TJ Maxx 2006 Annual Report Download - page 79

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The fair value of the derivatives is classified as assets or liabilities, current or non-current, based upon valuation results
and settlement dates of the individual contracts. Following are the balance sheet classifications of the fair value of our
derivatives:
In Thousands
January 27,
2007
January 28,
2006
Current assets $ 2,798 $ 1,328
Non-current assets 16,688 33,081
Current liabilities (3,382) (16,527)
Non-current liabilities (96,475) (97,930)
Net fair value asset (liability) $(80,371) $(80,048)
TJX’s forward foreign currency exchange and swap contracts require us to make payments of certain foreign
currencies or U.S. dollars for receipt of Canadian dollars, U.S. dollars or Euros. All of these contracts, except the
contracts relating to our investment in our foreign operations, mature during fiscal 2008. The British pound sterling
investment hedges have maturities from fiscal 2008 to fiscal 2009, the Canadian dollar investment hedge contracts and
interest rate swap contracts have maturities from fiscal 2008 to fiscal 2010.
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.
F. 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 which aggregated to approximately one-third of the total minimum rent for the fiscal year ended January 27, 2007
and January 28, 2006, respectively.
Following is a schedule of future minimum lease payments for continuing operations as of January 27, 2007:
In Thousands
Capital
Lease
Operating
Leases
Fiscal Year
2008 $ 3,726 $ 845,622
2009 3,726 811,231
2010 3,726 733,511
2011 3,726 637,573
2012 3,897 538,002
Later years 15,323 1,552,165
Total future minimum lease payments 34,124 $5,118,104
Less amount representing interest 9,888
Net present value of minimum capital lease payments $24,236
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 $837.6 million, $774.9 million,
and $713.3 million for fiscal 2007, 2006 and 2005, respectively. Rental expense includes contingent rent and is reported
F-17