- ----------
Income from continuing
operations before
income taxes $ 89,778 $ 57,187 $ 172,716 $ 96,562
========== ========== ========== ==========
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The off-price family apparel stores segment, T.J. Maxx, Marshalls, Winners and
T.K. Maxx significantly increased its operating income for both the second
quarter and six months. This segment's increased operating results reflect the
combined buying power of T.J. Maxx and Marshalls, as well as the expense savings
resulting from the consolidation of Marshalls. Winners had significant increases
in operating income in both periods. General corporate expense for the quarter
and six months was impacted by the charge associated with a deferred shares
award granted under a new five year employment contract with the Company's Chief
Executive Officer as well as reserves for certain HomeGoods store closings.
Stores in operation at the end of the period are as follows:
July 26, 1997 July 27, 1996
------------- -------------
T.J. Maxx 578 582
Marshalls 453 464
Winners 68 57
HomeGoods 21 23
T.K. Maxx 21 11
Financial Condition
- -------------------
Cash flows from operating activities for the six months reflect increases in
inventories and accounts payable that are primarily due to normal seasonal
requirements. Comparisons to fiscal 1997's six months are impacted by the
Company's movement to a leaner inventory position during fiscal 1997.
On April 9, 1997, the Company approved a two-for-one stock split to be effected
in the form of a 100% stock dividend which was subject to approval by the
shareholders of an increase in the number of authorized shares of the Company's
common stock. On June 3, 1997, the Company's shareholders approved an increase
in the number of authorized shares of common stock making the two-for-one stock
split effective. The split was paid on June 26, 1997 to shareholders of record
on June 11, 1997 and resulted in the issuance of 79.8 million shares of common
stock along with a corresponding decrease of $79.8 million in additional paid in
capital. All historical earnings per share amounts have been restated to reflect
the two-for-one stock split.
On June 25, 1997, the Company announced a program to purchase up to an aggregate
of $250 million of the Company's common stock and Series E preferred stock to be
accomplished through open market purchases or other transactions. Through July
26, 1997, the Company has purchased 1,616,645 shares of common stock and 2,500
shares of Series E preferred stock at a cost of $45.6 million. The Company is no
longer seeking to purchase its Series E preferred stock. The average price of
the common shares repurchased was $27.75 per share. Subsequent to the end of the
quarter through September 5, 1997, the Company has purchased an additional
3,466,500 shares of common stock for $94.7 million.
Through July 26, 1997, shareholders converted 293,400 shares of Series E
preferred stock into 3,167,611 shares of common stock. The Company paid $1.7
million to induce conversion of the preferred shares. Subsequent to the end of
the quarter through September 5, 1997, an additional 441,000 shares of the
Series E preferred stock were converted into 4,761,131 shares of common stock
and the Company paid $2.0 million to induce conversion of these preferred
shares.
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The following table sets forth the shareholders' equity transactions for the six months ended
July 26, 1997: (unaudited)
(In Millions)
Prfd Common
Stock Stock Add'l
Face Par Paid-In Retained
Value Value Capital Earnings Total
----- ----- ------- -------- -----
Balance, January 25, 1997 $150.0 $79.6 $429.0 $468.6 $1,127.2
Net income -- -- -- 101.0 101.0
Cash dividends:
Preferred -- -- -- (5.1) (5.1)
Common -- -- -- (16.0) (16.0)
Conversion of cumulative
Series E Preferred
stock into common (29.3) 3.1 26.2 (1.7) (1.7)
Stock repurchase
Preferred (.3) -- -- (.5) (.8)
Common -- (1.6) (43.2) -- (44.8)
Stock split -- 79.8 (79.8) -- --
Issuance of common
stock under stock
incentive plan -- .3 4.9 -- 5.2
Other -- -- 3.9 -- 3.9
------ ------ ------ ------ --------
Balance, July 26, 1997 $120.4 $161.2 $341.0 $546.3 $1,168.9
====== ====== ====== ====== ========
During the fourth quarter of fiscal 1997, the Company completed the sale of its
Chadwick's of Boston catalog division to Brylane, L.P. Total proceeds from the
sale estimated at $300 million included cash, a 10-year $20 million Convertible
Subordinated Note at 6% interest and Chadwick's consumer credit card
receivables. During the second quarter of fiscal 1998, the Company paid Brylane
$28.8 million as an estimated adjustment of the cash proceeds based on the
closing balance sheet of Chadwick's as of December 7, 1996 as prepared by the
Company. The cash proceeds may be further adjusted upon agreement regarding the
closing balance sheet of Chadwick's as of December 7, 1996. The results of
Chadwick's for all periods prior to December 7, 1996 have been reclassified to
discontinued operations. The cash provided by discontinued operations represents
the collection of the remaining balance of the Chadwick's consumer credit card
receivables outstanding as of January 1997.
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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's cash payments for interest expense and income taxes are as
follows: (in thousands)
Twenty-Six Weeks Ended
--------------------------
July 26, July 27,
1997 1996
-------- -------
Cash paid for:
Interest expense $ 14,259 $26,534
Income taxes 109,524 79,619
4. In October 1988, the Company completed the sale of its former Zayre stores
division to Ames Department Stores, Inc. ("Ames"). In April 1990, Ames
filed for protection under Chapter 11 of the Federal Bankruptcy Code and in
December 1992, Ames emerged from bankruptcy under a plan of reorganization.
The Company is liable for certain amounts to be distributed under the plan
for certain unassigned landlord claims under certain former Zayre store
leases on which the Company was liable as of the date of the sale and which
Ames has rejected.
The Company remains contingently liable for the leases of most of the
former Zayre stores still operated by Ames. In addition, the Company is
contingently liable on a number of leases of the Hit or Miss division, the
Company's former off-price women's specialty stores, sold in September
1995. The Company believes that in view of the nature of the leases and the
fact that Ames and Hit or Miss are primarily liable, the Company's
contingent liability on these leases will not have a material effect on the
Company's financial condition. Accordingly, the Company believes its
available reserves should be adequate to cover all reasonably expected
liabilities associated with discontinued operations that it may incur.
The Company is also contingently liable on certain leases of HomeBase, Inc.
(previously named Waban Inc)., which was spun off by the Company in fiscal
1990. HomeBase, Inc. is primarily liable and has indemnified the Company
for any amounts the Company may have to pay with respect to such leases.
HomeBase, Inc. recently consummated a spin-off of BJ's Wholesale Club, Inc.
HomeBase, Inc., BJ's Wholesale Club, Inc., and the Company have entered
into agreements under which BJ's Wholesale Club, Inc. has substantial
indemnification responsibility with respect to such HomeBase
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leases. The Company is also contingently liable on certain leases of BJ's
Wholesale Club, Inc. for which both BJ's Wholesale Club, Inc. and HomeBase,
Inc. remain liable. As a result of the foregoing, the Company believes
that its contingent liability on the HomeBase, Inc. and BJ's Wholesale
Club, Inc. leases will not have a material effect on the Company's
financial condition.
5. During 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 "Earnings per Share."
This statement specifies the computation, presentation and disclosures for
basic and dilutive earnings per share. The Company will implement the
standard in its fourth quarter period for the fiscal year ended January 31,
1998. Using the new method for computing earnings per share, basic earnings
per share and dilutive earnings per share would be as follows:
13 Weeks Ended 26 Weeks Ended
-------------------- --------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
-------- -------- -------- --------
Income from continuing
operations:
Basic $ .30 $ .20 $ .59 $ .33
Dilutive .30 .19 .57 .32
Net income:
Basic .30 .22 .59 .39
Dilutive .30 .21 .57 .38
6. On April 9, 1997, the Company approved a two-for-one stock split to be
effected in the form of a 100% stock dividend which was subject to approval
by the shareholders of an increase in the number of authorized shares of
the Company's common stock. On June 3, 1997, the shareholders approved an
increase in the number of authorized shares of common stock making the
two-for-one stock split effective. The split was paid on June 26, 1997 to
shareholders of record on June 11, 1997 and resulted in the issuance of
79.8 million shares of common stock along with a corresponding decrease of
$79.8 million in additional paid-in capital. All historical earnings per
share amounts have been restated to reflect the two-for-one stock split.
7. On June 25, 1997, the Company announced a program to purchase up to an
aggregate of $250 million of the Company's common stock and Series E
preferred stock to be accomplished through open market purchases or other
transactions. Through July 26, 1997, the Company has purchased 1,616,645
shares of common stock and 2,500 shares of Series E preferred stock at a
cost of $45.6 million. The Company is no longer seeking to purchase its
Series E preferred stock. The average price of the common shares
repurchased was $27.75 per share. Subsequent to the end of the quarter
through September 5, 1997, the Company has purchased an additional
3,466,500 shares of common stock for $94.7 million.
Through July 26, 1997, the shareholders converted 293,400 shares of Series
E preferred stock into 3,167,611 shares of common stock. The Company paid
$1.7 million to induce conversion of the preferred shares. Subsequent to
the end of the quarter through September 5, 1997, an additional 441,000
shares of the Series E preferred stock were converted into 4,761,131 shares
of common stock and the Company paid $2.0 million to induce conversion of
these preferred shares.
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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 3, 1997 (during the period
covered by this report) was provided in the Company's Quarterly
Report on Form 10-Q for the quarter ended April 26, 1997.
Item 6(a) Exhibits
--------
10.1 The 1993 Stock Option Plan for Non-Employee Directors as amended
through June 3, 1997 is filed herewith.
10.2 The TJX Companies, Inc. Management Incentive Plan as amended
through June 3, 1997 is filed herewith.
10.3 The TJX Companies, Inc. Long Range Performance Incentive Plan as
amended through June 3, 1997 is filed herewith.
11 Statement re Computation of Per Share Earnings.
Item 6(b) Reports on Form 8-K
-------------------
N/A
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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: September 9, 1997
/s/ Donald G. Campbell
--------------------------------------------
Donald G. Campbell, Executive Vice
President - Finance, on behalf
of The TJX Companies, Inc. and as
Principal Financial and Accounting
Officer of The TJX Companies, Inc.
1
EXHIBIT 10.1
------------
(As amended through June 3, 1997.
Reflects 2 for 1 stock split effective June, 1997.)
THE TJX COMPANIES, INC.
1993 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of this 1993 Stock Option Plan for Non-Employee Directors (the
"Plan") is to advance the interests of The TJX Companies, Inc. (the "Company")
by increasing the proprietary interest in the Company of non-employee members of
the Company's Board of Directors by providing a portion of their compensation in
options to acquire shares ("Shares") of the Company's common stock ("Common
Stock").
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company designated by the Board for that
purpose. The Committee shall have authority, not inconsistent with the express
provisions of the Plan, (a) to administer the issuance of options granted in
accordance with the formula set forth in this Plan to such directors as are
eligible to receive options; (b) to prescribe the form or forms of instruments
evidencing options and any other instruments required under the Plan and to
change such forms from time to time; (c) to adopt, amend and rescind rules and
regulations for the administration of the Plan; and (d) to interpret the Plan
and to decide any questions and settle all controversies and disputes that may
arise in connection with the Plan. Such determinations of the Committee shall be
conclusive and shall bind all parties. Transactions under this plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
Section 16 of the Securities Exchange Act of 1934 ("Rule 16b-3"). To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date approved by the shareholders of
the Company. No option shall be granted under the Plan after the day of the
annual meeting of stockholders held in 2002, but options previously granted may
extend beyond that date.
2
4. SHARES SUBJECT TO THE PLAN
(a) NUMBER OF SHARES. The maximum number of Shares that may be delivered
upon the exercise of options granted under the Plan shall be 100,000. If any
option granted under the Plan terminates without having been exercised in full,
the number of Shares as to which such option was not exercised shall be
available for future grants within the foregoing limit.
(b) SHARES TO BE DELIVERED. Shares delivered under the Plan shall be
authorized but unissued Shares or, if the Board so decides in its sole
discretion, previously issued Shares acquired by the Company and held in
treasury. No fractional Shares shall be delivered under the Plan.
(c) CHANGES IN STOCK; RESTRUCTURING, ETC. In the event of a stock dividend,
stock split or combination of shares, the number and kind of shares of stock or
securities of the Company subject to options then outstanding or subsequently
granted under the Plan, the maximum number of shares or securities that may be
delivered under the Plan, the exercise price, and other relevant provisions
shall be appropriately adjusted by the Committee. In the event of any other
recapitalization, reorganization, extraordinary dividend or distribution or
restructuring transaction affecting the Common Stock, the number of shares
issuable under this Plan shall be subject to such adjustment as the Committee
may deem appropriate, and the number of shares issuable pursuant to any option
theretofore granted (whether or not then exercisable) and/or the option price
per share of such option shall be subject to such adjustment as the Committee
may deem appropriate with a view toward preserving the value of such option.
5. ELIGIBILITY FOR OPTIONS
Directors eligible to receive options under the Plan ("Non-Employee
Directors") shall be those directors who are not present or former employees of
the Company or of any subsidiary of the Company.
6. TERMS AND CONDITIONS OF OPTIONS
(a) NUMBER OF OPTIONS (REFLECTS 2 FOR 1 STOCK SPLIT EFFECTIVE JUNE, 1997).
On June 8, 1993, each Non-Employee Director continuing in office and each
newly elected Non-Employee Director was awarded an option covering 2,000 Shares.
On the date of each subsequent annual meeting, each Non-Employee Director who
has served since at least the previous annual meeting and is continuing in
office shall be awarded an option covering 1,000 Shares and each newly elected
Non-Employee Director shall be awarded an option covering 2,000 Shares. For
purposes of this paragraph, each Non-Employee Director elected to office by the
Board since the then last annual meeting shall be treated as a newly elected
Non-Employee Director.
-2-
3
(b) EXERCISE PRICE. The exercise price of each option shall be 100% of the
fair market value per Share at the time the option is granted. In no event,
however, shall the option price be less, in the case of an original issue of
authorized stock, than par value per share. For purposes of this paragraph, the
fair market value of a Share on any date shall be the last sale price of a share
of Common Stock on such day as reflected in the New York Stock Exchange
Composite Transactions Index or, if there was no such reported price on such
day, the latest day prior thereto on which there was such a reported price.
(c) DURATION OF OPTIONS. The latest date on which an option may be
exercised (the "Final Exercise Date") shall be the date which is ten years from
the date the option was granted.
(d) EXERCISE OF OPTIONS.
(1) Each option shall become exercisable to the full extent of all Shares
covered thereby one year after the date of the grant.
(2) Any exercise of an option shall be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (i) any
documentation required by the Committee and (ii) payment in full for
the number of Shares for which the option is exercised.
(3) If tax withholding is required under applicable federal, state or
local tax laws, the Committee may withhold from the number of Shares
otherwise issuable to the individual upon exercise a number of Shares
with a fair market value equal to any federal, state or local
withholding tax requirements due upon the exercise of the option.
(4) If an option is exercised by the executor or administrator of a
deceased director, or by the person or persons to whom the option has
been transferred by the director's will or the applicable laws of
descent and distribution, the Company shall be under no obligation to
deliver Shares pursuant to such exercise until the Company is
satisfied as to the authority of the person or persons exercising the
option.
(e) PAYMENT FOR AND DELIVERY OF SHARES. Shares purchased under the Plan
shall be paid for as follows: (i) by certified or bank check or other instrument
or means acceptable to the Committee (in accordance with guidelines established
for this purpose), (ii) through the delivery of shares of Company common stock
(which, in the case of shares acquired from the Company, have been outstanding
for at least six months) having a fair market value on the last business day
preceding the date of exercise equal to the purchase price, (iii) by delivery of
an unconditional and irrevocable undertaking by a broker to deliver promptly to
the Company
-3-
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sufficient funds to pay the exercise price or (iv) by any combination of the
permissible forms of payment.
An option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him or her under
the Plan.
The Company shall not be obligated to deliver any Shares (1) until, in the
opinion of the Company's counsel, all applicable federal, state and foreign laws
and regulations have been complied with, and (2) if the Company's common stock
outstanding is at the time listed on any stock exchange, until the Shares to be
delivered have been listed or authorized to be listed on such exchange upon
official notice of issuance, and (3) until all other legal matters in connection
with the issuance and delivery of such Shares have been approved by the
Company's counsel. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the option, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Shares bear an appropriate legend
restricting transfer.
(f) NONTRANSFERABILITY OF OPTIONS. No option may be transferred other than
by will or by the laws of descent and distribution, and during a director's
lifetime an option may be exercised only by him or her.
(g) DEATH, RETIREMENT AND DISABILITY OF A DIRECTOR. Upon the death,
retirement from the Board after attaining age 65 with at least 10 years of
service as a director or after attaining age 70, 71 or 72 with 9, 8 or 7 years
of service, respectively, or disability (as determined by the Committee) of any
director granted options under this Plan, all options not then exercisable shall
terminate. All options held by the director that are exercisable immediately
prior to such event may be exercised by such director or by his or her executor
or administrator, or by the person or persons to whom the option is transferred
by will or the applicable laws of descent and distribution, at any time within
three years after such event. After completion of that three-year period, such
options shall terminate to the extent not previously exercised. Notwithstanding
the foregoing, options held by a director who dies in the third year following
such retirement or disability shall remain exercisable for one year following
death. In no event shall any option referred to in this paragraph 6(g) be
exercisable beyond its stated term, if earlier.
(h) OTHER TERMINATION OF STATUS OF DIRECTOR. If a director's service with
the Company terminates for any reason other than death, retirement or disability
as specified in paragraph 6(g), all options held by the director that are not
then exercisable shall terminate. Options that are exercisable on the date of
termination shall continue to be exercisable for a period of three months (but
not beyond their stated term if earlier). After completion of that three-month
period, such options shall terminate to the extent not previously exercised,
expired or terminated.
-4-
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(i) MERGERS, ETC. In the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of a
sale of all or substantially all assets or a dissolution or liquidation of the
Company, all options hereunder will terminate; provided, that 20 days prior to
the effective date of any such merger, consolidation, sale, dissolution, or
liquidation, all options outstanding hereunder that are not otherwise
exercisable shall become immediately exercisable.
7. EFFECT, TERMINATION AND AMENDMENT
The Committee may at any time terminate the Plan as to any further grants
of options. The Board may at any time or times amend the Plan for any purpose
which may at the time be permitted by law; provided, that except to the extent
expressly required or permitted by the Plan, no such amendment will, without the
approval of the stockholders of the Company, effectuate a change for which
stockholder approval is required in order for the Plan to continue to qualify
under Rule 16b-3.
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1
EXHIBIT 10.2
------------
THE TJX COMPANIES, INC.
MANAGEMENT INCENTIVE PLAN
(AS AMENDED THROUGH JUNE 3, 1997)
2
THE TJX COMPANIES, INC. MANAGEMENT INCENTIVE PLAN
-------------------------------------------------
Table of Contents
-----------------
1. Purpose..............................................................1
-------
2. Definitions..........................................................1
-----------
3. Effective Date.......................................................2
--------------
4. Administration.......................................................2
--------------
5. Eligibility..........................................................2
-----------
6. Description of Awards................................................2
---------------------
7. Determination of Awards..............................................3
-----------------------
8. Payment of Awards....................................................5
-----------------
9. Deferral of Award....................................................5
-----------------
10. Designation of Beneficiary...........................................5
--------------------------
11. Notices..............................................................6
-------
12. Rights of Participants...............................................6
----------------------
13. No Employment Rights.................................................6
--------------------
14. Certain Payments Upon a Change of Control............................6
-----------------------------------------
15. Nonalienation of Award...............................................6
----------------------
16. Withholding Taxes....................................................7
-----------------
17. Termination, Amendment and Modification..............................7
---------------------------------------
18. Headings and Captions................................................7
---------------------
19. Controlling Law......................................................7
---------------
20. Miscellaneous Provisions.............................................7
------------------------
21. Awards to Certain Officers...........................................8
--------------------------
3
THE TJX COMPANIES, INC.
MANAGEMENT INCENTIVE PLAN
1. Purpose
-------
The purpose of The TJX Companies, Inc. ("TJX") Management Incentive Plan
(the "Plan") is to provide officers and other employees who are key to the
annual growth and profitability of TJX with reward opportunities
commensurate with their performance relative to annual objectives.
2. Definitions
-----------
Unless the context requires otherwise, the following expressions as used in
the Plan shall have the meanings ascribed to each below, it being
understood that masculine, feminine, and neuter pronouns are used
interchangeably, and that each comprehends the others.
(a) "Change of Control" shall have the meaning set forth in the Company's
1986 Stock Incentive Plan, as in effect from time to time.
(b) "Company" shall mean TJX and its subsidiaries.
(c) "E.C.C." shall mean the Executive Compensation Committee of the Board
of Directors of TJX. A member of the E.C.C. shall not be eligible to
participate in the Plan while serving as a member of the E.C.C. or one
year prior to becoming a member of the E.C.C.
(d) "Fiscal Year" shall mean the fifty-two or fifty-three week period
ending on the last Saturday in January, and commencing on the Sunday
following the last Saturday in January of the preceding calendar year.
(e) "Participant" shall mean any officer or other employee of TJX or any
subsidiary of TJX who is designated a Participant pursuant to Section
5 below.
(f) "Performance Criteria" shall mean the standards of measurement of
performance by the Company, performance by any division or subsidiary
of the Company, and/or individual performance for each Performance
Period as established by the E.C.C. pursuant to paragraph (a) of
Section 6 below.
(g) "Performance Goal" shall mean the level of performance with respect to
each Performance Criterion at which awards are payable pursuant to
this Plan.
-1-
4
Performance Goals are established by the E.C.C. pursuant to paragraph
(b) of Section 6 below.
(h) "Performance Period" shall mean one Fiscal Year.
(i) "Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder.
3. Effective Date
--------------
The effective date of the Plan shall be January 28, 1979. The effective
date of this amendment and restatement of the Plan shall be June 3, 1997.
4. Administration
--------------
This Plan shall be administered by the E.C.C. The E.C.C. shall have full
authority to interpret the Plan; to establish, amend, and rescind rules for
carrying out the Plan; to administer the Plan; to determine the terms and
provisions of any agreements pertaining to the Plan; and to make all other
determinations necessary or advisable for its administration. The E.C.C.
shall not be bound to any standards of uniformity or similarity of action,
interpretation, or conduct in the discharge of its duties hereunder,
regardless of the apparent similarity of the matters coming before it. Its
determination shall be binding on all parties.
No member or former member of the E.C.C. or the Board of Directors of TJX
shall be liable for any action or determination made in good faith with
respect to the Plan or any award or payment made under the Plan.
5. Eligibility
-----------
For each Performance Period, the E.C.C. shall designate those Participants
who may be entitled to receive annual management incentive awards, subject
to the terms and conditions of the Plan.
6. Description of Awards
---------------------
(a) Designation of Performance Criteria
-----------------------------------
At the commencement of each Performance Period, the E.C.C. shall
determine the Performance Criteria for said Performance Period and the
relative weight to be given to each Performance Criterion. Performance
Criteria and the weighing thereof may vary by Participant and may be
different for different Performance Periods. Such Performance Criteria
may include, but shall not be limited to,
-2-
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measures such as pre-tax income, pre-tax income as a percentage of
sales, return on investment, or other measures specific to a
Participant's annual performance objectives. These criteria may be
based on Company, divisional, subsidiary and/or individual performance
as designated by the E.C.C.
(b) Performance Goals
-----------------
At the commencement of each Performance Period, the E.C.C. shall
determine a range of Performance Goals from minimum to target to
maximum for each Performance Criterion for said Performance Period,
based upon the Company, divisional or subsidiary Business Plan for
said Fiscal Year. Performance Goals are subject to the approval of the
President of TJX. Performance Goals may vary by Participant and may be
different for different Performance Periods.
At any time designated by the E.C.C. during a Performance Period or
thereafter, but prior to award payment, appropriate adjustments in the
Performance Goals may be made to avoid undue windfalls or hardships
due to external conditions outside the control of management, changes
in method of accounting, nonrecurring or abnormal items, or other
matters as the E.C.C. shall, in its sole discretion, determine.
(c) Award Opportunity
-----------------
At the commencement of each Performance Period, the E.C.C. shall
assign to each Participant the minimum, target and maximum opportunity
to be earned for said Performance Period, based upon the Participant's
position and ability to affect annual performance relative to goals
during the Performance Period. Award opportunity may be expressed as a
fixed amount or as a percentage of the Participant's actual base
salary earned for the Performance Period.
From time to time, discretionary awards, in addition to the annual
management incentive awards, may be made by the E.C.C. to any
Participant in recognition of outstanding performance or extraordinary
circumstances which occur during the Performance Period.
Recommendations of Participants to receive discretionary awards shall
be made by the President of TJX.
7. Determination of Awards
-----------------------
(a) Upon completion of each Performance Period and certification of the
Company's financial statements by the Company's independent public
accountants for the Fiscal Year included in such Performance Period,
the E.C.C. shall review performance relative to Performance Goals, as
adjusted from time to time in accordance with paragraph (b) of Section
6 above, and
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determine the value of the awards for each Performance Period, subject
to the approval of the President of TJX and/or the Chairman of the
E.C.C.
Achievement of Performance Goals shall result in payment of the target
award. Failure to achieve Performance Goals will result in a decrease
or elimination of the Participant's award. Exceeding Performance Goals
will result in an increased award.
Performance Goal awards may be adjusted upward or downward by the
E.C.C. due to special circumstances or individual performance review.
Without limiting the generality of the foregoing, the E.C.C. may
reduce or eliminate awards to Participants receiving "Needs
Improvement" performance ratings.
(b) If an employee becomes a Participant after the beginning of a
Performance Period, the award payable to him or her shall be prorated
in accordance with the portion of the Performance Period in which he
or she is a Participant.
(c) In the event of termination of employment of a Participant for any
reason prior to the last day of the Performance Period, a Participant
thereafter shall have no further rights under the Plan and shall not
be entitled to payment of any award.
If termination of employment occurs (i) by reason of death, (ii) by
reason of normal retirement under a retirement plan of the Company, or
(iii) with the consent of the Company, the E.C.C. may, in its sole
discretion, value and direct that all or some portion of the award be
deemed earned and payable, taking into account the duration of
employment during the Performance Period, the Participant's
performance, and other matters as the E.C.C. shall deem appropriate.
In the event of termination of employment for cause, as defined and
determined by the E.C.C. in its sole discretion, no payment shall be
made with regard to any prior or current Performance Period.
(d) If a Participant shall be actively employed by the Company less than a
full Performance Period because of an accident or illness but
completes 26 weeks of active employment during said Performance
Period, the award otherwise payable to said Participant for said
Performance Period shall not be reduced because of a failure of active
employment due to such accident or illness.
If a Participant shall be actively employed by the Company less than a
full Performance Period because of an accident or illness and does not
complete 26 weeks of active employment during said Performance period,
said Participant shall receive such award, if any, for said
Performance Period as the E.C.C. shall determine.
-4-
7
Any time for which a Participant receives sick leave and/or vacation
payments shall be deemed active employment time. Any time for which a
Participant received short-term income protection, short-term
disability and/or long-term disability payments shall not be deemed
active employment time.
The provisions in this Section 7 are subject to the terms of any
employment agreement, severance agreement or severance plan applicable
to any one or more participants and in the event of any conflict, such
terms shall control payment.
8. Payment of Awards
-----------------
As soon as practicable after valuation of the award for each Performance
Period, payment shall be made in cash with respect to the award earned by
each Participant.
9. Deferral of Award
-----------------
Participants who are designated by the E.C.C. as being eligible to
participate in the TJX General Deferred Compensation Plan may elect to
defer all or a portion of their awards in accordance with the terms of such
General Deferred Compensation Plan.
10. Designation of Beneficiary
--------------------------
(a) Subject to applicable law, each Participant shall have the right to
file with the E.C.C., to the attention of the Vice President, Human
Services Director of TJX, a written designation of one or more persons
as the beneficiary(ies) who shall be entitled to receive the amount,
if any, payable under the Plan upon his or her death. A Participant
may from time to time revoke or change his or her beneficiary by
filing a new designation with the E.C.C. The last such designation
received by the E.C.C. shall be controlling, provided, however, that
not designation change or revocation thereof shall be effective unless
received by the E.C.C. prior to the Participant's death and in no
event shall it be effective as of date prior to receipt.
(b) If no such beneficiary designation is in effect at the time of a
Participant's death, or if no designated beneficiary survives the
Participant, or if such designation conflicts with law, the payment of
the amount, if any, payable under the Plan upon his or her death shall
be made to the Participant's estate. If the E.C.C. is in doubt as to
the right of any person to receive any amount, the E.C.C. may retain
such amount, without liability for any interest thereon, until the
rights thereto are determined, or the E.C.C. may pay such amount into
any court of appropriate jurisdiction, and such payment shall be a
complete discharge of the liability of the Plan, the Company, and the
E.C.C. therefor.
-5-
8
11. Notices
-------
Each Participant whose employment relationship with the Company has
terminated, either voluntarily or involuntarily, shall be responsible for
furnishing the Vice President, Human Services Director of TJX, with the
current and proper address for the mailing of notices and the delivery of
agreements and 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
item mailed to such address is returned as undeliverable to the addressee,
mailing shall be suspended until the Participant furnishes the proper
address.
12. Rights of Participants
----------------------
Nothing contained in the Plan and no action taken pursuant to the Plan
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant or his or her legal
representative or designated beneficiary, or other persons.
If and to the extent that any Participant or his or her legal
representative or designated beneficiary, as the case may be, acquires a
right to receive any payment from the Company pursuant to the Plan, such
right shall be no greater than the right of an unsecured general creditor
of the Company.
13. No Employment Rights
--------------------
Nothing in this Plan or any other document describing or referring to this
Plan shall be deemed to confer on any Participant the right to continue in
the employ of the Company or his or her respective employer or affect the
right of such employer to terminate the employment of any such person with
or without cause.
14. Certain Payments Upon a Change of Control
-----------------------------------------
If, upon a Change of Control of TJX, amounts payable or that would or might
be payable in respect of an individual under the Plan instead are paid to
such individual or his or her estate or beneficiary pursuant to any change
of control severance plan or agreement, or any similar plan, agreement or
arrangement, to which the Company is a party, payments in respect of such
individual hereunder shall be reduced PRO TANTO.
15. Nonalienation of Award
----------------------
No amounts or other rights under the Plan shall be sold, transferred,
assigned, pledged, or otherwise disposed of or encumbered by a Participant,
except as provided herein,
-6-
9
and shall not be subject to attachment, garnishment, execution, or other
creditor's processes.
16. Withholding Taxes
-----------------
The Company shall have the right to deduct withholding taxes from any
payments made pursuant to the Plan, or make such other provisions as it
deems necessary or appropriate to satisfy its obligations to withhold
federal, state, or local income or other taxes incurred by reason of
payments pursuant to the Plan.
17. Termination, Amendment and Modification
---------------------------------------
The E.C.C. or the Board of Directors of TJX may from time to time amend,
modify, or discontinue the Plan or any provision hereof. No amendment to or
discontinuance or termination of the Plan, shall, without the written
consent of the Participant, adversely affect any rights of such Participant
that have vested. This Plan shall continue until terminated by the E.C.C.
or the Board of Directors of TJX.
18. Headings 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.
19. 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.
20. Miscellaneous Provisions
------------------------
(a) All costs and expenses involved in administering the Plan as provided
herein, or incident thereto, shall be borne by the Company.
(b) The E.C.C. may, in its sole discretion, reduce or eliminate awards
granted or money payable to any Participant or all Participants if it
determines that such awards or payment may cause the Company to
violate any applicable law, regulation, controls, or guidelines. Such
reduction or elimination may be made notwithstanding that the possible
violation might be eliminated by reducing or not increasing
compensation or benefits of other associates, it being the intent of
the Plan not to inhibit the discretion of the Company to provide such
forms and amounts of compensation and benefits to employees as it
deems advisable.
-7-
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21. Awards to Certain Officers
--------------------------
The provisions of this Section 21 shall apply, notwithstanding any other
provision of the Plan to the contrary, in the case of any award made to a
person expected to be described in Section 162(m) at the time the award is
to be paid, as determined by the E.C.C. at the time of the award. In the
case of any such award: (a) Performance Criteria shall be based on any one
or more of the following (on a consolidated, divisional, line of business,
geographical or area of executive's responsibilities basis): one or more
items of or within (i) sales, revenues, assets or expenses; (ii) earnings,
income or margins, before or after deduction for all or any portion of
interest, taxes, depreciation, or amortization, whether or not on a
continuing operations and aggregate or per share basis; (iii) return on
investment, capital, assets, sales or revenues; and (iv) stock price; (b)
the specific Performance Criteria established by the E.C.C. with respect to
any award shall be subject to mandatory adjustment for any change in law
(including tax laws and statutory rates), regulations and interpretations
occurring after the grant date affecting such divisional pre-tax earnings
by more than one (1%) percent; (c) the maximum amount payable under any
Plan award to any such individual shall be $2,000,000; (d) no payment shall
be made under the award unless the applicable Performance Goals, which
shall have been preestablished within the meaning of Section 162(m), have
been met, nor shall any such payment be made until the E.C.C. certifies in
accordance with Section 162(m) that such Goals have been met; and (e) those
provisions of the Plan generally applicable to awards hereunder which give
to the E.C.C. or any other person discretion to modify the award after the
establishment and grant of the award, or which if applied to an award
described in this Section 21 might otherwise cause such award to fail to
qualify as a performance-based award under Section 162(m) shall be deemed
inapplicable to the extent (but only to the extent) the retention of such
discretion by such person or the application of such provision would be
deemed inconsistent with qualification of the award as performance-based
under Section 162(m).
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1
EXHIBIT 10.3
------------
THE TJX COMPANIES, INC.
LONG RANGE PERFORMANCE INCENTIVE PLAN
(AS AMENDED THROUGH JUNE 3, 1997)
2
THE TJX COMPANIES, INC. LONG RANGE PERFORMANCE INCENTIVE PLAN
-------------------------------------------------------------
TABLE OF CONTENTS
-----------------
1. Purpose..............................................................1
-------
2. Definitions..........................................................1
-----------
3. Term.................................................................1
----
4. Plan Administration..................................................1
-------------------
5. Eligibility and Target Award.........................................1
----------------------------
6. Award Goals..........................................................2
-----------
7. Determination of Awards..............................................2
-----------------------
8. Termination..........................................................4
-----------
9. Transferability......................................................4
---------------
10. Designation of Beneficiary...........................................4
--------------------------
11. Change of Control; Mergers, etc......................................5
-------------------------------
12. Amendment and Modification...........................................5
--------------------------
13. Withholding Taxes....................................................5
-----------------
14. Future Rights........................................................6
-------------
15. Controlling Law......................................................6
---------------
16. Awards to Certain Officers...........................................6
--------------------------
3
THE TJX COMPANIES, INC.
LONG RANGE PERFORMANCE INCENTIVE PLAN
1. Purpose
-------
The purpose of The TJX Companies, Inc. Long Range Performance Incentive
Plan (the "Plan") is to promote the long-term success of The TJX Companies,
Inc. (the "Company") and its shareholders by providing competitive
incentive compensation to those officers and selected employees upon whose
judgment, initiative, and efforts the Company depends for its profitable
growth.
2. Definitions
-----------
Reference is hereby made to the Company's 1986 Stock Incentive Plan (the
"1986 Plan"). Terms defined in the 1986 Plan and not otherwise defined
herein are used herein with the meanings so defined.
3. Term
----
The plan shall be effective as of January 25, 1992 (the start of fiscal
year 1993), and the Plan shall remain in effect until terminated by the
Company's Board of Directors (the "Board").
4. Plan Administration
-------------------
The Plan shall be administered by the same Committee that administers the
1986 Plan. The Committee shall have full and exclusive power to interpret
the Plan and to adopt such rules, regulations and guidelines for carrying
out the Plan as it may deem necessary or proper, consistent with the 1986
Plan.
5. Eligibility and Target Award
----------------------------
Any key employee (an "Employee") of the Company or any of its Subsidiaries
who could receive an award under the 1986 Plan shall be eligible to receive
awards under the Plan.
At the commencement of each three-year performance cycle (the "Performance
Cycle"), the Committee shall designate those who will participate in the
Plan (the "Participants") and their target awards (the "Awards").
Subsequent to the
-3-
4
commencement of a Performance Cycle, the Committee may, in special
circumstances, designate additional Participants and their target Awards
for such Performance Cycle.
6. Award Goals
-----------
At the commencement of each Performance Cycle, the Committee shall set one
or more performance goals (the "Performance Goals") for such Performance
Cycle, the relative weight to be given to each Performance Goal, and a
schedule for determining payments if actual performance is above or below
the goal. For the Performance Cycles for fiscal years 1995-1997 and
thereafter, Awards shall not provide for any minimum payment; however, the
Committee for each such Cycle shall establish a maximum (not to exceed
150%) of the Award which may be earned.
At any time designated by the Committee during a Performance Cycle or
thereafter, but prior to Award payment, appropriate adjustments in the
goals may be made by the Committee to avoid undue windfalls or hardships
due to external conditions outside the control of management, nonrecurring
or abnormal items, or other matters as the Committee shall, in its sole
discretion, determine appropriate to avoid undue windfalls or hardships.
As soon as practicable after the end of the Performance Cycle, the
Committee shall determine what portion of each Award has been earned. The
Award payment shall be paid in cash.
7. Determination of Awards
-----------------------
a. Upon completion of each Performance Cycle and certification of the
Company's financial statements by the Company's independent public
accountants for the Fiscal Years included in such Performance Cycle,
the Committee shall review performance relative to Performance Goals,
and determine the value of the Awards for each Performance Cycle,
subject to the approval of the President of TJX and/or the Chairman of
the Committee.
Achievement of Performance Goals shall result in payment of the target
Award. Failure to achieve Performance Goals will result in a decrease
or elimination of the Participant's Award. Exceeding Performance Goals
will result in an increased Award.
Performance Goal Awards may be adjusted upward or downward by the
Committee due to special circumstances or individual performance
review. Without limiting the generality of the foregoing, the
Committee may reduce or eliminate Awards to Participants receiving
"Needs Improvement" performance ratings.
-2-
5
b. If an employee becomes a Participant after the beginning of a
Performance Cycle, the Award payable to him or her shall be prorated
in accordance with the portion of the Performance Cycle in which he or
she is a Participant.
c. In the event of termination of employment of a Participant for any
reason prior to the last day of the Performance Cycle, a Participant
thereafter shall have no further rights under the Plan and shall not
be entitled to payment of any Award.
If termination of employment occurs (i) by reason of death, (ii) by
reason of normal retirement under a retirement plan of the Company, or
(iii) with the consent of the Company, the Committee may, in its sole
discretion, value and direct that all or some portion of the Award be
deemed earned and payable, taking into account the duration of
employment during the Performance Cycle, the Participant's
performance, and other matters as the Committee shall deem
appropriate. In the event of termination of employment for cause, as
defined and determined by the Committee in its sole discretion, no
payment shall be made with regard to any prior or current Performance
Cycle.
d. If a Participant shall be actively employed by the Company less than a
full Performance Cycle because of an accident or illness but completes
26 weeks of active employment during said Performance Cycle, the Award
otherwise payable to said Participant for said Performance Cycle shall
not be reduced because of a failure of active employment due to such
accident or illness.
If a Participant shall be actively employed by the Company less than a
full Performance Cycle because of an accident or illness and does not
complete 26 weeks of active employment during said Performance Cycle,
said Participant shall receive such Award, if any, for said
Performance Cycle as the Committee shall determine.
Any time for which a Participant receives sick leave and/or vacation
payments shall be deemed active employment time. Any time for which a
Participant received short-term income protection, short-term
disability and/or long-term disability payments shall not be deemed
active employment time.
The provisions in this Section 7 are subject to the terms of any
employment agreement, severance agreement or severance plan applicable
to any one or more participants and in the event of any conflict, such
terms shall control payment.
-3-
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8. Termination
-----------
Awards are forfeited at termination of employment. However, if termination
of employment occurs by reason of (i) death, (ii) disability (as determined
under the 1986 Plan), (iii) normal retirement under a retirement plan of
the Company, or (iv) with the consent of the Company, the Committee may, in
its sole discretion, direct that all or a portion of a Participant's Award
be paid, taking into account the duration of employment during the
Performance Cycle, the Participant's performance, and such other matters as
the Committee shall deem appropriate. This Section 8 shall not apply to the
extent the rights of a Participant in such circumstances are governed by
another agreement.
9. Transferability
---------------
Awards under the Plan will be nontransferable and shall not be assignable,
alienable, saleable or otherwise transferable by the Participant other than
by will or the laws of descent and distribution.
10. Designation of Beneficiary
--------------------------
a. Subject to applicable law, each Participant shall have the right to
file with the Committee, to the attention of the Vice President, Human
Services Director of TJX, a written designation of one or more persons
as the beneficiary(ies) who shall be entitled to receive the amount,
if any, payable under the Plan upon his or her death. A Participant
may from time to time revoke or change his or her beneficiary by
filing a new designation with the Committee The last such designation
received by the Committee shall be controlling, provided, however,
that not designation change or revocation thereof shall be effective
unless received by the Committee prior to the Participant's death and
in no event shall it be effective as of date prior to receipt.
b. If no such beneficiary designation is in effect at the time of a
Participant's death, or if no designated beneficiary survives the
Participant, or if such designation conflicts with law, the payment of
the amount, if any, payable under the Plan upon his or her death shall
be made to the Participant's estate. If the Committee is in doubt as
to the right of any person to receive any amount, the Committee may
retain such amount, without liability for any interest thereon, until
the rights thereto are determined, or the Committee may pay such
amount into any court of appropriate jurisdiction, and such payment
shall be a complete discharge of the liability of the Plan, the
Company, and the Committee therefor.
-4-
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11. Change of Control; Mergers, etc.
--------------------------------
a. In the event the Company undergoes a Change of Control as defined in
the 1986 Plan, this Plan shall automatically terminate and within 30
days following such Change of Control, whether or not a Participant's
employment has been terminated, the Company shall pay to the
Participant the following in a lump sum in full payment of his or her
Award:
An amount with respect to each Performance Cycle for which the
Participant has been designated as a Plan Participant equal to 50
percent of the product of (i) the maximum Award for the Participant
for such Performance Cycle and (ii) a fraction, the denominator of
which is the total number of fiscal years in the Performance Cycle and
the numerator of which is the number of fiscal years which have
elapsed in such Performance Cycle prior to the Change of Control (for
purposes of this fraction, if the Change of Control occurs during the
first quarter of a fiscal year, then one-quarter of the fiscal year
shall be deemed to have lapsed prior to the Change of Control, and if
the Change of Control occurs after the first quarter of the fiscal
year, then the full fiscal year shall be deemed to have elapsed prior
to the Change of Control). For purposes of this paragraph (a), the
Valuation Date shall be the day preceding the date of the Change of
Control. This paragraph (a) shall not apply to any Participant whose
rights under this Plan upon a Change of Control are governed by
another agreement or plan.
b. In the event of a merger or consolidation with another company or in
the event of a liquidation or reorganization of the Company, other
than any merger, consolidation, reorganization or other event that
constitutes a Change of Control, the Committee may in its sole
discretion determine whether to provide for adjustments and
settlements of Awards. The Committee may make such determination at
the time of the Award or at a subsequent date.
12. Amendment and Modification
--------------------------
The Board may from time to time amend, modify, or discontinue the Plan or
any provision hereof. No such amendment to, or discontinuance, or
termination of the Plan shall, without the written consent of a
Participant, adversely affect any rights of such Participant under an
outstanding Award.
13. Withholding Taxes
-----------------
The Company shall have the right to deduct withholding taxes from any
payments made pursuant to the Plan, or make such other provisions as it
deems necessary or
-5-
8
appropriate to satisfy its obligations for withholding federal, state, or
local income or other taxes incurred by reason of payments pursuant to the
Plan.
Participants may elect in a writing furnished to the Committee prior to the
Valuation Date to satisfy their federal tax obligations with respect to any
shares paid hereunder by directing the Company to withhold an equivalent
value of shares.
14. Future Rights
-------------
No person shall have any claim or rights to be granted an Award under the
Plan, and no Participant shall have any rights under the Plan to be
retained in the employ of the Company.
15. 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.
16. Awards to Certain Officers
--------------------------
The provisions of this Section 16 shall apply, notwithstanding any other
provision of the Plan to the contrary, in the case of any Award made to a
person expected to be described in Section 162(m) of the Internal Revenue
Code ("Section 162(m)") at the time the Award is to be paid, as determined
by the Committee at the time of the Award. In the case of any such Award:
(a) Performance Goals shall be based on any one or more of the following
(on a consolidated, divisional, line of business, geographical or area of
executive's responsibilities basis): one or more items of or within (i)
sales, revenues, assets or expenses; (ii) earnings, income or margins,
before or after deduction for all or any portion of interest, taxes,
depreciation, or amortization, whether or not on a continuing operations
and aggregate or per share basis; (iii) return on investment, capital,
assets, sales or revenues; and (iv) stock price; (b) the specific
Performance Goals established by the Committee with respect to any Award
shall be subject to mandatory adjustment for any change in law (including
tax laws and statutory rates), regulations and interpretations occurring
after the grant date affecting such divisional pre-tax earnings by more
than one (1%) percent; (c) the maximum amount payable under any Plan Award
to any such individual shall be $2,000,000; (d) no payment shall be made
under the Award unless the applicable Performance Goals, which shall have
been preestablished within the meaning of Section 162(m), have been met,
nor shall any such payment be made until the Committee certifies in
accordance with Section 162(m) that such Goals have been met; and (e) those
provisions of the Plan generally applicable to Awards hereunder which give
to the Committee or any other person discretion to modify the Award after
the
-6-
9
establishment and grant of the Award, or which if applied to an Award
described in this Section 16 might otherwise cause such Award to fail to
qualify as a performance-based award under Section 162(m), shall be deemed
inapplicable to the extent (but only to the extent) the retention of such
discretion by such person or the application of such provision would be
deemed inconsistent with qualification of the Award as performance-based
within the meaning of Section 162(m).
-7-
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EXHIBIT 11
PAGE 1
COMPUTATION OF NET INCOME PER COMMON SHARE
(UNAUDITED)
DOLLARS IN THOUSANDS
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------------- --------------------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
------------ ------------ ------------ -------------
The computation of net income
available and adjusted shares
outstanding follows:
Net income $ 52,578 $ 36,054 $ 101,039 $ 66,140
Less:
Preferred stock dividends -- -- -- (2,578)
------------ ------------ ------------ -------------
Net income used for
primary and fully
diluted computation $ 52,578 $ 36,054 $ 101,039 $ 63,562
============ ============ ============ =============
Weighted average number of
common shares outstanding 159,655,766 148,264,940 159,647,011 148,255,748
Add (where dilutive):
Assumed exercise of those
options that are common
stock equivalents, net of
treasury shares deemed to
have been repurchased 2,190,955 1,865,386 2,127,811 1,709,860
Assumed conversion of
convertible preferred stock 19,152,269 29,843,228 19,292,235 23,481,782
------------ ------------ ------------ -------------
Adjusted shares outstanding,
used for primary and
fully diluted computation 180,998,990 179,973,554 181,067,057 173,447,390
============ ============ ============ =============
5
6-MOS
JAN-31-1998
JUL-26-1997
138,232,000
0
75,691,000
0
1,421,529,000
1,652,660,000
1,131,993,000
471,070,000
2,573,992,000
1,149,297,000
243,262,000
120,410,000
0
161,218,000
887,264,000
2,573,992,000
3,258,522,000
3,258,522,000
2,525,880,000
2,525,880,000
557,526,000
0
2,400,000
172,716,000
71,677,000
101,039,000
0
0
0
101,039,000
0.56
0.56
