TJ Maxx 2009 Annual Report Download - page 79

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The fair values of the derivatives are 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
TJX’s derivatives:
In thousands
January 30,
2010
January 31,
2009
Current assets $ 5,642 $11,772
Non-current assets ——
Current liabilities (1,471) (6,745)
Non-current liabilities ——
Net fair value $ 4,171 $ 5,027
The impact of derivative financial instruments on statements of income during fiscal 2010 is as follows:
In thousands
Location of Gain
(Loss) Recognized in
Income by Derivative
Amount of Gain
(Loss) Recognized
in Income by
Derivative
Derivatives designated as hedging instruments:
Fair value hedges
Interest rate swap fixed to floating on notional of
$50,000 Interest expense, net $ 1,092
Interest rate swap fixed to floating on notional of
$50,000 Interest expense, net 1,422
Intercompany balances, primarily short-term debt
and related interest Selling, general &
administrative
expenses
(9,249)
Derivatives not designated as hedging instruments:
Diesel contracts Cost of sales, including buying and occupancy costs 4,490
Merchandise purchase commitments Cost of sales, including buying and occupancy costs 494
Gain (loss) recognized in income $(1,751)
The counterparties to the forward exchange contracts and swap agreements are major international financial
institutions, and the contracts contain rights of offset, which minimize TJX’s exposure to credit loss in the event of
nonperformance by one of the counterparties. TJX is not required by counterparties, and TJX does not require that
counterparties, maintain collateral for these contracts. TJX periodically monitors its position and the credit ratings of the
counterparties and does not anticipate losses resulting from the nonperformance of these institutions.
F. Disclosures about Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price). U.S. GAAP classifies the inputs used to
measure fair value into the following hierarchy:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices
for identical or similar assets or liabilities in markets that are not active, or
inputs other than quoted prices that are observable for the asset or liability.
Level 3: Unobservable inputs for the asset or liability.
TJX endeavors to utilize the best available information in measuring fair value and classifies financial assets and
liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. TJX has
F-16