TJ Maxx 2014 Annual Report Download - page 76

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Earnings Per Share: The following schedule presents the calculation of basic and diluted earnings per share for
income from continuing operations:
Fiscal Year Ended
Amounts in thousands except per share amounts
January 31,
2015
February 1,
2014
February 2,
2013
(53 weeks)
Basic earnings per share:
Net income $2,215,128 $2,137,396 $1,906,687
Weighted average common stock outstanding for basic earnings per
share calculation 692,691 713,470 733,588
Basic earnings per share $ 3.20 $ 3.00 $ 2.60
Diluted earnings per share:
Net income $2,215,128 $2,137,396 $1,906,687
Weighted average common stock outstanding for basic earnings per
share calculation 692,691 713,470 733,588
Assumed exercise / vesting of:
Stock options and awards 10,854 12,906 13,967
Weighted average common stock outstanding for diluted earnings per
share calculation 703,545 726,376 747,555
Diluted earnings per share $ 3.15 $ 2.94 $ 2.55
The weighted average common shares for the diluted earnings per share calculation excludes the impact of
outstanding stock options if the assumed proceeds per share of the option is in excess of the related fiscal period’s
average price of TJX’s common stock. Such options are excluded because they would have an antidilutive effect.
There were 8.8 million, 4.7 million and 4.9 million such options excluded at the end of fiscal 2015, fiscal 2014 and
fiscal 2013, respectively.
Note F. Financial Instruments
As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and
foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and
financial position. TJX seeks to minimize risk from changes in interest rates and foreign currency exchange rates and
fuel costs, to the extent deemed appropriate, through the use of derivative financial instruments. TJX does not use
derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative
financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the statements of
financial position and measures those instruments at fair value. 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. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in
earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the
derivatives are either recorded in shareholders’ equity as a component of other comprehensive income or are
recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged. TJX
does not hedge its net investments in foreign subsidiaries.
Diesel Fuel Contracts: TJX hedges portions of its estimated notional diesel requirements, based on the diesel
fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight
carriers transporting TJX’s inventory charge TJX a mileage surcharge for diesel fuel price increases as incurred by the
carrier. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing (and the resulting per mile
surcharges payable by TJX) by setting a fixed price per gallon for the period being hedged. During fiscal 2014, TJX
entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2015. Similarly,
during fiscal 2015, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for
the fiscal year ending January 30, 2016 (“fiscal 2016”). The hedge agreements outstanding at January 31, 2015 relate
to approximately 44% of TJX’s estimated notional diesel requirements for fiscal 2016. These diesel fuel hedge
agreements will settle throughout fiscal 2016. TJX elected not to apply hedge accounting rules to these contracts.
F-14