PAGE 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
/X/ Quarterly Report Under Section 13 and 15(d)
of the Securities Exchange Act of 1934
or
/ / Transition Report Pursuant to Section 13 and 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended April 26, 1997
Commission file number 1-4908
The TJX Companies, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2207613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
770 Cochituate Road
Framingham, Massachusetts 01701
(Address of principal executive offices) (Zip Code)
(508)390-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X . No .
The number of shares of Registrant's common stock outstanding as of
May 24, 1997; 79,740,416.
PAGE 2
PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
Thirteen Weeks Ended
April, 26 April 27,
1997 1996
Net sales $1,560,150 $1,472,247
Cost of sales, including buying and
occupancy costs 1,202,619 1,167,359
Selling, general and administrative expenses 273,738 251,151
Interest expense, net 855 14,362
Income from continuing operations before
income taxes 82,938 39,375
Provision for income taxes 34,477 16,351
Income from continuing operations 48,461 23,024
Income from discontinued operations,
net of income taxes - 7,062
Net income 48,461 30,086
Preferred stock dividends 2,625 4,527
Net income available to common shareholders $ 45,836 $ 25,559
Primary and fully diluted earnings per
common share:
Continuing operations $ .54 $ .25
Net income $ .54 $ .33
Cash dividends per common share $ .10 $ .07
The accompanying notes are an integral part of the financial statements.
PAGE 3
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS
April 26, January 25, April 27,
1997 1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 397,127 $ 474,732 $ 191,413
Accounts receivable 91,528 57,275 75,394
Merchandise inventories 1,384,397 1,059,505 1,300,256
Prepaid expenses 16,486 16,379 18,876
Net current assets of
discontinued operations - 54,451 77,701
Total current assets 1,889,538 1,662,342 1,663,640
Property, at cost:
Land and buildings 103,067 103,067 110,437
Leasehold costs and improvements 436,692 428,836 430,098
Furniture, fixtures and equipment 548,903 527,710 546,474
1,088,662 1,059,613 1,087,009
Less accumulated depreciation
and amortization 445,415 419,129 366,090
643,247 640,484 720,919
Other assets 41,186 42,259 35,904
Goodwill and tradename,
net of amortization 214,560 216,127 234,486
Net noncurrent assets of
discontinued operations - - 51,119
TOTAL ASSETS $2,788,531 $2,561,212 $2,706,068
LIABILITIES
Current liabilities:
Short-term debt $ 2,632 $ - $ 2,195
Current installments of
long-term debt 26,234 27,140 88,728
Accounts payable 713,699 533,945 464,538
Accrued expenses and other
current liabilities 581,972 577,046 659,408
Federal and state income taxes
payable 43,051 44,165 8,911
Total current liabilities 1,367,588 1,182,296 1,223,780
Long-term debt exclusive of
current installments
Real estate mortgages 22,391 22,391 26,314
Promissory notes 1,985 2,135 3,159
General corporate debt 219,887 219,884 650,203
Deferred income taxes 8,685 7,320 17,071
SHAREHOLDERS' EQUITYPreferred 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
1,650,000 shares of 6.25% Series C - - 82,500
250,000 shares of 1.81% Series D - - 25,000
1,500,000 shares of 7% Series E 150,000 150,000 150,000
Common stock, authorized 150,000,000
shares, par value $1, issued and
outstanding 79,720,729; 79,576,438
and 72,554,759 shares 79,720 79,576 72,554
Additional paid-in capital 431,825 429,017 269,518
Retained earnings 506,450 468,593 160,969
Total shareholders' equity 1,167,995 1,127,186 785,541
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,788,531 $2,561,212 $2,706,068
The accompanying notes are an integral part of the financial statements.
PAGE 4
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
Thirteen Weeks Ended
April 26, April 27,
1997 1996
Cash flows from operating activities:
Net income $ 48,461 $ 30,086
Adjustments to reconcile net income
to net cash (used in)
operating activities:
(Income) from discontinued operations - (7,062)
Depreciation and amortization 29,899 30,448
Property disposals 2,615 1,085
Other 1,942 (438)
Changes in assets and liabilities:
(Increase) in accounts receivable (34,253) (20,250)
(Increase) in merchandise inventories (324,892) (41,768)
(Increase) in prepaid expenses (107) (2,470)
Increase in accounts payable 179,754 27,904
Increase (decrease) in accrued expenses
and other current liabilities 4,926 (11,628)
(Decrease) in income taxes payable (1,114) (11,149)
Increase in deferred income taxes 1,365 4,407
Net cash (used in) operating activities (91,404) (835)
Cash flows from investing activities:
Property additions (33,763) (16,415)
Net cash (used in) investing activities (33,763) (16,415)
Cash flows from financing activities:
Proceeds from borrowings of short-term debt 2,632 2,195
Principal payments on long-term debt (1,056) (983)
Proceeds from sale and issuance of common
stock, net 2,139 1,003
Cash dividends (10,604) (9,606)
Net cash (used in) financing activities (6,889) (7,391)
Net cash (used in) continuing operations (132,056) (24,641)
Net cash provided by discontinued operations 54,451 6,828
Net (decrease) in cash and cash equivalents (77,605) (17,813)
Cash and cash equivalents at beginning of year 474,732 209,226
Cash and cash equivalents at end of period $ 397,127 $ 191,413
The accompanying notes are an integral part of the financial statements.
PAGE 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Thirteen Weeks Ended April 26, 1997
Versus Thirteen Weeks Ended April 27, 1996
Effective December 7, 1996, the Company sold its Chadwick's of Boston mail
order operation to Brylane, L.P. This transaction was accounted for in the
Company's fourth quarter for the fiscal year ended January 25, 1997. The
operating results for Chadwick's for all periods prior to the sale have
been presented as discontinued operations.
Net sales from continuing operations for the first quarter were $1,560.2
million, up 6% from $1,472.2 million last year. The increase in sales is
primarily attributable to an increase in same store sales. Same store
sales increased 2% at T.J. Maxx, 8% at Marshalls, 19% at Winners, 24% at
T.K. Maxx and 9% at HomeGoods.
Income from continuing operations for the first quarter was $48.5 million,
or $.54 per common share, versus $23.0 million, or $.25 per common share
last year. Net income for the period ended April 27, 1996, after
reflecting Chadwick's of Boston as a discontinued operation was $30.1
million or $.33 per common share.
The following table sets forth operating results expressed as a percentage
of net sales (continuing operations):
Percentage of Net Sales
13 Weeks Ended
4/26/97 4/27/96
Net sales 100.0% 100.0%
Cost of sales, including buying
and occupancy costs 77.1 79.3
Selling, general and administrative
expenses 17.5 17.1
Interest expense, net .1 .9
Income from continuing operations
before income taxes 5.3% 2.7%
Cost of sales including buying and occupancy costs as a percent of net
sales decreased from the prior year. This improvement reflects the
benefits of the Marshalls acquisition. Enhanced purchasing power has
allowed the Company to pass on better values to its customers and has
improved merchandise margins.
Selling, general and administrative expenses, as a percentage of net sales,
increased from the prior year. This increase is attributable to a charge
of $10 million associated with a deferred shares award granted under a new
five year employment contract with the Company's Chief Executive Officer.
This charge more than offset additional expense savings the Company had
realized through the consolidation of certain administrative functions as a
result of the Marshalls acquisition.
PAGE 6
Interest expense, net, as a percentage of net sales, decreased from the
prior year. The decrease is the result of the Company's prepayment of its
9 1/2% sinking fund debentures during the third quarter of fiscal 1997 and
the $375 million term loan, incurred for the acquisition of Marshalls,
during the fourth quarter of fiscal 1997. In addition, as a result of the
Company's strong cash position, interest expense, net, includes $6.2
million of interest income this year versus $.8 million last year.
The following table sets forth the operating results of the Company's major
business segments: (unaudited)
(In Thousands)
Thirteen Weeks Ended
April 26, April 27,
1997 1996
Net sales:
Off-price family apparel stores $1,539,757 $1,452,864
Off-price home fashion stores 20,393 19,383
$1,560,150 $1,472,247
Operating income (loss):
Off-price family apparel stores $ 106,203 $ 67,057
Off-price home fashion stores (2,833) (2,570)
103,370 64,487
General corporate expense 18,924 10,097
Goodwill amortization 653 653
Interest expense, net 855 14,362
Income from continuing operations
before income taxes $ 82,938 $ 39,375
The off-price family apparel stores segment, T.J. Maxx, Marshalls, Winners
and T.K. Maxx significantly increased its operating income. This segment's
increased operating results reflect the combined buying power of T.J. Maxx
and Marshalls, as well as expense savings resulting from the consolidation
of Marshalls. Winners more than doubled its operating income from the
prior year. General corporate expense includes a charge for $10 million
associated with a deferred shares award granted under a new five year
employment contract with the Company's Chief Executive Officer.
Stores in operation at the end of the period are as follows:
April 26, 1997 April 27, 1996
T.J. Maxx 577 590
Marshalls 457 494
Winners 68 57
HomeGoods 21 23
T.K. Maxx 20 9
PAGE 7
Financial Condition
Cash flows from operating activities for the three months reflect increases
in inventories and accounts payable that are primarily due to normal
seasonal requirements. Comparisons to fiscal 1997's first quarter are
impacted by the Company's movement to a leaner inventory position during
fiscal 1997. This inventory management along with the strong sales
performance of fiscal 1997 resulted in higher inventory turnover and is the
prime reason for the increase in accounts payable as of April 1997 versus
April 1996. The Company's strong cash flow from operations since the
Marshalls acquisition along with the proceeds from the sale of Chadwick's
is the prime reason for the increase in cash at April 1997 versus April
1996.
During the fourth quarter of fiscal 1997, the Company completed the sale of
its Chadwick's of Boston catalog division to Brylane, L.P. Total proceeds
from the sale estimated at $300 million included cash, a 10-year $20
million Convertible Subordinated Note at 6% interest and Chadwick's
consumer credit card receivables. The estimated cash proceeds received at
closing will be adjusted to reflect the actual closing balance sheet of
Chadwick's as of December 7, 1996. The Company assumes approximately $30
million will be paid to Brylane L.P. during fiscal 1998 and has reflected
this estimated payable in accrued expenses. The results of Chadwick's for
all periods prior to December 7, 1996 have been reclassified to
discontinued operations. The cash provided by discontinued operations
represents the collection of the remaining balance of the Chadwick's
consumer credit card receivables outstanding as of January 1997.
PAGE 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results for the first three months are not necessarily indicative of
results for the full fiscal year, because the Company's business, in
common with the businesses of retailers generally, is subject to
seasonal influences, with higher levels of sales and income generally
realized in the second half of the year.
2. The preceding data are unaudited and reflect all normal recurring
adjustments, the use of retail statistics, and accruals and deferrals
among periods required to match costs properly with the related revenue
or activity, considered necessary by the Company for a fair presentation
of its financial statements for the periods reported, all in accordance
with generally accepted accounting principles and practices consistently
applied.
3. The Company's cash payments for interest expense and income taxes are as
follows: (in thousands)
Thirteen Weeks Ended
April 26, April 27,
1997 1996
Cash paid (received) for:
Interest on debt $ 3,079 $ 6,967
Income taxes 34,226 31,507
4. In October 1988, the Company completed the sale of its former Zayre
stores division to Ames Department Stores, Inc. ("Ames"). On April 25,
1990, Ames filed for protection under Chapter 11 of the Federal
Bankruptcy Code and on December 30, 1992, Ames emerged from bankruptcy
under a plan of reorganization. The Company is liable for certain
amounts to be distributed under the plan for certain unassigned landlord
claims under certain former Zayre store leases on which Zayre Corp. was
liable as of the date of acquisition and which Ames has rejected.
The Company remains contingently liable for the leases of most of the
former Zayre stores still operated by Ames. In addition, the Company is
contingently liable on a number of leases of the Hit or Miss division,
the Company's former off-price women's specialty stores, sold on
September 30, 1995. The Company believes that in view of the nature of
the leases and the fact that Ames and Hit or Miss are primarily liable,
the Company's contingent liability on these leases will not have a
material effect on the Company's financial condition. Accordingly, the
Company believes its available reserves should be adequate to cover all
reasonably expected liabilities associated with discontinued operations
that it may incur.
The Company is also contingently liable on certain leases of Waban Inc.,
which was spun off by the Company in fiscal 1990. Since Waban is
primarily liable and has indemnified the Company for any amounts the
Company may have to pay with respect to such leases, the Company
believes that its contingent liability on these leases will not have a
material effect on the Company's financial condition. Waban announced
PAGE 9
in April 1997 that it would renew its efforts to consummate a spin-off
of its BJ's Wholesale Club division. In the event of such spin-off,
Waban will continue to be primarily liable on such leases. In addition,
Waban, BJ's Wholesale Club, Inc., (the new corporation that would
acquire the assets of Waban's BJ's Wholesale Club division) and the
Company have entered into agreements under which BJ's Wholesale Club,
Inc., will have substantial indemnification responsibility with respect
to such leases upon consummation of the spin-off. Accordingly, the
Company believes that its contingent liability on these leases upon such
spin-off will not have a material effect on the Company's financial
condition.
5. During 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 "Earnings per
Share." This statement specifies the computation, presentation and
disclosures for basic and dilutive earnings per share. The Company will
implement the standard in its fourth quarter period for the fiscal year
ended January 31, 1998. Using the new method for computing earnings per
share, basic earnings per share and dilutive earnings per share would be
as follows:
Thirteen Weeks Ended
April 26, April 27,
1997 1996
Income from continuing operations:
Basic $ .58 $ .26
Dilutive .55 .25
Net Income:
Basic $ .58 $ .35
Dilutive .55 .35
6. On April 9, 1997, the Company approved a two-for-one stock split to be
effected in the form of a 100% stock dividend which was subject to
approval by the shareholders of an increase in the number of authorized
shares of the Company's common stock. On June 3, 1997, the shareholders
approved an increase in the number of authorized shares of common stock
making the two-for-one stock split effective. The split will be paid on
June 26, 1997 to shareholders of record June 11, 1997. During the
Company's second quarter reporting period, the Company will reflect the
issuance of the new shares by an increase in common stock outstanding
with a corresponding decrease in additional paid-in capital and all
historical earnings per share amounts will be restated to reflect the
two-for-one stock split. Earnings per share amounts presented in these
financials are presented on a pre-split basis.
PAGE 10
PART II. Other Information
Item 4 Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on June 3,
1997. The following were voted upon at the Annual Meeting:
Election of Directors For Withheld
Bernard Cammarata 69,745,051 427,747
Arthur F. Loewy 69,735,436 437,362
Robert F. Shapiro 69,742,926 429,872
Fletcher H. Wiley 69,744,319 428,479
In addition to those elected, the following are directors
whose term of office continued after the Annual Meeting:
Phyllis B. Davis
Dennis F. Hightower
Richard G. Lesser
John M. Nelson
John F. O'Brien
Willow B. Shire
Proposal for the approval to amend Article Fourth of the
Company's Second Restated Certificate of Incorporation to
increase the number of authorized shares of the Company's
common stock from 150,000,000 to 300,000,000.
For 69,604,490
Against 315,383
Abstain 252,925
Broker non-votes 0
Proposal for approval to amend certain material terms of the
Company's 1986 Stock Incentive Plan
For 62,709,031
Against 1,607,319
Abstain 310,962
Broker non-votes 5,545,486
Proposal for approval to amend certain material terms of the
Company's Management Incentive Plan.
For 68,829,000
Against 1,036,951
Abstain 306,847
Broker non-votes 0
PAGE 11
Proposal for approval to amend material terms of the Company's
Long Range Performance Incentive Plan
For 68,702,511
Against 1,161,865
Abstain 308,422
Broker non-votes 0
Proposal to amend the Company's 1993 Non-Employee Director
Stock Option Plan to extend the expiration date of the Plan.
For 58,261,935
Against 6,064,656
Abstain 300,721
Broker non-votes 5,545,486
Item 6(a) Exhibits
11 Statement re Computation of Per Share Earnings
Item 6(b) Reports on Form 8-K
The Company was not required to file a current report on Form
8-K during the quarter ended April 26, 1997.
PAGE 12
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: June 10, 1997
/s/ Donald G. Campbell
Donald G. Campbell, Executive Vice
President - Finance, on behalf
of The TJX Companies, Inc. and as
Principal Financial and Accounting
Officer of The TJX Companies, Inc.
EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON SHARE
(UNAUDITED)
DOLLARS IN THOUSANDS
Thirteen Weeks Ended
April 26, April 27,
1997 1996
The computation of net income available and
adjusted shares outstanding follows:
Net income $ 48,461 $ 30,086
Less:
Preferred stock dividends - (1,789)
Net income used for primary and fully
diluted computation $ 48,461 $ 28,297
Weighted average number of common shares
outstanding 79,719,807 72,545,566
Add:
Assumed exercise of those options that
are common stock equivalents 849,634 1,053,810
Assumed exercise of convertible
preferred stock 9,716,599 11,740,891
Adjusted shares outstanding, used for
primary and fully diluted computation 90,286,040 85,340,267
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
statements of income and balance sheets and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-26-1997
<CASH> 397,127,000
<SECURITIES> 0
<RECEIVABLES> 91,528,000
<ALLOWANCES> 0
<INVENTORY> 1,384,397,000
<CURRENT-ASSETS> 1,889,538,000
<PP&E> 1,088,662,000
<DEPRECIATION> 445,415,000
<TOTAL-ASSETS> 2,788,531,000
<CURRENT-LIABILITIES> 1,367,588,000
<BONDS> 244,263,000
150,000,000
0
<COMMON> 79,720,000
<OTHER-SE> 938,275,000
<TOTAL-LIABILITY-AND-EQUITY> 2,788,531,000
<SALES> 1,560,150,000
<TOTAL-REVENUES> 1,560,150,000
<CGS> 1,202,619,000
<TOTAL-COSTS> 1,202,619,000
<OTHER-EXPENSES> 273,738,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 855,000
<INCOME-PRETAX> 82,938,000
<INCOME-TAX> 34,477,000
<INCOME-CONTINUING> 48,461,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,461,000
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54
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