UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(mark one)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended October 31, 2020

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number 1-4908 

The TJX Companies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	04-2207613
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
770 Cochituate Road Framingham, Massachusetts	01701
(Address of principal executive offices)	(Zip Code)

(508) 390-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	TJX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ☒

The number of shares of registrant’s common stock outstanding as of October 31, 2020: 1,200,631,186

The TJX Companies, Inc.

TABLE OF CONTENTS

PART I
ITEM 1. Financial Statements	3
Consolidated Statements of Income (Loss)	3
Consolidated Statements of Comprehensive (Loss) Income	4
Consolidated Balance Sheets	5
Consolidated Statements of Cash Flows	6
Consolidated Statements of Shareholders' Equity	7
Notes To Consolidated Financial Statements	9
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	38
ITEM 4. Controls and Procedures	39
PART II
ITEM 1. Legal Proceedings	40
ITEM 1A. Risk Factors	40
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
ITEM 6. Exhibits	41
SIGNATURES	42

2

PART I - FINANCIAL INFORMATION

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.

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As a result of the COVID-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 approximately $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 by 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 discretionary 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.

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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.

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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.

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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.

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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 2.9M – 3.5M gal per month		Float on 2.9M – 3.5M 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)

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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	£