TJ Maxx 1999 Annual Report Download - page 25

N e t I n com e : Net income for fiscal 2000 includes a $5.2 million charge, or $.02 per share, for the cumulative
effect of the accounting change for layaway sales. Net income for fiscal 1999 includes an after-tax charge to
discontinued operations of $9.0 million for lease related obligations, primarily for our former Hit or Miss stores.
Fiscal 1998 includes an extraordinary charge of $1.8 million for the early retirement of debt.
Net income, after reflecting the above items, was $521.7 million, or $1.64 per share in fiscal 2000, $424.2
million, or $1.27 per share in fiscal 1999 and $304.8 million, or $.87 per share in fiscal 1998.
C a p i t a l S o ur ce s a n d L i q u i d it y
O p e r a t i n g A c t i v i t i e s : Net cash provided by operating activities was $578.0 million, $628.9 million and
$383.5 million in fiscal 2000, 1999 and 1998, respectively.The decrease in cash provided by operations in fiscal
2000 versus fiscal 1999 reflects funding of the trusts related to deferred compensation arrangements, and the
reduction of certain accrued expenses, primarily insurance obligations and the store closing and restructuring
re s e rve, as compared to fiscal 1999.The increase in cash provided by operations in fiscal 2000 and fiscal 1999, a s
c o m p a red to fiscal 1998, re flects increased earnings and strong inve n t o ry manage m e n t . I nventories as a perc e n t-
age of net sales we re 14.0% in fiscal 2000, 14.9% in fiscal 1999 and 16.1% in fiscal 1998. S t rong sales vo l u m e,
coupled with tight inve n t o ry contro l , resulted in faster inve n t o ry turns, all of which favo rably impacted the inve n-
t o ry ratios for fiscal 2000 and fiscal 1999. Wo rking capital was $334.2 million in fiscal 2000, $436.3 million in
fiscal 1999 and $465.0 million in fiscal 1998. The reduction in fiscal 2000, as compared to fiscal 1999 and fis c a l
1 9 9 8 , re flects a lower cash position at ye a r -end and an increase in the current installments of long-term deb t .
The cash flows from operating activities for fiscal 2000, 1999 and 1998 have been reduced by $27.9 million,
$16.6 million and $23.2 million,respectively, for cash expenditures charged against the store closing and restruc-
turing reserve, and the discontinued operations reserve.
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 the Marshalls store closing and
restructuring plan and $35.0 million for the closing of certain T.J. Maxx stores. The estimated cost of $244.1
million for the Marshalls closings, recorded in fiscal 1996, was reduced in subsequent years due to a reduction
in the number of planned closings and a reduction in the estimated cost of settling the related lease obligations.
Reflecting these changes,TJX reduced the total reserve by $85.9 million in fiscal 1997 with additional adjust-
ments reducing the reserve by $15.8 million in fiscal 1998 and $3.0 million in fiscal 2000. This reserve was a
component of the allocation of the purchase price for Marshalls and the reserve adjustments in each fiscal year
resulted in a corresponding reduction in the value assigned to the long-term assets acquired. The revised esti-
mated cost for the Marshalls closing and restructuring plan of $139.4 million, includes $67.8 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. The reserve established for
the closing of certain T.J. Maxx stores in connection with the Marshalls acquisition was initially estimated at
$35.0 million and was recorded as a pre-tax charge to income from continuing operations in fiscal 1996. Due to
lower than anticipated costs of the T.J. Maxx closings,TJX recorded a pre-tax credit to income from continuing
operations of $300,000 in fiscal 2000, $1.8 million in fiscal 1999 and $8.0 million in fiscal 1997.An additional
charge to continuing operations of $700,000 was recorded in fiscal 1998. The revised estimated cost of the T.J.
Maxx closings of $25.6 million, includes $13.5 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.All of the Marshalls and T.J. Maxx stores identified in the plan were closed as
of January 30, 1998.
The remaining balance in the store closing and restructuring reserve as of January 29, 2000 is $15.7 million.
This balance is primarily for the estimated cost of the future lease obligations of the closed stores. The estimates
and assumptions used in developing the remaining reserve requirements are subject to change, however, TJX
believes it has adequate reserves for these obligations.The reserve also includes some activity relating to several
HomeGoods store closings, the impact of which is immaterial. The following is a summary of the activity in the
store closing and restructuring reserve for the last three fiscal years: