TJ Maxx 2004 Annual Report Download - page 70

The counterparties to the forward exchange contracts and swap agreements are major international financial institutions and
the contracts contain rights of offset, which minimize our exposure to credit loss in the event of nonperformance by one of the
counterparties. We do not require counterparties to maintain collateral for these contracts. We periodically monitor our position and
the credit ratings of the counterparties and do not anticipate losses resulting from the nonperformance of these institutions.
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 our leases are store operating leases with a ten-year initial term and 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, we are generally required to pay insurance, real estate taxes and other operating expenses
including, in some cases, rentals based on a percentage of sales. These costs were of an amount equal to approximately one-third of
the total minimum rent for the fiscal years ended January 29, 2005 and January 31, 2004, respectively.
Following is a schedule of future minimum lease payments for continuing operations as of January 29, 2005:
Capital Operating
In Thousands Lease Leases
Fiscal Year
2006 $ 3,726 $ 707,676
2007 3,726 682,597
2008 3,726 628,306
2009 3,726 591,677
2010 3,726 520,998
Later years 22,945 1,709,386
Total future minimum lease payments 41,575 $4,840,640
Less amount representing interest 14,047
Net present value of minimum capital lease payments $27,528
The capital lease commitment relates to a 283,000-square-foot addition to TJX’s home office facility. Rental payments
commenced June 1, 2001, and we recognized a capital lease asset and related obligation equal to the present value of the lease
payments of $32.6 million.
Rental expense under operating leases for continuing operations amounted to $713.3 million, $597.8 million, and $524.7 mil-
lion for fiscal 2005, 2004 and 2003, respectively. Rental expense includes contingent rent and is reported net of sublease income.
Contingent rent paid was $6.9 million, $8.6 million, and $8.2 million in fiscal 2005, 2004 and 2003, respectively; and sublease
income was $3.0 million in fiscal 2005 and 2004 and $3.2 million in fiscal 2003. The total net present value of TJX’s minimum
operating lease obligations approximates $3,833.4 million as of January 29, 2005, including a current portion of $497.9 million.
TJX had outstanding letters of credit totaling $52.1 million as of January 29, 2005 and $54.7 million as of January 31, 2004.
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 Plan and related prices per share have been restated, for comparability purposes, to reflect the two-for-one
stock split distributed in May 2002.
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