e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(mark one)
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þ |
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Quarterly Period Ended October 27, 2007
Or
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o |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission file number 1-4908
The TJX Companies, Inc.
(Exact name of registrant as specified in its charter)
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DELAWARE
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04-2207613 |
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.) |
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770 Cochituate Road Framingham, Massachusetts
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01701 |
(Address of principal executive offices)
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(Zip Code) |
(508) 390-1000
(Registrants 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 þ NO o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
YES o NO þ.
The number of shares of registrants common stock outstanding as of October 27, 2007: 437,017,637
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
THE TJX COMPANIES, INC.
STATEMENTS OF INCOME
(UNAUDITED)
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
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|
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Thirteen Weeks Ended |
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October 27, |
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October 28, |
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2007 |
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2006 |
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Net sales |
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$ |
4,737,491 |
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$ |
4,472,943 |
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Cost of sales, including buying and occupancy costs |
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3,541,498 |
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3,334,085 |
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Selling, general and administrative expenses |
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792,552 |
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756,348 |
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Provision for Computer Intrusion related costs |
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Interest (income) expense, net |
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|
3,053 |
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6,784 |
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Income from continuing operations before provision for
income taxes |
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400,388 |
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375,726 |
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Provision for income taxes |
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150,927 |
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144,907 |
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Income from continuing operations |
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249,461 |
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230,819 |
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(Loss) from discontinued operations, net of income taxes |
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(207 |
) |
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Net income |
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$ |
249,461 |
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$ |
230,612 |
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Basic earnings per share: |
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Income from continuing operations |
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$ |
0.57 |
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$ |
0.51 |
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(Loss) from discontinued operations, net of income taxes |
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$ |
0.00 |
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$ |
0.00 |
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Net income |
|
$ |
0.57 |
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$ |
0.51 |
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Weighted average common shares basic |
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439,256 |
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452,544 |
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Diluted earnings per share: |
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Income from continuing operations |
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$ |
0.54 |
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$ |
0.48 |
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(Loss) from discontinued operations, net of income taxes |
|
$ |
0.00 |
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|
$ |
0.00 |
|
Net income |
|
$ |
0.54 |
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$ |
0.48 |
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Weighted average common shares diluted |
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464,534 |
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|
479,491 |
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Cash dividends declared per share |
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$ |
0.09 |
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$ |
0.07 |
|
The accompanying notes are an integral part of the financial statements.
2
THE TJX COMPANIES, INC.
STATEMENTS OF INCOME
(UNAUDITED)
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
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Thirty-Nine Weeks Ended |
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October 27, |
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October 28, |
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2007 |
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2006 |
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Net sales |
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$ |
13,158,870 |
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$ |
12,307,858 |
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Cost of sales, including buying and occupancy costs |
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9,936,410 |
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9,291,257 |
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Selling, general and administrative expenses |
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2,250,880 |
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2,133,778 |
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Provision for Computer Intrusion related costs |
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215,922 |
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Interest (income) expense, net |
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(423 |
) |
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15,956 |
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Income from continuing operations before provision for
income taxes |
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756,081 |
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866,867 |
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Provision for income taxes |
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285,480 |
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333,362 |
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Income from continuing operations |
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470,601 |
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533,505 |
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(Loss) from discontinued operations, net of income taxes |
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(928 |
) |
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Net income |
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$ |
470,601 |
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$ |
532,577 |
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Basic earnings per share: |
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Income from continuing operations |
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$ |
1.05 |
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$ |
1.17 |
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(Loss) from discontinued operations, net of income taxes |
|
$ |
0.00 |
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$ |
0.00 |
|
Net income |
|
$ |
1.05 |
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|
$ |
1.17 |
|
Weighted average common shares basic |
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|
447,092 |
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454,617 |
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Diluted earnings per share: |
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Income from continuing operations |
|
$ |
1.00 |
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$ |
1.12 |
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(Loss) from discontinued operations, net of income taxes |
|
$ |
0.00 |
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$ |
0.00 |
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Net income |
|
$ |
1.00 |
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$ |
1.12 |
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Weighted average common shares diluted |
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472,286 |
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480,242 |
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Cash dividends declared per share |
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$ |
0.27 |
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$ |
0.21 |
|
The accompanying notes are an integral part of the financial statements.
3
THE TJX COMPANIES, INC.
BALANCE SHEETS
IN THOUSANDS, EXCEPT SHARE DATA
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October 27, |
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January 27, |
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October 28, |
|
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2007 |
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|
2007 |
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2006 |
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(unaudited) |
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(unaudited) |
|
ASSETS |
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Current assets: |
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Cash and cash equivalents |
|
$ |
388,131 |
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$ |
856,669 |
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$ |
341,636 |
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Accounts receivable, net |
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192,483 |
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|
115,245 |
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|
161,570 |
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Merchandise inventories |
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3,364,500 |
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2,581,969 |
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3,246,287 |
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Prepaid expenses and other current assets |
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243,928 |
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|
159,105 |
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|
173,818 |
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Current deferred income taxes, net |
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|
96,701 |
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|
35,825 |
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|
16,284 |
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Total current assets |
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4,285,743 |
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3,748,813 |
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3,939,595 |
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Property at cost: |
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Land and buildings |
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277,124 |
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268,056 |
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260,301 |
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Leasehold costs and improvements |
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1,773,232 |
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1,628,867 |
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1,612,541 |
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Furniture, fixtures and equipment |
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2,664,199 |
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2,373,117 |
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2,340,499 |
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Total property at cost |
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|
4,714,555 |
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4,270,040 |
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|
4,213,341 |
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Less accumulated depreciation and amortization |
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|
2,496,229 |
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2,251,579 |
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2,178,222 |
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Net property at cost |
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|
2,218,326 |
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|
2,018,461 |
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|
2,035,119 |
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|
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Property under capital lease, net of accumulated
amortization of $14,332; $12,657 and $12,098, respectively |
|
|
18,240 |
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|
19,915 |
|
|
|
20,474 |
|
Non-current deferred income taxes, net |
|
|
8,878 |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
228,085 |
|
|
|
115,613 |
|
|
|
127,432 |
|
Goodwill and tradename, net of amortization |
|
|
182,966 |
|
|
|
182,898 |
|
|
|
183,120 |
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|
|
|
|
|
|
|
|
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|
TOTAL ASSETS |
|
$ |
6,942,238 |
|
|
$ |
6,085,700 |
|
|
$ |
6,305,740 |
|
|
|
|
|
|
|
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LIABILITIES |
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Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Obligation under capital lease due within one year |
|
$ |
1,968 |
|
|
$ |
1,854 |
|
|
$ |
1,817 |
|
Accounts payable |
|
|
1,819,194 |
|
|
|
1,372,352 |
|
|
|
1,717,088 |
|
Accrued expenses and other liabilities |
|
|
1,310,924 |
|
|
|
1,008,774 |
|
|
|
1,013,391 |
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
3,132,086 |
|
|
|
2,382,980 |
|
|
|
2,732,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities |
|
|
808,306 |
|
|
|
583,047 |
|
|
|
567,943 |
|
Non-current deferred income taxes, net |
|
|
|
|
|
|
21,525 |
|
|
|
14,089 |
|
Obligation under capital lease, less portion due within one year |
|
|
20,891 |
|
|
|
22,382 |
|
|
|
22,860 |
|
Long-term debt, exclusive of current installments |
|
|
839,349 |
|
|
|
785,645 |
|
|
|
794,680 |
|
Commitments and contingencies |
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SHAREHOLDERS EQUITY |
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Common stock, authorized 1,200,000,000 shares,
par value $1, issued and outstanding 437,017,637;
453,649,813 and 455,098,947, respectively |
|
|
437,018 |
|
|
|
453,650 |
|
|
|
455,099 |
|
Additional paid-in capital |
|
|
|
|
|
|
|
|
|
|
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|
Accumulated other comprehensive loss |
|
|
(12,864 |
) |
|
|
(33,989 |
) |
|
|
(32,773 |
) |
Retained earnings |
|
|
1,717,452 |
|
|
|
1,870,460 |
|
|
|
1,751,546 |
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
2,141,606 |
|
|
|
2,290,121 |
|
|
|
2,173,872 |
|
|
|
|
|
|
|
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|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
|
$ |
6,942,238 |
|
|
$ |
6,085,700 |
|
|
$ |
6,305,740 |
|
|
|
|
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|
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|
The accompanying notes are an integral part of the financial statements.
4
THE TJX COMPANIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
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|
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
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|
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|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
470,601 |
|
|
$ |
532,577 |
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
272,340 |
|
|
|
261,570 |
|
Property disposals |
|
|
13,731 |
|
|
|
5,564 |
|
Deferred income tax (benefit) provision |
|
|
(71,717 |
) |
|
|
16,254 |
|
Amortization of stock compensation expense |
|
|
42,292 |
|
|
|
55,689 |
|
Excess tax benefits from stock compensation expense |
|
|
(6,032 |
) |
|
|
(1,372 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) in accounts receivable |
|
|
(71,233 |
) |
|
|
(19,418 |
) |
(Increase) in merchandise inventories |
|
|
(710,044 |
) |
|
|
(857,246 |
) |
(Increase) in prepaid expenses and other current assets |
|
|
(38,894 |
) |
|
|
(13,156 |
) |
Increase in accounts payable |
|
|
399,578 |
|
|
|
389,259 |
|
Increase in accrued expenses and other liabilities |
|
|
246,133 |
|
|
|
81,423 |
|
Other |
|
|
31,325 |
|
|
|
25,651 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
578,080 |
|
|
|
476,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Property additions |
|
|
(406,078 |
) |
|
|
(291,838 |
) |
Proceeds from repayments on note receivable |
|
|
560 |
|
|
|
520 |
|
|
|
|
|
|
|
|
Net cash (used in) investing activities |
|
|
(405,518 |
) |
|
|
(291,318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Payments on capital lease obligation |
|
|
(1,377 |
) |
|
|
(1,271 |
) |
Cash payments for repurchase of common stock |
|
|
(639,259 |
) |
|
|
(428,985 |
) |
Proceeds from sale and issuance of common stock |
|
|
103,519 |
|
|
|
203,878 |
|
Excess tax benefits from stock compensation expense |
|
|
6,032 |
|
|
|
1,372 |
|
Cash dividends paid |
|
|
(112,267 |
) |
|
|
(91,169 |
) |
|
|
|
|
|
|
|
Net cash (used in) financing activities |
|
|
(643,352 |
) |
|
|
(316,175 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash |
|
|
2,252 |
|
|
|
6,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents |
|
|
(468,538 |
) |
|
|
(124,013 |
) |
Cash and cash equivalents at beginning of year |
|
|
856,669 |
|
|
|
465,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
388,131 |
|
|
$ |
341,636 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements.
5
THE TJX COMPANIES, INC.
STATEMENT OF SHAREHOLDERS EQUITY
(UNAUDITED)
IN THOUSANDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated Other |
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Paid-In |
|
|
Comprehensive |
|
|
|
|
|
|
|
|
|
Shares |
|
|
Par Value $1 |
|
|
Capital |
|
|
Income (Loss) |
|
|
Retained Earnings |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 27, 2007 |
|
|
453,650 |
|
|
$ |
453,650 |
|
|
$ |
|
|
|
$ |
(33,989 |
) |
|
$ |
1,870,460 |
|
|
$ |
2,290,121 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
470,601 |
|
|
|
470,601 |
|
Gain due to foreign
currency translation
adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,497 |
|
|
|
|
|
|
|
53,497 |
|
(Loss) on net
investment hedge
contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,873 |
) |
|
|
|
|
|
|
(30,873 |
) |
Gain on cash flow
hedge contract |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153 |
|
|
|
|
|
|
|
153 |
|
Amount of OCI
reclassified to net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,652 |
) |
|
|
|
|
|
|
(1,652 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
491,726 |
|
Cash dividends declared on
common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(120,459 |
) |
|
|
(120,459 |
) |
Restricted stock issued |
|
|
200 |
|
|
|
200 |
|
|
|
(200 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock
compensation expense |
|
|
|
|
|
|
|
|
|
|
42,292 |
|
|
|
|
|
|
|
|
|
|
|
42,292 |
|
Issuance of common stock
under stock incentive plan
and related tax effect |
|
|
5,511 |
|
|
|
5,511 |
|
|
|
100,496 |
|
|
|
|
|
|
|
|
|
|
|
106,007 |
|
Common stock repurchased |
|
|
(22,343 |
) |
|
|
(22,343 |
) |
|
|
(142,588 |
) |
|
|
|
|
|
|
(474,328 |
) |
|
|
(639,259 |
) |
Implementation of FIN 48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,181 |
) |
|
|
(27,181 |
) |
Implementation of SFAS 158
measurement provisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,641 |
) |
|
|
(1,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 27, 2007 |
|
|
437,018 |
|
|
$ |
437,018 |
|
|
$ |
|
|
|
$ |
(12,864 |
) |
|
$ |
1,717,452 |
|
|
$ |
2,141,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements.
6
THE TJX COMPANIES, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. |
|
The results for the first nine months are not necessarily indicative of results for the full
fiscal year because TJXs 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 consolidated interim financial statements are unaudited and, in the opinion of
management, 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 TJX for a fair presentation of its financial statements
for the periods reported, all in accordance with generally accepted accounting principles
consistently applied. The consolidated interim financial statements should be read in
conjunction with the audited consolidated financial statements, including the related notes,
contained in TJXs Annual Report on Form 10-K for the fiscal year ended January 27, 2007. |
3. |
|
During the fourth quarter of the fiscal year ended January 27, 2007, TJX closed 34 of its
A.J. Wright stores and recorded the cost to close the stores, as well as operating results of
those stores, as discontinued operations. Accordingly, the financial statements for the prior
period ended October 28, 2006 have been adjusted to report the operating results of the closed
stores as discontinued operations. |
4. |
|
The nine months ended October 27, 2007 include after-tax charges of $130 million ($216
million pre-tax) with respect to the previously announced unauthorized intrusion or intrusions
into portions of the Companys computer system and related theft of customer data
(collectively, the Computer Intrusion). These charges include after-tax costs of $23
million ($38 million pre-tax) incurred during the first six months of the current fiscal year,
as well as an after-tax accrual, recorded in the second quarter, of $107 million ($178 million
pre-tax) for TJXs estimated exposure to potential losses related to the Computer Intrusion.
This accrual reflects TJXs estimate of probable losses in accordance with generally accepted
accounting principles and includes an estimation of total potential cash liabilities, from
pending litigation, proceedings, investigations and other claims (including settlements), as
well as legal and other costs and expenses, arising from the Computer Intrusion. We entered
into a settlement agreement, which is subject to court approval and other conditions, with
respect to the customer class action litigation and a settlement agreement with Visa Inc.,
Visa U.S.A. Inc. and our U.S. acquiring bank, which is subject to conditions, with respect to
claims of eligible U.S. Visa issuers that issued payment cards potentially affected by the
Computer Intrusion. We also expect to incur non-cash charges in fiscal 2009 or 2010 pursuant
to the proposed settlement of the customer class action litigation. Cash charges against the
reserve in the third quarter ended October 27, 2007 were $3 million, reducing the reserve to
$175 million as of October 27, 2007. As an estimate, our accrual is subject to uncertainty,
and actual costs may vary materially from this estimate. We may decrease or increase our
estimate of future expenses and the amount of our reserve based on developments such as the
course and resolution of litigation and investigations and new information with respect to the
Computer Intrusion and amounts recoverable under insurance policies. Any such decreases or
increases may be material. |
5. |
|
Total stock-based compensation expense was $12.3 million for the quarter ended October 27,
2007 and $16.7 million for the quarter ended October 28, 2006. Total stock-based compensation
expense was $42.3 million for the nine months ended October 27, 2007 and $55.7 million for the
nine months ended October 28, 2006. These amounts include stock option expense as well as
restricted stock amortization. There were options to purchase 2.9 and 5.6 million shares of
common stock exercised during the third quarter and nine months ended October 27, 2007,
respectively. There were options to purchase 36.8 million shares of common stock outstanding
as of October 27, 2007. |
7
6. |
|
TJXs cash payments for interest and income taxes are as follows: |
|
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
|
(in thousands) |
Cash paid for: |
|
|
|
|
|
|
|
|
Interest on debt |
|
$ |
19,745 |
|
|
$ |
19,642 |
|
Income taxes |
|
$ |
375,820 |
|
|
$ |
344,589 |
|
7. |
|
TJX has a reserve for potential future obligations of discontinued operations that relates
primarily to real estate leases associated with A.J. Wright stores that were closed in the
fourth quarter of fiscal 2007 as well as leases of former TJX businesses. The balance in the
reserve and the activity for the nine months ended October 27, 2007 and October 28, 2006 is
presented below: |
|
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year: |
|
$ |
57,677 |
|
|
$ |
14,981 |
|
Additions to the reserve charged to net income: |
|
|
|
|
|
|
|
|
Lease related obligations |
|
|
|
|
|
|
1,555 |
|
Interest accretion |
|
|
1,365 |
|
|
|
300 |
|
Cash payments against the reserve: |
|
|
|
|
|
|
|
|
Lease related obligations |
|
|
(8,064 |
) |
|
|
(1,290 |
) |
Termination benefits and all other |
|
|
(2,149 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
Balance at end of period: |
|
$ |
48,829 |
|
|
$ |
15,541 |
|
|
|
|
|
|
|
|
|
|
The exit costs related to the closed A.J. Wright stores resulted in an addition to the reserve
of $62 million in the fourth quarter of fiscal 2007. The addition to the reserve for the nine
months ended October 28, 2006 was the result of an adjustment to TJXs estimated lease
obligations of its former businesses. This charge is offset in net income by creditor
recoveries of a similar amount. |
|
|
|
TJX may also be contingently liable on up to 15 leases of BJs Wholesale Club, a former TJX
business, for which BJs Wholesale Club is primarily liable. The reserve for discontinued
operations does not reflect these leases, because TJX believes that the likelihood of any future
liability to TJX with respect to these leases is remote due to the current financial condition
of BJs Wholesale Club. |
|
8. |
|
TJXs comprehensive income for the third quarter and nine months ended October 27, 2007 and
October 28, 2006 is presented below: |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
249,461 |
|
|
$ |
230,612 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Gain due to foreign currency translation adjustments, net of
related tax effects |
|
|
29,092 |
|
|
|
6,043 |
|
(Loss) gain on hedge contracts, net of related tax effects |
|
|
(15,323 |
) |
|
|
(3,367 |
) |
Gain (loss) on cash flow hedge contracts, net of related tax effects |
|
|
(618 |
) |
|
|
1,042 |
|
Amount reclassified from other comprehensive income to net income,
net of related tax effects |
|
|
(1,032 |
) |
|
|
80 |
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
261,580 |
|
|
$ |
234,410 |
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
470,601 |
|
|
$ |
532,577 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Gain due to foreign currency translation adjustments, net of
related tax effects |
|
|
53,497 |
|
|
|
16,356 |
|
(Loss) gain on hedge contracts, net of related tax effects |
|
|
(30,873 |
) |
|
|
(7,859 |
) |
Gain (loss) on cash flow hedge contracts, net of related tax effects |
|
|
153 |
|
|
|
(2,616 |
) |
Amount reclassified from other comprehensive income to net income,
net of related tax effects |
|
|
(1,652 |
) |
|
|
5,642 |
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
491,726 |
|
|
$ |
544,100 |
|
|
|
|
|
|
|
|
9. |
|
The computation of TJXs basic and diluted earnings per share (EPS) is as follows: |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands, except per share data) |
|
Basic earnings per share |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
249,461 |
|
|
$ |
230,612 |
|
Weighted average common shares outstanding for basic EPS |
|
|
439,256 |
|
|
|
452,544 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.57 |
|
|
$ |
0.51 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
249,461 |
|
|
$ |
230,612 |
|
Add back: Interest expense on zero coupon convertible
subordinated notes, net of income taxes |
|
|
1,183 |
|
|
|
1,159 |
|
|
|
|
|
|
|
|
Income from continuing operations used for diluted EPS calculation |
|
$ |
250,644 |
|
|
$ |
231,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares for basic and diluted earnings per share calculations: |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding for basic EPS |
|
|
439,256 |
|
|
|
452,544 |
|
Assumed conversion / exercise of: |
|
|
|
|
|
|
|
|
Stock options and awards |
|
|
8,373 |
|
|
|
10,042 |
|
Zero coupon convertible subordinated notes |
|
|
16,905 |
|
|
|
16,905 |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding for diluted EPS |
|
|
464,534 |
|
|
|
479,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.54 |
|
|
$ |
0.48 |
|
9
|
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands, except per share data) |
|
Basic earnings per share |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
470,601 |
|
|
$ |
532,577 |
|
Weighted average common shares outstanding for basic EPS |
|
|
447,092 |
|
|
|
454,617 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
1.05 |
|
|
$ |
1.17 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
470,601 |
|
|
$ |
532,577 |
|
Add back: Interest expense on zero coupon convertible
subordinated notes, net of income taxes |
|
|
3,529 |
|
|
|
3,459 |
|
|
|
|
|
|
|
|
Income from continuing operations used for diluted EPS calculation |
|
$ |
474,130 |
|
|
$ |
536,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares for basic and diluted earnings per share calculations: |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding for basic EPS |
|
|
447,092 |
|
|
|
454,617 |
|
Assumed conversion / exercise of: |
|
|
|
|
|
|
|
|
Stock options and awards |
|
|
8,289 |
|
|
|
8,720 |
|
Zero coupon convertible subordinated notes |
|
|
16,905 |
|
|
|
16,905 |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding for diluted EPS |
|
|
472,286 |
|
|
|
480,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
1.00 |
|
|
$ |
1.12 |
|
|
|
The average common shares for the diluted earnings per share calculation exclude the incremental
effect related to outstanding stock options for which the exercise price of the option is in
excess of the related periods average price of TJXs common stock. There were options to
purchase 42,000 shares excluded for the thirteen weeks and 5.7 million shares for the
thirty-nine weeks ended October 27, 2007 and options to purchase 10,000 shares excluded for the
thirteen weeks and 5.7 million shares for the thirty-nine weeks ended October 28, 2006. The
16.9 million shares attributable to the zero coupon convertible subordinated notes are reflected
in the diluted earnings per share calculation in all periods presented in accordance with
Emerging Issues Task Force Issue No. 04-08, The Effect of Contingently Convertible Debt on
Diluted Earnings per Share. |
|
10. |
|
During the quarter ended October 27, 2007, TJX repurchased and retired 10.3 million shares of
its common stock at a cost of $300.0 million. For the nine months ended October 27, 2007, TJX
repurchased and retired 22.7 million shares of its common stock outstanding at a cost of
$650.4 million. TJX reflects stock repurchases in its financial statements on a settlement
basis which amounted to $639.3 million for the nine months ended October 27, 2007, compared to
$429.0 million for the same period last year. Of the $300 million of repurchases made during
this years third quarter, $85.8 million completed a $1 billion stock repurchase program
initially approved by the Board of Directors in October 2005 and $214.2 million of these stock
repurchases were made under the $1 billion stock repurchase program approved by the Board of
Directors in January 2007. |
10
11. |
|
TJX evaluates the performance of its segments based on segment profit or loss, which TJX
defines as pre-tax income before general corporate expense and interest. Segment profit or
loss as defined by TJX may not be comparable to similarly titled measures used by other
entities. In addition, this measure of performance should not be considered an alternative to
net income or cash flows from operating activities as an indicator of TJXs performance or as
a measure of liquidity. The Provision for Computer Intrusion related costs is not allocated
to the segments. These charges are not directly attributable to any of the segments and are
not considered when assessing performance of the segment or allocating resources to the
segment. Presented below is financial information on TJXs business segments: |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
Net sales: |
|
|
|
|
|
|
|
|
Marmaxx |
|
$ |
3,008,842 |
|
|
$ |
2,947,106 |
|
Winners and HomeSense |
|
|
558,903 |
|
|
|
477,334 |
|
T.K. Maxx |
|
|
567,924 |
|
|
|
481,131 |
|
HomeGoods |
|
|
371,775 |
|
|
|
335,972 |
|
A.J. Wright |
|
|
151,274 |
|
|
|
148,499 |
|
Bobs Stores |
|
|
78,773 |
|
|
|
82,901 |
|
|
|
|
|
|
|
|
|
|
$ |
4,737,491 |
|
|
$ |
4,472,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss): |
|
|
|
|
|
|
|
|
Marmaxx |
|
$ |
309,413 |
|
|
$ |
313,799 |
|
Winners and HomeSense |
|
|
68,493 |
|
|
|
60,700 |
|
T.K. Maxx |
|
|
39,883 |
|
|
|
36,838 |
|
HomeGoods |
|
|
25,088 |
|
|
|
17,601 |
|
A.J. Wright |
|
|
(2,272 |
) |
|
|
(2,286 |
) |
Bobs Stores |
|
|
(2,933 |
) |
|
|
(1,178 |
) |
|
|
|
|
|
|
|
|
|
|
437,672 |
|
|
|
425,474 |
|
|
|
|
|
|
|
|
|
|
General corporate expenses |
|
|
34,231 |
|
|
|
42,964 |
|
Provision for Computer Intrusion related costs |
|
|
|
|
|
|
|
|
Interest (income) expense, net |
|
|
3,053 |
|
|
|
6,784 |
|
|
|
|
|
|
|
|
Income from continuing operations before
provision for income taxes |
|
$ |
400,388 |
|
|
$ |
375,726 |
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
Net sales: |
|
|
|
|
|
|
|
|
Marmaxx |
|
$ |
8,553,973 |
|
|
$ |
8,252,311 |
|
Winners and HomeSense |
|
|
1,419,707 |
|
|
|
1,246,680 |
|
T.K. Maxx |
|
|
1,495,032 |
|
|
|
1,235,891 |
|
HomeGoods |
|
|
1,032,181 |
|
|
|
943,151 |
|
A.J. Wright |
|
|
443,957 |
|
|
|
419,245 |
|
Bobs Stores |
|
|
214,020 |
|
|
|
210,580 |
|
|
|
|
|
|
|
|
|
|
$ |
13,158,870 |
|
|
$ |
12,307,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss): |
|
|
|
|
|
|
|
|
Marmaxx |
|
$ |
834,042 |
|
|
$ |
791,583 |
|
Winners and HomeSense |
|
|
142,884 |
|
|
|
130,263 |
|
T.K. Maxx |
|
|
60,709 |
|
|
|
54,608 |
|
HomeGoods |
|
|
44,174 |
|
|
|
30,333 |
|
A.J. Wright |
|
|
(6,968 |
) |
|
|
(9,070 |
) |
Bobs Stores |
|
|
(12,978 |
) |
|
|
(11,444 |
) |
|
|
|
|
|
|
|
|
|
|
1,061,863 |
|
|
|
986,273 |
|
|
|
|
|
|
|
|
|
|
General corporate expenses |
|
|
90,283 |
|
|
|
103,450 |
|
Provision for Computer Intrusion related costs |
|
|
215,922 |
|
|
|
|
|
Interest (income) expense, net |
|
|
(423 |
) |
|
|
15,956 |
|
|
|
|
|
|
|
|
Income from continuing operations before
provision for income taxes |
|
$ |
756,081 |
|
|
$ |
866,867 |
|
|
|
|
|
|
|
|
12. |
|
The following represents the net periodic pension cost and related components for the
thirteen weeks ended October 27, 2007 and October 28, 2006: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
Pension |
|
|
|
(Funded Plan) |
|
|
(Unfunded Plan) |
|
|
|
October 27, |
|
|
October 28, |
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
6,870 |
|
|
$ |
8,891 |
|
|
$ |
349 |
|
|
$ |
173 |
|
Interest cost |
|
|
6,123 |
|
|
|
5,390 |
|
|
|
733 |
|
|
|
930 |
|
Expected return on plan assets |
|
|
(8,013 |
) |
|
|
(7,549 |
) |
|
|
|
|
|
|
|
|
Amortization of prior service cost |
|
|
14 |
|
|
|
14 |
|
|
|
31 |
|
|
|
(144 |
) |
Estimated settlement cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,421 |
|
Recognized actuarial losses |
|
|
|
|
|
|
908 |
|
|
|
252 |
|
|
|
610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expense |
|
$ |
4,994 |
|
|
$ |
7,654 |
|
|
$ |
1,365 |
|
|
$ |
2,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
The following represents the net periodic pension cost and related components for the
thirty-nine weeks ended October 27, 2007 and October 28, 2006: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
Pension |
|
|
|
(Funded Plan) |
|
|
(Unfunded Plan) |
|
|
|
October 27, |
|
|
October 28, |
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
26,028 |
|
|
$ |
28,247 |
|
|
$ |
745 |
|
|
$ |
783 |
|
Interest cost |
|
|
18,474 |
|
|
|
16,445 |
|
|
|
2,150 |
|
|
|
2,197 |
|
Expected return on plan assets |
|
|
(24,194 |
) |
|
|
(22,046 |
) |
|
|
|
|
|
|
|
|
Amortization of prior service cost |
|
|
43 |
|
|
|
43 |
|
|
|
93 |
|
|
|
93 |
|
Recognized actuarial losses |
|
|
|
|
|
|
4,222 |
|
|
|
592 |
|
|
|
1,264 |
|
Special termination benefit/settlement costs |
|
|
|
|
|
|
|
|
|
|
168 |
|
|
|
1,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expense |
|
$ |
20,351 |
|
|
$ |
26,911 |
|
|
$ |
3,748 |
|
|
$ |
5,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result of voluntary funding contributions made to its funded pension plan in fiscal 2006
and prior years, there was no required funding in fiscal 2007 and TJX does not anticipate any
funding requirements for fiscal 2008. |
|
|
|
Effective January 1, 2006, TJX amended its postretirement medical plan to eliminate all plan
benefits for anyone retiring after January 1, 2006. For retirees enrolled in the plan as of
that date and who enroll in Medicare Part D within specified timeframes, the amended plan
provides a $35.00 monthly benefit, which is intended to cover the cost of the retirees monthly
premium payment for Medicare coverage. The reduction in the liability related to this plan
amendment is being amortized over the remaining lives of the current participants. The
postretirement medical plan generated benefit credits of $2.5 million for the nine months ended
October 27, 2007, compared to $2.5 million for the nine months ended October 28, 2006. |
|
13. |
|
At October 27, 2007, TJX had interest rate swap agreements outstanding with a notional amount
of $100 million. The agreements entitle TJX to receive biannual payments of interest at a
fixed rate of 7.45% and pay a floating rate of interest indexed to the six-month LIBOR rate
with no exchange of the underlying notional amounts. The interest rate swap agreements
converted a portion of TJXs long-term debt from a fixed-rate obligation to a floating-rate
obligation. TJX designated the interest rate swaps as a fair value hedge of the related
long-term debt. The fair value of the swap agreements outstanding at October 27, 2007,
excluding the estimated net interest receivable, was a liability of $1.6 million. The
valuation of the derivative instruments results in an offsetting fair value adjustment to the
debt hedged; accordingly, long-term debt has been reduced by $1.6 million. |
|
|
|
Also at October 27, 2007, TJX had an interest rate swap on the principal amount of its C$235
million three-year note, converting the interest on the note from floating to a fixed rate of
interest at approximately 4.136%. The interest rate swap is designated as a cash flow hedge of
the underlying debt. The fair value of the contract, excluding the net interest accrual,
amounted to an asset of $1.2 million (C$1.2 million) as of October 27, 2007. The valuation of
the swap results in an offsetting adjustment to other comprehensive income. |
|
14. |
|
TJX has a $500 million revolving credit facility maturing May 5, 2010 and a $500 million
revolving credit facility maturing May 5, 2011. These agreements have no compensating balance
requirements and have various covenants including a requirement of a specified ratio of debt
to earnings. These agreements serve as back up to TJXs commercial paper program. TJX had no
outstanding short-term borrowings at October 27, 2007 and October 28, 2006. The availability
under revolving credit facilities at October 27, 2007 and October 28, 2006 was $1 billion. |
|
15. |
|
TJX accrues for inventory purchase obligations at the time of shipment by the vendor. As a
result, merchandise inventories on TJXs balance sheets include an accrual for in-transit
inventory of $396 million at October 27, |
13
|
|
2007 and $327 million at October 28, 2006. A liability for a comparable amount is included in
accounts payable for the respective period. |
|
16. |
|
TJX adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation
48, Accounting for Uncertainty in Income Taxes (FIN 48), in the first quarter of fiscal year
2008. FIN 48 clarifies the accounting for income taxes by prescribing a minimum threshold for
benefit recognition of a tax position for financial reporting purposes. FIN 48 also
establishes tax accounting rules for measurement, classification, interest and penalties,
disclosure and interim period accounting. As a result of the adoption, TJX recognized a charge
of approximately $27.2 million to the retained earnings balance at the beginning of fiscal
2008 and certain amounts that were historically netted within other liabilities were
reclassified to other assets. As of the adoption date TJX had $124.6 million of unrecognized
tax benefits, all of which would impact the effective tax rate if recognized. As of October
27, 2007, TJX had $136.9 million of unrecognized tax benefits. |
|
|
|
TJX is subject to U.S federal income tax as well as income tax in multiple state, local and
foreign jurisdictions. In nearly all jurisdictions, the tax years through fiscal 2001 are no
longer subject to examination. |
|
|
|
TJXs continuing accounting policy classifies interest and penalties related to income tax
matters as part of income tax expense. The accrued amounts for interest and penalties were $42.0
million as of October 27, 2007 and $36.3 million as of January 27, 2007. |
|
|
|
Based on the outcome of tax examinations, or as a result of the expiration of statute of
limitations in specific jurisdictions, it is reasonably possible that unrecognized tax benefits
for certain tax positions taken on previously filed tax returns may change materially from those
recorded in the financial statements as of January 27, 2007. However, based on the status of
current audits and the protocol of finalizing audits, which may include formal legal
proceedings, it is not possible to estimate the impact of such changes, if any, to previously
recorded uncertain tax positions. There have been no significant changes to the status of these
items as of October 27, 2007. |
|
17. |
|
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans -An
amendment of FASB Statements No. 87, 88, 106 and 132 (R) (SFAS No. 158). SFAS No. 158
requires the recognition of the funded status of a benefit plan in the balance sheet; the
recognition in other comprehensive income of gains or losses and prior service costs or
credits arising during the period but which are not included as components of periodic benefit
cost; the measurement of defined benefit plan assets and obligations as of the balance sheet
date; and disclosure of additional information about the effects on periodic benefit cost for
the following fiscal year arising from delayed recognition in the current period. The
recognition provisions of SFAS No. 158 were adopted by TJX during its fiscal year ended
January 27, 2007. TJX deferred the implementation of the measurement provisions of SFAS No.
158 until fiscal 2008. The impact of adopting the measurement provisions was to increase our
post retirement liabilities by $2.7 million resulting in an after-tax charge of $1.6 million
to retained earnings during the first quarter of this fiscal year. |
|
|
|
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS
No. 157 defines fair value, establishes a framework for measuring fair value and requires
enhanced disclosures about fair value measurements. SFAS No. 157 requires companies to disclose
the fair value of their financial instruments according to a fair value hierarchy as defined in
the standard. Additionally, companies are required to provide enhanced disclosure regarding
financial instruments in one of the categories, including a reconciliation of the beginning and
ending balances separately for each major category of assets and liabilities. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. TJX believes the adoption of SFAS No. 157 will
not have a material impact on its results of operations or financial condition. |
14
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The Thirteen Weeks (third quarter) and Thirty-Nine Weeks (nine months) Ended October 27, 2007
Compared to
The Thirteen Weeks (third quarter) and Thirty-Nine Weeks (nine months) Ended October 28, 2006
Business Overview
We are the leading off-price retailer of apparel and home fashions in the United States and
worldwide. Our T.J. Maxx, Marshalls and A.J. Wright chains in the United States, our Winners chain
in Canada, and our T.K. Maxx chain in Europe sell off-price family apparel and home fashions. Our
HomeGoods chain in the United States and our HomeSense chain, operated by Winners in Canada, sell
off-price home fashions. The target customer for all of our off-price chains, except A.J. Wright,
is the middle- to upper-middle income shopper, with the same profile as a department or specialty
store customer. A.J. Wright targets the moderate-income customer. Our seven off-price chains are
synergistic in their philosophies and operating platforms. Our eighth chain, Bobs Stores, was
acquired in December 2003 and is a value-oriented, branded apparel chain based in the Northeastern
United States that offers casual, family apparel and footwear. Bobs Stores target customer
demographic spans the moderate- to upper-middle income bracket.
In November 2006, we announced our decision to close 34 A.J. Wright stores as part of a
repositioning of the chain. The following discussion reviews our results from continuing
operations, which excludes the results of the closed A.J. Wright stores. The cost to close these
stores was recorded as a discontinued operation in the fourth quarter of fiscal 2007 and the
operating income or loss from these stores is also presented as a discontinued operation for all
periods presented. All references in the following discussion are to continuing operations unless
otherwise indicated.
We suffered an unauthorized intrusion or intrusions into portions of our computer system,
discovered during the fourth quarter of fiscal 2007, and the related theft of customer data
(collectively, the Computer Intrusion). See Provision for Computer Intrusion related costs
below.
Results of Operations
Highlights of our financial performance for the third quarter and nine months ended October 27,
2007 include the following:
|
|
|
Net sales increased 6% to $4.7 billion for the third quarter and 7% to $13.2 billion for
the nine-month period over last years comparable periods. We continued to grow our
business, with stores in operation as of October 28, 2007 and total selling square footage
each up 4% from a year ago. |
|
|
|
|
Consolidated same store sales increased 3% for the third quarter and 3% on a
year-to-date basis. Same store sales growth was favorably impacted by currency exchange
rates, which contributed approximately two percentage points of growth to both the third
quarter and year-to-date periods. Same store sales growth for both the quarter and
year-to-date was unfavorably impacted by weakness in apparel sales, particularly outerwear,
largely due to the unseasonably warm weather during much of the third quarter. |
|
|
|
|
During this years second quarter ended July 28, 2007, TJX recorded a $178.1 million
pre-tax charge for estimated losses in connection with the Computer Intrusion. This charge
was in addition to pre-tax costs incurred of $37.8 million during the first and second
quarter of the current fiscal year. Thus, for the nine months ended October 27, 2008,
pre-tax income was reduced by $215.9 million for the Provision for Computer Intrusion
related costs. |
|
|
|
|
Our third quarter pre-tax margin (the ratio of pre-tax income to net sales) was 8.5% as
compared to 8.4% for the same period last year. Year-to-date, our pre-tax margin was 5.7%
as compared to 7.0% for the same period last year. The Provision for Computer Intrusion
related costs, which was 1.6% of net sales for the year-to-date period, more than offset
what would otherwise have been an increase in our pre-tax margin. |
15
|
|
|
Our cost of sales ratios increased by 0.2 percentage points in the third quarter as
compared to last years third quarter and, on a year-to-date basis, this ratio remained
essentially the same as the prior year. Merchandise margins improved during the third
quarter reflecting disciplined inventory management, and were on top of strong merchandise
margins recorded in the prior year. This improvement, however, was more than offset by a
mark-to-market adjustment on inventory related foreign currency hedge contracts (described
in more detail below) as well as the de-levering impact on occupancy costs of the low
single digit same store sales growth. |
|
|
|
|
Selling, general and administrative expense ratios improved for both the quarter and
year-to-date period primarily due to our cost containment initiatives, partially offset by
a planned increase in marketing expense. |
|
|
|
|
We recorded income from continuing operations for this years third quarter of $249.5
million, or $0.54 per diluted share, a 13% increase over diluted earnings per share of
$0.48 per share in last years third quarter. |
|
|
|
|
Income from continuing operations for the nine months ended October 27, 2007 was $470.6
million, or $1.00 per diluted share, (which was reduced by an after-tax charge of $130.2
million, or $0.28 per diluted share, for the charges relating to the Computer Intrusion)
and compares to income from continuing operations of $533.5 million, or $1.12 per diluted
share, for the same period last year. |
|
|
|
|
During the third quarter ended October 27, 2007, we repurchased 10.3 million shares of
our common stock at a cost of $300 million and for the first nine months we have
repurchased 22.7 million shares at a cost of $650 million. Repurchases were suspended
during most of the first quarter as a result of the discovery of the Computer Intrusion. We
continue to expect to repurchase approximately $900 million of TJX stock during fiscal
2008. |
|
|
|
|
Consolidated average per store inventories, including inventory on hand at our
distribution centers, as of October 27, 2007 were down 1% from the prior year, versus an
increase of 5% as of October 28, 2006 from the comparable prior year period. The decrease
of 1% in average per store inventories as of October 27, 2007 would have been greater had
it not been offset by an increase of 2% due to foreign currency exchange rates. |
The following is a discussion of our consolidated operating results, followed by a discussion of
our segment operating results. All references to earnings per share are diluted earnings per share
unless otherwise indicated.
Net sales: Consolidated net sales for the quarter ended October 27, 2007 were $4.7 billion, up 6%
from $4.5 billion in last years third quarter. The increase in net sales for this years third
quarter included 3% from same store sales and 3% from new stores. The same store sales increase
for this years third quarter was favorably impacted by approximately two percentage points from
foreign currency exchange rates as compared to a benefit in last years third quarter of
approximately one percentage point.
Consolidated net sales for the nine months ended October 27, 2007 were $13.2 billion, up 7% over
$12.3 billion in last years comparable period. The increase in net sales for the nine months
ended October 27, 2007 includes 3% from same store sales and 4% from new stores. Foreign currency
exchange rates favorably impacted same store sales by approximately one percentage point in both
the current and prior year nine-month periods.
Same store sales increases for both the quarter and nine months ended October 27, 2007, were driven
by strong sales of dresses, footwear and accessories, partially offset by softer sales in the
balance of the womens apparel category, particularly outerwear, (in part due to unseasonably warm
weather during much of the third quarter). Overall, during the third quarter, transaction volume
was slightly down, more than offset by an increase in average ticket. Throughout fiscal 2008, we
solidly executed our off-price fundamentals, buying close to need and taking advantage of
opportunities in the market place. As a result, our third quarter merchandise margin improved
slightly over the prior year despite increased markdowns.
Net sales for the third quarter and nine months ended October 27, 2007 reflected strong same store
sales increases at our international businesses with sales in Canada and the United Kingdom above
the consolidated average, while sales in most regions of the United States trailed the consolidated
average.
16
We define same store sales to be sales of those stores that have been in operation for all or a
portion of two consecutive fiscal years, or in other words, stores that are starting their third
fiscal year of operation. We classify a store as a new store until it meets the same store
criteria. We determine which stores are included in the same store sales calculation at the
beginning of a fiscal year and the classification remains constant throughout that year, unless a
store is closed. We calculate same store sales results by comparing the current and prior year
weekly periods that are most closely aligned. Relocated stores and stores that are expanded in
size are generally classified in the same way as the original store, and we believe that the impact
of these stores on the consolidated same store percentage is immaterial. Consolidated and
divisional same store sales are calculated in U.S. dollars. We also provide divisional same store
sales in local currency for our foreign divisions because this removes the effect of changes in
currency exchange rates, and we believe it is a more appropriate measure of the divisional
operating performance.
The following table sets forth our consolidated operating results expressed as a percentage of net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Net Sales |
|
Percentage of Net Sales |
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, including buying and occupancy
costs |
|
|
74.7 |
|
|
|
74.5 |
|
|
|
75.5 |
|
|
|
75.5 |
|
Selling, general and administrative expenses |
|
|
16.7 |
|
|
|
16.9 |
|
|
|
17.1 |
|
|
|
17.3 |
|
Provision for Computer Intrusion related costs |
|
|
|
|
|
|
|
|
|
|
1.6 |
|
|
|
|
|
Interest (income) expense, net |
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.0 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before
provision
for income taxes |
|
|
8.5 |
% |
|
|
8.4 |
% |
|
|
5.7 |
% |
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, including buying and occupancy costs: Cost of sales, including buying and occupancy
costs, as a percentage of net sales, increased 0.2 percentage points for the quarter ended October
27, 2007 as compared to the same period last year. Consolidated merchandise margins improved by
0.2 percentage points, which was more than offset by a $12 million mark-to-market adjustment on
inventory related foreign currency hedges and the de-levering impact on occupancy costs as a
percentage of net sales due to the low single digit same store sales growth (net of foreign
currency impacts) in the quarter. The improvement in merchandise margin in the quarter was driven
by a higher mark-on which more than offset increased markdowns taken on weather-sensitive apparel
categories.
On a year-to-date basis, cost of sales, including buying and occupancy costs, as a percentage of
net sales, remained consistent with the prior year. A year-to-date improvement in merchandise
margin was essentially offset by the mark-to-market adjustment on inventory related foreign
currency hedge contracts and a slight increase in occupancy costs as a percentage of net sales.
All other buying and occupancy costs remained relatively flat as compared to the same period last
year.
Inventory related foreign currency hedge contracts The charge related to our inventory hedge
contracts reflects the change in the fair value of hedge contracts on
Winners U.S. dollar denominated
merchandise purchases, as a result of the increase in the value of the Canadian dollar. We
routinely enter into these contracts to lock in the cost of merchandise purchased by Winners and
T.K. Maxx that are denominated in U.S. dollars. The gain or loss on these contracts is ultimately
offset by a similar gain or loss on the merchandise purchased. Because we do not elect hedge
accounting treatment under SFAS No. 133, the gain or loss on the value of these contracts is
recorded in a different period than the currency gain or loss on the related merchandise purchased.
The increase in the value of the Canadian dollar during the third quarter resulted in a $12
million third quarter charge on Winners U.S. denominated purchases which will be offset by a
similar gain in the fourth quarter when the related merchandise is sold.
Selling, general and administrative expenses: Selling, general and administrative expenses, as a
percentage of net sales, decreased 0.2 percentage points for the third quarter and nine months
ended October 27, 2007, as compared to the same periods last year. These ratios improved due to
our continued focus on expense management, as well as, on a year-to-date basis, leverage on our
same store sales. We experienced expense leverage in benefit costs, insurance and
17
administrative expenses. These improvements were partially offset by a planned increase in
advertising costs as well as store relocation costs incurred at T.K. Maxx.
Provision for Computer Intrusion related costs: We face potential liabilities to customers, banks,
payment card companies, governmental entities and shareholders with respect to the Computer
Intrusion. Certain banks have sought, and other banks and payment card companies may seek, either
directly against us or through claims against our acquiring banks as to which we may have indemnity
obligations, payment of or reimbursement for fraudulent payment card charges and operating expenses
(such as costs of replacing and/or monitoring payment cards thought by them to have been placed at
risk by the Computer Intrusion) that they believe they have incurred by reason of the Computer
Intrusion. Each of our acquiring banks has asserted a right to be indemnified by us for any losses
it incurs by reason of claims by issuing banks. In addition, payment card companies and
associations have imposed, and others may seek to impose, fines by reason of the Computer
Intrusion. Various litigation and claims have been, and additional litigation and claims may be,
asserted against us and/or our acquiring banks on behalf of customers, banks and payment card
companies and shareholders seeking damages allegedly arising out of the Computer Intrusion and
other relief related to the Computer Intrusion. We entered into a settlement agreement, which is
subject to court approval and other conditions, with respect to the customer class action
litigation and a settlement agreement with Visa Inc., Visa U.S.A. Inc. and our U.S. acquiring bank,
which is subject to conditions, with respect to claims of eligible U.S. Visa issuers that issued
payment cards potentially affected by the Computer Intrusion. We intend to defend pending
litigation and claims vigorously, although we cannot predict the outcome of any such litigation and
claims. Canadian privacy officials have completed their investigation and U.K. privacy officials
determined not to investigate. Various other governmental agencies are investigating the Computer
Intrusion, and although we are cooperating in such investigations, we may be subject to fines or
other obligations as a result of those investigations.
The nine months ended October 27, 2007 include after-tax charges of $130 million ($216 million
pre-tax) with respect to the Computer Intrusion. These charges include after-tax costs of $23
million ($38 million pre-tax) incurred during the first six months of the current fiscal year, as
well as an after-tax charge of $107 million ($178 million pre-tax) recorded in the second quarter
for TJXs estimated exposure to potential losses related to the Computer Intrusion. This accrual
reflects TJXs estimate of probable losses in accordance with generally accepted accounting
principles and includes an estimation of total potential cash liabilities, from pending litigation,
proceedings, investigations and other claims (including settlements), as well as legal and other
costs and expenses, arising from the Computer Intrusion. Cash charges against the reserve in the
third quarter ended October 27, 2007 were $3 million, reducing the reserve to $175 million as of
October 27, 2007. We also expect to incur non-cash charges in fiscal 2009 or 2010 pursuant to the
customer class action settlement. As an estimate, our reserve is subject to uncertainty, and actual
costs may vary materially from this estimate. We may decrease or increase our estimate of future
expenses and the amount of our reserve based on developments such as the course and resolution of
litigation and investigations and new information with respect to the Computer Intrusion and
amounts recoverable under insurance policies. Any such decreases or increases may be material.
Interest (income) expense, net: Interest (income) expense, net amounted to expense of $3.1 million
for the third quarter of fiscal 2008 compared to expense of $6.8 million for the same period last
year. Interest (income) expense, net, amounted to income of $0.4 million for the nine-months ended
October 27, 2007 compared to expense of $16.0 million for the same period last year. These changes
were the result of interest income totaling $7.3 million in the third quarter this year versus $3.4
million for the same period last year and $30.4 million for the nine month period this year versus
$13.6 million for the same period last year. The additional interest income this year was due to
higher cash balances available for investment, partly the result of the temporary suspension of our
stock buyback program for most of the fiscal 2008 first quarter, as well as higher interest rates
earned on our investments.
Income taxes: The effective income tax rate was 37.7% for the third quarter ended October 27, 2007
compared to 38.6% for last years third quarter, and 37.8% for the current year-to-date period as
compared to 38.5% for last years comparable period. The reduction in the effective income tax
rates for the fiscal 2008 third quarter and year-to-date period as compared to comparable prior
periods results largely from TJXs change in assertion regarding the undistributed earnings of one
of its Puerto Rico subsidiaries. Beginning in this years third quarter, TJX concluded that the
undistributed earnings of its Puerto Rico subsidiary that operates Marshalls stores would not be
permanently reinvested. As a result, we recorded a deferred tax liability for the effect of the
undistributed income and, in addition, we were able to fully recognize the benefit of accumulated
foreign tax credits that had been earned at the subsidiary level. The net impact of this change in
assertion was a reduction in our third quarter and year-to-date
18
effective income tax rates. Prior to this period the earnings of this Puerto Rico subsidiary were
deemed to be indefinitely reinvested. In addition the tax impact on the Provision for Computer
Intrusion related costs is recorded at a marginal tax rate which is slightly higher than the
effective income tax rate on all other earnings resulting in a reduction in the fiscal 2008
effective income tax rate.
Income from continuing operations: Income from continuing operations for this years third quarter
was $249.5 million, or $0.54 per diluted share versus income from continuing operations of $230.8
million, or $0.48 per diluted share, in last years third quarter. Income from continuing
operations for the nine months ended October 27, 2007 was $470.6 million, or $1.00 per diluted
share, (which includes an after-tax charge of $130.2 million, or $0.28 per diluted share, relating
to the Computer Intrusion) and compares to income from continuing operations of $533.5 million, or
$1.12 per diluted share, for the same period last year. Changes in currency exchange rates
(including the impact of the mark-to-market adjustment of inventory hedge contracts) did not have a
significant impact on our third quarter or year-to-date consolidated earnings.
Discontinued operations and net income: During the fourth quarter of the fiscal year ended January
27, 2007, we closed 34 A.J. Wright stores and recorded the cost to close the stores, as well as
operating results of the stores, as discontinued operations. Accordingly, the financial
statements for the prior periods ended October 28, 2006 have been adjusted to reflect the operating
results of the closed stores as discontinued operations. The loss related to the discontinued
operations and included in net income for the periods ended October 28, 2006 is immaterial.
Segment information: The following is a discussion of the operating results of our business
segments. We consider each of our operating divisions to be a segment. We evaluate the performance
of our segments based on segment profit or loss, which we define as pre-tax income before general
corporate expense, Provision for Computer Intrusion related costs and interest. Segment profit or
loss as we define the term may not be comparable to similarly titled measures used by other
entities. In addition, this measure of performance should not be considered an alternative to net
income or cash flows from operating activities as an indicator of our performance or as a measure
of liquidity. Presented below is selected financial information related to our business segments
(U.S. dollars in millions):
Marmaxx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
3,008.8 |
|
|
$ |
2,947.1 |
|
|
$ |
8,554.0 |
|
|
$ |
8,252.3 |
|
Segment profit |
|
$ |
309.4 |
|
|
$ |
313.8 |
|
|
$ |
834.0 |
|
|
$ |
791.6 |
|
Segment profit as a percentage of net sales |
|
|
10.3 |
% |
|
|
10.6 |
% |
|
|
9.8 |
% |
|
|
9.6 |
% |
Percent (decrease) increase in same store sales |
|
|
(1 |
)% |
|
|
5 |
% |
|
|
1 |
% |
|
|
2 |
% |
Stores in operation at end of period |
|
|
|
|
|
|
|
|
|
|
1,628 |
|
|
|
1,575 |
|
Selling square footage at end of period (in thousands) |
|
|
|
|
|
|
|
|
|
|
39,881 |
|
|
|
38,559 |
|
Net sales for Marmaxx increased 2% for the third quarter of fiscal 2008 as compared to the same
period last year and increased 4% for the nine months ended October 27, 2007 as compared to the
same period last year. Same store sales for Marmaxx decreased 1% for the quarter and increased 1%
for the year-to-date period. Unseasonably warm weather during the quarter negatively impacted
cold-weather apparel sales. In addition, home fashions underperformed. Sales at Marmaxx for both
the third quarter and nine-month periods reflected strong same store sales increases in less
weather sensitive categories such as dresses, footwear and accessories. During the nine months
ended October 27, 2007 we added 238 expanded footwear departments to Marshalls stores with the
expansions planned for fiscal 2008 now virtually complete. Geographically, same store sales for
the third quarter in most regions were consistent with the chain average with the Southwest and
West Coast recording same store sales increases. On a year-to-date basis, same store sales for the
Northeast, Southwest and West Coast were above the chain average, while same store sales in Florida
and the Midwest were below the chain average.
Segment profit for the quarter ended October 27, 2007 was $309.4 million, down slightly compared to
last years third quarter. Third quarter segment profit as a percentage of net sales (segment
profit margin or segment margin) was 10.3%, down from 10.6% last year. We executed our
off-price fundamentals well during the third quarter, and despite being aggressive with markdowns,
we were able to maintain merchandise margins.
19
Merchandise margins were essentially flat with the prior year as a strong mark-on largely offset
increased markdowns taken due to the unseasonably warm weather in the quarter. Segment margin was
reduced by the de-levering impact of a decrease in same store sales, as well as a planned increase
in advertising expense which increased 0.1 percentage points as a percentage of net sales. The
de-levering impact on expense ratios due to the same store sales decrease was partly offset by our
cost containment initiatives.
Segment profit for the nine months ended October 27, 2007 increased 5% to $834.0 million, compared
to the same period last year. Segment profit margin was 9.8% for the nine-month period in fiscal
2008 versus 9.6% last year. Segment margin was favorably impacted by merchandise margins, which
increased 0.2 percentage points due to higher mark-on, as well as some expense leverage due to our
cost containment measures. These year-to-date improvements in segment margin were partly offset by
a planned increase in advertising expense which increased 0.1 percentage points as a percentage of
net sales.
As of October 27, 2007, Marmaxxs average per store inventories, including inventory on hand at its
distribution centers, were down 6% as compared to average per store inventories at the same time
last year. This compares to a 5% increase in average per store inventories at October 28, 2006 from
the end of the prior year period. As of October 27, 2007, Marmaxxs total inventory commitment,
which includes inventory in our stores and distribution centers as well as merchandise on order,
was down versus last year on a per-store basis.
Winners and HomeSense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
Thirty-Nine Weeks Ended |
|
|
|
October 27, |
|
|
October 28, |
|
|
October 27, |
|
|
October 28, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
558.9 |
|
|
$ |
477.3 |
|
|
$ |
1,419.7 |
|
|
$ |
1,246.7 |
|
Segment profit |
|
$ |
68.5 |
|
|
$ |
60.7 |
|
|
$ |
142.9 |
|
|
$ |
130.3 |
|
Segment profit as a percentage of net sales |
|
|
12.3 |
% |
|
|
12.7 |
% |
|
|
10.1 |
% |
|
|
10.4 |
% |
Percent increase in same store sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. currency |
|
|
15 |
% |
|
|
11 |
% |
|
|
10 |
% |
|
|
12 |
% |
Local currency |
|
|
5 |
% |
|
|
5 |
% |
|
|
5 |
% |
|
|
4 |
% |
Stores in operation at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners |
|
|
|
|
|
|
|
|
|
|
190 |
|
|
|
184 |
|
HomeSense |
|
|
|
|
|
|
|
|
|
|
71 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Winners and HomeSense |
|
|
|
|
|
|
|
|
|
|
261 |
|
|
|
252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling square footage at end of period (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners |
|
|
|
|
|
|
|
|
|
|
4,364 |
|
|
|
4,214 |
|
HomeSense |
|
|
|
|
|
|
|
|
|
|
1,358 |
|
|
|
1,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Winners and HomeSense |
|
|
|
|
|
|
|
|
|
|
5,722 |
|
|
|
5,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for Winners and HomeSense increased 17% for the third quarter ended October 27, 2007 over
last years third quarter and increased 14% for the nine-month period over the same period last
year. Currency exchange accounted for approximately 60% of the sales increase in the quarter and
nearly 40% of the sales increase in the year-to-date period. In local currency, which we believe
better reflects our operating performance, same store sales increased 5% in both the third quarter
this year and last year. On a year-to-date basis, same store sales increased 5% this year
compared to a 4% same store sales increase for the year-to-date period last year. Same store sales
for the periods ended October 27, 2007 were positively impacted by sales of home fashions,
footwear, jewelry and accessories. HomeSense continued to perform well, favorably impacting same
store sales in fiscal 2008. These positive factors were partially offset by the impact of
unseasonably warm weather in this years third quarter apparel sales.
Segment profit for the current years second quarter increased 13% to $68.5 million, while segment
margin decreased slightly from last year to 12.3%. Segment profit for the nine months ended
October 27, 2007 increased 10% to $142.9 million, while segment margin decreased 0.3 percentage
points to 10.1%. Currency exchange rates reduced segment profit by $5 million for the third
quarter and $4 million for the year-to-date period, which includes a $12 million charge for the
mark-to-market adjustment of inventory hedge contracts designed to lock in the cost of merchandise
purchases that are denominated in U.S. dollars. This charge, which will be offset by a similar
gain in the fourth quarter when the
20
related merchandise is sold, reduced third quarter segment margin by 2.1 percentage points and
year-to-date segment margin by 0.8 percentage points. This reduction in third quarter segment
margin was partially offset by an increase in merchandise margin, primarily due to increased
mark-on, as well as a reduction in advertising as a percentage of net sales. The third quarter and
year-to-date segment margin also reflect the favorable impact of cost containment initiatives and
strong same store sales results on expense ratios.
T.K. Maxx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
567.9 |
|
|
$ |
481.1 |
|
|
$ |
1,495.0 |
|
|
$ |
1,235.9 |
|
Segment profit |
|
$ |
39.9 |
|
|
$ |
36.8 |
|
|
$ |
60.7 |
|
|
$ |
54.6 |
|
Segment profit as a percentage of net sales |
|
|
7.0 |
% |
|
|
7.7 |
% |
|
|
4.1 |
% |
|
|
4.4 |
% |
Percent increase in same store sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. currency |
|
|
13 |
% |
|
|
17 |
% |
|
|
16 |
% |
|
|
9 |
% |
Local currency |
|
|
6 |
% |
|
|
11 |
% |
|
|
7 |
% |
|
|
9 |
% |
Stores in operation at end of period |
|
|
|
|
|
|
|
|
|
|
225 |
|
|
|
210 |
|
Selling square footage at end of period (in thousands) |
|
|
|
|
|
|
|
|
|
|
5,045 |
|
|
|
4,605 |
|
T.K. Maxxs net sales for the third quarter ended October 27, 2007 increased 18% compared to the
same period last year and year-to-date net sales increased 21% over the same period last year.
Currency exchange rates accounted for nearly one-half of the sales growth for both periods of
fiscal 2008. In local currency, T.K. Maxxs same store sales increased 6% for the third quarter
this year compared to a same store sales increase of 11% for last years third quarter. On a
year-to-date basis, in local currency, same store sales increased 7% this year, versus 9% last
year. Same store sales for home fashions, footwear and accessories, and dresses performed above
the chain average, while other apparel categories were generally below the chain average.
Segment profit for the current years third quarter increased 8% to $39.9 million, and segment
margin decreased 0.7 percentage points compared to last years third quarter. Segment profit for
the nine-month period increased 11% to $60.7 million, while segment margin decreased slightly to
4.1% compared to the same period last year. Currency exchange rates favorably impacted segment
profit by approximately $2 million in the third quarter and approximately $5 million in the
year-to-date period. During this years third quarter T.K. Maxx opened its first five stores in
Germany which reduced segment profit for this years third quarter and year-to-date periods by $5
million and reduced third quarter segment margin by 0.9 percentage points and the year-to-date
segment margin by 0.3 percentage points. T.K. Maxxs segment margins for both the quarter and
year-to-date also reflect lower merchandise margins, primarily from higher markdowns, as well as
lease termination costs related to store relocations. These reductions in segment margin were
partially offset by the favorable impact of same store sales growth on expense ratios, as well as
the divisions cost containment efforts.
HomeGoods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
371.8 |
|
|
$ |
336.0 |
|
|
$ |
1,032.2 |
|
|
$ |
943.2 |
|
Segment profit |
|
$ |
25.1 |
|
|
$ |
17.6 |
|
|
$ |
44.2 |
|
|
$ |
30.3 |
|
Segment profit as a percentage of net sales |
|
|
6.7 |
% |
|
|
5.2 |
% |
|
|
4.3 |
% |
|
|
3.2 |
% |
Percent increase in same store sales: |
|
|
4 |
% |
|
|
5 |
% |
|
|
4 |
% |
|
|
4 |
% |
Stores in operation at end of period |
|
|
|
|
|
|
|
|
|
|
287 |
|
|
|
270 |
|
Selling square footage at end of period (in thousands) |
|
|
|
|
|
|
|
|
|
|
5,526 |
|
|
|
5,207 |
|
21
HomeGoods net sales for the third quarter of fiscal 2008 increased 11% compared to the same period
last year, and on a year-to-date basis net sales increased 9% over the same period last year. Same
store sales increased 4% for the third quarter of fiscal 2008, versus an increase of 5% for the
same period last year. Same store sales increased 4% for the year-to-date periods of both fiscal
years. Segment margin for the quarter and year-to-date period improved over last years comparable
periods primarily due to improved merchandise margins and the leveraging of expenses, particularly
in occupancy and administrative costs. These segment margin improvements were offset in part by an
increase in advertising expenses as a percentage of net sales in both the quarter and year-to-date
periods. We attribute this divisions strong performance to solid execution of off-price buying
and flow of product, with same store sales increases across most categories.
A.J. Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
151.3 |
|
|
$ |
148.5 |
|
|
$ |
444.0 |
|
|
$ |
419.2 |
|
Segment loss |
|
$ |
(2.3 |
) |
|
$ |
(2.3 |
) |
|
$ |
(7.0 |
) |
|
$ |
(9.1 |
) |
Segment loss as a percentage of net sales |
|
|
(1.5 |
)% |
|
|
(1.5 |
)% |
|
|
(1.6 |
)% |
|
|
(2.2 |
)% |
Percent increase in same store sales: |
|
|
0 |
% |
|
|
4 |
% |
|
|
2 |
% |
|
|
3 |
% |
Stores in operation at end of period
continuing operations* |
|
|
|
|
|
|
|
|
|
|
130 |
|
|
|
128 |
|
Selling square footage at end of period
(in thousands) continuing operations* |
|
|
|
|
|
|
|
|
|
|
2,600 |
|
|
|
2,558 |
|
|
|
|
* |
|
Stores in operation and square footage as of October 28, 2006 have been adjusted for store
closings accounted for as discontinued operations. |
The table above presents A.J. Wrights operating results from continuing operations. The operating
results of the stores classified as discontinued operations for the periods ended October 28, 2006
were immaterial.
A.J. Wrights net sales increased 2% for the third quarter ended October 27, 2007 over the same
quarter in the prior year and increased 6% for the year-to-date period compared to the same period
last year. The unseasonably warm weather in this years third quarter in the Northeast and
Midwest, where A.J. Wright stores are concentrated, led to same store sales that were flat in the
quarter compared to last years third quarter and up 2% on a year-to-date basis. A.J. Wrights
third quarter segment loss was comparable to last year with an increase in merchandise margin
offsetting the impact of weak sales. On a year-to-date basis, A.J. Wrights segment loss decreased
from the comparable prior year period, primarily due to improved expense ratios, partially offset
by a decrease in merchandise margin.
Bobs Stores
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
78.8 |
|
|
$ |
82.9 |
|
|
$ |
214.0 |
|
|
$ |
210.6 |
|
Segment loss |
|
$ |
(2.9 |
) |
|
$ |
(1.2 |
) |
|
$ |
(13.0 |
) |
|
$ |
(11.4 |
) |
Segment loss as a percentage of net sales |
|
|
(3.7 |
)% |
|
|
(1.4 |
)% |
|
|
(6.1 |
)% |
|
|
(5.4 |
)% |
Percent (decrease) increase in same store sales: |
|
|
(2 |
)% |
|
|
2 |
% |
|
|
2 |
% |
|
|
3 |
% |
Stores in operation at end of period |
|
|
|
|
|
|
|
|
|
|
34 |
|
|
|
36 |
|
Selling square footage at end of period (in
thousands) |
|
|
|
|
|
|
|
|
|
|
1,242 |
|
|
|
1,306 |
|
Bobs Stores third quarter net sales decreased 5% as compared to the same period in the prior
year, and increased 2% for the nine months ended October 27, 2007 as compared to the same period
last year. Same store sales decreased 2% in the third quarter and increased 2% for the nine months
ended October 27, 2007. Bobs Stores third quarter sales were negatively impacted by unseasonably
warm weather, as this divisions stores are concentrated in
22
the Northeastern United States. Bobs Stores segment loss for the quarter and year-to-date periods
increased over the prior year, with improved merchandise margins more than offset by the
de-levering impact of same store sales results on expense ratios as
well as higher advertising costs as a percentage of sales.
General corporate expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General corporate expense |
|
$ |
34.2 |
|
|
$ |
43.0 |
|
|
$ |
90.3 |
|
|
$ |
103.5 |
|
General corporate expense for segment reporting purposes refers to those costs not specifically
related to the operations of our business segments and is included in selling, general and
administrative expenses. The decrease in general corporate expense for the third quarter compared
to last years third quarter reflects a prior year contribution to our charitable foundation of $10
million partially offset by an increase in corporate support costs for this years third quarter.
On a year-to-date basis, general corporate expenses declined as last years general corporate
expense included the contribution to our charitable foundation of $10 million, as well as a $4
million charge for a portion of the cost of a workforce reduction in the first quarter of fiscal
2007.
Analysis of Financial Condition
Liquidity and Capital Resources
Net cash provided by operating activities was $578 million for the nine months ended October 27,
2007, compared to $477 million for the nine months ended October 28, 2006. Net income, after
adjusting for the non-cash charge of $107 million for the Provision for Computer Intrusion related
costs, provided cash of $578 million in fiscal 2008, compared to $533 million last year. The
change in merchandise inventory, net of the related change in accounts payable, resulted in a use
of cash of $310 million in fiscal 2008, compared to $468 million last year. These favorable
changes in cash provided are offset by the unfavorable impact of an increase in accounts receivable
and all other current assets of $110 million this year compared to an increase of $33 million last
year.
Investing activities relate primarily to property additions for new stores, store improvements and
renovations and investment in our distribution network. Cash outlays for property additions
amounted to $406 million in the nine months ended October 27, 2007, compared to $292 million in the
same period last year. We anticipate that capital spending for fiscal 2008 will be approximately
$575 million.
Cash flows from financing activities consist primarily of our share repurchase program. During the
nine months ended October 27, 2007, we repurchased and retired 22.7 million shares of our common
stock at a cost of $650 million. We reflect stock repurchases in our financial statements on a
settlement basis, which amounted to $639 million for the nine-month period ended October 27, 2007
versus $429 million for the nine months ended October 28, 2006. During the third quarter ended
October 27, 2007, we repurchased 10.3 million shares of our common stock at a cost of $300 million.
Of the $300 million of repurchases made during the third quarter, $86 million completed a $1
billion stock repurchase program approved in October 2005 and $214 million of our stock repurchases
were made under the $1 billion stock repurchase program approved in January 2007.
We traditionally have funded our seasonal merchandise requirements through cash generated from
operations, short-term bank borrowings and the issuance of short-term commercial paper. We have a
commercial paper program pursuant to which we issue commercial paper from time to time. Our $500
million revolving credit facility maturing May 2010 and our $500 million revolving credit facility
maturing May 2011 serve as back up to our commercial paper program. These credit facilities have
no compensating balance requirements and have various covenants including a requirement of a
specified ratio of debt to earnings. As of October 27, 2007 and October 28, 2006 we had no
short-term borrowings outstanding. The availability under our revolving credit facilities was $1
billion at October 27, 2007 and October 28, 2006. We believe internally generated funds and our
revolving credit facilities are more than adequate to meet our operating needs.
23
Recently Issued Accounting Pronouncements
We adopted the provisions of FASB Interpretation 48, Accounting for Uncertainty in Income Taxes
(FIN 48), in the first quarter of fiscal year 2008. FIN 48 clarifies the accounting for income
taxes by prescribing a minimum threshold for benefit recognition of a tax position for financial
statement purposes. FIN 48 also establishes tax accounting rules for measurement, classification,
interest and penalties, disclosure and interim period accounting. As a result of the adoption, we
recognized a charge of approximately $27.2 million to the retained earnings balance at the
beginning of fiscal 2008. In addition, as a result of the adoption, certain amounts that were
historically netted within other liabilities were reclassified to other assets. As of the adoption
date we had $124.6 million of unrecognized tax benefits, all of which would impact the effective
tax rate if recognized. As of October 27, 2007, we have $136.9 million of unrecognized tax
benefits.
In September 2006, FASB issued Statement of Financial Accounting Standards No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans -An amendment of FASB
Statements No. 87, 88, 106 and 132 (R) (SFAS No. 158). SFAS No. 158 requires the recognition of
the funded status of a benefit plan in the balance sheet; the recognition in other comprehensive
income of gains or losses and prior service costs or credits arising during the period but which
are not included as components of periodic benefit cost; the measurement of defined benefit plan
assets and obligations as of the balance sheet date; and disclosure of additional information about
the effects on periodic benefit cost for the following fiscal year arising from delayed recognition
in the current period. The recognition provisions of SFAS No. 158 were adopted by TJX during its
fiscal year ended January 27, 2007. TJX deferred the implementation of the measurement provisions
of SFAS No. 158 until the current fiscal year (fiscal 2008). The impact of adopting the
measurement provisions was to increase our post retirement liabilities by $2.7 million resulting in
an after-tax charge of $1.6 million to retained earnings during the first quarter of this fiscal
year.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No.
157 defines fair value, establishes a framework for measuring fair value and requires enhanced
disclosures about fair value measurements. SFAS No. 157 requires companies to disclose the fair
value of their financial instruments according to a fair value hierarchy as defined in the
standard. Additionally, companies are required to provide enhanced disclosure regarding financial
instruments in one of the categories, including a reconciliation of the beginning and ending
balances separately for each major category of assets and liabilities. SFAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. We believe the adoption of SFAS No. 157 will not have a
material impact on our results of operations or financial condition.
24
Forward-looking Statements
Various statements made in this Quarterly Report on Form 10-Q are forward-looking and involve a
number of risks and uncertainties. All statements that address activities, events or developments
that we intend, expect or believe may occur in the future, including estimates of losses from the
Computer Intrusion and projections of earnings per share and same store sales, are forward-looking
statements. The following are some of the factors that could cause actual results to differ
materially from the forward-looking statements: the results and effects of the Computer Intrusion
including the losses and expenses we may incur (which may be different from the amount we reserved
and estimated and which differences may be material) and consequences to our business (including
potential effects on our reputation and our sales) and to the value of our company and value of our
stock; the terms and completion of the settlement of the customer class actions and completion of
the Visa settlement; our ability to successfully expand our store base and increase same store
sales; fluctuations in quarterly operating results; risks of expansion and costs of contraction;
our ability to successfully implement our opportunistic inventory strategies and to effectively
manage our inventories; successful advertising and promotion; consumer confidence, demand, spending
habits and buying preferences; risks associated with the seasonality of our business, particularly
the effects of a decrease in sales or margins during the second half of the year; effects of
unseasonable weather; competitive factors; factors affecting availability of store and distribution
center locations on suitable terms; factors affecting our recruitment and employment of associates;
factors affecting expenses; success of our acquisition and divestiture activities; our ability to
successfully implement technologies and systems and protect data; our ability to continue to
generate adequate cash flows; our ability to execute the share repurchase program; availability and
cost of financing; general economic
conditions, including gasoline prices; potential disruptions due to wars, natural disasters and
other events beyond our control; changes in currency and exchange rates; import risks; risks
inherent in foreign operations; adverse outcomes for any significant litigation; changes in laws
and regulations and accounting rules and principles; adequacy of reserves; closing adjustments;
effectiveness of internal controls; and other factors that may be described in our filings with the
Securities and Exchange Commission. These risks and uncertainties are discussed in Item 1A, Risk
Factors in our Annual Report on Form 10-K for the fiscal year ended January 27, 2007 and in this
and our other filings with the Securities and Exchange Commission. We do not undertake to publicly
update or revise our forward-looking statements even if experience or future changes make it clear
that any projected results expressed or implied in such statements will not be realized.
25
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We do not enter into derivatives for speculative or trading purposes.
Foreign Currency Exchange Rate Risk
We are exposed to foreign currency exchange rate risk on our investment in our Canadian
(Winners and HomeSense) and European (T.K. Maxx) operations. As more fully described in Notes A
and E to the consolidated financial statements, on pages F-13 through F-17 of the Annual Report on
Form 10-K for the fiscal year ended January 27, 2007, we hedge with derivative financial
instruments a significant portion of our net investment in foreign operations, intercompany
transactions with these operations, and some merchandise purchase commitments incurred by these
operations. We enter into derivative contracts only when there is an underlying economic exposure.
We utilize currency forward and swap contracts designed to offset the gains or losses in the
underlying exposures; most of these gains and losses are recorded directly in shareholders equity.
The contracts are executed with banks we believe are creditworthy and are denominated in
currencies of major industrial countries. We have performed a sensitivity analysis assuming a
hypothetical 10% adverse movement in foreign currency exchange rates applied to the hedging
contracts and the underlying exposures described above. As of October 27, 2007, the analysis
indicated that such an adverse movement would not have a material effect on our consolidated
financial position, results of operations or cash flows.
Interest Rate Risk
Our cash equivalents and short-term investments and certain lines of credit bear variable
interest rates. Changes in interest rates affect interest we earned and paid. In addition,
changes in the gross amount of our borrowings will affect the impact on our future interest expense
of future changes in interest rates. We have some financial instruments to manage our cost of
borrowing; however, we believe that the use of primarily fixed rate debt minimizes our exposure to
market conditions. We performed a sensitivity analysis assuming a hypothetical 10% adverse
movement in interest rates applied to the maximum variable rate debt outstanding during the
previous year. As of October 27, 2007, the analysis indicated that such an adverse movement would
not have a material effect on our consolidated financial position, results of operations or cash
flows.
Market Risk
The assets of our qualified pension plan, a large portion of which is invested in equity
securities, are subject to the risks and uncertainties of the public stock market. We allocate the
pension assets in a manner that attempts to minimize and control our exposure to these market
uncertainties.
Item 4. Controls and Procedures
We have carried out an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures as of October 27, 2007
pursuant to Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the
Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in ensuring that information
required to be disclosed by us in the reports that we file or submit under the Act is (i) recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms; and (ii) accumulated and communicated to our management, including
our principal executive and principal financial officers, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosures. There were no changes in
our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under
the Act) during the fiscal quarter ended October 27, 2007 identified in connection with the
evaluation by our management, including our Chief Executive Officer and Chief Financial Officer,
that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
26
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Computer Intrusion Related Litigation. Putative class actions were filed against TJX and
consolidated in the District of Massachusetts in In re TJX Companies Retail Security Breach
Litigation, 07-cv-10162, putatively on behalf of customers, including all customers in the United
States, Puerto Rico and Canada, whose transaction data were allegedly compromised by the Computer
Intrusion, and putatively on behalf of all financial institutions that received alerts from
MasterCard or Visa related to the Computer Intrusion identifying payment cards issued by such
financial institutions, and who thereafter suffered damages from actual reissuance costs,
monitoring expenses or fraud loss. These putative class actions asserted claims for negligence and
related common-law and/or statutory causes of action stemming from the Computer Intrusion, and seek
various forms of relief including damages, related injunctive or equitable remedies, multiple or
punitive damages, and attorneys fees. On September 21,
2007, TJX entered into a settlement agreement with respect to the
consolidated class action litigation, amended November 14, 2007, which remains subject to various conditions and to
court approval. On October 12, 2007, the Court dismissed the plaintiffs claims in the
consolidated financial institution class action other than claims of negligent misrepresentation
and a state statutory claim based on the same claims of negligent misrepresentation. On November
29, 2007 the Court denied the plaintiffs motions for class certification in the consolidated
financial institution class action.
The Arkansas Carpenters Pension Fund, the purported beneficial holder of 4,500 shares of TJX common
stock, brought an action seeking the right to inspect TJXs books and records dating back to 2003,
as well as its attorneys fees and costs.
Computer Intrusion Related Government Investigations. A number of government agencies are
conducting investigations as to whether TJX as a result of the Computer Intrusion may have violated
laws regarding consumer protection and related matters. TJX has been cooperating in each of the
government investigations. On September 25, 2007, the Office of the Privacy Commissioner of Canada
and the Office of the Information and Privacy Commissioner of Alberta completed an Investigation
into Security, Collection and Retention of Personal Information with respect to the Computer
Intrusion and issued a Report of their joint findings, and TJX is implementing their
recommendations. TJX has been advised that the U.K. Information Commissioners Office will not be
pursuing the matter further.
Other Litigation. Putative class actions have been filed against TJX and consolidated in the United
States District Court for the District of Kansas in In re: The TJX Companies, Inc. Fair and
Accurate Credit Transactions Act (FACTA) Litigation, MDL Docket No. 1853, putatively on behalf of
persons in the United States to whom TJX provided credit card or debit card receipts in alleged
violation of the Fair and Accurate Credit Transactions Act, 15 U.S.C. § 1681 et seq. The
plaintiffs in these actions seek statutory damages, punitive damages, injunctive relief, and costs
and attorneys fees.
A putative class action captioned Mason Lee v. Marshalls of California, Inc. (Case No. RG07337021)
was filed in Alameda County, California, Superior Court on July 23, 2007 for alleged violations of
certain sections of the California Labor Code, principally Section 212 (prohibiting issuance of
out-of-state paychecks), Section 226.7 (requiring paid rest periods) and Section 226 (requiring
certain information on paychecks). The Complaint seeks unspecified actual damages, penalties of
$100 for each aggrieved employee for the initial violation and $200 for each aggrieved employee for
each subsequent violation, together with attorneys fees and costs.
TJX intends to defend all pending litigation and investigations vigorously.
27
Item 1A. Risk Factors
There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our
Annual Report on Form 10-K for the fiscal year ended January 27, 2007 other than the changes
previously disclosed on Form 10-Q for the period ended July 28, 2007, previously filed with the
Securities and Exchange Commission on August 24, 2007.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Information on Share Repurchases
The number of shares of common stock we repurchased (on a trade-date basis) during the
third quarter of fiscal 2008 and the average price per share we paid is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
(d) Maximum Number |
|
|
|
|
|
|
|
|
|
|
Total Number of Shares |
|
(or Approximate |
|
|
|
|
|
|
|
|
|
|
Purchased |
|
Dollar Value) of |
|
|
(a) Total |
|
(b) |
|
as Part of |
|
Shares that May Yet |
|
|
Number of Shares |
|
Average Price |
|
Publicly Announced |
|
Be Purchased Under |
|
|
Purchased |
|
Paid Per Share(1) |
|
Plans or Programs(2) |
|
Plans or Programs |
July 29, 2007
through August 25,
2007 |
|
|
4,424,494 |
|
|
|
28.25 |
|
|
|
4,424,494 |
|
|
$ |
960,811,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 26, 2007
through September
29, 2007 |
|
|
3,308,518 |
|
|
|
30.23 |
|
|
|
3,308,518 |
|
|
$ |
860,798,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
through October 27,
2007 |
|
|
2,551,480 |
|
|
|
29.39 |
|
|
|
2,551,480 |
|
|
$ |
785,798,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
10,284,492 |
|
|
|
|
|
|
|
10,284,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Average price paid per share includes commissions and is rounded to the nearest
two decimal places. |
|
(2) |
|
In August 2007 we completed our $1 billion share repurchase program announced in
October 2005, and in January 2007, our Board of Directors approved a new repurchase
program to repurchase up to $1 billion of TJX common stock from time to time. Through
October 27, 2007, we had repurchased 7.2 million shares at a cost of $214.2 million
under our $1 billion share repurchase program announced in January 2007. |
28
Item 6. Exhibits
|
3(i).1 |
|
The Fourth Restated Certificate of Incorporation is incorporated herein by
reference to Exhibit 99.1 to the Form 8-A/A filed September 9, 1999. Certificate
of Amendment of Fourth Restated Certificate of Incorporation is incorporated herein
by reference to Exhibit 3(i) to the Form 10-Q for the quarter ended July 28, 2005. |
|
|
3(ii).1 |
|
The by-laws of TJX, as amended, are incorporated herein by reference to Exhibit
3(ii) to the Form 10-Q for the quarter ended July 28, 2005. |
|
|
10.1 |
|
The Settlement Agreement between ACohen Marketing & Public Relations,
LLC, Julie Buckley, Anne Cohen, LaQuita Kearney, Laura Lerner, Robert Mann, Jitka
Parmet, Deborah Wilson, Kathleen Robinson, Shannon Kidd, and Mary Robb Farley,
individually and on behalf of the Settlement Class, The TJX Companies, Inc. and
Fifth Third Bancorp dated September 21, 2007, is incorporated herein by reference
to Exhibit 10.1 to the Form 8-K filed September 21, 2007. The Amended Settlement
Agreement, dated as of November 14, 2007, by and among ACohen Marketing & Public
Relations, LLC, Julie Buckley, Anne Cohen, LaQuita Kearney, Laura Lerner, Robert
Mann, Jitka Parmet, Deborah Wilson, Kathleen Robinson, Shannon Kidd and Mary Robb
Farley, individually and on behalf of the Settlement Class, The TJX Companies, Inc.
and Fifth Third Bancorp is filed herewith. |
|
|
10.2 |
|
Settlement Agreement among The TJX Companies, Inc., Visa U.S.A. Inc.
and Visa Inc. and Fifth Third Bank, dated November 29, 2007 is incorporated herein
by reference to Exhibit 10.1 to the Form 8-K filed November 30, 2007. |
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
32.1 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
|
|
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
29
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 5, 2007 |
/s/ Nirmal K. Tripathy
|
|
|
Nirmal K. Tripathy, Chief Financial Officer, on |
|
|
behalf of The TJX Companies, Inc. and as Principal
Financial and Accounting Officer of The TJX
Companies, Inc. |
|
|
30
EXHIBIT INDEX
|
|
|
Exhibit Number |
|
Description of Exhibit |
|
|
|
3(i).1
|
|
Fourth Restated Certificate of Incorporation is incorporated herein by reference to Exhibit
99.1 to the Form 8-A/A filed September 9, 1999. Certificate of Amendment of Fourth Restated
Certificate of Incorporation is incorporated herein by reference to Exhibit 3(i) to the Form
10-Q filed for the quarter ended July 28, 2005. |
|
|
|
3(ii).1
|
|
The by-laws of TJX, as amended, are incorporated herein by reference to Exhibit 3(ii) to
the Form 10-Q filed for the quarter ended July 28, 2005. |
|
|
|
10.1
|
|
The Settlement Agreement between ACohen Marketing & Public Relations, LLC, Julie Buckley,
Anne Cohen, LaQuita Kearney, Laura Lerner, Robert Mann, Jitka Parmet, Deborah Wilson, Kathleen
Robinson, Shannon Kidd, and Mary Robb Farley, individually and on behalf of the Settlement
Class, The TJX Companies, Inc. and Fifth Third Bancorp dated September 21, 2007, is
incorporated herein by reference to Exhibit 10.1 to the Form 8-K filed September 21, 2007.
The Amended Settlement Agreement, dated as of November 14, 2007, by and among ACohen Marketing
& Public Relations, LLC, Julie Buckley, Anne Cohen, LaQuita Kearney, Laura Lerner, Robert
Mann, Jitka Parmet, Deborah Wilson, Kathleen Robinson, Shannon Kidd and Mary Robb Farley,
individually and on behalf of the Settlement Class, The TJX Companies, Inc. and Fifth Third
Bancorp is filed herewith. |
|
|
|
10.2
|
|
Settlement Agreement among The TJX Companies, Inc., Visa U.S.A. Inc. and Visa Inc. and Fifth
Third Bank, dated November 29, 2007 is incorporated herein by reference to Exhibit 10.1 to the
Form 8-K filed November 30, 2007. |
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes- Oxley Act of
2002. |
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of
2002. |
31