<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
January 30, 1999 1-4908
THE TJX COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2207613
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
770 Cochituate Road
Framingham, Massachusetts 01701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508)390-1000
----------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ----------------------------- -----------------------
Common Stock, par value $1.00 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant on April 9, 1999 was $11,483,392,349.
There were 321,710,526 shares of the Registrant's Common Stock, $1 par value,
outstanding as of April 9, 1999.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
January 30, 1999 (certain parts as indicated herein) (Parts I and II).
Portions of the Proxy Statement for the Annual Meeting of Stockholders
to be held on June 8, 1999 (Part III).
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ITEM 1. BUSINESS
The TJX Companies, Inc., (together with its wholly-owned subsidiaries,
hereinafter referred to as the "Company"), is the largest off-price retailer of
apparel and home fashions in the United States and worldwide. The Company
operates 604 T.J. Maxx stores, 475 Marshalls stores, and Winners Apparel Ltd., a
Canadian off-price family apparel chain with 87 stores. TJX also operates
HomeGoods, a U.S. off-price home fashion chain with 35 stores, and T.K. Maxx, an
off-price family apparel concept in the United Kingdom, the Republic of Ireland,
and the Netherlands, which has 39 stores. In addition, during fiscal 1999 the
Company opened 6 A.J. Wright stores, a new United States chain of off-price
family apparel stores targeted to moderate income customers.
The Company strives to provide value to its customers by delivering
brand names, fashion, quality and compelling prices. During the fiscal year
ended January 30, 1999 ("fiscal 1999"), the Company's stores derived 32.4% of
its sales from the Northeast, 17.5% from the Midwest, 27.9% from the South, 1.1%
from the Central States, 13.4% from the West, 4.9% from Canada and 2.8% from
Europe (primarily the United Kingdom).
As a result of the acquisition of Marshalls in 1995, the Company has
continued to realize improved operating efficiencies for the combined T.J. Maxx
/ Marshalls entity through the integration of many administrative and
operational functions as well as through increased purchasing leverage, all of
which have allowed the Company to provide improved values to its customers. The
Company has retained the separate identities of the T.J. Maxx and Marshalls
stores, including certain elements of merchandising, product assortment,
marketing and store appearance. As a result of the acquisition, the Company
initiated a store closing program in an effort to reduce excess retail space.
Through the end of fiscal 1998, the Company closed a total of 32 T.J. Maxx
stores and 70 Marshalls stores under this plan. The Company also continually
reviews store performance and periodically identifies underperforming locations
for closing. During fiscal 1999 the Company closed 4 T.J. Maxx stores and 2
Marshalls stores. In total, over the past five years T.J. Maxx has opened 153
stores and closed 61, while Marshalls, since the date of the acquisition, has
opened 46 stores and closed 76.
The majority of the Company's sales volume is achieved through the
Company's T.J. Maxx and Marshalls stores. T.J. Maxx operates 604 stores in 47
states, with an average store size of 29,000 gross square feet, while Marshalls
operates 475 stores in 37 states and Puerto Rico, with an average store size of
31,000 gross square feet. T.J. Maxx and Marshalls sell a broad range of brand
name family apparel, accessories, shoes, domestics, giftware and jewelry at
prices generally 20% to 60% below department and specialty store regular prices.
Winners Apparel Ltd. is an off-price family apparel retailer, which operates 87
stores in Canada. HomeGoods, an off-price business that the Company began
testing in fiscal 1993, sells domestics, giftware and other home fashions and
operates a total of 35 stores. T.K. Maxx operates 39 off-price family apparel
stores in the United Kingdom, Republic of Ireland, and the Netherlands. A.J.
Wright, a U.S. based off-price family apparel retailer, began operations in the
Fall of fiscal 1999 with 6 stores in the northeast. Unless otherwise indicated,
all figures herein relating to numbers of stores are as of January 30, 1999.
In common with the business of apparel retailers generally, the
Company's business is subject to seasonal influences, with higher levels of
sales and income generally realized in the second half of the year.
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Set forth below are the locations of stores operated by the Company as of
January 30, 1999:
<TABLE>
<CAPTION>
T.J. MAXX MARSHALLS HOMEGOODS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama 10 2 -
Arizona 8 4 -
Arkansas 5 - -
California 45 66 -
Colorado 8 3 -
Connecticut 23 19 3
Delaware 3 2 -
District of Columbia 1 - -
Florida 42 41 4
Georgia 23 20 -
Idaho 1 - -
Illinois 33 34 3
Indiana 9 4 -
Iowa 4 1 -
Kansas 4 3 -
Kentucky 7 1 1
Louisiana 4 5 -
Maine 5 1 -
Maryland 7 13 -
Massachusetts 43 38 9
Michigan 29 7 -
Minnesota 12 10 -
Mississippi 3 - -
Missouri 6 7 -
Montana 1 - -
Nebraska 2 1 -
Nevada 4 3 -
New Hampshire 9 6 3
New Jersey 16 28 -
New Mexico 1 - -
New York 41 38 2
North Carolina 18 12 -
North Dakota 3 - -
Ohio 33 7 2
Oklahoma 3 1 -
Oregon 5 3 -
Pennsylvania 29 16 2
Puerto Rico - 11 -
Rhode Island 5 3 1
South Carolina 10 5 -
South Dakota 1 - -
Tennessee 14 7 -
Texas 24 29 -
Utah 5 - -
Vermont 2 - -
Virginia 23 19 1
Washington 8 4 -
West Virginia 1 - -
Wisconsin 11 1 4
--- --- --
Total Stores 604 475 35
=== === ==
</TABLE>
Winners Apparel Ltd. operates 87 stores in Canada: 12 in Alberta, 3 in
Manitoba, 47 in Ontario, 11 in Quebec, 2 in Nova Scotia, 2 in Saskatchewan, 7 in
British Columbia, 2 in New Brunswick and 1 in Newfoundland. T.K. Maxx operates
36 stores in the United Kingdom, 1 store in the Republic of Ireland, and 2 in
the Netherlands. A.J. Wright operates 6 stores in the United States: 5 in
Massachusetts and 1 in Rhode Island. The HomeGoods store locations include the
HomeGoods portion of a T.J. Maxx 'N More and a Marshalls Mega-Store.
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T.J. MAXX AND MARSHALLS
T.J. Maxx, the largest off-price family apparel chain in the United
States, was founded by the Company in 1976 and operates 604 stores in 47 states.
Marshalls is the second largest off-price family apparel retailer in the United
States, and operates 475 stores in 37 states and Puerto Rico.
T.J. Maxx sells brand name family apparel, accessories, giftware,
domestics, women's shoes and fine jewelry at prices generally 20% to 60% below
department and specialty store regular prices. T.J. Maxx's target customers are
women who typically have families with middle to upper-middle incomes and who
generally fit the profile of a department store shopper. Marshalls' target
customers fit a profile similar to those of T.J. Maxx. Marshalls' merchandise is
also similar to that carried by T.J. Maxx; however, Marshalls offers its
customers a full-line shoe department, a larger men's department and costume,
rather than fine jewelry.
The T.J. Maxx and Marshalls operations have a common buying and
merchandising organization. The ability to purchase merchandise at favorable
prices and operate with a low cost structure is essential to T.J. Maxx's and
Marshalls' off-price mission which emphasizes quality brand-name merchandise at
substantial values to its customers. These chains use opportunistic buying
strategies to purchase large quantities of merchandise at significant discounts
from initial wholesale prices. Those strategies include special situation
purchases, close-outs of current season fashions and out-of-season purchases of
basic seasonal items for warehousing until the appropriate selling season. These
buying strategies rely heavily on inventory controls that permit a virtually
continuous "open-to-buy" position. In addition, highly automated storage and
distribution systems track, allocate and deliver an average of 11,000 items per
week to each store. Computerized warehouse storage, handling and shipping
systems permit a continuous evaluation and replenishment of store inventory
requirements and the breakdown of manufacturers' bulk shipments into
computer-determined individual store allotments by style, size and quantity.
Pricing, markdown decisions and store inventory replenishment requirements are
determined centrally, using satellite-transmitted information provided by
point-of-sale computer terminals; this ensures that substantially all
merchandise is sold within targeted selling periods. Other administrative
functions that have been consolidated as a result of the acquisition of
Marshalls include finance, real estate, human resources and systems.
T.J. Maxx stores are generally located in suburban community shopping
centers and average approximately 29,000 gross square feet in size. During
fiscal 1999, 28 T.J. Maxx stores were opened and 4 stores were closed. In recent
years, T.J. Maxx has enlarged a number of stores to a larger size of
approximately 30,000 square feet or greater, and plans to continue its program
of enlarging other successful stores. This larger format allows T.J. Maxx to
expand all of its departments, with particular emphasis on its giftware and
housewares departments and other non-apparel categories. As of January 30, 1999
approximately half of the T.J. Maxx stores are the larger prototype. Each T.J.
Maxx store is currently serviced by one of the chain's four distribution centers
in Worcester, Massachusetts; Evansville, Indiana; Las Vegas, Nevada (a shared
facility with Marshalls); and Charlotte, North Carolina.
Marshalls stores average approximately 31,000 gross square feet. During
fiscal 1999, 16 Marshalls stores were opened and 2 were closed. Each Marshalls
store is currently serviced by one of four distribution centers located in
Woburn, Massachusetts; Decatur, Georgia; Bridgewater, Virginia; and Las Vegas,
Nevada (a shared facility with T.J. Maxx).
In fiscal 2000, approximately 59 new T.J. Maxx and Marshalls stores are
planned, many of which are expected to be larger format stores, along with the
planned expansion of about 11 existing locations, the relocation of
approximately 12 existing stores, and the closing of approximately 6 stores.
As discussed in the description of HomeGoods the Company has
experimented with combining a HomeGoods operation with a T.J. Maxx store (T.J.
Maxx 'N More) or a Marshalls store (Marshalls Mega-Stores). As of January 30,
1999 there were a total of 7 T.J. Maxx 'N More locations and 7 Marshalls
Mega-Stores.
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WINNERS APPAREL LTD.
The Company acquired the Winners chain in 1990. The Winners acquisition
has provided the Company with the opportunity to introduce the concept of
off-price apparel retailing to the Canadian market. Since the acquisition,
Winners has increased its number of stores from 5 to 87.
Winners' merchandising concept is substantially similar to that of T.J.
Maxx and Marshalls. Winners' stores average 27,000 square feet, and emphasize
off-price designer and brand name women's apparel and shoes, lingerie,
accessories, domestics, giftware, menswear and children's clothing. During the
last several years, Winners expanded certain merchandise categories, including
ladies footwear, special sizes, giftware and domestics. In addition, Winners
opened 11 stores and expects to open approximately 12 stores in fiscal 2000.
HOMEGOODS
HomeGoods is a chain of off-price home fashion stores opened in 1992 to
expand the Company's off-price presence in the home fashions market. The Company
is continuing to develop this business and, during fiscal 1998 and fiscal 1999,
store layouts were revamped, inventory levels were reduced to allow more
opportunistic buying, and categories such as specialty and seasonal merchandise
were refined to help generate repeat business. In fiscal 1999, the concept of
coupling this business with the T.J. Maxx and Marshalls formats was expanded by
adding 3 additional T.J. Maxx 'N More stores, and adding 5 Marshalls
Mega-Stores. The HomeGoods stores offer a broad and deep range of home fashion
products, including giftware, domestics, rugs, bath accessories, lamps and
seasonal merchandise in a no-frills, multi-department format.
HomeGoods' stand-alone stores currently average approximately 36,000
square feet. HomeGoods occupies approximately 23,000 square feet in the
superstore combination formats with T.J. Maxx and Marshalls. HomeGoods opened 8
superstores and 4 stand-alone stores in fiscal 1999. At fiscal 1999 year end,
HomeGoods operated a total of 35 stores, including 14 superstore combinations
with T.J. Maxx and Marshalls formats. The HomeGoods portion of each of these
units is considered a HomeGoods store location. For fiscal 2000, approximately 8
new stand-alone stores and 16 additional superstore combinations are planned,
including conversion of 3 existing stand-alone stores to the super store format,
along with 2 stand-alone store closings.
T.K. MAXX
During fiscal 1995, the Company implemented an off-price family apparel
concept in Europe by opening T.K. Maxx stores in the United Kingdom. T.K. Maxx
utilizes the same off-price strategy employed by T.J. Maxx, Marshalls and
Winners. The average size of a T.K. Maxx store is 25,000 square feet. At the end
of fiscal 1999, the Company had a total of 39 stores in operation with 36 in the
United Kingdom, 1 in Ireland and 2 in the Netherlands. T.K. Maxx opened 8 stores
in fiscal 1999 and has plans to open approximately 15 stores in fiscal 2000,
mostly in the United Kingdom.
A.J. WRIGHT
During fiscal 1999, the Company began testing another off-price family
apparel concept in the United States targeted to moderate income customers. A.J.
Wright utilizes a similar off-price strategy employed by T.J. Maxx, Marshalls,
Winners and T.K. Maxx, but at generally lower price points. At the end of fiscal
1999, the Company had a total of 6 stores, all in the Northeast, and has plans
to open approximately 10 stores in fiscal 2000. The stores, which average 28,000
square feet in size, are currently serviced by a distribution center located in
Framingham, Massachusetts.
EMPLOYEES
At January 30, 1999, the Company had approximately 62,000 employees,
many of whom work less than 40 hours per week. In addition, temporary employees
are hired during the peak back-to-school and holiday seasons. The Company has
collective bargaining agreements with the Union of Needletrades and Textile
Employees ("UNITE"), covering approximately 4,900 employees in its distribution
facilities in Worcester, Mansfield, and
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Woburn, Massachusetts; Evansville, Indiana; Las Vegas, Nevada; Charlotte, North
Carolina; Decatur, Georgia; and Bridgewater, Virginia. Negotiations are
currently being conducted with UNITE for a new agreement covering Evansville
union workers. The Company considers its labor/management relations and overall
employee relations to be good.
COMPETITION
The retail apparel business is highly competitive. The Company
generally competes for customers with a variety of conventional and discount
retail stores, including national, regional and local independent department and
specialty stores, as well as with catalog operations, factory outlet stores and
other off-price stores. Competitive factors important to the Company's customers
include fashion, value, merchandise selection, brand name recognition and, to a
lesser degree, store location. In addition, because the Company purchases much
of its inventory opportunistically, the Company competes for merchandise with
other national and regional off-price apparel and other discount outlets. Also,
many of the Company's competitors handle identical or similar lines of
merchandise and have comparable locations. The Company believes that the
Marshalls acquisition has enhanced its competitiveness.
CREDIT
The Company's stores operate primarily on a cash-and-carry basis. Each
chain accepts credit sales through programs offered by banks and others.
BUYING AND DISTRIBUTION
The T.J. Maxx and Marshalls chains are serviced by a single centralized
buying organization, while each of the other chains has its own centralized
buying organization. All of the Company's chains are serviced through their own
distribution network. Each T.J. Maxx store is serviced by one of the chain's
four distribution centers in Worcester, Massachusetts, Evansville, Indiana, Las
Vegas, Nevada (shared with Marshalls) and Charlotte, North Carolina. Each
Marshalls store is serviced by one of the chain's four distribution centers in
Woburn, Massachusetts; Decatur, Georgia; the shared Las Vegas, Nevada facility,
and Bridgewater, Virginia. Shipments are generally made at least twice a week by
contract carrier to each T.J. Maxx and Marshalls store. Winners Apparel Ltd.
stores are serviced from a distribution center in Brampton, Ontario, and
HomeGoods stores are serviced from a distribution center in Mansfield,
Massachusetts, and by the T.J. Maxx Evansville facility. A.J. Wright stores are
serviced from a distribution facility in Framingham, Massachusetts, and T.K.
Maxx stores are serviced from a distribution center in Milton Keynes, England.
SAFE HARBOR STATEMENTS UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained in this report are forward-looking and
involve a number of risks and uncertainties. Among the factors that could cause
actual results to differ materially are the following: general economic
conditions and consumer demand and consumer preferences and weather patterns in
the U.S., Canada and Europe, particularly the United Kingdom; competitive
factors, including continuing pressure from pricing and promotional activities
of major competitors; impact of excess retail capacity and the availability of
desirable store locations on suitable terms; the availability, selection and
purchasing of attractive merchandise on favorable terms; import risks, including
potential disruptions and duties, tariffs and quotas on imported merchandise,
including economic and political problems in countries from which merchandise is
imported; currency and exchange rate factors in the Company's foreign
operations; risks in the development of new businesses and application of the
Company's off-price strategies in foreign countries; acquisition and divestment
activities; risks and uncertainties relating to the Year 2000 issue; and other
factors that may be described in the Company's filings with the Securities and
Exchange Commission. The Company does not undertake to publicly update or revise
its forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied therein will not be
realized.
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ITEM 2. PROPERTIES
The Company's chains lease virtually all of their store locations.
Leases are generally for 10 years with options to extend for one or more 5 year
periods. The Company has the right to terminate certain leases before the
expiration date under certain circumstances and for a specified payment.
The approximate average size of a T.J. Maxx store is 29,000 square
feet, Marshalls stores average approximately 31,000 square feet, Winners stores
are approximately 27,000 square feet on average, T.K. Maxx stores average
approximately 25,000 square feet, and A.J. Wright stores average approximately
28,000 square feet. HomeGoods' stand-alone stores currently average
approximately 36,000 square feet, and the HomeGoods portion of a superstore
combination format with a T.J. Maxx or Marshalls averages approximately 23,000
square feet. The Company owns four T.J. Maxx distribution facilities - a 526,000
square foot facility in Worcester, Massachusetts; a 983,000 square foot facility
in Evansville, Indiana; a 718,000 square foot facility in Las Vegas, Nevada
(shared with Marshalls); and a 600,000 square foot facility in Charlotte, North
Carolina. The Company owns a 799,000 square foot Marshalls distribution facility
in Decatur, Georgia. In addition, Marshalls leases two distribution facilities -
an 824,000 square foot facility in Woburn, Massachusetts and a 713,000 square
foot facility in Bridgewater, Virginia. Winners leases a 506,000 square foot
distribution center in Brampton, Ontario and 56,000 square feet of office space
in Mississauga, Ontario. HomeGoods leases a 204,000 square foot distribution
center in Mansfield, Massachusetts. T.K. Maxx in the United Kingdom has leased a
158,000 square foot office and distribution facility in Milton Keynes, England
and a 22,000 square foot office space in Watford, England. A.J. Wright leases
68,000 square feet of distribution space in Framingham, Massachusetts. The
Company's, T.J. Maxx's, Marshalls', HomeGoods' and A.J. Wright's executive and
administrative offices are located in a 517,000 square foot office facility,
which the Company leases in Framingham, Massachusetts along with an additional
243,000 square feet of office space in the Framingham area.
The table below indicates the approximate gross square footage of
stores and distribution centers, by division, in operation as of January 30,
1999.
<TABLE>
<CAPTION>
(Sq. Ft. in Thousands)
Stores Distribution Centers
------ --------------------
Leased Owned
------ -----
<S> <C> <C>
T.J. Maxx 17,648 - 2,466
Marshalls 14,909 1,537 1,117
Winners 2,323 506 -
HomeGoods 1,086 204 -
T.K. Maxx 990 150 -
A.J. Wright 170 68 -
------ ----- -----
Total 37,126 2,465 3,583
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</TABLE>
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending against the Company or any of its
subsidiaries which the Company believes is material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted to a vote of the Company's security
holders during the fourth quarter of fiscal 1999.
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following persons are the executive officers of the Company as of
the date hereof:
Office and Employment
Name Age During Last Five Years
- ---- --- ----------------------
Bernard Cammarata 59 President, Chief Executive Officer and
Director since 1989, Chairman of the
Company's T.J. Maxx Division from 1986 to
1995 and of the Company's T.J. Maxx and
Marshalls Division ("The Marmaxx Group")
since 1995. Executive Vice President of the
Company from 1986 to 1989. President, Chief
Executive Officer and Director of the
Company's former TJX subsidiary from 1987 to
1989; President of T.J. Maxx, 1976 to 1986.
Donald G. Campbell 47 Executive Vice President - Finance since
1996 and Chief Financial Officer of the
Company since 1989. Senior Vice President -
Finance, from 1989 to 1996. Senior Financial
Executive of the Company, 1988 to 1989;
Senior Vice President - Finance and
Administration Zayre Stores Division
1987-1988; Vice President and Corporate
Controller of the Company, 1985 to 1987;
various financial positions with the
Company, 1973 to 1985.
Richard Lesser 64 Executive Vice President of the Company
since 1991, Chief Operating Officer of the
Company since 1994 and Director of the
Company and President of The Marmaxx Group
since 1995. Senior Vice President of the
Company 1989-1991 and President of the T.J.
Maxx Division from 1986 to 1994. Senior
Executive Vice President - Merchandising and
Distribution 1986. Executive Vice President
- General Merchandise Manager 1984 to 1986;
Senior Vice President - General Merchandise
Manager 1981 to 1984.
Edmond English 45 Senior Vice President, Group Executive of
the Company since 1998. Executive Vice
President, Merchandising, Planning and
Allocation of the Marmaxx Group from 1997 to
1998; Senior Vice President, Merchandising
from 1995 to 1997. Vice President, Senior
Merchandise Manager of the T.J. Maxx
Division from 1991 to 1995; various
merchandising positions with the Company,
1983 to 1991.
Arnold Barron 51 Senior Vice President, Group Executive of
the Company since 1996. Senior Vice
President, General Merchandise Manager of
the T.J. Maxx Division from 1993 to 1996;
Senior Vice President, Director of Stores,
1984 to 1993; various store operation
positions with the Company, 1979 to 1984.
The foregoing were elected to their current Company offices by the
Board of Directors in June 1998. All officers hold office until the next annual
meeting of the Board in June 1999 and until their successors are elected and
qualified.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED SECURITY HOLDER MATTERS
The information required by this Item is incorporated herein by
reference from page 39 of the Annual Report, under the caption "Price Range of
Common Stock," and from inside the back cover of the Annual Report, under the
caption "Shareholder Information."
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated herein by
reference from page 39 of the Annual Report, under the caption "Selected
Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is incorporated herein by
reference from pages 40 through 45 of the Annual Report, under the caption
"Management's Discussion and Analysis of Results of Operations and Financial
Condition."
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The information required by this Item is incorporated herein by
reference from the last two paragraphs of the "Financing Activities" section of
the Management's Discussion and Analysis found on page 44 of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item and not filed with this report as
Financial Statement Schedules is incorporated herein by reference from pages 18
through 37 of the Annual Report, under the captions; "Consolidated Statements of
Income," "Consolidated Balance Sheets," "Consolidated Statements of Cash Flows,"
"Consolidated Statements of Shareholders' Equity," "Selected Information by
Major Business Segment" and "Notes to Consolidated Financial Statements."
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company will file with the Securities and Exchange Commission a
definitive Proxy Statement no later than 120 days after the close of its fiscal
year ended January 30, 1999 (the "Proxy Statement"). The information required by
this Item and not given in Item 4A, Executive Officers of the Registrant, is
incorporated by reference to the Proxy Statement. However, information under the
captions "Executive Compensation Committee Report" and "Performance Graph" in
the Proxy Statement is not so incorporated.
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ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to
the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to
the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to
the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENT SCHEDULES
The Financial Statements filed as part of this report are listed and
indexed at Page F-1.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K with the Securities and
Exchange Commission during the quarter ended January 30, 1999.
(c) EXHIBITS
Listed below are all Exhibits filed as part of this report. Certain
Exhibits are incorporated by reference to documents previously filed by the
Registrant with the Securities and Exchange Commission pursuant to Rule 12b-32
under the Securities Exchange Act of 1934, as amended.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
3(i).1 Third Restated Certificate of Incorporation is incorporated herein
by reference to Exhibit 4.2 of the Company's Registration Statement
on Form S-8 No. 333-35073.
3(ii).1 The by-laws of the Company, as amended, are filed herewith.
4.1 Credit Agreement dated as of September 18, 1997, together with
Amendment and Waiver Number 1 dated as of December 17, 1997, among
the financial institutions as lenders, The First National Bank of
Chicago, Bank of America National Trust and Savings Association, The
Bank of New York, BankBoston, N.A.), certain parties as co-agents,
and the Company is incorporated herein by reference to Exhibit 4.1
to the Form 10-K filed for the fiscal year ended January 31, 1998.
Each other instrument relates to securities the total amount of
which does not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company agrees to furnish
to the Securities and Exchange Commission copies of each such
instrument not otherwise filed herewith or incorporated herein by
reference.
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10.2 The Employment Agreement dated as of January 26, 1997 with Bernard
Cammarata is incorporated herein by reference to Exhibit 10.2 to the
Form 10-K filed for the fiscal year ended January 25, 1997. The
Amendment dated as of January 26, 1998 and the Amendment dated as of
April 8, 1998 to such Employment Agreement are incorporated herein
by reference to Exhibit 10.2 to the Form 10-K filed for the fiscal
year ended January 31, 1998.*
10.3 The Amended and Restated Employment Agreement dated as of January
31, 1998 with Richard Lesser is incorporated herein by reference to
Exhibit 10.3 to the Form 10-K filed for the fiscal year ended
January 31, 1998.*
10.4 The Amended and Restated Employment Agreement dated as of January
31, 1998 with Donald G. Campbell is incorporated herein by reference
to Exhibit 10.4 to the Form 10-K filed for the fiscal year ended
January 31, 1998.*
10.5 The TJX Companies, Inc. Management Incentive Plan, as amended, is
incorporated herein by reference to Exhibit 10.2 to the Form 10-Q
filed for the quarter ended July 26, 1997.*
10.6 The 1982 Long Range Management Incentive Plan, as amended, is
incorporated herein by reference to Exhibit 10(h) to the Form 10-K
filed for the fiscal year ended January 29, 1994.*
10.7 The 1986 Stock Incentive Plan, as amended through February 2, 1999,
is filed herewith.*
10.8 The TJX Companies, Inc. Long Range Performance Incentive Plan, as
amended, is incorporated herein by reference to Exhibit 10.3 to the
Form 10-Q filed for the quarter ended July 26, 1997.*
10.9 The General Deferred Compensation Plan (1998 Restatement) and
related First Amendment, effective January 1, 1999, are filed
herewith.*
10.10 The Supplemental Executive Retirement Plan, as amended, is
incorporated herein by reference to Exhibit 10(l) to the Form 10-K
filed for the fiscal year ended January 25, 1992.*
10.11 The Executive Savings Plan and related Amendments No. 1 and No. 2,
effective as of October 1, 1998, are filed herewith.*
10.12 The 1993 Stock Option Plan for Non-Employee Directors, as amended on
April 13, 1999, is filed herewith.*
10.13 The Deferred Stock Plan for Non-Employee Directors effective January
1, 1998, as amended, is filed herewith.*
10.14 The form of Indemnification Agreement between the Company and each
of its officers and directors is incorporated herein by reference to
Exhibit 10(r) to the Form 10-K filed for the fiscal year ended
January 27, 1990.*
10.15 The Trust Agreement dated as of April 8, 1988 between the Company
and State Street Bank and Trust Company is incorporated herein by
reference to Exhibit 10(y) to the Form 10-K filed for the fiscal
year ended January 30, 1988.*
10.16 The Trust Agreement dated as of April 8, 1988 between the Company
and Fleet Bank (formerly Shawmut Bank of Boston, N.A.) is
incorporated herein by reference to Exhibit 10(z) to the Form 10-K
filed for the fiscal year ended January 30, 1988.*
<PAGE> 13
Page 13
10.17 The TJX Rabbi Trust, dated as of April 9, 1997 between the Company
and State Street Bank and Trust Company is filed herewith.*
10.18 Stock Purchase Agreement dated as of October 14, 1995 between the
Company and Melville Corporation is incorporated herein by reference
to the Current Report on Form 8-K dated October 14, 1995.*
10.19 Amendment Number One dated as of November 17, 1995 to the Stock
Purchase Agreement dated as of October 14, 1995 between the Company
and Melville Corporation is incorporated herein by reference to the
Current Report on Form 8-K dated November 17, 1995.
10.20 Asset Purchase Agreement dated as of October 18, 1996 between the
Company and Brylane, L.P. is incorporated herein by reference to the
Current Report on Form 8-K dated October 18, 1996.
10.21 The Distribution Agreement dated as of May 1, 1989 between the
Company and HomeBase, Inc. (formerly Waban Inc.) is incorporated
herein by reference to Exhibit 3 to the Company's Current Report on
Form 8-K dated June 21, 1989. The First Amendment to Distribution
Agreement dated as of April 18, 1997 between the Company and
HomeBase, Inc. (formerly Waban Inc.) is incorporated herein by
reference to Exhibit 10.22 to the Form 10-K filed for the fiscal
year ended January 25, 1997.
10.22 The Indemnification Agreement dated as of April 18, 1997 by and
between the Company and BJ's Wholesale Club, Inc. is incorporated
herein by reference to Exhibit 10.23 to the Form 10-K filed for the
fiscal year ended January 25, 1997.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS.
This statement is filed herewith.
13 ANNUAL REPORT TO SECURITY HOLDERS.
Portions of the Annual Report to Stockholders for the fiscal year
ended January 30, 1999 are filed herewith.
21 SUBSIDIARIES.
A list of the Registrant's subsidiaries is filed herewith.
23 CONSENTS OF EXPERTS AND COUNSEL.
The Consent of PricewaterhouseCoopers LLP is contained on Page F-2
of the Financial Statements filed herewith.
24 POWER OF ATTORNEY.
The Power of Attorney given by the Directors and certain Executive
Officers of the Company is filed herewith.
* Management contract or compensatory plan or arrangement.
<PAGE> 14
Page 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: April 29, 1999
/s/ DONALD G. CAMPBELL
------------------------------------
Donald G. Campbell
Executive Vice President - Finance
<PAGE> 15
Page 15
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
/s/ BERNARD CAMMARATA /s/ DONALD G. CAMPBELL
- ----------------------------------- -----------------------------------
Bernard Cammarata, President Donald G. Campbell, Executive
and Principal Executive Officer Vice President - Finance,
and Director Principal Financial and
Accounting Officer
PHYLLIS B. DAVIS JOHN F. O'BRIEN
- ----------------------------------- -----------------------------------
Phyllis B. Davis, Director John F. O'Brien, Director
DENNIS F. HIGHTOWER ROBERT F. SHAPIRO
- ----------------------------------- -----------------------------------
Dennis F. Hightower, Director Robert F. Shapiro, Director
RICHARD LESSER WILLOW B. SHIRE
- ----------------------------------- -----------------------------------
Richard Lesser, Director Willow B. Shire, Director
ARTHUR F. LOEWY FLETCHER H. WILEY
- ----------------------------------- -----------------------------------
Arthur F. Loewy, Director Fletcher H. Wiley, Director
JOHN M. NELSON
- -----------------------------------
John M. Nelson, Director
* By /s/ DONALD G. CAMPBELL
------------------------------
Donald G. Campbell
Dated: April 29, 1999 as attorney-in-fact
<PAGE> 16
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
THE TJX COMPANIES, INC.
FORM 10-K
ANNUAL REPORT
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended
January 30, 1999, January 31, 1998
and January 25, 1997
<PAGE> 17
THE TJX COMPANIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
For Fiscal Years Ended January 30, 1999, January 31, 1998 and
January 25, 1997
Report of Independent Accountants 38*
Consent of Independent Accountants F-2
Selected Quarterly Financial Data (Unaudited) 46*
Consolidated Financial Statements:
Consolidated Statements of Income for the fiscal
years ended January 30, 1999, January 31, 1998 and
and January 25, 1997 18*
Consolidated Balance Sheets as of January 30, 1999
and January 31, 1998 19*
Consolidated Statements of Cash Flows for the fiscal
years ended January 30, 1999, January 31, 1998 and
January 25, 1997 20*
Consolidated Statements of Shareholders' Equity for
the fiscal years ended January 30, 1999, January 31,
1998 and January 25, 1997 21*
Notes to Consolidated Financial Statements 23-37*
* Refers to page numbers in the Company's Annual Report to Stockholders for
the fiscal year ended January 30, 1999, certain portions of which pages are
incorporated by reference in Part II, Item 8 of this report as indicated.
F-1
<PAGE> 18
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of The TJX Companies, Inc. on Form S-3 (File Nos. 333-05501, 33-60059) and on
Forms S-8 (File Nos. 333-63293, 333-23613, 33-49747, 33-12220, 333-35073) of
our report dated March 2, 1999 on our audits of the consolidated financial
statements of The TJX Companies, Inc. as of January 30, 1999 and January 31,
1998 and for the years ended January 30, 1999, January 31, 1998 and January 25,
1997 which report is incorporated by reference in this Annual Report on Form
10-K.
Boston, Massachusetts
April 28, 1999 PricewaterhouseCoopers LLP
F-2
<PAGE> 19
Exhibit Index
Exhibit
No. Description of Exhibit
- --- ----------------------
3(i).1 Third Restated Certificate of Incorporation is incorporated
herein by reference to Exhibit 4.2 of the Company's Registration
Statement on Form S-8 No. 333-35073.
3(ii).1 The by-laws of the Company, as amended, are filed herewith.
4.1 Credit Agreement dated as of September 18, 1997, together with
Amendment and Waiver Number 1 dated as of December 17, 1997,
among the financial institutions as lenders, The First National
Bank of Chicago, Bank of America National Trust and Savings
Association, The Bank of New York, BankBoston, N.A.), certain
parties as co-agents, and the Company is incorporated herein by
reference to Exhibit 4.1 to the Form 10-K filed for the fiscal
year ended January 31, 1998.
Each other instrument relates to securities the total amount of
which does not exceed 10% of the total assets of the Company and
its subsidiaries on a consolidated basis. The Company agrees to
furnish to the Securities and Exchange Commission copies of each
such instrument not otherwise filed herewith or incorporated
herein by reference.
10.2 The Employment Agreement dated as of January 26, 1997 with
Bernard Cammarata is incorporated herein by reference to Exhibit
10.2 to the Form 10-K filed for the fiscal year ended January
25, 1997. The Amendment dated as of January 26, 1998 and the
Amendment dated as of April 8, 1998 to such Employment Agreement
are incorporated herein by reference to Exhibit 10.2 to the Form
10-K filed for the fiscal year ended January 31, 1998.*
10.3 The Amended and Restated Employment Agreement dated as of
January 31, 1998 with Richard Lesser is incorporated herein by
reference to Exhibit 10.3 to the Form 10-K filed for the fiscal
year ended January 31, 1998.*
10.4 The Amended and Restated Employment Agreement dated as of
January 31, 1998 with Donald G. Campbell is incorporated herein
by reference to Exhibit 10.4 to the Form 10-K filed for the
fiscal year ended January 31, 1998.*
10.5 The TJX Companies, Inc. Management Incentive Plan, as amended,
is incorporated herein by reference to Exhibit 10.2 to the Form
10-Q filed for the quarter ended July 26, 1997.*
10.6 The 1982 Long Range Management Incentive Plan, as amended, is
incorporated herein by reference to Exhibit 10(h) to the Form
10-K filed for the fiscal year ended January 29, 1994.*
10.7 The 1986 Stock Incentive Plan, as amended through February 2,
1999, is filed herewith.*
<PAGE> 20
10.8 The TJX Companies, Inc. Long Range Performance Incentive Plan,
as amended, is incorporated herein by reference to Exhibit 10.3
to the Form 10-Q filed for the quarter ended July 26, 1997.*
10.9 The General Deferred Compensation Plan (1998 Restatement) and
related First Amendment, effective January 1, 1999, are filed
herewith.*
10.10 The Supplemental Executive Retirement Plan, as amended, is
incorporated herein by reference to Exhibit 10(l) to the Form
10-K filed for the fiscal year ended January 25, 1992.*
10.11 The Executive Savings Plan and related Amendments No. 1 and No.
2, effective as of October 1, 1998, are filed herewith.*
10.12 The 1993 Stock Option Plan for Non-Employee Directors, as
amended on April 13, 1999, is filed herewith.*
10.13 The Deferred Stock Plan for Non-Employee Directors, as amended,
is filed herewith.*
10.14 The form of Indemnification Agreement between the Company and
each of its officers and directors is incorporated herein by
reference to Exhibit 10(r) to the Form 10-K filed for the fiscal
year ended January 27, 1990.*
10.15 The Trust Agreement dated as of April 8, 1988 between the
Company and State Street Bank and Trust Company is incorporated
herein by reference to Exhibit 10(y) to the Form 10-K filed for
the fiscal year ended January 30, 1988.*
10.16 The Trust Agreement dated as of April 8, 1988 between the
Company and Fleet Bank (formerly Shawmut Bank of Boston, N.A.)
is incorporated herein by reference to Exhibit 10(z) to the Form
10-K filed for the fiscal year ended January 30, 1988.*
10.17 The TJX Rabbi Trust, dated as of April 9, 1997 between the
Company and State Street Bank and Trust Company is filed
herewith.*
10.18 Stock Purchase Agreement dated as of October 14, 1995 between
the Company and Melville Corporation is incorporated herein by
reference to the Current Report on Form 8-K dated October 14,
1995.*
10.19 Amendment Number One dated as of November 17, 1995 to the Stock
Purchase Agreement dated as of October 14, 1995 between the
Company and Melville Corporation is incorporated herein by
reference to the Current Report on Form 8-K dated November 17,
1995.
10.20 Asset Purchase Agreement dated as of October 18, 1996 between
the Company and Brylane, L.P. is incorporated herein by
reference to the Current Report on Form 8-K dated October 18,
1996.
<PAGE> 21
10.21 The Distribution Agreement dated as of May 1, 1989 between the
Company and HomeBase, Inc. (formerly Waban Inc.) is incorporated
herein by reference to Exhibit 3 to the Company's Current Report
on Form 8-K dated June 21, 1989. The First Amendment to
Distribution Agreement dated as of April 18, 1997 between the
Company and HomeBase, Inc. (formerly Waban Inc.) is incorporated
herein by reference to Exhibit 10.22 to the Form 10-K filed for
the fiscal year ended January 25, 1997.
10.22 The Indemnification Agreement dated as of April 18, 1997 by and
between the Company and BJ's Wholesale Club, Inc. is
incorporated herein by reference to Exhibit 10.23 to the Form
10-K filed for the fiscal year ended January 25, 1997.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS.
This statement is filed herewith.
13 ANNUAL REPORT TO SECURITY HOLDERS.
Portions of the Annual Report to Stockholders for the fiscal
year ended January 30, 1999 are filed herewith.
21 SUBSIDIARIES.
A list of the Registrant's subsidiaries is filed herewith.
23 CONSENTS OF EXPERTS AND COUNSEL.
The Consent of PricewaterhouseCoopers LLP is contained on Page
F-2 of the Financial Statements filed herewith.
24 POWER OF ATTORNEY.
The Power of Attorney given by the Directors and certain
Executive Officers of the Company is filed herewith.
* Management contract or compensatory plan or arrangement.
<PAGE> 1
Exhibit 3(ii).1
[As amended through 4/13/99]
THE TJX COMPANIES, INC.
BY-LAWS
ARTICLE I
Certificate of Incorporation
The name, location of the principal office or place of business in the
State of Delaware, and the nature of the business or objects or purposes of the
corporation shall be as set forth in its certificate of incorporation. These
by-laws, the powers of the corporation and of its directors and stockholders,
and all matters concerning the management of the business and conduct of the
affairs of the corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in the certificate of incorporation; and the
certificate of incorporation is hereby made a part of these by-laws. In these
by-laws, references to the certificate of incorporation mean the provisions of
the certificate of incorporation (as that term is defined in the General
Corporation Law of the State of Delaware) of the corporation as from time to
time in effect, and references to these by-laws or to any requirement or
provision of law mean these by-laws or such requirement or provision of law as
from time to time in effect.
ARTICLE II
Annual Meeting of Stockholders
(a) The annual meeting of stockholders shall be held either (i) at
11:00 a.m. on the first Tuesday in June in each year, unless that day be a legal
holiday at the place where the meeting is to be held, in which case the meeting
shall be held at the same hour on the next succeeding day not a legal holiday,
or (ii) at such other date and time as shall be designated from time to time by
the board of directors and stated in the notice of the meeting, at which the
stockholders shall elect a board of directors and transact such other business
as may be required by law or these by-laws or as may properly come before the
meeting.
(b) Except as otherwise fixed pursuant to the provisions of Article
FOURTH of the certificate of incorporation relating to the rights of holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, nominations of persons for election to the board
of directors of the corporation may be made at a meeting of stockholders by or
at the direction of the board of directors or a committee appointed by the board
of directors or by any stockholder of the corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set
forth in this Article II. Such nominations, other than those made by or at the
direction of the board of directors or such committee, shall be made pursuant to
timely notice in writing to the secretary of the corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received by the
secretary at the principal executive offices of the corporation not less than 90
days nor more than 120 days prior to the first
1
<PAGE> 2
anniversary of the prior year's annual meeting. Such stockholder's notice shall
set forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age, business address and
residence address of such person, (ii) the principal occupation or employment of
such person, (iii) the class and number of shares of the corporation which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including without limitation such person's written consent to
being named in the proxy statement as the nominee and to serving as a director
if elected); and (b) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination is made (i) the name and address
of such stockholder, as they appear on the corporation's books, and of such
beneficial owner, (ii) the class and number of shares of the corporation which
are owned beneficially and of record by such stockholder and such beneficial
owner, (iii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose such nomination, and (iv) a
representation whether the stockholder or the beneficial owner, if any, intends
or is part of a group which intends to (a) deliver a proxy statement and/or form
of proxy to holders of at least the percentage of the corporation's outstanding
capital stock required to elect the nominee and/or (b) otherwise solicit proxies
from stockholders in support of such nomination. The corporation may require any
proposed nominee to furnish such other information as it may reasonably require
to determine the eligibility of such proposed nominee to serve as a director of
the corporation. No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in this
Article II. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by the by-laws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(c) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting business must be (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the board of directors, or (b) otherwise properly brought before the meeting by
a stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the secretary of the corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received by the secretary at the principal executive
offices of the corporation not less than 90 days nor more than 120 days prior to
the first anniversary of the prior year's annual meeting. A stockholder's notice
to the secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (a) a brief description of the business desired
to be brought before the annual meeting, (b) the text of the proposal or
business (including the text of any resolutions proposed for consideration and
in the event that such business includes a proposal to amend the By-laws of the
corporation, the language of the proposed amendment), the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made, (c) as to the stockholder giving the notice and the beneficial owner, if
any, on whose behalf the proposal is made, (i) the name and address of such
stockholder, as they appear on the corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder and such beneficial owner, (iii)
a representation that the stockholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to propose such business, and (iv) a representation
whether the stockholder or the beneficial owner, if any, intends or is part of a
group which intends to (a) deliver a proxy statement and/or form of proxy to
holders of at least the percentage of the
2
<PAGE> 3
corporation's outstanding capital stock required to approve or adopt the
proposal and/or (b) otherwise solicit proxies from stockholders in support of
such proposal. Notwithstanding anything in the by-laws to the contrary, no
business shall be conducted at any annual meeting except in accordance with the
procedures set forth in this Article II. The chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this Article II, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
ARTICLE III
Special Meetings of Stockholders
Except as otherwise required by law and or as fixed pursuant to the
provisions of Article FOURTH of the certificate of incorporation relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation, special meetings of the
stockholders may be called only by the chairman of the board, the president, or
the board of directors pursuant to a resolution approved by a majority of the
entire board of directors. Such call shall state the time, place and purposes of
the meeting.
ARTICLE IV
Place of Stockholders' Meetings
The annual meeting of the stockholders, for the annual election of
directors and other purposes, shall be held at such place within or without the
State of Delaware as the board of directors shall fix for such meeting.
Adjourned meetings of the stockholders shall be held at such places and at such
times as the board of directors shall fix. Special meetings of the stockholders,
and adjourned special meetings of the stockholders, shall be held at such places
within or without the State of Delaware and such time as the board of directors
shall fix.
ARTICLE V
Notice of Stockholders' Meetings
Except as may be otherwise required by law, by the certificate of
incorporation or by other provisions of these by-laws, and subject to the
provisions of Article XXII, a written notice of each meeting of stockholders,
stating the place, day and hour thereof and the purposes for which the meeting
is called, shall be given, at least ten days before the meeting, to each
stockholder entitled to vote thereat, by leaving such notice with him or at his
residence or usual place of business, or by mailing it, postage prepaid,
addressed to such stockholder at his address as it appears upon the books of the
corporation. Such notice shall be given by the secretary, or in case of the
death, absence, incapacity or refusal of the secretary, by some other officer or
by a person designated by the board of directors.
3
<PAGE> 4
ARTICLE VI
Quorum and Action of Stockholders
Any action required or permitted to be taken by the stockholders of the
corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such holders.
At any meeting of the stockholders, a quorum for the election of
directors or for the consideration of any question shall consist of a majority
of the stock issued and outstanding; except in any case where a larger quorum is
required by law, by the certificate of incorporation or by these by-laws. Stock
owned by the corporation, if any, shall not be deemed outstanding for this
purpose. In any case any meeting may be adjourned from time to time by a
majority of the votes properly cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
When a quorum for the election of any director is present at any
meeting, a plurality of the votes properly cast for election to such office
shall elect to such office. When a quorum for the consideration of a question is
present at any meeting, a majority of the votes properly cast upon the question
shall decide the question; except in any case where a larger vote is required by
law, by the certificate of incorporation or by these by-laws.
ARTICLE VII
Proxies and Voting
Except as otherwise provided in the certificate of incorporation, and
subject to the provisions of Article XXV, each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of the capital stock held by such stockholder, but no proxy shall be
voted on after three years from its date, unless the proxy provides for a longer
period; and except where the transfer books of the corporation shall have been
closed or a date shall have been fixed as a record date for the determination of
the stockholders entitled to vote, as provided in Article XXV, no share of stock
shall be voted on at any election for directors which has been transferred on
the books of the corporation within twenty days next preceding such election of
directors. Shares of the capital stock of the corporation belonging to the
corporation shall not be voted upon directly or indirectly.
Persons holding stock in a fiduciary capacity shall be entitled to vote
the shares so held, or to give any consent permitted by law, and persons whose
stock is pledged shall be entitled to vote, or to give any consent permitted by
law, unless in the transfer by the pledgor on the books of the corporation he
shall have expressly empowered the pledgee to vote thereon, in which case only
the pledgee or his proxy may represent said stock and vote thereon or give any
such consent.
The secretary shall prepare and make, at least ten days before every
election of directors, a complete list of the stockholders entitled to vote at
said election, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder during ordinary
business hours, at the place where said election is to be held, for said ten
days, and shall be produced and kept at the time and place of election during
the whole time thereof, and subject to the inspection of any stockholder who may
be present. The original or duplicate stock ledger
4
<PAGE> 5
shall be the only evidence as to who are stockholders entitled to examine such
list or to vote in person or by proxy at such election.
ARTICLE VIII
OMITTED
ARTICLE IX
Board of Directors
The whole board of directors shall consist of not less than three nor
more than fifteen directors. Within such limits the whole number of directors
shall be fixed from time to time, subject to the provisions of Article XXI
hereof, by action of the board of directors.
Except as otherwise fixed pursuant to the provisions of Article FOURTH
of the certificate of incorporation relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect additional directors under specified
circumstances, the number of directors of the corporation shall be fixed from
time to time by or pursuant to these by-laws. The directors, other than those
who may be elected by the holders of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation, shall be
classified, with respect to the time for which they severally hold office, into
three classes, designated Class I, Class II and Class III, as nearly equal in
number as possible, with the term of office of one Class expiring each year. At
the annual meeting of stockholders in 1985, directors of Class I shall be
elected to hold office for a term expiring at the next succeeding annual
meeting, directors of Class II shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of Class III
shall be elected to hold office for a term expiring at the third succeeding
annual meeting, with the members of each Class to hold office until their
successors are elected and qualified. At each subsequent annual meeting of the
stockholders of the Corporation, the successors to the Class of directors whose
term expires at such meeting shall be elected to hold office for a term expiring
at the annual meeting of stockholders held in the third year following the year
of their election.
References in these by-laws to the whole board of directors mean the
whole number fixed as herein or in the certificate of incorporation provided,
irrespective of the number at the time in office.
Each newly created directorship resulting from any increase in the
number of directors may be filled only as provided in Article XXI for the
filling of a vacancy in the office of a director.
No director need be a stockholder.
ARTICLE X
Powers of the Board of Directors
The board of directors shall have and may exercise all the powers of
the corporation; except such as are conferred upon the stockholders by law, by
the certificate of incorporation or by these by-laws.
5
<PAGE> 6
ARTICLE XI
Committees
The board of directors may at any time and from time to time, by
resolution adopted by a majority of the whole board, designate, change the
membership of or terminate the existence of any committee or committees,
including if desired any executive committee, each committee to consist of two
or more of the directors of the corporation. Each such committee shall have such
name as may be determined from time to time by resolution adopted by a majority
of the whole board of directors and shall have and may exercise such powers of
the board of directors in the management of the business and affairs of the
corporation, including power to authorize the seal of the corporation to be
affixed to all papers which may require it, as may be determined from time to
time by resolution adopted by a majority of the whole board. All minutes of
proceedings of committees shall be available to the board of directors on its
request.
In the absence or disqualification of any member of such committee or
committees the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in place of such absent or disqualified member.
ARTICLE XII
Meetings of the Board of Directors
Regular meetings of the board of directors may be held without call or
formal notice at such places either within or without the State of Delaware and
at such times as the board may from time to time determine. A regular meeting of
the board of directors may be held without call or formal notice immediately
after and at the same place as the annual meeting of the stockholders.
Special meetings of the board of directors may be held at any time and
at any place either within or without the State of Delaware when called by the
chairman of the board (if any), the president, the treasurer or two or more
directors, reasonable notice thereof being given to each director by the
secretary, or in the case of the death, absence, incapacity or refusal of the
secretary, by the officer or directors calling the meeting, or without call or
formal notice if each director then in office is either present or waives notice
as provided in Article XXII. In any case it shall be deemed sufficient notice to
a director to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to him at his usual or last
known business or residence address or to give notice to him in person either by
telephone or by handing him a written notice at least twenty-four hours before
the meeting.
ARTICLE XIII
Quorum and Action of Directors
At any meeting of the board of directors, except in any case where a
larger quorum or the vote of a larger number of directors is required by law, by
the certificate of incorporation or by these by-laws, a quorum for any election
or for the consideration of any question shall consist of a
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<PAGE> 7
majority of the directors then in office, but in any case not less than two
directors; but any meeting may be adjourned from time to time by a majority of
the votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice. When a quorum is
present at any meeting, the votes of a majority of the directors present and
voting shall be requisite and sufficient for election to any office, and a
majority of the directors present and voting shall decide any question brought
before such meeting, except in any case where a larger vote is required by law,
by the certificate of incorporation or by these by-laws.
ARTICLE XIV
Consent by Directors or Committees
To the extent permitted by law, whenever a vote or resolution at a
meeting of the board of directors or of any committee thereof is required or
permitted to be taken in connection with any corporate action by any provision
of law or of the certificate of incorporation or of these by-laws, such meeting
and such vote or resolution may be dispensed with and such corporate action may
be taken without such meeting, vote or resolution, if a written consent to such
corporate action is signed by all members of the board or of such committee, as
the case may be, and such written consent is filed with the minutes of the
proceedings of the board or of such committee.
ARTICLE XV
Chairman of the Board of Directors
A chairman of the board may be elected annually from among the
directors by the board of directors at its first meeting following the annual
meeting of the stockholders and shall serve until the first meeting of the board
of directors following the next annual meeting of the stockholders and until his
successor is elected, or until he dies, resigns, is removed or replaced or
becomes disqualified.
The chairman of the board (if any) shall preside at all meetings of the
stockholders and of the board of directors at which he is present, except that
if there is no chairman or in the absence of the chairman, or at the request of
the chairman, the president shall preside. The chairman (if any) shall have such
other duties and powers as may be designated from time to time by the board of
directors.
ARTICLE XVI
Officers and Agents
The officers of the corporation shall be a president, a treasurer, a
secretary, and such other officers, if any, as the board of directors may in its
discretion elect. The board of directors may delegate to the chief executive
officer the authority to appoint assistant vice presidents, assistant
treasurers, assistant secretaries and such agents, if any, as he may in his
discretion determine to appoint. So far as is permitted by law any two or more
offices may be held by the same person. The chief executive officer may appoint
such officers of the divisions of the corporation as he in his discretion shall
determine, the officers of divisions not being officers of the corporation.
Officers of the divisions may also be appointed officers of the corporation by
the board of directors or by the chief executive officer as above provided.
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<PAGE> 8
Subject to law, to the certificate of incorporation and to the other
provisions of these by-laws, each officer elected by the board of directors or
appointed by the chief executive officer shall have, in addition to the duties
and powers herein set forth, such duties and powers as are commonly incident to
his office and such duties and powers as the board of directors or the chief
executive officer may from time to time designate.
Officers elected by the board of directors shall be elected annually at
its first meeting following the annual meeting of the stockholders. Officers
appointed by the chief executive officer shall be appointed annually by the
chief executive officer on the day of the annual meeting of the stockholders.
Additional officers may be elected by the board of directors or appointed by the
chief executive officer at any time.
Each officer elected by the board of directors shall hold office until
the first meeting of the board of directors following the next annual meeting of
the stockholders and until his successor is elected or appointed and qualified,
or until he sooner dies, resigns, is removed or replaced or becomes
disqualified. Each officer and agent appointed by the chief executive officer
shall retain his authority at the pleasure of the chief executive officer.
ARTICLE XVII
President
The president shall be the chief executive officer of the corporation
with ultimate responsibility for the corporation's planning and operations, both
financial and operational subject to the policies and direction of the board of
directors.
ARTICLE XVIII
Chief Financial Officer
The chief financial officer is responsible for execution of all
financial policies, plans, procedures and controls of the corporation, and the
maintenance of books and records with respect thereto, including accounting and
treasury functions, internal audit, budgets, borrowings, securities offerings,
investments, tax reporting and financial reporting all subject to the control of
the board of directors and the president. The chief financial officer shall have
such other duties and powers as may be designated from time to time by the board
of directors and the president.
ARTICLE XIX
Secretary and Treasurer
The secretary shall record all the proceedings of the meetings of the
stockholders and the board of directors, in a book or books to be kept for that
purpose, and in his absence from any such meeting a temporary secretary shall be
chosen who shall record the proceedings thereof.
The secretary shall have charge of the stock ledger (which may,
however, be kept by any transfer agent or agents of the corporation), an
original or duplicate of which shall at all times during the usual hours for
business be open to the examination of every stockholder at the
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<PAGE> 9
principal office of the corporation. The secretary shall have such other duties
and powers as may be designated from time to time by the board of directors or
by the chief executive officer.
The treasurer shall be in charge of the funds and valuable papers of
the corporation and shall have such other duties and powers as may be designated
from time to time by the board of directors, by the chief executive officer or
by the chief financial officer.
ARTICLE XX
Resignations and Removals
Any director or officer may resign at any time by delivering his
resignation in writing to the president or the secretary or to a meeting of the
board of directors, and such resignation shall take effect at the time stated
therein, or if no time be so stated then upon its delivery, and without the
necessity of its being accepted unless the resignation shall so state. Except as
otherwise fixed pursuant to the provisions of Article FOURTH of the certificate
of incorporation relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any director may
be removed from office, without cause, only by the affirmative vote of the
holders of 66 2/3% of the combined voting power of the then outstanding shares
of stock entitled to vote generally in the election of directors, voting
together as a single class. The board of directors may at any time, by vote of a
majority of the directors present and voting, terminate or modify the authority
of any agent.
ARTICLE XXI
Vacancies
Except as otherwise fixed pursuant to the provisions of Article FOURTH
of the certificate of incorporation relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances,
newly created directorships resulting from any increase in the number of
directors and any vacancies on the board of directors resulting from death,
resignation, disqualification, removal or other cause shall be filled solely by
the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the board of directors, or by a sole remaining
director. Any director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the Class of directors in
which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting the board of directors shall shorten the term
of any incumbent director. If the office of any officer becomes vacant, by
reason of death, resignation, removal or disqualification, a successor may be
elected or appointed by the board of directors by vote of a majority of the
directors present and voting. Each such successor officer shall hold office for
the unexpired term, and until his successor shall be elected or appointed and
qualified, or until he sooner dies, resigns, is removed or replaced or becomes
disqualified. The board of directors shall have and may exercise all its powers
notwithstanding the existence of one or more vacancies in the whole board,
subject to any requirements of law or of the certificate of incorporation or of
these by-laws as to the number of directors required for a quorum or for any
vote, resolution or other action.
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<PAGE> 10
ARTICLE XXII
Waiver of Notice
Whenever any notice is required to be given by law or under the
provisions of the certificate of incorporation or of these by-laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein or otherwise fixed for the
meeting or other event for which notice is waived, shall be deemed equivalent to
such notice.
ARTICLE XXIII
Certificates of Stock
Every holder of stock in the corporation shall be entitled to have a
certificate, signed by, or in the name of the corporation by, the president or a
vice president and by the treasurer or an assistant treasurer or the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by him in the corporation; provided, however, that where such certificate
is signed (1) by a transfer agent or an assistant transfer agent or (2) by a
transfer clerk acting on behalf of the corporation and a registrar, the
signature of the president, vice president, treasurer, assistant treasurer,
secretary or assistant secretary may be facsimile. In case any officer or
officers who shall have signed or whose facsimile signature or signatures shall
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the corporation, such certificate or certificates may nevertheless be adopted by
the corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the corporation, and any such issue and delivery shall be regarded as an
adoption by the corporation of such certificate or certificates. Certificates of
stock shall be in such form as shall, in conformity to law, be prescribed from
time to time by the board of directors.
ARTICLE XXIV
Transfer of Shares of Stock
Subject to applicable restrictions upon transfer, if any, title to a
certificate of stock and to the shares represented thereby shall be transferred
only by delivery of the certificate properly endorsed, or by delivery of the
certificate accompanied by a written assignment of the same, or a written power
of attorney to sell, assign or transfer the same or the shares represented
thereby, properly executed; but the person registered on the books of the
corporation as the owner of shares shall have the exclusive right to receive the
dividends thereon and, except as provided in Article VII with respect to stock
which has been pledged, to vote thereon as such owner or to give any consent
permitted by law, and shall be held liable for such calls and assessments, if
any, as may lawfully be made thereon, and except only as may be required by law,
may in all respects be treated by the corporation as the exclusive owner
thereof. It shall be the duty of each stockholder to notify the corporation of
his post office address.
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<PAGE> 11
ARTICLE XXV
Transfer Books; Record Date
The board of directors shall have power to close the stock transfer
books of the corporation for a period not exceeding fifty days preceding the
date of any meeting of stockholders or the date for payment of any dividend or
the date for the allotment of rights or the date when any change or conversion
or exchange of capital stock shall go into effect or for a period of not
exceeding fifty days in connection with obtaining the consent of stockholders
for any purpose; provided, however, that in lieu of closing the stock transfer
books as aforesaid, the board of directors may fix in advance a date, not
exceeding fifty days preceding the date of any meeting of stockholders, or any
other of the above mentioned events, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
ARTICLE XXVI
Loss of Certificates
In the case of the alleged loss or destruction or the mutilation of a
certificate of stock, a duplicate certificate may be issued in place thereof,
upon such terms in conformity with law as the board of directors may prescribe.
ARTICLE XXVII
Seal
The corporate seal of the corporation shall, subject to alteration by
the board of directors, consist of a flat-faced circular die with the word
"Delaware", together with the name of the corporation and the year of its
organization, cut or engraved thereon. The corporate seal of the corporation may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE XXVIII
Execution of Papers
Except as the board of directors may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the corporation shall be signed by the president or by
one of the vice presidents or by the treasurer.
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<PAGE> 12
ARTICLE XXIX
Fiscal Year
Except as from time to time otherwise provided by the board of
directors, the fiscal year of the corporation shall terminate on the last
Saturday in January of each year.
ARTICLE XXX
Amendments
The board of directors and the stockholders shall each have the power
to adopt, alter, amend and repeal these by-laws; and any by-laws adopted by the
directors or the stockholders under the powers conferred hereby may be altered,
amended or repealed by the directors or by the stockholders; provided, however,
that these by-laws shall not be altered, amended or repealed by action of the
stockholders, and no by-law shall be adopted by action of the stockholders,
without the affirmative vote of the holders of at least 66 2/3% of the voting
power of all the shares of the corporation entitled to vote generally in the
election of directors, voting together as a single class.
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<PAGE> 1
Exhibit 10.7
(As amended through February 2, 1999)
THE TJX COMPANIES, INC.
1986 STOCK INCENTIVE PLAN
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. GENERAL PURPOSE OF THE PLAN ................................. 1
SECTION 2. PLAN ADMINISTRATION ......................................... 1
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS;
SUBSTITUTION ................................. 2
SECTION 4. ELIGIBILITY ................................................. 3
SECTION 5. LIMITATIONS ON TERM AND DATES OF AWARDS ..................... 4
SECTION 6. STOCK OPTIONS ............................................... 4
SECTION 7. STOCK APPRECIATION RIGHTS;
DISCRETIONARY PAYMENTS ....................... 7
SECTION 8. RESTRICTED STOCK; UNRESTRICTED STOCK ........................ 9
SECTION 9. DEFERRED STOCK AWARDS ....................................... 11
SECTION 10. PERFORMANCE AWARDS .......................................... 12
SECTION 11. OTHER STOCK-BASED AWARDS .................................... 13
SECTION 12. TRANSFER, LEAVE OF ABSENCE .................................. 14
SECTION 13. AMENDMENTS AND TERMINATION .................................. 15
SECTION 14. STATUS OF PLAN .............................................. 15
SECTION 15. CHANGE OF CONTROL PROVISIONS ................................ 15
SECTION 16. GENERAL PROVISIONS .......................................... 16
SECTION 17. DEFINITIONS ................................................. 17
DEFINITION OF "CHANGE OF CONTROL" ....................................... 20
</TABLE>
<PAGE> 3
THE TJX COMPANIES, INC.
1986 STOCK INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN.
The name of the plan is The TJX Companies, Inc. 1986 Stock Incentive
Plan (the "Plan"). The purpose of the Plan is to secure for The TJX Companies,
Inc. (the "Company") and its stockholders the benefit of the incentives inherent
in Common Stock ownership and the receipt of incentive awards by selected key
employees of the Company and its Subsidiaries who contribute to and will be
responsible for its continued long term growth. The Plan is intended to
stimulate the efforts of such key employees by providing an opportunity for
capital appreciation and giving suitable recognition for services which
contribute materially to the success of the Company.
SECTION 2. PLAN ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
Non-Employee Directors, who shall be appointed by the Board and who shall serve
at the pleasure of the Board.
The Committee shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and authority:
(i) to select the officers and other key employees of the Company
and its Subsidiaries to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock, Unrestricted
Stock, Deferred Stock, Performance Awards and any Other
Stock-based Awards, or any combination of the foregoing,
granted to any one or more participants;
(iii) to determine the number of shares to be covered by any Award;
(iv) to determine the terms and conditions, including restrictions,
not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards
and participants;
(v) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to
an Award shall be deferred either automatically or at the
election of the participant and whether and to what extent the
Company shall pay or credit amounts equal to interest (at
<PAGE> 4
rates determined by the Committee) or dividends or deemed
dividends on such deferrals; and
(vi) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts
and proceedings as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Award (including
related Award Agreements); to make all determinations it deems
advisable for the administration of the Plan; to decide all
disputes arising in connection with the Plan; and to otherwise
supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.
(a) Shares Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 42,000,000(1), including shares
issued in lieu of or upon reinvestment of dividends arising from Awards. For
purposes of this limitation, Awards and Stock which are forfeited, reacquired by
the Company or satisfied without the issuance of Stock shall not be counted and
such limitation shall apply only to shares which have become free of any
restrictions under the Plan, except that shares of Restricted Stock reacquired
by the Company, and shares withheld by the Company to satisfy tax withholding
requirements shall be counted to the extent required under Rule 16b-3 under the
Act or any successor rule. The maximum number of shares of Stock which may be
issued pursuant to awards of Restricted Stock or Performance Awards on or after
June 3, 1997 shall not exceed an aggregate of 6,300,000(2) shares. Subject to
the foregoing limitations in this paragraph (a), shares may be issued up to such
maximums pursuant to any type or types of Award, including Incentive Stock
Options. Shares issued under the Plan may be authorized but unissued shares or
shares reacquired by the Company.
The number of Stock Options, Stock Appreciation Rights or Performance
Awards that shall be awarded to any Participant during any consecutive
three-year period
(1) Reflects adjustments under Section 3(b) through February 2, 1999.
(2) Reflects adjustments under Section 3(b) through February 2, 1999.
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<PAGE> 5
commencing after June 3, 1997 shall be limited to 4,000,000(3) shares calculated
separately for each of Stock Options, Stock Appreciation Rights and Performance
Awards.
(b) Stock Dividends, Mergers, etc. In the event of a stock dividend,
stock split or similar change in capitalization, or extraordinary dividend or
distribution or restructuring transaction affecting the Stock, the Committee
shall make appropriate adjustments in the number and kind of shares of stock or
securities on which Awards may thereafter be granted and shall make such
adjustments in the number and kind of shares remaining subject to outstanding
Awards, and the option or purchase price in respect of such shares as it may
deem appropriate with a view toward preserving the value of outstanding awards.
In the event of any merger, consolidation, dissolution or liquidation of the
Company, the Committee in its sole discretion may, as to any outstanding Awards,
make such substitution or adjustment in the aggregate number of shares reserved
for issuance under the Plan and in the number and purchase price (if any) of
shares subject to such Awards as it may determine, or accelerate, amend or
terminate such Awards upon such terms and conditions as it shall provide (which,
in the case of the termination of the vested portion of any Award, shall require
payment or other consideration which the Committee deems equitable in the
circumstances), subject, however, to the provisions of Section 15.
(c) Substitute Awards. The Company may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances. The shares which may be delivered
under such substitute Awards shall be in addition to the maximum number of
shares provided for in Section 3(a).
SECTION 4. ELIGIBILITY.
Participants in the Plan will be such full or part time officers and
other key employees of the Company and its Subsidiaries (excluding any director
who is not a full time employee) who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries and who
are selected from time to time by the Committee, in its sole discretion. Persons
who are not employees of the
(3) Reflects adjustments under Section 3(b) through February 2, 1999.
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<PAGE> 6
Company or a subsidiary (within the meaning of Section 424 of the Code) shall
not be eligible to receive grants of Incentive Stock Options.
SECTION 5. LIMITATIONS ON TERM AND DATES OF AWARDS.
(a) Duration of Awards. Subject to Sections 16(a) and 16(c) below, no
restrictions or limitations on Awards shall extend beyond 10 years (or 10 years
and one day in the case of Non-Qualified Stock Options) from the grant date,
except that deferrals elected by participants of the receipt of Stock or other
benefits under the Plan may extend beyond such date.
(b) Latest Grant Date. No Award shall be granted after April 8, 2007,
but then outstanding Awards may extend beyond such date.
SECTION 6. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. To the extent that any option does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted to the Committee under
the Plan be so exercised, so as to disqualify the Plan or, without the consent
of the optionee, any Incentive Stock Option under Section 422 of the Code.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of grant
but shall be not less than 100% of Fair Market Value on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted and no Non-Qualified Stock Option
shall be exercisable more than ten years and one day after the date the option
is granted.
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<PAGE> 7
(c) Exercisability. Stock Options shall be exercisable at such future
time or times, whether or not in installments, as shall be determined by the
Committee at or after the grant date. The Committee may at any time accelerate
the exercisability of all or any portion of any Stock Option.
(d) Intentionally omitted.
(e) Method of Exercise. Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company specifying the number
of shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price, either by certified or bank check or other instrument or
means acceptable to the Committee or by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price. As determined by the Committee, in
its discretion, at (or, in the case of Non-Qualified Stock Options, after)
grant, payment in full or in part of the exercise price or to pay withholding
taxes (as provided in Section 16(c)) may also be made in the form of shares of
Stock not then subject to restrictions under any Company plan. An optionee shall
have the rights of a shareholder only as to shares acquired upon the exercise of
a Stock Option and not as to unexercised Stock Options. Notwithstanding anything
to the contrary contained herein, this Plan does not permit the exercise of an
option in successive stages (pyramiding) using as payment at each stage shares
which have been acquired under the option in preceding stages.
(f) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(g) Termination by Death. If an optionee's employment by the Company
and its Subsidiaries terminates by reason of death, the Stock Option may
thereafter be exercised, to the extent then exercisable (or on such accelerated
basis as the Committee shall at any time determine prior to death), by the legal
representative or legatee of the optionee, for a period of three years (or such
shorter period as the Committee shall specify at time of grant) from the date of
death or until the expiration of the stated term of the option, if earlier.
(h) Termination by Reason of Disability. Any Stock Option held by an
optionee whose employment by the Company and its Subsidiaries has terminated, or
who has been designated an inactive employee, by reason of Disability may
thereafter be exercised to the extent it was exercisable at the time of the
earlier of such termination or such designation (or on such accelerated basis as
the Committee shall at any time determine prior to such termination or
designation) for a period of three years (or such shorter
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<PAGE> 8
period as the Committee shall specify at time of grant) from the date of such
termination of employment or designation or until the expiration of the stated
term of the option, if earlier. Except as otherwise provided by the Committee at
the time of grant, the death of an optionee during the final year of such
exercise period shall extend such period for one year following death, subject
to termination on the expiration of the stated term of the option, if earlier.
The Committee shall have the authority to determine whether a participant has
been terminated or designated an inactive employee by reason of Disability.
(i) Termination by Reason of Normal Retirement. If an optionee's
employment by the Company and its Subsidiaries terminates by reason of Normal
Retirement, any Stock Option held by such optionee may thereafter be exercised
to the extent that it was then exercisable (or on such accelerated basis as the
Committee shall at any time determine) for a period of three years (or such
shorter period as the Committee shall specify at time of grant) from the date of
Normal Retirement or until the expiration of the stated term of the option, if
earlier. Except as otherwise provided by the Committee at the time of grant, the
death of an optionee during the final year of such exercise period shall extend
such period for one year following death, subject to earlier termination on the
expiration of the stated term of the option, if earlier.
(j) Termination by Reason of Special Service Retirement. If an
optionee's employment by the Company and its Subsidiaries terminates by reason
of a Special Service Retirement, any Stock Option granted on or after February
2, 1999 that is held by the optionee may thereafter be exercised (to the extent
exercisable from time to time during the extended exercise period as hereinafter
determined) for a period of three years (or such shorter period as the Committee
shall specify at time of grant) from the date of the Special Service Retirement
or until the expiration of the stated term of the option, if earlier. Except as
otherwise provided by the Committee at the time of grant, the death of an
optionee during the final year of such exercise period shall extend such period
for one year following death, subject to earlier termination on the expiration
of the stated term of the option, if earlier. For purposes of the first sentence
of this subsection (j), a Stock Option granted on or after February 2, 1999 that
is held by an optionee at the optionee's Special Service Retirement and that is
not then fully exercisable shall continue to become exercisable during the
post-retirement exercise period as though the optionee had remained employed by
the Company and its Subsidiaries during such period, or on such accelerated
basis as the Committee shall at any time determine.
(k) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and its Subsidiaries terminates for any
reason other than death, Disability, Normal Retirement, Special Service
Retirement or for Cause, any Stock Option held by such optionee may thereafter
be exercised to the extent
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it was exercisable on the date of termination of employment (or on such
accelerated basis as the Committee shall determine at or after grant) for a
period of three months (or such longer period up to three years as the Committee
shall specify at or after grant) from the date of termination of employment or
until the expiration of the stated term of the option, if earlier. If an
optionee's employment terminates for Cause, the unexercised portion of any Stock
Option then held by the optionee shall immediately terminate.
(1) Form of Settlement. Subject to Section 16(a) and Section 16(c)
below, shares of Stock issued upon exercise of a Stock Option shall be free of
all restrictions under the Plan, except as provided in the following sentence.
The Committee may provide at time of grant that the shares to be issued upon
the exercise of a Stock Option shall be in the form of Restricted Stock or
Deferred Stock, or may reserve the right to so provide after time of grant.
SECTION 7. STOCK APPRECIATION RIGHTS; DISCRETIONARY PAYMENTS.
(a) Nature of Stock Appreciation Right. A Stock Appreciation Right is
an Award entitling the recipient to receive an amount in cash or shares of Stock
(or in a form of payment permitted under paragraph (e) below) or a combination
thereof having a value equal to (or if the Committee shall so determine at time
of grant, less than) the excess of the Fair Market Value of a share of Stock on
the date of exercise over the Fair Market Value of a share of Stock on the date
of grant (or over the option exercise price, if the Stock Appreciation Right was
granted in tandem with a Stock Option) multiplied by the number of shares with
respect to which the Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of payment.
(b) Grant and Exercise of Stock Appreciation Rights. Stock
Appreciation Rights may be granted in tandem with, or independently of, any
Stock Option granted under the Plan. In the case of a Stock Appreciation Right
granted in tandem with a Non-Qualified Stock Option, such Right may be granted
either at or after the time of the grant of such option. In the case of a Stock
Appreciation Right granted in tandem with an Incentive Stock Option, such Right
may be granted only at the time of the grant of the option.
A Stock Appreciation Right or applicable portion thereof granted in
tandem with a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that a
Stock Appreciation Right granted with respect to less than the full number of
shares covered by a related Stock Option shall not be reduced until the exercise
or termination of the related Stock Option exceeds the number of shares not
covered by the Stock Appreciation Right.
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(c) Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Stock Options
shall be exercisable only at such time or times and to the
extent that the related Stock Options shall be exercisable.
(ii) Upon the exercise of a Stock Appreciation Right, the
applicable portion of any related Stock Option shall be
surrendered.
(iii) Stock Appreciation Rights granted in tandem with a Stock
Option shall be transferable only with such Stock Option.
Other Stock Appreciation Rights shall not be transferable
otherwise than by will or the laws of descent and
distribution. All Stock Appreciation Rights shall be
exercisable during the participant's lifetime only by the
participant or the participant's legal representative.
(d) Discretionary Payments. Notwithstanding that a Stock Option at the
time of exercise shall not be accompanied by a related Stock Appreciation Right,
if the market price of the shares subject to such Stock Option exceeds the
exercise price of such Stock Option at the time of its exercise, the Committee
may, in its discretion, cancel such Stock Option, in which event the Company
shall pay to the person exercising such Stock Option an amount equal to the
difference between the Fair Market Value of the Stock to have been purchased
pursuant to such exercise of such Stock Option (determined on the date the Stock
Option is cancelled) and the aggregate consideration to have been paid by such
person upon such exercise. Such payment shall be by check, bank draft or in
Stock (or in a form of payment permitted under paragraph (e) below) having a
Fair Market Value (determined on the date the payment is to be made) equal to
the amount of such payments or any combination thereof, as determined by the
Committee. The Committee may exercise its discretion under the first sentence of
this paragraph (d) only in the event of a written request of the person
exercising the option, which request shall not be binding on the Committee.
(e) Settlement in the Form of Restricted Shares or Rights to Receive
Deferred Stock. Subject to Sections 16(a) and 16(c) below, shares of Stock
issued upon exercise of a Stock Appreciation Right or as a Discretionary Payment
shall be free of all restrictions under the Plan, except as provided in the
following sentence. The Committee may provide at the time of grant in the case
of a Stock Appreciation Right (and at the time of payment in the case of a
Discretionary Payment) that such shares shall be in the form of shares of
Restricted Stock or rights to acquire Deferred Stock, or in the
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case of a Stock Appreciation Right may reserve the right to so provide at any
time after the time of grant. Any such shares and any shares subject to rights
to acquire Deferred Stock shall be valued at Fair Market Value on the date of
exercise of the Stock Appreciation Right or the date the Stock Option is
cancelled in the case of Discretionary Payments.
SECTION 8. RESTRICTED STOCK; UNRESTRICTED STOCK.
(a) Nature of Restricted Stock Award. A Restricted Stock Award is an
Award entitling the recipient to acquire shares of Stock for a purchase price
(which may be zero), subject to such conditions, including a Company right
during a specified period or periods to repurchase such shares at their original
purchase price (or to require forfeiture of such shares, if the purchase price
was zero) upon participant's termination of employment, as the Committee may
determine at the time of grant.
(b) Award Agreement. Unless the Committee shall otherwise determine, a
participant who is granted a Restricted Stock Award shall have no rights with
respect to such Award unless the participant shall have accepted the Award
within 60 days (or such shorter date as the Committee may specify) following the
award date by making payment to the Company by certified or bank check or other
instrument acceptable to the Committee in an amount equal to the specified
purchase price, if any, of the shares covered by the Award and by executing and
delivering to the Company a Restricted Stock Award Agreement in such form as the
Committee shall determine.
(c) Rights as a Shareholder. Upon complying with paragraph (b) above,
a participant shall have all the rights of a shareholder with respect to the
Restricted Stock including voting and dividend rights, subject to
nontransferability restrictions and Company repurchase or forfeiture rights
described in this Section and subject to any other conditions contained in the
Award Agreement. Unless the Committee shall otherwise determine, certificates
evidencing shares of Restricted Stock shall remain in the possession of the
Company until such shares are free of any restrictions under the Plan.
(d) Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment with the
Company and its subsidiaries for any reason such shares shall be resold to the
Company at their purchase price, or forfeited to the Company if the purchase
price was zero, except as set forth below.
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(i) The Committee at the time of grant shall specify the date or
dates (which may depend upon or be related to the attainment
of performance goals and other conditions) on which the
nontransferability of the Restricted Stock and the obligation
to resell such shares to the Company shall lapse. However, no
grants of Restricted Stock made after September 8, 1993 shall
specify such a date which is less than three years from the
date of grant, except that (i) such a date may be one year or
greater in the case of Restricted Stock granted subject to the
attainment of performance goals, (ii) future shares of
Restricted Stock may be granted which specify full vesting in
no less than three years and partial vesting at a rate no
faster than one-third of such shares each year, and (iii)
shares of Restricted Stock may be granted which specify any
vesting date provided that on a cumulative basis such shares
granted after September 8, 1993, when no longer subject to
restrictions under the Plan, do not exceed 800,000(4) shares.
The Committee at any time may accelerate such date or dates
and otherwise waive or, subject to Section 13, amend any
conditions of the Award.
(ii) Except as may otherwise be provided in the Award Agreement, in
the event of termination of employment by the Company and its
Subsidiaries for any reason (including death), a participant
or the participant's legal representative shall offer to
resell to the Company, at the price paid therefor, all
Restricted Stock, and the Company shall have the right to
purchase the same at such price, or if the price was zero to
require forfeiture of the same, provided that except as
provided in the Award Agreement, the Company must exercise
such right of repurchase or forfeiture not later than the 60th
day following such termination of employment.
(e) Waiver, Deferral and Reinvestment of Dividends. The Restricted
Stock Award Agreement may require or permit the immediate payment, waiver,
deferral or investment of dividends paid on the Restricted Stock.
(f) Unrestricted Stock. The Committee may, in its sole discretion,
grant or sell to any participant shares of Stock free of restrictions under the
Plan ("Unrestricted Stock"). Shares of Unrestricted Stock may be granted or sold
as described in the preceding sentence in respect of past services or other
valid consideration.
(4) Reflects adjustments under Section 3(b) through February 2, 1999.
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SECTION 9. DEFERRED STOCK AWARDS.
(a) Nature of Deferred Stock Award. A Deferred Stock Award is an award
entitling the recipient to acquire shares of Stock without payment in one or
more installments at a future date or dates, all as determined by the Committee.
The Committee may also condition such acquisition on the attainment of specified
performance goals.
(b) Award Agreement. Unless the Committee shall otherwise determine, a
participant who is granted a Deferred Stock Award shall have no rights with
respect to such Award unless within 60 days of the grant of such Award or such
shorter period as the Committee may specify, the participant shall have accepted
the Award by executing and delivering to the Company a Deferred Stock Award
Agreement.
(c) Restrictions on Transfer. Deferred Stock Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered. Rights with respect to such Awards shall be exercisable
during the participant's lifetime only by the participant or the participant's
legal representative.
(d) Rights as a Shareholder. A participant receiving a Deferred Stock
Award will have rights of a shareholder only as to shares actually received by
the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate for shares of Deferred Stock only upon
satisfaction of all conditions therefor specified in the Deferred Stock Award
Agreement.
(e) Termination. Except as may otherwise be provided by the Committee
at any time prior to termination of employment, a participant's rights in all
Deferred Stock Awards shall automatically terminate upon the participant's
termination of employment by the Company and its Subsidiaries for any reason
(including death).
(f) Acceleration, Waiver, etc. At any time prior to the participant's
termination of employment the Committee may in its discretion accelerate, waive,
or, subject to Section 13, amend any or all of the restrictions or conditions
imposed under any Deferred Stock Award.
(g) Payments in Respect of Deferred Stock. Without limiting the right
of the Committee to specify different terms, the Deferred Stock Award Agreement
may either make no provisions for, or may require or permit the immediate
payment, deferral or investment of amounts equal to, or less than, any cash
dividends which would have been
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payable on the Deferred Stock had such Stock been outstanding, all as determined
by the Committee in its sole discretion.
SECTION 10. PERFORMANCE AWARDS.
(a) Nature of Performance Awards. A Performance Award is an award
entitling the recipient to acquire cash or shares of Stock, or a combination of
cash and Stock, upon the attainment of specified performance goals. If the
grant, vesting, or exercisability of a Stock Option, SAR, Restricted Stock,
Deferred Stock or Other Stock-Based Award is conditioned upon attainment of a
specified performance goal or goals, it shall be treated as a Performance Award
for purposes of this Section and shall be subject to the provisions of this
Section in addition to the provisions of the Plan applicable to such form of
Award.
(b) Qualifying and Nonqualifying Performance Awards. Performance
Awards may include Awards intended to qualify for the performance-based
compensation exception under Section 162(m)(4)(C) of the Code ("Qualifying
Awards") and Awards not intended so to qualify ("Nonqualifying Awards").
(c) Terms of Performance Awards. The Committee in its sole discretion
shall determine whether and to whom Performance Awards are to be granted, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the Award. Performance Awards may be granted independently or in
connection with the granting of other Awards. In the case of a Qualifying Award
(other than a Stock Option or SAR), the following special rules shall apply: (i)
the Committee shall preestablish the performance goals and other material terms
of the Award not later than the latest date permitted under Section 162(m) of
the Code; (ii) the performance goal or goals fixed by the Committee in
connection with the Award shall be based exclusively on one or more Approved
Performance Criteria; (iii) no payment (including, for this purpose, vesting or
exercisability where vesting or exercisability, rather than the grant of the
award, is linked to satisfaction of performance goals) shall be made unless the
preestablished performance goals have been satisfied and the Committee has
certified (pursuant to Section 162(m) of the Code) that they have been
satisfied; (iv) no payment shall be made in lieu or in substitution for the
Award if the preestablished performance goals are not satisfied (but this clause
shall not limit the ability of the Committee or the Company to provide other
remuneration to the affected Participant, whether or not under the Plan, so long
as the payment of such remuneration would not cause the Award to fail to be
treated as having been contingent on the preestablished performance goals) and
(v) in all other respects the Award shall be construed and administered
consistent with the intent that any
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compensation under the Award be treated as performance-based compensation under
Section 162(m)(4)(C) of the Code.
(d) Award Agreement. Unless the Committee shall otherwise determine, a
participant shall have no rights with respect to a Performance Award unless
within 60 days of the grant of such Award or such shorter period as the
Committee may specify, the participant shall have accepted the Award by
executing and delivering to the Company a Performance Award Agreement.
(e) Rights as a Shareholder. A participant receiving a Performance
Award will have rights of a shareholder only as to shares actually received by
the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Award (to the extent the Award provides for the
delivery of shares of Stock) only upon satisfaction of all conditions therefor
specified in the Performance Award Agreement.
(f) Termination. Except as may otherwise be provided by the Committee
(consistent with Section 162(m), in the case of a Qualifying Award) at any time
prior to termination of employment, a participant's rights in all Performance
Awards shall automatically terminate upon the participant's termination of
employment by the Company and its Subsidiaries for any reason (including death).
(g) Acceleration, Waiver, etc. At any time prior to the participant's
termination of employment by the Company and its Subsidiaries, the Committee may
in its sole discretion (but subject to Section 162(m), in the case of a
Qualifying Award) accelerate, waive or, subject to Section 13, amend any or all
of the goals, restrictions or conditions imposed under any Performance Award.
SECTION 11. OTHER STOCK-BASED AWARDS.
(a) Nature of Awards. The Committee may grant other Awards under which
Stock is or may in the future be acquired ("Other Stock-based Awards").
(b) Purchase Price; Form of Payment. The Committee may determine the
consideration, if any, payable upon the issuance or exercise of an Other
Stock-based Award. The Committee may permit payment by certified check or bank
check or other instrument acceptable to the Committee or by surrender of other
shares of Stock (excluding shares then subject to restrictions under the Plan).
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(c) Forfeiture of Awards; Repurchase of Stock; Acceleration or Waiver
of Restrictions. The Committee may determine the conditions under which an
Other Stock-based Award shall be forfeited or, in the case of an Award involving
a payment by the recipient, the conditions under which the Company may or must
repurchase such Award or related Stock. At any time the Committee may in its
sole discretion accelerate, waive or, subject to Section 13, amend any or all of
the limitations or conditions imposed under any Other Stock-based Award.
(d) Award Agreements. Unless the Committee shall otherwise determine,
a participant shall have no rights with respect to any Other Stock-based Award
unless within 60 days after the grant of such Award (or such shorter period as
the Committee may specify) the participant shall have accepted the Award by
executing and delivering to the Company an Other Stock-based Award Agreement.
(e) Nontransferability. Other Stock-based Awards may not be sold,
assigned, transferred, pledged or encumbered except as may be provided in the
Other Stock-based Award Agreement. However, in no event shall any Other
Stock-based Award be transferred other than by will or by the laws of descent
and distribution or be exercisable during the participant's lifetime by other
than the participant or the participant's legal representative.
(f) Rights as a Shareholder. A recipient of any Other Stock-based
Award will have rights of a shareholder only at the time and to the extent, if
any, specified by the Committee in the Other Stock-based Award Agreement.
(g) Deemed Dividend Payments; Deferrals. Without limiting the right of
the Committee to specify different terms at or after grant, an Other Stock-based
Award Agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends or deemed dividends payable or deemed payable on Stock
subject to the Award.
SECTION 12. TRANSFER, LEAVE OF ABSENCE.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary
or from the Company to a Subsidiary, or from one Subsidiary to
another;
(b) an approved leave of absence for military service or sickness,
or for any other purpose approved by the Company, if the
employee's right to
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reemployment is guaranteed either by a statute or by contract
or under the policy pursuant to which the leave of absence was
granted or if the Committee otherwise so provides in writing.
For purposes of the Plan, the employees of a Subsidiary of the Company shall be
deemed to have terminated their employment on the date on which such Subsidiary
ceases to be a Subsidiary of the Company.
SECTION 13. AMENDMENTS AND TERMINATION.
The Board may at any time amend or discontinue the Plan and the
Committee may at any time amend or cancel any outstanding Award for the purpose
of satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder's
consent. However, no such amendment shall be effective unless approved by
stockholders if it would (i) reduce the exercise price of any option previously
granted hereunder or (ii) cause the Plan to fail to satisfy the incentive stock
option requirements of the Code or the requirements of Rule 16b-3 or any
successor rule under the Act as in effect on the date of such amendment.
Notwithstanding any provision of this Plan, the Board or the Committee may at
any time adopt any subplan or otherwise grant Stock Options or other Awards
under this Plan having terms consistent with applicable foreign tax or other
foreign regulatory requirements or laws; provided, however, that no person
subject to the restrictions of Section 16(b) of the Act may be eligible for or
be granted any such Stock Options or other Awards if such eligibility or grant
would cause the Plan to fail to satisfy the requirements of Rule 16b-3 or any
successor rule under the Act as in effect on the applicable date.
SECTION 14. STATUS OF PLAN.
With respect to the portion of any Award which has not been exercised
and any payments in cash, stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
SECTION 15. CHANGE OF CONTROL PROVISIONS.
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As used herein, a Change of Control and related definitions shall have
the meanings set forth in Exhibit A to this Plan.
Upon the occurrence of a Change of Control:
(i) Each Stock Option and Stock Appreciation Right shall
automatically become fully exercisable unless the Committee
shall otherwise expressly provide at the time of grant.
(ii) Restrictions and conditions on Restricted Stock, Deferred
Stock, Performance Units and Other Stock-based Awards shall
automatically be deemed waived only if and to the extent, if
any, specified (whether at or after time of grant) by the
Committee.
The Committee may at any time prior to or after a Change of Control accelerate
the exercisability of any Stock Options and Stock Appreciation Rights and may
waive restrictions, limitations and conditions on Restricted Stock, Deferred
Stock, Performance Units and Other Stock-based Awards to the extent it shall in
its sole discretion determine.
SECTION 16. GENERAL PROVISIONS.
(a) No Distribution; Compliance with Legal Requirements, etc. The
Committee may require each person acquiring shares pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board of Directors from adopting other
or additional compensation arrangements, subject to stockholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases. The adoption of the Plan does not confer
upon any employee any right to continued employment with the Company or a
Subsidiary, nor does it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.
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(c) Tax Withholding, etc. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant. The Company may withhold or otherwise administer the Plan to comply
with tax obligations under any applicable foreign laws.
The Committee may provide, in respect of any transfer of Stock under an
Award, that if and to the extent withholding of any Federal, state or local tax
is required in respect of such transfer or vesting, the participant may elect,
at such time and in such manner as the Committee shall prescribe, to (i)
surrender to the Company Stock not then subject to restrictions under any
Company plan or (ii) have the Company hold back from the transfer or vesting
Stock having a value calculated to satisfy such withholding obligation.
(d) Deferral of Awards. Participants may elect to defer receipt of
Awards or vesting of Awards only in such cases and to the extent that the
Committee shall determine at or after the grant date.
SECTION 17. DEFINITIONS.
The following terms shall be defined as set forth below:
(a) "Act" means the Securities Exchange Act of 1934.
(b) "Approved Performance Criteria" means criteria based on any
one or more of the following (on a consolidated, divisional,
line of business, geographical or area of executive's
responsibilities basis): one or more items of or within (i)
sales, revenues, assets or expenses; (ii) earnings, income or
margins, before or after deduction for all or any portion of
interest, taxes, depreciation, or amortization, whether or not
on a continuing operations and aggregate or per share basis;
(iii) return on investment, capital, assets, sales or
revenues; and (iv) stock price.
(c) "Award" or "Awards" except where referring to a particular
category of grant under the Plan shall include Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards,
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Unrestricted Stock Awards, Deferred Stock Awards, Performance
Awards and Other Stock-based Awards.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony,
or a participant's willful misconduct or dishonesty, any of
which is directly harmful to the business or reputation of the
Company or any Subsidiary.
(f) "Code" means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and
interpretations.
(g) "Committee" means the Committee referred to in Section 2. If
at any time no Committee shall be in office, the functions of
the Committee shall be exercised by the Board.
(h) "Deferred Stock Award" is defined in Section 9(a).
(i) "Disability" means disability as determined in accordance with
standards and procedures similar to those used under the
Company's long term disability program.
(j) "Fair Market Value" on any given date means the last sale
price regular way at which Stock is traded on such date as
reflected in the New York Stock Exchange Composite
Transactions Index or, where applicable, the value of a share
of Stock as determined by the Committee in accordance with the
applicable provisions of the Code.
(k) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" as defined in
the Code.
(l) "Non-Employee Director" shall have the meaning set forth in
Rule 16b-3(b)(3) promulgated under the Act, or any successor
definition under the Act.
(m) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(n) "Normal Retirement" means retirement from active employment
with the Company and its Subsidiaries at or after age 65 with
at least five years of
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service for the Company and its Subsidiaries as specified in
The TJX Companies, Inc. Retirement Plan.
(o) "Other Stock-based Award" is defined in Section 11(a).
(p) "Performance Award" is defined in Section 10(a).
(q) "Restricted Stock Award" is defined in Section 8(a).
(r) "Special Service Retirement" means retirement from active
employment with the Company and its Subsidiaries (i) at or
after age 60 with at least twenty years of service for the
Company and its Subsidiaries, or (ii) at or after age 65 with
at least ten years of service for the Company and its
Subsidiaries. The term "Special Service Retirement" applies
only to Stock Options granted on or after February 2, 1999.
(s) "Stock" means the Common Stock, $1.00 par value, of the
Company, subject to adjustments pursuant to Section 3.
(t) "Stock Appreciation Right" means a right described in Section
7(a) and granted, either independently of other Awards or in
tandem with the grant of a Stock Option.
(u) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 6.
(v) "Subsidiary" means any corporation or other entity (other than
the Company) in an unbroken chain beginning with the Company
if each of the entities (other than the last entity in the
unbroken chain) owns stock or other interests possessing 50%
or more of the total combined voting power of all classes of
stock or other interest in one of the other corporations or
other entities in the chain.
(w) "Unrestricted Stock Award" is defined in Section 8(f).
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EXHIBIT A
DEFINITION OF "CHANGE OF CONTROL"
"Change of Control" shall mean the occurrence of any one of the
following events:
(a) there occurs a change of control of the Company of a
nature that would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") or in any
other filing under the Exchange Act; provided, however, that if the
Participant or a Participant Related Party is the Person or a member of
a group constituting the Person acquiring control, a transaction shall
not be deemed to be a Change of Control as to a Participant unless the
Committee shall otherwise determine prior to such occurrence; or
(b) any Person other than the Company, any wholly-owned
subsidiary of the Company, or any employee benefit plan of the Company
or such a subsidiary becomes the owner of 20% or more of the Company's
Common Stock and thereafter individuals who were not directors of the
Company prior to the date such Person became a 20% owner are elected as
directors pursuant to an arrangement or understanding with, or upon the
request of or nomination by, such Person and constitute at least 1/4 of
the Company's Board of Directors; provided, however, that unless the
Committee shall otherwise determine prior to the acquisition of such
20% ownership, such acquisition of ownership shall not constitute a
Change of Control as to a Participant if the Participant or a
Participant Related Party is the Person or a member of a group
constituting the Person acquiring such ownership; or
(c) there occurs any solicitation or series of solicitations
of proxies by or on behalf of any Person other than the Company's Board
of Directors and thereafter individuals who were not directors of the
Company prior to the commencement of such solicitation or series of
solicitations are elected as directors pursuant to an arrangement or
understanding with, or upon the request of or nomination by, such
Person and constitute at least 1/4 of the Company's Board of Directors;
or
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(d) the Company executes an agreement of acquisition, merger
or consolidation which contemplates that (i) after the effective date
provided for in such agreement, all or substantially all of the
business and/or assets of the Company shall be owned, leased or
otherwise controlled by another Person and (ii) individuals who are
directors of the Company when such agreement is executed shall not
constitute a majority of the board of directors of the survivor or
successor entity immediately after the effective date provided for in
such agreement; provided, however, that unless otherwise determined by
the Committee, no transaction shall constitute a Change of Control as
to a Participant if, immediately after such transaction, the
Participant or any Participant Related Party shall own equity
securities of any surviving corporation ("Surviving Entity") having a
fair value as a percentage of the fair value of the equity securities
of such Surviving Entity greater than 125% of the fair value of the
equity securities of the Company owned by the Participant and any
Participant Related Party immediately prior to such transaction,
expressed as a percentage of the fair value of all equity securities of
the Company immediately prior to such transaction (for purposes of this
paragraph ownership of equity securities shall be determined in the
same manner as ownership of Common Stock); and provided, further, that,
for purposes of this paragraph (d), if such agreement requires as a
condition precedent approval by the Company's shareholders of the
agreement or transaction, a Change of Control shall not be deemed to
have taken place unless and until such approval is secured (but upon
any such approval, a Change of Control shall be deemed to have occurred
on the date of execution of such agreement).
In addition, for purposes of this Exhibit A the following terms have
the meanings set forth below:
"Common Stock" shall mean the then outstanding Common Stock of the
Company plus, for purposes of determining the stock ownership of any Person, the
number of unissued shares of Common Stock which such Person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall
not include shares of Preferred Stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board of Directors of the Company shall expressly so determine in any future
transaction or transactions.
-21-
<PAGE> 24
A Person shall be deemed to be the "owner" of any Common Stock:
(i) of which such Person would be the "beneficial owner," as
such term is defined in Rule 13d-3 promulgated by the Securities and
Exchange Commission (the "Commission") under the Exchange Act, as in
effect on March 1, 1989; or
(ii) of which such Person would be the "beneficial owner" for
purposes of Section 16 of the Exchange Act and the rules of the
Commission promulgated thereunder, as in effect on March 1, 1989; or
(iii) which such Person or any of its affiliates or associates
(as such terms are defined in Rule 12b-2 promulgated by the Commission
under the Exchange Act, as in effect on March 1, 1989) has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants or options or otherwise.
"Person" shall have the meaning used in Section 13(d) of the Exchange
Act, as in effect on March 1, 1989.
A "Participant Related Party" shall mean, with respect to a
Participant, any affiliate or associate of the Participant other than the
Company or a Subsidiary of the Company. The terms "affiliate" and "associate"
shall have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act
(the term "registrant" in the definition of "associate" meaning, in this case,
the Company).
"Participant" means a participant in the Plan.
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<PAGE> 1
EXHIBIT 10.9
THE TJX COMPANIES, INC.
GENERAL DEFERRED COMPENSATION PLAN
(1998 RESTATEMENT)
FIRST AMENDMENT
The TJX Companies, Inc. hereby amends its General Deferred Compensation
Plan (1998 Restatement), effective as of January 1, 1999, by adding thereto the
following Exhibit B:
"EXHIBIT B
Reference is made to the Company's Executive Savings Plan (the
"ESP"), under which nonqualified deferrals by eligible employees of the
Company, and additional Company credits, are credited to a memorandum
account maintained by the Company and notionally invested in one or
more mutual funds or other investments pending distribution or
withdrawal. Each Participant for whom one or more Deferred Accounts are
maintained under the Plan as of January 30, 1999 will have a one-time
opportunity to elect, within such period as the E.C.C. or its delegates
may determine (but not later than March 31, 1999), to have the
Participant's "eligible balance" or any "eligible portion" thereof (as
those terms are hereinafter defined) treated as having been credited
effective March 31, 1999 under the ESP and thereafter governed
exclusively by the terms of the ESP. The Deferred Account of a
Participant who makes an election under this Exhibit B shall be reduced
as of March 31, 1999 by the amount treated as having been transferred
to the ESP. Each election under this Exhibit B shall be irrevocable
when made and shall be made in accordance with such procedures as the
E.C.C. or its delegates may determine. For purposes of this Exhibit B,
a Participant's "eligible balance" includes all amounts credited to the
Participant's Deferred Accounts on January 30, 1999 (but excluding, for
the avoidance of doubt, deferrals under MIP for fiscal 1999 or similar
amounts that are later credited as of January 30, 1999), and an
"eligible portion" is any portion of the eligible balance that is
attributable to deferrals for one or more fiscal years of the Company.
For the avoidance of doubt, a Participant shall not be entitled to
elect the transfer described in this Exhibit B with respect to less
than all of the deferrals (and notional interest with respect thereto)
for a fiscal year."
IN WITNESS WHEREOF, The TJX Companies, Inc. has caused this instrument
of amendment to be executed by its duly authorized officer this 8th day of
March, 1999.
THE TJX COMPANIES, INC.
By: /s/ Donald G. Campbell
--------------------------
<PAGE> 2
THE TJX COMPANIES, INC.
GENERAL DEFERRED COMPENSATION PLAN
(1998 Restatement)
Attached is a true copy of the TJX Companies, Inc. General Deferred
Compensations Plan (1998 Restatement) (the "Plan") as in effect prior to the
First Amendment to the Plan.
THE TJX COMPANIES, INC.
By: /s/ Donald G. Campbell
--------------------------
Date: March 8th, 1999
<PAGE> 3
THE TJX COMPANIES, INC.
GENERAL DEFERRED COMPENSATION PLAN
(1998 Restatement)
<PAGE> 4
THE TJX COMPANIES, INC.
GENERAL DEFERRED COMPENSATION PLAN
<TABLE>
<S> <C>
1. Purpose .............................................................. 1
2. Definitions .......................................................... 1
3. Administration ....................................................... 2
4. Deferral of Compensation ............................................. 3
5. Establishment of Deferred Account .................................... 5
6. Payment of Deferred Compensation ..................................... 5
7. General Provisions ................................................... 7
</TABLE>
<PAGE> 5
THE TJX COMPANIES, INC.
GENERAL DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of The TJX Companies, Inc. General Deferred
Compensation Plan is to provide a means for selected participants to defer the
payment of compensation. Insofar as eligibility to participate in the Plan
extends to employees, it shall be limited to a select group of management or
highly compensated employees with the intention that the Plan at all times
qualify as an exempt "top hat" plan for purposes of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
2. Definitions.
A. "Company" shall mean The TJX Companies, Inc. and its
subsidiaries, except that as used in Exhibit A the term
"Company" shall mean The TJX Companies, Inc. As used in the
preceding sentence and in Exhibit A, "subsidiary" means any
corporation or other entity 50% or more of the total combined
voting power of all classes of stock or other interests of
which are owned, directly or indirectly, by The TJX Companies,
Inc.
B. "Deferred Compensation" shall mean "Eligible Compensation",
the payment of which has been deferred by a "Participant".
C. "Director" shall mean a member of the Board of Directors of
The TJX Companies, Inc.
D. "E.C.C." shall mean the Executive Compensation Committee of
the Board of Directors of The TJX Companies, Inc.
E. "Eligible Compensation" shall mean any of the following
payable to a Participant: (i) base salary, (ii) cash bonuses
pursuant to an annual or long-term incentive plan of the
Company, (iii) in the case of Directors, annual retainers
and/or meeting fees, and (iv) and, to the extent provided by
the E.C.C., other cash compensation.
F. "Eligible Person" shall mean (i) an employee of the Company
who has been selected by the E.C.C. as eligible to defer
compensation, or (ii) a Director.
G. "Interest Rate" for a Plan Year (the "Plan Year of reference")
shall be determined as follows. First, there shall be
determined for each month of the preceding Plan Year a rate
equal to the yield (as quoted in the Wall Street Journal on
the first Monday of the month) upon the issue of United States
Treasury Notes which has a period remaining to maturity of not
less than, but
<PAGE> 6
closest to, ten years after the first day of such month. If
there is no such quote for a month, the E.C.C. shall determine
a rate of interest for the month. The twelve rates so
determined for the preceding Plan Year shall then be averaged,
and the average so determined shall be the Interest Rate for
the Plan Year of reference.
H. "Participant" shall mean an Eligible Person who has elected to
defer compensation in accordance with the Plan.
I. "Plan" shall mean The TJX Companies, Inc. General Deferred
Compensation Plan as it may be amended from time to time.
J. "Plan Year" shall mean the calendar year.
K. "Retirement" shall mean retirement at or after age 55 under
the provisions of The TJX Companies, Inc. Retirement Plan as
now in effect or as hereafter amended.
L. "Termination Date" shall mean (i) in the case of an employee
Participant, the date of severance of the Participant's
employment with the Company, whether by death, disability,
Retirement, resignation, discharge, or otherwise or (ii) in
the case of a Director Participant, the date the Participant
ceases to be a member of the Board of Directors of The TJX
Companies, Inc.
3. Administration. This Plan shall be administered by the E.C.C. which,
in addition to the authority, power, and duty expressly set forth in the Plan,
shall have the discretionary authority, power, and duty, subject to the
provisions of the Plan, to (A) make rules and regulations for the deferral of
compensation, the designation of beneficiaries, and the payment of Deferred
Compensation, (B) interpret the Plan, and (C) make any other determinations that
it believes necessary or advisable for the administration of the Plan. Decisions
and determinations made by the E.C.C. shall be final and binding upon all
persons.
The Plan as it applies to employees of the Company is intended to be a
"pension plan" (within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is unfunded for ERISA
and tax purposes and that qualifies for the exemptions described in ERISA
Sections 201(a)(2), 301(a)(3) and 401(a)(1). The E.C.C. shall be the "plan
administrator" of the Plan and shall have discretion to construe its terms and
determine each Eligible Participant's or Beneficiary's eligibility for deferrals
or benefits hereunder. If any person claims any benefit hereunder, the E.C.C.
shall make and communicate its decision with respect to the claim within 90 days
from the date the claim was received. Where special circumstances require
additional time for processing the claim, the ninety-day response period may be
extended by the E.C.C. to 180 days. If the E.C.C. does not render a written
determination prior to the expiration of such 90-day (or 180-day) period,
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<PAGE> 7
the claim will be deemed denied. If a claim hereunder is denied, the claimant
may, within 60 days of such denial, appeal the denial by written request for
review delivered to the Board of Directors of The TJX Companies, Inc. or its
designee, which request may include a request to review pertinent documents and
to submit issues and comments in writing. The Board of Directors or its designee
shall render a decision on the appeal within 60 days (or, if special
circumstances require an extension of the time for processing, 120 days) after
receipt of the request for review; but if no written decision is rendered within
such period(s), the appeal will be deemed denied. No person who is a Participant
in the Plan shall act under this paragraph as a member of the E.C.C. or of the
full Board of Directors of The TJX Companies, Inc., or as a designee of the
Board of Directors of The TJX Companies, Inc., with respect to his or her own
claim (if any) for benefits under the Plan.
4. Deferral of Compensation.
A. Election to Defer. Each Eligible Person may elect to defer
receipt of all or any part of his or her Eligible Compensation
for a Plan Year, subject to such rules and regulations as the
E.C.C. may prescribe.
At the time of making an election to defer, each Participant
shall elect (i) the specific date or event, before or after
the Participant's Termination Date, following which the first
payment of any Deferred Compensation and interest thereon will
be made, and (ii) whether payment(s) shall be made in a lump
sum or in designated monthly installments, not to exceed 120
months. The choice of an installment method of payment shall
be available only in the case of distributions commencing to
be paid at Retirement. If, in connection with Retirement, the
Participant has failed to designate the payment period and/or
schedule for payment with respect to any Deferred
Compensation, the payment of said Deferred Compensation and
interest thereon will be made in 120 monthly installments
commencing as soon as reasonably practicable after the
Participant's Retirement.
B. Notice of Election to Defer. Each Participant shall, within
the time limits specified in Section 4.C. below, notify the
Company in writing on forms provided by the Company of an
election to defer the receipt of all or any part of payment of
Eligible Compensation. Each such notice shall state:
(i) the amount or percentage of the Eligible Compensation
to be deferred (not less than $1,000);
(ii) the date on which, or the event following which,
payment of said Deferred Compensation is to commence;
-3-
<PAGE> 8
(iii) the payment period, including number of months and
schedule elected for payment;
(iv) the Beneficiary(ies), if any, with respect to said
Deferred Compensation (see Section 7.C. below).
For purposes of (ii) above the E.C.C. may specify a minimum
period of deferral.
C. Time of Notice of Election to Defer. The Participant's written
notice of election to defer all or any part of the Eligible
Compensation that would otherwise have been payable in a Plan
Year must be received by the Company by November 30 of the
immediately preceding Plan Year. Notwithstanding the
foregoing, in the case of a Participant who had elected (under
the Plan as in effect prior to the 1998 restatement of the
Plan) to defer Eligible Compensation for the period ending
January 31, 1999, any election with respect to the 1999 Plan
Year shall be effective only as to Eligible Compensation that
would otherwise have been payable in the period February 1,
1999 to December 31, 1999.
D. Revocation of Election.
(i) Within Eligible Time Periods for Filing Election.
Subject to the other provisions of the Plan, a
Participant may revoke or modify an election under
this Section 4 only if notice of the same is filed
with the E.C.C. prior to the last day for making the
election prescribed under Section 4.C. above.
(ii) Hardships and Unusual Circumstances. In the case of
hardship or unusual circumstance, the E.C.C., in its
sole discretion, may modify any election previously
made to defer any compensation pursuant to this
Section 4, if such modification shall be requested by
said Participant, or after the Participant's death,
by his designated Beneficiary or his estate, as the
case may be.
5. Establishment of Deferred Account. The Company shall establish and
maintain a separate Deferred Account for each deferral made by a Participant,
except that a single aggregated Deferred Account may be maintained for all
deferrals by a Participant having identical payout periods. Each Deferred
Account of a Participant shall consist of an amount (expressed in dollars)
credited to such account by reason of the Participant's election to defer
Eligible Compensation, as follows:
-4-
<PAGE> 9
A. Principal. The Participant's Deferred Account shall be
credited with the amount of the Eligible Compensation elected
to be deferred by the Participant as of the date on which it
would have been payable but for said deferral.
B. Interest. As of January 1, 2000 and the first day of each
subsequent Plan Year, except as hereinafter provided, the
Participant's Deferred Account shall be credited with an
amount representing notional simple interest for the
immediately preceding Plan Year, based on the Interest Rate
for the immediately preceding Plan Year and the average
monthly balance of the Deferred Account during the immediately
preceding Plan Year. Notwithstanding the foregoing,
(i) (a) there shall be credited as of January 31, 1999
with respect to the fiscal year just ended and in
accordance with the Plan as in effect prior to the
1998 restatement, notional interest based on the rate
determined by reference to the fiscal year just
ended, and (b) the notional interest credited as of
January 1, 2000 shall be based on the average monthly
balance of the Deferred Account over the period
beginning January 31, 1999 and ending December 31,
1999; and
(ii) in the case of a distribution during a Plan Year, the
E.C.C. may provide for the payment of interest not
yet credited with respect to periods preceding the
date of distribution.
After the close of each Plan Year (commencing with the 1999 Plan Year), the
Company shall deliver to each Participant a written report summarizing the
balance as of a stated date of the Participant's Deferred Account(s).
6. Payment of Deferred Compensation.
A. Amount of Payment. Unless the Participant has selected a lump
sum payment or some other payment schedule or formula which
has been approved by the E.C.C., the amount to be paid to a
Participant in any month during the payout period specified in
the Participant's election shall be paid in cash and computed
by multiplying the amount credited to the Deferred Account by
a fraction, the numerator of which is one and the denominator
of which is the number of months remaining in the applicable
payment period.
B. Time of Payment.
(i) Distribution While Actively Employed. If a
Participant elects to receive payment on a specified
date or event and the Participant is actively
employed by the Company at such date or event, all
payments
-5-
<PAGE> 10
shall be made in accordance with the election(s)
filed with the Company.
(ii) Distribution Upon Termination Date. Notwithstanding
the terms of any election made under Section 4 of the
Plan, the entire amount, if any, then credited to
each Deferred Account of a Participant shall be paid
to him or his designated Beneficiary or his estate,
as the case may be,
(a) in the case of a Participant who is
an employee, pursuant to the terms
of said election, but the final
payment, a lump sum if necessary,
shall be made not later than the
tenth anniversary of the
Termination Date, if said
Participant's employment shall be
terminated by reason of (i)
Retirement at or after age 65, (ii)
Retirement after age 55 (but prior
to age 65) with the consent of the
Company, (iii) disability, or (iv)
death.
(b) in the case of a Participant who is
an employee, in a lump sum as soon
as practicable following the close
of the Plan Year in which the
Termination Date falls, if said
Participant's employment shall be
terminated for any other reason.
(c) in the case of a Participant who is
a Director, pursuant to the terms
of said election but the final
payment, a lump sum if necessary,
shall be made not later than the
tenth anniversary of the
Termination Date.
C. Changes in Form and Timing of Payment. A Participant may
change, not more than twice in any five-Plan Year period, the
date as of which and (in the case of Retirement) the form in
which payments of the Participant's deferred compensation
amounts under the Plan are to be paid; provided, that no such
change in election shall be effective with respect to payments
that are to commence within the one-year period following the
election; and further provided, that no such change in
election shall affect the application of Section 6.B.(ii)
above.
D. Retirement Equalization Benefits. At the time a benefit is
paid to a Participant in the Plan under The TJX Companies,
Inc. Retirement Plan, the Participant shall be entitled to
receive a retirement equalization benefit having a value equal
to the difference between (i) the amount such Participant
would
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<PAGE> 11
have been entitled to receive under The TJX Companies, Inc.
Retirement Plan if none of his compensation had been deferred
under this Plan and (ii) the amount such Participant actually
receives under The TJX Companies, Inc. Retirement Plan. Such
retirement equalization benefit shall be payable in the same
form that the Participant elects to receive benefits under The
TJX Companies, Inc. Retirement Plan. Such retirement
equalization benefit shall not be payable to the extent that
the Participant is entitled to receive an equalization benefit
of comparable value under The TJX Companies, Inc. Supplemental
Executive Retirement Plan or any other plan.
7. General Provisions.
A. Assignment. No Participant's interest in any Deferred Account
is assignable, either by voluntary or involuntary assignment
or by operation of law. No part of any Deferred Compensation
may be paid over, loaned, sold, assigned, transferred,
discontinued, pledged as collateral for a loan, or in any
other way encumbered until after the Deferral Period with
respect to such Deferred Compensation.
B. Unsegregated Funds. The Company shall be under no obligation
to segregate any deferred funds and an election to defer
Compensation hereunder shall constitute an acknowledgment and
agreement by the Participant that such unsegregated funds
belong absolutely and unconditionally to the Company and are
subject to the claims of the Company's unsecured general
creditors. The Company's obligations under the Plan are
unsecured and unfunded contractual obligations only. Nothing
herein contained shall be construed as creating any trust,
express or implied, for the benefit of any Participant.
Notwithstanding the foregoing, the Company in its discretion
may establish and fund a so-called "rabbi trust" or similar
grantor trust to provide for the payment of benefits
hereunder.
C. Designation of Beneficiary. Subject to applicable law, each
Participant may designate a Beneficiary(ies) to receive
payments to be made of Deferred Compensation, if any, after
the Participant's death. In the absence of such designation,
all such amounts shall be paid to the Participant's estate.
The designation shall be made on a form to be supplied by the
E.C.C. and may be revoked or superseded at any time. Payments
to a Beneficiary(ies) shall be made in accordance with a
schedule designated by the Participant.
D. Reservation of Rights. Nothing in this Plan shall be construed
to (i) give any employee any right to defer compensation other
than as expressly authorized and permitted by the E.C.C., (ii)
limit in any way the right of the Company to terminate a
Participant's employment with the Company, or (iii) be
-7-
<PAGE> 12
evidence of any agreement or understanding, express or
implied, that the Company will employ a Participant at any
particular rate of remuneration.
E. Amendment or Termination of the Plan. The E.C.C. may at any
time terminate or amend this Plan provided that any such
termination or amendment shall not affect the rights of
Participants or Beneficiaries to payments of amounts standing
to the credit of Participants in their Deferred Accounts at
the time of such amendment or termination. In the event of
termination of this Plan, the E.C.C., in its sole discretion,
may establish classes of Participants and/or beneficiaries and
apply different payment rules to such classes. Without
limiting the foregoing, if at any time the E.C.C. determines
that the continued participation of a Participant or
Beneficiary in the Plan could cause the Plan to fail to
qualify under Title I of ERISA as an unfunded plan maintained
primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated
employees, the E.C.C. may remove such Participant or
Beneficiary from participation in the Plan, cause the Deferred
Compensation standing to his or her account to be promptly
distributed, or take such other steps (not inconsistent with
the first sentence of this paragraph) as it may determine to
be necessary or advisable under the circumstances.
F. Withholding. The Company shall have the right to deduct or
withhold from all payments of Deferred Compensation any taxes
required by law to be withheld from an employee with respect
to such payments. In the case of any FICA or Medicare taxes
with respect to deferrals hereunder that may be due prior to
payment of Deferred Compensation, the Company shall have the
right to deduct or withhold from other wages of the employee,
or if there are no such wages, by reducing the employee's
account hereunder by the amount of such FICA or Medicare taxes
and any income tax withholding required in connection with
such reduction.
G. Change in Employment or Law. The E.C.C. may, in its sole
discretion, make appropriate adjustments with respect to the
terms of the Plan and its applicability to Participants,
including termination of individual deferral agreements, or
dilution or suspension of any provision of such agreements in
the event (i) of a discontinuance by the Company of a
Participant's employment with the Company resulting from an
event such as the merger, sale or consolidation of the Company
and (ii) any of the anticipated benefits of deferral pursuant
to this Plan or any provision hereof are altered by reason of
any interpretation of or change in law, policy or regulation.
H. Effective Date. This 1998 restatement of the Plan is effective
with respect to the deferral of Eligible Compensation that
would otherwise be payable on or
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<PAGE> 13
after January 1, 1999 and with respect to the distribution of
amounts payable hereunder on or after January 1, 1999.
I. Change of Control. Notwithstanding any other provision of the
Plan, upon a Change of Control (as defined in Exhibit A) of
the Company no further deferrals under Section 4 (whether
elected prior to the Change of Control or not) shall be
permitted; the entire amount then credited to each Deferred
Account of each Participant and the present value of the
retirement equalization benefit (if any) then accrued by such
Participant shall promptly be paid to such Participant (or his
designated Beneficiary or his estate) in a lump sum payment;
and the Plan shall terminate. For purposes of determining the
present value of retirement equalization benefits under this
paragraph, there shall be applied the same actuarial
assumptions as would be used in determining lump-sum present
values under the Company's Supplemental Executive Retirement
Plan as in effect immediately prior to the Change of Control,
or in the absence of such assumptions, an interest rate
assumption of eight percent compounded annually and the same
mortality assumptions as are then used in determining the
present value of benefits under the Company's tax-qualified
Retirement Plan.
-9-
<PAGE> 14
EXHIBIT A
Definition of "Change of Control"
"Change of Control" shall mean the occurrence of any one of the
following events:
(a) there occurs a change of control of the Company of a
nature that would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") or in any
other filing under the Exchange Act; provided, however, that no
transaction shall be deemed to be a Change of Control as to a
Participant (i) if the person or each member of a group of persons
acquiring control is excluded from the definition of the term "Person"
hereunder or (ii) unless the Committee shall otherwise determine prior
to such occurrence, if the Participant or a Participant Related Party
is the Person or a member of a group constituting the Person acquiring
control; or
(b) any Person other than the Company, any wholly-owned
subsidiary of the Company, or any employee benefit plan of the Company
or such a subsidiary becomes the owner of 20% or more of the Company's
Common Stock and thereafter individuals who were not directors of the
Company prior to the date such Person became a 20% owner are elected as
directors pursuant to an arrangement or understanding with, or upon the
request of or nomination by, such Person and constitute at least 1/4 of
the Company's Board of Directors; provided, however, that unless the
Committee shall otherwise determine prior to the acquisition of such
20% ownership, such acquisition of ownership shall not constitute a
Change of Control as to a Participant if the Participant or a
Participant Related Party is the Person or a member of a group
constituting the Person acquiring such ownership; or
(c) there occurs any solicitation or series of solicitations
of proxies by or on behalf of any Person other than the Company's Board
of Directors and thereafter individuals who were not directors of the
Company prior to the commencement of such solicitation or series of
solicitations are elected as directors pursuant to an arrangement or
understanding with, or upon the request of or nomination by, such
Person and constitute at least 1/4 of the Company's Board of Directors;
or
(d) the Company executes an agreement of acquisition, merger
or consolidation which contemplates that (i) after the effective date
provided for in such agreement, all or substantially all of the
business and/or assets of the Company shall be owned, leased or
otherwise controlled by another Person and (ii) individuals who are
directors of the Company when such agreement is executed shall not
constitute a majority of the board of directors of the survivor or
successor entity immediately after the effective date provided for in
such agreement; provided, however, that
-1-
<PAGE> 15
unless otherwise determined by the Committee, no transaction shall
constitute a Change of Control as to a Participant if, immediately
after such transaction, the Participant or a Participant Related Party
shall own equity securities of any surviving corporation ("Surviving
Entity") having a fair value as a percentage of the fair value of the
equity securities of such Surviving Entity greater than 125% of the
fair value of the equity securities of the Company owned by the
Participant or a Participant Related Party immediately prior to such
transaction, expressed as a percentage of the fair value of all equity
securities of the Company immediately prior to such transaction (for
purposes of this paragraph ownership of equity securities shall be
determined in the same manner as ownership of Common Stock); and
provided, further, that, for purposes of this paragraph (d), if such
agreement requires as a condition precedent approval by the Company's
shareholders of the agreement or transaction, a Change of Control shall
not be deemed to have taken place unless and until such approval is
secured (but upon any such approval, a Change of Control shall be
deemed to have occurred on the date of execution of such agreement).
In addition, for purposes of this Exhibit A the following terms have
the meanings set forth below:
"Common Stock" shall mean the then outstanding Common Stock of the
Company plus, for purposes of determining the stock ownership of any Person, the
number of unissued shares of Common Stock which such Person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall
not include shares of Preferred Stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board of Directors of the Company shall expressly so determine in any future
transaction or transactions.
A Person shall be deemed to be the "owner" of any Common Stock:
(i) of which such Person would be the "beneficial owner," as
such term is defined in Rule 13d-3 promulgated by the Securities and
Exchange Commission (the "Commission") under the Exchange Act, as in
effect on March 1, 1989; or
(ii) of which such Person would be the "beneficial owner" for
purposes of Section 16 of the Exchange Act and the rules of the
Commission promulgated thereunder, as in effect on March 1, 1989; or
(iii) which such Person or any of its affiliates or associates
(as such terms are defined in Rule 12b-2 promulgated by the Commission
under the Exchange Act, as in effect on March 1, 1989), has the right
to acquire (whether such right is
-2-
<PAGE> 16
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise.
"Person" shall have the meaning used in Section 13(d) of the Exchange
Act, as in effect on March 1, 1989.
A "Participant Related Party" shall mean, with respect to a
Participant, any affiliate or associate of the Participant other than the
Company or a subsidiary of the Company. The terms "affiliate" and "associate"
shall have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act
(the term "registrant" in the definition of "associate" meaning, in this case,
the Company).
-3-
<PAGE> 1
EXHIBIT 10.11
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
AMENDMENT NO. 2
The TJX Companies, Inc. Executive Savings Plan (the "ESP") is hereby
amended as follows, effective as of October 1, 1998:
1. Section 3.2 is amended by adding at the end thereof, immediately
before Section 3.3, the following sentence:
"Notwithstanding the foregoing, no credits shall be made under this
Section 3.2 with respect to any Participant who is either a Category A
Key Employee or a Category B Key Employee under The TJX Companies, Inc.
Supplemental Executive Retirement Plan."
IN WITNESS WHEREOF, The TJX Companies, Inc. has caused this instrument
of amendment to be executed by its duly authorized officer this 6th day of April
1999.
THE TJX COMPANIES, INC.
By: /s/ Donald G. Campbell
------------------------------
Donald G. Campbell
<PAGE> 2
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
AMENDMENT NO. 1
The TJX Companies, Inc. Executive Savings Plan (the "ESP"), effective as
of October 1, 1998, is hereby amended as follows:
1. Effective as of October 1, 1998, Section 1.17 ("Performance Goal") is
amended by deleting the words "Management Incentive Plan" and replacing them
with the words "Management Incentive Plan for corporate division associates".
2. Effective as of October 1, 1998, Section 3.2(c) is amended by (i)
deleting the term "Management Incentive Plan payout" and replacing it with the
term "payout under Management Incentive Plan awards applicable to associates in
the corporate division"; (ii) deleting all other references to "Management
Incentive Plan" and replacing them with references to "Management Incentive Plan
for associates in the corporate division"; and (iii) deleting the sentence which
begins: "The Administrator shall adjust these computations in its discretion
where the Performance Goals are other than those specified . . ."
3. Effective as of the date of this amendment, the ESP is amended by
adding the following new Exhibit B:
"EXHIBIT B"
One-Time Election Relating To General Deferred Compensation Plan Balances
Reference is made to The TJX Companies, Inc. General Deferred Compensation
Plan (1998 Restatement) (the "GDCP"), an unfunded, nonqualified deferred
compensation plan maintained for the benefit of a select group of management or
highly compensated employees under which certain eligible employees of the
Employer have elected to defer a portion of the compensation they would
otherwise have received from the Employer. Each GDCP participant who is also an
Eligible Individual has been given a one-time opportunity to elect on an
irrevocable basis to cause a portion of his or her account under the GDCP to be
treated as subject to the terms and provisions of the Plan. In the case of any
Eligible Individual who has made the election described in the preceding
sentence, an amount equal to the affected portion of the Eligible Individual's
GDCP account balance shall be credited effective March 31, 1999 to the Eligible
Individual's Deferral Account (or in the discretion of the Administrator to a
separate or sub-account). The amount so credited, as adjusted pursuant to
Article 4, shall be fully vested at all times and shall be subject in all
respects to the terms of the Plan as though credited to the Eligible
Individual's Deferral Account; provided, that the one-time credit
<PAGE> 3
described in this Exhibit B shall not affect or limit the Eligible Individual's
rights to make Compensation Deferrals to his or her Deferral Account. In no
event shall any amount credited pursuant to this Exhibit B be eligible to be
"matched" by Employer Credits pursuant to Section 3.2 or otherwise."
4. Effective as of the date of this amendment, the ESP is amended by
adding the following new Exhibit C:
"EXHIBIT C"
Special 1999 Deferral
Each Eligible Individual shall have a one-time opportunity, exercisable
prior to March 31, 1999 in accordance with the provisions of this Exhibit C, to
defer up to an additional $4,000 of that portion, if any, of his or her 1999
Salary which (but for deferral) would have been payable in the period July 1,
1999 through December 31, 1999. Any election to defer under the preceding
sentence shall be made in writing on a form acceptable to the Administrator and
shall be irrevocable when made. Amounts deferred pursuant to this Exhibit C: (i)
shall be in addition to any Compensation Deferrals made for 1999 under Section
3.1 and shall not be taken into account in applying the 20%-of-Salary
limitations under Section 3.1; (ii) shall be fully vested at all times; and
(iii) shall be credited to the Eligible Individual's Deferral Account and
treated for all purposes of the Plan in the same manner as other amounts
credited to that Account, subject, however, to the express provisions of this
Exhibit C. Any deferral election pursuant to this Exhibit C shall be treated as
an election by the Eligible Individual to have his or her Salary, if any, for
each pay date between July 9, 1999 and December 31, 1999 (inclusive) reduced by
the total amount of the deferral (not to exceed $4,000) divided by twenty-six
(26) and to have an equivalent amount deferred hereunder."
IN WITNESS WHEREOF, The TJX Companies, Inc. has caused this instrument of
amendment to be executed by its duly authorized officer this 8th day of March,
1999.
THE TJX COMPANIES, INC.
By: /s/ Donald G. Campbell
-2-
<PAGE> 4
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
Effective as of October 1, 1998
<PAGE> 5
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
Effective as of October 1, 1998
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
1.1 ACCOUNT ...........................................................1
1.2 ADMINISTRATOR .....................................................1
1.3 BENEFICIARY .......................................................1
1.4 CHANGE OF CONTROL .................................................1
1.5 CLAIMANT ..........................................................1
1.6 CODE ..............................................................1
1.7 COMPENSATION DEFERRAL .............................................1
1.8 DEFERRAL ACCOUNT ..................................................1
1.9 EFFECTIVE DATE ....................................................1
1.10 ELIGIBLE DEFERRALS ................................................1
1.11 ELIGIBLE INDIVIDUAL ...............................................2
1.12 EMPLOYER ..........................................................2
1.13 EMPLOYER CREDIT ACCOUNT ...........................................2
1.14 EMPLOYER CREDITS ..................................................2
1.15 ENTRY DATE ........................................................2
1.16 PARTICIPANT .......................................................2
1.17 PERFORMANCE GOAL ..................................................2
1.18 PERIOD OF PARTICIPATION ...........................................2
1.19 PLAN ..............................................................2
1.20 PLAN YEAR .........................................................2
1.21 SALARY ............................................................2
ARTICLE 2 ELIGIBILITY AND PARTICIPATION
2.1 ELIGIBILITY TO PARTICIPATE ........................................3
2.2 TERMINATION OF ELIGIBILITY ........................................3
i
<PAGE> 6
ARTICLE 3 CREDITS
3.1 COMPENSATION DEFERRALS ............................................3
3.2 EMPLOYER CREDITS ..................................................4
3.3 VESTING OF EMPLOYER CREDIT ACCOUNTS ...............................6
ARTICLE 4 ADJUSTMENT TO ACCOUNTS; DEEMED INVESTMENTS
4.1 DEEMED INVESTMENT EXPERIENCE ......................................6
4.2 DISTRIBUTIONS AND WITHDRAWALS .....................................6
4.3 NOTIONAL INVESTMENT OF ACCOUNTS ...................................7
4.4 EXPENSES ..........................................................7
ARTICLE 5 ENTITLEMENT TO BENEFITS
5.1 REGULAR DISTRIBUTION EVENTS .......................................8
5.2 HARDSHIP DISTRIBUTIONS ............................................8
5.3 NON-HARDSHIP IN-SERVICE WITHDRAWALS ...............................8
ARTICLE 6 DISTRIBUTION OF BENEFITS
6.1 REGULAR DISTRIBUTION EVENTS .......................................9
6.2 OTHER DISTRIBUTIONS ...............................................9
6.3 GENERAL PROVISIONS ................................................9
6.4 DEATH BENEFITS ...................................................10
ARTICLE 7 BENEFICIARIES; PARTICIPANT DATA
7.1 DESIGNATION OF BENEFICIARIES .....................................10
7.2 AVAILABLE INFORMATION; MISSING PERSONS ...........................11
ARTICLE 8 ADMINISTRATION
8.1 ADMINISTRATIVE AUTHORITY .........................................11
8.2 LITIGATION .......................................................12
8.3 CLAIMS PROCEDURE .................................................12
ii
<PAGE> 7
ARTICLE 9 AMENDMENT
9.1 RIGHT TO AMEND ...................................................13
9.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN .............14
ARTICLE 10 TERMINATION
10.1 RIGHT OF THE EMPLOYER TO TERMINATE OR SUSPEND PLAN ...............14
10.2 ALLOCATION AND DISTRIBUTION ......................................14
ARTICLE 11 MISCELLANEOUS
11.1 LIMITATIONS ON LIABILITY OF EMPLOYER .............................14
11.2 CONSTRUCTION .....................................................15
11.3 TAXES ............................................................15
11.4 SPENDTHRIFT PROVISION ............................................15
11.5 RETIREMENT EQUALIZATION BENEFITS .................................16
EXHIBIT A Definition of "Change of Control"
iii
<PAGE> 8
THE TJX COMPANIES, INC.
EXECUTIVE SAVINGS PLAN
Effective as of October 1, 1998
RECITALS
The TJX Companies, Inc. Executive Savings Plan (the "Plan") is intended to
provide a means whereby eligible employees may defer, in general until
termination of employment, compensation that would otherwise be received on a
current basis and the employer may credit certain additional amounts on a
deferred basis for the benefit of participating employees. The Plan is intended
to be an unfunded "top-hat" plan under sections 201(2), 301(a)(3) and 401(a)(1)
of the Employee Retirement Income Security Act of 1974 ("ERISA").
ARTICLE 1
DEFINITIONS
1.1 ACCOUNT means either or both, as the context requires, of a
Participant's or Beneficiary's Deferral Account and/or Employer Credit Account.
1.2 ADMINISTRATOR means the Executive Compensation Committee (the
"E.C.C.") of the Board of Directors of The TJX Companies, Inc., and its
delegates.
1.3 BENEFICIARY means any person or person so designated in accordance
with the provisions of Article 7.
1.4 CHANGE OF CONTROL means a Change of Control as defined in Exhibit A
hereto.
1.5 CLAIMANT is defined in Section 8.3.
1.6 CODE means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
1.7 COMPENSATION DEFERRAL is defined in Section 3.1.
1.8 DEFERRAL ACCOUNT means the unfunded book-entry account maintained by
the Administrator to reflect that portion of a Participant's balance under the
Plan which is attributable to his or her Compensation Deferrals.
1.9 EFFECTIVE DATE means October 1, 1998.
1.10 ELIGIBLE DEFERRALS means (a) in the case of any Participant who is a
Vice President or higher, Compensation Deferrals with respect to a Plan Year not
in excess of ten percent (10%) of the Participant's Salary, and (b) in the case
of any other Participant,
<PAGE> 9
Compensation Deferrals with respect to a Plan Year not in excess of five percent
(5%) of the Participant's Salary.
1.11 ELIGIBLE INDIVIDUAL means, for any Plan Year (or applicable portion
thereof), a person who is determined by the Administrator to be eligible to
participate in the Plan, consistent with the intended purpose of the Plan as set
forth in the "RECITALS" above.
1.12 EMPLOYER means The TJX Companies, Inc. and its subsidiaries.
1.13 EMPLOYER CREDIT ACCOUNT means the unfunded book-entry account
maintained by the Administrator to reflect that portion, if any, of a
Participant's balance under the Plan which is attributable to Employer Credits
allocable to the Participant.
1.14 EMPLOYER CREDITS is defined in Section 3.2.
1.15 ENTRY DATE means October 1, 1998 and each subsequent January 1, plus
such other Entry Dates as the Administrator may specify pursuant to Section
2.1(b).
1.16 PARTICIPANT means any Eligible Individual who participates in the
Plan.
1.17 PERFORMANCE GOAL means a performance goal (which may be, but need
not be, the same as a performance goal applicable under the Employer's
Management Incentive Plan) specified by the Administrator with respect to a
fiscal year of the Employer in which a Plan Year ends.
1.18 PERIOD OF PARTICIPATION means, with respect to any Participant, the
period commencing with the commencement of participation in the Plan and ending
on the earlier of the date on which the Participant ceases to be employed by the
Employer or the date on which the Participant's Accounts have been completely
distributed, withdrawn or forfeited.
1.19 PLAN means The TJX Companies, Inc. Executive Savings Plan as set
forth herein and as the same may be amended from time to time.
1.20 PLAN YEAR means the period October 1, 1998 through December 31, 1998
and each calendar year thereafter.
1.21 SALARY means the base salary payable by the Employer to a
Participant during a Plan Year, determined before reduction for deferrals under
any qualified or nonqualified plan (including, without limitation, the Plan).
2
<PAGE> 10
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 ELIGIBILITY TO PARTICIPATE.
(a) Every employee of the Employer who is an Eligible Individual in
connection with the establishment of the Plan shall be eligible to become
a Participant as of the Effective Date or any subsequent Entry Date,
provided that he or she is an Eligible Individual on the applicable Entry
Date. An employee of the Employer who becomes an Eligible Individual after
October 1, 1998 shall be eligible to become a Participant as of any
subsequent Entry Date, provided that he or she is then an Eligible
Individual.
(b) Notwithstanding (a) above, in the case of an individual who
first becomes an Eligible Individual on a date after October 1, 1998, the
Administrator may specify an initial Entry Date that is other than January
1 of the following year provided that the Eligible Individual (i)
satisfies the special thirty-day election rule described in Section 3.1(c)
below, and (ii) is an Eligible Individual on such initial Entry Date.
2.2 TERMINATION OF ELIGIBILITY. An individual shall cease to be eligible
to participate in the Plan when he or she is no longer an Eligible Individual
(whether by reason of termination of employment or by reason of a change in job
classification or otherwise) but shall again become eligible to participate
pursuant to the second sentence of Section 2.1 if he or she again becomes an
Eligible Individual.
ARTICLE 3
CREDITS
3.1 COMPENSATION DEFERRALS. A Participant may defer Salary that is not
yet payable (any such deferral accomplished in accordance with this Section 3.1,
a "Compensation Deferral") by making a timely election in accordance with this
Section 3.1, as follows:
(a) For the Plan Year ending December 31, 1998, a Participant's
deferral election must be made by such date prior to the Effective Date as
the Administrator may specify.
(b) With respect to Salary payable in any Plan Year after 1998, a
Participant's deferral election must be made by November 30 of the
preceding Plan Year (for example, by November 30, 1998 for deferral of
Salary payable in calendar 1999).
3
<PAGE> 11
(c) Notwithstanding (a) and (b) above, an individual who first
becomes an Eligible Individual after October 1, 1998 may also elect,
within thirty (30) days of becoming an Eligible Individual, to defer
Salary for the period beginning on the initial Entry Date described in
Section 2.1(b) and ending on December 31 of the Plan Year in which such
initial Entry Date occurs.
No more than twenty percent (20%) of a Participant's Salary for any pay period
may be deferred pursuant to an election under this Section 3.1. Subject to the
foregoing, a Participant's deferral election may specify different deferral
percentages for different pay periods. Subject to such additional limitations as
the Administrator may prescribe,
(1) a Participant described in Section 1.10(a) or (b) may
change the rate at which future Salary is to be deferred under this
Section 3.1 by written notice delivered to the Administrator by
November 30 of the Plan Year preceding the Plan Year for which such
change is to take effect; and
(2) a Participant described in Section 1.10(b) who is promoted
during a Plan Year to the rank of Vice President (or higher) may,
within thirty (30) days of such promotion, increase (but not
decrease), up to a maximum of twenty (20%) of Salary per pay period,
the rate of deferral to be applied to future Salary.
Subject to the foregoing, an election under this Section 3.1, once made, shall
continue in force indefinitely.
Salary otherwise payable to a Participant for a pay period shall be
reduced by the Participant's Compensation Deferrals for the pay period. The
Administrator shall establish and maintain a Deferral Account in the name of
each Participant to which shall be credited amounts equal to the Participant's
Compensation Deferrals and which shall be further adjusted as provided in
Article 4 to reflect any withdrawals or distributions and any deemed earnings,
losses or other charges allocable to the Deferral Account. Compensation
Deferrals shall be credited to a Participant's Deferral Account as soon as
practicable following the date the related Salary is paid.
A Participant shall at all times be 100% vested in his or her Deferral
Account, subject to adjustment pursuant to Article 4.
3.2 EMPLOYER CREDITS. The Administrator shall establish and maintain a
separate Employer Credit Account in the name of each Participant to which shall
be credited amounts equal to the Employer Credits, if any, allocable to the
Participant and which shall be further adjusted as provided in Article 4 to
reflect any withdrawals, distributions or forfeitures and any deemed earnings,
losses or other charges allocable to the Employer Credit Account. The Employer
Credits allocable to a Participant shall be determined as follows:
4
<PAGE> 12
(a) Non-Performance-Based Employer Credits. For each Plan Year, the
Administrator shall credit to a Participant's Employer Credit Account an
amount equal to ten percent (10%) of the Participant's Eligible Deferrals
for the Plan Year. The non-performance-based matching credits described in
this subsection (a) shall be credited to the Participant's Employer Credit
Account as of the same dates as the Eligible Deferrals to which such
matching credits relate.
(b) Basic Performance-Based Employer Credits. For each Plan Year
ending within a fiscal year of the Employer for which the Employer's
Performance Goals are met (as determined by the Administrator), the
Administrator shall credit to the Employer Credit Account of each eligible
Participant an amount (in addition to the credit described at Section
3.2(a) above) equal to fifteen percent (15%) of the Participant's Eligible
Deferrals for the Plan Year. The basic performance-based matching credit
described in this subsection (b) shall be credited as soon as practicable
following the close of the fiscal year and only to the Employer Credit
Accounts of those Participants who were employed by the Employer on the
last day of such fiscal year.
(c) Supplemental Performance-Based Employer Credits. For each Plan
Year ending in a fiscal year of the Employer for which the Employer's
Performance Goals are exceeded (as determined by the Administrator), the
Administrator shall credit to the Employer Credit Account of each eligible
Participant described in Section 1.10(a) an amount determined as set forth
below. Participants described in Section 1.10(b) shall not be eligible for
the credit described in this Section 3.2(c). If the Employer's Performance
Goals are exceeded by a margin sufficient to produce a Management
Incentive Plan payout equal to one hundred fifty (150%) percent of the
target award under the Management Incentive Plan, the credit described in
this Section 3.2(c) shall equal twenty-five percent (25%) of the eligible
Participant's Eligible Deferrals. If the Employer's Performance Goals are
exceeded but by a smaller margin than that which would be needed to
produce a Management Incentive Plan payout equal to one hundred fifty
percent (150%) of the target award under the Management Incentive Plan,
the Employer Credit described in this Section 3.2(c) shall be an amount
which, when expressed as a percentage of the eligible Participant's
Eligible Deferrals, bears the same relationship to twenty-five percent
(25%) as the excess percentage over target of the award under the
Management Incentive Plan bears to 50%. The Administrator shall adjust
these computations in its discretion where the Performance Goals hereunder
are other than those specified for purposes of the Management Incentive
Plan. The supplemental performance-based matching credit described in this
Section 3.2(c), which shall be in addition to the matching credits
described in Sections 3.2(a) and 3.2(b) above, shall be credited as soon
as practicable following the close of the fiscal year and only to the
Employer Credit Accounts of those Participants described in Section
1.10(a) who were employed by the Employer on the last day of such fiscal
year. In the case of an eligible Participant who is described in Section
1.10(a) for only a portion of a Plan
5
<PAGE> 13
Year, the supplemental performance-based matching credit shall apply only
to those Eligible Deferrals made while the eligible Participant was
described in Section 1.10(a).
3.3 VESTING OF EMPLOYER CREDIT ACCOUNTS. A Participant shall become
vested in the balance of his or her Employer Credit Account, subject to
adjustment pursuant to Article 4, in accordance with the following vesting
schedule:
Completed Period of Participation Vested Percentage
--------------------------------- -----------------
Less than five years 0%
Five years or more,
but less than ten years 50%
Ten or more years 100%
Notwithstanding the foregoing, if a Participant who is 50% but not 100% vested
in his or her Employer Credit Account takes an in-service withdrawal under
Section 5.2 or Section 5.3 or both, the Participant's vested interest in his or
her Employer Credit Account as of any subsequent date prior to full vesting (the
"determination date") shall be
1/2(AB+W) - W
where "AB" is the balance of the Employer Credit Account as of the determination
date and "W" is that portion of the withdrawal (or withdrawals, if more than
one) under Section 5.2 and/or Section 5.3 that was attributable to the Employer
Credit Account.
In addition, a Participant will become immediately vested in his or her
Employer Credit Account, subject to adjustment pursuant to Article 4, upon
attainment by the Participant of age fifty-five (55), upon termination of
employment by reason of permanent disability (as determined by the
Administrator) or death, or upon the earlier occurrence of a Change of Control.
ARTICLE 4
ADJUSTMENT TO ACCOUNTS; DEEMED INVESTMENTS
4.1 DEEMED INVESTMENT EXPERIENCE. Each Account shall be adjusted on such
periodic basis and subject to such rules as the Administrator may prescribe to
reflect the value of the notional investments in which the Account is deemed
invested pursuant to Section 4.3, including without limitation any interest,
dividends or other distributions deemed to have been received with respect to
such notional investments.
4.2 DISTRIBUTIONS AND WITHDRAWALS. As of the date of any distribution or
withdrawal hereunder, the Administrator shall reduce the affected Participant's
Accounts to
6
<PAGE> 14
reflect such distribution or withdrawal. Any such adjustment shall reduce
ratably each affected Account's share of each of the notional investments in
which the Account is deemed to be invested, except as the Administrator may
otherwise determine.
4.3 NOTIONAL INVESTMENT OF ACCOUNTS. The Administrator shall from time
to time specify one or more mutual funds or other investment alternatives that
shall be available as measures of notional investment return for Accounts under
the Plan (each such specified alternative, a "measuring investment option").
Subject to such rules and limitations as the Administrator may from time to time
prescribe, each Participant shall have the right to have the balance of his or
her Accounts treated for all purposes of the Plan as having been notionally
invested in one or more measuring investment options and to change the notional
investment of his or her Accounts from time to time. The Administrator shall
have complete discretion at any time and from time to time to eliminate or add a
measuring investment option. The Administrator may designate one or more
measuring investment options as the default in which a Participant's Accounts
shall be deemed to be invested to the extent the Participant does not
affirmatively, timely and properly provide other notional investment directions.
Nothing in this Section 4.3 shall be construed as giving any Participant
the right to cause the Administrator, the Employer or any other person to
acquire or dispose of any investment, to set aside (in trust or otherwise) money
or property to meet the Employer's obligations under the Plan, or in any other
way to fund the Employer's obligations under the Plan. The sole function of the
notional investment provisions of this Section 4.3 is to provide a computational
mechanism for measuring the Employer's unfunded contractual deferred
compensation obligation to Participants. Consistent with the foregoing, the
Employer may (although it shall not be obligated to do any of the following):
(i) establish and fund a so-called "rabbi" trust or similar trust or account to
hold and invest amounts to help the Employer meet its obligations under the
Plan; and (ii) if it establishes and funds such a trust or account, cause the
trustee or other person holding the assets in such trust or account to invest
them in a manner that is consistent with the notional investment directions of
Participants under the Plan.
Each reference in this Section 4.3 to a Participant shall be deemed to
include, where applicable, a reference to a Beneficiary.
4.4 EXPENSES. All expenses associated with the Plan shall be paid by the
Employer; but if a trust or account is established as described at Section 4.3
above, the Employer may provide that expenses associated with that trust or
account shall be paid out of the assets held therein.
7
<PAGE> 15
ARTICLE 5
ENTITLEMENT TO BENEFITS
5.1 REGULAR DISTRIBUTION EVENTS.
(a) Deferral Account. A Participant's Deferral Account will be
valued and paid in accordance with the provisions of Article 6 upon the
Participant's termination of employment with the Employer (as determined
by the Administrator).
(b) Employer Credit Account. A Participant's vested Employer Credit
Account will be valued and paid in accordance with the provisions of
Article 6 upon the earliest to occur of (i) the Participant's death, or
(ii) termination of the Participant's employment with the Employer by
reason of permanent disability (as determined by the Administrator), or
(iii) the later of termination for any other reason of the Participant's
employment with the Employer (as determined by the Administrator) or the
Participant's attainment of age 55; provided, that if the Participant's
employment is terminated for cause as determined by the Administrator, no
portion of the Participant's Employer Credit Account shall be paid and the
entirety of the Employer Credit Account shall instead be immediately
forfeited.
5.2 HARDSHIP DISTRIBUTIONS. In the event of financial hardship of the
Participant, as hereinafter defined, the Participant may apply to the
Administrator for the distribution of all or any part of his or her vested
Account. The Administrator shall consider the circumstances of each case and
shall have the right, in its sole discretion, to allow or disallow the
application in whole or in part. In no event shall the aggregate amount of any
distribution under this Section exceed the lesser of the vested portion of the
Participant's Account or the amount determined by the Administrator to be
necessary to alleviate the Participant's financial hardship (including any taxes
estimated by the Administrator to be due with respect to the distribution) and
which is not reasonably available from other resources of the Participant. For
purposes of this Section 5.2,"financial hardship" means a severe financial
hardship to the Participant resulting from (a) a sudden and unexpected illness
or accident of the Participant or of a dependent (as defined in Code section
152(a)) of the Participant, (b) a loss of the Participant's property due to
casualty, or (c) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, each as
determined by the Administrator. A hardship withdrawal under this Section 5.2
shall be allocated between the Participant's Deferral Account and the vested
portion of the Participant's Employer Credit Account in proportion thereto.
5.3 NON-HARDSHIP IN-SERVICE WITHDRAWALS. Prior to termination of
employment with the Employer, a Participant may request from the Administrator,
for any reason, a lump sum distribution of all, but not less than all, of the
Participant's vested Account. Upon receipt by the Administrator of such a
request, eighty-five percent (85%) of
8
<PAGE> 16
the Participant's vested Account (i.e., 85% of the Participant's Deferral
Account and 85% of that portion of the Participant's Employer Credit Account
which is vested) shall be valued and paid in accordance with Article 6 and the
remaining fifteen percent (15%) of the Participant's vested Account balance
(i.e., the entire remaining portion of the Participant's Deferral Account plus
the remaining 15% vested portion of the Participant's Employer Credit Account),
plus fifteen percent (15%) of any unvested portion of the Participant's Employer
Credit Account, shall be irrevocably forfeited. Notwithstanding the foregoing,
if the Administrator determines that a Participant's request for a withdrawal
hereunder has been made in anticipation of a termination of the Participant's
employment for cause, the Administrator may decline to distribute any portion of
the Participant's Accounts under this Section 5.3.
ARTICLE 6
DISTRIBUTION OF BENEFITS
6.1 REGULAR DISTRIBUTION EVENTS. The amount distributable under Section
5.1(a) shall be the balance of the Participant's Deferral Account determined as
of the date of distribution. Distribution of the Participant's Deferral Account
shall be made upon or as soon as practicable following the date of the
Participant's termination of employment. The amount distributable under Section
5.1(b) shall (except in the case of a termination for cause as determined by the
Administrator) be the vested portion of the Participant's Employer Credit
Account determined as of the date of distribution. Except in the case of a
termination for cause (as determined by the Administrator), distribution of the
Participant's vested Employer Credit Account shall be made (or commence) upon or
as soon as practicable following the date specified in Section 5.1(b).
6.2 OTHER DISTRIBUTIONS. Hardship distributions under Section 5.2 shall
be made, in the amount determined under Section 5.2, as soon as practicable
after the Administrator's determination under Section 5.2. Withdrawals under
Section 5.3 shall be made, in the amount specified in (and subject to the
conditions of ) Section 5.3, as soon as practicable following the
Administrator's receipt of the Participant's properly filed request for such a
withdrawal.
6.3 GENERAL PROVISIONS.
(a) Cash Payment. All payments under the Plan shall be made in cash.
(b) Lump sums; installments.
(i) Except as provided at (ii) immediately below, all
distributions and withdrawals under the Plan shall be made in the
form of a lump sum payment.
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<PAGE> 17
(ii) A Participant whose employment terminates (other than by
reason of death or a termination for cause (as determined by the
Administrator)) upon or after attaining age 55 may elect to have
amounts distributable under Section 6.1 paid either as a lump sum or
in annual installments over a period of not more than ten years. In
the absence of a proper election to have such amounts paid in
installments, amounts distributable under Section 6.1 shall be paid
as a lump sum. Any election by a Participant to have amounts
distributable under Section 6.1 paid in installments (an
"installment election") must be delivered to the Administrator, in a
form acceptable to the Administrator, not later than by the date
which precedes the Participant's termination of employment by one
year. A Participant who has made an installment election may cancel
such election at any time prior to the applicable deadline described
in the immediately preceding sentence by timely delivering a notice
of such cancellation to the Administrator in a form acceptable to
the Administrator; but following such deadline the Participant's
actual or deemed election as to form of benefit shall be
irrevocable. Where an Account is payable in installments, the amount
of each installment shall be determined by dividing the vested
portion of the Account (as adjusted through the date of such
installment distribution) by the number of installments remaining to
be paid. The Administrator may require that the balance of Accounts
for which an installment election is made must exceed a dollar
minimum specified by the Administrator.
(c) Employer's Obligation. All payments under the Plan not made from
a trust or account described in Section 4.3 above shall be made by the
Employer.
6.4 DEATH BENEFITS. If a Participant dies before distribution of his or
her Account has occurred or (if payable in installments) has commenced, the
entire value of the Participant's vested Account shall be paid, as soon as
practicable following the Participant's death, in a lump sum to the
Participant's Beneficiary or Beneficiaries. Where installment payments to a
Participant have begun and the Participant dies before all installments have
been paid, the remaining installments shall be paid in the normal course to the
Participant's Beneficiary or Beneficiaries unless, in the case of any
Beneficiary, the Administrator determines that the remaining payments to such
Beneficiary shall be accelerated and paid in a single lump sum.
ARTICLE 7
BENEFICIARIES; PARTICIPANT DATA
7.1 DESIGNATION OF BENEFICIARIES. Subject to such rules and limitations
as the Administrator may prescribe, each Participant from time to time may
designate one or
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<PAGE> 18
more persons (including a trust) to receive benefits payable with respect to the
Participant under the Plan upon or after the Participant's death, and may change
such designation at any time. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Administrator, and will be effective only when filed in writing with the
Administrator during the Participant's lifetime.
In the absence of a valid Beneficiary designation, or if, at the time any
benefit payment is due to a Beneficiary there is no living Beneficiary validly
named by the Participant, the Administrator shall cause such benefit to be paid
to the Participant's estate. In determining the existence or identity of anyone
entitled to a benefit payment, the Administrator may rely conclusively upon
information supplied by the Participant's personal representative, executor or
administrator.
7.2 AVAILABLE INFORMATION: MISSING PERSONS. Any communication, statement
or notice addressed to a Participant or to a Beneficiary at his or her last post
office address as shown on the Administrator's records shall be binding on the
Participant or Beneficiary for all purposes of the Plan. The Administrator shall
not be obliged to search for any Participant or Beneficiary beyond the sending
of a registered letter to such last known address. If the Administrator notifies
any Participant or Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Administrator within three (3) years thereafter,
then, except as otherwise required by law, if the location of one or more of the
next of kin of the Participant is known to the Administrator, the Administrator
may direct distribution of such amount to any one or more or all of such next of
kin, and in such proportions as the Administrator determines. If the location of
none of the foregoing persons can be determined, the Administrator shall have
the right to direct that the amount payable shall be deemed to be a forfeiture,
except that the dollar amount of the forfeiture, unadjusted for deemed gains or
losses in the interim, shall be paid by the Employer if a claim for the benefit
subsequently is made by the Participant or the Beneficiary to whom it was
payable. If a benefit payable to an unlocated Participant or Beneficiary is
subject to escheat pursuant to applicable state law, neither the Administrator
nor the Employer shall be liable to any person for any payment made in
accordance with such law.
ARTICLE 8
ADMINISTRATION
8.1 ADMINISTRATIVE AUTHORITY. Except as otherwise specifically provided
herein, the Plan shall be administered by the Administrator. The Administrator
shall have full discretionary authority to construe and administer the terms of
the Plan and its actions under the Plan shall be binding on all persons. Without
limiting the foregoing, the Administrator shall have full discretionary
authority to:
11
<PAGE> 19
(a) Resolve and determine all disputes or questions arising under
the Plan, and to remedy any ambiguities, inconsistencies or omissions in
the Plan.
(b) Adopt such rules of procedure and regulations as in its opinion
may be necessary for the proper and efficient administration of the Plan
and as are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules
and regulations adopted as above.
(d) Make determinations with respect to the eligibility of any
person to participate in the Plan or derive benefits hereunder and make
determinations concerning the crediting and adjustment of Accounts.
(e) Appoint such persons or firms, or otherwise act to obtain such
advice or assistance, as it deems necessary or desirable in connection
with the administration and operation of the Plan, and the Administrator
shall be entitled to rely conclusively upon, and shall be fully protected
in any action or omission taken by it in good faith reliance upon, the
advice or opinion of such firms or persons.
8.2 LITIGATION. Except as may be otherwise required by law, in any
action or judicial proceeding affecting the Plan, no Participant or Beneficiary
shall be entitled to any notice or service of process, and any final judgment
entered in such action shall be binding on all persons interested in, or
claiming under, the Plan.
8.3 CLAIMS PROCEDURE. Any person claiming a benefit under the Plan (a
"Claimant") shall present the claim, in writing, to the Administrator and the
Administrator shall respond in writing. If the claim is denied, the written
notice of denial shall state, in a manner calculated to be understood by the
Claimant:
(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is based;
(b) A description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation
of why such material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Administrator's
receipt of the claim, unless special circumstances require an extension of time
for processing the claim. If such an extension is required, written notice of
the extension shall be furnished by the Administrator to the
12
<PAGE> 20
Claimant within the initial ninety (90) day period and in no event shall such an
extension exceed a period of ninety (90) days from the end of the initial ninety
(90) day period. Any extension notice shall indicate the special circumstances
requiring the extension and the date on which the Administrator expects to
render a decision on the claim. Any claim not granted or denied within the
period noted above shall be deemed to have been denied.
Any Claimant whose claim is denied or deemed to have been denied under the
preceding sentence (or such Claimant's authorized representative) may, within
sixty (60) days after the Claimant's receipt of notice of the denial, or after
the date of the deemed denial, request a review of the denial by notice given,
in writing, to the Administrator. Upon such a request for review, the claim
shall be reviewed by the Administrator, which may, but shall not be required to,
grant the Claimant a hearing. In connection with the review, the Claimant may
have representation, may examine pertinent documents, and may submit issues and
comments in writing.
The decision on review normally shall be made within sixty (60) days of
the Administrator's receipt of the request for review. If an extension of time
is required due to special circumstances, the Claimant shall be notified, in
writing, by the Administrator, and the time limit for the decision on review
shall be extended to one hundred twenty (120) days. The decision on review shall
be in writing and shall state, in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include references to
the relevant Plan provisions on which the decision is based. The written
decision on review shall be given to the Claimant within the sixty (60) day (or,
if applicable, the one hundred twenty (120) day) time limit discussed above. If
the decision on review is not communicated to the Claimant within the sixty (60)
day (or, if applicable, the one hundred twenty (120) day) period discussed
above, the claim shall be deemed to have been denied upon review. All decisions
on review shall be final and binding with respect to all parties.
ARTICLE 9
AMENDMENT
9.1 RIGHT TO AMEND. The E.C.C., by written instrument executed by a duly
authorized representative, shall have the right to amend the Plan, at any time
and with respect to any provisions hereof, including without limitation with
respect to Compensation Deferrals and Employer Credits already made under the
Plan as of the date of such amendment, and all parties hereto or claiming any
interest hereunder shall be bound by such amendment; provided, however, that no
amendment of the Plan shall be effective to the extent it would cause the
balance of an Account, determined as of the date of such amendment and taking
into account the amendment, to be reduced below the balance of such Account
determined as of such date but disregarding the amendment.
13
<PAGE> 21
9.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN.
Notwithstanding the provisions of Section 9.1, the Plan may be amended by the
Administrator at any time, including retroactively, if the Administrator
determines that such amendment is necessary or advisable to ensure that the Plan
is an unfunded "top-hat" plan as described under ERISA sections 201(2),
301(a)(3), and 401(a)(1) and that the Plan does not result in taxable income to
any Participant or Beneficiary with respect to his or her Accounts hereunder
prior to the actual receipt of benefits. No such amendment shall be considered
prejudicial to any interest of a Participant or a Beneficiary hereunder. In
connection with any amendment described in this Section 9.2, the Administrator
may exclude any person from participation in the Plan and may cause the Accounts
maintained for the benefit of such excluded Participant to be promptly
distributed in a lump sum.
ARTICLE 10
TERMINATION
10.1 RIGHT OF THE EMPLOYER TO TERMINATE OR SUSPEND PLAN. The E.C.C.
reserves the right at any time to terminate the Plan or to suspend the operation
of the Plan for a fixed or indeterminate period of time. In the event of a
suspension of the Plan, the Administrator shall continue all aspects of the
Plan, other than Compensation Deferrals and Employer Credits, during the period
of the suspension, in which event payments hereunder will continue to be made
during the period of the suspension in accordance with Articles 5 and 6.
10.2 ALLOCATION AND DISTRIBUTION. This Section 10.2 shall become
operative on a complete termination of the Plan. The provisions of this Section
10.2 shall also become operative in the event of a partial termination of the
Plan, as determined by the Administrator, but only with respect to that portion
of the Plan attributable to the Participants to whom the partial termination is
applicable. Upon the effective date of any such event, notwithstanding any other
provisions of the Plan, no persons who were not theretofore Participants shall
be eligible to become Participants, and the vested balances of the Accounts of
all Participants and Beneficiaries shall be determined and distributed. All
distributions under this Section 10.2 shall be made in single lump sums except
as the Administrator shall determine.
ARTICLE 11
MISCELLANEOUS
11.1 LIMITATIONS ON LIABILITY OF EMPLOYER. The Employer's sole liability
under the Plan shall be to pay benefits under the Plan as expressly set forth
herein and subject to the terms hereof. Subject to the preceding sentence,
neither the establishment or administration of the Plan, nor any modification
nor the termination or suspension of the Plan, nor the creation of any account
under the Plan, nor the payment of any benefits under the Plan,
14
<PAGE> 22
nor any other action taken by the Employer or the Administrator with respect to
the Plan shall be construed as giving to any Participant, any Beneficiary or any
other person any legal or equitable right against the Administrator, the
Employer, or any officer or employer thereof. Without limiting the foregoing,
neither the Administrator nor the Employer in any way guarantees any
Participant's or Beneficiary's Account from loss or decline for any reason.
11.2 CONSTRUCTION. If any provision of the Plan is held to be illegal or
void, such illegality or invalidity shall not affect the remaining provisions of
the Plan, but the illegal or void provision shall be fully severable and the
Plan shall be construed and enforced as if said illegal or void provision had
never been inserted herein. For all purposes of the Plan, where the context
admits, the singular shall include the plural, and the plural shall include the
singular. Headings of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the construction of the
Plan. The laws of the Commonwealth of Massachusetts shall govern, control and
determine all questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions, except where those
laws are preempted by the laws of the United States. Participation under the
Plan will not give any Participant the right to be retained in the service of
the Employer, nor shall any loss or claimed loss of present or future benefits,
whether accrued or unaccrued, constitute an element of damages in any claim
brought in connection with a Participant's termination of employment.
No provision of the Plan shall be interpreted so as to give any individual
any right in any assets of the Employer which right is greater than the rights
of a general unsecured creditor of the Employer.
11.3 TAXES. Notwithstanding any other provision of the Plan, all
distributions and withdrawals hereunder shall be subject to reduction for
applicable income tax withholding and other legally or contractually required
withholdings. To the extent amounts credited under the Plan are includible in
"wages" for purposes of Chapter 21 of the Code, or are otherwise includible in
taxable income, prior to distribution or withdrawal the Employer may deduct the
required withholding with respect to such wages or income from compensation
currently payable to the Participant or the Administrator may reduce the
Participant's Accounts hereunder or require the Participant to make other
arrangements satisfactory to the Administrator for the satisfaction of the
Employer's withholding obligations.
11.4 SPENDTHRIFT PROVISION. No amount payable to a Participant or a
Beneficiary under the Plan will, except as otherwise specifically provided by
law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled thereto. Nothing herein shall be construed as limiting
the Employer's right to cause its obligations hereunder to be assumed by a
successor to all or a portion of its business or assets.
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<PAGE> 23
11.5 RETIREMENT EQUALIZATION BENEFITS. At the time a benefit is paid to a
Participant under The TJX Companies, Inc. Retirement Plan (the "Retirement
Plan") or The TJX Companies, Inc. Supplemental Executive Retirement Plan (the
"SERP") (the "Retirement Plan" and the "SERP" being hereinafter referred to as
the "Pension Plans"), the Participant shall be entitled to receive a retirement
equalization benefit having a value equal to the difference between (a) the
amount such Participant would have been entitled to receive under the Pension
Plans if none of his or her Salary had been deferred under this Plan and (b) the
amount such Participant actually receives under the Pension Plans. Such
retirement equalization benefit shall be payable in the same form that the
Participant elects to receive benefits under the Pension Plans. Such retirement
equalization benefit shall not be payable to the extent that the Participant is
entitled to receive an equalization benefit of comparable value under the SERP
or any other plan.
IN WITNESS WHEREOF, the Employer has caused the Plan to be executed and
its seal to be affixed hereto, effective as of the 1st day of October, 1998.
THE TJX COMPANIES, INC.
ATTEST/WITNESS
By:
/s/ Judith Casali /s/ Donald G. Campbell (SEAL)
- ------------------------------- -------------------------------
Print Name: Print Name:
Judith Casali Donald G. Campbell
- ------------------------------- -------------------------------
Date:
3-8-99
-------------------------------
16
<PAGE> 24
EXHIBIT A
DEFINITION OF "CHANGE OF CONTROL"
"Change of Control" shall mean the occurrence of any one of the following
events:
(a) there occurs a change of control of the Company of a nature that
would be required to be reported in response to Item 1(a) of the Current
Report on Form 8-K pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") or in any other filing under the
Exchange Act; provided, however, that if the Participant or a Participant
Related Party is the Person or a member of a group constituting the Person
acquiring control, a transaction shall not be deemed to be a Change of
Control as to a Participant unless the Committee shall otherwise determine
prior to such occurrence; or
(b) any Person other than the Company, any wholly-owned subsidiary
of the Company, or any employee benefit plan of the Company or such a
subsidiary becomes the owner of 20% or more of the Company's Common Stock
and thereafter individuals who were not directors of the Company prior to
the date such Person became a 20% owner are elected as directors pursuant
to an arrangement or understanding with, or upon the request of or
nomination by, such Person and constitute at least 1/4 of the Company's
Board of Directors; provided, however, that unless the Committee shall
otherwise determine prior to the acquisition of such 20% ownership, such
acquisition of ownership shall not constitute a Change of Control as to a
Participant if the Participant or a Participant Related Party is the
Person or a member of a group constituting the Person acquiring such
ownership; or
(c) there occurs any solicitation or series of solicitations of
proxies by or on behalf of any Person other than the Company's Board of
Directors and thereafter individuals who were not directors of the Company
prior to the commencement of such solicitation or series of solicitations
are elected as directors pursuant to an arrangement or understanding with,
or upon the request of or nomination by, such Person and constitute at
least 1/4 of the Company's Board of Directors; or
(d) the Company executes an agreement of acquisition, merger or
consolidation which contemplates that (i) after the effective date
provided for in such agreement, all or substantially all of the business
and/or assets of the Company shall be owned, leased or otherwise
controlled by another Person and (ii) individuals who are directors of the
Company when such agreement is executed shall not constitute a majority of
the board of directors of the survivor or successor entity immediately
after the effective date provided for in such agreement; provided,
however, that unless otherwise determined by the Committee, no transaction
shall constitute a Change of Control as to a
17
<PAGE> 25
Participant if, immediately after such transaction, the Participant or any
Participant Related Party shall own equity securities of any surviving
corporation ("Surviving Entity") having a fair value as a percentage of
the fair value of the equity securities of such Surviving Entity greater
than 125% of the fair value of the equity securities of the Company owned
by the Participant and any Participant Related Party immediately prior to
such transaction, expressed as a percentage of the fair value of all
equity securities of the Company immediately prior to such transaction
(for purposes of this paragraph ownership of equity securities shall be
determined in the same manner as ownership of Common Stock); and provided,
further, that, for purposes of this paragraph (d), if such agreement
requires as a condition precedent approval by the Company's shareholders
of the agreement or transaction, a Change of Control shall not be deemed
to have taken place unless and until such approval is secured (but upon
any such approval, a Change of Control shall be deemed to have occurred on
the date of execution of such agreement).
In addition, for purposes of this Exhibit A the following terms have the
meanings set forth below:
"Common Stock" shall mean the then outstanding Common Stock of the Company
plus, for purposes of determining the stock ownership of any Person, the number
of unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall
not include shares of Preferred Stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board of Directors of the Company shall expressly so determine in any future
transaction or transactions.
A Person shall be deemed to be the "owner" of any Common Stock:
(i) of which such Person would be the "beneficial owner," as such
term is defined in Rule 13d-3 promulgated by the Securities and Exchange
Commission (the "Commission") under the Exchange Act, as in effect on
March 1, 1989; or
(ii) of which such Person would be the "beneficial owner" for
purposes of Section 16 of the Exchange Act and the rules of the Commission
promulgated thereunder, as in effect on March 1, 1989; or
(iii) which such Person or any of its affiliates or associates (as
such terms are defined in Rule 12b-2 promulgated by the Commission under
the Exchange Act, as in effect on March 1, 1989) has the right to acquire
(whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement
18
<PAGE> 26
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options or otherwise.
"Person" shall have the meaning used in Section 13(d) of the Exchange Act,
as in effect on March 1, 1989.
A "Participant Related Party" shall mean, with respect to a Participant,
any affiliate or associate of the Participant other than the Company or a
Subsidiary of the Company. The terms "affiliate" and "associate" shall have the
meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the term
"registrant" in the definition of "associate" meaning, in this case, the
Company).
"Subsidiary" shall mean any corporation or other entity (other than the
Company) in an unbroken chain beginning with the Company if each of the entities
(other than the last entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the total combined voting power of all classes of
stock or other interests in one of the other corporations or other entities in
the chain.
"Committee" shall mean the Executive Compensation Committee of the
Board of Directors of the Company.
"Company" shall mean The TJX Companies, Inc.
Initially capitalized terms not defined above shall have the meanings
assigned to those terms in Article I of the Plan.
19
<PAGE> 1
EXHIBIT 10.12
As Amended on April 13, 1999
THE TJX COMPANIES, INC.
1993 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of this 1993 Stock Option Plan for Non-Employee Directors (the
"Plan") is to advance the interests of The TJX Companies, Inc. (the "Company")
by increasing the proprietary interest in the Company of non-employee members of
the Company's Board of Directors by providing a portion of their compensation in
options to acquire shares ("Shares") of the Company's common stock ("Common
Stock").
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company designated by the Board for that
purpose. The Committee shall have authority, not inconsistent with the express
provisions of the Plan, (a) to administer the issuance of options granted in
accordance with the formula set forth in this Plan to such directors as are
eligible to receive options; (b) to prescribe the form or forms of instruments
evidencing options and any other instruments required under the Plan and to
change such forms from time to time; (c) to adopt, amend and rescind rules and
regulations for the administration of the Plan; and (d) to interpret the Plan
and to decide any questions and settle all controversies and disputes that may
arise in connection with the Plan. Such determinations of the Committee shall be
conclusive and shall bind all parties. Transactions under this plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
Section 16 of the Securities Exchange Act of 1934 ("Rule 16b-3"). To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date approved by the shareholders
of the Company. No option shall be granted under the Plan after the day of the
annual meeting of stockholders held in 2002, but options previously granted may
extend beyond that date.
<PAGE> 2
4. SHARES SUBJECT TO THE PLAN
(a) NUMBER OF SHARES. The maximum number of Shares that may be delivered
upon the exercise of options granted under the Plan shall be 200,000. If any
option granted under the Plan terminates without having been exercised in full,
the number of Shares as to which such option was not exercised shall be
available for future grants within the foregoing limit.
(b) SHARES TO BE DELIVERED. Shares delivered under the Plan after April 7,
1998 shall be previously issued Shares acquired by the Company and held in
treasury. No fractional Shares shall be delivered under the Plan.
(c) CHANGES IN STOCK; RESTRUCTURING, ETC. In the event of a stock
dividend, stock split or combination of shares, the number and kind of shares of
stock or securities of the Company subject to options then outstanding or
subsequently granted under the Plan, the maximum number of shares or securities
that may be delivered under the Plan, the exercise price, and other relevant
provisions shall be appropriately adjusted by the Committee. In the event of any
other recapitalization, reorganization, extraordinary dividend or distribution
or restructuring transaction affecting the Common Stock, the number of shares
issuable under this Plan shall be subject to such adjustment as the Committee
may deem appropriate, and the number of shares issuable pursuant to any option
theretofore granted (whether or not then exercisable) and/or the option price
per share of such option shall be subject to such adjustment as the Committee
may deem appropriate with a view toward preserving the value of such option.
5. ELIGIBILITY FOR OPTIONS
Directors eligible to receive options under the Plan ("Non-Employee
Directors") shall be those directors who are not present or former employees of
the Company or of any subsidiary of the Company.
6. TERMS AND CONDITIONS OF OPTIONS
(a) NUMBER OF OPTIONS (REFLECTS 2 FOR 1 STOCK SPLIT EFFECTIVE JUNE, 1998).
In addition to options granted prior to the amendment of the Plan on April
13, 1999, on the date of each subsequent annual meeting, each Non-Employee
Director who has served since at least the previous annual meeting and is
continuing in office and each newly elected Non-Employee Director shall be
awarded an option covering 4,000 Shares. For purposes of this paragraph, each
Non-Employee Director elected to office by the Board since the then last annual
meeting shall be treated as a newly elected Non-Employee Director.
(b) EXERCISE PRICE. The exercise price of each option shall be 100% of the
fair market value per Share at the time the option is granted. In no event,
however, shall the option price be less, in the case of an original issue of
authorized stock, than par value per share. For
-2-
<PAGE> 3
purposes of this paragraph, the fair market value of a Share on any date shall
be the last sale price of a share of Common Stock on such day as reflected in
the New York Stock Exchange Composite Transactions Index or, if there was no
such reported price on such day, the latest day prior thereto on which there was
such a reported price.
(c) DURATION OF OPTIONS. The latest date on which an option may be
exercised (the "Final Exercise Date") shall be the date which is ten years from
the date the option was granted.
(d) EXERCISE OF OPTIONS.
(1) Each option shall become exercisable to the full extent of all
Shares covered thereby one year after the date of the grant.
(2) Any exercise of an option shall be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (i)
any documentation required by the Committee and (ii) payment in full
for the number of Shares for which the option is exercised.
(3) If tax withholding is required under applicable federal, state or
local tax laws, the Committee may withhold from the number of Shares
otherwise issuable to the individual upon exercise a number of
Shares with a fair market value equal to any federal, state or local
withholding tax requirements due upon the exercise of the option.
(4) If an option is exercised by the executor or administrator of a
deceased director, or by the person or persons to whom the option
has been transferred by the director's will or the applicable laws
of descent and distribution, the Company shall be under no
obligation to deliver Shares pursuant to such exercise until the
Company is satisfied as to the authority of the person or persons
exercising the option.
(e) PAYMENT FOR AND DELIVERY OF SHARES. Shares purchased under the Plan
shall be paid for as follows: (i) by certified or bank check or other instrument
or means acceptable to the Committee (in accordance with guidelines established
for this purpose), (ii) through the delivery of shares of Company common stock
(which, in the case of shares acquired from the Company, have been outstanding
for at least six months) having a fair market value on the last business day
preceding the date of exercise equal to the purchase price, (iii) by delivery of
an unconditional and irrevocable undertaking by a broker to deliver promptly to
the Company sufficient funds to pay the exercise price or (iv) by any
combination of the permissible forms of payment.
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<PAGE> 4
An option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him or her under
the Plan.
The Company shall not be obligated to deliver any Shares (1) until, in the
opinion of the Company's counsel, all applicable federal, state and foreign laws
and regulations have been complied with, and (2) if the Company's common stock
outstanding is at the time listed on any stock exchange, until the Shares to be
delivered have been listed or authorized to be listed on such exchange upon
official notice of issuance, and (3) until all other legal matters in connection
with the issuance and delivery of such Shares have been approved by the
Company's counsel. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the option, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Shares bear an appropriate legend
restricting transfer.
(f) NONTRANSFERABILITY OF OPTIONS. No option may be transferred other than
by will or by the laws of descent and distribution, and during a director's
lifetime an option may be exercised only by him or her.
(g) DEATH AND DISABILITY OF A DIRECTOR. Upon the death or disability (as
determined by the Committee) of any director granted options under this Plan,
all options not then exercisable shall terminate. All options held by the
director that are exercisable immediately prior to such event may be exercised
by such director or by his or her executor or administrator, or by the person or
persons to whom the option is transferred by will or the applicable laws of
descent and distribution, at any time within three years after such event. After
completion of that three-year period, such options shall terminate to the extent
not previously exercised. Notwithstanding the foregoing, options held by a
director who dies in the third year following such disability shall remain
exercisable for one year following death. In no event shall any option referred
to in this paragraph 6(g) be exercisable beyond its stated term, if earlier.
(h) RETIREMENT OF A DIRECTOR. Options granted under this Plan prior to
April 13, 1999 shall terminate at the time of a director's Retirement (as
defined below) to the extent not then exercisable. Options granted under this
Plan on or after April 13, 1999 which are held by a director at his or her
Special Service Retirement (as defined below), to the extent not then fully
exercisable, shall continue to become exercisable during the post-retirement
exercise period described below as though such director had remained a director
during such period, or on such accelerated basis as the Committee shall at any
time determine. Unless terminated in accordance with the foregoing, each option
held by a director at the time of his or her Retirement or Special Service
Retirement may thereafter be exercised (to the extent exercisable) for a period
of three years from the date of such retirement or until the expiration of the
stated term of the option, if earlier. The death of a director during the final
year of such exercise period shall extend such period for one year following
death or until the expiration of the stated term of the option, if earlier. As
used herein, "Retirement" shall mean retirement
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<PAGE> 5
from the Board after attaining age 65 with at least 10 years of service as a
director. "Special Service Retirement" shall mean retirement from the Board
after attaining age 65 with at least 10 years of service as a director or after
attaining age 60 with at least 20 years of service as a director.
(i) OTHER TERMINATION OF STATUS OF DIRECTOR. If a director's service with
the Company terminates for any reason other than death, disability, Retirement
or Special Retirement as specified in paragraph 6(g) or 6(h), all options held
by the director that are not then exercisable shall terminate. Options that are
exercisable on the date of termination shall continue to be exercisable for a
period of three months (or six months in the case of options granted after April
8, 1998), but not beyond their stated term if earlier. After completion of such
three-month or six month period, such options shall terminate to the extent not
previously exercised, expired or terminated.
(i) MERGERS, ETC. In the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of a
sale of all or substantially all assets or a dissolution or liquidation of the
Company, all options hereunder will terminate; provided, that 20 days prior to
the effective date of any such merger, consolidation, sale, dissolution, or
liquidation, all options outstanding hereunder that are not otherwise
exercisable shall become immediately exercisable.
7. EFFECT, TERMINATION AND AMENDMENT
The Committee may at any time terminate the Plan as to any further grants
of options. The Board may at any time or times amend the Plan for any purpose
which may at the time be permitted by law; provided, that except to the extent
expressly required or permitted by the Plan, no such amendment will, without the
approval of the stockholders of the Company, effectuate a change for which
stockholder approval is required in order for the Plan to continue to qualify
under Rule 16b-3.
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<PAGE> 1
Exhibit 10.13
THE TJX COMPANIES, INC.
DEFERRED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. INTRODUCTION. Reference is made to The TJX Companies, Inc. Retirement
Plan for Directors (formerly the Zayre Corp. Retirement Plan for Directors) (the
"Directors Retirement Plan"), under which non-employee members of the board of
directors of The TJX Companies, Inc. (the "Company") earned benefits payable in
accordance with the terms of the Directors Retirement Plan. The Deferred Stock
Plan for Non-Employee Directors set forth herein (as the same may be amended,
the "Plan") has been adopted (i) to replace benefits under the Directors
Retirement Plan with a commitment on the part of the Company to deliver to
eligible directors or their beneficiaries, upon the director's retirement or
earlier termination, common stock of the Company ("Stock") in an amount and
subject to the terms set forth below, and (ii) to provide for continuing awards
of deferred Stock to eligible directors on the terms set forth below. A maximum
of 50,000 shares of Stock (appropriately adjusted by the Administrator for
mergers, consolidations, stock splits, stock dividends and similar changes in
capitalization affecting the Stock that occur after January 1, 1998) are
authorized for delivery under the Plan.
2. ELIGIBILITY. Participants in the Plan (each, a "Participant") shall
consist of the individuals listed on Exhibit A hereto and each other individual
who from time to time after January 1, 1998 serves as a member of the Board of
Directors of the Company. No individual who is or at any time has been an
employee of the Company or of any company while such company is a direct or
indirect subsidiary of the Company shall be eligible to participate in the Plan.
3. ADMINISTRATION. The Plan shall be administered by the Executive
Compensation Committee of the Board of Directors of the Company, or its delegate
(the "Administrator"). The Administrator shall have full discretion, consistent
with the terms of the Plan, to interpret the Plan and make all determinations
hereunder.
4. CONVERSION OF EXISTING BENEFITS. Each Participant listed on Exhibit
A, each of whom has accrued a benefit under the Directors Retirement Plan, shall
have an initial credit under the Plan equal to the number of shares set forth
opposite such Participant's name on Exhibit A. Units representing such shares
shall be credited to the Participant's Account in accordance with paragraph 5
below.
5. ACCOUNT. For each Participant, there shall be maintained on the books
of the
<PAGE> 2
Company a memorandum account (the "Account") reflecting the Participant's right
to receive shares of Stock in the future. In the case of a Participant listed on
Exhibit A, the Account shall have an opening balance as of January 1, 1998 equal
to the number of shares specified in Exhibit A. Thereafter, there shall be
credited to the Account of each Participant who is elected a director at (or if
previously elected, continues as a director after) each annual meeting of the
stockholders of the Company a number of units equal to $10,000 divided by the
closing price of a share of Stock on the date of such annual meeting. The number
of share units credited to a Participant's Account shall be appropriately
adjusted by the Administrator for mergers, consolidations, stock splits, stock
dividends and similar changes in capitalization affecting the Stock that occur
after the date such share units are credited to the Account. In the case of any
cash dividend for which the ex-dividend date occurs after the date share units
are credited to an Account, there shall be added to the Account a number of
share units equal to the dividend that would have been paid on the shares
represented by the units credited to the Account (before application of this
sentence) had those shares been outstanding, divided by the closing price of one
share of Stock on the date the dividend is paid. The share units reflected on
the books of the Company as credited to a Participant's Account shall be
"phantom" or notional shares only and shall not entitle the Participant to any
voting rights or to any dividend or distribution rights except as expressly set
forth herein. Nothing herein shall obligate the Company to issue or set aside
shares of Stock, in trust or otherwise, to meet its contractual obligations
under the Plan prior to distribution of a Participant's benefit.
6. DELIVERY OF STOCK. As soon as practicable following the earlier of a
Change of Control (as defined in the Company's 1986 Stock Incentive Plan as from
time to time amended and in effect) or a termination for any reason (including
death) of a Participant's service as a director of the Company, in each case
occurring after January 1, 1998, the Company shall deliver to the Participant
(or in the event of the Participant's death, to his or her designated
beneficiary) a number of shares of Stock equal to the number of whole share
units credited to the Participant's Account, plus cash equal to the fair market
value of any fractional share units credited to the Account. The Company may
withhold such required taxes (if any), as the Administrator determines as a
precondition to the delivery of any shares or the payment of any cash hereunder.
Shares of Stock delivered under the Plan shall consist of treasury shares.
7. DESIGNATION OF BENEFICIARY. A Participant may at any time designate a
beneficiary or beneficiaries to receive any shares or cash remaining to be paid
hereunder at the time of the Participant's death. Any such designation or change
in designation shall be effective only if made in writing, in form acceptable to
the Administrator, and received by the Administrator prior to the Participant's
death. In the absence of an effective beneficiary designation hereunder, any
amounts payable hereunder upon the Participant's death shall be paid to his or
her estate.
<PAGE> 3
8. NO ASSIGNMENT; NATURE OF RIGHTS. Rights under the Plan are not
transferable or subject to assignment or alienation of any kind. The obligations
of the Company under the Plan are unfunded contractual obligations only, and the
rights, if any, of a Participant or beneficiary to any benefits or distributions
hereunder shall be no greater than those of an unsecured general creditor of the
Company.
9. BINDING ON SUCCESSORS. The obligations of the Company under the Plan
shall be binding on any successor to the Company or to its business, by merger
or otherwise.
10. AMENDMENT AND TERMINATION. The Company by vote of its Board of
Directors may at any time terminate the Plan or at any time and from time to
time amend the Plan; provided, that no such action of termination or amendment
shall (except to the extent consistent with an adjustment to Accounts described
in paragraph 5) reduce the number of share units credited to a Participant's
Account immediately prior to the effective date of such termination or
amendment. Upon termination of the Plan, the Administrator shall promptly
distribute (in whole shares of Stock and cash in lieu of fractional shares) to
each Participant the balance in his or her Account. In all events the Plan will
terminate when the last Account is distributed.
11. GOVERNING LAW. The Plan shall be construed and administered in
accordance with the laws of the State of Delaware.
<PAGE> 4
EXHIBIT A
Name of Director Number of Shares*
---------------- -----------------
Phyllis B. Davis 7,148.68
Dennis F. Hightower 1,017.20
John M. Nelson 3,074.68
John F. O'Brien 919.68
Robert Shapiro 4,397.00
Willow B. Shire 1,251.26
Fletcher H. Wiley 4,130.26
* Reflects June 1998 two-for-one stock split
<PAGE> 1
EXHIBIT 10.17
THE TJX RABBI TRUST (1997-1)
AGREEMENT OF TRUST
This Agreement made as of April 9, 1997 by and between The TJX
Companies, Inc., a Delaware corporation (the "Employer"), and State Street Bank
and Trust Company (the "Trustee");
WHEREAS the Employer and Bernard Cammarata, President and Chief
Executive Officer of the Employer (the "Executive"), are parties to an
employment agreement dated April 9, 1997 (the "Employment Agreement");
WHEREAS the Employment Agreement provides for certain amounts of
compensation to be paid by the Employer to the Executive on a deferred basis
under a memorandum account (the "Account") established under the Employment
Agreement;
WHEREAS, in accordance with the terms of the Employment Agreement, the
Employer wishes to establish a trust to be known as The TJX Rabbi Trust (1997-1)
(the "Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Employer's creditors in the event of the Employer's
Insolvency, as herein defined, until paid to the Executive or his beneficiaries
in such manner and at such times as specified in the Employment Agreement;
WHEREAS it is the intention of the parties that the Trust shall
constitute an unfunded arrangement consistent with exemption of the Employment
Agreement from Parts 2, 3 and 4 of Subtitle B of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and with deferral
of income for income tax purposes;
WHEREAS it is the intention of the Employer to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Employment Agreement;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) The Employer hereby deposits with the Trustee in trust two hundred
eighty thousand three hundred sixty-seven dollars and forty-three cents
($280,367.43) and 225,000 shares of common stock of the Employer which, together
with any additional contributions and earnings thereon, shall become the
principal of the Trust to be held, administered and disposed of by the Trustee
as provided in this Trust Agreement. Promptly upon receipt of such deposit, the
Trustee shall pay $225,000 thereof to The TJX Companies, Inc. in payment of the
par value of
<PAGE> 2
the contributed shares, whereupon said shares shall be deemed for all purposes
of this Trust Agreement as having been issued to the Trust and held therein from
and after the effective date hereof.
(b) The Trust hereby established shall be irrevocable, subject to the
terms of this Trust Agreement.
(c) The Trust is intended to be a grantor trust, of which the Employer
is the grantor, within the meaning of subpart E, part I, subchapter J, Chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of the Employer and except as otherwise
expressly provided herein shall be used exclusively to pay to Executive or his
beneficiary amounts credited to the Executive under the Account ("Account-Based
Benefits"). The Executive and his beneficiaries shall have no preferred claim
on, nor any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Employment Agreement and this Trust Agreement shall be
mere unsecured contractual rights of the Executive and his beneficiaries against
the Employer. Any assets held by the Trust will be subject to the claims of the
Employer's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) The Employer, in its sole discretion, may at any time or from time
to time make additional deposits of cash or other property in trust with the
Trustee to augment the principal to be held, administered and disposed of by the
Trustee as provided in this Trust Agreement. Neither the Trustee nor Executive
or his beneficiary shall have any right to compel such additional deposits.
SECTION 2. PAYMENTS TO THE EXECUTIVE AND HIS BENEFICIARIES.
(a) Except as provided at Section 3, the Trustee shall make
Account-Based Benefit payments to the Executive from the Trust in such amounts
and at such times as the Employer, acting through the Chief Financial Officer of
the Employer or his authorized delegate, or through such other body or person as
may be designated by the Executive Compensation Committee of the Board of
Directors of the Employer (the "ECC") shall direct (the Chief Financial Officer
or his authorized delegate, or such other body or person, being hereinafter
referred to as the "Authorizing Agent"). The Chairman of the ECC or, in the
absence of direction from such Chairman, the Chief Financial Officer of the
Employer shall designate in a writing delivered to the Trustee the individuals
authorized to act on behalf of the Authorizing Agent for all purposes of this
Trust Agreement. The Employer shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the deferral of compensation or the payment of benefits
pursuant to the terms of the Employment Agreement and shall pay amounts withheld
to the appropriate taxing authorities.
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<PAGE> 3
(b) The entitlement of the Executive or beneficiary to Account-Based
Benefits shall be determined by the ECC or such party as it shall designate
under the Employment Agreement, and any claim for such Benefits shall be
considered and reviewed under the procedures set out in the Employment
Agreement.
(c) Upon certification to the Trustee by the Authorizing Agent that the
Employer has made a payment directly to the Executive of all or a portion of the
Employer's obligation to Executive with respect to an Account-Based Benefit
payment, the Trustee shall reimburse the Employer for such payment out of the
assets of the Trust. In addition, if the principal of the Trust, and earnings
thereon, are not sufficient to make payments of Account-Based Benefits in
accordance with the terms of the Employment Agreement, the Employer shall make
the balance of each such payment as it falls due.
(d) As of the end of each calendar quarter, the value of the assets of
the Trust shall be determined by the Trustee, based, in the case of assets with
a readily ascertainable market value, on such assets' market value and, in the
case of assets, if any, without a readily ascertainable market value, on such
valuation methodology reasonably acceptable to both the Trustee and the
Employer. In the event the value of the assets of the Trust as of the end of a
calendar quarter exceeds the then balance of the Account as determined by the
Employer, the Trustee shall, at the request of the Employer, distribute such
excess to the Employer. In the event the balance of the Account as of the end of
such calendar quarter, as determined by the Employer, exceeds the value of the
assets of the Trust as of such date, the Employer shall promptly make a deposit
to the Trust in cash or other assets having a value equal to such excess.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
THE EMPLOYER IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to the Executive and
his beneficiaries if the Employer is Insolvent. The Employer shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) the Employer is unable
to pay its debts as they become due, or (ii) the Employer is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Employer under federal and state law as set
forth below.
(1) The Board of Directors and the Chief Financial Officer of the
Employer shall have the duty to inform the Trustee in writing
of the Employer's Insolvency. If a person claiming to be a
creditor of the Employer alleges in writing to the Trustee
that the Employer has become Insolvent, the Trustee shall
determine whether the
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<PAGE> 4
Employer is Insolvent and, pending such determination, the
Trustee shall discontinue payment of benefits to the Executive
or his beneficiaries.
(2) Unless the Trustee has actual knowledge of the Employer's
Insolvency, or has received notice from the Employer or a
person claiming to be a creditor alleging that the Employer is
Insolvent, the Trustee shall have no duty to inquire whether
the Employer is Insolvent. The Trustee may in all events rely
on such evidence concerning the Employer's solvency as may be
furnished to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the
Employer's solvency.
(3) If at any time the Trustee has determined that the Employer is
Insolvent, the Trustee shall discontinue payments to the
Executive or his beneficiaries and shall hold the assets of
the Trust for the benefit of the Employer's general creditors.
Nothing in this Trust Agreement shall in any way diminish any
rights of the Executive or his beneficiaries to pursue their
rights as general creditors of the Employer with respect to
benefits due under the Employment Agreement.
(4) The Trustee shall resume the payment of benefits to the
Executive or his beneficiaries in accordance with Section 2 of
this Trust Agreement only after the Trustee has determined
that the Employer is not Insolvent (or is no longer
Insolvent).
SECTION 4. PAYMENTS TO THE EMPLOYER.
Except as provided in Section 1(a), 2(c), 2(d), 3 or 5(c) hereof, the
Employer shall have no right or power to direct the Trustee to return to the
Employer or to divert to others any of the Trust assets before all Account-Based
Benefits payments have been made to the Executive or his beneficiaries pursuant
to the terms of the Employment Agreement.
SECTION 5. INVESTMENT AUTHORITY.
(a) The Trustee shall invest the principal of the Trust and any
earnings thereon in accordance with the directions of the Authorizing Agent. The
Trustee shall have no duty to inquire into or review the appropriateness of the
investments made pursuant to the directions of the Authorizing Agent.
Transactions involving assets of the Trust shall be effected through a brokerage
account established with such broker and on such terms as shall be mutually
agreeable to the Authorizing Agent and the Trustee.
(b) Subject to Section 5(a) and in accordance with the directions of
the Authorizing Agent, the Trustee may invest in securities (including stock or
rights to acquire stock) or
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<PAGE> 5
obligations issued by The TJX Companies, Inc. Any dividend or voting rights with
respect to Trust assets will be exercised by the Employer.
(c) The Employer acting through the Authorizing Agent shall have the
right at any time and from time to time in its sole discretion to substitute
assets of equal fair market value, including cash, for any asset, including
cash, held by the Trust.
SECTION 6. DISPOSITION OF INCOME.
During the term of the Trust and subject to the terms of this Trust
Agreement, all income received by the Trust, net of expenses and taxes paid by
the Trust, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY THE TRUSTEE.
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
the Employer and the Trustee. Within 60 days following the close of each
calendar year and within 60 days after the removal or resignation of the
Trustee, the Trustee shall deliver to the Employer a written account of its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF THE TRUSTEE.
(a) The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. In the event of a dispute
between the Employer and a party, the Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
(b) The Employer agrees to indemnify and hold harmless the Trustee from
and against any losses, costs, damages, claims or expenses, including reasonable
attorneys' fees, which the Trustee may incur or pay out in connection with, or
otherwise arising out of, the performance by the Trustee of its duties hereunder
(including, but not limited to, any liability (i) relating to the Employer's
provision for reporting and withholding of any federal, state or local
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<PAGE> 6
taxes pursuant to Section 2(a) or (ii) to any person for any action taken
pursuant to a direction, request or approval given by the Employer or the
Authorizing Agent which is contemplated by, and in conformity with, the terms of
the Trust and is given in writing by the Employer or the Authorizing Agent) or
arising solely by reason of the Trustee having the status as the holder of the
Trust, provided, however, that the Employer shall not indemnify or hold harmless
the Trustee from any such losses, costs, damages, claims or expenses resulting
from the negligence or malfeasance of the Trustee. Any amount owed by the
Employer to the Trustee under this Section, to the extent not paid by the
Employer, shall be a charge upon, and may be reimbursed from, the Trust.
(c) The Trustee may consult with legal counsel (who may also be counsel
for the Employer) with respect to any of its duties or obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder. The Trustee shall timely
file, or cause to be filed, Internal Revenue Service Form 1041 (or its successor
form), as required by law or regulation, and any similar information tax return
required under state or local law.
(e) The Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person,
other than the Trustee, the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or to applicable law, the Trustee shall not have any power that
could give the Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF THE TRUSTEE.
The Trustee shall be entitled to a fee for its services hereunder
determined in accordance with Exhibit A. All ordinary investment and
administrative expenses of the Trust, including the Trustee's fees, shall be
paid from the Trust unless paid by the Employer in its sole discretion. The
Employer shall pay any other expenses of the Trust, but if such expenses remain
unpaid 30 days after they are billed to the Employer, they shall be paid from
the Trust.
-6-
<PAGE> 7
SECTION 10. RESIGNATION AND REMOVAL OF THE TRUSTEE.
(a) The Trustee may resign at any time by written notice to the
Employer, which shall be effective 30 days after receipt of such notice unless
the Employer and the Trustee agree otherwise.
(b) The Trustee may be removed by the Employer on 30 days' notice or
upon shorter notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 30 days after receipt of notice
of resignation, removal or transfer, unless the Employer extends the time limit.
(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraph (a) or (b) of this section. If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If the Trustee resigns or is removed in accordance with Section
10(a) or (b) hereof, the Employer may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace the Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by the Employer or the
successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for, and
the Employer shall indemnify and defend the successor Trustee from, any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
-7-
<PAGE> 8
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Employer. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Employment Agreement or make the
Trust revocable (except as provided under the Trust Agreement as in effect
before such amendment), unless the Executive (if alive) or his beneficiaries (if
the Executive is deceased) have consented in writing to such amendment.
(b) The Trust shall not terminate until the date on which the Executive
or his beneficiaries are no longer entitled to Account-Based Benefits. Upon
written approval of the Executive (or, if he is deceased his beneficiaries) if
he (or his beneficiaries) continue to be entitled to payment of benefits
pursuant to the terms of the Employment Agreement, the Employer may terminate
the Trust prior to the time all benefit payments have been made. Upon
termination of the Trust, any assets remaining in the Trust shall be returned to
the Employer.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to the Executive or his beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
SECTION 14. EFFECTIVE DATE.
This Trust Agreement shall be effective as of the date first above
written.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this agreement to be signed
on their behalves by their duly authorized officers.
The TJX Companies, Inc.
By: /s/ Donald G. Campbell
-----------------------------------------
Title: Executive Vice President - Finance
Chief Financial Officer
Date: May 14, 1997
State Street Bank and Trust Company
By: /s/ Kimberly D. Gluck
-----------------------------------------
Title: Vice President
Date: 5/14/97
-9-
<PAGE> 10
EXHIBIT A
THE TJX RABBI TRUST (1997-1)
SCHEDULE OF TRUSTEE FEES
The following annual trustee fees shall be payable to the Trustee for
the performance of its services as Trustee under the Trust:
$2,500 plus
10 basis points on the first $10,000,000 of assets in the Trust
5 basis points on the second $10,000,000 of assets in the Trust
Minimum annual fee: $5,000
No basis points will be levied on stock of The TJX Companies, Inc. held
in the Trust
Fees will be billed quarterly in arrears, with such fees based on the
average net asset value of the assets of the Trust for the previous three
months.
-10-
<PAGE> 1
EXHIBIT 11
THE TJX COMPANIES, INC.
DETAILED COMPUTATIONS OF NET INCOME PER COMMON SHARE
BASIC AND DILUTED
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------------------------------------
January 30, January 31, January 25, January 27, January 28,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
The computation of net income available
and adjusted shares outstanding follows:
Net income $424,154,000 $304,815,000 $363,123,000 $ 26,261,000 $ 82,619,000
Less provision for dividends on
preferred stock in each year 3,523,000 11,668,000 13,741,000 9,407,000 7,156,000
------------ ------------ ------------ ------------ ------------
A) Net income used for basic computation 420,631,000 293,147,000 349,382,000 16,854,000 75,463,000
------------ ------------ ------------ ------------ ------------
Add (where dilutive):
Provision for preferred dividends 3,523,000 11,668,000 13,741,000 93,000 --
------------ ------------ ------------ ------------ ------------
B) Net income used for diluted computation $424,154,000 $304,815,000 $363,123,000 $ 16,947,000 $ 75,463,000
============ ============ ============ ============ ============
C) Weighted average number of common shares
outstanding, used for basic calculation 318,073,081 321,474,046 300,926,904 289,660,704 292,541,336
Add (where dilutive):
Assumed conversion of:
Convertible preferred stock 10,914,354 24,032,172 46,331,584 1,064,628 --
Stock options 5,660,515 4,105,966 3,391,612 56,568 1,296,464
------------ ------------ ------------ ------------ ------------
D) Adjusted shares outstanding, used for
fully diluted computation 334,647,950 349,612,184 350,650,100 290,781,900 293,837,800
============ ============ ============ ============ ============
Earnings per share:
Basic (A divided by C) $ 1.32 $ 0.91 $ 1.16 $ 0.06 $ 0.26
Diluted (B divided by D) $ 1.27 $ 0.87 $ 1.04 $ 0.06 $ 0.26
</TABLE>
Note: Share amounts above are presented as if the 2 for 1 stock split had been
effective for each period.
<PAGE> 1
(L = British Pound Sterling)
EXHIBIT 13
PORTIONS OF THE TJX COMPANIES, INC.
1998 ANNUAL REPORT
<PAGE> 2
STORE LOCATIONS
<TABLE>
<CAPTION>
at 1/30/99 T.J. Maxx Marshalls
- ---------- --------- ---------
<S> <C> <C>
Alabama 10 2
Arizona 8 4
Arkansas 5 -
California 45 66
Colorado 8 3
Connecticut 23 19
Delaware 3 2
District of Columbia 1 -
Florida 42 41
Georgia 23 20
Idaho 1 -
Illinois 33 34
Indiana 9 4
Iowa 4 1
Kansas 4 3
Kentucky 7 1
Louisiana 4 5
Maine 5 1
Maryland 7 13
Massachusetts 43 38
Michigan 29 7
Minnesota 12 10
Mississippi 3 -
Missouri 6 7
Montana 1 -
Nebraska 2 1
Nevada 4 3
New Hampshire 9 6
New Jersey 16 28
New Mexico 1 -
New York 41 38
North Carolina 18 12
North Dakota 3 -
Ohio 33 7
Oklahoma 3 1
Oregon 5 3
Pennsylvania 29 16
Puerto Rico - 11
Rhode Island 5 3
South Carolina 10 5
South Dakota 1 -
Tennessee 14 7
Texas 24 29
Utah 5 -
Vermont 2 -
Virginia 23 19
Washington 8 4
West Virginia 1 -
Wisconsin 11 1
--- ---
Total Stores 604 475
=== ===
</TABLE>
Winners Apparel Ltd. operates 87 stores in Canada; HomeGoods operates 35
stores in the United States; T.K. Maxx operates 36 stores in the United
Kingdom, 1 store in the Republic of Ireland, and 2 in the Netherlands; A.J.
Wright operates 6 stores in the United States.
SHAREHOLDER INFORMATION
COMMON STOCK
TRANSFER AGENT AND REGISTRAR
EquiServe Limited Partnership
P.O. Box 8200
Boston, Massachusetts 02266-8200
1-800-426-5523
TRUSTEES
PUBLIC DEBENTURES
6 5/8% Promissory Notes
7% Promissory Notes
The First National Bank of Chicago
Chicago, Illinois
AUDITORS
PricewaterhouseCoopers LLP
INDEPENDENT COUNSEL
Ropes & Gray
FORM 10-K
Information concerning the Company's operations and financial position is
provided in this report and in the Form 10-K filed with the Securities and
Exchange Commission. A copy of the 10-K may be obtained without charge by
writing or calling:
The TJX Companies, Inc.
Investor Relations
770 Cochituate Road
Framingham, Massachusetts 01701
(508) 390-2323
INVESTOR RELATIONS
Analysts and investors seeking financial data about the Company are asked to
visit our corporate Website at http://www.tjx.com or to contact:
Sherry Lang, Investor and Public Relations Director
(508) 390-2323
ANNUAL MEETING
The 1999 annual meeting will be held at 11:00 a.m. on Tuesday, June 8, 1999
at BankBoston, Lobby Auditorium, 1st Floor, 100 Federal Street, Boston,
Massachusetts
EXECUTIVE OFFICES
Framingham, Massachusetts 01701
FOR THE STORE NEAREST YOU, CALL:
T.J. Maxx: 1-800-2-TJMAXX
Marshalls: 1-800-MARSHALLS
Winners: 1-800-646-WINN (in Canada)
HomeGoods: 1-800-614-HOME
T.K. Maxx: (01923) 475797 (in the U.K.)
A.J. Wright: 1-888-SHOPAJW
<PAGE> 3
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------
January 30, January 31, January 25,
Dollars in Thousands Except Per Share Amounts 1999 1998 1997
- --------------------------------------------- ------------ ------------ ------------
(53 weeks)
<S> <C> <C> <C>
Net sales $ 7,949,101 $ 7,389,069 $ 6,689,410
------------ ------------ ------------
Cost of sales, including buying and occupancy costs 5,957,415 5,676,541 5,198,783
Selling, general and administrative expenses 1,285,988 1,185,755 1,087,137
Interest expense, net 1,686 4,502 37,350
------------ ------------ ------------
Income from continuing operations before
income taxes and extraordinary item 704,012 522,271 366,140
Provision for income taxes 270,810 215,679 152,314
------------ ------------ ------------
Income from continuing operations
before extraordinary item 433,202 306,592 213,826
Discontinued operations:
Income from discontinued operations, net of income taxes -- -- 29,361
Gain (loss) on disposal of discontinued
operations, net of income taxes (9,048) -- 125,556
------------ ------------ ------------
Income before extraordinary item 424,154 306,592 368,743
Extraordinary (charge), net of income taxes -- (1,777) (5,620)
------------ ------------ ------------
Net income 424,154 304,815 363,123
Preferred stock dividends 3,523 11,668 13,741
------------ ------------ ------------
Net income available to common shareholders $ 420,631 $ 293,147 $ 349,382
============ ============ ============
Basic earnings per share:
Income from continuing operations
before extraordinary item $ 1.35 $ 0.92 $ .66
Net income $ 1.32 $ 0.91 $ 1.16
Weighted average common shares basic 318,073,081 321,474,046 300,926,904
Diluted earnings per share:
Income from continuing operations
before extraordinary item $ 1.29 $ 0.88 $ .61
Net income $ 1.27 $ 0.87 $ 1.04
Weighted average common shares diluted 334,647,950 349,612,184 350,650,100
Cash dividends per share $ .12 $ 0.10 $ .07
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 4
THE TJX COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 30, January 31,
In Thousands 1999 1998
- ------------ ----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 461,244 $ 404,369
Accounts receivable 67,345 60,735
Merchandise inventories 1,186,068 1,190,170
Prepaid expenses 28,448 27,357
----------- ----------
Total current assets 1,743,105 1,682,631
----------- ----------
Property at cost:
Land and buildings 115,485 108,729
Leasehold costs and improvements 547,099 480,964
Furniture, fixtures and equipment 711,320 611,470
----------- ----------
1,373,904 1,201,163
Less: accumulated depreciation and amortization 617,302 515,027
----------- ----------
756,602 686,136
Other assets 27,436 36,645
Deferred income taxes 22,386 --
Goodwill and tradename, net of amortization 198,317 204,220
----------- ----------
Total Assets $ 2,747,846 $2,609,632
=========== ==========
LIABILITIES
Current liabilities:
Current installments of long-term debt $ 694 $ 23,360
Accounts payable 617,159 582,791
Accrued expenses and other current liabilities 688,993 611,506
----------- ----------
Total current liabilities 1,306,846 1,217,657
----------- ----------
Long-term debt, exclusive of current installments 220,344 221,024
Deferred income taxes -- 6,859
SHAREHOLDERS' EQUITY
Preferred stock at face value, authorized 5,000,000 shares,
par value $1, issued and outstanding cumulative convertible
stock of 727,300 shares of 7% Series E at January 31, 1998 -- 72,730
Common stock, authorized 600,000,000 shares, par value $1,
issued and outstanding 322,140,770 and 159,901,247 shares 322,141 159,901
Additional paid-in capital -- 198,736
Accumulated other comprehensive income (loss) (1,529) 3,317
Retained earnings 900,044 729,408
----------- ----------
Total shareholders' equity 1,220,656 1,164,092
----------- ----------
Total Liabilities and Shareholders' Equity $ 2,747,846 $2,609,632
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 5
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------
January 30, January 31, January 25,
In Thousands 1999 1998 1997
- ------------ ---------- ---------- ----------
(53 weeks)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 424,154 $ 304,815 $ 363,123
Adjustments to reconcile net income to net cash
provided by operating activities:
(Income) from discontinued operations,
net of income taxes -- -- (29,361)
Loss (gain) on disposal of discontinued operations 9,048 -- (125,556)
Extraordinary charge -- 1,777 5,620
Depreciation and amortization 136,531 124,891 126,830
Property disposals and asset write-downs 6,037 18,778 25,399
Other, net (6,296) (3,928) (732)
Changes in assets and liabilities, excluding
effect of acquisitions and dispositions:
(Increase) in accounts receivable (6,610) (3,460) (2,131)
(Increase) decrease in merchandise inventories 4,102 (130,665) 198,983
(Increase) decrease in prepaid expenses (1,091) (10,978) 27
Increase in accounts payable 34,368 48,846 95,677
Increase in accrued expenses
and other current liabilities 62,491 39,184 11,928
(Decrease) in deferred income taxes (19,965) (3,793) (5,344)
--------- --------- ---------
Net cash provided by operating activities 642,769 385,467 664,463
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (207,742) (192,382) (119,153)
Proceeds from sale of other assets 9,421 15,697 --
Acquisition of Marshalls, net of cash acquired -- -- (49,327)
Proceeds from (adjustments to) sale
of discontinued operations -- (33,190) 222,800
--------- --------- ---------
Net cash provided by (used in) investing activities (198,321) (209,875) 54,320
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (23,360) (27,179) (46,506)
Prepayment of long-term debt -- -- (455,560)
Proceeds from sale and issuance of common stock, net 27,763 15,471 34,395
Stock repurchased (350,319) (245,198) --
Cash dividends (41,657) (43,500) (35,019)
--------- --------- ---------
Net cash (used in) financing activities (387,573) (300,406) (502,690)
--------- --------- ---------
Net cash provided by (used in) continuing operations 56,875 (124,814) 216,093
Net cash provided by discontinued operations -- 54,451 49,413
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 56,875 (70,363) 265,506
Cash and cash equivalents at beginning of year 404,369 474,732 209,226
--------- --------- ---------
Cash and cash equivalents at end of year $ 461,244 $ 404,369 $ 474,732
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 6
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Preferred Common Additional Other
Stock Stock, Par Paid-in Comprehensive Retained
In Thousands Face Value Value $1 Capital Income (Loss) Earnings Total
- ------------ --------- --------- --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 27, 1996 $ 282,500 $ 72,486 $ 270,839 $(1,680) $ 140,489 $ 764,634
Comprehensive income:
Net income -- -- -- -- 363,123 363,123
Foreign currency translation -- -- -- 642 -- 642
----------
Total comprehensive income 363,765
Cash dividends:
Preferred stock -- -- -- -- (13,741) (13,741)
Common stock -- -- -- -- (21,278) (21,278)
Conversion of cumulative preferred
stock into common stock:
Series A (25,000) 1,190 23,810 -- -- --
Series C (82,500) 3,178 79,322 -- -- --
Series D (25,000) 1,350 23,650 -- -- --
Issuance of common stock under
stock incentive plans and related
tax benefits -- 1,372 32,786 -- -- 34,158
Other -- -- (352) -- -- (352)
--------- --------- --------- ------- --------- ----------
Balance, January 25, 1997 150,000 79,576 430,055 (1,038) 468,593 1,127,186
Comprehensive income:
Net income -- -- -- -- 304,815 304,815
Foreign currency translation -- -- -- (643) -- (643)
Unrealized gains on securities -- -- -- 4,998 -- 4,998
----------
Total comprehensive income 309,170
Cash dividends:
Preferred stock -- -- -- -- (11,668) (11,668)
Common stock -- -- -- -- (31,832) (31,832)
Conversion of cumulative Series E
preferred stock into common stock (77,020) 8,315 68,705 -- -- --
Stock repurchased:
Preferred (250) -- -- -- (500) (750)
Common -- (8,528) (235,920) -- -- (244,448)
Stock split, two-for-one -- 79,823 (79,823) -- -- --
Issuance of common stock under
stock incentive plans and related
tax benefits -- 715 15,719 -- -- 16,434
--------- --------- --------- ------- --------- ----------
Balance, January 31, 1998 72,730 159,901 198,736 3,317 729,408 1,164,092
Comprehensive income:
Net income -- -- -- -- 424,154 424,154
Foreign currency translation -- -- -- 152 -- 152
Reclassification of unrealized gains -- -- -- (4,998) -- (4,998)
----------
Total comprehensive income 419,308
Cash dividends:
Preferred stock -- -- -- -- (3,523) (3,523)
Common stock -- -- -- -- (38,134) (38,134)
Conversion of cumulative Series E
preferred stock into common stock (72,730) 14,682 58,048 -- -- --
Common stock repurchased -- (12,998) (187,859) -- (149,462) (350,319)
Stock split, two-for-one -- 158,954 (96,555) -- (62,399) --
Issuance of common stock under
stock incentive plans and related
tax benefits -- 1,602 27,630 -- -- 29,232
--------- --------- --------- ------- --------- ----------
Balance, January 30, 1999 $ -- $ 322,141 $ -- $(1,529) $ 900,044 $1,220,656
========= ========= ========= ======= ========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 7
THE TJX COMPANIES, INC.
SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
January 30, January 31, January 25,
In Thousands 1999 1998 1997
- ------------ ---------- ---------- ----------
(53 weeks)
<S> <C> <C> <C>
Net sales:
Off-price family apparel stores $7,816,563 $7,290,959 $6,602,391
Off-price home fashion stores 132,538 98,110 87,019
---------- ---------- ----------
$7,949,101 $7,389,069 $6,689,410
========== ========== ==========
Operating income (loss):
Off-price family apparel stores $ 782,706 $ 596,908 $ 463,419
Off-price home fashion stores (1) (4,950) (8,615) (14,018)
---------- ---------- ----------
777,756 588,293 449,401
General corporate expense (2) 69,449 58,906 43,297
Goodwill amortization 2,609 2,614 2,614
Interest expense, net 1,686 4,502 37,350
---------- ---------- ----------
Income from continuing operations
before income taxes and extraordinary item $ 704,012 $ 522,271 $ 366,140
========== ========== ==========
Identifiable assets:
Off-price family apparel stores $2,093,879 $2,033,945 $1,801,779
Off-price home fashion stores 49,515 39,074 36,493
Corporate, primarily cash, goodwill and
deferred taxes (3) 604,452 536,613 668,489
---------- ---------- ----------
$2,747,846 $2,609,632 $2,506,761
========== ========== ==========
Capital expenditures:
Off-price family apparel stores $ 202,054 $ 190,720 $ 104,955
Off-price home fashion stores 5,688 1,662 731
Corporate (3) -- -- 13,467
---------- ---------- ----------
$ 207,742 $ 192,382 $ 119,153
========== ========== ==========
Depreciation and amortization:
Off-price family apparel stores $ 130,325 $ 115,967 $ 113,479
Off-price home fashion stores 3,302 3,186 2,104
Corporate, including goodwill (3) 2,904 5,738 11,247
---------- ---------- ----------
$ 136,531 $ 124,891 $ 126,830
========== ========== ==========
</TABLE>
(1) The periods ended January 30, 1999, January 31, 1998, and January 25, 1997
include a charge of $2.2 million, $1.5 million and $3.1 million,
respectively, for certain store closings and other restructuring costs
relating to HomeGoods.
(2) General corporate expense for the fiscal year ended January 30, 1999
includes a pre-tax charge of $6.3 million for costs associated with a
fiscal 1998 executive deferred compensation award and a $7.5 million
charitable donation to The TJX Foundation. General corporate expense for
the fiscal year ended January 31, 1998 includes a pre-tax charge of $15.2
million for costs associated with the foregoing executive deferred
compensation award and a pre-tax gain of $6 million for the sale of
Brylane, Inc. common stock. General corporate expense for the fiscal year
ended January 25, 1997 includes the net operating results of T.K. Maxx.
Fiscal years 1999 and 1998 include the operating results of T.K. Maxx in
the off-price family apparel stores segment.
(3) The period ended January 25, 1997 includes assets and activity of T.K.
Maxx. Fiscal years 1999 and 1998 include T.K. Maxx in the off-price family
apparel stores segment.
22
<PAGE> 8
THE TJX COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
FISCAL YEAR: The Company's fiscal year ends on the last Saturday in January. The
fiscal year ended January 31, 1998 (fiscal 1998) included 53 weeks. The fiscal
years ended January 30, 1999 and January 25, 1997 each included 52 weeks.
BASIS OF PRESENTATION: The consolidated financial statements of The TJX
Companies, Inc. include the financial statements of all the Company's
wholly-owned subsidiaries, including its foreign subsidiaries. The financial
statements for the applicable periods present the Company's former Chadwick's
and Hit or Miss divisions as discontinued operations. The notes pertain to
continuing operations except where otherwise noted.
The preparation of the financial statements, in conformity with generally
accepted accounting principles, 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. Actual results could differ from those estimates.
CASH EQUIVALENTS: The Company generally considers highly liquid investments with
an initial maturity of three months or less to be cash equivalents. The
Company's investments are primarily high grade commercial paper, institutional
money market funds and time deposits with major banks. The fair value of cash
equivalents approximates carrying value.
MERCHANDISE INVENTORIES: Inventories are stated at the lower of cost or
market. The Company uses the retail method for valuing inventories on the
first-in first-out basis.
DEPRECIATION AND AMORTIZATION: For financial reporting purposes, the Company
provides for depreciation and amortization of property principally by the use of
the straight-line method over the estimated useful lives of the assets.
Buildings are depreciated over 33 years, leasehold costs and improvements are
generally amortized over the lease term or their estimated useful life,
whichever is shorter, and furniture, fixtures and equipment are depreciated over
3 to 10 years. Maintenance and repairs are charged to expense as incurred. Upon
retirement or sale, the cost of disposed assets and the related depreciation are
eliminated and any gain or loss is included in net income. Debt discount and
related issue expenses are amortized over the lives of the related debt issues.
Pre-opening costs are expensed as incurred.
GOODWILL AND TRADENAME: Goodwill is primarily the excess of the purchase price
incurred over the carrying value of the minority interest in the Company's
former 83%-owned subsidiary. The minority interest was acquired pursuant to the
Company's fiscal 1990 restructuring. In addition, goodwill includes the excess
of cost over the estimated fair market value of the net assets of Winners
Apparel Ltd., acquired by the Company effective May 31, 1990. Goodwill totaled
$79.3 million, net of amortization, as of January 30, 1999 and is being
amortized over 40 years. Annual amortization of goodwill was $2.6 million in
fiscal years 1999, 1998 and 1997. Cumulative amortization as of January 30, 1999
and January 31, 1998 was $25.1 million and $22.5 million, respectively.
23
<PAGE> 9
Tradename is the value assigned to the name "Marshalls" as a result of the
Company's acquisition of the Marshalls chain on November 17, 1995. The final
allocation of the purchase price of Marshalls, pursuant to the purchase
accounting method, resulted in $130.0 million being allocated to the tradename.
The value of the tradename was determined by the discounted present value of
assumed after-tax royalty payments, offset by a reduction for its pro-rata share
of the total negative goodwill acquired (see Note A). The tradename is deemed to
have an indefinite life and accordingly is being amortized over 40 years.
Amortization expense was $3.2 million, $3.4 million and $3.7 million for fiscal
years 1999, 1998 and 1997, respectively. Cumulative amortization as of January
30, 1999 and January 31, 1998 was $11.0 million and $7.8 million, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS: The Company periodically reviews the value of
its property and intangible assets in relation to the current and expected
operating results of the related business segments in order to assess whether
there has been a permanent impairment of their carrying values.
During the fiscal year ended January 25, 1997, the Company recorded a $12.2
million impairment charge, relating to the T.J. Maxx distribution facilities,
which has been included in selling, general and administrative expenses.
ADVERTISING COSTS: The Company expenses advertising costs during the fiscal
year incurred.
EARNINGS PER SHARE: Statement of Financial Accounting Standards (SFAS) No. 128
"Earnings per Share" requires the presentation of "basic" and "diluted" earnings
per share. Basic earnings per share is based on a simple weighted average of
common stock outstanding. Diluted earnings per share includes the dilutive
effect of convertible securities and other common stock equivalents. See Note F
for a computation of basic and diluted earnings per share. All earnings per
share amounts discussed refer to diluted earnings per share unless otherwise
indicated. Prior period earnings per share amounts have been restated for the
June 1998 and June 1997 two-for-one stock splits.
FOREIGN CURRENCY TRANSLATION: The Company's foreign assets and liabilities are
translated at the year-end exchange rate and income statement items are
translated at the average exchange rates prevailing during the year. A large
portion of the Company's net investment in foreign operations is hedged with
foreign currency swap agreements and forward contracts. The translation
adjustment associated with the foreign operations and the related hedging
instruments are included in shareholders' equity as a component of comprehensive
income (loss). Cumulative foreign currency translation adjustments included in
shareholders' equity amounted to losses of $1.5 million as of January 30, 1999
and $1.7 million as of January 31, 1998.
NEW ACCOUNTING STANDARDS: During 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income." This Statement specifies the
computation, presentation and disclosures for components of comprehensive
income. The Company adopted SFAS No. 130 in the first quarter ended May 2,
1998 and presents comprehensive income as a component of shareholders'
equity.
Also during 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information." This new standard did not result in
any changes to the Company's reportable segments or in the information disclosed
about its segments (see Note L).
During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement established accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. This
Statement requires that an entity recognize all derivatives as either assets or
liabilities in the statements of financial position and measure those
instruments at fair value. The Company believes that the impact of
implementation of this new standard will be immaterial. The Company will adopt
SFAS No. 133 in its fiscal year ending January 27, 2001 or earlier.
OTHER: Certain amounts in prior years' financial statements have been
reclassified for comparative purposes.
24
<PAGE> 10
A. DISPOSITIONS AND ACQUISITIONS
SALE OF CHADWICK'S OF BOSTON: During the fourth quarter of fiscal 1997, the
Company sold its Chadwick's of Boston catalog division to Brylane, L.P.
(Brylane). Proceeds of approximately $300 million included cash, a 10 year $20
million Convertible Subordinated Note at 6% interest (the "Brylane note") and
Chadwick's consumer credit card receivables. During fiscal 1998, the Company
paid Brylane $33.2 million as a final settlement of the sale proceeds based upon
the final closing balance sheet of Chadwick's as of December 7, 1996. Also,
pursuant to the disposition, the Company agreed to purchase certain amounts of
excess inventory from Chadwick's through fiscal 2000. This arrangement has
subsequently been amended and extended through fiscal 2002. 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 for fiscal
1998 represents the collection of the remaining balance of the Chadwick's
consumer credit card receivables outstanding as of January 25, 1997. During
fiscal 1998, the Company converted a portion of the Brylane note into 352,908
shares of Brylane, Inc. common stock which it sold for $15.7 million. This sale
resulted in an after-tax gain of $3.6 million, or $.01 per share. During fiscal
1999 the balance of the note was converted into shares of Brylane common stock.
A portion of the shares were donated to the Company's charitable foundation, and
the remaining shares were sold. The net pre-tax impact of these transactions was
immaterial.
The Chadwick's of Boston catalog division had net sales of $464.8 million
and recorded income from operations of $29.4 million, net of income taxes of
$20.9 million, for the fiscal year ended January 25, 1997, which represents this
division's results through December 7, 1996, the effective date of the
transaction. The results of Chadwick's for all periods prior to December 7, 1996
have been reclassified to discontinued operations. The sale of the division
resulted in a gain on disposal of $125.6 million, net of income taxes of $15.2
million, or $.36 per share. This gain allowed the Company to utilize its $139
million capital loss carry forward. Interest expense was allocated to
discontinued operations based on their respective proportion of assets to total
assets.
SALE OF HIT OR MISS: Effective September 30, 1995, the Company sold its Hit or
Miss division to members of Hit or Miss management and outside investors. The
Company received $3 million in cash and a 7 year $10 million note with interest
at 10%. During fiscal 1998, the Company forgave a portion of this note and was
released from certain obligations and guarantees which reduced the note to $5.5
million. During fiscal 1999 the Company settled the note for $2.0 million, the
balance of $3.5 million was charged to selling, general and administrative
expenses.
ACQUISITION OF MARSHALLS: On November 17, 1995, the Company acquired the
Marshalls family apparel chain from Melville Corporation. The Company paid
$424.3 million in cash and $175 million in junior convertible preferred stock.
The total purchase price of Marshalls, including acquisition costs of $6.7
million, was $606 million.
The acquisition has been accounted for using the purchase method of
accounting and accordingly, the purchase price has been allocated to the assets
purchased and the liabilities assumed based upon their fair values at the date
of acquisition. The purchase accounting method allows a one year period to
finalize the fair values of the net assets acquired. No further adjustments to
fair market values are made after that point. The final allocation of purchase
price resulted in the fair value of the net assets acquired exceeding the
purchase price, creating negative goodwill of $86.4 million. The negative
goodwill was allocated to the long-term assets acquired. During fiscal 1998, the
store closing and restructuring reserve established in the final allocation of
the purchase price was reduced by an additional $15.8 million as the Company
closed fewer stores than initially planned. The $15.8 million reserve reduction
was offset by a reduction of $10.0 million to property, plant and equipment and
a reduction of $5.8 million to tradename. The final allocation of purchase
price, as adjusted for the reserve adjustment in fiscal 1998, is summarized
below:
<TABLE>
In Thousands
- ------------
<S> <C>
Current assets $ 718,627
Property, plant and equipment 227,071
Tradename 130,046
Current liabilities (469,744)
---------
Total purchase price $ 606,000
=========
</TABLE>
The operating results of Marshalls have been included in the consolidated
results of the Company from the date of acquisition on November 17, 1995.
25
<PAGE> 11
B. LONG-TERM DEBT AND CREDIT LINES
At January 30, 1999 and January 31, 1998, long-term debt, exclusive of current
installments, consisted of the following:
<TABLE>
<CAPTION>
January 30, January 31,
In Thousands 1999 1998
- ------------ ---------- ----------
<S> <C> <C>
Equipment notes, interest at 11% to 11.25% maturing
December 12, 2000 to December 30, 2001 $ 433 $ 1,127
-------- --------
General corporate debt:
Medium term notes, interest at 5.87% to 7.97%,
$15 million maturing on October 21, 2003 and
$5 million on September 20, 2004 20,000 20,000
6 5/8% unsecured notes, maturing June 15, 2000 100,000 100,000
7% unsecured notes, maturing June 15, 2005
(effective interest rate of 7.02% after reduction
of the unamortized debt discount of $89,000 and
$103,000 in fiscal 1999 and 1998, respectively) 99,911 99,897
-------- --------
Total general corporate debt 219,911 219,897
-------- --------
Long-term debt, exclusive of current installments $220,344 $221,024
======== ========
</TABLE>
The aggregate maturities of long-term debt, exclusive of current installments,
at January 30, 1999 are as follows:
<TABLE>
<CAPTION>
General
Equipment Corporate
In Thousands Notes Debt Total
--------- --------- --------
<C> <C> <C> <C>
Fiscal Year
2001 $348 $100,000 $100,348
2002 85 -- 85
2003 -- -- --
2004 -- 15,000 15,000
Later years -- 104,911 104,911
---- -------- --------
Aggregate maturities of long-term debt,
exclusive of current installments $433 $219,911 $220,344
==== ======== ========
</TABLE>
On September 16, 1996, pursuant to a call for redemption, the Company prepaid
$88.8 million of its 9 1/2% sinking fund debentures. The Company recorded an
after-tax extraordinary charge of $2.9 million, or $.01 per common share,
related to the early retirement of this debt. The Company paid the outstanding
balance of $8.5 million during fiscal 1998 utilizing an optional sinking fund
payment under the indenture.
In June 1995, the Company filed a shelf registration statement with the
Securities and Exchange Commission which provided for the issuance of up to $250
million of long-term debt. This shelf registration statement was replaced by a
new shelf registration statement filed in fiscal 1997 which currently provides
for the issuance of up to $600 million of debt, common stock or preferred stock.
In June 1995, the Company issued $200 million of long-term notes under the
original registration statement; $100 million of 6 5/8 % notes due June 15, 2000
and $100 million of 7% notes due June 15, 2005. The proceeds were used in part
to repay short-term borrowings and for general corporate purposes, including the
repayment of scheduled maturities of other outstanding long-term debt and for
new store and other capital expenditures.
On November 17, 1995, the Company entered into an unsecured $875 million
bank credit agreement under which the Company borrowed $375 million on a term
loan basis to fund the cash portion of the Marshalls purchase price. During the
fourth quarter of the fiscal year ended January 25, 1997, the Company prepaid
the outstanding balance of the $375 million term loan and recorded an after-tax
extraordinary charge of $2.7 million, or $.01 per share, for the early
retirement of this debt. The agreement also allowed the Company to borrow up to
an additional $500 million on a revolving loan basis to fund the working capital
needs of the Company. In September 1997, the Company replaced this $500 million
revolving credit agreement with a new five year $500 million revolving credit
facility. The Company recorded an extraordinary charge of $1.8 million
associated with the write-off of deferred financing costs of the former
agreement.
26
<PAGE> 12
The new agreement provides for reduced commitment fees on the unused portion of
the line, as well as lower borrowing costs and has certain financial covenants
which include a minimum net worth requirement, and certain leverage and fixed
charge covenants.
As of January 30, 1999, all $500 million of the revolving credit facility
was available for use. Interest is payable on borrowings at rates equal to or
less than prime. The revolving credit facility is used as backup to the
Company's commercial paper program. The Company had no short-term borrowings
under this facility or its commercial paper program during fiscal 1999 or 1998.
Excluding the Company's foreign subsidiaries, the weighted average interest rate
on the Company's short-term borrowings under the former agreement was 5.81% in
fiscal 1997. The Company does not have any compensating balance requirements
under these arrangements. The Company also has C$40 million of credit lines for
its Canadian operation, all of which were available as of January 30, 1999.
C. FINANCIAL INSTRUMENTS
The Company periodically enters into forward foreign exchange contracts to hedge
firm U.S. dollar merchandise purchase commitments made by its foreign
subsidiaries. As of January 30, 1999, the Company had $18.8 million of such
contracts outstanding for its Canadian subsidiary and $3.3 million for its
subsidiary in the United Kingdom. The contracts cover certain commitments for
the first quarter of fiscal 2000 and any gains or losses on the contracts will
ultimately be reflected in the cost of the merchandise. Deferred gains and
losses on the contracts as of January 30, 1999 were immaterial.
The Company also has entered into several foreign currency swap and forward
contracts in both Canadian dollars and British pounds sterling. Both the swap
and forward agreements are accounted for as a hedge against the Company's
investment in foreign subsidiaries; thus, foreign exchange gains and losses on
the agreements are recognized in shareholders' equity thereby offsetting
translation adjustments associated with the Company's investment in foreign
operations. The gains and losses on this hedging activity as of January 30, 1999
are immaterial.
The Canadian swap and forward agreements will require the Company to pay
C$41.7 million in exchange for $31.2 million in U.S. currency between October
2003 and September 2004. The British pounds sterling swap and forward agreements
will require the Company to pay L59.9 million between October 1999 and
September 2002 in exchange for $94.1 million in U.S. currency.
The agreements contain rights of offset which minimize the Company's
exposure to credit loss in the event of nonperformance by one of the
counterparties. The interest rates payable on the foreign currency swap
agreements are slightly higher than the interest rates receivable on the
currency exchanged, resulting in deferred interest costs which are being
amortized to interest expense over the term of the related agreements. The
premium costs or discounts associated with the forward contracts are being
amortized over the term of the related agreements and are included with the
gains or losses of the hedging instrument. The unamortized balance of the net
deferred costs was $3.2 million and $4.3 million as of January 30, 1999 and
January 31, 1998, respectively.
The counterparties to the exchange contracts and swap agreements are major
international financial institutions. The Company periodically monitors its
position and the credit ratings of the counterparties and does not anticipate
losses resulting from the nonperformance of these institutions.
The fair value of the Company's long-term debt, including current
installments, is estimated using discounted cash flow analysis based upon the
Company's current incremental borrowing rates for similar types of borrowing
arrangements. The fair value of long-term debt, including current installments,
at January 30, 1999 is estimated to be $234.7 million compared to a carrying
value of $221.0 million. These estimates do not necessarily reflect certain
provisions or restrictions in the various debt agreements which might affect the
Company's ability to settle these obligations.
27
<PAGE> 13
D. COMMITMENTS
The Company is committed under long-term leases related to its continuing
operations for the rental of real estate, and fixtures and equipment. T.J. Maxx
leases are generally for a ten year initial term with options to extend for one
or more five year periods. Marshalls leases, acquired in fiscal 1996, have
remaining terms ranging up to twenty-five years. In addition, the Company is
generally required to pay insurance, real estate taxes and other operating
expenses including, in some cases, rentals based on a percentage of sales.
Following is a schedule of future minimum lease payments for continuing
operations as of January 30, 1999:
<TABLE>
<CAPTION>
In Thousands Operating Leases
- ------------ ----------------
<S> <C>
Fiscal Year
2000 $ 328,187
2001 311,247
2002 284,097
2003 260,927
2004 229,949
Later years 1,040,217
----------
Total future minimum lease payments $2,454,624
==========
</TABLE>
The rental expense under operating leases for continuing operations amounted to
$318.1 million, $301.9 million and $293.5 million for fiscal years 1999, 1998
and 1997, respectively. The present value of the Company's operating lease
obligations approximates $1,693.3 million as of January 30, 1999, including
$199.0 million payable in fiscal 2000.
The Company had outstanding letters of credit in the amount of $40.4
million as of January 30, 1999. Letters of credit are issued by the Company
primarily for the purchase of inventory.
E. STOCK COMPENSATION PLANS
In the following note, all references to historical awards, outstanding awards
and availability of shares for future grants under the Company's Stock Incentive
Plan and related prices per share have been restated, for comparability
purposes, for the two-for-one stock splits distributed in June 1998 and June
1997.
The Company has a Stock Incentive Plan under which options and other stock
awards may be granted to certain officers and key employees. The Stock Incentive
Plan, as amended, provides for the issuance of up to 42 million shares with 15.7
million shares available for future grants as of January 30, 1999. The Company
also has a Directors' Stock Option Plan under which stock options are granted to
directors who are not otherwise employed by the Company. This plan provides for
the issuance of up to 200,000 shares. There are 94,000 shares available for
future grants under this plan as of January 30, 1999.
Under its stock option plans, the Company has granted options for the
purchase of common stock, generally within ten years from the grant date at
option prices of 100% of market price on the grant date. Most options
outstanding are exercisable at various percentages starting one year after the
grant, while certain options are exercisable in their entirety three years after
the grant date. Options granted to directors become fully exercisable one year
after the date of grant.
A summary of the status of the Company's stock options and related Weighted
Average Exercise Prices ("WAEP"), adjusted for the two-for-one stock splits
distributed in June 1998 and June 1997 is presented below (shares in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------------------
January 30, 1999 January 31, 1998 January 25, 1997
------------------- ------------------ ------------------
Shares WAEP Shares WAEP Shares WAEP
------ ------ ------ ------ ------ ----
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 10,507 $ 9.04 8,192 $ 6.10 11,248 $4.59
Granted 1,964 21.77 4,338 12.97 2,852 8.72
Exercised (2,215) 6.31 (1,756) 5.31 (5,448) 4.45
Canceled (151) 13.35 (267) 7.31 (460) 4.95
------ ------ ------ ------ ------ -----
Outstanding, end of year 10,105 $12.04 10,507 $ 9.04 8,192 $6.10
------ ------ ------ ------ ------ -----
Options exercisable, end of year 4,796 3,932 3,412
====== ====== ======
</TABLE>
28
<PAGE> 14
The Company realizes an income tax benefit from the exercise of stock options.
This benefit results in a decrease in current income taxes payable and an
increase in additional paid-in capital. Such benefits amounted to $13.8 million,
$6.1 million and $10.2 million for the fiscal years ended January 30, 1999,
January 31, 1998 and January 25, 1997, respectively.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," and continues to apply the provisions of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for compensation
expense under its stock option plans. The Company grants options at fair market
value on the date of the grant; accordingly, no compensation expense has been
recognized for the stock options issued during fiscal years 1999, 1998 or 1997.
Had compensation expense been determined in accordance with SFAS No. 123, the
Company's income from continuing operations, net income and related earnings per
share amounts would have been reduced to the unaudited pro forma amounts
indicated below:
<TABLE>
<CAPTION>
Unaudited Pro Forma
-------------------
Fiscal Year Ended
-------------------------------------
January 30, January 31, January 25,
Dollars in Thousands Except Per Share Amounts 1999 1998 1997
- --------------------------------------------- --------- ---------- ----------
(53 weeks)
<S> <C> <C> <C>
Income from continuing operations before extraordinary item $424,512 $301,129 $211,893
Per diluted share $ 1.27 $ .86 $ .60
Net income $415,464 $299,352 $361,190
Per diluted share $ 1.24 $ .85 $ 1.03
</TABLE>
For purposes of applying the provisions of SFAS No. 123 for the pro forma
calculations, the fair value of each option grant issued during fiscal 1999,
1998 and 1997 is estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions: dividend yield 1% in 1999, 1998
and 1997, expected volatility of 40% in fiscal 1999 and 38% in both fiscal 1998
and 1997, a risk-free interest rate of 5.0% in fiscal 1999, 5.8% in fiscal 1998
and 6.7% in fiscal 1997, and expected holding periods of six years in all fiscal
periods. The weighted average fair value of options granted during fiscal 1999,
1998 and 1997 was $9.28, $5.52 and $3.88 per share, respectively.
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
1995, and additional awards in future years are anticipated.
The following table summarizes information about stock options outstanding
as of January 30, 1999 (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------- ------------------------
Weighted
Average
Range of Remaining Weighted Average Weighted Average
Exercise Prices Shares Contract Life Exercise Price Shares Exercise Price
- --------------- ------ ------------- ---------------- ------ ---------------
<C> <C> <C> <C> <C> <C>
$ 2.5625-$ 6.3125 2,209 5.3 Years $ 4.73 2,209 $ 4.73
$ 6.3126-$10.6875 3,255 7.7 Years 9.56 1,847 9.36
$10.6876-$14.4688 2,694 8.5 Years 14.01 740 14.42
$14.4689-$23.9375 1,947 9.6 Years 21.77 -- --
------ -----
Total 10,105 7.8 Years $12.04 4,796 $ 8.01
====== =====
</TABLE>
During fiscal 1998, a special deferred compensation award was granted to the
Company's Chief Executive Officer initially denominated in 900,000 shares of the
Company's stock with a fair value of $10.69 per share at the date of grant. The
shares vested at the time of the grant and the Company recorded a deferred
compensation charge of $9.6 million at the time of the grant. The executive may
elect to have such grant denominated into other investments. The Company does
not anticipate that the shares will be issued and therefore does not consider
them for diluted earnings per share calculations and adjusts the compensation
charge for changes in the market value of the stock through the date an election
is made to denominate into other investments. The Company recorded additional
expense of $6.3 and $5.6 million in fiscal 1999 and 1998, respectively, due to
the increase in market value of the shares of Company stock from date of grant.
During fiscal 1999 elections were made to denominate 650,000 shares of Company
stock into other investments. The Company separately transfers funds to a trust
in an amount equal to the value of the executive's new investment elections. The
trust assets, included with other assets on the balance sheet, are invested in a
manner that matches the elections made by the executive.
29
<PAGE> 15
The Company has also issued restricted stock and performance based stock
awards under the Stock Incentive Plan. Restricted stock awards are issued at par
value, or at no cost, and have restrictions which generally lapse over three to
five years from date of grant. At January 31, 1998, the performance based stock
awards had either vested or been forfeited. The market value in excess of cost
is charged to income ratably over the period during which these awards vest,
such pre-tax charges amounted to $600,000, $2.7 million and $2.5 million in
fiscal years 1999, 1998 and 1997, respectively. The market value of the awards
is determined at date of grant for restricted stock awards, and at the date
shares are earned for performance based awards.
There has been a combined total of 4,000 shares, 1,023,834 shares and
70,000 shares for deferred, restricted and performance based awards issued for
the fiscal years ended January 1999, 1998 and 1997, respectively. There were
300,000 shares forfeited for the fiscal year ended January 1998, no shares were
forfeited during fiscal years ended January 1999 or 1997. The weighted average
market value per share of these stock awards at grant date was $18.03, $10.89
and $5.99 for fiscal 1999, 1998 and 1997, respectively.
During fiscal 1998, the Company formed a deferred stock compensation plan
for its outside directors which replaced the Company's retirement plan for
directors. Each director's deferred stock account has been credited with
deferred stock to compensate for the value of such director's accrued retirement
benefit. Additional share awards valued at $10,000 are issued annually to each
eligible director. Currently there are 24,966 deferred shares outstanding,
actual shares will be issued at retirement. The Company has 100,000 shares held
in treasury from which the Company will issue such shares.
F. CAPITAL STOCK AND EARNINGS PER SHARE
CAPITAL STOCK: The Company distributed a two-for-one stock split, effected in
the form of a 100% stock dividend, on June 25, 1998 to shareholders of record on
June 11, 1998, which resulted in the issuance of 158.9 million shares of common
stock and corresponding decreases of $96.5 million in additional paid-in capital
and $62.4 million in retained earnings. Similar transfers were made between
additional paid-in capital and common stock in the amount of $79.8 million,
reflecting the two-for-one stock split of June 26, 1997 to shareholders of
record on June 11, 1997. All historical earnings per share amounts have been
restated to reflect both two-for-one stock splits. Reference to common stock
activity before the distribution of the related split has not been restated
unless otherwise noted. All activity after the distribution date reflects the
two-for-one stock splits.
In April 1992, the Company issued 250,000 shares of Series A cumulative
convertible preferred stock in a private offering. As of June 1996, pursuant to
a call for redemption, the Series A preferred stock was converted into 1,190,475
shares of common stock.
In August 1992, the Company issued 1,650,000 shares of Series C cumulative
convertible preferred stock in a public offering. As of September 1996, pursuant
to a call for redemption, the Series C preferred stock was converted into
3,177,844 shares of common stock.
On November 17, 1995, the Company issued its Series D and Series E
convertible preferred stock as part of the purchase price for Marshalls. The
250,000 shares of Series D preferred stock, with a face value of $25 million,
carried an annual dividend rate of $1.81 per share and was automatically
converted into 1,349,527 shares of common stock on November 17, 1996.
The shares of Series E preferred stock, with 1,500,000 shares initially
issued at a face value of $150 million, carried an annual dividend rate of $7.00
per share. During fiscal 1998, 770,200 shares of the Series E preferred stock
were voluntarily converted into 8.3 million shares of common stock and 2,500
shares were repurchased. During fiscal 1999, 357,300 shares of Series E were
voluntarily converted into 6.7 million shares of common stock. On November 18,
1998, the remaining 370,000 shares of the Series E preferred stock were
mandatorily converted into 8.0 million shares of common stock in accordance with
its terms. Inducement fees of $130,000 and $3.8 million were paid on the Series
E voluntary conversions in fiscal 1999 and fiscal 1998, respectively.
The Company recorded aggregate dividends, including inducement fees, on its
preferred stock of $3.5 million in fiscal 1999, $11.7 million in fiscal 1998 and
$13.7 million in fiscal 1997. The preferred dividends reduce net income in
computing net income available to common shareholders.
During fiscal 1997, the Company replaced the June 1995 shelf registration
statement with another shelf registration statement which currently provides for
the issuance of up to $600 million of debt, common stock or preferred stock.
In June 1997, the Company announced a $250 million stock buyback program.
During fiscal 1998, the Company repurchased 17.1 million shares of common stock
(adjusted for stock splits) for a cost of
30
<PAGE> 16
$245.2 million. The program was completed in February 1998 at which time the
Company announced a second $250 million stock repurchase program. In October
1998, the Company completed the second $250 million stock repurchase program and
announced its intentions to repurchase an additional $750 million of common
stock over the next several years. The Company has spent $95.5 million through
January 30, 1999 on this current repurchase program. In total, during fiscal
1999, the Company repurchased a combined total of 15.6 million shares of common
stock (adjusted for stock splits) at a total cost of $350.3 million.
EARNINGS PER SHARE: The Company calculates earnings per share in accordance with
SFAS No. 128 which requires the presentation of basic and diluted earnings per
share. The following schedule presents the calculation of basic and diluted
earnings per share for income from continuing operations:
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------
January 30, January 31, January 25,
Dollars in Thousands Except Per Share Amounts 1999 1998 1997
------------ ------------ ------------
(53 weeks)
Basic earnings per share:
Income from continuing operations before extraordinary item $ 433,202 $ 306,592 $ 213,826
Less: preferred stock dividends 3,523 11,668 13,741
------------ ------------ ------------
Income from continuing operations before extraordinary
item available to common shareholders $ 429,679 $ 294,924 $ 200,085
============ ============ ============
Weighted average common stock outstanding
for basic earnings per share 318,073,081 321,474,046 300,926,904
Basic earnings per share $ 1.35 $ .92 $ .66
Diluted earnings per share:
Income from continuing operations before extraordinary item
available to common shareholders $ 429,679 $ 294,924 $ 200,085
Add back: preferred stock dividends 3,523 11,668 13,741
------------ ------------ ------------
Income from continuing operations before extraordinary
item for diluted earnings per share calculation $ 433,202 $ 306,592 $ 213,826
============ ============ ============
Weighted average common stock outstanding
for basic earnings per share 318,073,081 321,474,046 300,926,904
Assumed conversion of:
Convertible preferred stock 10,914,354 24,032,172 46,331,584
Stock options and awards 5,660,515 4,105,966 3,391,612
------------ ------------ ------------
Weighted average common shares for
diluted earnings per share calculation 334,647,950 349,612,184 350,650,100
============ ============ ============
Diluted earnings per share $ 1.29 $ .88 $ .61
G. INCOME TAXES
The provision for income taxes includes the following:
<CAPTION>
Fiscal Year Ended
------------------------------------------------
January 30, January 31, January 25,
In Thousands 1999 1998 1997
---------- ---------- ----------
(53 weeks)
<S> <C> <C> <C>
Current:
Federal $231,811 $172,026 $116,848
State 45,117 39,200 27,160
Foreign 13,784 8,117 8,079
Deferred:
Federal (13,084) (3,432) 33
State (2,306) (326) 462
Foreign (4,512) 94 (268)
-------- -------- --------
Provision for income taxes $270,810 $215,679 $152,314
======== ======== ========
</TABLE>
31
<PAGE> 17
The Company had a net deferred tax (asset) liability as follows:
<TABLE>
<CAPTION>
January 30, January 31,
In Thousands 1999 1998
---------- ----------
<S> <C> <C>
Deferred tax assets:
Foreign net operating loss carryforward $ 30,660 $ 34,554
Reserve for discontinued operations 12,074 6,723
Reserve for closed store and restructuring costs 19,767 23,571
Insurance costs not currently deductible for tax purposes 7,496 15,049
Pension, postretirement and employee benefits 48,556 34,173
Leases 13,379 9,350
Other 24,255 18,789
Valuation allowance (27,321) (34,603)
-------- --------
Total deferred tax assets 128,866 107,606
-------- --------
Deferred tax liabilities:
Property, plant and equipment 17,056 14,736
Safe harbor leases 31,738 37,945
Tradename 47,373 48,659
Other 10,313 13,125
-------- --------
Total deferred tax liabilities 106,480 114,465
-------- --------
Net deferred tax (asset) liability $(22,386) $ 6,859
======== ========
</TABLE>
The Company has elected to repatriate the fiscal 1999 earnings of its Canadian
subsidiary. During fiscal 1999 the majority of the earnings of its Canadian
subsidiary were repatriated and deferred foreign tax credits have been provided
for on the undistributed portion of fiscal 1999 earnings. Prior earnings of its
Canadian subsidiary and all the earnings of the Company's other foreign
subsidiaries are indefinitely reinvested and no deferred taxes have been
provided for on those earnings.
The Company has a United Kingdom net operating loss carryforward of
approximately $50 million for tax and financial reporting purposes. The United
Kingdom net operating loss does not expire under current United Kingdom tax law.
The Company also has a Puerto Rico net operating loss carryforward of
approximately $39 million at January 30, 1999, for tax and financial reporting
purposes, which was acquired in the Marshalls acquisition and expires in fiscal
2000 through fiscal 2003. The Company has recognized in fiscal 1999 a $3.4
million Puerto Rico deferred tax asset for estimated future utilization of the
Puerto Rico net operating loss carryforward. Additional utilization of these net
operating loss carryforwards is dependent upon future earnings of the Company's
foreign subsidiaries.
The Company's worldwide effective tax rate was 38% for the fiscal year
ended January 30, 1999, 41% and 42% for fiscal years ended January 31, 1998 and
January 25, 1997, respectively. The difference between the U.S. federal
statutory income tax rate and the Company's worldwide effective income tax rate
is summarized as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
January 30, January 31, January 25,
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
U.S. federal statutory income tax rate 35% 35% 35%
Effective state income tax rate 4 5 5
Impact of foreign operations (1) -- 1
All other -- 1 1
---- ---- ----
Worldwide effective income tax rate 38% 41% 42%
==== ==== ====
</TABLE>
H. PENSION PLANS AND OTHER RETIREMENT BENEFITS
The Company has a non-contributory defined benefit retirement plan covering the
majority of full-time U.S. employees. Effective in fiscal 1998, Marshalls
associates are included in the plan with credit for service prior to the
acquisition. Employees who have attained twenty-one years of age and have
completed one year of service are covered under the plan. Benefits are based on
compensation earned in each year of service. The Company also has an unfunded
supplemental retirement plan which covers certain key employees of the Company
and provides additional retirement benefits based on average compensation and an
unfunded postretirement medical plan which provides limited postretirement
medical and life insurance benefits to
32
<PAGE> 18
associates who participate in the Company's retirement plan and who retire at
age fifty-five or older with ten or more years of service.
Presented below is certain financial information relating to the Company's
retirement plans for the fiscal years indicated:
<TABLE>
<CAPTION>
Pension Postretirement Medical
--------------------------- -------------------------
January 30, January 31, January 30, January 31,
Dollars in Thousands 1999 1998 1999 1998
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $127,148 $100,465 $21,172 $15,093
Service cost 10,538 8,372 1,405 1,133
Interest cost 9,647 8,398 1,610 1,649
Amendments -- 750 -- 2,702
Actuarial losses 11,027 15,299 1,712 1,456
Benefits paid (5,497) (5,283) (907) (860)
Expenses paid (816) (853) -- --
-------- -------- ------- -------
Benefit obligation at end of year $152,047 $127,148 $24,992 $21,173
======== ======== ======= =======
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year $110,234 $ 89,554 $ -- $ --
Actual return on plan assets 8,164 22,494 -- --
Employer contribution 11,106 4,323 907 860
Benefits paid (5,497) (5,284) (907) (860)
Expenses paid (816) (853) -- --
-------- -------- ------- -------
Fair value of plan assets at end of year $123,191 $110,234 $ -- $ --
======== ======== ======= =======
RECONCILIATION OF FUNDED STATUS:
Benefit obligation at end of year $152,047 $127,148 $24,992 $21,173
Fair value of plan assets at end of year 123,191 110,234 -- --
-------- -------- ------- -------
Funded status - obligation in excess of assets 28,856 16,914 24,992 21,173
Unrecognized transition obligation 522 596 -- --
Unrecognized prior service cost 773 861 1,616 1,953
Unrecognized actuarial (gains) losses 4,909 (5,243) 3,997 2,388
-------- -------- ------- -------
Net accrued liability recognized $ 22,652 $ 20,700 $19,379 $16,832
======== ======== ======= =======
WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate 6.63% 7.00% 6.75% 7.00%
Expected return on plan assets 9.00% 9.00% N/A N/A
Rate of compensation increase 4.00% 4.00% 4.00% 4.00%
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost $ 10,538 $ 8,372 $ 1,405 $ 1,366
Interest cost 9,647 8,398 1,610 1,649
Expected return on plan assets (9,991) (7,937) -- --
Amortization of transition obligation 75 75 -- --
Amortization of prior service cost 87 837 338 749
Recognized actuarial losses 2,702 206 103 --
-------- -------- ------- -------
Net periodic benefit cost $ 13,058 $ 9,951 $ 3,456 $ 3,764
======== ======== ======= =======
</TABLE>
The net periodic benefit cost for the Company's pension and postretirement
medical plans for the fiscal year ended January 25, 1997, was $5.9 million and
$1.8 million, respectively. The projected benefit obligation and accumulated
benefit obligation of the Company's unfunded supplemental retirement plan were
$26.2 million and $20.1 million, respectively, as of January 30, 1999 and $19.7
million and $13.4 million, respectively, as of January 31, 1998.
33
<PAGE> 19
For measurement purposes of the postretirement medical plan, a 4% annual
rate of increase in the per capita cost of covered health care benefits was
assumed and is gradually reduced to zero. The impact of medical inflation
eventually diminishes because of the $3,000 per capita annual limit on medical
benefits. An increase in the assumed health care cost trend rate of one
percentage point for all future years would increase the accumulated
postretirement benefit obligation at January 30, 1999 by about $1.4 million, and
the total of the service cost and interest cost components of net periodic
postretirement cost for fiscal 1999, by about $180,000. Similarly, decreasing
the trend rate by one percentage point for all future years would decrease the
accumulated postretirement benefit obligation at January 30, 1999 by about $1.3
million as well as the total of the service cost and interest cost components of
net periodic postretirement cost for fiscal 1999, by about $170,000.
The Company also sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code for all eligible U.S. employees, including Marshalls
associates effective January 1, 1997. Employees may contribute up to 15% of
eligible pay. The Company matches employee contributions up to 5% of eligible
pay at rates ranging from 25% to 50% based upon Company performance. The Company
contributed for all 401(k) plans $6.4 million in fiscal 1999, $5.7 million in
fiscal 1998 and $6.4 million in fiscal 1997. Prior to January 1, 1997, Marshalls
associates participated in a separate Section 401(k) savings plan consistent
with the plan Marshalls associates participated in prior to acquisition.
In addition to the plans described above, the Company also maintains
retirement/deferred savings plans for all eligible associates at its foreign
subsidiaries. The Company contributed for these plans $534,000, $440,000 and
$294,000 in fiscal years 1999, 1998 and 1997, respectively.
I. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The major components of accrued expenses and other current liabilities are as
follows:
<TABLE>
<CAPTION>
January 30, January 31,
In Thousands 1999 1998
---------- ----------
<S> <C> <C>
Employee compensation and benefits $173,630 $142,945
Reserve for discontinued operations 29,660 17,843
Store closing and restructuring reserve, continuing operations 44,598 57,966
Insurance 44,654 58,070
Rent, utilities, advertising and other 396,451 334,682
-------- --------
Accrued expenses and other current liabilities $688,993 $611,506
======== ========
</TABLE>
The Company's reserve for discontinued operations relates to obligations the
Company retained or incurred in connection with the sale of its former Zayre,
Hit or Miss and Chadwick's operations. During fiscal 1999, the Company increased
the reserve by $15 million for additional lease related obligations, primarily
in connection with its former Hit or Miss properties. The balance of the
activity in the reserve for fiscal 1999, a reduction of $3.1 million, is
primarily for lease related obligations of the former Zayre stores. During
fiscal 1998, the reserve decreased by $5.8 million primarily due to settlement
costs associated with Chadwick's and for lease related costs associated with the
former Zayre and Hit or Miss properties. The combined remaining reserve balance
of $29.7 million as of January 30, 1999 is expected to be used for lease related
obligations, primarily for former Zayre and Hit or Miss properties, which is
expected to be paid out over the next ten to fifteen years, as leases are
settled or terminated.
The reserve for store closings and restructurings is primarily for costs
associated with the disposition and settlement of leases for the T.J. Maxx and
Marshalls closings anticipated as a result of the Marshalls acquisition. The
initial reserves established in fiscal 1996 were estimated at $244.1 million for
a Marshalls store closing and restructuring plan and $35 million for the closing
of certain T.J. Maxx stores.
The initial reserve established in the acquisition of Marshalls for the
fiscal year-ended January 27, 1996, was estimated at $244.1 million and included
$44.1 million for inventory markdowns and $200 million for a store closing and
restructuring program. The initial store closing plan included the closing of
170 Marshalls stores during fiscal 1997 and fiscal 1998. The Company reduced the
total reserve by $85.9 million in fiscal 1997 and by an additional $15.8 million
in fiscal 1998, primarily due to fewer store closings and a reduction in the
estimated cost of settling the related lease obligations. This reserve was a
component of the allocation of the purchase price for Marshalls and the reserve
adjustments in fiscal 1998 and 1997 resulted in a corresponding
34
<PAGE> 20
reduction in the value assigned to the long-term assets acquired. The adjusted
reserve balance included $70.8 million for lease related obligations for 70
store and other facility closings, $9.6 million for property write-offs, $44.1
million for inventory markdowns and $17.9 million for severance, professional
fees and all other costs associated with the restructuring plan. Property
write-offs were the only non-cash charge to the reserve.
In connection with the Marshalls acquisition, the Company also established
a reserve for the closing of certain T.J. Maxx stores. The Company recorded an
initial pre-tax charge to income from continuing operations of $35 million in
fiscal 1996 and a pre-tax credit to income from continuing operations of $1.8
million in fiscal 1999 and $8 million in fiscal 1997 to reflect a lower than
anticipated cost of the T.J. Maxx closings. An additional charge to continuing
operations of $700,000 was recorded in fiscal 1998. The adjusted reserve balance
includes $13.8 million for lease related obligations of 32 store closings,
non-cash charges of $9.8 million for property write-offs and $2.3 million for
severance, professional fees and all other costs associated with the closings.
The following is a summary of the activity in the store closing and
restructuring reserve for the last two fiscal years:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------
January 30, January 31,
In Thousands 1999 1998
---------- ----------
<S> <C> <C>
Balance, beginning of year $57,966 $ 95,867
Additions to the reserve 1,961 --
Reserve adjustments:
Adjust Marshalls restructuring reserve -- (15,843)
Adjust T.J. Maxx store closing reserve (1,800) 700
Charges against the reserve:
Lease related obligations (12,521) (13,593)
Severance and all other cash charges (927) (1,876)
Net activity relating to HomeGoods closings (81) (1,887)
Non-cash property write-offs -- (5,402)
------- --------
Balance, end of year $44,598 $ 57,966
======= ========
</TABLE>
As of January 31, 1998, all the Marshalls and T.J. Maxx properties reserved for
had been closed. The remaining reserve balance as of January 30, 1999 of $44.6
million is almost entirely for the estimated cost of future obligations of
closed stores and other facility leases. It includes estimates and assumptions
as to how the leases will be disposed of, and could change; however, the Company
believes it has adequate reserves to deal with these obligations. The use of the
reserve will reduce operating cash flows in varying amounts over the next ten to
fifteen years as the related leases expire or are settled.
J. SUPPLEMENTAL CASH FLOWS INFORMATION
The Company classifies the cash flows associated with the operating results of
its discontinued operations through the date of sale, as "net cash provided by
discontinued operations." The following is a reconciliation of the "income from
discontinued operations, net of income taxes" to the "net cash provided by
discontinued operations" for the fiscal years indicated. No cash flows from the
operating results of the Company's discontinued operations were received during
the year ended January 30, 1999.
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------
January 31, January 25,
In Thousands 1998 1997
---------- ----------
(53 weeks)
<S> <C> <C>
Income from discontinued operations, net of income taxes $ -- $ 29,361
------- --------
Decrease in net assets of discontinued operations during the period:
Net assets of discontinued operations - beginning of period 54,451 128,586
Less:
Net assets of discontinued operations - sold during period -- 54,083
Net assets of discontinued operations - end of period -- 54,451
------- --------
Decrease in net assets of discontinued operations 54,451 20,052
------- --------
Net cash provided by discontinued operations $54,451 $ 49,413
======= ========
</TABLE>
35
<PAGE> 21
The Company is also responsible for certain leases related to, and other
obligations arising from, the sale of these operations, for which reserves have
been provided in its reserve for discontinued operations, and is included in
accrued expenses. The cash flow impact of these obligations is reflected as a
component of cash provided by operating activities in the statements of cash
flows.
The Company's cash payments for interest expense and income taxes,
including discontinued operations, and its non-cash investing and financing
activities are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------
January 30, January 31, January 25,
In Thousands 1999 1998 1997
---------- ---------- ----------
(53 weeks)
<S> <C> <C> <C>
Cash paid for:
Interest $ 22,542 $ 26,359 $ 44,288
Income taxes 275,538 199,025 159,245
Non-cash investing and financing activities:
Conversion of cumulative convertible preferred
stock into common stock
Series A $ -- $ -- $ 25,000
Series C -- -- 82,500
Series D -- -- 25,000
Series E 72,730 77,020 --
Distribution of two-for-one stock split 158,954 79,823 --
Note receivable from sale of Chadwick's of Boston -- -- 20,000
</TABLE>
K. DISCONTINUED OPERATIONS AND RELATED CONTINGENT LIABILITIES
In October 1988, the Company completed the sale of its former Zayre Stores
division to Ames Department Stores, Inc. ("Ames"). 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.
The Company remains contingently liable for the leases of most of the
former Zayre stores still operated by Ames. The Company believes that the
Company's contingent liability on these leases will not have a material effect
on the Company's financial condition.
The Company is also contingently liable on certain leases of its former
warehouse club operations (BJ's Wholesale Club and HomeBase), which was spun off
by the Company in fiscal 1990 as Waban Inc. During fiscal 1998, Waban Inc. was
renamed HomeBase, Inc. and spun-off from its BJ's Wholesale Club division (BJ's
Wholesale Club, Inc.). HomeBase, Inc., and BJ's Wholesale Club, Inc. are
primarily liable on their respective leases and have indemnified the Company for
any amounts the Company may have to pay with respect to such leases. In
addition, HomeBase, Inc., BJ's Wholesale Club, Inc. and the Company have entered
into agreements under which BJ's Wholesale Club, Inc. has substantial
indemnification responsibility with respect to such HomeBase, Inc. leases. The
Company 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.
The Company believes that its contingent liability on the HomeBase, Inc. and
BJ's Wholesale Club, Inc. leases will not have a material effect on the
Company's financial condition.
The Company is also contingently liable on approximately 50 store leases
and the office and warehouse leases of its former Hit or Miss division which was
sold by the Company in September 1995. During the third quarter ended October
31, 1998, the Company increased its reserve for its discontinued operations by
$15 million ($9 million after tax), primarily for potential lease liabilities
relating to guarantees on leases of its former Hit or Miss division. The after
tax cost of $9 million or, $.02 per diluted share, was recorded as a loss on
disposal of discontinued operations.
36
<PAGE> 22
L. SEGMENT INFORMATION
During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosure about Segments of an
Enterprise and Related Information." This new standard did not result in any
changes to the Company's reportable segments or in the information disclosed
about its segments.
The Company has two reportable segments. It's off-price family apparel
segment includes the T.J. Maxx, Marshalls and A.J. Wright domestic store chains
and the Company's foreign store chains, Winners and T.K. Maxx. The Company
manages the results of its T.J. Maxx and Marshalls chains on a combined basis.
The other chains, whose operating results are managed separately, sell similar
product categories and share similar economic and other characteristics of the
T.J. Maxx and Marshalls operations and are aggregated with the off-price family
apparel segment. This segment generated 7.8% of its fiscal 1999 revenue from its
foreign operations. All of these stores offer apparel for the entire family with
limited offerings of domestic goods. The Company's other segment, the off-price
home fashions stores is made up of the Company's HomeGoods stores which offer a
wide variety of home furnishings.
The Company evaluates the performance of its segments based on pre-tax
income before interest and general corporate expenses. For data on business
segments for fiscal years 1999, 1998 and 1997, see page 22.
37
<PAGE> 23
THE TJX COMPANIES, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
[PRICEWATERHOUSECOOPERS LOGO]
TO THE BOARD OF DIRECTORS OF THE TJX COMPANIES, INC.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity and cash flows present
fairly, in all material respects, the financial position of The TJX Companies,
Inc. and subsidiaries (the "Company") at January 30, 1999 and January 31, 1998,
and the results of its operations and its cash flows for each of the three years
in the period ended January 30, 1999, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 2, 1999
REPORT OF MANAGEMENT
The financial statements and related financial information in this annual report
have been prepared by management which is responsible for their integrity,
objectivity and consistency. The financial statements were prepared in
accordance with generally accepted accounting principles and necessarily include
amounts which are based upon judgments and estimates made by management.
The Company maintains a system of internal controls designed to provide, at
appropriate cost, reasonable assurance that assets are safeguarded, transactions
are executed in accordance with management's authorization and the accounting
records may be relied upon for the preparation of financial statements. The
system of controls includes the careful selection and training of associates,
and the communication and application of formal policies and procedures that are
consistent with high standards of accounting and administrative practices. The
accounting and control systems are continually reviewed, evaluated and where
appropriate, modified to accommodate changing business conditions and the
recommendations of the Company's internal auditors and the independent public
accountants.
An Audit Committee, comprised of members of the Board of Directors who are
neither officers nor employees of the Company, meets periodically with
management, internal auditors and the independent public accountants to review
matters relating to the Company's financial reporting, the adequacy of internal
accounting controls and the scope and results of audit work. The Committee is
responsible for reporting the results of its activities and for recommending the
selection of independent auditors to the full Board of Directors. The internal
auditors and the independent public accountants have free access to the
Committee and the Board of Directors.
The financial statements have been examined by PricewaterhouseCoopers LLP,
whose report appears separately. Their report expresses an opinion as to the
fair presentation of the consolidated financial statements and is based on an
independent examination performed in accordance with generally accepted auditing
standards.
/s/ Bernard Cammarata /s/ Donald G. Campbell
- ------------------------------------- --------------------------------------
Bernard Cammarata Donald G. Campbell
President and Chief Executive Officer Executive Vice President - Finance and
Chief Financial Officer
March 2, 1999
38
<PAGE> 24
THE TJX COMPANIES, INC.
SELECTED FINANCIAL DATA (CONTINUING OPERATIONS)
The following selected financial data includes the results of Marshalls for the
periods following its acquisition on November 17, 1995. All prior year data has
been restated to reflect Chadwick's and Hit or Miss as discontinued operations.
<TABLE>
<CAPTION>
Fiscal Year Ended January
---------------------------------------------------------------------------
Dollars in Thousands Except Per Share Amounts 1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(53 Weeks)
<S> <C> <C> <C> <C> <C>
Income statement and per share data:
Net sales $ 7,949,101 $ 7,389,069 $ 6,689,410 $ 3,975,115 $ 3,055,573
Income from continuing
operations before
extraordinary item 433,202 306,592 213,826 51,589(1) 84,480
Weighted average common
shares for diluted earnings
per share computations 334,647,950 349,612,184 350,650,100 290,781,900 293,837,800
Diluted earnings per share
from continuing operations
before extraordinary item $ 1.29 $ .88 $ .61 $ .15(1) $ .26
Dividends per share .12 .10 .07 .12 .14
Balance sheet data:
Working capital $ 436,259 $ 464,974 $ 425,595 $ 332,864 $ 240,646
Total assets 2,747,846 2,609,632 2,506,761 2,545,825 1,373,964
Capital expenditures 207,742 192,382 119,153 105,864 109,436
Long-term debt 220,344 221,024 244,410 690,713 194,478
Shareholders' equity 1,220,656 1,164,092 1,127,186 764,634 606,952
Stores in operation at year-end:
T.J. Maxx 604 580 578 587 551
Marshalls 475 461 454 496 --
Winners 87 76 65 52 37
HomeGoods 35 23 21 22 15
T.K. Maxx 39 31 18 9 5
A.J. Wright 6 -- -- -- --
</TABLE>
(1) Includes an after-tax charge of $21.0 million, or $.07 per share, for the
estimated cost of closing certain T.J. Maxx stores in connection with the
acquisition of Marshalls.
PRICE RANGE OF COMMON STOCK
The following per share data reflects the two-for-one stock splits distributed
in June 1998 and June 1997.
The common stock of the Company is listed on the New York Stock Exchange
(Symbol: TJX). The quarterly high and low trading stock prices for fiscal 1999
and fiscal 1998 are as follows:
<TABLE>
<CAPTION>
Fiscal 1999 Fiscal 1998
------------------- -------------------
Quarter High Low High Low
------- ------- -------- ------
<S> <C> <C> <C> <C>
First $23 3/4 $17 3/16 $12 1/32 $ 9 9/16
Second 28 7/16 22 3/16 14 31/32 11 1/4
Third 28 15 1/2 16 7/16 13 1/8
Fourth 31 1/16 18 3/4 19 9/32 13
</TABLE>
The approximate number of common shareholders at January 30, 1999 was 47,300.
The Company declared four quarterly dividends of $.03 per share for
fiscal 1999 and $.025 per share for fiscal 1998.
39
<PAGE> 25
THE TJX COMPANIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
During fiscal 1999 and 1998, the Company declared two-for-one stock splits
effected in the form of 100% stock dividends. All earnings per share amounts
have been restated to reflect these two-for-one splits. Earnings per share
amounts discussed herein refer to "diluted" earnings per share unless otherwise
indicated.
Effective December 7, 1996, the Company sold its Chadwick's of Boston mail
order operation and accounted for the gain on this transaction as discontinued
operations.
RESULTS OF OPERATIONS
CONTINUING OPERATIONS: Income from continuing operations before extraordinary
item ("income from continuing operations") was $433.2 million in fiscal 1999,
$306.6 million in fiscal 1998 and $213.8 million in fiscal 1997. Income from
continuing operations per share was $1.29 in fiscal 1999, versus $.88 in fiscal
1998 and $.61 in fiscal 1997.
Net sales for fiscal 1999 increased 7.6% to $7.95 billion from $7.39
billion in fiscal 1998. Net sales for fiscal 1998 increased 10.5% from $6.69
billion in fiscal 1997. Fiscal 1998 included 53 weeks while fiscal 1999 and 1997
each included 52 weeks. On a comparable 52-week basis net sales for fiscal 1999
increased 9.0%, and for fiscal 1998, net sales increased 8.9%. Consolidated same
store sales on a 52-week basis increased 5% in fiscal 1999 and increased 6% in
fiscal 1998. Percentage increases in same store sales, on a divisional basis,
are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------
January 30, January 31,
1999 1998
---------- ----------
<S> <C> <C>
T.J. Maxx +4% +5%
Marshalls +5% +7%
Winners +13% +14%
HomeGoods +9% +13%
T.K. Maxx +12% +15%
</TABLE>
Consolidated sales results for fiscal 1999 and 1998 primarily reflect the many
benefits associated with the Marshalls acquisition, along with new store growth.
Following the acquisition of Marshalls, the Company replaced Marshalls' frequent
promotional activity with an everyday low price strategy and also implemented a
more timely markdown policy. These changes conformed the Marshalls store
operation to that of the T.J. Maxx stores. In addition, the enhanced buying
power of the combined entities, combined with strong inventory management, has
allowed the Company to offer better values to consumers at both chains.
Cost of sales, including buying and occupancy costs, as a percentage of net
sales was 74.9%, 76.8% and 77.7% in fiscal 1999, 1998 and 1997, respectively.
The improvement in this ratio is largely due to improved inventory management,
the benefits associated with the acquisition of Marshalls and a reduction in
occupancy and depreciation costs as a percentage of net sales.
Selling, general and administrative expenses as a percentage of net sales
were 16.2% in fiscal 1999, 16.0% in fiscal 1998 and 16.3% in fiscal 1997. The
improvement in this ratio in fiscal 1999 and 1998, as compared to fiscal 1997,
reflects the stronger sales performance as well as expense savings provided by
the consolidation of the Marshalls and T.J. Maxx operations. During fiscal 1999
this ratio increased, as compared to fiscal 1998, largely due to certain charges
including a $7.5 million charitable cash donation to The TJX Foundation, $3.5
million for the settlement of the Hit or Miss note receivable and $6.3 million
associated with a fiscal 1998 deferred compensation award to the Company's Chief
Executive Officer. During fiscal 1998, selling, general and administrative
expenses included a charge of $15.2 million associated with the foregoing
deferred compensation award and a pre-tax gain of $6.0 million from the sale of
Brylane common stock.
40
<PAGE> 26
Interest expense, net of interest income, was $1.7 million, $4.5 million
and $37.4 million in fiscal 1999, 1998 and 1997, respectively. The Company
maintained a strong cash position throughout fiscal 1999 and 1998 as a result of
cash generated from operations. During fiscal 1997 the Company prepaid
approximately $450 million of long-term debt including the outstanding balance
of the loan incurred to acquire Marshalls. The impact of the Company's positive
cash flow position throughout fiscal 1999 and 1998 resulted in virtually no
short-term borrowings during these two years despite the Company's purchase of
$350.3 million of the Company's common stock in fiscal 1999 and $245.2 million
of its common stock in fiscal 1998. Interest income for fiscal 1999 was $20.5
million versus $21.6 million and $14.7 million in fiscal 1998 and 1997,
respectively.
The Company's effective income tax rate was 38% in fiscal 1999, 41% in
fiscal 1998 and 42% in fiscal 1997. The reduction in the fiscal 1999 effective
income tax rate is due to a lower effective state income tax rate, the benefit
of foreign tax credits and net operating loss carryforwards, and a charitable
donation of appreciated property. The Company elected to repatriate the current
year earnings of its Canadian subsidiary which favorably impacted the Company's
fourth quarter tax provision for fiscal 1999. The reduction in the fiscal 1998
effective income tax rate is primarily due to the impact of foreign operations.
DISCONTINUED OPERATIONS AND NET INCOME: Net income for fiscal 1999 includes an
after-tax charge to discontinued operations of $9.0 million for lease related
obligations, primarily for the Company's former Hit or Miss stores. Net income
for fiscal 1997 includes a gain on the sale of Chadwick's discontinued
operation, net of income taxes, of $125.6 million and also includes the fiscal
1997 operating results of Chadwick's prior to its sale measurement date, which
amounted to net income of $29.4 million. In addition, in each of the fiscal
years 1998 and 1997, the Company retired certain long-term debt instruments
prior to scheduled maturities, resulting in extraordinary losses, net of income
taxes, of $1.8 million and $5.6 million, respectively.
Net income, after reflecting the above items, was $424.2 million, or $1.27
per share in fiscal 1999, $304.8 million, or $.87 per share, in fiscal 1998 and
$363.1 million, or $1.04 per share, in fiscal 1997.
CAPITAL SOURCES AND LIQUIDITY
OPERATING ACTIVITIES: Net cash provided by operating activities was $642.8
million, $385.5 million and $664.5 million in fiscal 1999, 1998 and 1997,
respectively. The increase in cash provided by operations in fiscal 1999
reflects increased earnings and strong inventory management. The decrease in
cash provided by operating activities in fiscal 1998 is primarily the result of
an increase in merchandise inventories versus a decrease in fiscal 1997.
Inventories as a percentage of net sales were 14.9% in fiscal 1999, 16.1% in
fiscal 1998, and 15.8% in fiscal 1997. Strong sales volume, coupled with tight
inventory control, resulted in faster inventory turns, all of which were
favorable to cash flows and inventory ratios for fiscal 1999 and 1998. Working
capital was $436.3 million in fiscal 1999, $465.0 million in fiscal 1998 and
$425.6 million in fiscal 1997.
The cash flows from operating activities for fiscal 1999, 1998 and 1997
have been reduced by $16.6 million, $23.2 million and $62.9 million,
respectively, for cash expenditures associated with the Company's store closing
and restructuring reserves, which relate primarily to the Marshalls acquisition,
and for obligations relating to the Company's discontinued operations.
The initial reserve established in the acquisition of Marshalls for the
fiscal year-ended January 27, 1996 was estimated at $244.1 million and included
$44.1 million for inventory markdowns and $200 million for a store closing and
restructuring program. The initial store closing plan included the closing of
170 Marshalls stores during fiscal 1997 and fiscal 1998. The Company reduced the
total reserve by $85.9 million in fiscal 1997 and by an additional $15.8 million
in fiscal 1998, primarily due to fewer store closings and a reduction in the
estimated cost of settling the related lease obligations. This reserve was a
component of the allocation of the purchase price for Marshalls and the reserve
adjustments in fiscal 1998 and 1997 resulted in a corresponding reduction in the
value assigned to the long-term assets acquired. The adjusted reserve balance
included $70.8 million for lease related obligations for 70 store and other
facility closings, $9.6 million for property write-offs, $44.1 million for
inventory markdowns and $17.9 million for severance, professional fees and all
other costs associated with the restructuring plan. Property write-offs were the
only non-cash charge to the reserve.
41
<PAGE> 27
In connection with the Marshalls acquisition, the Company also established
a reserve for the closing of certain T.J. Maxx stores. The Company recorded an
initial pre-tax charge to income from continuing operations of $35 million in
fiscal 1996 and a pre-tax credit to income from continuing operations of $1.8
million in fiscal 1999 and $8 million in fiscal 1997 to reflect a lower than
anticipated cost of the T.J. Maxx closings. An additional charge to continuing
operations of $700,000 was recorded in fiscal 1998. The adjusted reserve balance
includes $13.8 million for lease related obligations of 32 store closings,
non-cash charges of $9.8 million for property write-offs and $2.3 million for
severance, professional fees and all other costs associated with the closings.
As of January 31, 1998, all of the Marshalls and T.J. Maxx properties
reserved for had been closed. The reserve also includes some activity relating
to several HomeGoods store closings, the impact of which is immaterial. Actual
spending and charges against the reserve are summarized below:
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
January 30, January 31, January 25,
In Thousands 1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash charges:
Lease related obligations $12,521 $13,593 $21,277
Inventory markdowns -- -- 15,886
Severance and other costs 1,008 3,763 13,572
------- ------- -------
Subtotal cash charges 13,529 17,356 50,735
Non-cash charges:
Property write-offs -- 5,402 11,064
------- ------- -------
Total reserve spending $13,529 $22,758 $61,799
======= ======= =======
</TABLE>
The balance in the store closing and restructuring reserve as of January
31, 1999 of $44.6 million is virtually all for the estimated cost of future
lease obligations of the closed stores and other facilities. It includes
estimates and assumptions as to how the leases will be disposed of, which could
change, however the Company believes it has adequate reserves for these
obligations. The spending of the reserve will reduce operating cash flows in
varying amounts over the next ten to fifteen years as the leases expire or are
settled. Future spending against the store closing and restructuring reserve
will not have a material impact on future cash flows or the Company's financial
condition.
The Company also has a reserve for future obligations relating to its
discontinued operations. During fiscal 1999 the reserve increased by $11.9
million. The Company added $15 million to the reserve for additional lease
related obligations. This was offset by charges against the reserve in fiscal
1999 of $3.1 million, primarily for charges for lease related costs associated
with the former Zayre stores. The decrease in the reserve in fiscal 1998 of $5.8
million was primarily for settlement costs associated with Chadwick's as well as
lease related costs associated with the former Zayre and Hit or Miss locations.
The balance in the discontinued operations reserve of $29.7 million as of
January 30, 1999 is for lease related obligations of the former Zayre and Hit or
Miss stores, which are expected to reduce operating cash flows in varying
amounts over the next ten to fifteen years, as leases expire, are settled or are
terminated. Future spending against the discontinued operations reserve will not
have a material impact on future cash flows or the Company's financial
condition. The Company is also contingently liable on certain leases of its
discontinued operation, see Note K to the consolidated financial statements for
further information.
INVESTING ACTIVITIES: The Company's cash flows for investing activities
include capital expenditures for the last two years as set forth in the table
below:
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------
January 30, January 31,
In Millions 1999 1998
---------- ----------
<S> <C> <C>
New stores $ 66.7 $ 53.1
Store renovations and improvements 92.1 103.3
Office and distribution centers 48.9 36.0
------ ------
Capital expenditures $207.7 $192.4
====== ======
</TABLE>
42
<PAGE> 28
The Company expects that capital expenditures will approximate $245 million for
fiscal year 2000. This includes $83.5 million for new stores, $97.7 million for
store renovations and improvements and $63.8 million for the Company's office
and distribution centers.
Investing activities for fiscal 1999 and fiscal 1998 include proceeds of
$9.4 million and $15.7 million, respectively, for the sale of shares of Brylane
Inc. common stock. Fiscal 1998 also includes a payment by the Company, to
Brylane, of $33.2 million as a final settlement of the proceeds from the sale of
Chadwick's. As part of the sale of Chadwick's, the Company retained the consumer
credit card receivables of the division as of the closing date, which totaled
approximately $125 million, with $54.5 million still outstanding as of January
25, 1997. The balance of the receivables was collected in the first quarter of
fiscal 1998 and is classified as cash provided by discontinued operations. The
Company also received a $20 million convertible note which, as of January 30,
1999, is no longer outstanding.
FINANCING ACTIVITIES: The strong cash flows from operations has exceeded the
Company's needs in fiscal 1999 and fiscal 1998, and no additional borrowings
were required. Financing activities for fiscal 1999 include principal payments
on long-term debt of $23.4 million. Financing activities for fiscal 1998 include
principal payments on long-term debt of $27.2 million, including $8.5 million to
fully retire the Company's 9 1/2% sinking fund debentures. As a result of its
strong cash position, the Company prepaid certain long-term debt in addition to
regularly scheduled maturities during fiscal 1997. On September 16, 1996,
pursuant to a call for redemption, the Company prepaid $88.8 million of its
9 1/2% sinking fund debentures. In addition, during the fourth quarter of fiscal
1997, the Company retired the entire outstanding balance of the $375 million
term loan incurred to acquire Marshalls. The Company recorded after-tax
extraordinary charges totaling $5.6 million, or $.02 per share, due to the early
retirement of these obligations. During fiscal 1997, the Company paid a total of
$455.6 million for the prepayment of certain long-term debt and a total of $46.5
million for regularly scheduled maturities of long-term debt.
In June 1997, the Company announced a $250 million stock buyback program.
During fiscal 1998, the Company repurchased 17.1 million shares of common stock
(adjusted for stock splits) for a cost of $245.2 million. The program was
completed in February 1998 at which time the Company announced a second $250
million stock repurchase program. In October 1998, the Company completed the
second $250 million stock repurchase program and announced its intentions to
repurchase an additional $750 million of common stock over the next several
years. The Company has spent $95.5 million through January 30, 1999 on this
current repurchase program. In total, during fiscal 1999, the Company
repurchased a combined total of 15.6 million shares of common stock (adjusted
for stock splits) at a total cost of $350.3 million.
The Company declared quarterly dividends on its common stock of $.03 per
share in fiscal 1999 and $.025 per share in fiscal 1998. Annual dividends on
common stock totaled $38.1 million in fiscal 1999 and $31.8 million in fiscal
1998. The Company also had dividend requirements on all of its outstanding
preferred stock which totaled $3.5 million in fiscal 1999, $11.7 million in
fiscal 1998 and $13.7 million in fiscal 1997. During fiscal 1998, 770,200 shares
of the Series E preferred stock were voluntarily converted into 8.3 million
shares of common stock and 2,500 shares were repurchased. During fiscal 1999,
357,300 shares of Series E preferred stock were voluntarily converted into 6.7
million shares of common stock. On November 18, 1998 the remaining 370,000
outstanding shares of the Series E preferred stock were mandatorily converted
into 8.0 million shares of common stock in accordance with its terms. Inducement
fees of $130,000 and $3.8 million were paid on the Series E voluntary
conversions in fiscal 1999 and fiscal 1998, respectively. The inducement fees
are classified as preferred dividends. During fiscal 1997, both the Series A
cumulative convertible preferred stock and the Series C cumulative convertible
preferred stock were converted into an aggregate of 4.4 million shares of common
stock pursuant to separate calls for redemption. Preferred dividends were paid
through the respective conversion dates. The Series D preferred stock
automatically converted on November 17, 1996 into 1.3 million shares of common
stock. Financing activities for fiscal 1999 and 1998 also includes proceeds of
$27.8 million and $15.5 million, respectively, from the exercise of employee
stock options. These proceeds include $13.8 million and $6.1 million for related
tax benefits in fiscal 1999 and fiscal 1998, respectively.
43
<PAGE> 29
The Company has traditionally funded its seasonal merchandise requirements
through short-term bank borrowings and the issuance of short-term commercial
paper. The Company has the ability to borrow up to $500 million under a
revolving credit facility it entered into in September 1997. This agreement
replaced the agreement entered into at the time of the Marshalls acquisition and
contains certain financial covenants which include a minimum net worth
requirement and certain leverage and fixed charge coverage ratios. In fiscal
1998 the Company recorded an extraordinary charge of $1.8 million, or $.01 per
share, on the write-off of deferred financing costs associated with the former
agreement. As of January 30, 1999, the entire $500 million was available for
use. The Company's strong cash position throughout fiscal 1999 and 1998 required
minimal short-term borrowings during those years. There were no U.S. short-term
borrowings outstanding during fiscal 1999 or fiscal 1998. The maximum amount of
U.S. short-term borrowings outstanding during fiscal 1997 was $3 million. The
Company also has C$40 million of credit lines for its Canadian operations, all
of which were available for use as of January 30, 1999. The maximum amount
outstanding under its Canadian credit line during fiscal 1999, 1998 and 1997 was
C$15.6 million, C$12.1 million and C$6 million, respectively. The Company
currently has a shelf registration statement which provides for the issuance of
up to $600 million of debt or equity. Management believes that its current
credit facilities and availability under its shelf registration statement are
more than adequate to meet its needs. See Notes B and F to the consolidated
financial statements for further information regarding the Company's long-term
debt, capital stock transactions and available financing sources.
The Company is exposed to foreign currency exchange rate risk on its
investment in its Canadian (Winners) and European (T.K. Maxx) operations. As
more fully described in Note C to the consolidated financial statements, the
Company hedges a large portion of its net investment and certain merchandise
commitments in these operations with derivative financial instruments. The
Company utilizes currency forward and swap contracts, designed to offset the
gains or losses in the underlying exposures, most of which are recorded directly
in shareholders' equity. The contracts are executed with creditworthy banks and
are denominated in currencies of major industrial countries. The Company does
not enter into derivatives for speculative trading purposes.
The Company has performed a sensitivity analysis assuming a hypothetical
10% adverse movement in foreign exchange rates applied to the hedging contracts
and the underlying exposures described above. As of January 30, 1999, the
analysis indicated that such market movements would not have a material effect
on the Company's consolidated financial position, results of operations or cash
flows.
THE YEAR 2000 ISSUE
The following paragraphs relating to the Year 2000 issue also are designated a
Year 2000 Readiness Disclosure within the meaning of the Year 2000 Information
and Readiness Disclosure Act.
The operations of the Company rely on various computer technologies which,
as is true of many companies, may be affected by what is commonly referred to as
the Year 2000 ("Y2K") issue. To address this matter, in October 1995, the
Company began to evaluate whether its computer resources would be able to
recognize and accept date sensitive information before and after the arrival of
the Year 2000. A failure of these technologies to recognize and process such
information could create an adverse impact on the operations of the Company.
In connection with its Y2K evaluation, the Company established a
Company-wide Y2K project team to review and assess the Y2K readiness of its
computer technologies in each business area, and to remediate, validate and,
where necessary, develop contingency plans to enable these technologies to
effect a smooth transition to the Year 2000 and beyond.
These efforts have focused, and will continue to focus, on: (1) the
Company's information technology systems in the form of hardware and software
(so-called "IT" systems), such as mainframes, client/server systems, personal
computers, proprietary software and software purchased or licensed from third
parties, upon which the Company relies for its retail functions, such as
merchandise procurement and distribution, point-of-sale information systems and
inventory control; (2) the Company's embedded computer technologies (so-called
"non-IT" systems), such as materials handling equipment, telephones, elevators,
climate control devices and building security systems; and (3) the IT and non-IT
systems of third parties with whom the Company has commercial relationships to
support its daily operations, such as those of banks, credit card processors,
payroll services, telecommunications services, utilities and merchandise
vendors.
44
<PAGE> 30
THE COMPANY'S STATE OF READINESS: The Company's review and assessment phase is
substantially complete with respect to its IT systems and the Company has
identified and inventoried those IT systems which are critical to its
operations. The Company's effort to modify these IT technologies to address the
Y2K issue is ongoing and is expected to be substantially completed by June 1999
with full completion scheduled for September 1999. The Company's mainframe
operating system has already been remediated, tested and determined to be
compliant in a simulated Y2K environment. Ongoing validation testing of this
system is being performed during 1999. The Company's proprietary software
systems as well as those purchased or licensed from third parties are undergoing
remediation and validation testing and such testing will continue during 1999.
The remaining non-compliant IT technologies which have been identified as being
critical to the Company's operations are currently being remediated, and are
scheduled for validation testing and, where necessary, contingency planning.
With respect to the Company's non-IT systems, the review and assessment
phase is substantially complete and the Company has identified and inventoried
such technologies. The Company has undertaken a program to modify or replace
such technologies where they are related to critical functions of the Company
and has estimated a target completion date of October 1999 for this portion of
the Y2K project plan.
With respect to the IT and non-IT systems of critical third party
providers, the Company has already communicated with these parties to obtain
assurances regarding their respective Y2K remediation efforts. While the Company
expects such third parties to address the Y2K issue based on the representations
it has received to date, the Company cannot guarantee that these systems will be
made Y2K compliant in a timely manner or that the Company will not experience a
material adverse effect as a result of such non-compliance.
COSTS ASSOCIATED WITH YEAR 2000 ISSUES: As of January 30, 1999, the Company has
incurred approximately $9 million in costs related to the Y2K project. The
Company currently estimates that the aggregate cost of the Y2K project will be
approximately $13 million, which cost is being expensed as incurred. The
Company's Y2K costs are primarily for the cost of internal and third party
programming for remediation and testing. All of these costs have been or are
expected to be funded through operating cash flows. The aggregate cost estimate
is based on the current assessment of the Y2K project and is subject to change
as the project progresses. The Company has not deferred the implementation of
any significant IT projects while addressing the Y2K issue.
CONTINGENCY PLANS: The Company believes that the IT and non-IT technologies
which support its critical functions will be ready for the transition to the
Year 2000. There can be no assurance, however, that similar unresolved issues
for key commercial partners (including utilities, financial services, building
services and transportation services) will not cause an adverse effect on the
Company. To address these risks, and to address the risk that its own IT and
non-IT technologies will not perform as expected during the Y2K transition, the
Company is in the process of developing and finalizing appropriate Y2K
contingency plans, which plans will be established and then revised as necessary
during the course of 1999. Although the Company believes that its efforts to
address the Y2K issue will be sufficient to avoid a material adverse impact on
the Company, there can be no assurance that these efforts will be fully
effective.
45
<PAGE> 31
THE TJX COMPANIES, INC.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Earnings per share amounts in the following table reflect the effect of the
two-for-one stock splits distributed in June 1998 and June 1997.
<TABLE>
<CAPTION>
First Second Third Fourth
In Thousands Except Per Share Amounts Quarter Quarter Quarter Quarter
- ------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Fiscal year ended January 30, 1999
Net sales $1,775,847 $1,864,236 $2,026,578 $2,282,440
Gross earnings* 445,586 445,746 546,077 554,277
Income from continuing operations
before extraordinary item 87,767 84,876 133,667 126,892
Diluted earnings per share .26 .25 .40 .39
Net income 87,767 84,876 124,619 126,892
Diluted earnings per share .26 .25 .38 .39
Fiscal year ended January 31, 1998 (53 Weeks) (14 Weeks)
Net sales $1,560,150 $1,698,372 $1,887,698 $2,242,849
Gross earnings* 357,531 375,111 473,362 506,524
Income from continuing operations
before extraordinary item 48,461 52,578 106,942 98,611
Diluted earnings per share .14 .15 .31 .29
Net income 48,461 52,578 105,165 98,611
Diluted earnings per share .14 .15 .30 .29
</TABLE>
* Gross earnings equal net sales less cost of sales, including buying and
occupancy costs.
Fourth quarter comparisons are impacted by the shift in the fiscal calendar
resulting from the extra week included in the fourth quarter of fiscal 1998, as
well as the favorable adjustments to the Company's tax provision and certain
accrued expenses in fiscal 1999. Net income for the third quarter of fiscal 1999
includes an after-tax charge of $9.0 million as a loss on disposal of
discontinued operations for lease related obligations, primarily for the
Company's Hit or Miss stores. Net income for the third quarter of fiscal 1998
includes an after-tax extraordinary charge of $1.8 million for the write-off of
deferred financing costs associated with the early termination of a revolving
credit facility.
FORWARD-LOOKING INFORMATION
Certain statements contained in this Annual Report are forward-looking and
involve a number of risks and uncertainties. Among the factors that could cause
actual results to differ materially are the following: general economic
conditions and consumer demand and consumer preferences and weather patterns in
the U.S., Canada and Europe, particularly the United Kingdom; competitive
factors, including continuing pressure from pricing and promotional activities
of major competitors; impact of excess retail capacity and the availability of
desirable store locations on suitable terms; the availability, selection and
purchasing of attractive merchandise on favorable terms; import risks, including
potential disruptions and duties, tariffs and quotas on imported merchandise,
including economic and political problems in countries from which merchandise is
imported; currency and exchange rate factors in the Company's foreign
operations; risks in the development of new businesses and application of the
Company's off-price strategies in foreign countries; acquisition and divestment
activities; risks and uncertainties relating to the Year 2000 issue; and other
factors that may be described in the Company's filings with the Securities and
Exchange Commission. The Company does not undertake to publicly update or revise
its forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied therein will not be
realized.
46
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OR JURISDICTION NAME UNDER WHICH
OF INCORPORATION DOES BUSINESS
OPERATING SUBSIDIARIES OR ORGANIZATION (IF DIFFERENT)
- ---------------------- --------------------- -----------------
<S> <C> <C>
NBC Attire Inc. Massachusetts
Newton Buying Corp. Delaware
NBC Distributors Inc. Massachusetts
NBC Merchants, Inc. Indiana
NBC Charlotte Merchants, Inc. North Carolina
NBC Nevada Merchants, Inc. Nevada
Marmaxx Operating Corp. Delaware T.J.Maxx/Marshalls
Marshalls Atlanta Merchants, Inc. Georgia
Marshalls Bridgewater Merchants, Inc. Virginia
Marshalls Woburn Merchants, Inc. Massachusetts
Marshalls of MA, Inc. Massachusetts
New York Department Stores Puerto Rico Marshalls
de Puerto Rico, Inc.
Marshalls of Richfield, MN, Inc. Minnesota
Marshalls of Novato, CA, Inc. California
Marshalls of Northridge-Devonshire, CA, Inc. California
Marshalls of Glen Burnie, MD, Inc. Maryland
Marshalls of Beacon, VA, Inc. Virginia
Marshalls of Laredo, TX, Inc. Texas
Marshalls of Calumet City, IL, Inc. Illinois
Marshalls of Chicago-Clark, IL, Inc. Illinois
Marshalls of Streamwood, IL, Inc. Illinois
Marshalls of Chicago-Brickyard, IL, Inc. Illinois
Marshalls of Matteson, IL, Inc. Illinois
Marshalls of Elizabeth, NJ, Inc. New Jersey
Marshalls of Nevada, Inc. Nevada
Strathmex Corp. Delaware
HomeGoods, Inc. Delaware
H.G. Merchants, Inc. Massachusetts
Winners Apparel Ltd. Ontario, Canada
Winners Merchants Ltd. Ontario, Canada
NBC Apparel, Inc. Delaware
TKM Holding Corp. Delaware
NBC Apparel United Kingdom T.K. Maxx
NBC Apparel Group United Kingdom
T.K. Maxx United Kingdom
NBC Apparel Management Limited United Kingdom
TJX Netherlands B.V. Netherlands T.K. Max
Concord Buying Group Massachusetts A.J. Wright
NBC Operating Corp. Massachusetts
</TABLE>
<PAGE> 2
EXHIBIT 21
SUBSIDIARIES
CONTINUED
<TABLE>
<CAPTION>
STATE OR JURISDICTION NAME UNDER WHICH
OF INCORPORATION DOES BUSINESS
OPERATING SUBSIDIARIES OR ORGANIZATION (IF DIFFERENT)
- ---------------------- --------------------- -----------------
<S> <C> <C>
T.J. Maxx of CA, LLC Delaware
T.J. Maxx of IL, LLC Delaware
Marshalls of CA, LLC Delaware
Marshalls of IL, LLC Delaware
NYDS, LLC Delaware
LEASING SUBSIDIARIES
- --------------------
Cochituate Realty, Inc. Massachusetts
NBC First Realty Corp. Indiana
NBC Second Realty Corp. Massachusetts
NBC Fourth Realty Corp. Nevada
NBC Fifth Realty Corp. Illinois
NBC Sixth Realty Corp. North Carolina
</TABLE>
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bernard Cammarata and Donald G. Campbell and each
of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign the form 10-K to be filed by
The TJX Companies, Inc. for the fiscal year ended January 30, 1999 and any or
all amendments thereto and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/S/ BERNARD CAMMARATA /S/ DONALD G. CAMPBELL
- ------------------------------------ ------------------------------------
Bernard Cammarata, President, Donald G. Campbell, Executive
Principal Executive Officer and Vice President - Finance
Director Principal Financial and
Accounting Officer
/S/ PHYLLIS B. DAVIS /s/ JOHN F. O'BRIEN
- ------------------------------------ ------------------------------------
Phyllis B. Davis, Director John F. O'Brien, Director
/s/ DENNIS F. HIGHTOWER /s/ ROBERT F. SHAPIRO
- ------------------------------------ ------------------------------------
Dennis F. Hightower, Director Robert F. Shapiro, Director
/s/ RICHARD LESSER /s/ WILLOW B. SHIRE
- ------------------------------------ ------------------------------------
Richard Lesser, Director Willow B. Shire, Director
/s/ ARTHUR F. LOEWY /s/ FLETCHER H. WILEY
- ------------------------------------ ------------------------------------
Arthur F. Loewy, Director Fletcher H. Wiley, Director
/s/ JOHN M. NELSON
- ------------------------------------
John M. Nelson, Director
Dated: April 13, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATMENTS OF INCOME AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JAN-30-1999
<CASH> 461,244,000
<SECURITIES> 0
<RECEIVABLES> 67,345,000
<ALLOWANCES> 0
<INVENTORY> 1,186,068,000
<CURRENT-ASSETS> 1,743,105,000
<PP&E> 1,373,904,000
<DEPRECIATION> 617,302,000
<TOTAL-ASSETS> 2,747,846,000
<CURRENT-LIABILITIES> 1,306,846,000
<BONDS> 220,344,000
0
0
<COMMON> 322,141,000
<OTHER-SE> 898,515,000
<TOTAL-LIABILITY-AND-EQUITY> 2,747,846,000
<SALES> 7,949,101,000
<TOTAL-REVENUES> 7,949,101,000
<CGS> 5,957,415,000
<TOTAL-COSTS> 5,957,415,000
<OTHER-EXPENSES> 1,285,988,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,686,000
<INCOME-PRETAX> 704,012,000
<INCOME-TAX> 270,810,000
<INCOME-CONTINUING> 433,202,000
<DISCONTINUED> 9,048,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 424,154,000
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.27
</TABLE>
