PAGE 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 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 30, 1994
Commission file number 1-4908
The TJX Companies, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2207613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
770 Cochituate Road
Framingham, Massachusetts 01701
(Address of principal executive offices) (Zip Code)
(508)390-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X . No .
The number of shares of Registrant's common stock outstanding as of
August 27, 1994: 73,466,277
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PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
Thirteen Weeks Ended
July 30, July 31,
1994 1993
Net sales $866,689 $841,054
Cost of sales, including buying and
occupancy costs 656,589 636,504
Selling, general and administrative expenses 172,005 156,088
Interest on debt and capital leases 5,724 5,035
Income before income taxes 32,371 43,427
Provision for income taxes 13,575 17,442
Net income 18,796 25,985
Preferred stock dividends 1,789 1,789
Net income available to common shareholders $ 17,007 $ 24,196
Primary and fully diluted earnings per common share:
Net income $ .23 $ .33
Cash dividends per common share $ .14 $ .125
The accompanying notes are an integral part of the financial statements.
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PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
Twenty-Six Weeks Ended
July 30, July 31,
1994 1993
Net sales $1,718,425 $1,626,691
Cost of sales, including buying and
occupancy costs 1,292,303 1,221,910
Selling, general and administrative
expenses 349,614 314,019
Interest on debt and capital leases 11,203 9,781
Income before income taxes and cumulative
effect of accounting changes 65,305 80,981
Provision for income taxes 27,140 32,339
Income before cumulative effect of
accounting changes 38,165 48,642
Cumulative effect of accounting changes - (2,667)
Net income 38,165 45,975
Preferred stock dividends 3,578 3,578
Net income available to common
shareholders $ 34,587 $ 42,397
Primary and fully diluted earnings per common share:
Income before cumulative effect of
accounting changes $ .47 $ .61
Cumulative effect of accounting changes - (.04)
Net income $ .47 $ .57
Cash dividends per common share $ .28 $ .25
The accompanying notes are an integral part of the financial statements.
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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS
ASSETS July 30, January 29, July 31,
1994 1994 1993
Current assets:
Cash and cash equivalents $ 20,605 $ 58,102 $ 17,792
Accounts receivable 38,505 30,639 32,001
Merchandise inventories 963,343 772,324 911,948
Prepaid expenses 22,675 20,791 21,656
Total current assets 1,045,128 881,856 983,397
Property, at cost:
Land and buildings 113,774 110,793 103,201
Leasehold costs and improvements 277,888 256,929 237,373
Furniture, fixtures and equipment 422,359 398,106 369,484
814,021 765,828 710,058
Less accumulated depreciation 356,056 326,685 307,316
457,965 439,143 402,742
Other assets 13,872 13,744 9,641
Goodwill, net of amortization 91,224 92,627 94,001
TOTAL ASSETS $1,608,189 $1,427,370 $1,489,781
LIABILITIES
Current liabilities:
Short-term debt $ 94,000 $ - $ 97,000
Current installments of
long-term debt 6,119 5,936 5,403
Accounts payable 423,818 340,578 409,755
Accrued expenses and other
current liabilities 241,755 245,139 233,029
Total current liabilities 765,692 591,653 745,187
Long-term debt exclusive of current
installments:
Real estate mortgages 40,446 42,823 45,089
Equipment notes 5,303 6,031 6,776
General corporate debt 161,830 162,000 125,000
Deferred income taxes 29,985 33,963 36,411
SHAREHOLDERS' EQUITY
Preferred stock at face value,
authorized 5,000,000 shares, par
value $1, issued and outstanding
cumulative convertible stock of:
- 250,000 shares of 8% Series A 25,000 25,000 25,000
- 1,650,000 shares of 6.25% Series C 82,500 82,500 82,500
Common stock, par value $1, authorized
150,000,000 shares, issued and
outstanding 73,459,528, 73,430,615
and 73,367,055 shares 73,460 73,431 73,367
Additional paid-in capital 285,463 284,744 281,719
Retained earnings 138,510 125,225 68,732
Total shareholders' equity 604,933 590,900 531,318
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,608,189 $1,427,370 $1,489,781
The accompanying notes are an integral part of the financial statements.
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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
Twenty-Six Weeks Ended
July 30, July 31,
1994 1993
Cash flows from operating activities:
Income before cumulative effect of
accounting changes $ 38,165 $ 48,642
Adjustments to reconcile income before
cumulative effect of accounting changes
to net cash (used in) operating activities:
Depreciation and amortization 36,575 32,725
Loss on property disposals 3,207 682
Other (196) (840)
Changes in assets and liabilities:
(Increase) in accounts receivable (7,866) (7,880)
(Increase) in merchandise inventories (191,019) (239,594)
(Increase) in prepaid expenses (1,884) (3,763)
Increase in accounts payable 83,240 83,977
(Decrease) in accrued expenses and
other current liabilities (3,384) (22,818)
(Decrease) in deferred income taxes (3,978) (552)
Net cash (used in) operating activities (47,140) (109,421)
Cash flows from investing activities:
Property additions (56,936) (55,171)
Cash flows from financing activities:
Proceeds from borrowings of short-term debt 94,000 97,000
Principal payments on long-term debt (3,092) (1,723)
Proceeds from sale and issuance of common
stock, net 551 2,321
Cash dividends (24,880) (21,905)
Net cash provided by financing activities 66,579 75,693
Net (decrease) in cash and cash equivalents (37,497) (88,899)
Cash and cash equivalents at beginning of year 58,102 106,691
Cash and cash equivalents at end of period $ 20,605 $ 17,792
The accompanying notes are an integral part of the financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Thirteen Weeks (Second Quarter) and Twenty-Six Weeks Ended July 30, 1994
Versus Thirteen Weeks and Twenty-Six Weeks Ended July 31, 1993
Net sales for the second quarter increased 3% to $866.7 million up from
$841.1 million last year. For the six months, net sales increased 6% to
$1,718.4 million up from $1,626.7 million for the same period last year.
The increase in sales for both periods is attributable to new stores. Same
store sales for the second quarter decreased by 1% and 9% for T.J. Maxx and
Hit or Miss, respectively, and increased by 10% for Winners. For the six
months, same store sales were flat for T.J. Maxx, decreased 5% for Hit or
Miss and increased 11% for Winners. In general, sales comparisons are
impacted by a general softness, industrywide, in apparel sales. Chadwick's
sales decreased by 10% and 2% for the second quarter and six months,
respectively. During the second quarter, demand for certain items in the
summer catalog exceeded expectations and, therefore, Chadwick's was unable
to achieve its desired fulfillment rates. Chadwick's year-to-date results
also reflect a poor performance by the spring catalog.
Net income for the second quarter was $18.8 million, or $.23 per common
share versus last year's $26.0 million, or $.33 per common share. For the
six months, net income was $38.2 million, or $.47 per common share versus
$48.6 million, or $.61 per common share before the cumulative effect of
accounting changes of $2.7 million recorded in that period. Net income in
the prior period, after the one-time charge for accounting changes, was
$46.0 million, or $.57 per common share.
The following table sets forth operating results expressed as a percentage
of net sales:
Percentage of Net Sales
13 Weeks Ended 26 Weeks Ended
7/30/94 7/31/93 7/30/94 7/31/93
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales, including buying
and occupancy costs 75.8 75.7 75.2 75.1
Selling, general and administrative
expenses 19.8 18.5 20.3 19.3
Interest on debt and capital leases .7 .6 .7 .6
Income before income taxes
and cumulative effect of
accounting changes 3.7% 5.2% 3.8% 5.0%
Consolidated cost of sales, including buying and occupancy costs, as a
percentage of net sales remained fairly constant in both periods as
compared to last year.
Selling, general and administrative expenses as a percentage of net sales
increased in both periods, which reflects the weak sales performance of
apparel in the U.S. divisions. In addition, this percentage is impacted by
the net operating results of T.K. Maxx, the Company's start-up United
Kingdom venture.
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The following table sets forth the operating results of the Company's major
business segments: (unaudited)
(In Thousands)
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
Net sales:
Off-price family
apparel stores $689,849 $649,423 $1,343,277 $1,243,163
Off-price women's
specialty stores 91,449 96,493 180,925 184,789
Off-price catalog
operation 85,391 95,138 194,223 198,739
$866,689 $841,054 $1,718,425 $1,626,691
Operating income (loss):
Off-price family
apparel stores $ 46,924 $ 45,451 $ 93,603 $ 88,198
Off-price women's
specialty stores (1,171) 3,603 (928) 3,726
Off-price catalog
operation 4,111 7,112 5,083 13,595
49,864 56,166 97,758 105,519
General corporate expense* 11,115 7,050 19,943 13,448
Goodwill amortization 654 654 1,307 1,309
Interest expense 5,724 5,035 11,203 9,781
Income before income taxes
and cumulative effect of
accounting changes $ 32,371 $ 43,427 $ 65,305 $ 80,981
* The periods ended July 31, 1993 include the net operating results of
HomeGoods and Value Mart. The periods ended July 30, 1994 include the
operating results of HomeGoods and T.K. Maxx. In addition, the 26 weeks
ended July 30, 1994 include a reserve for the closing of the Value Mart
operation.
The off-price family apparel stores segment, T.J. Maxx and Winners,
recorded an increase of 3% and 6% in operating profit in the second quarter
and six months, respectively. Hit or Miss, which has a narrower
merchandise mix, was more directly impacted by the softness in apparel
sales and recorded a decrease in operating profit in both periods.
Chadwick's of Boston experienced a decrease in operating income for both
periods. Demand for certain items in the summer catalog outpaced
expectations, impacting desired fulfillment rates and ultimately second
quarter operating income. In addition, the year-to-date results reflect a
poor performance of the spring catalogs.
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Stores in operation at the end of the period are as follows:
July 30, 1994 July 31, 1993
T.J. Maxx 520 489
Hit or Miss 504 496
Winners 29 21
HomeGoods 10 6
T.K. Maxx 2 -
Financial Condition
Cash flows from operating and financing activities for the six months
reflect increases in inventory, accounts payable, and short-term
borrowings, which are primarily due to normal seasonal requirements. In
addition for the period ended July 31, 1993, cash flows were impacted by an
increase in income taxes paid due to the Ames cash settlement received in
December 1992.
During the second quarter, the Company increased its unsecured committed
short-term credit lines to $300 million. These lines, when needed, are
drawn upon or used as backup to the Company's commercial paper program.
The Company believes that internally generated funds along with its ability
to access external financing sources, will meet its needs.
The Company has available reserves for lease and other contingent
liabilities associated with the 1988 sale of the Company's former Zayre
Stores division to Ames Department Stores, Inc. and the Company believes
that these reserves should be adequate to cover all reasonably expected
liabilities that it may incur as a result of the Ames bankruptcy. On
December 30, 1992, Ames emerged from bankruptcy pursuant to a plan of
reorganization.
On August 16, 1994, the Company announced a repurchase program of up to
$100 million of the Company's common stock. At current market prices, this
would represent approximately 6-7% of the Company's outstanding common
stock. The repurchase of these shares would be accomplished over time
through open market purchases or through other transactions.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results for the first six months are not necessarily indicative of
results for the full fiscal year, because the Company's business, in
common with the businesses of retailers generally, is subject to
seasonal influences, with higher levels of sales and income generally
realized in the second half of the year.
2. The preceding data are unaudited and reflect all normal recurring
adjustments, the use of retail statistics, and accruals and deferrals
among periods required to match costs properly with the related revenue
or activity, considered necessary by the Company for a fair presentation
of its financial statements for the periods reported, all in accordance
with generally accepted accounting principles and practices consistently
applied.
3. The Company has available reserves for lease and other contingent
liabilities associated with the 1988 sale of the Company's former Zayre
Stores division to Ames Department Stores, Inc. and the Company believes
that these reserves should be adequate to cover all reasonably expected
liabilities that it may incur as a result of the Ames bankruptcy. On
December 30, 1992, Ames emerged from bankruptcy pursuant to a plan of
reorganization.
4. The Company's cash payments for interest expense and income taxes are as
follows: (in thousands)
Twenty-Six Weeks Ended
July 30, July 31,
1994 1993
Cash paid for:
Interest on debt and capital leases $11,229 $ 9,340
Income taxes 33,882 44,951
5. Effective January 31, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS No. 109). SFAS No. 109 requires the adjustment of
deferred tax assets and liabilities to reflect the effect of enacted
changes in tax laws or rates. In connection with the adoption of SFAS
No. 109, the Company recorded as a cumulative effect of an accounting
change, a gain of $3,478,000, or $.05 per share, which represents the
net decrease to the net deferred tax liability as of January 31, 1993.
6. Effective January 31, 1993, the Company also adopted the Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This standard requires
accrual for the cost of postretirement health care and life insurance
benefits during the years that an employee provides services to the
Company. The Company has elected to recognize the transition obligation
in full as of January 31, 1993, and accordingly has recorded a one-time
implementation charge of $6,145,000, net of a tax benefit of $3,937,000,
as a cumulative effect of an accounting change. The Company's cash
flows are not impacted by the new accounting.
7. On August 16, 1994, the Company authorized the repurchase of up to $100
million of TJX common stock. At current prices, this would represent
approximately 6-7% of the Company's outstanding common stock. The
repurchase of these shares would be accomplished over time through open
market purchases or through other transactions.
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PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Information with respect to matters voted on at the Company's
Annual Meeting of Stockholders on June 7, 1994 (during the
period covered by this report) was provided in the Company's
Quarterly Report on Form 10-Q for the quarter ended April 30,
1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Statement re Computation of Per Share Earnings
(b) The Company did not file any reports on Form 8-K with the
Securities and Exchange Commission during the quarter ended
July 30, 1994.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE TJX COMPANIES, INC.
(Registrant)
Date: August 31, 1994
/s/ Donald G. Campbell
Donald G. Campbell, Senior Vice
President - Finance, on behalf
of The TJX Companies, Inc. and as
Principal Financial and Accounting
Officer of The TJX Companies, Inc.