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Financing Activities:In
December 1999, TJX issued $200 million of 7.45% unsecured notes
resulting in net proceeds of $198.1 million. The proceeds are
being used for general corporate purposes and in support of
our ongoing stock repurchase program. The strong cash flows
from operations exceeded our needs in fiscal 1999 and fiscal
1998, thus no additional borrowings were required in those years.
Financing activities include principal payments on long-term
debt of $695,000 in fiscal 2000, $23.4 million in fiscal 1999
and $27.2 million in fiscal 1998. Fiscal 1998 principal payments
included $8.5 million to fully retire our 91/2% sinking fund
debentures.
At year-end, TJX had a $750 million,
multi-year, stock repurchase program in effect under which it
had repurchased 27.7 million shares at an aggregate cost of
$696.8 million through January 29, 2000. Subsequent to year-end,
TJX repurchased an additional 2.7 million shares, completing
the $750 million stock repurchase program and announced a new
multi-year, $1 billion stock repurchase program. In addition,
during fiscal 1998 and fiscal 1999, TJX also repurchased stock
under two separate $250 million stock repurchase programs. TJX
has had cash expenditures, under all of its programs, of $604.6
million, $337.7 million and $245.2 million in fiscal 2000, 1999
and 1998, respectively, funded primarily by excess cash generated
from operations. The total common shares repurchased (adjusted
for stock splits) amounted to 23.6 million shares in fiscal
2000, 15.6 million in fiscal 1999 and 17.1 million in fiscal
1998.
TJX declared quarterly dividends on
its common stock of $.035 per share in fiscal 2000, $.03 per
share in fiscal 1999 and $.025 per share in fiscal 1998. Cash
payments for dividends on its common stock totaled $42.7 million
in fiscal 2000, $36.5 million in fiscal 1999 and $29.4 million
in fiscal 1998. Prior to fiscal 2000, TJX also had dividend
requirements on all of its outstanding preferred stock that
resulted in cash outlays of $3.9 million in fiscal 1999 and
$12.1 million in fiscal 1998. During fiscal 1998, 770,200 shares
of the Series E preferred stock were voluntarily converted into
8.3 million shares of common stock and 2,500 shares were repurchased.
During fiscal 1999, 357,300 shares of Series E preferred stock
were voluntarily converted into 6.7 million shares of common
stock. On November 18, 1998 the remaining 370,000 outstanding
shares of the Series E preferred stock were mandatorily converted
into 8.0 million shares of common stock in accordance with its
terms. Inducement fees of $130,000 and $3.8 million were paid
on the Series E voluntary conversions in fiscal 1999 and fiscal
1998, respectively. The inducement fees are classified as preferred
dividends and were paid through the respective conversion dates.
Financing activities for fiscal 2000, 1999 and 1998 also include
proceeds of $21.0 million, $27.8 million and $15.5 million,
respectively, from the exercise of employee stock options. These
proceeds include $11.7 million, $13.8 million and $6.1 million
for related tax benefits in fiscal 2000, 1999 and fiscal 1998,
respectively.
TJX has traditionally funded its seasonal
merchandise requirements through cash generated from operations,
short-term bank borrowings and the issuance of short-term commercial
paper. TJX has the ability to borrow up to $500 million under
a five-year revolving credit facility into which it entered
in September 1997. This agreement replaced the agreement into
which it entered at the time of the Marshalls acquisition and
contains certain financial covenants, including a fixed charge
coverage ratio and a leverage ratio. In fiscal 1998, TJX recorded
an extraordinary charge of $1.8 million, or $.01 per share,
on the write-off of deferred financing costs associated with
the former agreement. As of January 29, 2000, the entire $500
million was available for use. The maximum amount outstanding
under the agreement during fiscal 2000 was $108 million, with
no borrowings under this agreement during fiscal 1999 or fiscal
1998. TJX also has C$40 million of credit lines for its Canadian
operations, all of which were available for use as of January
29, 2000. The maximum amount outstanding under its Canadian
credit line during fiscal 2000, 1999 and 1998 was C$19.2 million,
C$15.6 million and C$12.1 million, respectively. TJX management
believes that its current credit facilities are more than adequate
to meet its operating needs. See Notes C and G to the consolidated
financial statements for further information regarding our long-term
debt, capital stock transactions and available financing sources.
TJX is exposed to foreign currency exchange
rate risk on its investment in its Canadian (Winners) and European
(T.K. Maxx) operations. As more fully described in Note D to
the consolidated financial statements, we hedge a significant
portion of our net investment and certain merchandise commitments
in these operations with derivative financial instruments. TJX
utilizes currency forward and swap contracts, designed to offset
the gains or losses in the underlying exposures. The contracts
are executed with creditworthy banks and are denominated in
currencies of major industrial countries. TJX does not enter
into derivatives for speculative trading purposes.
The Year 200 Issue
As discussed in TJXs prior filings,
we have devoted significant effort in addressing the Year 2000
(Y2K) issue, as it related to our operations. We
did not incur any significant Y2K problems in our information
technology systems or our non-information technology systems.
Our systems and applications are effectively processing information
in order to support ongoing operations in the year 2000 and
beyond. While we believe we have effectively addressed the Y2K
issue, there can be no assurance that all the issues have been
addressed, or that third parties with whom we conduct business
will not experience Y2K problems in the future. As of January
29, 2000, TJX had incurred $12 million of costs related to Y2K
issues and does not anticipate any significant expenditures
on this issue going forward. |
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