What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-12-01 compared with 2020-08-28 · 221 added, 191 removed, 485 unchanged (46% of the section changed)

1 unchanged sentence

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

IN THOUSANDS EXCEPT PER SHARE AMOUNTS

Thirteen Weeks Ended Twenty-Six Weeks Ended

2020 August 3,

2019 August 1,

2020 August 3,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 November 2,

2019 October 31,

2020 November 2,

Net sales $ 10,117,289 $ 10,451,334 $ 21,193,752 $ 29,510,515

2 unchanged sentences

Interest expense, net 52,884 3,259 133,571 6,973

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

Income (loss) before income taxes 1,015,992 1,122,119 ( 418,875 ) 3,079,908

(Provision) benefit for income taxes ( 149,336 ) ( 293,856 ) 183,822 ( 792,505 )

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

Basic (loss) earnings per share $ ( 0.18 ) $ 0.63 $ ( 0.92 ) $ 1.20

Net income (loss)

$ 866,656 $ 828,263 $ ( 235,053 ) $ 2,287,403

Basic earnings (loss) per share

$ 0.72 $ 0.69 $ ( 0.20 ) $ 1.89

Weighted average common shares – basic 1,199,951 1,206,369 1,198,798 1,210,475

Diluted (loss) earnings per share $ ( 0.18 ) $ 0.62 $ ( 0.92 ) $ 1.19

Diluted earnings (loss) per share

$ 0.71 $ 0.68 $ ( 0.20 ) $ 1.86

Weighted average common shares – diluted 1,214,195 1,224,288 1,198,798 1,228,903

3 unchanged sentences

Thirteen Weeks Ended

2020 August 3,

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

2020 November 2,

Net income $ 866,656 $ 828,263

Additions to other comprehensive (loss) income:

1 unchanged sentence

( 25,568 ) 70,785

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

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

Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $ 1,981 in fiscal 2021 and $ 1,609 in fiscal 2020

Amortization of loss on cash flow hedge, net of related tax provisions of $ 75 in fiscal 2021 and $ 75 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,

Other comprehensive (loss) income, net of tax ( 19,920 ) 75,411

Total comprehensive income $ 846,736 $ 903,674

Thirty-Nine Weeks Ended

2020 November 2,

Net (loss) income $ ( 235,053 ) $ 2,287,403

Additions to other comprehensive (loss) income:

Additions to other comprehensive (loss):

Foreign currency translation adjustments, net of related tax benefit of $ 493 in fiscal 2021 and $ 711 in fiscal 2020

2 unchanged sentences

Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $ 5,473 in fiscal 2021 and $ 4,515 in fiscal 2020

15,034 12,402

Amortization of loss on cash flow hedge, net of related tax provisions of $ 227 in fiscal 2021 and $ 227 in fiscal 2020

6 unchanged sentences

2020 February 1,

2020 August 3,

2020 November 2,

Current assets:

36 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Six Weeks Ended

2020 August 3,

Thirty-Nine Weeks Ended

2020 November 2,

Cash flows from operating activities:

7 unchanged sentences

(Increase) in accounts receivable ( 76,604 ) ( 99,476 )

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

(Increase) in merchandise inventories ( 134,877 ) ( 1,701,704 )

(Increase) in income taxes recoverable ( 138,679 ) ( 169,610 )

(Increase) in prepaid expenses and other current assets ( 53,702 ) ( 62,358 )

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

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

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

Increase in accounts payable 3,464,266 805,766

Increase in accrued expenses and other liabilities 550,261 133,651

Increase (decrease) in income taxes payable 20,131 ( 131,499 )

Increase in net operating lease liabilities 226,909 32,056

22 unchanged sentences

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Thirteen Weeks Ended

4 unchanged sentences

Earnings Total

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

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

Net income — — — — 866,656 866,656

Other comprehensive (loss), net of tax — — — ( 19,920 ) — ( 19,920 )

Recognition of share-based compensation — — 31,262 — — 31,262

Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 1,570 1,570 26,619 — — 28,189

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

Balance, October 31, 2020 1,200,631 $ 1,200,631 $ 126,413 $ ( 742,861 ) $ 4,982,573 $ 5,566,756

Thirteen Weeks Ended

4 unchanged sentences

Earnings Total

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

Net income — — — — 828,263 828,263

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

Other comprehensive income, net of tax — — — 75,411 — 75,411

Cash dividends declared on common stock — — — — ( 277,115 ) ( 277,115 )

2 unchanged sentences

Common stock repurchased and retired ( 8,824 ) ( 8,824 ) ( 100,925 ) — ( 380,890 ) ( 490,639 )

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

Balance, November 2, 2019 1,203,184 $ 1,203,184 $ — $ ( 637,414 ) $ 4,976,762 $ 5,542,532

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Thirty-Nine Weeks Ended

Shares Par Value

9 unchanged sentences

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

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

Twenty-Six Weeks Ended

Balance, October 31, 2020 1,200,631 $ 1,200,631 $ 126,413 $ ( 742,861 ) $ 4,982,573 $ 5,566,756

Thirty-Nine Weeks Ended

Shares Par Value

11 unchanged sentences

Common stock repurchased and retired ( 22,168 ) ( 22,168 ) ( 230,409 ) — ( 937,813 ) ( 1,190,390 )

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

Balance, November 2, 2019 1,203,184 $ 1,203,184 $ — $ ( 637,414 ) $ 4,976,762 $ 5,542,532

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

23 unchanged sentences

The following table presents deferred gift card revenue activity:

In thousands August 1,

2020 August 3,

In thousands October 31,

2020 November 2,

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

3 unchanged sentences

Balance, end of period $ 465,532 $ 404,747

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.

TJX recognized $ 306.8 million in gift card revenue for the three months ended October 31, 2020 and $ 358.3 million for the three months ended November 2, 2019.

The decrease in both deferred revenue and revenue recognized versus the prior year reflects the impact of lower customer traffic for the three months ended October 31, 2020 and temporary store and e-commerce closures due to the COVID-19 pandemic for the nine months ended October 31, 2020.

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

8 unchanged sentences

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 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.

The Company reports its share of Familia’s results on a one-quarter lag.

The losses from the Company's investment in Familia were $ 3.2 million for the three months ended October 31, 2020 and $ 2.5 million for the nine months ended October 31, 2020, which has been recorded in our Consolidated Statements of Income (Loss) and is included in Selling, general and administrative expenses.

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

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

dollar as of October 31, 2020 resulted in a cumulative translation loss and reduced the carrying value of our investment by $ 44 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.

The carrying value of the equity investment on the Consolidated Balance Sheets at October 31, 2020, including acquisition costs of $ 5.6 million, was $ 184.1 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,

We have not impaired our investment due to our belief that any decline in fair value of our investment is temporary 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 thirty-nine weeks ended October 31, 2020 and November 2, 2019 is as follows:

Thirty-Nine Weeks Ended

In thousands October 31,

2020 November 2,

Operating cash flows paid for operating leases $ 1,179,618 $ 1,274,861

Lease liabilities arising from obtaining right of use assets $ 1,151,543 $ 1,416,591

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.

During the first nine months 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.

7 unchanged sentences

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 the first half of fiscal 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 nine months of fiscal 2021.

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

2 unchanged sentences

Impact of the COVID-19 Pandemic

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.

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 December 2019, COVID-19 emerged and has subsequently spread worldwide.

The World Health Organization declared COVID-19 a pandemic, 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 quarantine or isolation protocols for those who may have been exposed to the virus.

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

In May 2020, the Company began reopening its stores with capacity constraints and reduced operating hours.

By the end of the second quarter, more than 4,500 of the Company’s worldwide stores, and each of its online businesses, had reopened.

In response to increasing cases of COVID-19, a number of our stores have temporarily closed again.

As of November 30, 2020, the Company has approximately 500 stores temporarily closed due to local government mandates, primarily located in Europe.

The Company’s tkmaxx.com e-commerce business in the U.K.

remains open.

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.

As the COVID-19 pandemic is complex and rapidly evolving, and cases have been rising around the world, the Company cannot reasonably estimate the duration and severity of this pandemic, which 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

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.

During the third quarter the Company generated positive operating cash flows and ended the third quarter with $ 10.6 billion of cash.

In addition, in the third quarter of fiscal 2021 the Company 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.

Additionally, subsequent to the end of the third quarter, the Company issued $ 1.0 billion in aggregate long-term debt and commenced cash tender offers to repurchase up to $ 750.0 million combined aggregate principal amount of certain of its notes issued on April 1, 2020.

For additional information on these transactions, see Note M—Subsequent Events.

While the Company's Board of Directors did not declare a dividend in the first nine months of fiscal 2021, the Company expects a dividend of $ 0.26 per share to be declared in the fourth quarter of fiscal 2021, payable in March 2021, subject to the approval by its Board of Directors.

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

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.

1 unchanged sentence

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.

In addition to negotiating deferral of lease payments, the Company also temporarily extended payment terms on merchandise orders, which increased our accounts payable as of the end of the third quarter, benefiting our third quarter operating cash flows.

We have reduced the length of our extended payment terms to more closely align with our typical business terms and as we make deferred payments, our operating cash flows are likely to be negatively impacted.

The Company evaluated the value of its inventory in light of the temporary store closures in the first quarter of fiscal 2021 due to the COVID-19 pandemic.

Permanent markdowns, which have been 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 first six months of fiscal 2021.

Additional markdowns throughout the year were taken in the ordinary course of business operations.

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 half of fiscal 2021.

Given the substantial reduction in our sales and the reduced cash flow projections as a result of the temporary store closures during the first half of fiscal 2021 due to the COVID-19 pandemic, we determined that a triggering event had occurred in the first and second quarters of fiscal 2021 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 nine months 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.

The Company continued to qualify for certain of these provisions, which partially offset related expenses.

During the third quarter of fiscal 2021 the impact of these programs on our expenses was immaterial.

During the nine months ended October 31, 2020 , these programs reduced our expenses by approximately $ 0.4 billion on our Consolidated Statements of Income (Loss), 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 $ 0.3 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 payroll costs associated with monitoring occupancy limits to comply with social distancing protocols and implementing enhanced cleaning regimens.

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

– Personal protective equipment for our Associates.

– Incremental cleaning supplies and personal protective equipment for our Associates.

Property at Cost

The following table presents the components of property at cost:

In thousands August 1,

In thousands October 31,

2020 February 1,

2020 August 3,

2020 November 2,

Land and buildings

7 unchanged sentences

Net property at cost $ 5,004,774 $ 5,325,048 $ 5,250,971

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 .

Depreciation expense was $ 215.6 million for the three months ended October 31, 2020 and $ 216.3 million three months ended November 2, 2019.

Depreciation expense was $ 649.1 million for the nine months ended October 31, 2020 and $ 640.5 million for the nine months ended November 2, 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 six months ended August 1, 2020:

The following table details the changes in accumulated other comprehensive loss for the twelve months ended February 1, 2020 and the nine months ended October 31, 2020:

In thousands Foreign

23 unchanged sentences

— 15,034 — 15,034

Balance, August 1, 2020

Balance, October 31, 2020

$ ( 542,468 ) $ ( 200,449 ) $ 56 $ ( 742,861 )

Capital Stock and (Loss) Earnings Per Share

Capital Stock and Earnings (Loss) Per Share

Capital Stock

3 unchanged sentences

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 six months ended August 1, 2020, and $ 699.8 million for the six months ended August 3, 2019.

TJX had cash expenditures under repurchase programs of $ 201.5 million for the nine months ended October 31, 2020 and $ 1.2 billion for the nine months ended November 2, 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 August 1, 2020, TJX had approximately $ 3.0 billion available under these previously announced stock repurchase programs.

As of October 31, 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.

(Loss) Earnings Per Share

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

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:

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

Weighted average common shares outstanding for basic (loss) earnings per share calculation 1,198,634 1,210,525 1,198,222 1,212,528

Basic (loss) earnings per share $ ( 0.18 ) $ 0.63 $ ( 0.92 ) $ 1.20

Diluted (loss) earnings per share:

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

Weighted average common shares outstanding for basic (loss) earnings per share calculations 1,198,634 1,210,525 1,198,222 1,212,528

Earnings (Loss) Per Share

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Amounts in thousands, expect per share amounts October 31,

2020 November 2,

2019 October 31,

2020 November 2,

Basic earnings (loss) per share:

Net income (loss)

$ 866,656 $ 828,263 $ ( 235,053 ) $ 2,287,403

Weighted average common shares outstanding for basic earnings (loss) per share calculation

1,199,951 1,206,369 1,198,798 1,210,475

Basic earnings (loss) per share

$ 0.72 $ 0.69 $ ( 0.20 ) $ 1.89

Diluted earnings (loss) per share:

Net income (loss)

$ 866,656 $ 828,263 $ ( 235,053 ) $ 2,287,403

Weighted average common shares outstanding for basic earnings (loss) per share calculations

1,199,951 1,206,369 1,198,798 1,210,475

Assumed exercise / vesting of:

Stock options and awards 14,244 17,919 — 18,428

Weighted average common shares outstanding for diluted (loss) earnings per share calculation 1,198,634 1,228,986 1,198,222 1,231,211

Diluted (loss) earnings per share $ ( 0.18 ) $ 0.62 $ ( 0.92 ) $ 1.19

Weighted average common shares outstanding for diluted earnings (loss) per share calculation

1,214,195 1,224,288 1,198,798 1,228,903

Diluted earnings (loss) per share

$ 0.71 $ 0.68 $ ( 0.20 ) $ 1.86

Cash dividends declared per share $ — $ 0.230 $ — $ 0.690

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.

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

There were 17.7 million such options excluded for the thirteen weeks ended October 31, 2020.

There were 12.0 million such options excluded for each of the thirteen weeks and thirty-nine weeks ended November 2, 2019.

During periods of net loss, all common stock equivalents are excluded because they are anti-dilutive.

For the thirty-nine weeks ended October 31, 2020, there were approximately 49.1 million common stock equivalents excluded from diluted earnings per share.

In November 2020, the Company announced that it expects a quarterly dividend of $ 0.26 per share to be declared in the fourth quarter of fiscal 2021, payable in March 2021, subject to approval by its Board of Directors.

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 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.

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

The hedge agreements outstanding at October 31, 2020 relate to approximately 40 % of TJX’s estimated notional diesel requirements for the remainder of fiscal 2021 and approximately 41 % of TJX’s estimated notional diesel requirements for the first nine months of fiscal 2022.

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

TJX elected not to apply hedge accounting to these contracts.

3 unchanged sentences

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

The contracts outstanding at October 31, 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.

7 unchanged sentences

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 August 1, 2020:

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at October 31, 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 (Accrued Exp) $ — $ ( 628 ) $ ( 628 )

zł 65,000 £ 12,780 0.1966 Prepaid Exp / (Accrued Exp) $ 195 $ ( 68 ) $ 127

€ 60,000 £ 53,412 0.8902 (Accrued Exp) — ( 904 ) ( 904 )

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

A$ 80,000 U.S.$ 58,016 0.7252 Prepaid Exp 1,749 — 1,749

U.S.$ 72,475 £ 55,000 0.7589 (Accrued Exp) — ( 1,280 ) ( 1,280 )

£ 200,000 U.S.$ 249,499 1.2475 (Accrued Exp) — ( 9,810 ) ( 9,810 )

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

Economic hedges for which hedge accounting was not elected:

5 unchanged sentences

N/A (Accrued Exp) — ( 15,078 ) ( 15,078 )

Intercompany billings in TJX International, primarily merchandise related:

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

Merchandise purchase commitments:

1 unchanged sentence

£ 415,653 U.S.$ 533,150 1.2827 Prepaid Exp / (Accrued Exp) 1,050 ( 6,768 ) ( 5,718 )

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

A$ 45,584 U.S.$ 32,650 0.7163 Prepaid Exp 600 — 600

zł 264,400 £ 53,293 0.2016 Prepaid Exp 2,189 — 2,189

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

U.S.$ 53,605 € 45,600 0.8507 (Accrued Exp) — ( 394 ) ( 394 )

Total fair value of derivative financial instruments $ 9,111 $ ( 35,454 ) $ ( 26,343 )

27 unchanged sentences

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 August 3, 2019:

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

zł 64,000 £ 13,144 0.2054 Prepaid Exp $ 246 $ — $ 246

€ 46,450 £ 41,712 0.8980 Prepaid Exp 1,919 — 1,919

A$ 50,000 U.S.$ 34,370 0.6874 (Accrued Exp) — ( 303 ) ( 303 )

U.S.$ 72,020 £ 55,000 0.7637 (Accrued Exp) — ( 757 ) ( 757 )

7 unchanged sentences

Intercompany billings in TJX International, primarily merchandise related:

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

Lease liability in TJX International:

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

€ 86,800 £ 76,837 0.8852 Prepaid Exp 2,411 — 2,411

Merchandise purchase commitments:

C$ 642,859 U.S.$ 487,300 0.7580 Prepaid Exp / (Accrued Exp) 808 ( 2,960 ) ( 2,152 )

C$ 38,119 € 25,400 0.6663 (Accrued Exp) — ( 592 ) ( 592 )

C$ 31,863 € 21,600 0.6779 Prepaid Exp / (Accrued Exp) 36 ( 111 ) ( 75 )

£ 308,166 U.S.$ 386,700 1.2548 Prepaid Exp / (Accrued Exp) 373 ( 14,122 ) ( 13,749 )

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

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 )

A$ 42,054 U.S.$ 28,767 0.6840 Prepaid Exp / (Accrued Exp) 46 ( 414 ) ( 368 )

zł 369,290 £ 76,343 0.2067 Prepaid Exp / (Accrued Exp) 2,192 ( 148 ) 2,044

U.S.$ 2,254 £ 1,761 0.7813 Prepaid Exp 23 — 23

U.S.$ 69,558 € 61,875 0.8895 Prepaid Exp / (Accrued Exp) 304 ( 614 ) ( 310 )

Total fair value of derivative financial instruments $ 8,358 $ ( 23,307 ) $ ( 14,949 )

Presented below is the impact of derivative financial instruments on the Consolidated Statements of (Loss) Income for the periods shown:

Amount of Gain (Loss) Recognized

in Income by Derivative

Location of Gain (Loss)

Recognized in Income by

Thirteen Weeks Ended Twenty-Six Weeks Ended

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

Presented below is the impact of derivative financial instruments on the Consolidated Statements of Income (Loss) for the periods shown:

Amount of (Loss) Gain Recognized

in Income / (Loss) by Derivative

Location of (Loss) Gain

Recognized in Income / (Loss) by

Thirteen Weeks Ended Thirty-Nine Weeks Ended

In thousands October 31,

2020 November 2,

2019 October 31,

2020 November 2,

Fair value hedges:

6 unchanged sentences

Merchandise purchase commitments Cost of sales, including buying and occupancy costs 7,302 ( 18,622 ) 41,629 8,536

Gain recognized in (loss) / income $ ( 45,784 ) $ ( 5,538 ) $ ( 25,528 ) $ 15,457

(Loss) gain recognized in income / (loss) $ ( 2,153 ) $ ( 5,410 ) $ ( 27,681 ) $ 10,047

Fair Value Measurements

4 unchanged sentences

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

In thousands August 1,

In thousands October 31,

2020 February 1,

2020 August 3,

2020 November 2,

Executive Savings Plan investments $ 327,833 $ 305,777 $ 289,496

4 unchanged sentences

Foreign currency exchange contracts and diesel fuel contracts are valued using broker quotations, which include observable market information.

TJX’s investments are primarily high-grade commercial paper, institutional money market funds and time deposits with major banks.

TJX does not make 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.

3 unchanged sentences

These inputs are considered to be Level 2.

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.

The fair value of long-term debt as of October 31, 2020 was $ 6.3 billion compared to a carrying value of $ 5.4 billion.

The fair value of the current portion of long-term debt as of October 31, 2020 was $ 758.5 million compared to a carrying value of $ 749.4 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 and August 3, 2019 was $ 2.3 billion compared to a carrying value of $ 2.2 billion.

The fair value of long-term debt as of February 1, 2020 and November 2, 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.

13 unchanged sentences

The terms “segment margin” or “segment profit margin” are used to describe segment profit or loss as a percentage of net sales.

These measures of performance should not be considered alternatives to net (loss) income or cash flows from operating activities as an indicator of TJX’s performance or as a measure of liquidity.

These measures of performance should not be considered alternatives to net income (loss) or cash flows from operating activities as an indicator of TJX’s performance or as a measure of liquidity.

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

In thousands October 31,

2020 November 2,

2019 October 31,

2020 November 2,

In the United States:

10 unchanged sentences

TJX International 86,576 99,397 ( 303,303 ) 178,343

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

Total segment profit 1,219,375 1,263,303 88,955 3,474,417

General corporate expense 150,499 137,925 374,259 387,536

Interest expense, net 52,884 3,259 133,571 6,973

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

Income (loss) before income taxes $ 1,015,992 $ 1,122,119 $ ( 418,875 ) $ 3,079,908

Pension Plans and Other Retirement Benefits

2 unchanged sentences

Thirteen Weeks Ended Thirteen Weeks Ended

In thousands August 1,

2020 August 3,

2019 August 1,

2020 August 3,

In thousands October 31,

2020 November 2,

2019 October 31,

2020 November 2,

Service cost $ 12,512 $ 11,415 $ 404 $ 440

4 unchanged sentences

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,

Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended

In thousands October 31,

2020 November 2,

2019 October 31,

2020 November 2,

Service cost $ 37,592 $ 33,513 $ 1,822 $ 1,544

6 unchanged sentences

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 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.

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 Income (Loss), 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 August 1, 2020, February 1, 2020 and August 3, 2019.

The table below presents long-term debt, exclusive of current installments, as of October 31, 2020, February 1, 2020 and November 2, 2019.

All amounts are net of unamortized debt discounts.

In thousands August 1,

In thousands October 31,

2020 February 1,

2020 August 3,

2020 November 2,

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 $ 63 at August 1, 2020, $ 100 at February 1, 2020 and $ 137 at August 3, 2019)

2.75 % senior unsecured notes, maturing June 15, 2021 (effective interest rate of 2.76 % after reduction of unamortized debt discount of $ 44 at October 31, 2020, $ 100 at February 1, 2020 and $ 119 at November 2, 2019)

$ 749,956 $ 749,900 $ 749,881

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)

2.50 % senior unsecured notes, maturing May 15, 2023 (effective interest rate of 2.51 % after reduction of unamortized debt discount of $ 111 at October 31, 2020, $ 145 at February 1, 2020 and $ 156 at November 2, 2019)

499,889 499,855 499,844

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)

3.50 % senior unsecured notes, maturing April 15, 2025 (effective interest rate of 3.58 % after reduction of unamortized debt discount of $ 4,461 at October 31, 2020)

1,245,539 — —

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)

2.25 % senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32 % after reduction of unamortized debt discount of $ 4,352 at October 31, 2020, $ 4,911 at February 1, 2020 and $ 5,097 at November 2, 2019)

995,648 995,089 994,903

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)

3.75 % senior unsecured notes, maturing April 15, 2027 (effective interest rate of 3.76 % after reduction of unamortized debt discount of $ 474 at October 31, 2020)

3.875 % senior unsecured notes, maturing April 15, 2030 (effective interest rate of 3.89 % after reduction of unamortized debt discount of $ 1,471 at October 31, 2020)

1,248,529 — —

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)

4.50 % senior unsecured notes, maturing April 15, 2050 (effective interest rate of 4.52 % after reduction of unamortized debt discount of $ 4,333 at October 31, 2020)

Total debt 6,234,754 2,244,844 2,244,628

2 unchanged sentences

Long-term debt $ 5,447,208 $ 2,236,625 $ 2,235,873

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.

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 3.500 % notes due 2025, (b) $ 750.0 million aggregate principal amount of 3.750 % notes due 2027, (c) $ 1.25 billion aggregate principal amount of 3.875 % notes due 2030 and (d) $ 750.0 million aggregate principal amount of 4.500 % notes due 2050, all of which was outstanding at October 31, 2020.

Subsequent to the end of the third quarter, on November 18, 2020, in order to refinance a portion of the notes issued on April 1, 2020, the Company simultaneously commenced cash tender offers (collectively the “Tender Offer”) to repurchase up to $ 750.0 million combined aggregate principal amount of certain of its existing notes and commenced a notes offering pursuant to which, on November 30, 2020, it issued (a) $ 500.0 million aggregate principal amount of 1.150 % notes due 2028 and (b) $ 500.0 million aggregate principal amount of 1.600 % notes due 2031 to fund, in whole or in part, the Tender Offer.

The Tender Offer will expire on December 16, 2020 at 11:59 pm New York City time, unless extended or earlier terminated by the Company.

The early tender deadline is December 2, 2020 at 5:00 pm New York City time, unless extended or early terminated by the Company.

For additional information on these transactions, see Note M—Subsequent Events.

During the fiscal quarter ended October 31, 2020, TJX had a $ 500.0 million revolving credit facility that matures in March 2022 (the “2022 Revolving Credit Facility”) and a $ 500.0 million revolving credit facility that matures in May 2024 (the “2024 Revolving Credit Facility”) and, on August 10, 2020, the Company increased its borrowing capacity with a $ 500 million 364 day revolving credit facility (the “364-Day Revolving Credit Facility”).

Under these credit facilities, the Company has borrowing capacity of $ 1.5 billion, all of which remains available to the Company.

I n July 2020, t he Company paid off the $ 1.0 billion it had drawn down on the 2022 Revolving Credit Facility and 2024 Revolving Credit Facility 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.

The 2022 Revolving Credit Facility and the 2024 Revolving Credit Facility require usages fees based on total credit extensions under such facilities.

As of October 31, 2020, February 1, 2020 and November 2, 2019, and during the quarter and year then ended, there were no amounts outstanding under these facilities.

Beginning with the fiscal quarter ending May 1, 2021, the terms and covenants under the revolving credit facilities 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 $ 650.0 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.

The Company was in compliance with all covenants related to its credit facilities at the end of all periods presented.

As of October 31, 2020, February 1, 2020 and November 2, 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 October 31, 2020, February 1, 2020 and November 2, 2019, and during the quarters and year then ended, there were no amounts outstanding on the Canadian credit line.

As of October 31, 2020, February 1, 2020 and November 2, 2019, our European business at TJX International had an uncommitted credit line of £ 5 million.

As of October 31, 2020, February 1, 2020 and November 2, 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 14.7 % for the third quarter of fiscal 2021 and 26.2 % for the third quarter of fiscal 2020.

The e ffective income tax rate was 43.9 % for the nine months ended October 31, 2020 compared to 25.7 % for the nine months ended November 2, 2019.

The decrease in the third quarter, and increase in the year to date, effective income tax rates of fiscal 2021 are primarily due to the jurisdictional mix of profits and losses and the better than anticipated third quarter results.

TJX had net unrecognized tax benefits of $ 267.1 million as of October 31, 2020, $ 254.8 million as of February 1, 2020 and $ 245.8 million as of November 2, 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 $ 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.

The total accrued amount on the Consolidated Balance Sheets for interest and penalties was $ 34.2 million as of October 31, 2020, $ 27.9 million as of February 1, 2020 and $ 29.3 million as of November 2, 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 August 1, 2020 to be approximately $ 13.4 million.

TJX estimates the undiscounted value of these contingent obligations as of October 31, 2020 to be approximately $ 12 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.

8 unchanged sentences

In connection with ongoing litigation, an immaterial amount has been accrued in the accompanying Consolidated Financial Statements.

Subsequent Events

On November 18, 2020, the Company announced the issuance of $ 500.0 million in aggregate principal amount of 1.150 % notes due 2028 (“2028 Notes”) and $ 500.0 million in aggregate principal amount of 1.600 % notes due 2031 (“2031 Notes”).

This issuance was completed on November 30, 2020.

On November 18, 2020, the Company concurrently announced the commencement of the Tender Offer to purchase up to $ 750.0 million combined aggregate principal amount (the “Maximum Tender Amount”) of certain of its existing notes (collectively, the “Tender Offer Notes”) in the following priority (1) 4.500 % notes due 2050, (2) 3.875 % notes due 2030, and (3) 3.750 % notes due 2027.

TJX reserves the absolute right to increase or decrease the Maximum Tender Amount, subject to compliance with applicable law.

There can be no assurance that TJX will increase or decrease the Maximum Tender Amount.

The Tender Offer will expire on December 16, 2020 at 11:59pm New York City time, unless extended or earlier terminated by the Company.

The early tender deadline is December 2, 2020, at 5:00pm New York City time, unless extended or earlier terminated by the Company.

Tender Offer Notes validly tendered by the early tender deadline will qualify for an early tender premium and repurchase of such Tender Offer Notes is expected to be completed on December 4, 2020.

The Company expects to use the proceeds from this issuance, together with cash on hand, for the repurchase of the Tender Offer Notes tendered and the payment of related premiums, fees and expenses.

Any net proceeds not used for the foregoing shall be used for general corporate purposes, which may include working capital and capital expenditures and repayment of indebtedness.

In the fourth quarter of fiscal 2021, the Company expects to record a loss on early extinguishment of debt, the amount of which would be dependent on the results of the Tender Offer.

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