TJ Maxx 2006 Annual Report Download - page 43

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fiscal 2006. Of the $18.2 million, $10.1 million related to fiscal 2005. These two items collectively reduced the fiscal 2006
effective income tax rate by 6.8 percentage points. See Note I to the consolidated financial statements.
Income from continuing operations:
Income from continuing operations was $776.8 million in fiscal 2007,
$689.8 million in fiscal 2006 and $610.2 million in fiscal 2005. Income from continuing operations per share was $1.63
in fiscal 2007, $1.41 in fiscal 2006 and $1.21 in fiscal 2005. Unlike many companies in the retail industry, TJX did not
have a 53rd week in fiscal 2007, but will have a 53rd week in fiscal 2009.
Income from continuing operations for fiscal 2007 was adversely impacted by an after-tax charge relating to the
Computer Intrusion of approximately $3 million, which reduced fourth quarter earnings per share by $0.01 per share.
Income from continuing operations for fiscal 2006 was favorably impacted by a tax benefit of $47 million, or $0.10 per
share, due to the repatriation of foreign earnings as well as a tax benefit of $22 million, or $0.04 per share, relating to the
correction of a previously established deferred tax liability. Favorable changes in currency exchange rates added
approximately $0.03 to our earnings per share in fiscal 2007 and approximately $0.01 per share in fiscal 2006.
Income from continuing operations for fiscal 2006 was adversely impacted by approximately $12 million, or
$0.02 per share, due to the third quarter events. These third quarter events included the after-tax cost of executive
resignation agreements, primarily with respect to our former CEO ($5 million), e-commerce exit costs and third quarter
operating losses ($6 million), and uninsured losses due to third quarter hurricanes, including the estimated impact of
lost sales ($6 million), all of which were partially offset by a gain from a VISA/MasterCard antitrust litigation settlement
($5 million). Operating losses of the e-commerce operation in the first six months of fiscal 2006 were largely offset by
fiscal 2005 start up costs and a fourth quarter operating loss in fiscal 2005.
Income from continuing operations for fiscal 2005 was reduced by $19.3 million, or $0.04 per share, as a result of
the after-tax effect of the $30.7 million cumulative pre-tax, non-cash charge to conform our lease accounting practices
to generally accepted accounting principles. See Note A to the consolidated financial statements under the caption
“Lease Accounting.” Lastly, favorable changes in currency exchange rates during fiscal 2005 added approximately $0.02
to our earnings per share.
The change in earnings per share from fiscal 2006 to fiscal 2007 was favorably impacted by our share repurchase
program. During fiscal 2007 we repurchased 22.0 million shares of our stock at a cost of $557 million, which was less
than planned as we temporarily suspended our buyback activity in December 2006 as a result of the discovery and
investigation of the Computer Intrusion. In fiscal 2006 we repurchased 25.9 million shares at a cost of $600 million. In
January 2007, our Board of Directors approved a new stock repurchase program that authorizes the repurchase of up to
$1 billion of TJX common stock from time to time, which is in addition to the $436 million remaining in the existing
plan. We plan to continue our share repurchase program in fiscal 2008 with planned purchases of approximately
$900 million.
Fourth Quarter Results:
Fourth quarter income from continuing operations was $243 million, or $0.51 per
share, in fiscal 2007, $287 million, or $0.59 per share, in fiscal 2006 and $165 million, or $0.33 per share, in fiscal 2005.
Results for the fourth quarter of fiscal 2006 and fiscal 2005 were impacted by certain charges and one-time items that
affect the comparability of reported results. The chart below shows the effect of these items on fourth quarter income
from continuing operations and earnings per share:
Dollars In Millions Except Per Share Amounts $’s EPS $’s EPS $’s EPS
Fourth Quarter
Fiscal 2007
Fourth Quarter
Fiscal 2006
Fourth Quarter
Fiscal 2005
Income from continuing operations, as reported $243 $0.51 $287 $ 0.59 $165 $0.33
Charges and one-time items:
Correction to deferred tax liability --(22) (0.04) - -
Repatriation income tax benefit --(47) (0.10) - -
Cumulative lease accounting charge --- - 19 0.04
Income from continuing operations, as adjusted $243 $0.51 $218 $ 0.45 $184 $0.37
We believe this presentation reflects our results on a more comparable basis, and is useful in understanding the
underlying trends in our business.
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