TJ Maxx 2009 Annual Report Download - page 42

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Income taxes: Our effective annual income tax rate was 37.8% in fiscal 2010, 36.9% in fiscal 2009 and 37.9% in
fiscal 2008.
The increase in our effective income tax rate for fiscal 2010 as compared to fiscal 2009 is primarily attributed to the
favorable impact in fiscal 2009 of a $19 million reduction in the reserve for uncertain tax positions arising from the
settlement of several state tax audits. The absence of this fiscal 2009 benefit increased the effective income tax rate in fiscal
2010 by 1.3 percentage points, partially offset by a reduction in the effective income tax rate related to foreign income.
The decrease in the tax rate for fiscal 2009 as compared to fiscal 2008 reflected a 1.3 percentage point favorable
impact of a reduction in the reserve for uncertain tax position. This benefit in the annual income tax rate in fiscal 2009
was offset by the absence of a fiscal 2008 favorable tax benefit of 0.4 percentage points relating to the tax treatment of our
Puerto Rico subsidiary. See Note K to the consolidated financial statements.
TJX anticipates an effective annual income tax rate of 38.0% to 38.5% for fiscal 2011.
Income from continuing operations and income per share from continuing operations: Income from continuing
operations was $1.2 billion in fiscal 2010, a 33% increase over the $914.9 million in fiscal 2009, which in turn was a
17% increase over the $782.4 million in fiscal 2008. Income from continuing operations per share was $2.84 in fiscal
2010, $2.08 in fiscal 2009 and $1.68 in fiscal 2008. Several items, discussed below, affected earnings per share
comparisons for fiscal 2010, fiscal 2009 and fiscal 2008.
We estimate that the 53
rd
week in fiscal 2009 favorably affected earnings per share in that year by $0.09 per share.
The reduction in the Provision for Computer Intrusion related costs in fiscal 2009 benefited income from
continuing operations in fiscal 2009 by approximately $0.04 per share. The charge relating to the Computer Intrusion
related costs in fiscal 2008 adversely affected income from continuing operations in that year by $0.25 per share.
Foreign currency exchange rates also affected the comparability of our results. Foreign currency rates reduced
earnings per share by $0.01 per share in fiscal 2010 compared to a $0.01 per share benefit in fiscal 2009. When
comparing fiscal 2009 to fiscal 2008, foreign currency exchange rates reduced earnings per share by $0.05 per share in
fiscal 2009 compared to a $0.01 per share benefit in fiscal 2008.
In addition, our weighted average diluted shares outstanding affect the comparability of earnings per share, which
are benefited by our share repurchase programs. We repurchased 27.0 million shares of our stock at a cost of
$950 million in fiscal 2010; 24.0 million shares at a cost of $741 million in fiscal 2009; and 33.3 million shares at a cost
of $950 million in fiscal 2008. We significantly reduced our weighted average diluted shares outstanding from
442.3 million to 427.6 million in fiscal 2010 with the incremental purchase over those planned under our stock
repurchase program by using the proceeds of our April 2009 debt offering to repurchase the majority of the 15.1 million
shares issued on conversion of our zero coupon convertible subordinated notes following their call.
Discontinued operations and net income: Fiscal 2009 and prior periods include the loss on the sale of the Bob’s
Stores division in discontinued operations. In addition, the operating results for Bob’s Stores for all periods prior to the
sale are included in discontinued operations. Including the impact of discontinued operations, net income was
$1.2 billion, or $2.84 per share, for fiscal 2010, $880.6 million, or $2.00 per share, for fiscal 2009 and $771.8 million,
or $1.66 per share, for fiscal 2008.
Segment information: The following is a discussion of the operating results of our business segments. In the
United States, our T.J. Maxx and Marshalls stores are aggregated as the Marmaxx segment, and each of HomeGoods and
A.J. Wright is reported as a separate segment. TJX’s stores operated in Canada (Winners and HomeSense) are reported as
the TJX Canada segment, and TJX’s stores operated in Europe (T.K. Maxx and HomeSense) are reported as the TJX
Europe segment. We evaluate the performance of our segments based on “segment profit or loss,” which we define as pre-
taxincomebeforegeneralcorporateexpense,Provisionfor Computer Intrusion related costs and interest. “Segment
profitorloss,”aswedefinetheterm,maynotbecomparabletosimilarlytitledmeasuresusedbyotherentities.In
addition, this measure of performance should not be considered an alternative to net income or cash flows from
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