TJ Maxx 2009 Annual Report Download - page 80

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determined that its financial assets and liabilities are generally classified within level 1 or level 2 in the fair value hierarchy.
The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis:
In thousands
January 30,
2010
January 31,
2009
Level 1
Assets:
Executive savings plan $ 55,404 $40,636
Level 2
Assets:
Short-term investments $130,636 $—
Foreign currency exchange contracts 5,642 9,534
Interest rate swaps —1,859
Liabilities:
Foreign currency exchange contracts $ 1,029 $ 1,435
Diesel fuel contracts 442 4,931
The fair value of TJX’s general corporate debt, including current installments, was estimated by obtaining market
quotes given the trading levels of other bonds of the same general issuer type and market perceived credit quality. The fair
value of the zero coupon convertible subordinated notes was estimated by obtaining market quotes. The fair value of
long-term debt at January 30, 2010 was $862.3 million versus a carrying value of $774.3 million. The fair value of the
current installments of long-term debt at January 31, 2009 was $399.9 million versus a carrying value of $392.9 million.
The fair value of the subordinated notes as of January 31, 2009, was $358.3 million versus a carrying value of
$365.6 million. These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that
might affect TJX’s ability to settle these obligations.
Our cash equivalents are stated at cost, which approximates fair value, due to the short maturities of these
instruments.
Investments designed to meet obligations under our executive savings plan are invested in securities traded in active
markets and carried at unadjusted quoted prices.
As a result of its international operating and financing activities, TJX is exposed to market risks from changes in
interest and foreign currency exchange rates, which may adversely affect its operating results and financial position.
When deemed appropriate, we minimize risk from interest and foreign currency exchange rate fluctuations through the
use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for
trading or other speculative purposes and TJX does not use leveraged derivative financial instruments. The forward
foreign currency exchange contracts and interest rate swaps are valued using broker quotations which include observable
market information. TJX makes no adjustments to quotes or prices obtained from brokers or pricing services but does
assess the credit risk of counterparties and will adjust final valuations when appropriate. Where independent pricing
services provide fair values, TJX obtains an understanding of the methods used in pricing. As such, these derivative
instruments are classified within level 2.
G. 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 then remaining terms ranging up to twenty-
five years. T.K. Maxx leases are generally for ten to twenty-five years with ten-year kick-out options. Many of our 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. These expenses
in the aggregate were approximately one-third of the total minimum rent in fiscal 2010, fiscal 2009 and fiscal 2008.
F-17