TJX COMPANIES INC /DE/ 10-Q

Item 1. Financial Statements THE TJX COMPANIES, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) IN THOUSANDS EXCEPT PER SHARE AMOUNTS Thirteen Weeks Ended Thirty-Nine Weeks Ended October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019 Net sales $ 10,117,289 $ 10,451,334 $ 21,193,752 $ 29,510,515 Cost of sales, including buying and occupancy costs 7,062,285 7,440,033 16,651,240 21,103,975 Selling, general and administrative expenses 1,986,128 1,885,923 4,827,816 5,319,659 Interest expense, net 52,884 3,259 133,571 6,973 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 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 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 The accompanying notes are an integral part of the unaudited consolidated financial statements. 3 THE TJX COMPANIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) IN THOUSANDS Thirteen Weeks Ended October 31, 2020 November 2, 2019 Net income $ 866,656 $ 828,263 Additions to other comprehensive (loss) income: Foreign currency translation adjustments, net of related tax provisions of $ 993 in fiscal 2021 and $ 241 in fiscal 2020 ( 25,568 ) 70,785 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 5,440 4,418 Amortization of loss on cash flow hedge, net of related tax provisions of $ 75 in fiscal 2021 and $ 75 in fiscal 2020 208 208 Other comprehensive (loss) income, net of tax ( 19,920 ) 75,411 Total comprehensive income $ 846,736 $ 903,674 Thirty-Nine Weeks Ended October 31, 2020 November 2, 2019 Net (loss) income $ ( 235,053 ) $ 2,287,403 Additions to other comprehensive (loss): Foreign currency translation adjustments, net of related tax benefit of $ 493 in fiscal 2021 and $ 711 in fiscal 2020 ( 85,348 ) ( 20,119 ) Reclassifications from other comprehensive (loss) to net (loss) income: 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 624 624 Other comprehensive (loss), net of tax ( 69,690 ) ( 7,093 ) Total comprehensive (loss) income $ ( 304,743 ) $ 2,280,310 The accompanying notes are an integral part of the unaudited consolidated financial statements. 4 THE TJX COMPANIES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) IN THOUSANDS, EXCEPT SHARE DATA October 31, 2020 February 1, 2020 November 2, 2019 ASSETS Current assets: Cash and cash equivalents $ 10,581,993 $ 3,216,752 $ 2,060,176 Accounts receivable, net 463,732 386,261 442,883 Merchandise inventories 4,997,506 4,872,592 6,274,778 Prepaid expenses and other current assets 425,027 368,048 414,376 Federal, state and foreign income taxes recoverable 185,648 46,969 182,402 Total current assets 16,653,906 8,890,622 9,374,615 Net property at cost 5,004,774 5,325,048 5,250,971 Non-current deferred income taxes, net 56,132 12,132 5,484 Operating lease right of use assets 9,028,696 9,060,332 9,069,146 Goodwill 96,733 95,546 96,313 Other assets 725,259 761,323 492,175 TOTAL ASSETS $ 31,565,500 $ 24,145,003 $ 24,288,704 LIABILITIES Current liabilities: Accounts payable $ 6,142,547 $ 2,672,557 $ 3,447,443 Accrued expenses and other current liabilities 3,228,618 3,041,774 2,806,225 Current portion of operating lease liabilities 1,650,154 1,411,216 1,412,262 Current portion of long-term debt 749,446 — — Federal, state and foreign income taxes payable 46,429 24,700 21,214 Total current liabilities 11,817,194 7,150,247 7,687,144 Other long-term liabilities 860,497 851,116 797,573 Non-current deferred income taxes, net 78,007 142,170 203,515 Long-term operating lease liabilities 7,795,838 7,816,633 7,822,067 Long-term debt 5,447,208 2,236,625 2,235,873 Commitments and contingencies (See Note L) SHAREHOLDERS’ EQUITY Preferred stock, authorized 5,000,000 shares, par value $ 1 , no shares issued — — — Common stock, authorized 1,800,000,000 shares, par value $ 1 , issued and outstanding 1,200,631,186 ; 1,199,099,768 and 1,203,183,703 respectively 1,200,631 1,199,100 1,203,184 Additional paid-in capital 126,413 — — Accumulated other comprehensive loss ( 742,861 ) ( 673,171 ) ( 637,414 ) Retained earnings 4,982,573 5,422,283 4,976,762 Total shareholders’ equity 5,566,756 5,948,212 5,542,532 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 31,565,500 $ 24,145,003 $ 24,288,704 The accompanying notes are an integral part of the unaudited consolidated financial statements. 5 THE TJX COMPANIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) IN THOUSANDS Thirty-Nine Weeks Ended October 31, 2020 November 2, 2019 Cash flows from operating activities: Net (loss) income $ ( 235,053 ) $ 2,287,403 Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization 658,497 647,389 Loss on property disposals and impairment charges 38,970 6,253 Deferred income tax (benefit) provision ( 112,965 ) 42,120 Share-based compensation 58,909 86,590 Changes in assets and liabilities: (Increase) in accounts receivable ( 76,604 ) ( 99,476 ) (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 ) 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 Other, net 10,697 ( 3,053 ) Net cash provided by operating activities 4,276,760 1,873,528 Cash flows from investing activities: Property additions ( 433,604 ) ( 992,712 ) Purchase of investments ( 24,468 ) ( 24,052 ) Sales and maturities of investments 13,894 11,590 Other — 7,419 Net cash (used in) investing activities ( 444,178 ) ( 997,755 ) Cash flows from financing activities: 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 ) — Cash payments for repurchase of common stock ( 201,500 ) ( 1,190,390 ) Cash dividends paid ( 278,250 ) ( 795,092 ) Proceeds from issuance of common stock 87,721 175,285 Cash payments of employee tax withholdings for performance based stock awards ( 21,843 ) ( 23,297 ) Net cash provided by (used in) financing activities 3,540,708 ( 1,833,494 ) Effect of exchange rate changes on cash ( 8,049 ) ( 12,332 ) Net increase (decrease) in cash and cash equivalents 7,365,241 ( 970,053 ) Cash and cash equivalents at beginning of year 3,216,752 3,030,229 Cash and cash equivalents at end of period $ 10,581,993 $ 2,060,176 The accompanying notes are an integral part of the unaudited consolidated financial statements. 6 THE TJX COMPANIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED) IN THOUSANDS Thirteen Weeks Ended Common Stock Shares Par Value $ 1 Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total 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, October 31, 2020 1,200,631 $ 1,200,631 $ 126,413 $ ( 742,861 ) $ 4,982,573 $ 5,566,756 Thirteen Weeks Ended Common Stock Shares Par Value $ 1 Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total 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 income, net of tax — — — 75,411 — 75,411 Cash dividends declared on common stock — — — — ( 277,115 ) ( 277,115 ) Recognition of share-based compensation — — 31,190 — — 31,190 Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 3,075 3,075 69,735 — — 72,810 Common stock repurchased and retired ( 8,824 ) ( 8,824 ) ( 100,925 ) — ( 380,890 ) ( 490,639 ) 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. 7 THE TJX COMPANIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED) IN THOUSANDS Thirty-Nine Weeks Ended Common Stock Shares Par Value $ 1 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 — — — — ( 235,053 ) ( 235,053 ) Other comprehensive (loss), net of tax — — — ( 69,690 ) — ( 69,690 ) Recognition (reversal) of share-based compensation — — 90,744 — ( 31,835 ) 58,909 Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 4,918 4,918 61,384 — ( 424 ) 65,878 Common stock repurchased and retired ( 3,387 ) ( 3,387 ) ( 25,715 ) — ( 172,398 ) ( 201,500 ) Balance, October 31, 2020 1,200,631 $ 1,200,631 $ 126,413 $ ( 742,861 ) $ 4,982,573 $ 5,566,756 Thirty-Nine Weeks Ended Common Stock Shares Par Value $ 1 Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Balance February 2, 2019 1,217,183 $ 1,217,183 $ — $ ( 630,321 ) $ 4,461,744 $ 5,048,606 Net income — — — — 2,287,403 2,287,403 Cumulative effect of accounting change — — — — 403 403 Other comprehensive (loss), net of tax — — — ( 7,093 ) — ( 7,093 ) Cash dividends declared on common stock — — — — ( 834,975 ) ( 834,975 ) Recognition of share-based compensation — — 86,590 — — 86,590 Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings 8,169 8,169 143,819 — — 151,988 Common stock repurchased and retired ( 22,168 ) ( 22,168 ) ( 230,409 ) — ( 937,813 ) ( 1,190,390 ) 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. 8 THE TJX COMPANIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The Consolidated Financial Statements and Notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These Consolidated Financial Statements and Notes thereto are unaudited and, in the opinion of management, reflect all normal recurring adjustments, accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by The TJX Companies, Inc. (together with its subsidiaries, “TJX”) for a fair statement of its Consolidated Financial Statements for the periods reported, all in conformity with GAAP consistently applied. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 (“fiscal 2020”). 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. 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. Fiscal Year TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The current fiscal year ends January 30, 2021 (“fiscal 2021”) and is a 52-week fiscal year. Fiscal 2020 was also a 52-week fiscal year. Use of Estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. TJX considers its accounting policies relating to 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 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. Deferred Gift Card Revenue The following table presents deferred gift card revenue activity: In thousands October 31, 2020 November 2, 2019 Balance, beginning of year $ 500,844 $ 450,302 Deferred revenue 650,956 1,104,694 Effect of exchange rates changes on deferred revenue ( 667 ) ( 636 ) Revenue recognized ( 685,601 ) ( 1,149,613 ) Balance, end of period $ 465,532 $ 404,747 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. As such, the revenue recognized consists of gift cards that were part of the deferred revenue balance at the beginning of the period as well as gift cards that were issued during the period. 9 Equity Investment On November 18, 2019, the Company, through a wholly owned subsidiary, completed an investment of $ 225 million, excluding acquisition costs, for a 25 % ownership stake in privately held Familia, an established, off-price apparel and home fashions retailer with more than 275 stores throughout Russia. 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 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. dollars. The Company amortizes the tradename and customer relationships over their useful lives of 10 and 7 years, respectively, using the straight-line method. 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. 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 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 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 and we expect Familia to have adequate liquidity to continue operations notwithstanding the COVID-19 pandemic. Leases 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, 2019 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 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. Recently Adopted Accounting Standards Simplified Accounting for Income Taxes In December 2019, the Financial Accounting Standards Board (“FASB”) issued guidance related to simplified accounting for income taxes. The new standard simplifies accounting for income taxes by removing certain exceptions to the general principals in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company reviewed the provisions of this standard and determined that most of them do not apply to TJX. 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 nine months of fiscal 2021. From time to time, the FASB or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we have reviewed the guidance and have determined that they will not apply or are not expected to be material to our Consolidated Financial Statements upon adoption and therefore are not disclosed. 10 Note B. Impact of the COVID-19 Pandemic 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. 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 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. 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. 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. 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 additional information on cash flows for operating leases see Note A—Basis of Presentation and Summary of Significant Accounting Policies. 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 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. 11 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. 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 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. – Incremental cleaning supplies and personal protective equipment for our Associates. Note C. Property at Cost The following table presents the components of property at cost: In thousands October 31, 2020 February 1, 2020 November 2, 2019 Land and buildings $ 1,495,448 $ 1,426,222 $ 1,384,809 Leasehold costs and improvements 3,611,903 3,541,413 3,506,784 Furniture, fixtures and equipment 6,406,050 6,404,643 6,236,535 Total property at cost $ 11,513,401 $ 11,372,278 $ 11,128,128 Less: accumulated depreciation and amortization 6,508,627 6,047,230 5,877,157 Net property at cost $ 5,004,774 $ 5,325,048 $ 5,250,971 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 . 12 Note D. 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 nine months ended October 31, 2020: In thousands Foreign Currency Translation Deferred Benefit Costs Cash Flow Hedge on Debt Accumulated Other Comprehensive (Loss) Income Balance, February 2, 2019 $ ( 453,177 ) $ ( 175,745 ) $ ( 1,399 ) $ ( 630,321 ) Additions to other comprehensive loss: Foreign currency translation adjustments (net of taxes of $ 1,189 ) ( 3,943 ) — — ( 3,943 ) Recognition of net gains/losses on benefit obligations (net of taxes of $ 20,489 ) — ( 56,275 ) — ( 56,275 ) Reclassifications from other comprehensive loss to net income: Amortization of loss on cash flow hedge (net of taxes of $ 303 ) — — 831 831 Amortization of prior service cost and deferred gains/losses (net of taxes of $ 6,019 ) — 16,537 — 16,537 Balance, February 1, 2020 $ ( 457,120 ) $ ( 215,483 ) $ ( 568 ) $ ( 673,171 ) Additions to other comprehensive loss: Foreign currency translation adjustments (net of taxes of $ 493 ) ( 85,348 ) — — ( 85,348 ) Reclassifications from other comprehensive loss to net (loss): Amortization of loss on cash flow hedge (net of taxes of $ 227 ) — — 624 624 Amortization of prior service cost and deferred gains/losses (net of taxes of $ 5,473 ) — 15,034 — 15,034 Balance, October 31, 2020 $ ( 542,468 ) $ ( 200,449 ) $ 56 $ ( 742,861 ) Note E. Capital Stock and Earnings (Loss) Per Share Capital Stock 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. 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 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. In February 2020, the Company announced that its Board of Directors had approved in January 2020 a new stock repurchase program that authorizes the repurchase of up to an additional $ 1.5 billion of TJX common stock from time to time. 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 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. 13 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, 2019 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 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 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 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. Note F. Financial Instruments As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments when and to the extent deemed appropriate. TJX does not use derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the Consolidated Balance Sheets and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of other comprehensive (loss) income or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged. 14 Diesel Fuel Contracts TJX hedges portions of its estimated notional diesel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. 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 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. Foreign Currency Contracts 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 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 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. All merchandise is purchased centrally in the U.K. and then shipped and billed to the retail entities in other countries. This intercompany billing to TJX’s European businesses’ Euro denominated operations creates exposure to the central buying entity for changes in the exchange rate between the Euro and British Pound. The inflow of Euros to the central buying entity provides a natural hedge for merchandise purchased from third-party vendors that is denominated in Euros. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this exposure. TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt and intercompany interest payable. The changes in fair value of these contracts are recorded in selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. 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. 15 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 Contract Rate Balance Sheet Location Current Asset U.S.$ Current (Liability) U.S.$ Net Fair Value in U.S.$ at October 31, 2020 Fair value hedges: Intercompany balances, primarily debt and related interest: 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$ 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 ) Economic hedges for which hedge accounting was not elected: Diesel fuel contracts Fixed on 2.9 M – 3.5 M gal per month Float on 2.9 M – 3.5 M gal per month N/A (Accrued Exp) — ( 15,078 ) ( 15,078 ) Merchandise purchase commitments: C$ 637,508 U.S.$ 481,000 0.7545 Prepaid Exp / (Accrued Exp) 3,328 ( 1,152 ) 2,176 £ 415,653 U.S.$ 533,150 1.2827 Prepaid Exp / (Accrued Exp) 1,050 ( 6,768 ) ( 5,718 ) 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.$ 53,605 € 45,600 0.8507 (Accrued Exp) — ( 394 ) ( 394 ) Total fair value of derivative financial instruments $ 9,111 $ ( 35,454 ) $ ( 26,343 ) 16 The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at February 1, 2020: In thousands Pay Receive Blended Contract Rate Balance Sheet Location Current Asset U.S.$ Current (Liability) U.S.$ Net Fair Value in U.S.$ at February 1, 2020 Fair value hedges: Intercompany balances, primarily debt and related interest: zł 45,000 £ 8,930 0.1984 Prepaid Exp $ 270 $ — $ 270 A$ 50,000 U.S.$ 33,911 0.6782 Prepaid Exp 275 — 275 U.S.$ 72,475 £ 55,000 0.7589 Prepaid Exp 743 — 743 Economic hedges for which hedge accounting was not elected: Diesel fuel contracts Fixed on 2.9 M – 3.5 M gal per month Float on 2.9 M– 3.5 M gal per month N/A (Accrued Exp) — ( 9,927 ) ( 9,927 ) Intercompany billings in TJX International, primarily merchandise related: € 58,700 £ 49,848 0.8492 Prepaid Exp 655 — 655 Merchandise purchase commitments: C$ 609,340 U.S.$ 463,200 0.7602 Prepaid Exp / (Accrued Exp) 2,877 ( 207 ) 2,670 C$ 37,051 € 25,200 0.6801 Prepaid Exp / (Accrued Exp) 61 ( 44 ) 17 £ 265,653 U.S.$ 341,880 1.2869 Prepaid Exp / (Accrued Exp) 11 ( 9,792 ) ( 9,781 ) zł 362,700 £ 72,217 0.1991 Prepaid Exp 1,903 — 1,903 A$ 29,400 U.S.$ 20,151 0.6854 Prepaid Exp 435 — 435 U.S.$ 49,849 € 44,635 0.8954 Prepaid Exp / (Accrued Exp) 10 ( 235 ) ( 225 ) Total fair value of derivative financial instruments $ 7,240 $ ( 20,205 ) $ ( 12,965 ) 17 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 Contract Rate Balance Sheet Location Current Asset U.S.$ Current (Liability) U.S.$ Net Fair Value in U.S.$ at November 2, 2019 Fair value hedges: Intercompany balances, primarily debt and related interest: 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 ) Economic hedges for which hedge accounting was not elected: Diesel fuel contracts Fixed on 2.7 M – 3.3 M gal per month Float on 2.7 M – 3.3 M gal per month N/A (Accrued Exp) — ( 3,878 ) ( 3,878 ) Intercompany billings in TJX International, primarily merchandise related: € 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$ 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$ 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 ) 18 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 Derivative Thirteen Weeks Ended Thirty-Nine Weeks Ended In thousands October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019 Fair value hedges: Intercompany balances, primarily debt and related interest Selling, general and administrative expenses $ ( 2,086 ) $ 7,238 $ ( 45,319 ) $ 526 Economic hedges for which hedge accounting was not elected: Intercompany receivable Selling, general and administrative expenses — — — 3,257 Diesel fuel contracts Cost of sales, including buying and occupancy costs ( 7,059 ) 529 ( 19,790 ) ( 2,103 ) Intercompany billings in TJX International, primarily merchandise related Cost of sales, including buying and occupancy costs ( 310 ) 5,144 ( 4,201 ) 944 International lease liabilities Cost of sales, including buying and occupancy costs — 301 — ( 1,113 ) Merchandise purchase commitments Cost of sales, including buying and occupancy costs 7,302 ( 18,622 ) 41,629 8,536 (Loss) gain recognized in income / (loss) $ ( 2,153 ) $ ( 5,410 ) $ ( 27,681 ) $ 10,047 Note G. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date or “exit price.” The inputs used to measure fair value are generally classified into the following hierarchy: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability Level 3: Unobservable inputs for the asset or liability The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis: In thousands October 31, 2020 February 1, 2020 November 2, 2019 Level 1 Assets: Executive Savings Plan investments $ 327,833 $ 305,777 $ 289,496 Level 2 Assets: Foreign currency exchange contracts 9,111 7,240 8,358 Liabilities: Foreign currency exchange contracts $ 20,376 $ 10,278 $ 19,429 Diesel fuel contracts 15,078 9,927 3,878 Investments designed to meet obligations under the Executive Savings Plan are invested in registered investment companies traded in active markets and are recorded at unadjusted quoted prices. 19 Foreign currency exchange contracts and diesel fuel contracts are valued using broker quotations, which include observable market information. 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. Where independent pricing services provide fair values, TJX obtains an understanding of the methods used in pricing. As such, these instruments are classified within Level 2. The fair value of TJX’s general corporate debt was estimated by obtaining market quotes given the trading levels of other bonds of the same general issuer type and market perceived credit quality. These inputs are considered to be Level 2. 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 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. TJX’s cash equivalents are stated at cost, which approximates fair value due to the short maturities of these instruments. Note H. Segment Information TJX operates four main business segments. The Marmaxx segment (T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and the HomeGoods segment (HomeGoods and Homesense) both operate in the United States, the TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and the TJX International segment operates T.K. Maxx, Homesense and tkmaxx.com in Europe and T.K. Maxx in Australia. In addition to our four main business segments, Sierra operates sierra.com and retail stores in the U.S. The results of Sierra are included in the Marmaxx segment. All of TJX’s stores, with the exception of HomeGoods and HomeSense, sell family apparel and home fashions. HomeGoods and HomeSense offer home fashions. TJX evaluates the performance of its segments based on “segment profit or loss,” which it defines as pre-tax income or loss before general corporate expense, interest expense, net and certain separately disclosed unusual or infrequent items. “Segment profit or loss,” as defined by TJX, may not be comparable to similarly titled measures used by other entities. 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 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 Thirty-Nine Weeks Ended In thousands October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019 Net sales: In the United States: Marmaxx $ 5,784,753 $ 6,353,987 $ 12,441,872 $ 18,262,444 HomeGoods 1,875,641 1,582,411 3,871,479 4,404,112 TJX Canada 1,027,828 1,081,522 1,999,382 2,896,717 TJX International 1,429,067 1,433,414 2,881,019 3,947,242 Total net sales $ 10,117,289 $ 10,451,334 $ 21,193,752 $ 29,510,515 Segment profit (loss): In the United States: Marmaxx $ 665,070 $ 820,430 $ 55,872 $ 2,471,622 HomeGoods 291,209 173,212 235,082 438,939 TJX Canada 176,520 170,264 101,304 385,513 TJX International 86,576 99,397 ( 303,303 ) 178,343 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 Income (loss) before income taxes $ 1,015,992 $ 1,122,119 $ ( 418,875 ) $ 3,079,908 20 Note I. Pension Plans and Other Retirement Benefits Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown: Funded Plan Unfunded Plan Thirteen Weeks Ended Thirteen Weeks Ended In thousands October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019 Service cost $ 12,512 $ 11,415 $ 404 $ 440 Interest cost 12,620 13,149 860 871 Expected return on plan assets ( 22,264 ) ( 18,630 ) — — Amortization of net actuarial loss and prior service cost 6,028 5,556 1,394 471 Total expense $ 8,896 $ 11,490 $ 2,658 $ 1,782 Funded Plan Unfunded Plan Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended In thousands October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019 Service cost $ 37,592 $ 33,513 $ 1,822 $ 1,544 Interest cost 37,658 39,129 2,462 2,805 Expected return on plan assets ( 66,748 ) ( 55,606 ) — — Amortization of net actuarial loss and prior service cost 17,046 14,574 3,462 2,343 Total expense $ 25,548 $ 31,610 $ 7,746 $ 6,692 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. We do not anticipate any required funding in fiscal 2021 for the funded plan. 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 Income (Loss), net of related tax effects, for the periods presented. 21 Note J. Long-Term Debt and Credit Lines 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 October 31, 2020 February 1, 2020 November 2, 2019 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 $ 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 $ 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 $ 4,461 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 $ 4,352 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 $ 474 at October 31, 2020) 749,526 — — 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 $ 4,333 at October 31, 2020) 745,667 — — Total debt 6,234,754 2,244,844 2,244,628 Current maturities of long-term debt, net of debt issuance costs ( 749,446 ) — — Debt issuance costs ( 38,100 ) ( 8,219 ) ( 8,755 ) 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 3.500 % 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. 22 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. 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. 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. Note K. Income Taxes 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. federal income tax as well as income tax in multiple state, local and foreign jurisdictions. In the U.S. and India, fiscal years through 2010 are no longer subject to examination. In all other jurisdictions, fiscal years through 2011 are no longer subject to examination. 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 $ 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. During the next 12 months, it is reasonably possible that tax examinations of prior years’ tax returns or judicial or administrative proceedings that reflect such positions taken by TJX may be finalized. As a result, the total net amount of unrecognized tax benefits may decrease, which would reduce the provision for taxes on earnings, by a range of zero to $ 38 million. 23 Note L. Contingent Obligations and Contingencies Contingent Obligations TJX has contingent obligations on leases, for which it was a lessee or guarantor, which were assigned to third parties without TJX being released by the landlords. We have had numerous leases from our former operations where our guarantee required us to satisfy some of these lease obligations and we established appropriate reserves. We may be contingently liable on up to eight leases of former TJX businesses, for which we believe the likelihood of future liability to TJX is remote. 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 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. 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. These obligations are often limited in time and amount. There are no amounts reflected in our Consolidated Balance Sheets with respect to these contingent obligations. Contingencies TJX is subject to certain legal proceedings, lawsuits, disputes and claims that arise from time to time in the ordinary course of our business. In addition, TJX is a defendant in several lawsuits filed in federal and state courts brought as putative class or collective actions on behalf of various groups of current and former salaried and hourly Associates in the U.S. The lawsuits allege violations of the Fair Labor Standards Act and of state wage and hour and other labor statutes. The lawsuits are in various procedural stages and seek monetary damages, injunctive relief and attorneys’ fees. In connection with ongoing litigation, an immaterial amount has been accrued in the accompanying Consolidated Financial Statements. Note M. 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. 24