TJ Maxx 2009 Annual Report Download - page 47

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TJX Foundation in fiscal 2010 compared to no contribution in fiscal 2009. Additionally, fiscal 2010 had higher
performance-based incentive and benefit plan accruals as compared to fiscal 2009, which were partially offset by benefits
related to hedging activity.
General corporate expense in fiscal 2009 versus fiscal 2008 was virtually flat.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities:
Net cash provided by operating activities was $2,272 million in fiscal 2010, $1,155 million in fiscal 2009 and
$1,375 million in fiscal 2008. The cash generated from operating activities in each of these fiscal years was largely due to
operating earnings. The decrease in fiscal 2009 reflected the effects of the economic recession.
Operating cash flows for fiscal 2010 increased $1,117 million compared to fiscal 2009. Net income provided cash of
$1,214 million in fiscal 2010, an increase of $333 million over net income of $881 million in fiscal 2009. The change in
merchandise inventory, net of the related change in accounts payable, provided a source of cash of $345 million in fiscal
2010, compared to a $210 million use of cash in fiscal 2009. The reduction in inventory in fiscal 2010 was the result of
the ongoing implementation of our strategy of operating with leaner inventories and buying closer to need, which, in
turn, increased inventory turnover. Changes in current income taxes payable/recoverable increased cash in fiscal 2010 by
$191 million compared to a decrease in cash of $49 million in fiscal 2009. The change in prepaid expenses and other
current assets had a favorable impact on fiscal 2010 cash flows of $64 million, primarily due to the timing of February
rental payments. The change in accrued expenses and other liabilities provided cash of $31 million in fiscal 2010,
compared to a $35 million use of cash in fiscal 2009, reflecting higher accruals in fiscal 2010 for performance-based
incentive compensation, partially offset by increased funding of the pension plan. Partially offsetting these favorable
changes to fiscal 2010 operating cash flows was the change in the deferred income tax provision, which reduced cash
flows by $79 million compared to fiscal 2009 and the unfavorable impact of $61 million of all other items, which
primarily reflects unrealized gains on assets of the executive savings plan in fiscal 2010 versus unrealized losses in fiscal
2009.
Operating cash flows for fiscal 2009 decreased by $220 million as compared to fiscal 2008. Net income and the non-
cash impact of depreciation and the sale of Bob’s Stores assets of $31 million in fiscal 2009 (including the benefit of the
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week), provided cash of $1,314 million, an increase of $173 million from the adjusted $1,141 million in fiscal
2008. The change in deferred income taxes favorably impacted cash flows in fiscal 2009 by $132 million, while last year’s
deferred income taxes reduced cash flows by $102 million. Deferred taxes in fiscal 2008 reflected the non-cash tax benefit
of $47 million relating to the establishment of the Computer Intrusion reserve. The favorable impact on deferred
income taxes in fiscal 2009 reflected the tax treatment of payments against the Computer Intrusion reserve and favorable
impact of tax depreciation. The change in merchandise inventory, net of the related change in accounts payable offset the
favorable changes in cash flows in fiscal 2009, as it resulted in a use of cash of $210 million in fiscal 2009, compared to a
source of cash of $5 million in fiscal 2008. The change in merchandise inventories and accounts payable in fiscal 2009
was primarily driven by a timing difference in the payment of our accounts payable due to a change in our buying
pattern. The change in accrued expenses and other liabilities resulted in a use of cash of $35 million in fiscal 2009 versus a
source of cash of $203 million in fiscal 2008. In fiscal 2008, the increase in accrued expenses and other liabilities reflected
$117 million for the pre-tax reserve established for the Computer Intrusion, which favorably impacted cash flows, while
fiscal 2009’s cash flows were reduced by $75 million for payments against and adjustments to this reserve. Changes in
current income taxes payable/recoverable reduced cash in fiscal 2009 by $49 million compared to an increase of
$56 million in fiscal 2008 and the change in prepaid expenses reduced fiscal 2009 operating cash flows by an additional
$65 million, primarily due to the timing of February rental payments.
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