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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(mark one)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended November 2, 2019
OR
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)
Delaware   04-2207613
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer 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)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $1.00 per share TJX New York Stock Exchange
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    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
Emerging growth company       
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  
The number of shares of registrant’s common stock outstanding as of November 2, 2019: 1,203,183,703



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
 
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Net sales $ 10,451,334    $ 9,825,759    $ 29,510,515    $ 27,845,594   
Cost of sales, including buying and occupancy costs 7,440,033    6,983,483    21,103,975    19,797,537   
Selling, general and administrative expenses 1,885,923    1,756,448    5,319,659    5,006,937   
Pension settlement charge —    36,122    —    36,122   
Interest expense, net 3,259    3,188    6,973    10,365   
Income before provision for income taxes 1,122,119    1,046,518    3,079,908    2,994,633   
Provision for income taxes 293,856    284,265    792,505    776,373   
Net income $ 828,263    $ 762,253    $ 2,287,403    $ 2,218,260   
Basic earnings per share:
Net income $ 0.69    $ 0.62    $ 1.89    $ 1.78   
Weighted average common shares – basic 1,206,369    1,236,842    1,210,475    1,245,639   
Diluted earnings per share:
Net income $ 0.68    $ 0.61    $ 1.86    $ 1.75   
Weighted average common shares – diluted 1,224,288    1,257,562    1,228,903    1,264,100   
The accompanying notes are an integral part of the unaudited consolidated financial statements.
2


THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
IN THOUSANDS
 
  Thirteen Weeks Ended
  November 2, 2019 November 3, 2018
Net income $ 828,263    $ 762,253   
Additions to other comprehensive loss:
Foreign currency translation adjustments, net of related tax provisions of $241 in fiscal 2020 and $143 in fiscal 2019
70,785    (18,055)  
Recognition of net gains/losses on benefit obligations, net of related tax benefit of $1,867 in fiscal year 2019 (See Note H)
—    (5,128)  
Reclassifications from other comprehensive loss to net income:
Pension settlement charge, net of related tax provision of $9,641 in fiscal 2019
—    26,481   
Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $1,609 in fiscal 2020 and $1,109 in fiscal 2019
4,418    3,047   
Amortization of loss on cash flow hedge, net of related tax provisions of $75 in fiscal 2020 and $75 in fiscal 2019
208    206   
Other comprehensive income, net of tax 75,411    6,551   
Total comprehensive income $ 903,674    $ 768,804   

  Thirty-Nine Weeks Ended
  November 2, 2019 November 3, 2018
Net income $ 2,287,403    $ 2,218,260   
Additions to other comprehensive loss:
Foreign currency translation adjustments, net of related tax benefit of $711 in fiscal 2020 and $13,582 in fiscal 2019
(20,119)   (200,318)  
Gain on net investment hedges, net of related tax provision of $7,113 in fiscal 2019
—    19,538   
Recognition of net gains/losses on benefit obligations, net of related tax benefit of $1,867 in fiscal year 2019 (See Note H)
—    (5,128)  
Reclassifications from other comprehensive loss to net income:
Pension settlement charge, net of related tax provision of $9,641 in fiscal 2019
—    26,481   
Amortization of prior service cost and deferred gains, net of related tax provisions of $4,515 in fiscal 2020 and $3,210 in fiscal 2019
12,402    8,817   
Amortization of loss on cash flow hedge, net of related tax provisions of $227 in fiscal 2020 and $228 in fiscal 2019
624    622   
Other comprehensive (loss), net of tax (7,093)   (149,988)  
Total comprehensive income $ 2,280,310    $ 2,068,272   
The accompanying notes are an integral part of the unaudited consolidated financial statements.
3


THE TJX COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS, EXCEPT SHARE DATA
 
November 2, 2019 February 2, 2019 November 3, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 2,060,176    $ 3,030,229    $ 2,711,767   
Accounts receivable, net 442,883    346,298    419,790   
Merchandise inventories 6,274,778    4,579,033    5,543,413   
Prepaid expenses and other current assets 596,778    513,662    642,043   
Total current assets 9,374,615    8,469,222    9,317,013   
Net property at cost 5,250,971    5,255,208    5,165,875   
Non-current deferred income taxes, net 5,484    6,467    —   
Operating lease right of use assets 9,069,146    —    —   
Goodwill 96,313    97,552    97,348   
Other assets 492,175    497,580    445,006   
TOTAL ASSETS $ 24,288,704    $ 14,326,029    $ 15,025,242   
LIABILITIES
Current liabilities:
Accounts payable $ 3,447,443    $ 2,644,143    $ 3,340,596   
Accrued expenses and other current liabilities 2,806,225    2,733,076    2,594,561   
Current portion of operating lease liabilities 1,412,262    —    —   
Federal, state and foreign income taxes payable 21,214    154,155    78,668   
Total current liabilities 7,687,144    5,531,374    6,013,825   
Other long-term liabilities 797,573    1,354,242    1,284,911   
Non-current deferred income taxes, net 203,515    158,191    236,769   
Long-term operating lease liabilities 7,822,067    —    —   
Long-term debt 2,235,873    2,233,616    2,232,864   
Commitments and contingencies (See Note K)
SHAREHOLDERS’ EQUITY
Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued
—    —    —   
Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,203,183,703; 1,217,182,508 and 1,233,145,248 respectively
1,203,184    1,217,183    1,233,145   
Additional paid-in capital —    —    —   
Accumulated other comprehensive loss (637,414)   (630,321)   (591,847)  
Retained earnings 4,976,762    4,461,744    4,615,575   
Total shareholders’ equity 5,542,532    5,048,606    5,256,873   
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 24,288,704    $ 14,326,029    $ 15,025,242   
The accompanying notes are an integral part of the unaudited consolidated financial statements.
4


THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
 
  Thirty-Nine Weeks Ended
  November 2, 2019 November 3, 2018
Cash flows from operating activities:
Net income $ 2,287,403    $ 2,218,260   
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 647,389    601,227   
Loss on property disposals and impairment charges 6,253    14,574   
Pension settlement charge —    36,122   
Deferred income tax provision (benefit) 42,120    (15,630)  
Share-based compensation 86,590    77,353   
Changes in assets and liabilities:
(Increase) in accounts receivable (99,476)   (97,891)  
(Increase) in merchandise inventories (1,701,704)   (1,442,577)  
(Increase) decrease in prepaid expenses and other current assets (231,968)   124,788   
Increase in accounts payable 805,766    902,502   
Increase in accrued expenses and other liabilities 133,651    97,696   
(Decrease) in income taxes payable (131,499)   (33,292)  
Other 29,003    (5,375)  
Net cash provided by operating activities 1,873,528    2,477,757   
Cash flows from investing activities:
Property additions (992,712)   (872,963)  
Purchase of investments (24,052)   (157,198)  
Sales and maturities of investments 11,590    634,288   
       Other 7,419    26,653   
Net cash (used in) investing activities (997,755)   (369,220)  
Cash flows from financing activities:
Cash payments for repurchase of common stock (1,190,390)   (1,591,392)  
Cash dividends paid (795,092)   (682,322)  
Proceeds from issuance of common stock 175,285    239,608   
Cash payments of employee tax withholdings for performance based stock awards (23,297)   (16,014)  
Other —    (5,409)  
Net cash (used in) financing activities (1,833,494)   (2,055,529)  
Effect of exchange rate changes on cash (12,332)   (99,718)  
Net (decrease) in cash and cash equivalents (970,053)   (46,710)  
Cash and cash equivalents at beginning of year 3,030,229    2,758,477   
Cash and cash equivalents at end of period $ 2,060,176    $ 2,711,767   
The accompanying notes are an integral part of the unaudited consolidated financial statements.
5


THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
IN THOUSANDS
Thirteen Weeks Ended
  Common Stock    
   Shares
Par Value
$1
Additional Paid-In
Capital
Accumulated Other Comprehensive
Loss
Retained
Earnings
Total
Balance, August 3, 2019 1,208,933    $ 1,208,933    $ —    $ (712,825)   $ 4,806,504    $ 5,302,612   
Net income —    —    —    —    828,263    828,263   
Other comprehensive income, net of tax —    —    —    75,411    —    75,411   
Cash dividends declared on common stock —    —    —    —    (277,115)   (277,115)  
Recognition of share-based compensation —    —    31,190    —    —    31,190   
Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 3,075    3,075    69,735    —    —    72,810   
Common stock repurchased and retired (8,824)   (8,824)   (100,925)   —    (380,890)   (490,639)  
Balance, November 2, 2019 1,203,184    $ 1,203,184    $ —    $ (637,414)   $ 4,976,762    $ 5,542,532   

Thirteen Weeks Ended
Common Stock    
Shares
Par Value
$1
Additional Paid-In
Capital
Accumulated Other Comprehensive
Loss
Retained
Earnings
Total
Balance, August 4, 2018 1,241,533    $ 1,241,533    $ —    $ (598,398)   $ 4,583,938    $ 5,227,073   
Net income —    —    —    —    762,253    762,253   
Other comprehensive income, net of tax —    —    —    6,551    —    6,551   
Cash dividends declared on common stock —    —    —    —    (241,147)   (241,147)  
Recognition of share-based compensation —    —    27,412    —    —    27,412   
Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 3,063    3,063    74,593    —    (1,532)   76,124   
Common stock repurchased and retired (11,451)   (11,451)   (102,005)   —    (487,937)   (601,393)  
Balance, November 3, 2018 1,233,145    $ 1,233,145    $ —    $ (591,847)   $ 4,615,575    $ 5,256,873   
The accompanying notes are an integral part of the unaudited consolidated financial statements.




6


 THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
IN THOUSANDS
Thirty-Nine Weeks Ended
  Common Stock    
   Shares
Par Value
$1
Additional Paid-In
Capital
Accumulated Other Comprehensive
Loss
Retained
Earnings
Total
Balance, February 2, 2019 1,217,183    $ 1,217,183    $ —    $ (630,321)   $ 4,461,744    $ 5,048,606   
Net income —    —    —    —    2,287,403    2,287,403   
Cumulative effect of accounting change (See Note A) —    —    —    —    403    403   
Other comprehensive loss, net of tax —    —    —    (7,093)   —    (7,093)  
Cash dividends declared on common stock —    —    —    —    (834,975)   (834,975)  
Recognition of share-based compensation —    —    86,590    —    —    86,590   
Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 8,169    8,169    143,819    —    —    151,988   
Common stock repurchased and retired (22,168)   (22,168)   (230,409)   —    (937,813)   (1,190,390)  
Balance, November 2, 2019 1,203,184    $ 1,203,184    $ —    $ (637,414)   $ 4,976,762    $ 5,542,532   

Thirty-Nine Weeks Ended
Common Stock    
Shares
Par Value
$1
Additional Paid-In
Capital
Accumulated Other Comprehensive
Loss
Retained
Earnings
Total
Balance, February 3, 2018 1,256,018    $ 1,256,018    $ —    $ (441,859)   $ 4,334,150    $ 5,148,309   
Net income —    —    —    —    2,218,260    2,218,260   
Cumulative effect of accounting change —    —    —    —    58,712    58,712   
Other comprehensive loss, net of tax —    —    —    (149,988)   —    (149,988)  
Cash dividends declared on common stock —    —    —    —    (727,975)   (727,975)  
Recognition of share-based compensation —    —    77,353    —    —    77,353   
Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 11,030    11,030    218,079    —    (5,515)   223,594   
Common stock repurchased and retired (33,903)   (33,903)   (295,432)   —    (1,262,057)   (1,591,392)  
Balance, November 3, 2018 1,233,145    $ 1,233,145    $ —    $ (591,847)   $ 4,615,575    $ 5,256,873   
The accompanying notes are an integral part of the unaudited consolidated financial statements.

7


THE TJX COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements and Notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These Consolidated Financial Statements and Notes thereto are unaudited and, in the opinion of management, reflect all normal recurring adjustments, accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by The TJX Companies, Inc. (together with its subsidiaries, “TJX”) for a fair statement of its Consolidated Financial Statements for the periods reported, all in conformity with GAAP consistently applied. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (“fiscal 2019”).
These interim results are not necessarily indicative of results for the full fiscal year. 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.
The February 2, 2019 balance sheet data was derived from audited Consolidated Financial Statements and does not include all disclosures required by GAAP.
Fiscal Year
TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The current fiscal year ends February 1, 2020 (“fiscal 2020”) and is a 52-week fiscal year. Fiscal 2019 was also a 52-week fiscal year.
Use of Estimates
The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. TJX considers its accounting policies relating to inventory valuation, impairment of long-lived assets, goodwill and tradenames, reserves for uncertain tax positions, leases and loss contingencies to be the most significant accounting policies that involve management estimates and judgments. Actual amounts could differ from those estimates, and such differences could be material.
Deferred Gift Card Revenue
The following table presents deferred gift card revenue activity:
In thousands November 2, 2019 November 3, 2018
Balance, beginning of year $ 450,302    $ 406,506   
Deferred revenue 1,104,694    1,096,333   
Effect of exchange rates changes on deferred revenue (636)   (6,561)  
Revenue recognized (1,149,613)   (1,138,507)  
Balance, end of period $ 404,747    $ 357,771   
TJX recognized $358.3 million in gift card revenue for the three months ended November 2, 2019 and $363.6 million for the three months ended November 3, 2018. Gift cards are combined in one homogeneous pool and are not separately identifiable. As such, the revenue recognized consists of gift cards that were part of the deferred revenue balance at the beginning of the period as well as gift cards that were issued during the period.

8


Summary of Accounting Policies
Leases
We adopted ASU No. 2016-02, Leases (Topic 842), as of February 3, 2019, using the modified retrospective method under ASU 2018-11. The transition method allows entities to apply the transition requirements at the effective date rather than at the beginning of the earliest comparative period presented. Our reporting for comparative periods is presented in accordance with ASC 840, Leases. Adoption of the new standard resulted in the recording of right of use (“ROU”) assets and lease liabilities of approximately $9 billion, as of February 3, 2019. The Company elected the transition package of three practical expedients, which among other things, allowed us to carry forward the historical lease classification. We have elected, under Topic 842, the practical expedient to not separate non-lease components from the lease components to which they relate and instead to combine them and account for them as a single lease component. The Company also elected the accounting policy election to keep leases with a term of twelve months or less off the Consolidated Balance Sheets and recognizes these lease payments on a straight-line basis over the lease term.
Operating leases are included in "Operating lease right of use assets", "Current portion of operating lease liabilities", and "Long-term operating lease liabilities" on our Consolidated Balance Sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. At the inception of the arrangement, the Company determines if an arrangement is a lease based on assessment of the terms and conditions of the contract. Operating lease ROU assets and lease liabilities are recognized at possession date based on the present value of lease payments over the lease term. The majority of our leases are retail store locations and the possession date is typically 30 to 60 days prior to the opening of the store and generally occurs before the commencement of the lease term, as specified in the lease. Our lessors do not provide an implicit rate, nor is one readily available, therefore we use our incremental borrowing rate based on the information available at possession date in determining the present value of future lease payments. The incremental borrowing rate is calculated based on the US Consumer Discretionary yield curve and adjusted for collateralization and foreign currency impact for TJX International and Canada leases. The operating lease ROU asset also includes any acquisition costs offset by lease incentives. Our lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term within "Cost of sales, including buying and occupancy costs".
9


Impact of New Lease Standard on Consolidated Balance Sheet Line Items
As a result of applying the new lease standard using the optional transition method, the following adjustments were made to accounts on the Condensed Consolidated Balance Sheet as of February 3, 2019:
In thousands
As Reported February 2, 2019
Adjustments Adjusted February 3, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS:
Prepaid expenses and other current assets $ 513,662    $ (149,029)  
(a)
$ 364,633   
Net property at cost 5,255,208    (281,361)  
(b),(f)
4,973,847   
Operating lease right of use asset —    8,704,584   
(c)
8,704,584   
Other assets 497,580    (30,086)  
(b)
467,494   
Total Assets $ 14,326,029    $ 8,244,108    $ 22,570,137   
Accrued expenses and other current liabilities 2,733,076    (3,819)   2,729,257   
Current portion of operating lease liabilities —    1,481,555   
(d)
1,481,555   
Other long-term liabilities 1,354,242    (593,137)  
(e),(f)
761,105   
Long-term operating lease liabilities —    7,359,106   
(d)
7,359,106   
Retained earnings 4,461,744    403   
(f),(g)
4,462,147   
Total Liabilities and Shareholders' Equity $ 14,326,029    $ 8,244,108    $ 22,570,137   
(a)Represents prepaid rent reclassified to operating lease right of use assets and current portion of operating lease liabilities.
(b)Represents impact of reclassifying initial direct costs to operating lease right of use assets.
(c)Represents capitalization of operating lease right of use assets and reclassification of lease acquisition costs, straight-line rent, prepaid rent and tenant incentives.
(d)Represents recognition of current and long-term operating lease liabilities.
(e)Represents reclassification of straight-line rent to operating lease right of use assets.
(f)Represents de-recognition of assets and liabilities related to non-TJX owned properties under previously existing build-to-suit accounting rules.
(g)Represents impairment at transition on operating lease right of use assets.
See Note L—Leases of Notes to Consolidated Financial Statements for additional information.
Recently Adopted Accounting Standards
Leases
See Leases in this Note A for the impact upon adoption.
Intangibles-Goodwill and Other-Internal-Use Software
In August 2018, the Financial Accounting Standards Board issued guidance related to accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The standard allows entities who are customers in hosting arrangements that are service contracts to apply the existing internal-use software guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The guidance specifies classification for capitalizing implementation costs and related amortization expense within the Consolidated Financial Statements and requires additional disclosures. The Company early adopted the standard prospectively in the third quarter of fiscal 2020. The standard did not have a material impact on our Consolidated Financial Statements.
Subsequent Events
Investment in Familia
On November 18, 2019, the Company, through a wholly owned subsidiary, completed an investment of $225 million for a 25% ownership stake in privately held Familia, an established, off-price apparel and home fashions retailer with more than 275 stores throughout Russia. The Company's investment represents a non-controlling, minority position. As part of this investment, TJX has the right to appoint one member to the Board of Directors of Familia.
The investment will be accounted for under the equity method of accounting from the date of investment forward. TJX will report its share of Familia’s results on a one-quarter lag as their results are not expected to be available in time to be recorded in the concurrent period.
10


Note B. Property at Cost
The following table presents the components of property at cost:
In thousands November 2, 2019 February 2, 2019 November 3, 2018
Land and buildings(a)
$ 1,384,809    $ 1,457,835    $ 1,423,528   
Leasehold costs and improvements(a)
3,506,784    3,377,045    3,318,857   
Furniture, fixtures and equipment 6,236,535    5,894,239    5,728,827   
Total property at cost $ 11,128,128    $ 10,729,119    $ 10,471,212   
Less accumulated depreciation and amortization(a)
5,877,157    5,473,911    5,305,337   
Net property at cost $ 5,250,971    $ 5,255,208    $ 5,165,875   
(a)See Leases in Note A—Basis of Presentation and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for impact of lease accounting changes.        
Depreciation expense was $216.3 million for the three months ended November 2, 2019 and $203.6 million for the three months ended November 3, 2018. Depreciation expense was $640.5 million for the nine months ended November 2, 2019 and $601.5 million for the nine months ended November 3, 2018.
Note C. Accumulated Other Comprehensive Income (Loss)
Amounts included in accumulated other comprehensive loss are recorded net of taxes. The following table details the changes in accumulated other comprehensive loss for the twelve months ended February 2, 2019 and the nine months ended November 2, 2019:
In thousands Foreign
Currency
Translation
Deferred
Benefit
Costs
Cash
Flow
Hedge
on Debt
Accumulated
Other
Comprehensive
Income (Loss)
Balance, February 3, 2018
$ (280,051)   $ (159,562)   $ (2,246)   $ (441,859)  
Additions to other comprehensive loss:
Foreign currency translation adjustments (net of taxes of $8,233)
(192,664)   —    —    (192,664)  
Recognition of net gains/losses on net investment hedges (net of taxes $7,113)
19,538    —    —    19,538   
Recognition of net gains/losses on benefit obligations (net of taxes of $19,813)
—    (54,420)   —    (54,420)  
Pension settlement charge (net of taxes of $9,641)
—    26,481    —    26,481   
Reclassifications from other comprehensive loss to net income:
Amortization of loss on cash flow hedge (net of taxes of $304)
—    —    847    847   
Amortization of prior service cost and deferred gains/losses (net of taxes of $4,280)
—    11,756    —    11,756   
Balance, February 2, 2019
$ (453,177)   $ (175,745)   $ (1,399)   $ (630,321)  
Additions to other comprehensive loss:
Foreign currency translation adjustments (net of taxes of $711)
(20,119)   —    —    (20,119)  
Reclassifications from other comprehensive loss to net income:
Amortization of loss on cash flow hedge (net of taxes of $227)
—    —    624    624   
Amortization of prior service cost and deferred gains/losses (net of taxes of $4,515)
—    12,402    —    12,402   
Balance, November 2, 2019
$ (473,296)   $ (163,343)   $ (775)   $ (637,414)  

11


Note D. Capital Stock and Earnings Per Share
Capital Stock
In fiscal 2019, we completed a two-for-one stock split of the Company’s common stock in the form of a stock dividend. One additional share was paid for each share held by holders of record as of the close of business on October 30, 2018. The shares were distributed on November 6, 2018 and resulted in the issuance of 617 million shares of common stock. In connection with our stock split, the shareholders approved an increase in the number of authorized shares of common stock of 0.6 billion to 1.8 billion shares. Certain balances within the Consolidated Statements of Shareholders' Equity have been adjusted retroactively to reflect the two-for-one stock split.
TJX repurchased and retired 9.0 million shares of its common stock at a cost of $500 million during the quarter ended November 2, 2019, on a “trade date” basis. During the nine months ended November 2, 2019, TJX repurchased and retired 21.3 million shares of its common stock at a cost of $1.15 billion, on a "trade date" basis. TJX reflects stock repurchases in its Consolidated Financial Statements on a “settlement date” or cash basis. TJX had cash expenditures under repurchase programs of $1.2 billion for the nine months ended November 2, 2019, and $1.6 billion for the nine months ended November 3, 2018. These expenditures were funded by cash generated from current and prior period operations.
In February 2019, TJX announced that its Board of Directors had approved an additional stock repurchase program that authorized the repurchase of up to $1.5 billion of TJX common stock from time to time.
In February 2018, our Board of Directors approved the repurchase of an additional $3.0 billion of TJX common stock from time to time. Under this program, on a “trade date” basis through November 2, 2019, TJX repurchased 47.7 million shares of common stock at a cost of $2.5 billion.
As of November 2, 2019, TJX had approximately $2.0 billion available under these previously announced stock repurchase programs.
All shares repurchased under the stock repurchase programs have been retired.
Earnings Per Share
The following table presents the calculation of basic and diluted earnings per share (“EPS”) for net income:
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
In thousands, except per share amounts November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Basic earnings per share
Net income $ 828,263    $ 762,253    $ 2,287,403    $ 2,218,260   
Weighted average common shares outstanding for basic EPS 1,206,369    1,236,842    1,210,475    1,245,639   
Basic earnings per share $ 0.69    $ 0.62    $ 1.89    $ 1.78   
Diluted earnings per share
Net income $ 828,263    $ 762,253    $ 2,287,403    $ 2,218,260   
Shares for basic and diluted earnings per share calculations:
Weighted average common shares outstanding for basic EPS 1,206,369    1,236,842    1,210,475    1,245,639   
Assumed exercise/vesting of stock options and awards 17,919    20,720    18,428    18,461   
Weighted average common shares outstanding for diluted EPS 1,224,288    1,257,562    1,228,903    1,264,100   
Diluted earnings per share $ 0.68    $ 0.61    $ 1.86    $ 1.75   
Cash dividends declared per share $ 0.230    $ 0.195    $ 0.690    $ 0.585   
The weighted average common shares for the diluted earnings per share calculation exclude the impact of outstanding stock options if the assumed proceeds per share of the option is in excess of the average price of TJX’s common stock for the related fiscal periods. Such options are excluded because they would have an antidilutive effect. There were 12.0 million such options excluded for each of the thirteen weeks and thirty-nine weeks ended November 2, 2019. There were 6.1 million such options excluded for each of the thirteen weeks and thirty-nine weeks ended November 3, 2018.
12


Note E. Financial Instruments
As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments when and to the extent deemed appropriate. TJX does not use derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the Consolidated Balance Sheets and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of other comprehensive income or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged.
Diesel Fuel Contracts
TJX hedges portions of its estimated notional diesel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing (and the resulting per mile surcharges payable by TJX) by setting a fixed price per gallon for the period being hedged. During fiscal 2019, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2020, and during the first nine months of fiscal 2020, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first nine months of fiscal 2021. The hedge agreements outstanding at November 2, 2019 relate to approximately 48% of TJX’s estimated notional diesel requirements for the remainder of fiscal 2020 and approximately 49% of TJX’s estimated notional diesel requirements for the first nine months of fiscal 2021. These diesel fuel hedge agreements will settle throughout the remainder of fiscal 2020 and throughout the first ten months of fiscal 2021. TJX elected not to apply hedge accounting to these contracts.
Foreign Currency Contracts
TJX enters into forward foreign currency exchange contracts to obtain economic hedges on portions of merchandise purchases made and anticipated to be made by the Company’s operations in currencies other than their respective functional currencies. These contracts typically have a term of twelve months or less. The contracts outstanding at November 2, 2019 cover a portion of such actual and anticipated merchandise purchases throughout the remainder of fiscal 2020. Additionally, TJX’s operations in Europe are subject to foreign currency exposure as a result of their buying function being centralized in the United Kingdom. All merchandise is purchased centrally in the U.K. and then shipped and billed to the retail entities in other countries. This intercompany billing to TJX’s European businesses’ Euro denominated operations creates exposure to the central buying entity for changes in the exchange rate between the Euro and British Pound. The inflow of Euros to the central buying entity provides a natural hedge for merchandise purchased from third-party vendors that is denominated in Euros. However, with the growth of TJX’s Euro denominated retail operations, the intercompany billings committed to the Euro denominated operations is generating Euros in excess of those needed to meet merchandise commitments to outside vendors. TJX calculates this excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate the exposure. During the first six months of fiscal 2020, TJX had entered into derivative contracts to hedge Polish leases that are denominated in Euros and paid in Zlotys in order to mitigate the foreign currency exposure as a result of implementing ASU No. 2016-02, Leases. TJX had elected not to apply hedge accounting to these contracts. During the third quarter of fiscal 2020 TJX discontinued these hedges.
TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt, certain intercompany dividends and intercompany interest payable. The changes in fair value of these contracts are recorded in selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in selling, general and administrative expenses.
TJX periodically reviews its net investments in foreign subsidiaries. During the fiscal quarter ended May 5, 2018, TJX entered into net investment hedge contracts related to a portion of its investment in TJX Canada. During the fiscal quarter ended August 4, 2018, TJX de-designated the net investment hedge contracts. The remaining life of the foreign currency contracts provided a natural hedge to the declared cash dividend from TJX Canada. The contracts settled during the second quarter of fiscal 2019 resulting in a pre-tax gain of $27 million while designated as a net investment hedge and subsequent to de-designation, a pre-tax gain of $19 million. The $27 million gain is reflected in shareholders' equity as a component of other comprehensive income. The $19 million gain subsequent to de-designation is reflected in the income statement offsetting a foreign currency loss of $18 million on the declared dividends.
13


The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at November 2, 2019:
In thousands Pay Receive Blended
Contract
Rate
Balance Sheet
Location
Current
Asset
U.S.$
Current
(Liability)
U.S.$
Net Fair
Value in
U.S.$ at
November 2, 2019
Fair value hedges:
Intercompany balances, primarily debt and related interest:
64,000    £ 13,144    0.2054    Prepaid Exp $ 246    $ —    $ 246   
46,450    £ 41,712    0.8980    Prepaid Exp 1,919    —    1,919   
A$ 50,000    U.S.$ 34,370    0.6874    (Accrued Exp) —    (303)   (303)  
U.S.$ 72,020    £ 55,000    0.7637    (Accrued Exp) —    (757)   (757)  
Economic hedges for which hedge accounting was not elected:
Diesel fuel contracts
Fixed on
2.7M – 3.3M
gal per month
Float on
2.7M – 3.3M
gal per month
N/A (Accrued Exp) —    (3,878)   (3,878)  
Intercompany billings in TJX International, primarily merchandise related:
86,800    £ 76,837    0.8852    Prepaid Exp 2,411    —    2,411   
Merchandise purchase commitments:
C$ 642,859    U.S.$ 487,300    0.7580    Prepaid Exp / (Accrued Exp) 808    (2,960)   (2,152)  
C$ 31,863    21,600    0.6779    Prepaid Exp / (Accrued Exp) 36    (111)   (75)  
£ 308,166    U.S.$ 386,700    1.2548    Prepaid Exp / (Accrued Exp) 373    (14,122)   (13,749)  
A$ 42,054    U.S.$ 28,767    0.6840    Prepaid Exp / (Accrued Exp) 46    (414)   (368)  
369,290    £ 76,343    0.2067    Prepaid Exp / (Accrued Exp) 2,192    (148)   2,044   
U.S.$ 2,254    £ 1,761    0.7813    Prepaid Exp 23    —    23   
U.S.$ 69,558    61,875    0.8895    Prepaid Exp / (Accrued Exp) 304    (614)   (310)  
Total fair value of derivative financial instruments $ 8,358    $ (23,307)   $ (14,949)  

14


The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at February 2, 2019:
In thousands Pay Receive Blended
Contract
Rate
Balance Sheet
Location
Current
Asset
U.S.$
Current
(Liability)
U.S.$
Net Fair
Value in
U.S.$ at
February 2,
2019
Fair value hedges:
Intercompany balances, primarily debt and related interest:
59,000    £ 12,021    0.2037    Prepaid Exp $ 56    $ —    $ 56   
55,950    £ 49,560    0.8858    Prepaid Exp / (Accrued Exp) 126    (140)   (14)  
A$ 30,000    U.S.$ 21,483    0.7161    (Accrued Exp) —    (314)   (314)  
U.S.$ 72,020    £ 55,000    0.7637    Prepaid Exp 1,037    —    1,037   
Economic hedges for which hedge accounting was not elected:
Diesel fuel contracts
Fixed on
2.7M – 3.3M
gal per month
Float on
2.7M– 3.3M
gal per month
N/A (Accrued Exp) —    (3,786)   (3,786)  
Intercompany billings in TJX International, primarily merchandise related:
46,600    £ 41,835    0.8977    Prepaid Exp 1,300    —    1,300   
Merchandise purchase commitments:
C$ 546,083    U.S.$ 414,100    0.7583    Prepaid Exp / (Accrued Exp) 1,239    (4,741)   (3,502)  
C$ 31,455    20,700    0.6581    (Accrued Exp) —    (248)   (248)  
£ 173,624    U.S.$ 230,000    1.3247    Prepaid Exp / (Accrued Exp) 3,459    (1,466)   1,993   
280,167    £ 57,586    0.2055    Prepaid Exp / (Accrued Exp) 707    (86)   621   
A$ 51,043    U.S.$ 36,961    0.7241    Prepaid Exp / (Accrued Exp) 97    (213)   (116)  
U.S.$ 56,847    49,355    0.8682    Prepaid Exp / (Accrued Exp) 115    (207)   (92)  
Total fair value of derivative financial instruments $ 8,136    $ (11,201)   $ (3,065)  

15


The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at November 3, 2018:
In thousands Pay Receive Blended
Contract
Rate
Balance Sheet
Location
Current
Asset
U.S.$
Current
(Liability)
U.S.$
Net Fair 
Value in 
U.S.$ at 
November 3, 2018
Fair value hedges:
Intercompany balances, primarily debt and related interest:
62,000    £ 12,983    0.2094    Prepaid Exp $ 475    $ —    $ 475   
48,950    £ 43,612    0.8909    Prepaid Exp 626    —    626   
U.S.$ 77,079    £ 55,000    0.7136    (Accrued Exp) —    (5,545)   (5,545)  
A$ 30,000    U.S.$ 21,207    0.7069    (Accrued Exp) —    (429)   (429)  
Economic hedges for which hedge accounting was not elected:
Diesel fuel contracts
Fixed on
1.3M – 3.0M
gal per month
Float on
1.3M – 3.0M
gal per month
N/A Prepaid Exp 4,965    —    4,965   
Intercompany billings in TJX International, primarily merchandise related:
82,000    £ 71,853    0.8763    (Accrued Exp) —    (231)   (231)  
Merchandise purchase commitments:
C$ 582,670    U.S.$ 447,800    0.7685    Prepaid Exp / (Accrued Exp) 3,216    (543)   2,673   
C$ 29,614    19,500    0.6585    Prepaid Exp / (Accrued Exp)   (342)   (338)  
£ 271,690    U.S.$ 369,500    1.3600    Prepaid Exp / (Accrued Exp) 15,585    (132)   15,453   
U.S.$ 2,692    £ 2,067    0.7678    Prepaid Exp / (Accrued Exp) 15    (28)   (13)  
A$ 45,132    U.S.$ 32,962    0.7303    Prepaid Exp / (Accrued Exp) 441    (21)   420   
289,208    £ 59,158    0.2046    Prepaid Exp / (Accrued Exp) 744    (373)   371   
U.S.$ 67,459    57,065    0.8459    (Accrued Exp) —    (2,235)   (2,235)  
Total fair value of derivative financial instruments $ 26,071    $ (9,879)   $ 16,192   

16


Presented below is the impact of derivative financial instruments on the Consolidated Statements of Income for the periods shown:
    Amount of Gain (Loss) Recognized
in Income by Derivative
 
 Location of Gain (Loss)
Recognized in Income by
Derivative
Thirteen Weeks Ended Thirty-Nine Weeks Ended
In thousands November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Fair value hedges:
Intercompany balances, primarily debt and related interest Selling, general and administrative expenses $ 7,238    $ 672    $ 526    $ (3,538)  
Economic hedges for which hedge accounting was not elected:
Intercompany receivable Selling, general and administrative expenses —    —    3,257    18,823   
Diesel fuel contracts Cost of sales, including buying and occupancy costs 529    1,572    (2,103)   7,530   
Intercompany billings in TJX International, primarily merchandise related Cost of sales, including buying and occupancy costs 5,144    1,718    944    1,024   
International lease liabilities Cost of sales, including buying and occupancy costs 301    —    (1,113)   —   
Merchandise purchase commitments Cost of sales, including buying and occupancy costs (18,622)   8,463    8,536    61,091   
Gain / (loss) recognized in income $ (5,410)   $ 12,425    $ 10,047    $ 84,930   

Note F. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date or “exit price.” The inputs used to measure fair value are generally classified into the following hierarchy:
Level 1:    Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2:    Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3:    Unobservable inputs for the asset or liability
The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis:
In thousands November 2, 2019 February 2, 2019 November 3, 2018
Level 1
Assets:
Executive Savings Plan investments $ 289,496    $ 253,215    $ 245,856   
Level 2
Assets:
Foreign currency exchange contracts 8,358    8,136    21,106   
Diesel fuel contracts —    —    4,965   
Liabilities:
Foreign currency exchange contracts $ 19,429    $ 7,415    $ 9,879   
Diesel fuel contracts 3,878    3,786    —   


17


Investments designed to meet obligations under the Executive Savings Plan are invested in registered investment companies traded in active markets and are recorded at unadjusted quoted prices.
Foreign currency exchange contracts and diesel fuel contracts are valued using broker quotations, which include observable market information. TJX’s investments are primarily high-grade commercial paper, institutional money market funds and time deposits with major banks. TJX does not make adjustments to quotes or prices obtained from brokers or pricing services but does assess the credit risk of counterparties and will adjust final valuations when appropriate. Where independent pricing services provide fair values, TJX obtains an understanding of the methods used in pricing. As such, these instruments are classified within Level 2.
The fair value of TJX’s general corporate debt was estimated by obtaining market quotes given the trading levels of other bonds of the same general issuer type and market perceived credit quality. These inputs are considered to be Level 2. The fair value of long-term debt as of November 2, 2019 was $2.3 billion compared to a carrying value of $2.2 billion. The fair value of long-term debt as of February 2, 2019 approximated the carrying value of $2.2 billion. The fair value of long-term debt as of November 3, 2018 was $2.1 billion compared to a carrying value of $2.2 billion. These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that might affect TJX’s ability to settle these obligations.
TJX’s cash equivalents are stated at cost, which approximates fair value due to the short maturities of these instruments.
Note G. Segment Information
TJX operates four main business segments. The Marmaxx segment (T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and the HomeGoods segment (HomeGoods and Homesense) both operate in the United States, the TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and the TJX International segment operates T.K. Maxx, Homesense and tkmaxx.com in Europe and T.K. Maxx in Australia. In addition to our four main business segments, Sierra operates sierra.com and retail stores in the U.S. The results of Sierra are included in the Marmaxx segment.
All of TJX’s stores, with the exception of HomeGoods and Homesense, sell family apparel and home fashions. HomeGoods and Homesense offer home fashions.
TJX evaluates the performance of its segments based on “segment profit or loss,” which it defines as pre-tax income or loss before general corporate expense, pension settlement charge and interest expense, net. “Segment profit or loss,” as defined by TJX, may not be comparable to similarly titled measures used by other entities. The terms “segment margin” or “segment profit margin” are used to describe segment profit or loss as a percentage of net sales. These measures of performance should not be considered alternatives to net income or cash flows from operating activities as an indicator of TJX’s performance or as a measure of liquidity.
Presented below is financial information with respect to TJX’s business segments:
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
In thousands November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Net sales:
In the United States:
Marmaxx $ 6,353,987    $ 5,973,476    $ 18,262,444    $ 17,202,115   
HomeGoods 1,582,411    1,463,892    4,404,112    4,060,569   
TJX Canada 1,081,522    1,036,884    2,896,717    2,828,456   
TJX International 1,433,414    1,351,507    3,947,242    3,754,454   
Total net sales $ 10,451,334    $ 9,825,759    $ 29,510,515    $ 27,845,594   
Segment profit:
In the United States:
Marmaxx $ 820,430    $ 762,911    $ 2,471,622    $ 2,343,682   
HomeGoods 173,212    166,090    438,939    455,540   
TJX Canada 170,264    182,170    385,513    446,089   
TJX International 99,397    102,432    178,343    191,949   
Total segment profit 1,263,303    1,213,603    3,474,417    3,437,260   
General corporate expense 137,925    127,775    387,536    396,140   
Pension settlement charge —    36,122    —    36,122   
Interest expense, net 3,259    3,188    6,973    10,365   
Income before provision for income taxes $ 1,122,119    $ 1,046,518    $ 3,079,908    $ 2,994,633   
18


Segment assets as of November 2, 2019 increased from February 2, 2019 due to inclusion of operating lease right of use assets in segment assets. As of November 2, 2019, the breakdown of the Company’s operating right of use assets by segment is $4.3 billion in Marmaxx, $1.6 billion in HomeGoods, $1.1 billion in TJX Canada and $2.1 billion in TJX International.
Note H. Pension Plans and Other Retirement Benefits
Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown:
  Funded Plan Unfunded Plan
  Thirteen Weeks Ended Thirteen Weeks Ended
In thousands November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Service cost $ 11,415    $ 10,781    $ 440    $ 572   
Interest cost 13,149    12,837    871    994   
Expected return on plan assets (18,630)   (17,468)   —    —   
Amortization of net actuarial loss and prior service cost 5,556    3,241    471    914   
Expense related to current period $ 11,490    $ 9,391    $ 1,782    $ 2,480   
Pension settlement charge —    36,122    —    —   
Total expense $ 11,490    $ 45,513    $ 1,782    $ 2,480   

  Funded Plan Unfunded Plan
  Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended
In thousands November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Service cost $ 33,513    $ 34,007    $ 1,544    $ 1,794   
Interest cost 39,129    40,767    2,805    2,700   
Expected return on plan assets (55,606)   (59,392)   —    —   
Amortization of net actuarial loss and prior service cost 14,574    9,469    2,343    2,556   
Expense related to current period $ 31,610    $ 24,851    $