1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 /X/ Quarterly Report under Section 13 and 15(d) Of the Securities Exchange Act of 1934 Or / / Transition Report Pursuant to Section 13 and 15(d) Of the Securities Exchange Act of 1934 For Quarter Ended July 28, 2001 Commission file number 1-4908 THE TJX COMPANIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-2207613 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 770 Cochituate Road Framingham, Massachusetts 01701 (Address of principal executive offices) (Zip Code) (508) 390-1000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . The number of shares of Registrant's common stock outstanding as of August 25, 2001: 274,297,043 1
2 PART I FINANCIAL INFORMATION THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME (UNAUDITED) DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS Thirteen Weeks Ended --------------------------- July 28, July 29, 2001 2000 ---------- ---------- Net sales $2,487,622 $2,258,174 ---------- ---------- Cost of sales, including buying and occupancy costs 1,894,704 1,702,298 Selling, general and administrative expenses 406,442 364,474 Interest expense, net 5,688 5,074 ---------- ---------- Income before provision for income taxes 180,788 186,328 Provision for income taxes 68,880 72,295 ---------- ---------- Net income $ 111,908 $ 114,033 ========== ========== Earnings per share: Net income: Basic $ .41 $ .39 Diluted $ .40 $ .39 Cash dividends declared per share $ .045 $ .04 The accompanying notes are an integral part of the financial statements. 2
3 PART I FINANCIAL INFORMATION THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME (UNAUDITED) DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS Twenty-six Weeks Ended -------------------------- July 28, July 29, 2001 2000 ---------- ---------- Net sales $4,758,517 $4,366,290 ---------- ---------- Cost of sales, including buying and occupancy costs 3,581,320 3,256,338 Selling, general and administrative expenses 786,713 702,431 Interest expense, net 9,904 7,827 ---------- ---------- Income before provision for income taxes 380,580 399,694 Provision for income taxes 145,001 155,081 ---------- ---------- Net income $ 235,579 $ 244,613 ========== ========== Earnings per share: Net income: Basic $ .85 $ .83 Diluted $ .84 $ .83 Cash dividends declared per share $ .09 $ .08 The accompanying notes are an integral part of the financial statements. 3
4 THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES BALANCE SHEETS (UNAUDITED) IN THOUSANDS <TABLE> <CAPTION> July 28, January 27, July 29, 2001 2001 2000 ----------- ----------- ----------- <S> <C> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 138,617 $ 132,535 $ 39,400 Accounts receivable 68,743 61,845 57,411 Merchandise inventories 1,854,626 1,452,877 1,690,933 Prepaid expenses and other current assets 64,353 74,690 80,264 ----------- ----------- ----------- Total current assets 2,126,339 1,721,947 1,868,008 ----------- ----------- ----------- Property at cost: Land and buildings 134,385 133,714 121,705 Leasehold costs and improvements, including capitalized leases 799,269 704,011 672,476 Furniture, fixtures and equipment 1,085,137 984,848 899,156 ----------- ----------- ----------- 2,018,791 1,822,573 1,693,337 Less accumulated depreciation and amortization 1,001,331 914,590 834,223 ----------- ----------- ----------- 1,017,460 907,983 859,114 Other assets 76,819 69,976 70,372 Deferred income taxes, net 37,509 47,391 34,988 Goodwill and tradename, net of amortization 182,064 184,986 187,912 ----------- ----------- ----------- TOTAL ASSETS $ 3,440,191 $ 2,932,283 $ 3,020,394 =========== =========== =========== LIABILITIES Current liabilities: Current installments of long-term debt $ 19 $ 73 $ 185 Short-term debt 2,891 39,000 297,384 Accounts payable 898,675 645,672 767,008 Accrued expenses and other current liabilities 420,886 501,822 430,362 Federal and state income taxes payable 40,787 42,192 21,449 ----------- ----------- ----------- Total current liabilities 1,363,258 1,228,759 1,516,388 ----------- ----------- ----------- Other long-term liabilities 167,803 165,440 186,711 Capital lease obligations 30,962 -- -- Long-term debt, exclusive of current installments 669,379 319,372 319,352 Commitments and contingencies -- -- -- SHAREHOLDERS' EQUITY Common stock, authorized 1,200,000,000 shares, par value $1, issued and outstanding 273,965,508; 280,378,675 and 281,973,618 shares, respectively 273,966 280,379 281,974 Additional paid-in capital -- -- -- Accumulated other comprehensive income (loss) (2,961) (3,288) (1,943) Retained earnings 937,784 941,621 717,912 ----------- ----------- ----------- Total shareholders' equity 1,208,789 1,218,712 997,943 ----------- ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,440,191 $ 2,932,283 $ 3,020,394 =========== =========== =========== </TABLE> The accompanying notes are an integral part of the financial statements. 4
5 THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CASH FLOWS (UNAUDITED) IN THOUSANDS <TABLE> <CAPTION> Twenty-six Weeks Ended ----------------------- July 28, July 29, 2001 2000 --------- --------- <S> <C> <C> Cash flows from operating activities: Net income $ 235,579 $ 244,613 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 99,877 82,861 (Gain) on sale of other assets -- (722) Property disposals 1,203 475 Tax benefit of employee stock options 13,906 1,181 Changes in assets and liabilities: (Increase) in accounts receivable (6,977) (1,898) (Increase) in merchandise inventories (405,314) (455,492) Decrease (increase) in deferred income taxes 9,882 (11,934) Decrease (increase) in prepaid expenses and other current assets 10,114 (44,340) Increase in accounts payable 254,916 148,725 (Decrease) in accrued expenses and other liabilities (78,049) (32,536) (Decrease) in income taxes payable (1,250) (21,633) Other, net (2,095) (4,800) --------- --------- Net cash provided by (used in) operating activities 131,792 (95,500) --------- --------- Cash flows from investing activities: Property additions (171,323) (114,554) Issuance of note receivable (4,784) (11,602) Proceeds from sale of other assets -- 9,183 --------- --------- Net cash (used in) investing activities (176,107) (116,973) --------- --------- Cash flows from financing activities: Proceeds from current year borrowings of short-term debt, net 2,876 297,384 Payments on short-term debt outstanding from prior year (39,000) -- Proceeds from borrowing of long-term debt 347,579 -- Payments on capital lease obligation (406) -- Principal payments on long-term debt (54) (100,228) Cash payments for repurchase of common stock (259,776) (298,663) Proceeds from sale and issuance of common stock, net 23,427 2,491 Cash dividends paid (23,692) (22,223) --------- --------- Net cash provided by (used in) financing activities 50,954 (121,239) --------- --------- Effect of exchange rate changes on cash (557) 1,353 --------- --------- Net increase (decrease) in cash and cash equivalents 6,082 (332,359) Cash and cash equivalents at beginning of year 132,535 371,759 --------- --------- Cash and cash equivalents at end of period $ 138,617 $ 39,400 ========= ========= </TABLE> The accompanying notes are an integral part of the financial statements. 5
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The results for the first six months are not necessarily indicative of results for the full fiscal year, because TJX's business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year. 2. The preceding data are unaudited and reflect all normal recurring adjustments, the use of retail statistics, and accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by TJX for a fair presentation of its financial statements for the periods reported, all in accordance with generally accepted accounting principles and practices consistently applied. 3. TJX's cash payments for interest and income taxes are as follows: Twenty-six Weeks Ended ------------------------------------ July 28, July 29, 2001 2000 --------- ---------- (In Thousands) Cash paid for: Interest on debt $ 12,987 $ 16,083 Income taxes $121,551 $186,564 Effective June 1, 2001, TJX recorded a capital lease asset and a related capital lease obligation (non-cash transaction) of $32.6 million in connection with the lease of 283,000 square feet of additional office space in Framingham, Massachusetts. 4. In October 1988, TJX completed the sale of its former Zayre Stores division to Ames Department Stores, Inc. In April 1990, Ames filed for protection under Chapter 11 of the Federal Bankruptcy Code and in December 1992, Ames emerged from bankruptcy under a plan of reorganization. On August 20, 2001, Ames filed a voluntary petition for relief under Chapter 11 of the Federal Bankruptcy Code. TJX remains contingently liable on certain leases of the former Zayre stores still leased by Ames. We believe that any contingent liability for these leases will not have a material adverse effect on our financial condition, operating results or cash flows. TJX is also contingently liable on certain leases of its former warehouse club operations (BJ's Wholesale Club and HomeBase) which was spun off by TJX in fiscal 1990 as Waban Inc. During fiscal 1998, Waban Inc. was renamed HomeBase, Inc. and spun-off its BJ's Wholesale Club division as BJ's Wholesale Club, Inc. HomeBase, Inc., and BJ's Wholesale Club, Inc. are primarily liable on their respective leases and have indemnified TJX for any amounts it may have to pay with respect to such leases. In addition, HomeBase, Inc., BJ's Wholesale Club, Inc. and TJX have entered into agreements under which BJ's Wholesale Club, Inc. has substantial indemnification responsibility with respect to such HomeBase, Inc. leases. TJX is also contingently liable on certain leases of BJ's Wholesale Club, Inc. for which both BJ's Wholesale Club, Inc. and HomeBase, Inc. remain liable. TJX believes that its contingent liability on the HomeBase, Inc. and BJ's Wholesale Club, Inc. leases will not have a material adverse effect on our financial condition, operating results or cash flows. TJX is also contingently liable on certain store leases of its former Hit or Miss division. In November 2000, the Hit or Miss store chain filed for bankruptcy and subsequently sold or closed all of its store locations. TJX believes that its current reserve for discontinued operations is adequate to meet the costs it may incur in connection with the Hit or Miss bankruptcy and that the contingent liability on these leases will not have a material adverse effect on our financial condition, operating results or cash flows. 6
7 5. Effective January 28, 2001, TJX implemented Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement requires that all derivatives be recorded on the balance sheet at fair value. TJX enters derivative contracts to hedge its net investment in foreign operations, and to hedge certain foreign denominated merchandise commitments and intercompany payables. The fair value of all its derivative contracts as of January 28, 2001, most of which were net investment hedge contracts, amounted to a net asset of $10.0 million, as compared to a carrying value of $11.6 million. This resulted in a reduction to accumulated other comprehensive income for the cumulative effect of an accounting change of $1.6 million. As of July 28, 2001, TJX recorded all of its hedge contracts at fair value. The change in fair value relates primarily to the contracts designated as a hedge of the net investment in foreign operations. A gain on these contracts was credited to other comprehensive income to offset losses of the translation adjustment of its foreign operations. The remainder of TJX's hedge contracts were either designated as fair value hedges or hedge accounting was not elected. Thus the change in fair value of these contracts, which is immaterial, is reflected in current period earnings. 6. TJX's comprehensive income for the periods ended July 28, 2001 and July 29, 2000 is presented below: <TABLE> <CAPTION> Thirteen Weeks Ended Twenty-Six Weeks Ended ---------------------------- ---------------------------- July 28, July 29, July 28, July 29, 2001 2000 2001 2000 ---------- ---------- ---------- ---------- (Dollars in thousands) (Dollars in thousands) <S> <C> <C> <C> <C> Net income $111,908 $114,033 $235,579 $244,613 Other comprehensive income (loss): Cumulative effect of accounting change (SFAS 133) -- -- (1,572) -- Loss due to foreign currency translation adjustments (37) (3,497) (2,351) (8,867) Gain on net investment hedge contracts 1,135 3,101 3,999 8,224 Amounts reclassified from other comprehensive income to net income -- -- 251 133 -------- -------- -------- -------- Comprehensive income $113,006 $113,637 $235,906 $244,103 ======== ======== ======== ======== </TABLE> 7
8 7. The computation of basic and diluted earnings per share is as follows: <TABLE> <CAPTION> Thirteen Weeks Ended ------------------------------------- July 28, July 29, 2001 2000 ---------- ---------- (Dollars in thousands) (except per share amounts) <S> <C> <C> Net income $ 111,908 $ 114,033 Shares for basic and diluted earnings per share calculations: Average common shares outstanding for basic EPS 276,259,051 290,885,089 Dilutive effect of stock options and awards 2,877,276 1,780,567 ----------- ----------- Average common shares outstanding for diluted EPS 279,136,327 292,665,656 =========== =========== Net income: Basic earnings per share $.41 $.39 Diluted earnings per share $.40 $.39 </TABLE> <TABLE> <CAPTION> Twenty-six Weeks Ended ------------------------------------- July 28, July 29, 2001 2000 ---------- ---------- (Dollars in thousands) (except per share amounts) <S> <C> <C> Net income $ 235,579 $ 244,613 Shares for basic and diluted earnings per share calculations: Average common shares outstanding for basic EPS 277,773,285 294,583,185 Dilutive effect of stock options and awards 2,858,351 1,801,979 ----------- ----------- Average common shares outstanding for diluted EPS 280,631,636 296,385,164 =========== =========== Net income: Basic earnings per share $.85 $.83 Diluted earnings per share $.84 $.83 </TABLE> 8. During the second quarter ended July 28, 2001, TJX repurchased 4.0 million shares of its common stock under its $1 billion stock repurchase program at a cost of $127.1 million. For the six months ended July 28, 2001, TJX repurchased 8.5 million shares at a cost of $259.8 million. Since the inception of the $1 billion stock repurchase program through July 28, 2001, TJX repurchased 28.0 million shares at a cost of $641.4 million. 9. On February 13, 2001, TJX issued $517.5 million zero coupon convertible subordinated notes due February 2021 and raised gross proceeds of $347.6 million. The issue price of the notes represents a yield to maturity of 2% per year. The notes are convertible into 8.5 million shares of common stock if specified conditions are met. The holders of the notes have the right to require TJX to purchase the notes at the end of the first, third, sixth and twelfth year following the issuance date. TJX incurred approximately $8 million of expenses associated with the offering. Due to the option the holders have to require TJX to purchase the notes after one year, the debt expenses are being amortized over twelve months. 8
9 10. TJX evaluates the performance of its segments based on "operating income" which is defined as pre-tax income before general corporate expense, goodwill amortization and interest. Presented below is financial information on TJX's business segments. <TABLE> <CAPTION> Thirteen Weeks Ended Twenty-Six Weeks Ended --------------------------- ----------------------------- July 28, July 29, July 28, July 29, 2001 2000 2001 2000 ---------- ---------- ----------- ---------- <S> <C> <C> <C> <C> Net sales: Marmaxx $2,073,938 $1,955,477 $3,997,297 $3,801,881 Winners * 156,686 131,457 284,084 248,398 T.K. Maxx 111,979 85,510 207,511 157,986 HomeGoods 111,045 67,154 210,655 126,287 A.J. Wright 33,974 18,576 58,970 31,738 ---------- ---------- ---------- ---------- $2,487,622 $2,258,174 $4,758,517 $4,366,290 ========== ========== ========== ========== Operating income (loss): Marmaxx $ 192,912 $ 190,985 $ 402,320 $ 409,258 Winners * 11,412 15,417 21,580 28,551 T.K. Maxx 2,987 709 4,259 (963) HomeGoods (4,006) (445) (3,888) 643 A.J. Wright (2,976) (3,596) (7,075) (7,547) ---------- ---------- ---------- ---------- 200,329 203,070 417,196 429,942 General corporate expense 13,201 11,016 25,408 21,116 Goodwill amortization 652 652 1,304 1,305 Interest expense, net 5,688 5,074 9,904 7,827 ----------- ----------- ----------- ---------- Income before provision for income taxes $ 180,788 $ 186,328 $ 380,580 $ 399,694 =========== =========== =========== =========== </TABLE> * Includes the operating results of the new HomeSense stores which commenced operations in April 2001. 11. In June 2001 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." This statement addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. We expect to implement SFAS No. 142 for our fiscal year beginning January 27, 2002 and are currently assessing the impact of the new standard. 12. Certain amounts in the financial statements of the prior period have been reclassified for comparative purposes. 9
10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Twenty-Six Weeks Ended July 28, 2001 Versus Twenty-Six Weeks Ended July 29, 2000 All reference to earnings per share amounts are diluted earnings per share unless otherwise indicated. Net sales from continuing operations for the second quarter were $2,487.6 million, up 10% from $2,258.2 million last year. For the twenty-six week period net sales were $4,758.5 million, up 9% from $4,366.3 million for the same period last year. The increase in sales for both periods is attributable to new stores and an increase in same store sales. Consolidated same store sales increased 2% for the second quarter ended July 28, 2001 and increased 1% for the six month period. Net income for the second quarter was $111.9 million, or $.40 per share, versus $114.0 million, or $.39 per share last year. For the twenty-six week period, net income was $235.6 million, or $.84 per share, versus $244.6 million, or $.83 per share. The following table sets forth operating results expressed as a percentage of net sales: PERCENTAGE OF NET SALES <TABLE> <CAPTION> Thirteen Weeks Ended Twenty-six Weeks Ended ------------------------ -------------------------- July 28, July 29, July 28, July 29, 2001 2000 2001 2000 ------- ------- -------- -------- <S> <C> <C> <C> <C> Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales, including buying and occupancy costs 76.2 75.4 75.3 74.6 Selling, general and administrative expenses 16.3 16.1 16.5 16.1 Interest expense, net .2 .2 .2 .1 ----- ----- ----- ----- Income before provision for income taxes 7.3% 8.3% 8.0% 9.2% ===== ===== ===== ===== </TABLE> Cost of sales including buying and occupancy costs, as a percentage of net sales, increased for both periods reflecting the effect of less than planned growth in sales and an increase in distribution costs. We expect distribution costs to continue to increase in the short term due to increased investment in our distribution center network. In addition, during the second quarter, this ratio reflects the negative margin impact of operating with higher than planned inventories at Winners and costs incurred to move HomeGoods to a liquid inventory position. Selling, general and administrative expenses, as a percentage of net sales, increased from the prior year in both periods due to higher store payroll costs, primarily at Marmaxx, as well as the effect of less than planned growth in sales. The increase in store payroll costs is due to higher labor costs. The increase in interest expense, net over the comparable period last year is due to amortization of the debt discount and debt expenses relating to zero coupon convertible notes issued in February 2001. (See Note 9 of the Notes to Consolidated Financial Statements for more information). Interest expense, net includes interest income of $4.3 million in the second quarter of the current year versus $2.6 million of interest 10
11 income in the second quarter last year. The twenty-six weeks ended this year includes interest income of $9.7 million versus $8.2 million of interest income last year. Our effective income tax rate was 38.1% for both the three months and the six months ended July 28, 2001 versus 38.8% for both the three months and six months ended July 29, 2000. The reduction in the income tax rate is attributable to tax benefits associated with our United Kingdom operations. The following is a summary of key operating statistics of our business segments: (US dollars in millions) <TABLE> <CAPTION> Thirteen Weeks Ended Twenty-six Weeks Ended -------------------------- --------------------------- July 28, July 29, July 28, July 29, 2001 2000 2001 2000 -------- -------- -------- --------- <S> <C> <C> <C> <C> MARMAXX Net sales $2,073.9 $1,955.5 $3,997.3 $3,801.9 Operating income $ 192.9 $ 191.0 $ 402.3 $ 409.3 Operating margin 9.3% 9.8% 10.1% 10.8% Percent increase in same store sales 2% 0% 1% 1% Stores in operation at end of period 1,217 1,158 WINNERS Net sales $ 156.7 $ 131.4 $ 284.1 $ 248.4 Operating income $ 11.4 $ 15.4 $ 21.6 $ 28.5 Operating margin 7.3% 11.7% 7.6% 11.5% Percent increase in same store sales (local currency) 3% 8% 3% 10% Stores in operation at end of period Winners 123 106 HomeSense 6 -- T.K. MAXX Net sales $ 112.0 $ 85.5 $ 207.5 $ 158.0 Operating income (loss) $ 3.0 $ .7 $ 4.3 $ (1.0) Operating margin 2.7% .8% 2.0% (.6)% Percent increase in same store sales (local currency) 8% 9% 8% 8% Stores in operation at end of period 83 64 HOMEGOODS Net sales $ 111.0 $ 67.2 $ 210.7 $ 126.3 Operating income (loss) $ (4.0) $ (.4) $ (3.9) $ .6 Operating margin (3.6)% (.6)% (1.8)% .5% Percent increase in same store sales 5% 5% 4% 7% Stores in operation at end of period 99 60 A.J. WRIGHT Net sales $ 34.0 $ 18.6 $ 59.0 $ 31.7 Operating (loss) $ (3.0) $ (3.6) $(7.1) $ (7.5) Operating margin (8.8)% (19.4)% (12.0)% (23.7)% Percent increase in same store sales 18% 19% 20% 22% Stores in operation at end of period 31 19 </TABLE> 11
12 Marmaxx sales for the periods ending July 28, 2001, were adversely affected by unseasonable weather in February, March and May in many areas of the United States. Sales for the last two months of the second quarter improved considerably with apparel categories gaining strength. Operating income was slightly ahead of last year for the second quarter and slightly less than last year for the six month period. Operating margins were less than last year in both periods. Marmaxx results reflect the lower-than-planned sales growth and higher store payroll costs. Winners same store sales increases were below plan and reflect the adverse impact of unseasonably cool weather during several months of this year. In addition, during the second quarter Winners operating performance was affected by the negative margin impact of operating with higher-than-planned inventories. This factor and Winners lower-than-planned sales are the reason operating income and operating margins for the periods ending July 28, 2001, are less than the prior year periods. HomeGoods same store sales have been aided by progress we have made in dealing with the distribution issues that adversely affected HomeGoods in the second half of last year. At the same time however, operating profits for the periods ending July 28, 2001, were negatively impacted by the increase in distribution costs and the cost incurred to move HomeGoods to a more liquid inventory position. The strong sales performance at both T.K. Maxx and A.J. Wright led to an improvement in their operating income and margins as compared to the prior year. FINANCIAL CONDITION Cash flows from operating activities for the six months ended July 28, 2001 and July 29, 2000 reflect increases in inventories and accounts payable that are primarily due to normal seasonal requirements and new stores. The increase in net cash provided by operating activities for the six months ended July 28, 2001, as compared to the prior year, is primarily the result of a fresher and more liquid inventory position. Investing activities relate primarily to our property additions which are higher than the comparable period last year due to our accelerated store roll-out program and investment in our distribution center network. Investing activities for the period ended July 29, 2000 included proceeds of $9.2 million from the sale of all of our shares of Manulife Financial received as part of its demutualization in 1999. During the first six months of fiscal 2002 we repurchased 8.5 million shares at a total cost of $259.8 million as compared to the repurchase of 18.4 million shares at a cost of $346.7 million in the prior period. Since the inception of the $1 billion stock repurchase program, through July 28, 2001, we have repurchased 28.0 million shares at a total cost of $641.4 million. Financing activities for the period ending July 28, 2001 includes the payment of $39 million of short-term debt outstanding at the end of the fiscal year ended January 27, 2001. Financing activities for the period ended July 28, 2001 also include proceeds of $347.6 million from the February 2001 issue of $517.5 million zero coupon convertible subordinated notes due 2021. In July 2001, we renewed the $250 million, 364-day revolving credit agreement through July 5, 2002. Our $500 million, five-year revolving credit facility extends through September, 2002. 12
13 In October 1988, TJX completed the sale of its former Zayre Stores division to Ames Department Stores, Inc. In April 1990, Ames filed for protection under Chapter 11 of the Federal Bankruptcy Code and in December 1992, Ames emerged from bankruptcy under a plan of reorganization. On August 20, 2001, Ames filed a voluntary petition for relief under Chapter 11 of the Federal Bankruptcy Code. TJX remains contingently liable on certain leases of the former Zayre stores still leased by Ames. We believe that any contingent liability for these leases will not have a material adverse effect on our financial condition, operating results or cash flows. NEW ACCOUNTING PRONOUNCEMENTS In June 2001 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." This statement addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. We expect to implement SFAS No. 142 for our fiscal year beginning January 27, 2002 and are currently assessing the impact of the new standard. 13
14 PART II. OTHER INFORMATION Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Information with respect to matters voted on at the Annual Meeting of Stockholders on June 5, 2001 (during the period covered by this report) was provided in the Quarterly Report on Form 10-Q for the quarter ended April 28, 2001. Item 6(a) EXHIBITS 10.1 The 1986 Stock Incentive Plan as amended through June 5, 2001, is filed herewith. Item 6(b) REPORTS ON FORM 8-K The Company did not file a current report on Form 8-K during the quarter ended July 28, 2001. 14
15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE TJX COMPANIES, INC. --------------------------------- (Registrant) Date: September 11, 2001 /s/ Donald G. Campbell --------------------------------- Donald G. Campbell, Executive Vice President - Finance, on behalf of The TJX Companies, Inc. and as Principal Financial and Accounting Officer of The TJX Companies, Inc. 15