FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

þ Quarterly Report under Section 13 and 15(d) Of the Securities Exchange Act of 1934

For Quarter Ended April 30, 2005
Commission file number 1-4908

The TJX Companies, Inc.

(508) 390-1000
(Registrant’s telephone number, including area code)

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 þ. No o.

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act).                                                                         YES þ      NO o

The number of shares of Registrant’s common stock outstanding as of April 30, 2005: 470,431,454

Table of Contents

PART I FINANCIAL INFORMATION

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

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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES

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

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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES

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

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NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.	The results for the first three months are not necessarily indicative of results for the full fiscal year, because 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.
2.	The consolidated interim financial statements are unaudited and, in the opinion of management, reflect all normal recurring adjustments, the use of retail statistics, and accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by TJX for a fair presentation of its financial statements for the periods reported, all in accordance with generally accepted accounting principles and practices consistently applied. The consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements, including notes thereto, contained in TJX’s Annual Report on Form 10-K for the year ended January 29, 2005.
3.	TJX’s cash payments for interest and income taxes are as follows:

4.

We have a reserve for potential future obligations of discontinued operations that relates primarily to real estate leases of former TJX businesses. The reserve reflects TJX’s estimation of its cost for claims that have been, or are likely to be, made against TJX for liability as an original lessee or guarantor of the leases, after mitigation of the number and cost of lease obligations.

At April 30, 2005, substantially all leases of discontinued operations that were rejected in bankruptcy and for which the landlords asserted liability against TJX had been resolved. It is possible that there will be future costs for leases from these discontinued operations that were not terminated or had not expired. We do not expect to incur any material costs related to our discontinued operations in excess of our reserve. The reserve balance amounted to $12.6 million as of April 30, 2005 and $15.3 million as of May 1, 2004.

During the first quarter ended April 30, 2005, we received a $2.2 million creditor recovery in the bankruptcy of one of our discontinued operations. The receipt of these proceeds was offset by a $2.2 million addition to our reserve. This recovery was in addition to a $2.3 million creditor recovery in this bankruptcy received in the quarter ended July 31, 2004. We expect to receive some additional creditor recovery in this bankruptcy, but the amount has not yet been determined.

We may also be contingently liable on up to 18 leases of BJ’s Wholesale Club, Inc. for which BJ’s Wholesale Club is primarily liable. Our reserve for discontinued operations does not reflect these leases, because we believe that the likelihood of any future liability to us with respect to these leases is remote due to the current financial condition of BJ’s Wholesale Club.

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5.	TJX’s comprehensive income for the periods ended April 30, 2005 and May 1, 2004 is presented below:

6.	The computation of basic and diluted earnings per share is as follows:

The weighted average common shares for the diluted earnings per share calculation exclude the incremental effect related to outstanding stock options when the exercise price of the option is in excess of the related period’s average price of TJX’s common stock. There were 10,000 such options excluded for the quarter ended April 30, 2005, and no such options were excluded for the quarter ended May 1, 2004. The 16.9 million shares attributable to the zero coupon convertible debt are included in the diluted earnings per share calculation in all periods presented in accordance with Emerging Issues Task Force Issue No. 04-08, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share.” This accounting change was implemented in the fourth quarter of the fiscal year ended January 29, 2005 and was applied retroactively.

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7.	During the first quarter ended April 30, 2005, TJX repurchased and retired 11.0 million shares of its common stock at a cost of $262.9 million. From the inception of the $1 billion stock repurchase program in May 2004 through April 30, 2005, TJX repurchased 28.7 million shares at a cost of $669.4 million.
8.	TJX evaluates the performance of its segments based on “segment profit or loss,” which TJX defines as pre-tax income before general corporate expense and interest. “Segment profit or loss” as defined by TJX may not be comparable to similarly titled measures used by other entities. In addition, this measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity. Presented below is financial information on TJX’s business segments (in thousands):

9.

TJX has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” and continues to apply the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for compensation expense under our stock option plan. We grant options at fair market value on the date of the grant; accordingly, no compensation expense has been recognized for any stock options issued. Compensation expense for stock-based compensation determined in accordance with SFAS No. 123, net of related income tax effect, would have amounted to $14.5 million and $15.1 million for the fiscal quarters ended April 30, 2005 and May 1, 2004, respectively.

Presented below are the unaudited pro forma net income and related earnings per share showing the effect that stock-based compensation expense, determined in accordance with SFAS No. 123, would have on reported results (dollars in thousands except per share amounts):

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In December 2004, the FASB issued SFAS No. 123R which will require that the cost of equity-based awards be recognized in the financial statements. The effective date of the new standard has been delayed by the Securities and Exchange Commission and compliance with the new standard will be required by the Company in the first reporting period of the fiscal year ending in January 2007. The Company is in the process of evaluating the new standard, including the timing of its implementation.

10.	The following represents the net periodic pension and postretirement benefit costs and related components for the thirteen weeks ended April 30, 2005 and May 1, 2004 (in thousands):

TJX made voluntary funding contributions to its funded pension plan in the fiscal years ended in January 2005 and 2004, and we do not anticipate any contributions to that plan will be required for our current fiscal year.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 provides a federal subsidy to sponsors of retiree health care benefits if the benefit they provide is at least actuarially equivalent to Medicare Part D. The FASB issued a FASB Staff Position (FSP FAS 106-2) entitled “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” The Company has determined that its plan is not actuarially equivalent to Medicare Part D, and accordingly, the above Postretirement medical cost does not reflect any federal subsidy.

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11.	At April 30, 2005, TJX had interest rate swap agreements outstanding with a notional amount of $100 million. The agreements entitle TJX to receive biannual payments of interest at a fixed rate of 7.45% and pay a floating rate of interest indexed to the six-month LIBOR rate with no exchange of the underlying notional amounts.
	The interest rate swap agreements converted a portion of TJX’s long-term debt from a fixed rate obligation to a floating rate obligation. TJX has designated the interest rate swaps as a fair value hedge of the related long-term debt. The fair value of the swap agreements outstanding at April 30, 2005, excluding the estimated net interest receivable, was a liability of $3.6 million. The valuation of the derivative instruments results in an offsetting fair value adjustment to the debt hedged; accordingly, long-term debt has been reduced by $3.6 million.
12.	In May 2005, we entered into a $500 million four-year revolving credit facility and a $500 million five-year revolving credit facility. These arrangements replaced our $370 million five-year revolving credit facility entered into in March 2002 and our $330 million 364-day revolving credit facility, which had been extended through July 15, 2005. The new agreements have no compensating balance requirements and have various covenants including a requirement of a specified ratio of debt to earnings. These agreements serve as back up to our commercial paper program. At April 30, 2005, we had $35 million of commercial paper outstanding. Combined availability under our prior revolving credit facilities at April 30, 2005 and May 1, 2004 was $665 million and $700 million, respectively.
13.	Effective with the third quarter ended October 30, 2004, we began to accrue for inventory purchase obligations at the time the inventory is shipped rather than when received and accepted by TJX. As a result, merchandise inventory and accounts payable on our balance sheets reflect an accrual for in-transit inventory of $179.6 million at April 30, 2005 and $236.9 million at January 29, 2005. Periods ended prior to October 30, 2004 have not been adjusted for this change. This accrual for inventory in transit affects only the reported levels of inventory and accounts payable on the balance sheet, and has no impact on our operating results, cash flows, liquidity or shareholders’ equity.
14.	Accrued expenses and other current liabilities as of April 30, 2005 include $172 million of checks outstanding in excess of the book balance in certain cash accounts. These are zero balance cash accounts maintained with certain financial institutions that we fund as checks clear and for which no right of offset exists.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

The Thirteen Weeks Ended
April 30, 2005
Versus the Thirteen Weeks Ended May 1, 2004

Results of Operations

Overview: Highlights of our financial performance for the first quarter ended April 30, 2005, include the following:

	•	Net sales increased 9% to $3.7 billion as compared to last year’s first quarter. We continued to grow our business, with stores in operation and total selling square footage at April 30, 2005 each up 8% from a year ago.
	•	Consolidated same store sales increased 3% and were negatively impacted by unseasonably cool weather throughout much of the U.S. and Canada during March and part of April.
	•	Our first quarter pre-tax margin (the ratio of pre-tax income to net sales) declined from 8.2% last year to 6.6% in the current year. The decline was driven by a reduction in merchandise margins, primarily due to higher markdowns at Marmaxx and Winners, as well as the de-levering impact of low single digit increases or a reduction in same store sales at divisions other than Marmaxx.
	•	Net income was $149 million for the quarter, 11% below last year’s first quarter. Diluted earnings per share, which reflect the benefits of our stock repurchase program, was $.30 per share for the first quarter, 6% below last year.