TJ Maxx 2000 Annual Report Download - page 25

THE TJX COMPANIES, INC.
41
A.J. WRIGHT:
Fiscal Year Ended January
Dollars In Millions 2001 2000 1999
Net sales $ 83.2 $ 43.3 $10.7
Operating (loss) $(15.0) $(14.4) $ (8.7)
Percent increase in same store sales 19% N/A N/A
Stores in operation at end of period 25 15 6
A.J. Wright increased its store base by 67% and achieved a 19% increase in same store sales in fiscal 2001. This chain is still in the
development stages and entered new markets in the United States during fiscal 2001. During fiscal 2001 we opened a new 301,000
square foot distribution center in Fall River, Massachusetts. We currently plan to add 20 new stores in fiscal 2002.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Net cash provided by operating activities was $556.8 million in fiscal 2001, $595.2 million in fiscal 2000 and $642.4 million in fiscal 1999.
The decrease in cash provided by operations in fiscal 2001 was primarily due to an increase in inventory levels offset, in part, by an
increase in accrued expenses. Inventory levels as of January 27, 2001, as compared to the prior year, were higher primarily due to earlier
buying for the spring season. Inventories as a percentage of sales were 15.2% in fiscal 2001, 14.0% in fiscal 2000 and 14.9% in fiscal
1999. 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 reserve. Working capital was $493.2 million in fiscal 2001, $513.4 million in fiscal 2000 and $629.2 million in fiscal 1999.
The reduction in working capital in fiscal 2001, as compared to fiscal 2000, reflects a lower cash position offsetting increases in inven-
tory. The reduction in working capital in fiscal 2000, as compared to fiscal 1999, reflects a lower cash position at year–end and an
increase in the current installments of long–term debt. The cash balance in both years was largely influenced by activity in our stock
repurchase program. The cash flows from operating activities have been reduced by $3.8 million for fiscal 2001, $27.9 million for fiscal
2000 and $16.7 million for fiscal 1999, for cash expenditures charged against the store closing and restructuring reserve, and the
discontinued operations reserve as discussed in more detail below.
STORE CLOSING AND RESTRUCTURING RESERVE: Our store closing and restructuring reserve relates primarily to a restructuring
plan in connection with our acquisition of Marshalls in November 1995. This reserve, which was initially established in fiscal 1996 and
subsequently adjusted, included the cost of closing 32 T. J. Maxx stores and the cost of closing 70 Marshalls stores and other Marshalls
facilities. This reserve also included other costs in connection with the Marshalls acquisition, primarily inventory markdowns. The T.J.
Maxx closing costs were charged to operations while the costs associated with Marshalls were a component of the allocation of the
purchase price. This reserve also included some activity relating to several HomeGoods store closings, the impact of which is immate-
rial and currently includes the estimated cost of $3.1 million for settling the lease obligations in connection with the closure of the three
T.K. Maxx stores in the Netherlands. The following is a summary of the activity in the store closing and restructuring reserve for the last
three fiscal years:
Fiscal Year Ended January
In Thousands 2001 2000 1999
Balance at beginning of year $15,731 $44,598 $57,966
Additions to the reserve 3,109 –1,961
RESERVE ADJUSTMENTS:
Adjust Marshalls restructuring reserve –(3,000) –
Adjust T.J. Maxx store closing reserve –(300) (1,800)
CHARGES AGAINST THE RESERVE:
Lease related obligations (1,922) (23,734) (12,521)
Severance and all other charges ––(927)
Net activity relating to HomeGoods closings (126) (1,833) (81)
Balance at end of year $16,792 $15,731 $44,598