What changed in this filing

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Item 1. Financial Statements

2020-08-28 compared with 2020-05-21 · 234 added, 151 removed, 442 unchanged (47% of the section changed)

3 unchanged sentences

IN THOUSANDS EXCEPT PER SHARE AMOUNTS

Thirteen Weeks Ended

Thirteen Weeks Ended Twenty-Six Weeks Ended

2020 August 3,

2019 August 1,

2020 August 3,

Net sales $ 6,667,575 $ 9,781,596 $ 11,076,463 $ 19,059,181

3 unchanged sentences

(Loss) income before income taxes ( 92,019 ) 1,021,307 ( 1,434,867 ) 1,957,789

Benefit (provision) for income taxes 455,359 ( 236,304 )

(Provision) benefit for income taxes ( 122,201 ) ( 262,345 ) 333,158 ( 498,649 )

Net (loss) income $ ( 214,220 ) $ 758,962 $ ( 1,101,709 ) $ 1,459,140

7 unchanged sentences

Thirteen Weeks Ended

2020 August 3,

Net (loss) income $ ( 214,220 ) $ 758,962

Additions to other comprehensive (loss) income:

Foreign currency translation adjustments, net of related tax benefit of $ 6,948 in fiscal 2021 and tax provision of $ 2,633 in fiscal 2020

Foreign currency translation adjustments, net of related tax provisions of $ 5,462 in fiscal 2021 and $ 1,681 in fiscal 2020

69,378 ( 83,743 )

Reclassifications from other comprehensive income (loss) to net (loss) income:

Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $ 1,746 in fiscal 2021 and $ 1,453 in fiscal 2020

Amortization of loss on cash flow hedge, net of related tax provisions of $ 76 in fiscal 2021 and $ 76 in fiscal 2020

Other comprehensive income (loss), net of tax 74,383 ( 79,543 )

Total comprehensive (loss) income $ ( 139,837 ) $ 679,419

Twenty-Six Weeks Ended

2020 August 3,

Net (loss) income $ ( 1,101,709 ) $ 1,459,140

Additions to other comprehensive (loss) income:

Foreign currency translation adjustments, net of related tax benefit of $ 1,486 in fiscal 2021 and $ 952 in fiscal 2020

( 59,780 ) ( 90,904 )

Reclassifications from other comprehensive loss to net (loss) income:

1 unchanged sentence

Amortization of loss on cash flow hedge, net of related tax provisions of $ 152 in fiscal 2021 and $ 152 in fiscal 2020

Other comprehensive (loss) income, net of tax ( 124,153 ) ( 2,961 )

Other comprehensive (loss), net of tax ( 49,770 ) ( 82,504 )

Total comprehensive (loss) income $ ( 1,151,479 ) $ 1,376,636

4 unchanged sentences

2020 February 1,

2020 August 3,

Current assets:

15 unchanged sentences

Current portion of operating lease liabilities 1,591,076 1,411,216 1,353,721

Current portion of long-term debt 749,209 — —

Federal, state and foreign income taxes payable — 24,700 37,518

11 unchanged sentences

Additional paid-in capital 68,532 — —

Accumulated other comprehensive (loss) income ( 797,324 ) ( 673,171 ) ( 633,282 )

Accumulated other comprehensive loss ( 722,941 ) ( 673,171 ) ( 712,825 )

Retained earnings 4,115,917 5,422,283 4,806,504

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirteen Weeks Ended

Twenty-Six Weeks Ended

2020 August 3,

Cash flows from operating activities:

Net (loss) income $ ( 1,101,709 ) $ 1,459,140

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

Adjustments to reconcile net (loss) income to cash provided by operating activities:

Depreciation and amortization 439,525 427,834

3 unchanged sentences

Changes in assets and liabilities:

Decrease (increase) in accounts receivable 210,419 ( 47,658 )

(Increase) in merchandise inventories ( 136,027 ) ( 487,085 )

(Increase) in accounts receivable ( 56,041 ) ( 35,848 )

Decrease (increase) in merchandise inventories 1,111,612 ( 560,386 )

(Increase) in income taxes recoverable ( 258,655 ) ( 166,333 )

(Increase) decrease in prepaid expenses and other current assets ( 39,580 ) 11,725

(Increase) in prepaid expenses and other current assets ( 40,032 ) ( 73,770 )

(Decrease) in accounts payable ( 240,356 ) ( 6,823 )

(Decrease) in accrued expenses and other liabilities ( 578,178 ) ( 240,156 )

(Decrease) increase in income taxes payable ( 13,290 ) 38,217

Increase (decrease) in accrued expenses and other liabilities 153,502 ( 113,799 )

(Decrease) in income taxes payable ( 25,254 ) ( 116,460 )

Increase in net operating lease liabilities 209,071 25,284

Other, net 27,057 ( 36,065 )

Net cash (used in) provided by operating activities ( 3,160,483 ) 149,239

Net cash provided by operating activities 196,775 899,244

Cash flows from investing activities:

2 unchanged sentences

Sales and maturities of investments 10,503 9,374

Other — 7,419

Net cash (used in) investing activities ( 318,818 ) ( 580,219 )

Cash flows from financing activities:

Proceeds from long-term debt 4,988,452 —

Cash payments on revolving credit facilities ( 1,000,000 ) —

Proceeds from long-term debt including revolving credit facilities 4,988,452 —

Cash payments for debt issuance expenses ( 33,872 ) —

11 unchanged sentences

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

Thirteen Weeks Ended

Shares Par Value

1 unchanged sentence

Capital Accumulated Other Comprehensive

(Loss) Income Retained

Loss Retained

Earnings Total

Balance, February 1, 2020 1,199,100 $ 1,199,100 $ — $ ( 673,171 ) $ 5,422,283 $ 5,948,212

Net (loss) income — — — — ( 887,489 ) ( 887,489 )

Balance, May 2, 2020 1,197,877 $ 1,197,877 $ 8,104 $ ( 797,324 ) $ 4,330,561 $ 4,739,218

Net loss — — — — ( 214,220 ) ( 214,220 )

Other comprehensive income, net of tax — — — 74,383 — 74,383

Recognition of share-based compensation — — 39,178 — — 39,178

Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 1,184 1,184 21,250 — ( 424 ) 22,010

Balance, August 1, 2020 1,199,061 $ 1,199,061 $ 68,532 $ ( 722,941 ) $ 4,115,917 $ 4,660,569

Thirteen Weeks Ended

Shares Par Value

Additional Paid-In

Capital Accumulated Other Comprehensive

Loss Retained

Earnings Total

Balance, May 4, 2019 1,212,668 $ 1,212,668 $ — $ ( 633,282 ) $ 4,552,509 $ 5,131,895

Net income — — — — 758,962 758,962

Other comprehensive (loss), net of tax — — — ( 79,543 ) — ( 79,543 )

Cash dividends declared on common stock — — — — ( 278,624 ) ( 278,624 )

Recognition of share-based compensation — — 29,668 — — 29,668

Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 1,952 1,952 40,759 — — 42,711

Common stock repurchased and retired ( 5,687 ) ( 5,687 ) ( 70,427 ) — ( 226,343 ) ( 302,457 )

Balance, August 3, 2019 1,208,933 $ 1,208,933 $ — $ ( 712,825 ) $ 4,806,504 $ 5,302,612

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

Twenty-Six Weeks Ended

Shares Par Value

Additional Paid-In

Capital Accumulated Other Comprehensive

Loss Retained

Earnings Total

Balance, February 1, 2020 1,199,100 $ 1,199,100 $ — $ ( 673,171 ) $ 5,422,283 $ 5,948,212

Net loss — — — — ( 1,101,709 ) ( 1,101,709 )

Other comprehensive (loss), net of tax — — — ( 49,770 ) — ( 49,770 )

Recognition (reversal) of share-based compensation — — 59,482 — ( 31,835 ) 27,647

1 unchanged sentence

Common stock repurchased and retired ( 3,387 ) ( 3,387 ) ( 25,715 ) — ( 172,398 ) ( 201,500 )

Balance, May 2, 2020 1,197,877 $ 1,197,877 $ 8,104 $ ( 797,324 ) $ 4,330,561 $ 4,739,218

Balance, August 1, 2020 1,199,061 $ 1,199,061 $ 68,532 $ ( 722,941 ) $ 4,115,917 $ 4,660,569

Twenty-Six Weeks Ended

Shares Par Value

1 unchanged sentence

Capital Accumulated Other Comprehensive

(Loss) Income Retained

Loss Retained

Earnings Total

7 unchanged sentences

Common stock repurchased and retired ( 13,344 ) ( 13,344 ) ( 129,484 ) — ( 556,923 ) ( 699,751 )

Balance, May 4, 2019 1,212,668 $ 1,212,668 $ — $ ( 633,282 ) $ 4,552,509 $ 5,131,895

Balance, August 3, 2019 1,208,933 $ 1,208,933 $ — $ ( 712,825 ) $ 4,806,504 $ 5,302,612

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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These interim results are not necessarily indicative of results for the full fiscal year.

TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year, as well as the uncertainty surrounding the financial impact of the novel coronavirus (“COVID-19”) pandemic as discussed in Note B—Impact of the COVID-19 Pandemic.

TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year.

TJX is also impacted by the uncertainty surrounding the financial impact of the novel coronavirus (“COVID-19”) pandemic as discussed in Note B—Impact of the COVID-19 Pandemic.

The February 1, 2020 balance sheet data was derived from audited Consolidated Financial Statements and does not include all disclosures required by GAAP.

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TJX considers its accounting policies relating to leases, inventory valuation, impairment of long-lived assets, goodwill and tradenames, reserves for uncertain tax positions and loss contingencies to be the most significant accounting policies that involve management estimates and judgments.

The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods.

We believe that our accounting estimates are appropriate after giving consideration to the increased uncertainties surrounding the severity and duration of the COVID-19 pandemic and the associated containment and remediation efforts.

The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited consolidated financial statements and there may be changes to those estimates in future periods.

We believe that our accounting estimates are appropriate after giving consideration to the ongoing uncertainties surrounding the severity and duration of the COVID-19 pandemic and the associated containment and remediation efforts.

Actual amounts could differ from these estimates, and such differences could be material.

1 unchanged sentence

The following table presents deferred gift card revenue activity:

In thousands May 2,

In thousands August 1,

2020 August 3,

Balance, beginning of year $ 500,844 $ 450,302

3 unchanged sentences

Balance, end of period $ 476,605 $ 406,010

TJX recognized $ 198.7 million in gift card revenue for the three months ended August 1, 2020 and $ 407.6 million for the three months ended August 3, 2019.

The decrease in both deferred revenue and revenue recognized versus the prior year reflects the impact of temporary store and e-commerce closures due to the COVID-19 pandemic.

Gift cards are combined in one homogeneous pool and are not separately identifiable.

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The Company's investment represents a non-controlling, minority position and is accounted for under the equity method of accounting.

Included in the initial carrying value of $ 225 million, which represents the fair value on the transaction date, was a basis difference of $ 212 million related to the difference between the cost of the investment and the Company's proportionate share of the net assets of Familia.

Goodwill comprised $ 186 million of the difference, and the remainder was allocated to Familia tradename, customer relationships and basis adjustments to convert Familia from International Financial Reporting Standards to U.S.

GAAP, primarily for lease accounting.

Included in the initial carrying value of $ 225 million, which represents the transaction date fair value, was a basis difference of $ 212 million related to the difference between the cost of the investment and the Company's proportionate share of the net assets of Familia.

Goodwill comprised $ 186 million of the difference, and the remainder was allocated to the Familia tradename and customer relationships.

The carrying value of the equity method investment is primarily adjusted for the Company's share in the earnings of Familia, as adjusted for basis differences, and the foreign currency exchange translation adjustment related to translating the investment from Russian rubles to U.S.

1 unchanged sentence

This investment is included in Other assets on our Consolidated Balance Sheets.

The Company reports its share of Familia’s results on a one-quarter lag, and earnings from the Company's investment in Familia for the three months ended May 2, 2020 were $ 0.4 million, which has been recorded in our Consolidated Statements of (Loss) Income as a reduction to Selling, general and administrative expenses.

The Company reports its share of Familia’s results on a one-quarter lag, and earnings from the Company's investment in Familia were $ 0.3 million for the three months ended August 1, 2020 and $ 0.7 million for the six months ended August 1, 2020, which has been recorded in our Consolidated Statements of (Loss) Income as a reduction to Selling, general and administrative expenses.

Revaluing the investment from Russian rubles to the U.S.

dollar as of May 2, 2020 resulted in a cumulative translation loss and reduced the carrying value of our investment by $ 32 million.

The cumulative translation loss has been recorded in our Consolidated Balance Sheets as a component of Accumulated other comprehensive (loss) income.

The carrying value of the equity investment on the Consolidated Balance Sheets at May 2, 2020, including acquisition costs of $ 6 million, was $ 199 million.

We assess this investment for impairment if a decline in fair value of our investment is deemed other than temporary.

Familia operations have also been impacted by the COVID-19 pandemic and virtually all stores have been temporarily closed.

We have not impaired our investment due to our belief that any decline in fair value of our investment is temporary as Familia anticipates reopening stores sometime in June if government guidelines so permit and that it has adequate liquidity to deal with the temporary store closures.

Supplemental cash flow information related to leases for the thirteen weeks ended May 2, 2020 and May 4, 2019 is as follows:

Thirteen Weeks Ended

In thousands May 2,

dollar as of August 1, 2020 resulted in a cumulative translation loss and reduced the carrying value of our investment by $ 32 million.

The cumulative translation loss has been recorded in our Consolidated Balance Sheets as a component of Accumulated other comprehensive loss.

The carrying value of the equity investment on the Consolidated Balance Sheets at August 1, 2020, including acquisition costs of $ 5.6 million, was $ 199.7 million.

Familia operations have also been impacted by the COVID-19 pandemic and virtually all stores were temporarily closed.

We have not impaired our investment due to our belief that any decline in fair value of our investment is temporary as almost all Familia stores have been reopened and we expect Familia to have adequate liquidity to continue operations notwithstanding the COVID-19 pandemic.

Supplemental cash flow information related to leases for the twenty-six weeks ended August 1, 2020 and August 3, 2019 is as follows:

Twenty-Six Weeks Ended

In thousands August 1,

2020 August 3,

Operating cash flows paid for operating leases $ 762,823 $ 846,211

Lease liabilities arising from obtaining right of use assets $ 765,183 $ 993,979

During the first half of fiscal 2021, we negotiated rent deferrals (primarily for second quarter lease payments) for a significant number of our stores, with repayment at later dates, primarily in fiscal 2022.

See Note B—Impact of the COVID-19 Pandemic for additional information.

Recently Adopted Accounting Standards

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The most significant impact to the Company is the simplification of the tax benefit calculation recognized on pre-tax losses in interim periods.

The Company elected to early adopt this standard as of February 2, 2020, which did not have an impact on the Company's financial statements or disclosures for first quarter 2021.

The Company elected to early adopt this standard as of February 2, 2020, which did not have an impact on the Company's financial statements or disclosures for the first half of fiscal 2021.

From time to time, the FASB or other standard setting bodies issue new accounting pronouncements.

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Impact of the COVID-19 Pandemic

In December 2019, COVID-19 emerged and spread worldwide.

During 2019, COVID-19 emerged and spread worldwide.

The World Health Organization declared COVID-19 a pandemic in March 2020, resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus.

After closely monitoring and taking into consideration the guidance from federal, state and local governments, in March 2020, the Company temporarily closed all of its stores, distribution centers and offices, and online businesses, with Associates working remotely where possible .

These and other factors have had and may continue to have a material impact on our business, results of operations, financial position and cash flows.

The Company amended its revolving credit facilities agreements and as a result, we expect to maintain compliance with our covenants for at least one year from the issuance of these financial statements based on our current expectations.

As the ongoing public health impact and the associated containment and remediation efforts related to the COVID-19 pandemic is complex and rapidly evolving, the Company's plans as described below may change.

I n March 2020, the Company temporarily closed all of its stores, distribution centers and offices, and online businesses, with Associates working remotely where possible .

In May 2020, the Company began reopening stores and as of August 1, 2020, more than 4,500 of the Company’s worldwide stores, and each of its online shopping websites, were reopened.

In the first quarter of fiscal 2021 the Company amended the credit agreements governing its revolving credit facilities and as a result, we expect to maintain compliance with our covenants for at least one year from the issuance of these financial statements.

The impact of the COVID-19 pandemic has had and may continue to have a material impact on our business, results of operations, financial position and cash flows.

Financial Actions

Balance Sheet, Cash Flow and Liquidity

We have taken steps to further strengthen our financial position and balance sheet, and to maintain financial liquidity and flexibility, including suspending our share repurchase program, reviewing and reducing operating expenses, reducing the fiscal 2021 capital expenditure plan to a range of $ 0.4 billion to $ 0.6 billion, lowering fiscal 2021 store openings to approximately 50 stores, pausing a majority of our planned store remodels, and delaying a majority of distribution center, home office and IT capital spending.

In addition, the Company drew down the entire $ 1.0 billion on our revolving credit facilities and issued $ 4.0 billion in aggregate principal long-term debt.

For additional information on the new debt issuances, see Note J—Long-Term Debt and Credit Lines.

The Company did not declare a dividend for the first quarter of 2021, and at this time does not expect to declare a dividend in the second quarter of fiscal 2021.

The Company is committed to resuming dividend payments for the long term whenever the environment and its business stabilize.

During the first quarter of fiscal 2021, we negotiated rent deferrals (primarily for second quarter lease payments) for a significant number of our stores, with repayment at later dates, primarily in fiscal 2022.

The Company ended the second quarter with $ 6.6 billion of cash.

During the second quarter, the Company generated positive operating cash flows and paid off the $ 1.0 billion it drew down in March 2020 from its revolving credit facilities maturing 2022 and 2024.

Subsequent to the end of the quarter, on August 10, 2020, the Company also increased its borrowing capacity by entering into a new $ 500 million 364 Day Revolving Credit Facility, making a total of $ 1.5 billion available to the Company under revolving credit facilities.

For additional information on the new credit facility, see Note J—Long-Term Debt and Credit Lines.

The Company has and will continue to monitor its expenses, capital spending, and shareholder distributions due to the current environment.

The Company did not declare a dividend in the first six months of fiscal 2021 and does not expect to declare a dividend in the third quarter of fiscal 2021 and has suspended its share buyback program.

Consistent with updated guidance from the FASB in April 2020, we have elected to treat the COVID-19 pandemic-related rent deferrals as a resolution of a contingency by remeasuring the remaining consideration in the contract, with a corresponding adjustment to the right-of-use asset, using the remeasured consideration.

The Company did not reassess the lease classification and did not update the discount rate used to measure the lease liability.

For the first quarter of fiscal 2021, as a result of the COVID-19 pandemic, and store closures, the Company evaluated the value of its inventory.

Permanent markdowns, which have been or are expected to be taken upon reopening of the stores, on transitional or out of season merchandise and merchandise that was already in markdown status, combined with the write-off of perishable goods, resulted in a reduction of approximately $ 0.5 billion in inventory at May 2, 2020.

While the Company recognized these markdowns in the first quarter of fiscal 2021, the non-perishable inventory is expected to be sold in the second quarter of fiscal 2021.

For additional information on cash flows for operating leases see Note A—Basis of Presentation and Summary of Significant Accounting Policies.

For the first half of fiscal 2021, as a result of the COVID-19 pandemic, and store closures, the Company evaluated the value of its inventory.

Permanent markdowns taken upon reopening of the stores, on transitional or out of season merchandise and merchandise that was already in markdown status, combined with the write-off of perishable goods, resulted in a reduction of approximately $ 0.4 billion in inventory for the six months ended August 1, 2020, which reflects a $ 0.1 billion reversal of the estimated markdowns recorded in the first quarter of fiscal 2021.

TJX evaluates its long-lived assets, operating lease right of use assets, goodwill and tradenames for indicators of impairment at least annually in the fourth quarter of each fiscal year or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Given the substantial reduction in our sales and the reduced cash flow projections as a result of the store closures due to the COVID-19 pandemic, we determined that a triggering event occurred and that an impairment assessment was warranted for certain stores.

This analysis resulted in an immaterial amount of impairment charges related to long-lived assets and operating lease right of use assets in the first quarter of fiscal 2021.

As a result of the global COVI D-19 pandemic, governments in the U.S., United Kingdom ("U.K."), Canada and various other jurisdictions have implemented programs to encourage companies to retain and pay employees that are unable to work or are limited in the work that they can perform in light of closures or a significant decline in sales.

TJX continued to pay all employees through at least April 11, 2020 and continues to provide benefits for furloughed eligible impacted employees that are unable to work.

As such, we qualify for certain of these provisions which will partially offset related expenses.

During the quarter ended May 2, 2020, these programs reduced our expenses by approximately $ 0.2 billion on our Consolidated Statements of (Loss) Income and increased our Accounts receivable, net on our Consolidated Balance Sheets by approximately$ 0.1 billion.

We expect that these programs will continue to provide additional liquidity through the second quarter of fiscal 2021.

Business Update

Be ginning May 2, 2020, the Company started to reopen stores in select states and countries.

When the Company reopened these stores it did so in accordance with local government guidelines.

As of May 21, 2020, the Company has reopened more than 1,600 of its stores worldwide.

In the United States, the Company has fully or partially reopened in 25 s tates.

Internationally, TJX Canada has begun opening stores in some provinces, and the Company's stores in Germany, Poland, Austria, the Netherlands, and Australia are fully open.

The Company has also reopened its U.K.

e-commerce businesses.

The Company expects to continue reopening stores and other facilities around the world in a phased approach as more states and countries reopen for retail.

This analysis resulted in an immaterial amount of impairment charges related to long-lived assets and operating lease right of use assets in the first half of fiscal 2021.

As a result of the COVI D-19 pandemic, governments in the U.S., United Kingdom ( “ U.K.

” ), Canada and various other jurisdictions have implemented programs to encourage companies to retain and pay employees who are unable to work or are limited in the work that they can perform in light of closures or a significant decline in sales.

TJX continued to pay and provide benefits to eligible impacted employees during the second quarter of fiscal 2021.

As such, we qualified for certain of these provisions, which partially offset related expenses.

During the second quarter of fiscal 2021 and the six months ended August 1, 2020 , these programs reduced our expenses by approximately $ 0.2 billion and $ 0.4 billion, respectively, on our Consolidated Statements of (Loss) Income, and increased Accounts receivable, net on our Consolidated Balance Sheets by approxim ately $ 0.1 billion.

These government programs also provide for the option to defer payroll tax and VAT payments, which has resulted in an increase in Accrued expenses and other current liabilities on our Consolidated Balance Sheets b y approximately $ 0.2 billion.

The Company also incurred incremental costs associated with the COVID-19 pandemic, including primarily from:

– Incremental payroll investments in our stores for enhanced cleaning and monitoring occupancy.

– Incremental expense related to the discre tionary appreciation bonus for store and distribution center Associates.

– Personal protective equipment for our Associates.

Property at Cost

The following table presents the components of property at cost:

In thousands May 2,

In thousands August 1,

2020 February 1,

2020 August 3,

Land and buildings

7 unchanged sentences

Net property at cost $ 5,100,411 $ 5,325,048 $ 5,041,878

Depreciation expense was $ 217.0 million for the three months ended May 2, 2020 and $ 209.7 million for the three months ended May 4, 2019.

Depreciation expense was $ 216.5 million for the three months ended August 1, 2020 and $ 214.5 million three months ended August 3, 2019.

Depreciation expense was $ 433.5 million for the six months ended August 1, 2020 and $ 424.2 million for the six months ended August 3, 2019 .

Accumulated Other Comprehensive (Loss) Income

Amounts included in accumulated other comprehensive loss are recorded net of taxes.

The following table details the changes in accumulated other comprehensive loss for the twelve months ended February 1, 2020 and the three months ended May 2, 2020:

The following table details the changes in accumulated other comprehensive loss for the twelve months ended February 1, 2020 and the six months ended August 1, 2020:

In thousands Foreign

19 unchanged sentences

( 59,780 ) — — ( 59,780 )

Reclassifications from other comprehensive loss to net (loss) income:

Reclassifications from other comprehensive loss to net (loss):

Amortization of loss on cash flow hedge (net of taxes of $ 152 )

1 unchanged sentence

— 9,594 — 9,594

Balance, May 2, 2020

Balance, August 1, 2020

$ ( 516,900 ) $ ( 205,889 ) $ ( 152 ) $ ( 722,941 )

2 unchanged sentences

In March 2020, in connection with the actions taken related to the COVID-19 pandemic as described in Note B—Impact of the COVID-19 Pandemic, the Company suspended its share repurchase program.

Prior to the suspension of the program, TJX repurchased and retired 3.2 million shares of its common stock at a cost of $ 190.1 million during the quarter ended May 2, 2020, on a “trade date” basis.

During the first quarter of fiscal 2021, prior to the suspension of our share repurchase program, TJX repurchased and retired 3.2 million shares of its common stock at a cost of $ 190.1 million on a "trade date" basis.

All share repurchases occurred during the first quarter of fiscal 2021.

TJX reflects stock repurchases in its financial statements on a “settlement date” or cash basis.

TJX had cash expenditures under repurchase programs of $ 201.5 million for the three months ended May 2, 2020, and $ 397.3 million for the three months ended May 4, 2019.

TJX had cash expenditures under repurchase programs of $ 201.5 million for the six months ended August 1, 2020, and $ 699.8 million for the six months ended August 3, 2019.

These expenditures were funded by cash generated from operations.

1 unchanged sentence

In February 2019, TJX announced that its Board of Directors had approved an additional stock repurchase program that authorized the repurchase of up to $ 1.5 billion of TJX common stock from time to time.

As of May 2, 2020, TJX had approximately $ 3.0 billion available under these previously announced stock repurchase programs.

As of August 1, 2020, TJX had approximately $ 3.0 billion available under these previously announced stock repurchase programs.

All shares repurchased under the stock repurchase programs have been retired.

1 unchanged sentence

The following table presents the calculation of basic and diluted (loss) earnings per share for net (loss) income:

Thirteen Weeks Ended

Amounts in thousands, expect per share amounts May 2,

Thirteen Weeks Ended Twenty-Six Weeks Ended

Amounts in thousands, expect per share amounts August 1,

2020 August 3,

2019 August 1,

2020 August 3,

Basic (loss) earnings per share:

10 unchanged sentences

Cash dividends declared per share $ — $ 0.230 $ — $ 0.460

For the period ended May 2, 2020, as a result of the net loss for the quarter, all options have been excluded from the calculation of diluted earnings per share and therefore there was no difference in the weighted average number of common shares for basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive.

When there is net income 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 average price of TJX’s common stock for the related fiscal period.

For the quarter and six months ended August 1, 2020, as a result of net losses, all options have been excluded from the calculation of diluted earnings per share and therefore there was no difference in the weighted average number of common shares for basic and diluted loss per share as the effect of all potentially dilutive shares outstanding would have been anti-dilutive.

In reporting periods with net income, 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 average price of TJX’s common stock for the related fiscal period.

Such options are excluded because they would have an antidilutive effect.

There were 6.0 million such options excluded for thirteen weeks ended May 4, 2019.

There were 5.9 million such options excluded for each of the thirteen weeks and twenty-six weeks ended August 3, 2019.

Financial Instruments

11 unchanged sentences

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 2020, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2021, and during the first three months of fiscal 2021, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first three months of fiscal 2022.

The hedge agreements outstanding at May 2, 2020 relate to approximately 87 % of TJX’s estimated notional diesel requirements for the remainder of fiscal 2021 and approximately 50 % of TJX’s estimated notional diesel requirements for the first three months of fiscal 2022.

These diesel fuel hedge agreements will settle throughout the remainder of fiscal 2021 and throughout the first four months of fiscal 2022.

During fiscal 2020, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2021, and during the first six months of fiscal 2021, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first six months of fiscal 2022.

The hedge agreements outstanding at August 1, 2020 relate to approximately 50 % of TJX’s estimated notional diesel requirements for the remainder of fiscal 2021 and approximately 50 % of TJX’s estimated notional diesel requirements for the first six months of fiscal 2022.

These diesel fuel hedge agreements will settle throughout the remainder of fiscal 2021 and throughout the first seven months of fiscal 2022.

TJX elected not to apply hedge accounting to these contracts.

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TJX enters into forward foreign currency exchange contracts to obtain economic hedges on portions of merchandise purchases made and anticipated to be made by the Company’s operations in currencies other than their respective functional currencies.

As a result of the pandemic, there was a significant change in the Company's anticipated merchandise purchases and we early settled derivative contracts designed to hedge merchandise purchases that would no longer take place.

As a result of the COVID-19 pandemic, there was a significant change in the Company's anticipated merchandise purchases and we early settled derivative contracts designed to hedge merchandise purchases that would no longer take place.

The settlement of these contracts resulted in a net gain of $ 24.8 million in the first quarter of fiscal 2021.

The contracts outstanding at May 2, 2020 cover the merchandise purchases the Company is committed to over the next several months.

The contracts outstanding at August 1, 2020 cover the merchandise purchases the Company is committed to over the next several months.

Additionally, TJX’s operations in Europe are subject to foreign currency exposure as a result of their buying function being centralized in the U.K.

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Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in selling, general and administrative expenses.

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at May 2, 2020:

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at August 1, 2020:

In thousands Pay Receive Blended

3 unchanged sentences

U.S.$ Net Fair

August 1,2020

Fair value hedges:

Intercompany balances, primarily debt and related interest:

zł 65,000 £ 12,780 0.1966 Prepaid Exp $ 351 $ — $ 351

€ 60,000 £ 53,412 0.8902 Prepaid Exp 437 — 437

A$ 110,000 U.S.$ 70,802 0.6437 Prepaid Exp / (Accrued Exp) 1,788 ( 1,656 ) 132

zł 65,000 £ 12,780 0.1966 (Accrued Exp) $ — $ ( 628 ) $ ( 628 )

€ 60,000 £ 53,412 0.8902 (Accrued Exp) — ( 1,033 ) ( 1,033 )

A$ 110,000 U.S.$ 70,802 0.6437 (Accrued Exp) — ( 7,798 ) ( 7,798 )

U.S.$ 72,475 £ 55,000 0.7589 (Accrued Exp) — ( 448 ) ( 448 )

£ 200,000 U.S.$ 249,499 1.2475 Prepaid Exp / (Accrued Exp) 999 ( 2,332 ) ( 1,333 )

C$ 350,000 U.S.$ 248,821 0.7109 Prepaid Exp / (Accrued Exp) 640 ( 478 ) 162

£ 200,000 U.S.$ 249,499 1.2475 (Accrued Exp) — ( 12,538 ) ( 12,538 )

C$ 550,000 U.S.$ 390,766 0.7105 (Accrued Exp) — ( 19,571 ) ( 19,571 )

Economic hedges for which hedge accounting was not elected:

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Intercompany billings in TJX International, primarily merchandise related:

€ 49,100 £ 43,144 0.8787 Prepaid Exp — ( 65 ) ( 65 )

€ 73,400 £ 65,678 0.8948 (Accrued Exp) — ( 570 ) ( 570 )

Merchandise purchase commitments:

C$ 77,979 U.S.$ 59,200 0.7592 Prepaid Exp 3,819 — 3,819

£ 63,618 U.S.$ 82,200 1.2921 Prepaid Exp 2,469 — 2,469

A$ 17,438 U.S.$ 11,780 0.6755 Prepaid Exp 578 — 578

zł 69,400 £ 13,880 0.2000 Prepaid Exp 666 — 666

C$ 271,576 U.S.$ 201,700 0.7427 Prepaid Exp / (Accrued Exp) 737 ( 1,647 ) ( 910 )

£ 240,694 U.S.$ 304,800 1.2663 Prepaid Exp / (Accrued Exp) 34 ( 10,415 ) ( 10,381 )

A$ 40,156 U.S.$ 28,250 0.7035 (Accrued Exp) — ( 447 ) ( 447 )

zł 87,000 £ 18,059 0.2076 Prepaid Exp 419 — 419

U.S.$ 3,771 € 3,383 0.8971 Prepaid Exp 213 — 213

Total fair value of derivative financial instruments $ 1,403 $ ( 69,015 ) $ ( 67,612 )

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Total fair value of derivative financial instruments $ 7,240 $ ( 20,205 ) $ ( 12,965 )

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at May 4, 2019:

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at August 3, 2019:

In thousands Pay Receive Blended

3 unchanged sentences

U.S.$ Net Fair

August 3,2019

Fair value hedges:

Intercompany balances, primarily debt and related interest:

zł 59,000 £ 12,021 0.2037 Prepaid Exp $ 451 $ — $ 451

€ 55,950 £ 49,560 0.8858 Prepaid Exp 2,160 — 2,160

zł 64,000 £ 13,055 0.2040 (Accrued Exp) $ — $ ( 585 ) $ ( 585 )

€ 55,950 £ 49,560 0.8858 (Accrued Exp) — ( 2,208 ) ( 2,208 )

A$ 40,000 U.S.$ 28,249 0.7062 Prepaid Exp 944 — 944

U.S.$ 72,020 £ 55,000 0.7637 Prepaid Exp 1,261 — 1,261

U.S.$ 72,020 £ 55,000 0.7637 (Accrued Exp) — ( 4,785 ) ( 4,785 )

Economic hedges for which hedge accounting was not elected:

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Intercompany billings in TJX International, primarily merchandise related:

€ 71,600 £ 61,777 0.8628 Prepaid Exp 1,163 — 1,163

€ 89,000 £ 80,029 0.8992 (Accrued Exp) — ( 1,687 ) ( 1,687 )

Lease liability in TJX International:

zł 690,366 € 160,851 0.2330 (Accrued Exp) — ( 473 ) ( 473 )

zł 330,044 € 77,479 0.2348 Prepaid Exp 866 — 866

Merchandise purchase commitments:

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A$ 32,229 U.S.$ 22,665 0.7032 Prepaid Exp 690 — 690

zł 359,743 £ 72,401 0.2013 Prepaid Exp / (Accrued Exp) 1,430 ( 88 ) 1,342

zł 418,012 £ 85,810 0.2053 (Accrued Exp) — ( 3,267 ) ( 3,267 )

U.S.$ 3,834 £ 3,052 0.7960 (Accrued Exp) — ( 120 ) ( 120 )

U.S.$ 79,010 € 69,427 0.8787 (Accrued Exp) — ( 1,567 ) ( 1,567 )

Total fair value of derivative financial instruments $ 24,241 $ ( 26,198 ) $ ( 1,957 )

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Recognized in Income by

Thirteen Weeks Ended

In thousands May 2,

Thirteen Weeks Ended Twenty-Six Weeks Ended

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

Fair value hedges:

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The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis:

In thousands May 2,

In thousands August 1,

2020 February 1,

2020 August 3,

Executive Savings Plan investments $ 324,270 $ 305,777 $ 282,548

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These inputs are considered to be Level 2.

The fair value of long-term debt as of May 2, 2020 was $ 7.8 billion compared to a carrying value of $ 7.2 billion.

The fair value of long-term debt as of August 1, 2020 was $ 6.4 billion compared to a carrying value of $ 5.4 billion.

The fair value of the current portion of long-term debt as of August 1, 2020 was $ 762.7 million compared to a carrying value of $ 749.2 million.

For additional information on the new debt issuances, see Note J—Long-Term Debt and Credit Lines.

The fair value of long-term debt as of February 1, 2020 was $ 2.3 billion compared to a carrying value of $ 2.2 billion.

The fair value of long-term debt as of May 4, 2019 approximated the carrying value of $ 2.2 billion.

The fair value of long-term debt as of February 1, 2020 and August 3, 2019 was $ 2.3 billion compared to a carrying value of $ 2.2 billion.

These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that might affect TJX’s ability to settle these obligations.

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Presented below is financial information with respect to TJX’s business segments:

Thirteen Weeks Ended

In thousands May 2,

Thirteen Weeks Ended Twenty-Six Weeks Ended

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

In the United States:

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Total net sales $ 6,667,575 $ 9,781,596 $ 11,076,463 $ 19,059,181

Segment (loss) profit:

Segment profit (loss):

In the United States:

3 unchanged sentences

TJX International ( 131,262 ) 50,459 ( 389,879 ) 78,946

Total segment (loss) profit ( 1,219,170 ) 1,058,297

Total segment profit (loss) 88,750 1,152,817 ( 1,130,420 ) 2,211,114

General corporate expense 123,433 128,613 223,760 249,611

5 unchanged sentences

Thirteen Weeks Ended Thirteen Weeks Ended

In thousands May 2,

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

Service cost $ 12,540 $ 11,049 $ 709 $ 552

3 unchanged sentences

Total expense $ 8,326 $ 10,060 $ 2,544 $ 2,455

Funded Plan Unfunded Plan

Twenty-Six Weeks Ended Twenty-Six Weeks Ended

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

Service cost $ 25,080 $ 22,098 $ 1,418 $ 1,104

Interest cost 25,038 25,980 1,602 1,934

Expected return on plan assets ( 44,484 ) ( 36,976 ) — —

Amortization of net actuarial loss and prior service cost 11,018 9,018 2,068 1,872

Total expense $ 16,652 $ 20,120 $ 5,088 $ 4,910

TJX’s policy with respect to the funded plan is to fund, at a minimum, the amount required to maintain a funded status of 80 % of the applicable pension liability (the Funding Target pursuant to the Internal Revenue Code section 430) or such other amount as is sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code.

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We anticipate making contributions of $ 3.1 million to provide current benefits coming due under the unfunded plan in fiscal 2021.

The amounts included in recognized actuarial losses in the table above have been reclassified in their entirety from accumulated other comprehensive income to the Consolidated Statements of (Loss) Income, net of related tax effects, for the periods presented.

The amounts included in amortization of net actuarial loss and prior service cost in the table above have been reclassified in their entirety from accumulated other comprehensive loss to the Consolidated Statements of (Loss) Income, net of related tax effects, for the periods presented.

Long-Term Debt and Credit Lines

The table below presents long-term debt, exclusive of current installments, as of May 2, 2020, February 1, 2020 and May 4, 2019.

The table below presents long-term debt, exclusive of current installments, as of August 1, 2020, February 1, 2020 and August 3, 2019.

All amounts are net of unamortized debt discounts.

In thousands May 2,

In thousands August 1,

2020 February 1,

Revolving credit facilities:

$ 500 million revolver, maturing March 11, 2022

$ 500,000 $ — $ —

$ 500 million revolver, maturing May 10, 2024

2020 August 3,

General corporate debt:

2.75 % senior unsecured notes, maturing June 15, 2021 (effective interest rate of 2.76 % after reduction of unamortized debt discount of $ 81 at May 2, 2020, $ 100 at February 1, 2020 and $ 156 at May 4, 2019)

2.75 % senior unsecured notes, maturing June 15, 2021 (effective interest rate of 2.76 % after reduction of unamortized debt discount of $ 63 at August 1, 2020, $ 100 at February 1, 2020 and $ 137 at August 3, 2019)

$ 749,937 $ 749,900 $ 749,863

2.50 % senior unsecured notes, maturing May 15, 2023 (effective interest rate of 2.51 % after reduction of unamortized debt discount of $ 134 at May 2, 2020, $ 145 at February 1, 2020 and $ 178 at May 4, 2019)

2.50 % senior unsecured notes, maturing May 15, 2023 (effective interest rate of 2.51 % after reduction of unamortized debt discount of $ 122 at August 1, 2020, $ 145 at February 1, 2020 and $ 167 at August 3, 2019)

499,878 499,855 499,833

3.50 % senior unsecured notes, maturing April 15, 2025 (effective interest rate of 3.58 % after reduction of unamortized debt discount of $ 4,966 at May 2, 2020)

3.50 % senior unsecured notes, maturing April 15, 2025 (effective interest rate of 3.58 % after reduction of unamortized debt discount of $ 4,713 at August 1, 2020)

1,245,287 — —

2.25 % senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32 % after reduction of unamortized debt discount of $ 4,725 at May 2, 2020, $ 4,911 at February 1, 2020 and $ 5,471 at May 4, 2019)

2.25 % senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32 % after reduction of unamortized debt discount of $ 4,538 at August 1, 2020, $ 4,911 at February 1, 2020 and $ 5,284 at August 3, 2019)

995,462 995,089 994,716

3.75 % senior unsecured notes, maturing April 15, 2027 (effective interest rate of 3.76 % after reduction of unamortized debt discount of $ 511 at May 2, 2020)

3.875 % senior unsecured notes, maturing April 15, 2030 (effective interest rate of 3.89 % after reduction of unamortized debt discount of $ 1,549 at May 2, 2020)

3.75 % senior unsecured notes, maturing April 15, 2027 (effective interest rate of 3.76 % after reduction of unamortized debt discount of $ 493 at August 1, 2020)

3.875 % senior unsecured notes, maturing April 15, 2030 (effective interest rate of 3.89 % after reduction of unamortized debt discount of $ 1,510 at August 1, 2020)

1,248,490 — —

4.50 % senior unsecured notes, maturing April 15, 2050 (effective interest rate of 4.52 % after reduction of unamortized debt discount of $ 4,405 at May 2, 2020)

4.50 % senior unsecured notes, maturing April 15, 2050 (effective interest rate of 4.52 % after reduction of unamortized debt discount of $ 4,368 at August 1, 2020)

Total debt 6,234,193 2,244,844 2,244,412

Current maturities of long-term debt, net of debt issuance costs ( 749,209 ) — —

Debt issuance costs ( 39,659 ) ( 8,219 ) ( 9,291 )

Long-term debt $ 5,445,325 $ 2,236,625 $ 2,235,121

On April 1, 2020, given the rapidly changing environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, the Company completed the issuance and sale of (a) $ 1.25 billion aggregate principal amount of 3.50 % notes due 2025, (b) $ 750 million aggregate principal amount of 3.75 % notes due 2027, (c) $ 1.25 billion aggregate principal amount of 3.875 % notes due 2030 and (d) $ 750 million aggregate principal amount of 4.50 % notes due 2050, all of which was outstanding at May 2, 2020.

TJX has two $ 500 million revolving credit facilities, one which matures in March 2022 and one which matures in May 2024.

On March 20, 2020, the Company drew down $ 1.0 billion on these revolving credit facilities.

As of May 2, 2020, $ 1.0 billion was outstanding under these facilities.

The amounts drawn are included as outstanding long-term debt in the table above.

As of February 1, 2020 and May 4, 2019, and during the quarter and year then ended, there were no amounts outstanding under these facilities.

For additional information, see Note B—Impact of the COVID-19 Pandemic.

The terms and covenants under the revolving credit facilities require quarterly payments of 7.0 basis points per annum on the committed amounts for both agreements.

The six month interest rate on these borrowings was 1.757 % and upon executing the amendment, described below, increased by 0.25 %.

In May 2020, given the rapidly changing environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, the Company entered into amendments to its revolving credit facilities, which, among other things, included a waiver of the application of the funded debt to earnings before interest, taxes, depreciation and amortization and rentals (“EBITDAR”) covenants under its revolving credit facilities for each of the four fiscal quarters in fiscal 2021.

In addition, the amendments require the Company to maintain a minimum liquidity, defined as cash and undrawn revolvers, of at least $ 1.5 billion through the period ending April 30, 2021, as well as minimum EBITDAR of $ 650 million for the fourth quarter of fiscal 2021.

The amendments then allow for TJX to maintain a ratio of funded debt to EBITDAR of not more than 5.00 to 1.00 for the first fiscal quarter of 2022, with an incremental 0.50 stepdown each quarter thereafter, until the fourth quarter of fiscal 2022 when the new covenant of 3.50 to 1.00 permanently applies.

As of May 2, 2020, February 1, 2020 and May 4, 2019, TJX Canada had two uncommitted credit lines, a C$ 10 million facility for operating expenses and a C$ 10 million letter of credit facility.

As of May 2, 2020, February 1, 2020 and May 4, 2019, and during the quarters and year then ended, there were no amounts outstanding on the Canadian credit line for operating expenses.

As of May 2, 2020, February 1, 2020 and May 4, 2019, our European business at TJX International had an uncommitted credit line of £ 5 million.

As of May 2, 2020, February 1, 2020 and May 4, 2019, and during the quarters and year then ended, there were no amounts outstanding on the European credit line.

The e ffective income tax rate was 33.9 % for the first quarter of fiscal 2021 and 25.2 % for the first quarter of fiscal 2020.

The increase in the effective income tax rate is primarily due to the anticipated benefit from the Coronavirus Aid, Relief, and Economic Security Act ( “ CARES Act ” ) enacted on March 27, 2020.

The CARES Act provides for net operating losses in fiscal 2021 to be carried back to earlier tax years with higher tax rates than the current year.

TJX had net unrecognized tax benefits of $ 256.1 million as of May 2, 2020, $ 254.8 million as of February 1, 2020 and $ 237.7 million as of May 4, 2019.

On April 1, 2020, given the rapidly changing environment and level of uncertainty created by the COVID-19 pandemic and the associated impact on future earnings, the Company completed the issuance and sale of (a) $ 1.25 billion aggregate principal amount of 3.50 % notes due 2025, (b) $ 750 million aggregate principal amount of 3.75 % notes due 2027, (c) $ 1.25 billion aggregate principal amount of 3.875 % notes due 2030 and (d) $ 750 million aggregate principal amount of 4.50 % notes due 2050, all of which was outstanding at August 1, 2020.

As of the fiscal period ended August 1, 2020, TJX had two $ 500 million revolving credit facilities, one which matures in March 2022 and one which matures in May 2024.

I n July 2020, t he Company paid off the $ 1.0 billion it had drawn down on these revolving credit facilities during the first quarter of fiscal 2021.

The six month interest rate on these borrowings was 1.757 % through May 15, 2020, and increased to 2.007 % through the payoff date.

The terms of these revolving credit facilities require quarterly payments on the committed amount and payment of interest on borrowings at rates based on LIBOR or a base rate plus a variable margin, in each case based on the Company’s long term debt ratings, and require usages fees based on total credit extensions under such facilities.

As of August 1, 2020, February 1, 2020 and August 3, 2019, and during the quarter and year then ended, there were no amounts outstanding under these facilities.

Subsequent to the fiscal q uarter ending August 1, 2020, on August 10, 2020, the Company increased its borrowing capacity by entering into a new $ 500 million 364 Day Revolving Credit Facility, maturing in August 2021.

With the new 364 Day Revolving Credit Facility, the Company has increased its borrowing capacity to $ 1.5 billion, all of which currently remains available to the Company.

Th e terms of the 364 Day Revolving Credit Facility require quarterly payments on committed amounts and payment of interest on borrowings at rates based on LIBOR or a base rate plus a variable margin, in each case based on the Company's long-term debt ratings.

Beginning with the fiscal period ending May 1, 2021, the terms and covenants under the existing revolving credit facilities and the new 364 Day revolving Credit Facility require the Company to maintain a quarterly-tested leverage ratio of funded debt to earnings before interest, taxes, depreciation and amortization and rentals (“EBITDAR”) of not more than 5.00 to 1.00, with an incremental 0.50 stepdown each quarter thereafter, until the fourth quarter of fiscal 2022 when the new covenant of 3.50 to 1.00 permanently applies.

In addition, the Company is required to maintain a minimum liquidity, defined as unrestricted cash and cash equivalents and aggregate borrowing availability under the 2022 revolving credit facility and the 2024 revolving credit facility plus, under the 364 Day Revolving Credit Facility, borrowing ability under that facility, of at least $ 1.5 billion through the period ending April 30, 2021, as well as minimum EBITDAR of $ 650 million for the fiscal quarter ending January 30, 2021.

As of August 1, 2020, February 1, 2020 and August 3, 2019, TJX Canada had two uncommitted credit lines, a C$ 10 million facility for operating expenses and a C$ 10 million letter of credit facility.

As of August 1, 2020, February 1, 2020 and August 3, 2019, and during the quarters and year then ended, there were no amounts outstanding on the Canadian credit line.

As of August 1, 2020, February 1, 2020 and August 3, 2019, our European business at TJX International had an uncommitted credit line of £ 5 million.

As of August 1, 2020, February 1, 2020 and August 3, 2019, and during the quarters and year then ended, there were no amounts outstanding on the European credit line.

The e ffective income tax rate was ( 132.8 )% for the second quarter of fiscal 2021 and 25.7 % for the second quarter of fiscal 2020.

The e ffective income tax rate was 23.2 % for the six months ended August 1, 2020 compared to 25.5 % for the six months ended August 3, 2019.

The second quarter’s negative effective income tax rate is primarily due to the reversal of income tax benefit recorded in the first quarter of fiscal 2021 related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020.

The CARES Act provides for net operating losses incurred in fiscal 2021 to be carried back to earlier tax years with higher tax rates than the current year.

The projected losses subject to carry back to earlier years decreased in the second quarter of fiscal 2021, resulting in a reduction of the year to date income tax benefit and a second quarter negative effective income tax rate.

TJX had net unrecognized tax benefits of $ 262.2 million as of August 1, 2020, $ 254.8 million as of February 1, 2020 and $ 241.6 million as of August 3, 2019.

TJX is subject to U.S.

3 unchanged sentences

TJX’s accounting policy classifies interest and penalties related to income tax matters as part of income tax expense.

The total accrued amount on the Consolidated Balance Sheets for interest and penalties was $ 29.5 million as of May 2, 2020, $ 27.9 million as of February 1, 2020 and $ 25.5 million as of May 4, 2019.

The total accrued amount on the Consolidated Balance Sheets for interest and penalties was $ 32.0 million as of August 1, 2020, $ 27.9 million as of February 1, 2020 and $ 27.3 million as of August 3, 2019.

Based on the outcome of tax examinations or judicial or administrative proceedings, or as a result of the expiration of statutes of limitations in specific jurisdictions, it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those presented in the Consolidated Financial Statements.

7 unchanged sentences

We may also be contingently liable for assignments and subleases if the subtenants or assignees do not fulfill their obligations.

TJX estimates the undiscounted value of these contingent obligations as of May 2, 2020 to be approximately $ 26.0 million.

TJX believes that most or all of these contingent obligations will not revert to the Company and, to the extent they do, will be resolved for substantially less due to mitigating factors including TJX's expectation to further sublet.

TJX estimates the undiscounted value of these contingent obligations as of August 1, 2020 to be approximately $ 13.4 million.

TJX believes that most or all of these contingent obligations will not revert to the Company and, to the extent they do, may be resolved for substantially less due to mitigating factors including TJX's expectation to further sublet.

TJX is a party to various agreements under which it may be obligated to indemnify the other party with respect to certain losses related to matters including title to assets sold, specified environmental matters or certain income taxes.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements