TJ Maxx 1999 Annual Report Download - page 27

Fin a n cin g A c t i v i t i e s : In December 1999,TJX issued $200 million of 7.45% unsecured notes resulting in net
proceeds of $198.1 million. The proceeds are being used for general corporate purposes and in support of our
ongoing stock repurchase program.The strong cash flows from operations exceeded our needs in fiscal 1999 and
fiscal 1998, thus no additional borrowings were required in those years. Financing activities include principal
payments on long-term debt of $695,000 in fiscal 2000, $23.4 million in fiscal 1999 and $27.2 million in fiscal
1998. Fiscal 1998 principal payments included $8.5 million to fully retire our 91/2% sinking fund debentures.
At year-end,TJX had a $750 million, multi-year, stock repurchase program in effect under which it had repur-
chased 27.7 million shares at an aggregate cost of $696.8 million through January 29, 2000. Subsequent to year-
end,TJX repurchased an additional 2.7 million shares, completing the $750 million stock repurchase program
and announced a new multi-year, $1 billion stock repurchase program. In addition, during fiscal 1998 and fiscal
1999,TJX also repurchased stock under two separate $250 million stock repurchase programs.TJX has had cash
expenditures, under all of its programs, of $604.6 million,$337.7 million and $245.2 million in fiscal 2000, 1999
and 1998, respectively, funded primarily by excess cash generated from operations. The total common shares
repurchased (adjusted for stock splits) amounted to 23.6 million shares in fiscal 2000, 15.6 million in fiscal 1999
and 17.1 million in fiscal 1998.
TJX declared quarterly dividends on its common stock of $.035 per share in fiscal 2000, $.03 per share in
fiscal 1999 and $.025 per share in fiscal 1998. Cash payments for dividends on its common stock totaled $42.7
million in fiscal 2000, $36.5 million in fiscal 1999 and $29.4 million in fiscal 1998. Prior to fiscal 2000,TJX also
had dividend requirements on all of its outstanding preferred stock that resulted in cash outlays of $3.9 million
in fiscal 1999 and $12.1 million in fiscal 1998. 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 and were paid through the respective
conversion dates. Financing activities for fiscal 2000, 1999 and 1998 also include proceeds of $21.0 million,
$27.8 million and $15.5 million, respectively, from the exercise of employee stock options. These proceeds
include $11.7 million,$13.8 million and $6.1 million for related tax benefits in fiscal 2000,1999 and fiscal 1998,
respectively.
TJX has traditionally funded its seasonal merchandise requirements through cash generated from operations,
short-term bank borrowings and the issuance of short-term commercial paper. TJX has the ability to borrow up
to $500 million under a five-year revolving credit facility into which it entered in September 1997. This agree-
ment replaced the agreement into which it entered at the time of the Marshalls acquisition and contains certain
financial covenants, including a fixed charge coverage ratio and a leverage ratio. In fiscal 1998,TJX 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 29, 2000, the entire $500 million was available for use.The maximum
amount outstanding under the agreement during fiscal 2000 was $108 million, with no borrowings under this
agreement during fiscal 1999 or fiscal 1998.TJX also has C$40 million of credit lines for its Canadian opera-
tions, all of which were available for use as of January 29, 2000. The maximum amount outstanding under its
Canadian credit line during fiscal 2000,1999 and 1998 was C$19.2 million, C$15.6 million and C$12.1 million,
respectively.TJX management believes that its current credit facilities are more than adequate to meet its oper-
ating needs. See Notes C and G to the consolidated financial statements for further information regarding our
long-term debt, capital stock transactions and available financing sources.
TJX is exposed to foreign currency exchange rate risk on its investment in its Canadian (Winners) and Euro-
pean (T.K. Maxx) operations.As more fully described in Note D to the consolidated financial statements, we
hedge a significant portion of our net investment and certain merchandise commitments in these operations with
derivative financial instruments.TJX utilizes currency forward and swap contracts, designed to offset the gains
or losses in the underlying exposures.The contracts are executed with creditworthy banks and are denominated
in currencies of major industrial countries.TJX does not enter into derivatives for speculative trading purposes.