TJ Maxx 2000 Annual Report Download - page 23

THE TJX COMPANIES, INC.
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primary reason for the increase in this expense ratio in fiscal 2001. Selling, general and administrative expenses for fiscal 1999 include
charges of $7.5 million for a charitable cash donation to The TJX Foundation, $3.5 million for the settlement of the Hit or Miss note
receivable and $6.3 million associated with an executive deferred compensation award. These charges in fiscal 1999, along with the
pre–tax gain included in fiscal 2000, result in a reduction in the selling, general and administrative expenses as a percentage of net sales
in fiscal 2000, as compared to fiscal 1999. In addition, the improvement in this ratio in fiscal 2000 also reflects the benefit of our sales
growth along with the levering of expenses, particularly at our newer divisions. We believe this ratio will remain at or near the levels expe-
rienced over the past several years, excluding the non-recurring items.
INTEREST EXPENSE, NET: Interest expense, net of interest income, was $22.9 million in fiscal 2001, $7.3 million in fiscal 2000 and
$1.7 million in fiscal 1999. Interest income was $11.8 million in fiscal 2001 versus $13.1 million in fiscal 2000 and $20.5 million in fiscal
1999. The increase in net interest expense in fiscal 2001 is due to increased borrowing levels. The increase in net interest expense for
fiscal 2000 is due to the reduction in interest income. The increase in borrowing levels in fiscal 2001 and the reduction in interest income
in fiscal 2000 is largely influenced by our stock repurchase activity in each of those years.
INCOME TAXES: Our effective annual income tax rate was 37.8% in fiscal 2001, 38.3% in fiscal 2000 and 38.5% in fiscal 1999. The
reduction in the effective annual tax rate for fiscal 2001 is due to tax benefits recognized in connection with the United Kingdom net
operating loss carryforward and tax benefits associated with the closing of the stores in the Netherlands. These tax benefits were all
recognized in the fourth quarter of fiscal 2001 which results in an effective tax rate for the fourth quarter of fiscal 2001 of 34.6% versus
38.0% for the fourth quarter of fiscal 2000. The reduction in the effective annual tax rate in fiscal 2000 is due to recognition of tax bene-
fits in connection with our net operating loss carryforward in Puerto Rico.
INCOME FROM CONTINUING OPERATIONS/NET INCOME: Income from continuing operations was $538.1 million in fiscal 2001,
$526.8 million in fiscal 2000, and $433.2 million in fiscal 1999. Income from continuing operations per share was $1.86 in fiscal 2001,
versus $1.66 in fiscal 2000 and $1.29 in fiscal 1999. 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 discon-
tinued operations of $9.0 million for lease related obligations, primarily for our former Hit or Miss stores. Net income, after reflecting the
above items, was $538.1 million, or $1.86 per share, in fiscal 2001, $521.7 million, or $1.64 per share, in fiscal 2000 and $424.2 million,
or $1.27 per share, in fiscal 1999.
SEGMENT INFORMATION:
The following is a discussion of the operating results of our business segments. We consider each of our operating divisions to be a
segment. More detailed information about our segments can be found in Note N to the consolidated financial statements.
MARMAXX:
Fiscal Year Ended January
Dollars In Millions 2001 2000 1999
Net sales $8,228.5 $7,779.8 $7,196.3
Operating income $ 858.4 $ 849.6 $ 753.9
Operating margin 10.4% 10.9% 10.5%
Percent increase in same store sales 2% 4% 5%
Stores in operation at end of period 1,196 1,137 1,079
Marmaxx had a 2% same store sales increase in fiscal 2001, which was slightly less than our expectations and last year’s 4% increase.
This shortfall occurred primarily in those areas of the country that experienced unseasonable or severe weather conditions. This, along with
increases in store payroll and freight costs are the prime reason for the reduction in Marmaxx’s operating margin in fiscal 2001. These nega-
tives were partially offset by maintaining strong merchandise margins and the strong performance of our new store openings. The results
for fiscal 2000 versus fiscal 1999 reflect the strong sales performance in virtually all geographic regions along with good expense controls.
As a result of the success of our new stores, we have decided to increase our new store openings for fiscal 2002. Marmaxx currently
expects to add a net of 75 new stores in fiscal 2002.