TJ Maxx 1999 Annual Report Download - page 7

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
S u m m a r y o f A cco u n t i n g Po l i c i e s
Fisca l Ye a r: 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 29, 2000 and January 30, 1999 each
included 52 weeks.
B a sis o f Pre s e n t a t i o n : 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 finan-
cial statements for the applicable periods present the Company’s former Chadwick’s of Boston (Chadwick’s)
and Hit or Miss divisions as discontinued operations. The notes pertain to continuing operations except where
otherwise noted.
U se o f E stim a te s: The pre p a ration of the financial stat e m e n t s , in conformity with ge n e ra l l y accepted account-
ing principles, re q u i res management to make estimates and assumptions that affect the reported amounts of assets
and liab i l i t i e s , and disclosure of contingent liab i l i t i e s , at the date of the financial statements as well as the re p o r t e d
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimat e s .
C a sh , C a sh E q u iv a le n t s a n d S h o rt -Te r m I n v e s t m e n t s : 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.
During September 1999, the Company received 693,537 common shares of Manulife Financial. The shares
issued reflect ownership interest in the demutualized insurer due to policies held by the Company. These securi-
ties were recorded at market value upon receipt resulting in an $8.5 million pre-tax gain.The Company has clas-
sified these Manulife Financial common shares as available-for-sale and includes them in other current assets on
the balance sheets. In years prior to fiscal 2000, the Company also held available-for-sale marketable securities
received as proceeds from the sale of its former Chadwick’s division (see Note B).Available-for-sale securities
are stated at fair market value with unrealized gains or losses, net of income taxes, included as a component of
other comprehensive income (loss). Realized gains or losses are included in net income when the securities are
sold or disposed of, resulting in a related reclassification adjustment to other comprehensive income (loss).
M e r ch a n d ise I n v e n t o r i e s : 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.
D e p r e ciat i o n an d A m o r t i z a t i o n : 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.Depreciation and amortization expense for property was $154.2 million, $130.4
million and $115.8 million for the fiscal years 2000, 1999 and 1998, respectively. Maintenance and repairs are
charged to expense as incurred. Internal costs for the development of software are generally not material and
the Company expenses them 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 to interest expense over the lives of the related debt issues. Pre-opening costs are
expensed as incurred.
G o od w ill an d Tra d e n a m e : 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 WinnersApparel Ltd., acquired by the Company in fiscal
1 9 9 1 . G o o dw i l l , net of amortizat i o n , totaled $76.8 million and $79.3 million as of Ja n u a ry 29, 2000 and
T h e T J X C o m p a n i e s , I n c .