TJ Maxx 1999 Annual Report Download - page 13

Un a u d it e d P ro Fo rm a Fisca l Ye a r E n d e d
Ja n u a ry 2 9 , Ja n u a ry 3 0, Ja n u a ry 3 1 ,
Do ll a rs I n Th ou s a n d s E x cep t Pe r S hare A m o u n t s 2 0 0 0 1 9 9 9 1 9 9 8
(5 3 w e e k s )
Income from continuing operations before extraordinary
item and cumulative effect of accounting change $513,862 $424,512 $301,129
Per diluted share $ 1.62 $ 1.27 $ .86
Net income $508,708 $415,464 $299,352
Per diluted share $ 1.60 $ 1.24 $ .85
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 2000, 1999 and 1998 is estimated on the date of grant using the Black-Scholes
option pricing model with the following assumptions: dividend yield of 1% in each fiscal year, expected volatil-
ity of 46% , 40% and 38% in fiscal 2000, 1999 and 1998, respectively, a risk-free interest rate of 6.4% in fiscal
2000, 5.0% in fiscal 1999 and 5.8% in fiscal 1998, and expected holding periods of six years in all fiscal peri-
ods. The weighted average fair value of options granted during fiscal 2000, 1999 and 1998 was $14.38, $9.28
and $5.52 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 29, 2000 (shares
in thousands):
O p tio n s O u tst a n d ing O p t ions E x e rc i s a bl e
We i g h t e d
Av e r ag e W e i g h t e d W e i g h t e d
R a n g e o f R e m a i n i n g A v e r a ge A v e r ag e
E xe rcise Pr ice s S h a re s C o n t r a ct L ife E xe r cise Price S h a re s E x e r cise Price
$12.5625 - $16.3125 1,575 4.2 Years $ 5.06 1,575 $ 5.06
$16.3126 - $10.6875 2,766 6.8 Years 9.71 2,433 9.58
$10.6876 - $14.4688 2,503 7.5 Years 13.97 1,340 14.44
$14.4689 - $21.7500 1,829 8.6 Years 21.74 604 21.74
$21.7501 - $30.5000 3,159 9.6 Years 29.21 28 23.94
Total 11,832 7.6 Years $17.06 5,980 $10.77
During fiscal 1998, a special deferred compensation award was granted to the Company’s then 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 compensa-
tion charge of $9.6 million at the time of the grant.The award provided the executive the option to periodically
denominate the shares granted into other investments. The Company was subject to income statement charges
or credits for changes in the fair market value ofTJX common stock to the extent the award, or a portion thereof,
was denominated in TJX stock. The Company recorded additional compensation expense of $1.1 million, $6.3
million and $5.6 million in fiscal 2000, 1999 and 1998, respectively, due to the increase in market value of the
shares of Company stock from date of grant.As of January 29, 2000, all of the shares have been denominated
into other investments. The Company separately transferred funds to a trust in an amount equal to the value of
the new investment elections at the time such elections were made by the executive.The trust assets are included
in other assets on the balance sheet and are invested in a manner that matches the elections made by the exec-
utive. Thus, deferred compensation adjustments due to the change in the executive’s deferred compensation
account are offset by similar amounts due to gains or losses on the trust assets.
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