TJ Maxx 2015 Annual Report Download - page 69

The TJX Companies, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A. Summary of Accounting Policies
Basis of Presentation: The consolidated financial statements of The TJX Companies, Inc. (referred to as “TJX,”
“we” or “the Company”) include the financial statements of all of TJX’s subsidiaries, all of which are wholly owned. All
of its activities are conducted by TJX or its subsidiaries and are consolidated in these financial statements. All
intercompany transactions have been eliminated in consolidation.
Fiscal Year: TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The fiscal
years ended January 30, 2016 (fiscal 2016), January 31, 2015 (fiscal 2015) and February 1, 2014 (fiscal 2014) each
included 52 weeks.
Earnings Per Share: All earnings per share amounts refer to diluted earnings per share, unless otherwise
indicated.
Use of Estimates: Preparation of the TJX Companies, Inc. financial statements, in conformity with accounting
principles generally accepted in the United States of America (GAAP), requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements as well as the reported amounts of revenues and expenses during the reporting
period. TJX considers its accounting policies relating to inventory valuation, impairments of long-lived assets, goodwill
and tradenames, retirement obligations, share-based compensation, casualty insurance, reserves for uncertain tax
positions and loss contingencies to be the most significant accounting policies that involve management estimates
and judgments. Actual amounts could differ from those estimates, and such differences could be material.
Revenue Recognition: TJX records revenue at the time of sale and receipt of merchandise by the customer, net
of a reserve for estimated returns. We estimate returns based upon our historical experience. We defer recognition of
a layaway sale and its related profit to the accounting period when the customer receives the layaway merchandise.
Proceeds from the sale of gift cards as well as the value of store cards issued to customers as a result of a return or
exchange are deferred until the customers use the cards to acquire merchandise. Based on historical experience, we
estimate the amount of gift cards and store cards that will not be redeemed (referred to as breakage) and, to the
extent allowed by local law, these amounts are amortized into income over the redemption period. Revenue
recognized from breakage was $13.8 million in fiscal 2016, $17.8 million in fiscal 2015 and $17.5 million in fiscal 2014.
We estimate the date of receipt by the customer when recognizing revenue from sales by our e-commerce operations
and shipping and handling costs charged to the customer are included in revenue. The shipping and handling costs
incurred by TJX are included in cost of sales, including buying and occupancy costs.
Consolidated Statements of Income Classifications: Cost of sales, including buying and occupancy costs,
includes the cost of merchandise sold including foreign currency gains and losses on merchandise purchases
denominated in other currencies; gains and losses on inventory and fuel-related derivative contracts; store occupancy
costs (including real estate taxes, utility and maintenance costs and fixed asset depreciation); the costs of operating
distribution centers; payroll, benefits and travel costs directly associated with buying inventory; and systems costs
related to the buying and tracking of inventory.
Selling, general and administrative expenses include store payroll and benefit costs; communication costs; credit
and check expenses; advertising; administrative and field management payroll, benefits and travel costs; corporate
administrative costs and depreciation; gains and losses on non-inventory related foreign currency exchange
contracts; and other miscellaneous income and expense items.
Cash and Cash Equivalents: TJX generally considers highly liquid investments with a maturity of 90 days or less
at the date of purchase to be cash equivalents. Investments with maturities greater than 90 days but less than one
year at the date of purchase are included in short-term investments. These investments are classified as trading
securities and are stated at fair value. Investments are classified as either short- or long-term based on their original
maturities. TJX’s investments are primarily high-grade commercial paper, institutional money market funds and time
deposits with major banks.
As of January 30, 2016, TJX’s cash and cash equivalents held outside the U.S. were $1.2 billion, of which $355.4
million was held in countries where TJX has the intention to reinvest any undistributed earnings indefinitely.
F-8