TJ Maxx 2000 Annual Report Download - page 8

A. CHANGE IN ACCOUNTING PRINCIPLE
Effective January 31, 1999, TJX changed its method of accounting for layaway sales in compliance with Staff Accounting Bulletin
No. 101 “Revenue Recognition in Financial Statements,” issued by the Securities and Exchange Commission during the fourth
quarter of fiscal 2000. Under the new accounting method, TJX defers recognition of a layaway sale and its related profit to the
accounting period when the customer picks up layaway merchandise. The cumulative effect of this change for periods prior to
January 31, 1999 of $5.2 million (net of income taxes of $3.4 million), or $.02 per share, is shown as the cumulative effect of
accounting change in the consolidated statements of income. The accounting change has virtually no impact on annual sales and
earnings (before cumulative effect). However, due to the seasonal influences of the business, the accounting change results in a shift
of sales and earnings among quarterly periods.
B. DISPOSITIONS AND ACQUISITIONS
SALE OF CHADWICK’S OF BOSTON: TJX sold its former Chadwick’s division in fiscal 1997 to Brylane, Inc. As part of the proceeds
from the sale, TJX received a $20 million convertible note. During fiscal 1998, TJX converted a portion of the Brylane note into 352,908
shares of Brylane, Inc. common stock which it sold for $15.7 million. This sale resulted in an after–tax gain of $3.6 million. During fiscal
1999, the balance of the note was converted into shares of Brylane common stock. A portion of the shares were donated to TJX’s char-
itable foundation, and the remaining shares were sold. The net pre–tax impact of these transactions was immaterial. Pursuant to the
disposition, TJX agreed to purchase certain amounts of excess inventory from Chadwick’s. This arrangement has been extended
through fiscal 2002.
SALE OF HIT OR MISS: Effective September 30, 1995, TJX sold its Hit or Miss division to members of Hit or Miss management and
outside investors. TJX received $3.0 million in cash and a seven–year $10 million note with interest at 10%. During fiscal 1998, TJX forgave
a portion of this note and was released from certain obligations and guarantees which reduced the note to $5.5 million. During fiscal 1999,
TJX settled the note for $2.0 million, and the balance of $3.5 million was charged to selling, general and administrative expenses.
ACQUISITION OF MARSHALLS: On November 17, 1995, TJX acquired Marshalls from Melville Corporation. TJX paid $424.3 million in
cash and $175 million in junior convertible preferred stock. The total purchase price of Marshalls, including acquisition costs of $6.7
million, was $606 million.
C. LONG–TERM DEBT AND CREDIT LINES
At January 27, 2001 and January 29, 2000, long–term debt, exclusive of current installments, consisted of the following:
January 27, January 29,
In Thousands Except Unamortized Debt Discount Amounts 2001 2000
Equipment notes, interest at 11.25% maturing December 30, 2001 $ – $ 73
General corporate debt:
Medium term notes, interest at 5.87% to 7.97%, $15 million maturing October 21, 2003 and
$5 million maturing September 20, 2004 20,000 20,000
7% unsecured notes, maturing June 15, 2005 (effective interest rate of 7.02% after reduction of
the unamortized debt discount of $61,000 and $75,000 in fiscal 2001 and 2000, respectively) 99,939 99,925
7.45% unsecured notes, maturing December 15, 2009 (effective interest rate of 7.50% after reduction
of unamortized debt discount of $567,000 and $631,000 in fiscal 2001 and 2000, respectively) 199,433 199,369
Total general corporate debt 319,372 319,294
Long–term debt, exclusive of current installments $319,372 $319,367
THE TJX COMPANIES, INC.
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