TJ Maxx 2004 Annual Report Download - page 76

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Funded Plan Unfunded Plan
Fiscal Year Ended Fiscal Year Ended
January 29, January 31, January 29, January 31,
Dollars in Thousands 2005 2004 2005 2004
(53 Weeks) (53 Weeks)
Amount recognized in the statements of financial position consists of:
Net (asset) accrued liability $(59,036) $(63,828) $35,140 $30,920
Intangible asset ----
Net (asset) liability recognized $(59,036) $(63,828) $35,140 $30,920
Weighted average assumptions for measurement purposes:
Discount rate 5.75% 6.00% 5.50% 5.55%
Expected return on plan assets 8.00% 8.00% NA NA
Rate of compensation increase 4.00% 4.00% 6.00% 6.00%
The net asset attributable to the funded plan is reflected on the balance sheets as a non-current asset of $26.1 million and a
current asset of $32.9 million as of January 29, 2005 and a non-current asset of $32.3 million and a current asset of $31.5 million as
of January 31, 2004. The net accrued liability attributable to TJX’s unfunded supplemental retirement plan is included in other long-
term liabilities on the balance sheets.
We made aggregate cash contributions of $27.2 million, $19.7 million and $59.9 million for fiscal 2005, 2004 and 2003,
respectively, to the non-contributory defined benefit retirement plan and to fund current benefit and expense payments under the
unfunded supplemental retirement plan. Our funding policy is to fund any required contribution to the plan at the full funding
limitation. Contributions in excess of any required contribution will be made so as to fully fund the accumulated benefit obligation
to the extent such contribution is allowed for tax purposes. As a result of voluntary funding contributions made in fiscal 2005, fiscal
2004 and fiscal 2003, we do not anticipate any funding requirements for fiscal 2006. The following is a summary of our target
allocation for plan assets along with the actual allocation of plan assets as of the valuation date for the fiscal years presented:
Target Actual Allocation for
Allocation Fiscal Year Ended
January 29, January 31,
2005 2004
Equity securities 60% 60% 62%
Fixed income 40% 38% 32%
All other — primarily cash - 2% 6%
We employ a total return investment approach whereby a mix of equities and fixed income investments is used to maximize
the long-term return of plan assets with a prudent level of risk. Risk tolerance is established through careful consideration of plan
liabilities, funded plan status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and
fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as small and large
capitalizations. Both actively managed and passively invested portfolios may be utilized for U.S. equity investments. Other assets such
as real estate funds, private equity funds, and hedge funds are currently used for their diversification and return enhancing
characteristics. Derivatives may be used to reduce market exposure, however, derivatives may not be used to leverage the portfolio
beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through
quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability studies.
We employ a building block approach in determining the long-term rate of return for plan assets. Historical markets are
studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely accepted
capital market principle that assets with higher volatility generate a greater return over the long term. Current market factors such as
inflation and interest rates are evaluated before long-term capital market assumptions are determined. Proper consideration is also
given to asset class diversification and rebalancing as well as to the expected returns likely to be earned over the life of the plan by
each category of plan assets. Peer data and historical returns are reviewed to check for reasonability and appropriateness.
F-22