TJ Maxx 2000 Annual Report Download - page 10

The fair value of TJX’s long–term debt, including current installments, is estimated using discounted cash flow analysis based upon
TJX’s current incremental borrowing rates for similar types of borrowing arrangements. The fair value of long–term debt, including current
installments, at January 27, 2001 approximates the carrying value of $319.4 million. These estimates do not necessarily reflect certain
provisions or restrictions in the various debt agreements which might affect TJX’s ability to settle these obligations.
E. COMMITMENTS
TJX is committed under long–term leases related to its continuing operations for the rental of real estate and fixtures and equipment.
Most of TJX’s leases are for a ten–year initial term with options to extend for one or more five–year periods. Certain Marshalls leases,
acquired in fiscal 1996, had remaining terms ranging up to twenty–five years. Leases for T.K. Maxx are generally for fifteen to twenty–five
years with ten–year kick–out options. Many of the leases contain escalation clauses and early termination penalties. In addition, TJX 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 27, 2001:
Capital Operating
In Thousands Leases Leases
Fiscal Year
2002 $ 2,794 $ 415,696
2003 3,726 391,925
2004 3,726 360,157
2005 3,726 324,268
2006 3,726 281,485
Later years 37,848 1,250,644
Total future minimum lease payments $55,546 $3,024,175
The capital lease commitments relate to a 283,000 square foot addition to TJX’s home office facility. Construction of the addition is in
progress, with completion currently scheduled for the spring of fiscal 2002. At the time rental payments are to commence, TJX will
recognize a capital lease asset and related obligation equal to the present value of the lease payments, of approximately $34 million.
The rental expense under operating leases for continuing operations amounted to $390.6 million, $352.6 million and $318.1 million
for fiscal years 2001, 2000 and 1999, respectively. The present value of TJX’s operating lease obligations approximates $2,147.6 million
as of January 27, 2001, including $265.6 million payable on operating lease obligations in fiscal 2002.
TJX had outstanding letters of credit in the amounts of $31.6 million as of January 27, 2001 and $37.6 million as of January 29, 2000.
Letters of credit are issued by TJX primarily for the purchase of inventory.
F. STOCK COMPENSATION PLANS
In the following note, all references to historical awards, outstanding awards and availability of shares for future grants under TJX’s stock
incentive plans and related prices per share have been restated, for comparability purposes, for historical stock splits.
TJX has a stock incentive plan under which options and other stock awards may be granted to officers and key employees. The
Stock Incentive Plan, as amended, provides for the issuance of up to 42 million shares with 8.7 million shares available for future grants
as of January 27, 2001. TJX also has a Directors’ Stock Option Plan under which stock options are granted to directors who are not
otherwise employed by TJX. This plan provides for the issuance of up to 200,000 shares. There were 38,000 shares available for future
grants under this plan as of January 27, 2001.
Under its stock option plans, TJX 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, and 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.
THE TJX COMPANIES, INC.
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