TJ Maxx 2000 Annual Report Download - page 27

THE TJX COMPANIES, INC.
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FINANCING ACTIVITIES
In December 1999, we issued $200 million of 7.45% unsecured notes resulting in net proceeds of $198.1 million. The proceeds were
used for general corporate purposes and to support our ongoing stock repurchase program. Financing activities include principal
payments on long–term debt of $100.2 million in fiscal 2001, $695,000 in fiscal 2000 and $23.4 million in fiscal 1999.
During fiscal 2001, we completed a $750 million stock repurchase program and announced a new multi–year, $1 billion stock
repurchase program. These stock repurchase programs followed a $250 million stock repurchase program in fiscal 1999. We
spent $444.1 million in fiscal 2001, $604.6 million in fiscal 2000 and $337.7 million in fiscal 1999, funded primarily by excess cash
generated from operations. We repurchased 22.2 million shares in fiscal 2001, 23.6 million in fiscal 2000 and 15.6 million in fiscal
1999 (adjusted for stock split). As of January 27, 2001 we have repurchased 19.6 million shares of our common stock at a cost
of $381.6 million under the current $1 billion stock repurchase program.
We declared quarterly dividends on our common stock of $.04 per share in fiscal 2001, $.035 per share in fiscal 2000 and $.03 per share
in fiscal 1999. Cash payments for dividends on our common stock totaled $44.7 million in fiscal 2001, $42.7 million in fiscal 2000 and $36.5
million in fiscal 1999. Prior to fiscal 2000, we also had dividend requirements on all of our outstanding preferred stock that resulted in cash
outlays of $3.9 million in fiscal 1999. 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 manda-
torily converted into 8.0 million shares of common stock in accordance with its terms. We paid inducement fees of $130,000 on the Series
E voluntary conversions in fiscal 1999. The inducement fees are classified as preferred dividends and were paid through the respective conver-
sion dates. Financing activities also include proceeds of $26.1 million for fiscal 2001, $9.3 million for fiscal 2000 and $13.9 million for fiscal
1999 from the exercise of employee stock options. These stock option exercises provided tax benefits of $15.9 million in fiscal 2001, $11.7
million in fiscal 2000 and $13.8 million in fiscal 1999, which are included in cash provided by operating activities.
We traditionally have funded our seasonal merchandise requirements through cash generated from operations, short–term bank
borrowings and the issuance of short–term commercial paper. We can borrow up to $500 million under our five–year revolving credit
agreement entered in September 1997 and up to $250 million under our 364–day revolving credit agreement entered in July 2000. The
revolving credit facilities are used as backup to our commercial paper program. As of January 27, 2001 we had a total of $711 million
available under these agreements. The maximum amount of U.S. short term borrowings outstanding was $330 million during fiscal
2001, $108 million during fiscal 2000, with no borrowings outstanding during fiscal 1999. The weighted average interest rate on our U.S.
short term borrowings was 6.82% in fiscal 2001 and 6.06% in fiscal 2000. We also have C$40 million of credit lines for our Canadian
operations, all of which were available as of January 27, 2001. The maximum amount outstanding under our Canadian credit lines was
C$15.2 million during fiscal 2001, C$19.2 million during fiscal 2000 and C$15.6 million during fiscal 1999.
In February 2001, we issued $517.5 million zero coupon convertible subordinated notes due 2021 and raised gross proceeds of $347.6
million. The issue price of the notes represents a yield to maturity of 2% per year. The notes are convertible into 8.5 million shares of our
common stock if its value reaches specified thresholds, and upon the occurrence of other specified events. The holders may require us to
purchase the notes at specified prices on the first, third, sixth and twelfth anniversary of their issuance. We may pay the purchase price in
cash, our stock, or a combination of the two. We intend to use the proceeds for our accelerated store roll–out program, investment in our
distribution center network, general corporate purposes and our common stock repurchase program.
We believe that our current credit facilities are more than adequate to meet our operating needs. See Notes C, G and O to the consol-
idated financial statements for further information regarding our long–term debt, capital stock transactions and available financing sources.
RECENT ACCOUNTING PRONOUNCEMENTS
During 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” This Statement, as amended, established accounting and reporting
standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.
This Statement requires that an entity recognize all derivatives as either assets or liabilities in the statements of financial position and
measure those instruments at fair value. This Statement also requires that companies recognize adjustments to the fair value of deriva-
tives in earnings when they occur, if they do not qualify for hedge accounting. For derivatives that qualify for hedge accounting, changes
in the fair value of the derivatives can be recognized currently in earnings, along with an offsetting adjustment against the basis of the
underlying hedged item, or can be deferred in accumulated other comprehensive income.
This Statement will affect the accounting for our hedging contracts as described in Note D to the consolidated financial statements.
As described in Note D, TJX periodically enters into forward foreign currency exchange contracts to hedge certain merchandise
purchase commitments and to hedge our net investment in foreign subsidiaries. Through January 27, 2001, TJX applied hedge
accounting to these contracts. We adopted SFAS No. 133 at the beginning of our first quarter for fiscal 2002. Upon adoption of SFAS
No. 133 we elected not to apply the hedge accounting rules to our merchandise related contracts even though these contracts effec-