TJX Companies Annual Report 2008

Plain-text annual report

tjx p o s i t i o n e d f o r t o d ay a n d t h e f u t u r e t h e t j x c o m p a n i e s , i n c . 2 0 0 8 a n n u a l r e p o r t The TJX Companies, Inc., the largest off-price apparel and home fashions retailer in the United States and worldwide, is a Fortune 200 company operating under eight nameplates with over 2,600 stores and approximately 133,000 Associates. At 2008’s year-end, TJX’s off-price concepts included T.J. Maxx, Marshalls, HomeGoods, and A.J. Wright, in the U.S., Winners and HomeSense in Canada, and T.K. Maxx and HomeSense in Europe. Our off-price mission is to deliver a rapidly changing assortment of quality, brand name merchandise at prices that are 20-60% less than department and specialty store regular prices, every day. Our core target customer is a middle- to upper-middle- income shopper, who is fashion and value conscious and ﬁ ts the same proﬁ le as a department store shopper. A.J. Wright targets a more moderate-income market. The TJX Companies, Inc. Positioned for Today Positioned for the Future (cid:129) Flexible Business Model (cid:129) Growing Customer/Vendor Base (cid:129) Financial Strength (cid:129) Stronger Competitive Position (cid:129) Conservative Approach for 2009 (cid:129) Promising Growth Vehicles To Our Fellow Shareholders: In a difﬁ cult economy like the one we faced in 2008, ﬂ exibility is key. TJX has one of the most ﬂ exible business models in the world along with great ﬁ nancial strength. For a Company as large as TJX, our ﬂ exibility allowed us to react quickly and strategi- cally when the economy declined dramatically in the fall. Our business held its own and performed better than most of the retail industry in 2008. We continued to deliver great value, which continued to attract customers to our stores even as the holiday shopping season became deeply promotional. Customer trafﬁ c was up for the year, which indicates we are gaining market share in this tough environment. We believe the retail environment will remain extremely difﬁ cult in the year ahead and we are taking a prudent approach in 2009. That said, our long-term vision to grow TJX as a global, off-price/value retailer remains unchanged. We are capitalizing on the ﬂ exibility in our business to take actions today that will help us weather the recession and posi- tion us well to emerge in an even stronger competitive position when times improve. While our 2008 results were below our expectations for the full year, our performance exceeded our plans up until the fourth quarter, as the economy deteriorated suddenly and signiﬁ cantly. The economic downturn impacted retailers across the board, but as the fourth quarter progressed, our off-price/value proposition continued to reso- nate with customers and our consolidated comparable store sales were among the top of our retail peer group’s. Overall for 2008, net sales were $19.0 billion, a 4% increase over the prior year, and consolidated comparable store sales increased 1%. Net income from continuing operations was $915 million. Adjusted diluted earnings per share from continuing operations were $2.01, a 4% increase over the adjusted $1.93 in the prior year.1 Overall, we grew total square footage by 4%, netting 123 stores to end the year with 2,652 stores. One of the highlights of the year was that consolidated merchandise margins were up overall, despite the challenging consumer envi- ronment and over strong increases last year. Additionally, our A.J. Wright division, an important growth vehicle for our future, made great progress in 2008 and achieved proﬁ tability for the year. Further, our T.K. Maxx businesses Our extremely ﬂ exible business model enables us to respond swiftly to macro challenges. in Europe performed extremely well in a very difﬁ cult retail environment. Our new HomeSense business in the U.K. got off to a solid start. Our stores in Germany outperformed our expectations, which is very encouraging for our growth prospects in Europe, considering that we believe Germany alone could support 250-300 stores in the long term. conse rvative approach i n 20 09 We are taking a conservative approach in 2009. We are implementing actions in the short term to protect the bottom line in an uncertain economic environment that we believe also will position us to be even stronger in the long term. The three main planks of our strategy are to plan comparable store sales conservatively, run the business with very lean inventories, and eliminate approximately $150 million from our already low cost structure. eve n smarte r off-pric e buy i ng Establishing conservative comparable store sales plans forces inventory levels and ex- penses to be structured around this reduced sales expectation. To the extent that we exceed our plans, we will ﬂ ow more proﬁ ts to the bottom line. One key opportunity to drive sales goes to the heart of our business and that is being even smarter off-price buyers. In a ﬁ ercely promotional environment, delivering great fashion and brands at extreme value is critical. We are placing an even greater emphasis on brands and buying even closer to need. Further, we are aggressively shifting more of our purchase dollars to off-price, closeout deals, which create excitement in our stores and the “WOW” factor that our customers love. We see our stores as the destination for moderate- to high-end 1 On a GAAP basis, diluted earnings per share from continuing operations for Fiscal 2009 were $2.08 versus $1.68 in the prior year. Fiscal 2009 adjusted earnings per share from continuing operations exclude the positive impacts of a $.04 per share reduction to the reserve for the previously announced computer intrusion(s) and a $.03 per share beneﬁ t due to a tax-related adjustment. Fiscal 2008 adjusted results exclude an after-tax charge of $.25 per share related to the computer intrusion(s). Fiscal 2009 had 53 weeks. 3 We believe that value is the place to be, in good as well as difﬁ cult times. brands at low-end prices! The ﬂ exibility we have in our stores and distribution centers supports our off-price buying strategies. Our stores have no walls between departments, so we can expand and contract departments to take advantage of buying opportunities. Further, we have implemented greater efﬁ ciencies in our distribution network, which gives our buyers conﬁ dence to make closer-to-need buys, knowing the merchandise will ﬂ ow to our stores when it is needed on the selling ﬂ oor. initiative s to drive sale s As always, we are taking intelligent risks to drive sales, which includes testing new merchandise initiatives and expanding those that are working. At Marshalls, The Cube, which we rolled out to over 280 additional stores in 2008, following successful testing in the prior year, is driving the Juniors business. This is exciting because attracting younger customers is a key to our growth. At T.J. Maxx, our expanded accessories departments continue to do very well and The Runway designer departments continue to help us attract upscale department-store customers in speciﬁ cally targeted demo- 4 graphic markets. The continued success of our expanded footwear departments at Marshalls and Winners prompted our 2008 tests of the Shoe MegaShop by Marshalls in the U.S. and STYLESENSE in Canada. We opened just four stores between these two concepts in 2008, and in 2009, we will continue to test these concepts. If they continue to be successful, as we expect they will be, they represent two new growth vehicles for North America. Testing new merchandise initiatives is a key way to inject more excitement into our stores and develop ways in which to grow our business. marketing: bolde r me ssag e, bi g g e r aud i e nc e We will be bolder in our marketing in 2009 through our new advertising campaigns, which will aggressively communicate our value message and educate customers about our off-price concept. We learned a lot from the testing and analysis that we conducted in 2008 and have found a strategy that we believe will simultaneously reduce our marketing spend and reach a broader audience in the upcoming year. We are looking forward to the launch of our ﬁ rst-ever national network television campaign, which means penetrating advertising markets for 35% of our store base where we have never before advertised on television. tighte r inve ntorie s, faste r turn s Another major strategy of our conservative approach in this challenging retail environ- ment is to run our business with both leaner and even fresher inventories. We entered the year in a historically low and liquid inventory position. For our buyers, this means having “sweaty palms” and making more off-price deals. We are ﬂ owing new merchandise assortments to our stores nearly every day and driving faster turns. We believe our stores look fresher than ever this spring, which sets us apart from many other retailers. We expect that managing with very lean inventories, combined with our initiatives to drive sales, will lead to even higher merchandise margins in 2009 while simultaneously offering truly excel- lent value to customers. co st savings boo st profi tabi li ty The third major strategy in our conservative approach in 2009 is lowering our cost structure by approximately $150 million to protect proﬁ tability. As part of our off-price business model, we have always operated with a low cost structure. How- ever, with the challenges of an extremely weak consumer environment, we have taken a hard look at opportunities to improve efﬁ ciencies and processes that will reduce our expenses even further. Overall, these strategies were well received when communicated to the organization, and Associates across the Com- pany are contributing new ideas for reducing expenses. The cost-savings measures span all areas of the organization, including a hiring and salary freeze and voluntary retirement program; store and distribution center efﬁ ciencies; the reduced marketing spend we mentioned earlier, and; driving savings in the procurement of non-merchandise supplies and services. These are just some of the actions that we are taking at this time and we hope they will be enough to endure the recession; that said, we may need to implement additional measures should the economic environment worsen. Importantly, we expect these actions will not only help protect the bottom line in the short term, but will also improve our cost structure for the long term. g row i ng our c u stom e r and ve ndor base The volatile retail environment offers opportunities for us to grow our customer and vendor base for the future. With our value proposition, we are attracting new customers and gaining market share. Despite consumer weakness in 2008, we remained a shopping destination of choice. Even as the department and specialty stores reached historically high levels of promotions in the fourth quarter, we saw an increase in customer trafﬁ c at our stores. Our history tells us that when customers discover our values in difﬁ cult times, they continue to shop our stores when times improve. This is key, because even a slight improvement in the economy and capturing a piece of an increase in consumers’ discre- tionary spending would be very meaning- ful for our business. Just as we attract new customers in tough times, this retail envi- ronment also is an opportunity for us to expand our vendor universe, which already numbers over 10,000 vendors and spans over 60 countries. We opened hundreds of new vendor doors in 2008, and establishing new vendor relationships remains a priority in 2009. TJX has some of the best vendor relationships in retailing and new vendors learn quickly that they like doing business with us. With a merchant organization over 600 people strong, we believe in support- ing our vendors and work hard to build longstanding relationships that are mutu- ally beneﬁ cial in the short and long terms. Broadening our purchase universe affords us even greater ﬂ exibility in sourcing product and allows us to offer an even wider selec- tion of brands for our customers. 6 We see ourselves today as the destination for moderate/high-end brands at low-end prices. st rong e r com petitive po sit i on Unfortunately, many retailers already have gone out of business and many others will likely do the same. Consumer demand has decreased signiﬁ cantly, but fewer open retail stores creates an opportunity for our business. We believe this will be particularly true in the home fashions area, which should beneﬁ t HomeGoods and our other home businesses. Consolidation within retail also creates real estate opportunities that give us a tremendous advantage for the future both in the U.S. as well as abroad. The current real estate landscape is presenting unprecedented opportunities not only for new store locations, but also for relocating stores to more favorable locations and renegotiating leases on even better terms. For example, in the U.K., we are relocating some of our early stores to more desirable locations, and other locations that were previously unavailable to us are opening up for the ﬁ rst time. 7 Our ﬁ nancial strength and ﬂ exibility are more important today than ever. g rowth ve hicle s pe rforming we ll An important reason for our continued conﬁ dence is that the growth vehicles we have in our younger and smaller businesses are performing very well, despite the challenging economy. A.J. Wright gained signiﬁ cant traction in 2008. We have a better understanding of how to market to our A.J. Wright customers, are focusing on key merchandise catego- ries that are important for them, and have sharpened our values. The proﬁ tability of indi- vidual A.J. Wright stores dramatically improved in 2008, which bodes well for long-term investment returns. We will continue to be prudent in our approach to growth, but we believe A.J. Wright, with its large moderate-income customer demographic in the U.S., holds great potential for the future of TJX. We continue to believe that being an international retailer gives us great advantages in the short and long term. Our new T.K. Maxx stores in Germany exceeded our expecta- tions in 2008 and are achieving ﬁ nancial results very close to those of our established stores in the U.K. and Ireland, which bodes well for our future growth in Europe. We also opened our ﬁ rst HomeSense stores in the U.K. in 2008 to positive customer response, which presents another vehicle for us to grow in Europe. We are the only major off-price retailer of any size in Europe, and believe we have major opportunities to grow our Company there. financial stre ngth and f lex ib i li ty Our ﬁ nancial strength and ﬂ exibility have always been cornerstones of TJX’s success and have become even more critical in today’s economy. In this very uncertain economic environment, our approach is to manage our strong balance sheet and cash position to preserve ﬁ nancial ﬂ exibility. We have an “A” Standard & Poor’s credit rating, one of the strongest in retail, and ample ﬁ nancial liquidity, including the signiﬁ cant excess cash gen- erated by our strong operations. In 2008, we generated $1.2 billion from operations. After reinvesting in our businesses, we increased the per-share dividend by 22%, and bought back $741 million of TJX stock, which was less than we originally anticipated, as we took a more conservative approach to share repurchases in response to the economic crisis. 8 Our capital expenditures are planned at $450 million for 2009, which is $133 million less than last year. We have reduced our pace of store openings to net approximately 65 new stores overall in 2009, about half the number we opened in 2008, and have approached these plans very strategically. With these conservative plans, we will be maintaining our ﬂ exibility and keeping our powder dry to take advantage of real estate opportunities that we expect will become increasingly attractive as the year proceeds. Therefore, we may decide to open more stores, but we will see how the year progresses. We have slowed the pace at HomeGoods as we believe the competitive landscape will improve for this business as the recession eases over time. Although we will proceed prudently, A.J. Wright’s solid progress and improved results in 2008 give us the conﬁ - dence to increase the pace of growth at this division and open the new market of Atlanta, Georgia, in 2009. As T.K. Maxx in Germany continues to outperform, we expect to open ten additional stores in that country by 2009 year-end. We expect to repurchase approximately $250 million of TJX stock in 2009, which we may adjust up or down, depending on the economic environment. We remain com- mitted to returning value to our shareholders through stock repurchases and dividends, which we will balance with maintaining ﬁ nancial liquidity. In April 2009, the Board of Directors approved a 9% increase in the per-share dividend, which underscores our conﬁ dence in the Company and its ﬁ nancial position. With our strong ﬁ nancial foun- dation and cash ﬂ ow, we believe we are well positioned to respond to the challenges of this economy and take advantage of opportunities it may present. global off -price retai le r v i si on While we are facing what is the worst retail envi- ronment this Company has ever seen, our long- term vision to grow TJX as a global, off-price/ value retailer is unwavering. This Company has held its own through three past recessions and we are conﬁ dent that with our value proposition, we will remain a retailer of choice for customers in challenging times and build our customer base for the future. While our execution in the short term has shifted to accommodate the current retail environment, we have great conﬁ dence in this Company’s ability to weather these tough times and believe we will be in an even stronger competitive position in a smaller retail landscape when the recession is over. 9 The ﬂ exibility and resiliency of our business model give us great advantages. We are developing new vendor relationships and taking advantage of real estate opportunities, which will beneﬁ t our business longer term. Our younger and smaller growth vehicles are performing well, domestically and internationally. We are taking actions in the short term to protect the bottom line and preserve our ﬁ nancial liquidity. Importantly, our ﬁ nancial strength underscores our conﬁ dence in our ability to manage through the recession and successfully grow TJX in the years ahead. our g ratitude In April 2009, Donald Campbell stepped down from his position as Vice Chairman of TJX and will remain available as an Advisor to the Company. In his over three decades of dedicated service, Don served as Chief Administrative and Business Development Ofﬁ cer and prior to that, as the Company’s Chief Financial Ofﬁ cer, a post he held from 1989-2004. With Don’s business acumen, in-depth knowledge of TJX and steadfastness, he has been a highly valued resource to our Company and has played a major role in the Company’s success. We will always be grateful for Don’s many years of tireless com- mitment to TJX. In January 2009, Arnold Barron, who served in the role of Senior Executive Vice Presi- dent, Group President since 2004, retired. Over the past 30 years, Arnold has been an integral part of the culture, growth and success of our business. He was instrumental in the development and growth of T.J. Maxx and made signiﬁ cant contributions to each of our other businesses. We will miss working with Arnold and extend to him our sincerest gratitude, and wish good health and happiness to him and his family. We have a management team and organization determined to manage through these challenging times and build upon opportunities for the future. We want to sincerely thank our 133,000 Associates for their hard work and dedication, especially in such dif- ﬁ cult times. The year 2009 will present many challenges, and we have great conﬁ dence that with this organization’s strong commitment and dedicated efforts, we will meet the challenges of the recession head on and grow successfully in the future. We extend our gratitude to our customers for their loyalty and patronage, and we also thank our fellow shareholders, vendors, and other business associates for their ongoing support. Respectfully, Bernard Cammarata Chairman of the Board Carol Meyrowitz President and Chief Executive Ofﬁ cer 10 A Neighbor of Choice Photo credit: Save the Children A major component of our platform as a Company of Choice is being a Neighbor of Choice. As a Neighbor of Choice, we embrace the communities and neighbor- hoods in which we live and work, and in these difﬁ cult economic times, being a good neighbor is more important than ever. Through The TJX Foundation, TJX touches many communities in signiﬁ cant ways. In 2008, The TJX Foundation, together with our divisions, supported over 1,800 nonproﬁ t organizations. Our charitable focus continues to be organizations that support women, children and families in need. As part of our philanthropic work, we invite Associates in our stores, ofﬁ ces and distribution centers to recommend organizations in their communities to receive charitable grants, making our efforts more localized and meaningful for both our Associates and custom- ers. In 2008, nearly 30,000 Associates participated in our annual United Way campaign, in addition to donating their time, talent and efforts to many worthwhile charitable causes throughout the year. In 2008, in the U.S., T.J. Maxx continued its long- standing support of Save the Children, an organiza- tion dedicated to the welfare of children in need. Marshalls continued its support of organizations for the prevention of domestic violence against women and children. HomeGoods again conducted fund- raising for the Family Violence Prevention Fund, as well as for the Jimmy Fund in its search for a cure for childhood cancer. A.J. Wright continued its support of the Boys & Girls Clubs of America, both at the national level and locally, giving kids a safe place to play and be kids. In Canada, Winners, HomeSense and STYLESENSE continued to support the Canadian Women’s Foundation, which is dedicated to preventing violence against women, as well as Ovarian Cancer Canada and The Sunshine Foundation: Dreams for Kids. In Europe, T.K. Maxx continued its support of Action for Children (formerly NCH), which assists vulnerable children, and also ran an extremely successful campaign to beneﬁ t Cancer Research UK. Recently, T.K. Maxx held its most successful Comic Relief campaign, which helps people suffering poverty or social injustice in the U.K. and Africa. HomeSense U.K. supports Emmaus, a charity dedicated to improving the lives of people who are homeless. Being a Neighbor of Choice also encompasses our community and governmental programs. Through TJX Community Relations, we continued our outreach programs that align with our business goals, including working with school, professional and cultural organizations. Our Workforce Initiatives Group continued the Welfare-to-Work Program, through which we have hired more than 82,000 people from the welfare system since 1997. Through our relationships with community-based organiza- tions, we have also helped transition many talented individuals with special needs to work in our stores, distribution centers and home ofﬁ ces. We are proud of our involvement with the 5-Star Statement of Support for the National Guard and Reserve. In 2008, TJX was nationally recognized for our commitment to Associates who serve in the military and their families. We take pride in our community efforts and are equally proud that our successes in this regard are due to the hard work and dedication of our Associ- ates. Integrity and treating people with dignity and fairness are at the core of TJX’s values. By being true to who we are and the communities that we serve, TJX is able to add great value to the lives of those in the communities around us. 11 C O N S O L I DAT E D P E R F O R M A N C E N E T S A L E S S E G M E N T P RO F I T s n o i l l i m $ 1,600 1,200 800 400 0 82* 83* 91* 02* 09* 82* 83* 91* 02* 09* * Recession ( f y ) * Recession ( f y ) S E L E C T E D C A S H F L OW DATA S T O R E C O U N T Net Cash from Operating Activities Property Additions Share Repurchases Dividend Payments s e r o t s 3,000 2,500 2,000 1,500 1,000 500 0 05 09 05 09 05 09 83 89 94 99 04 09 ( f y ) ( f y e ) 20 16 12 8 4 0 s n o i l l i b $ s n o i l l i m $ 1,500 1,250 1,000 750 500 250 0 form 10-kcontents Business Overview 3Store Locations 7Selected Financial Data 21Management’s Discussion & Analysis 22Report of Independent Registered Public Accounting Firm F-2Consolidated Financial Statements F-3Notes to Consolidated Financial Statements: F-7 Selected Business Segment Financial Information F-30 Selected Quarterly Financial Data F-33pageThe line graph above compares the cumulative performance of TJX’s common stock with the S&P Composite-500 Stock Index and the Dow Jones Apparel Retailers Index as of the date nearest the end of TJX’s ﬁ scal year for which index data is readily available for each year in the ﬁ ve-year period ended January 31, 2009. The graph assumes that $100 was invested on January 30, 2004, in each of TJX’s common stock, the S&P Compos-ite-500 Stock Index and the Dow Jones Apparel Retailers Index and that all dividends were reinvested.FIVE-YEAR CUMULATIVE PERFORMANCE OF TJX STOCK COMPARED WITH S&P 500 INDEX AND THE DJ APPAREL INDEXTJX Stock Performance2005base yeardollars2006200720082009180160140120100806040200tjxs&pdjarUNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWASHINGTON,DC20549FORM10-K[x]AnnualReportPursuanttoSection13or15(d)oftheSecuritiesExchangeActof1934ForthefiscalyearendedJanuary31,2009or[]TransitionReportPursuanttoSection13or15(d)oftheSecuritiesExchangeActof1934ForthetransitionperiodfromtoCommissionfilenumber1-4908THETJXCOMPANIES,INC.(Exactnameofregistrantasspecifiedinitscharter)Delaware04-2207613(Stateorotherjurisdictionofincorporationororganization)(IRSEmployerIdentificationNo.)770CochituateRoadFramingham,Massachusetts01701(Addressofprincipalexecutiveoffices)(ZipCode)Registrant’stelephonenumber,includingareacode(508)390-1000SecuritiesregisteredpursuanttoSection12(b)oftheAct:TitleofeachclassCommonStock,parvalue$1.00pershareNameofeachexchangeonwhichregisteredNewYorkStockExchangeSecuritiesregisteredpursuanttoSection12(g)oftheAct:NONEIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YES[x]NO[]IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YES[]NO[x]Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YES[x]NO[]IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(§229.405ofthischapter)isnotcontainedherein,andwillnotbecontained,tothebestofregistrant’sknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.[]Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,orasmallerreportingcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler”and“smallerreportingcompany”inRule12b-2oftheExchangeAct.(Checkone):LargeAcceleratedFiler[x]AcceleratedFiler[]Non-AcceleratedFiler[]SmallerReportingCompany[](Donotcheckifasmallerreportingcompany)Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheAct).YES[]NO[x]Theaggregatemarketvalueofthevotingcommonstockheldbynon-affiliatesoftheregistrantonJuly26,2008was$13,553,030,893,basedontheclosingsalepriceasreportedontheNewYorkStockExchange.Therewere412,821,592sharesoftheregistrant’scommonstock,$1.00parvalue,outstandingasofJanuary31,2009.DOCUMENTSINCORPORATEDBYREFERENCEPortionsoftheProxyStatementtobefiledwiththeSecuritiesandExchangeCommissioninconnectionwiththeAnnualMeetingofStockholderstobeheldonJune2,2009(PartIII).CautionaryNoteRegardingForward-LookingStatementsOurdisclosureandanalysisinthisForm10-Kandinour2008AnnualReporttoShareholderscontain“forward-lookingstatements,”withinthemeaningofthePrivateSecuritiesLitigationReformActof1995,includingsomeofthestatementsinthisForm10-KunderItem1,“Business,”Item7,“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,”andItem8,“FinancialStatementsandSupplementaryData,”andinour2008AnnualReporttoShareholdersunder“LettertoShareholders”and“FinancialGraphs.”Forward-lookingstatementsareinherentlysubjecttorisks,uncertaintiesandpotentiallyinaccurateassumptions.Suchstatementsgiveourcurrentexpectationsorforecastsoffutureevents;theydonotrelatestrictlytohistoricalorcurrentfacts.Wehavegenerallyidentifiedsuchstatementsbyusingwordssuchas“anticipate,”“believe,”“could,”“estimate,”“expect,”“forecast,”“intend,”“lookingforward,”“may,”“plan,”“potential,”“project,”“should,”“target,”“will”and“would”oranyvariationsofthesewordsorotherwordswithsimilarmeanings.Allstatementsthataddressactivities,eventsordevelopmentsthatweintend,expectorbelievemayoccurinthefutureareforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamendedandSection21EoftheSecuritiesExchangeActof1934,asamended,orExchangeAct.These“forwardlookingstatements”mayrelatetosuchmattersasourfutureactions,futureperformanceorresultsofcurrentandanticipatedsales,expenses,interestrates,foreignexchangeratesandtheoutcomeofcontingenciessuchaslegalproceedings,andfinancialresults.Wecannotguaranteethattheresultsandotherexpectationsexpressed,anticipatedorimpliedinanyforward-lookingstatementwillberealized.TheriskssetforthunderItem1AofthisForm10-Kdescribemajorriskstoourbusiness.Avarietyoffactorsincludingtheseriskscouldcauseouractualresultsandotherexpectationstodiffermateriallyfromtheanticipatedresultsorotherexpectationsexpressed,anticipatedorimpliedinourforward-lookingstatements.Shouldknownorunknownrisksmaterialize,orshouldourunderlyingassumptionsproveinaccurate,actualresultscoulddiffermateriallyfrompastresultsandthoseanticipated,estimatedorprojectedintheforward–lookingstatements.Youshouldbearthisinmindasyouconsiderforward-lookingstatements.Ourforward-lookingstatementsspeakonlyasofthedatesonwhichtheyaremade,andwedonotundertakeanyobligationtoupdateanyforward-lookingstatement,whethertoreflectnewinformation,futureeventsorotherwise.Youareadvised,however,toconsultanyfurtherdisclosureswemaymakeinourfuturereportstotheSECorotherwise.2PartIITEM1.BUSINESSBUSINESSOVERVIEWTheTJXCompanies,Inc.(TJX)istheleadingoff-priceapparelandhomefashionsretailerintheUnitedStatesandworldwide.Ourover2,600storesofferarapidlychangingassortmentofquality,brand-nameanddesignermerchandiseatpricesgenerally20%to60%belowdepartmentandspecialtystoreregularpriceseveryday.RetailConcepts:Weoperatesevenoff-priceretailconceptsintheU.S.,CanadaandEuropeandareknownforourtreasurehuntshoppingexperienceandexcellentvalues.Theoperatingplatformsandstrategiesofallofourretailconceptsaresynergistic.Therefore,wecapitalizeonouroff-priceexpertiseandsystemsthroughoutourbusiness,leveragebestpractices,initiativesandnewideasacrossourconcepts,utilizethesubstantialbuyingpowerofourbusinessestoleverageourglobalrelationshipswithvendors,anddeveloptalentbyprovidingopportunitiesacrossourconcepts.IntheUnitedStates:—T.J.MAXXandMARSHALLS:T.J.MaxxandMarshallsarethelargestoff-priceretailersintheUnitedStateswith1,680stores.WefoundedT.J.Maxxin1976andacquiredMarshallsin1995.Bothchainssellfamilyapparel(includingfootwearandaccessories),homefashions(includinghomebasics,accentfurniture,lamps,rugs,walldécor,decorativeaccessoriesandgiftware)andothermerchandise,primarilytargetingthemiddletoupper-middleincomecustomerdemographic.WemaintaintheseparateidentitiesofT.J.MaxxandMarshallsthroughdifferentproductassortment(includinganexpandedassortmentoffinejewelryandaccessoriesatT.J.Maxxandafulllineoffootwearandbroadermen’sandjuniors’offeringsatMarshalls),in-storeinitiatives,marketingandstoreappearance.ThedifferentiatedshoppingexperienceatT.J.MaxxandMarshallsencouragesourcustomerstoshopbothchains.—HOMEGOODS:HomeGoods,introducedin1992,isanoff-priceretailerofhomefashionsintheU.S.Through318stores,itsellsabroadarrayofhomebasics,giftware,accentfurniture,lamps,rugs,walldécor,decorativeaccessories,children’sfurniture,seasonalmerchandiseandotherfashionsforthehome.—A.J.WRIGHT:Launchedin1998,A.J.Wright,likeT.J.MaxxandMarshalls,sellsoff-pricefamilyapparel,homefashionsandothermerchandise.Cateringtotheentirefamily,keyapparelcategoriesforA.J.Wright’s135storesincludebasics,children’s,women’splussizes,juniors,youngmen’sandfootwear.Differentfromallofourotherchains,A.J.Wrightprimarilytargetsthemoderate-incomecustomerdemographic.InCanada:—WINNERS:Acquiredin1990,Winnersistheleadingoff-priceapparelandhomefashionsretailerinCanada.Themerchandiseofferingatits202storesacrossCanadaissimilartoT.J.MaxxandMarshalls.In2008,WinnersbegantestingStyleSense,anewconceptthatoffersfamilyfootwearandaccessories.—HOMESENSE:HomeSenseintroducedthehomefashionsoff-priceconcepttoCanadain2001.Thechainhas75storesofferingamerchandisemixofhomefashionssimilartoHomeGoods.InEurope:—T.K.MAXX:Launchedin1994,T.K.Maxxintroducedoff-pricetotheU.K.andisEurope’sonlymajoroff-priceretailerofapparelandhomefashions.With235stores,T.K.MaxxoperatesintheU.K.andIrelandandexpandedtoGermanyin2007.T.K.MaxxoffersamerchandisemixsimilartoT.J.MaxxandMarshallsintheU.S.andWinnersinCanada.—HOMESENSE:HomeSenseintroducedthehomefashionsoff-priceconcepttotheU.K.in2008anditssevenstoresofferamerchandisemixofhomefashionsintheU.K.likethatofHomeGoodsintheU.S.andHomeSenseinCanada.3FlexibleBusinessModel:Ouroff-pricebusinessmodelisflexible,particularlyforacompanyofoursize,allowingustoreacttomarkettrends.Ouropportunisticbuyingandinventorymanagementstrategiesgiveusflexibilitytoadjustthemerchandiseinourstoresmorefrequentlythantraditionalretailers,andourstoresanddistributioncentersarebuilttosupportthisflexibility.Bymaintainingaliquidinventoryposition,ourmerchantscanbuyclosetoneed,enablingthemtobuyintocurrentmarkettrendsandtakeadvantageofopportunitiesinthemarketplace.Buyingclosetoneedgivesustheabilitytoturnourinventorymorerapidlyandadjustourpricingtothecurrentmarketmorefrequentlythanconventionalretailers.Oursellingfloorspaceisflexible,withoutwallsbetweendepartmentsandlargelyfreeofpermanentfixtures,sowecaneasilyexpandandcontractdepartmentsinresponsetocustomerdemand,availablemerchandiseandfashiontrends.Ourdistributionfacilitiesaredesignedtoaccommodateourmethodsofreceivingandshippingbothsmallandlargequantitiesofproducttoourlargestorebasequicklyandefficiently.OpportunisticBuying:Wearedistinguishedfromtraditionalretailersbyouropportunisticbuyingofbrandname,fashionablemerchandise.Wepurchasethemajorityoftheinventoryforourapparelchainsandasignificantportionoftheinventoryforourhomefashionchainsopportunistically.Ourmerchantorganizationnumbersover600.Incontrasttotraditionalretailers,whichtypicallyordergoodsfarinadvanceofthetimetheproductappearsonthesellingfloor,ourmerchantsareinthemarketplacevirtuallyeveryweek,buyingprimarilyforthecurrentsellingseason,andtoalimitedextent,forafuturesellingseason.Duetotheunpredictablenatureofsupplyandconsumerdemandinthehighlyfragmentedapparelandhomefashionsmarketplace,weareabletobuythevastmajorityofouropportunisticinventorydirectlyfrommanufacturers,withsomecomingfromotherretailersandsources.Wesourcefromavendoruniverseofover10,000vendorsayearandpurchasevirtuallyallofourinventoryatdiscountsfrominitialwholesaleprices.Asmallpercentageofthemerchandisewesellisprivatelabelmerchandiseproducedspecificallyforusbythirdpartymanufacturers.Webelieveanumberoffactorsmakeusanattractiveoutletforthevendorcommunityandprovideusexcellentaccessonanongoingbasistoleadingbrandedmerchandise.Wearewillingtopurchaseless-than-fullassortmentsofitems,stylesandsizes,paypromptlyanddonotaskfortypicalretailconcessions(suchasadvertising,promotionalandmarkdownallowances),deliveryconcessions(suchasdropshipmentstostoresordelayeddeliveries)orreturnprivileges.Weareabletopurchasequantitiesofinventorythatrangefromsmalltoverylargeandwehavetheabilitytosellproductthroughageographicallydiversenetworkofstores.Importantly,inTJX,weoffervendorsanoutletwithfinancialstrengthandanexcellentcreditrating.InventoryManagement:Weofferourcustomersarapidlychangingselectionofmerchandisetocreatea“treasurehunt”experienceinourstores.Toachievethis,weseektorapidlyturntheinventoryinourstores,regularlyofferingfreshselectionsofapparelandhomefashionsatexcellentvalues.Ourspecializedinventoryplanning,purchasing,monitoringandmarkdownsystems,coupledwithdistributioncenterstorage,processing,handlingandshippingsystems,enableustotailorthemerchandiseinourstorestolocalpreferences,achieverapidin-storeinventoryturnoveronavastarrayofproductsandsellsubstantiallyallmerchandisewithintargetedsellingperiods.Pricingandmarkdowndecisionsandstoreinventoryreplenishmentaredeterminedcentrally,usinginformationprovidedbyspecializedcomputersystems,andaredesignedtomoveinventorythroughourstoresinatimelyanddisciplinedmanner.Wedonotgenerallyengageinpromotionalpricingactivity.LowCostOperations:Weoperatewithalowcoststructurecomparedtomanyothertraditionalretailers.Wefocusaggressivelyonexpensesthroughoutourbusiness,includingmerchandiseandnon-merchandiseprocurement.Ouradvertisingbudgetasapercentageofsalesislowcomparedtotraditionalretailers.Wedesignourstores,generallylocatedincommunityshoppingcenters,toprovideapleasant,convenientshoppingenvironmentbutdonotspendheavilyonstorefixtures.Additionally,ourdistributionnetworkisdesignedtoruncosteffectively.CustomerService:Whileweofferaself-serviceformat,wetrainourstoreassociatestoprovidefriendlyandhelpfulcustomerservice.Wealsohavecustomer-friendlyreturnpolicies.Weacceptavarietyofpaymentmethodsincludingcash,creditcardsanddebitcards.IntheU.S.,weofferaco-brandedTJXcreditcardandaprivatelabelcreditcard,boththroughamajorbank,butdonotmaintaincustomercreditreceivablesrelatedtoeitherprogram.4Distribution:Weoperate13distributioncentersintheU.S.,2inCanadaand4intheU.K.Ourdistributioncentersencompassapproximately11millionsquarefeet.Weshipsubstantiallyallofourmerchandisetoourstoresthroughthesedistributioncenters,whicharelarge,highlyautomatedandbuilttosuitourspecific,off-pricebusinessmodel,aswellaswarehousesoperatedbythirdparties.Weshippedapproximately1.5billionunitstoourstoresduringfiscal2009.StoreGrowth:ExpansionofourbusinessthroughtheadditionofnewstoresisanimportantpartofourstrategyforTJXasaglobal,off-price,valuecompany.Thefollowingtableprovidesinformationonthegrowthandpotentialgrowthofeachofourchains:ApproximateAverageStoreSize(squarefeet)Fiscal2008Fiscal2009Fiscal2010(estimated)EstimatedUltimateNumberofStoresNumberofStoresatYearEndIntheUnitedStates:T.J.Maxx30,000847874Marshalls32,000776806Marmaxx1,6231,6801,6972,000HomeGoods25,000289318322550-600A.J.Wright26,000129135148500InCanada:Winners29,000191202211230HomeSense24,00071757980InEurope:T.K.Maxx32,000226235249525-575*HomeSense19,000—710100-1502,5292,6522,7163,985-4,135*RepresentsestimatednumberofstoresforU.K.,GermanyandIrelandonly.Inaddition,Marshallsopened2free-standingShoeMegaShopbyMarshallsstoresintheU.S.infiscal2009,whichsellfamilyfootwear,andWinnersopened2StyleSensestoresinCanadainfiscal2009,whichsellfamilyfootwearandaccessories.SomeofourHomeGoodsandHomeSensestoresareco-locatedwithoneofourapparelstoresinasuperstoreformat.Wecounteachofthestoresinthesuperstoreformatasaseparatestore.RevenueInformation:Thepercentagesofourconsolidatedrevenuesbygeographyforthelastthreefiscalyearswereasfollows:Fiscal2007Fiscal2008Fiscal2009UnitedStates79%77%77%Northeast27%26%26%Midwest14%13%13%South(includingPuertoRico)25%25%25%West13%13%13%Canada10%11%11%Europe11%12%12%Total100%100%100%5Thepercentagesofourconsolidatedrevenuesbymajorproductcategoryforthelastthreefiscalyearswereasfollows:Fiscal2007Fiscal2008Fiscal2009Clothingincludingfootwear63%62%62%Homefashions25%26%25%Jewelryandaccessories12%12%13%Total100%100%100%SegmentOverview:Weoperatefivebusinesssegments:threeintheU.S.andoneineachofCanadaandEurope.Eachofoursegmentshasitsownadministrative,buyingandmerchandisingorganizationanddistributionnetwork.OfourU.S.-basedstores,T.J.MaxxandMarshalls,referredtoasMarmaxx,aremanagedtogetherandreportedasasinglesegment,andA.J.WrightandHomeGoodseachisreportedasaseparatesegment.OutsidetheU.S.,ourchainsinCanadaaremanagedtogetherandourchainsinEuropearemanagedtogether.Thus,CanadaisreportedasasegmentandEuropeisreportedasasegment.Moredetailedinformationaboutoursegments,includingfinancialinformationforeachofthelastthreefiscalyears,canbefoundinNotePtotheconsolidatedfinancialstatements.6STORELOCATIONSWeoperatedstoresinthefollowinglocationsasofJanuary31,2009:StoresLocatedintheUnitedStates:T.J.Maxx*Marshalls*HomeGoods*A.J.WrightAlabama1852—Arizona11166—Arkansas8—1—California76111347Colorado1174—Connecticut2523116Delaware331—DistrictofColumbia11—1Florida6570333Georgia362710—Idaho511—Illinois37401518Indiana171028Iowa62——Kansas631—Kentucky9432Louisiana810——Maine843—Maryland112376Massachusetts47482120Michigan3320118Minnesota12128—Mississippi52——Missouri13126—Montana3———Nebraska42——Nevada673—NewHampshire14851NewJersey3140227NewMexico33——NewYork47592319NorthCarolina282110—NorthDakota3———Ohio381898Oklahoma44——Oregon853—Pennsylvania3931126PuertoRico—146—RhodeIsland5642SouthCarolina1994—SouthDakota2———Tennessee251463Texas426614—Utah10—2—Vermont411—Virginia312578Washington1510——WestVirginia521—Wisconsin16762Wyoming1———TotalStores874806318135*IncludesT.J.Maxx,MarshallsorHomeGoodsportionofasuperstore.7StoresLocatedinCanada:Winners*HomeSense*Alberta238BritishColumbia2614Manitoba61NewBrunswick32Newfoundland21NovaScotia62Ontario9535PrinceEdwardIsland1—Quebec3711Saskatchewan31TotalStores20275*IncludesWinnersorHomeSenseportionofasuperstore.StoresLocatedinEurope:T.K.MaxxHomeSenseUnitedKingdom2117RepublicofIreland15—Germany9—TotalStores2357CompetitionTheretailapparelandhomefashionbusinessishighlycompetitive.Wecompeteonthebasisoffashion,quality,price,value,merchandiseselectionandfreshness,brandnamerecognition,service,reputationandstorelocation.Wecompetewithlocal,regional,nationalandinternationaldepartment,specialty,off-price,discount,warehouseandoutletstoresaswellasotherretailersthatsellapparel,homefashionsandothermerchandisethatwesell,whetherinstores,throughcataloguesormediaorovertheinternet.EmployeesAtJanuary31,2009,wehadapproximately133,000employees,manyofwhomworklessthan40hoursperweek.Inaddition,wehiretemporaryemployeesduringthepeakback-to-schoolandholidayseasons.TrademarksWehavetherighttouseourprincipaltrademarksandservicemarks,whichareT.J.Maxx,Marshalls,HomeGoods,Winners,HomeSense,T.K.MaxxandA.J.Wright,inrelevantcountries.Ourrightsinthesetrademarksandservicemarksendureforaslongastheyareused.SeasonalityOurbusinessissubjecttoseasonalinfluences.Inthesecondhalfoftheyear,whichincludestheback-to-schoolandholidayseasons,wegenerallyrealizehigherlevelsofsalesandincome.SaleofBob’sStoresInfiscal2009,wesoldBob’sStores,avalue-oriented,brandedapparelchainweacquiredinfiscal2004.Thelossonthesaleandhistoricalresultsofoperationshavebeenaccountedforasdiscontinuedoperations.SECFilingsandCertificationsCopiesofourannualreportsonForm10-K,proxystatements,quarterlyreportsonForm10-QandcurrentreportsonForm8-KfiledwithorfurnishedtotheSecuritiesandExchangeCommission,orSEC,andany8amendmentstothosedocuments,areavailablefreeofchargeonourwebsite,www.tjx.com,under“SECFilings,”assoonasreasonablypracticableaftertheyareelectronicallyfiledwithorfurnishedtotheSEC.TheyarealsoavailablefreeofchargefromTJXInvestorRelations,770CochituateRoad,Framingham,Massachusetts,01701.ThepubliccanreadandcopymaterialsattheSEC’sPublicReferenceRoomat100FStreet,NE,Washington,DC20549,1-800-SEC-0330.TheSECmaintainsawebsitecontainingallreports,proxies,informationstatements,andallotherinformationregardingissuersthatfileelectronically(http://www.sec.gov).TheAnnualCEOCertificationforthefiscalyearendedJanuary26,2008,asrequiredbytheNewYorkStockExchange,regardingourcompliancewiththecorporategovernancelistingstandardsoftheNYSE,wassubmittedtotheNYSEonJune23,2008.Unlessotherwiseindicated,allstoreinformationinthisItem1isasofJanuary31,2009,andreferencestostoresquarefootagearetogrosssquarefeet.Fiscal2007meansthefiscalyearendedJanuary27,2007,fiscal2008meansthefiscalyearendedJanuary26,2008,fiscal2009meansthefiscalyearendedJanuary31,2009andfiscal2010meansthefiscalyearendingJanuary30,2010.Unlessotherwisestatedorthecontextotherwiserequires,referencesinthisForm10-Kto“TJX,”“we,”“us”and“our”refertoTheTJXCompanies,Inc.anditssubsidiaries.ITEM1A.RISKFACTORSThestatementsinthisSectiondescribethemajorriskstoourbusinessandshouldbeconsideredcarefully,inconnectionwithalloftheotherinformationsetforthinthisannualreportonForm10-K.Therisksthatfollow,individuallyorintheaggregate,arethosethatwethinkcouldcauseouractualresultstodiffermateriallyfromthosestatedorimpliedinforward-lookingstatements.Theadversechangesinglobaleconomicconditionsandinfinancialandcreditmarketshaveadverselyaffectedandcouldcontinuetoadverselyaffectourfinancialperformance.Aswidelyreported,economiesworldwideareincrisis,andglobalfinancialmarketshavebeenexperiencingextremevolatility,disruptionandcreditcontraction.Thecurrentvolatilityanddisruptiontothecapitalmarketshavereachedunprecedentedlevelsandhavesignificantlyadverselyimpactedglobaleconomicconditionsandmaycontinuetodoso,resultinginadditionalsignificantrecessionarypressuresanddeclinesinemploymentlevels,disposableincomeandactualandperceivedwealth.Adverseeconomicconditionscontinuetoaffectconsumerconfidenceanddiscretionaryconsumerspendingandhaveadverselyaffectedandmaycontinuetoadverselyaffectoursales,cashflowsandresultsofoperations.Additionally,adverseconditionsinthefinancialandcreditmarketscouldadverselyaffectourcostsofcapitalandthesourcesofliquidityavailabletousandhaveincreasedandcouldinthefutureincreaseourpensionfundingrequirements.Finally,theeffectsandconsequencesofthecurrentglobaleconomiccrisismaynotyetbeknown,whichcouldpotentiallyhaveamaterialadverseeffectonourliquidityandcapitalresources,orotherwisenegativelyaffectourbusinessandfinancialresults.Fluctuationsinforeigncurrencyexchangeratesmayleadtolowerrevenuesandearnings.InadditiontoourU.S.businesses,weoperatestoresinCanada,theU.K.,IrelandandGermany.SalesmadebyourstoresoutsidetheUnitedStatesaredenominatedinthecurrencyofthecountryinwhichthestoreislocated,andchangesinforeignexchangeratesaffectthetranslationofthesalesandearningsofthesebusinessesintoU.S.dollarsforfinancialreportingpurposes.Becauseofthis,movementsinexchangerateshavehadandareexpectedtocontinuetohaveasignificantimpactonournetsalesandearnings.Additionally,weroutinelyenterintoinventory-relatedhedginginstrumentstomitigatetheimpactofforeignexchangeonmerchandisemarginsofmerchandisepurchasedbyourinternationalsegmentsthatisdenominatedincurrenciesotherthantheirlocalcurrencies.Inaccordancewithgenerallyacceptedaccountingprinciples,weevaluatethefairvalueofthesehedginginstrumentsandmakemark-to-marketadjustmentsattheendofanaccountingperiod.Theseadjustmentsareofamuchgreatermagnitudewhenthereissignificantvolatilityincurrencyexchangeratesandmayhaveasignificantimpactonourearnings.9Inaddition,changesinforeignexchangeratescanincreasethecostofinventorypurchasesbyoneofourbusinessesthataredenominatedinacurrencyotherthanthelocalcurrencyofthatbusiness.Whenthesechangesoccursuddenly,itcanbedifficultforustoadjustretailpricesaccordingly,andgrossmargincanbeadverselyaffected.WeexpectthatsuchchangesmaymateriallyaffectthegrossmarginsofourCanadasegment.Althoughweimplementforeigncurrencyhedgingandriskmanagementstrategiestoreduceourexposuretofluctuationsinearningsandcashflowsassociatedwithchangesinforeignexchangerates,weexpectthatforeigncurrencyfluctuationscouldhaveamaterialadverseeffectonournetsalesandresultsofoperations.Failuretoexecuteouropportunisticbuyingandinventorymanagementcouldadverselyaffectourbusiness.Wepurchasethemajorityofourinventoryopportunisticallywithourbuyerspurchasingclosetoneed.Todrivetraffictothestoresandtoincreasesamestoresales,thetreasurehuntnatureoftheoff-pricebuyingexperiencerequirescontinuedreplenishmentoffresh,highquality,attractivelypricedmerchandiseinourstores.Whileopportunisticbuyingenablesourbuyerstobuyatopportunetimesandprices,inthequantitiesweneedandintomarkettrends,itplacesconsiderablediscretioninourbuyers,subjectingustorisksonthetiming,pricing,quantityandnatureofinventoryflowingtothestores.Inaddition,webaseourpurchasesofinventory,inpart,onsalesforecasts.Ifoursalesforecastsdonotmatchcustomerdemand,wemayexperiencehigherinventorylevelsanddecreasedprofitmarginsifwehaveexcessorslow-movinginventory,orwemayhaveinsufficientinventorytomeetcustomerdemand,eitherofwhichcouldadverselyaffectourfinancialperformance.Inadditiontoacquiringinventory,wemustproperlyexecuteourinventorymanagementstrategiesthrougheffectivelyallocatingmerchandiseamongourstores,timelyandefficientlydistributinginventorytostores,maintaininganappropriatemixandlevelofinventoryinstores,appro-priatelychangingtheallocationoffloorspaceofstoresamongproductcategoriestorespondtocustomerdemandandeffectivelymanagingpricingandmarkdowns.Failuretoexecuteouropportunisticinventorybuyingandinventorymanagementwellcouldadverselyaffectourperformanceandourrelationshipwithourcustomers.Failuretocontinuetoexpandouroperationssuccessfullycouldadverselyaffectourfinancialresults.Wehavesteadilyexpandedthenumberofconceptsandstoresweoperate.Ourrevenuegrowthisdependent,amongotherthings,uponourabilitytocontinuetoexpandsuccessfullythroughnewstoreopeningsaswellasourabilitytoincreasesamestoresales.Successfulstoregrowthrequiresacquisitionanddevelopmentofappropriaterealestateincludingselectionofstorelocationsinappropriategeographies,availabilityofattractivestoresorstoresitesinsuchlocationsandnegotiationofacceptableterms.Competitionfordesirablesites,increasesinrealestate,constructionanddevelopmentcostsandavailabilityandcostsofcapitalcouldlimitourabilitytoopennewstoresindesirablelocationsinthefutureoradverselyaffecttheeconomicsofnewstores.Whenweopenstoresinnewmarkets,wemayencounterdifficultiesinattractingcustomersduetoalackofcustomerfamiliaritywithourbrand,ourlackoffamiliaritywithlocalcustomerpreferences,andseasonaldifferencesinthemarket.Newstoresmaynotachievethesamesalesorprofitlevelsasourexistingstoresandmaybeadverselyaffectedbythesalesandprofitabilityofexistingstoresintheirmarketareas.Further,expansionplacessignificantdemandsontheadministrative,merchandising,storeoperations,distributionandotherorganizationsinourbusinessestomanagerapidgrowth,andwemaynotdososuccessfully.Failuretosuccessfullyidentifycustomertrendsandpreferencestomeetcustomerdemandcouldnegativelyimpactourperformance.Becauseoursuccessdependsonourabilitytomeetcustomerdemand,wetakevariousstepstokeepupwithconsumertrendsandpreferencesincludingcontactswithvendors,monitoringproductcategoryandfashiontrendsandcomparisonshoppingandactivelymonitoringfashiontrends.Ouropportunisticbuyingmodelallowsustobuyclosetoneedandinresponsetoconsumerpreferencesandtrends.However,identifyingconsumertrendsandpreferencesandsuccessfullymeetingcustomerdemandischallenging,andthesestepsandouroff-pricebuyingmaybeinsufficienttodoso,whichcouldadverselyaffectourresults.10Ourquarterlyoperatingresultscanbesubjecttosignificantfluctuationsandmayfallshortofeitherapriorquarterorinvestors’expectations.Ouroperatingresultshavefluctuatedfromquartertoquarteratpointsinthepast,andtheymaycontinuetodosointhefuture.Ourearningsmaynotcontinuetogrowatratessimilartothegrowthratesachievedinrecentyearsandmayfallshortofeitherapriorquarterorinvestors’expectations.Ifwefailtomeettheexpectationsofsecuritiesanalystsorinvestors,oursharepricemaydecline.Factorsthatcouldcauseusnottomeetanalysts’earningsexpectationsincludesomefactorsthatarewithinourcontrol,suchastheexecutionofouroff-pricebuying;selection,pricingandmixofmerchandise;andinventorymanagementincludingflow,markonandmarkdowns;andsomefactorsthatarenotwithinourcontrol,includingactionsofcompetitors,weatherconditions,economicconditionsandconsumerconfidence,andseasonality.Inaddition,ifwedonotrepurchasethenumberofshareswecontemplatepursuanttoourstockrepurchaseprogram,ourearningspersharemaybeadverselyaffected.Mostofouroperatingexpenses,suchasrentexpenseandassociatesalaries,donotvarydirectlywiththeamountofsalesandaredifficulttoadjustintheshortterm.Asaresult,ifsalesinaparticularquarterarebelowexpectationsforthatquarter,wemaynotproportionatelyreduceoperatingexpensesforthatquarter,andthereforesuchasalesshortfallwouldhaveadisproportionateeffectonournetincomeforthequarter.Wemaintainaforecastingprocessthatseekstoprojectsalesandalignexpenses.Ifwedonotcorrectlyforecastsalesorappropriatelyadjusttoactualresults,ourfinancialperformancecouldbeadverselyaffected.Ourfutureperformanceisdependentuponourabilitytocontinuetoexpandwithinourexistingmarketsandtoextendouroff-pricemodelinnewproductlines,chainsandgeographicregions.Ourstrategyistocontinuetoexpandwithinexistingmarketsandtoexpandtonewmarketsandgeographies.Thisgrowthstrategyincludesdevelopingnewwaystosellmoreordifferentmerchandisewithinourexistingstores,continuedexpansionofourexistingchainsinourexistingmarketsandcountries,expansionofthesechainstonewmarketsandcountries,anddevelopmentandopeningofnewchains,allofwhichentailsignificantrisk.Ourgrowthisdependentuponourabilitytosuccessfullyextendouroff-priceretailapparelandhomefashionsconceptsintheseways.Unsuccessfulextensionofourmodelcouldadverselyaffectfuturegrowthorfinancialperformance.Failuretoimplementourmarketing,advertisingandpromotionalprogramssuccessfully,orifourcompetitorsaremoreeffectivewiththeirprogramsthanweare,mayadverselyaffectourrevenue.Weusemarketing,advertisingandpromotionalprogramstoattractcustomerstoourstores.Weusevariousmediafortheseprograms,includingprint,television,databasemarketinganddirectmarketing.Someofourcompetitorsmayhavesubstantiallylargerexpendituresfortheirprograms,whichmayprovidethemwithacompetitiveadvantage.Therecanbenoassurancethatwewillbeabletocontinuetoeffectivelyexecuteourmarketing,advertisingandpromotionalprograms,andanyfailuretodosocouldhaveamaterialadverseeffectonourrevenueandresultsofoperations.OuractuallossesarisingfromtheComputerIntrusioncouldexceedourreserveforourestimatedprobablelosses,andourreputationandbusinesscouldbemateriallyharmedasaresultofanyfuturedatabreach.Wesufferedanunauthorizedintrusionorintrusions(suchintrusionorintrusions,collectively,the“ComputerIntrusion”)intoportionsofourcomputersystemthatprocessandstoreinformationrelatedtocustomertransactions,whichwasdiscoveredlateinfiscal2007andinwhichwebelievethatcustomerdatawerestolen.Asaresultwefacedandcontinuetofacelitigation,claimsandinvestigations.WehaverecordedareservethatreflectsourestimationofprobablelossesarisingfromtheComputerIntrusioninaccordancewithgenerallyacceptedaccountingprinciples.Whilethisreserverepresentsourbestestimationoftotal,potentialcashliabilitiesfromlitigation,proceedings,investigationsandotherclaims,aswellaslegalandothercostsandexpenses,arisingfromtheComputerIntrusion,thereisnoassurancethatouractuallosseswillnotbegreater.SincediscoveringtheComputerIntrusion,wehavetakenstepsdesignedtofurtherstrengthenthesecurityofourcomputersystemandprotocolsandhaveinstitutedanongoingprogramwithrespecttodatasecurity.Nevertheless,therecanbenoassurancethatwewillnotsufferafuturedatacompromise.Werelyoncommerciallyavailablesystems,11software,toolsandmonitoringtoprovidesecurityforprocessing,transmissionandstorageofconfidentialcustomerinformation,suchaspaymentcardandpersonalinformation.Further,thesystemscurrentlyusedfortransmissionandapprovalofpaymentcardtransactions,andthetechnologyutilizedinpaymentcardsthemselves,allofwhichcanputpaymentcarddataatrisk,aredeterminedandcontrolledbythepaymentcardindustry,notbyus.Improperactivitiesbythirdparties,advancesincomputerandsoftwarecapabilitiesandencryptiontechnology,newtoolsanddiscoveriesandothereventsordevelopmentsmayfacilitateorresultinafurthercompromiseorbreachofourcomputersystem.Anysuchfurthercompromisesorbreachescouldcauseinterruptionsinouroperations,damagetoourreputationandcustomers’willingnesstoshopinourstores,violationofapplicablelaws,regulations,ordersandagreements,andsubjectustoadditionalcostsandliabilitieswhichcouldbematerial.Ourbusinessissubjecttoseasonalinfluencesandadecreaseinsalesormarginsduringthesecondhalfoftheyearcouldadverselyaffectouroperatingresults.Ourbusinessissubjecttoseasonalinfluences;wegenerallyrealizehigherlevelsofsalesandincomeinthesecondhalfoftheyear,whichincludestheback-to-schoolandyear-endholidayseasons.Anydecreaseinsalesormarginsduringthisperiodcouldhaveadisproportionatelyadverseeffectonourfinancialconditionandresultsofoperations.Weexperiencerisksassociatedwithoursubstantialsizeandscale.Weoperatesevenretailconceptsinseveralcountries.Someaspectsofthebusinessesandoperationsoftheconceptsareconductedwithrelativeautonomy.Thelargesizeofouroperations,ourmultiplebusinessesandtheautonomyaffordedtotheconceptsincreasetheriskthatsystemsandpracticeswillnotbeimplementeduniformlythroughoutourcompanyandthatinformationwillnotbeappropriatelysharedacrossdifferentconceptsandcountries.Unseasonableweatherinthemarketsinwhichourstoresoperateorourdistributioncentersarelocatedcouldadverselyaffectouroperatingresults.Adverseandunseasonableweatheraffectscustomers’willingnesstoshopandtheirdemandforthemerchandiseinourstores.Frequentorunusuallyheavysnow,iceorrainstorms,severecoldorheatorextendedperiodsofunseasonabletemperaturesinourmarketscouldadverselyaffectoursalesandincreasemarkdowns.Inaddition,naturaldisasterssuchashurricanes,tornadoes,floodsandearthquakescouldseverelydamageordestroyoneormoreofourstoresordistributionfacilitieslocatedintheaffectedareasorresultinthesuspensionofbusinessintheaffectedareasorinareasservedbytheaffecteddistributioncenter,therebydisruptingourbusinessoperations.Weoperateinhighlycompetitivemarkets,andwemaynotbeabletocompeteeffectively.Theretailbusinessishighlycompetitive.Wecompetewithmanyotherlocal,regional,nationalandinternationalretailersthatsellapparel,homefashionsandothermerchandisethatwesell,whetherinstores,throughcatalogsormediaorovertheinternet.Wecompeteonthebasisofquality,price,value,merchandiseselectionandfreshness,brandnamerecognition,service,reputationandstorelocation.Othercompetitivefactorsthatinfluencethedemandforthemerchandisewesellincludeouradvertising,marketingandpromotionalactivitiesandthenamerecognitionandreputationofourchains.Ifwefailtocompeteeffectively,oursalesandresultsofoperationscouldbeadverselyaffected.Failuretoattractandretainqualitysales,distributioncenterandotherassociatesinappropriatenumbersaswellasexperiencedbuyingandmanagementpersonnelcouldadverselyaffectourperformance.Ourperformancedependsonrecruiting,developing,trainingandretainingqualitysales,distributioncenterandotherassociatesinlargenumbersaswellasexperiencedbuyingandmanagementpersonnel.Manyofourassociatesareinentrylevelorpart-timepositionswithhistoricallyhighratesofturnover.Thenatureoftheworkforceintheretailindustrysubjectsustotheriskofimmigrationlawviolations,whichriskhasincreasedinrecentyears.Ourabilitytomeetourlaborneedswhilecontrollinglaborcostsissubjecttoexternalfactorssuchasunemploymentlevels,prevailingwagerates,minimumwagelegislation,changingdemographics,healthandotherinsurancecostsandgovernmentallaborandemploymentrequirements.Intheeventofincreasingwagerates,ifwefailtoincreaseourwagescompetitively,thequalityofourworkforcecoulddecline,causingourcustomerservicetosuffer,whileincreasingourwagescouldcauseourearningstodecrease.Inaddition,certainassociatesinourdistributioncentersaremembersofunionsandthereforesubjectustotheriskoflaboractions.Becauseofthedistinctivenatureofouroff-pricemodel,12wemustdosignificantinternaltraininganddevelopmentforasubstantialnumberofourassociates.Themarketforretailmanagementishighlycompetitiveand,incommonwithotherretailers,wefacechallengesinsecuringsufficientmanagementtalent.Changesthatadverselyimpactourabilitytoattractandretainqualityassociatesandmanagementpersonnelcouldadverselyaffectourperformance.Ifweengageinmergersoracquisitionsofnewbusinesses,ordivestanyofourcurrentbusinesses,ourbusinesswillbesubjecttoadditionalrisks.Wehavegrownourbusinessinpartthroughmergersandacquisitions.Wemayconsideropportunitiestoacquirenewbusinessesortodivestcurrentbusinesses.Acquisitionordivestitureactivitiesmaydivertattentionofmanagementfromoperatingtheexistingbusinesses.Wemaydoaless-than-optimaljobofevaluatingtargetcompaniesandtheirrisksandbenefits,andintegrationofacquisitionscanbedifficultandtime-consuming.Acquisitionsmaynotmeetourexpectationsormayexposeustounexpectedorgreater-than-expectedliabilities.Divestiturealsoinvolvesrisks,suchastherisksofexposureonleaseobligations,obligationsundertakeninthedispositionandpotentialliabilitiesthatmayariseunderlawasaresultofthedispositionorthesubsequentfailureoftheacquirer.Failuretoexecuteonmergersordivestituresinasatisfactorymannercouldadverselyaffectourfutureresultsofoperationsandfinancialcondition.Failuretooperateinformationsystemsandimplementnewtechnologieseffectivelycoulddisruptourbusinessorreduceoursalesorprofitability.Theefficientoperationofourbusinessdependsonourinformationsystems,includingourabilitytooperatethemeffectivelyandtosuccessfullyselectandimplementnewtechnologies,systems,controlsandadequatedisasterrecoverysystems.WemustoperateandimplementthesesystemsandtechnologiessuchthatweprotecttheconfidentialityofdataofourCompany,ourassociates,ourcustomersandotherthirdparties.Thefailureofourinformationsystemstoperformasdesignedorourfailuretoimplementandoperatethemeffectivelycoulddisruptourbusinessorsubjectustoliabilityandtherebyharmourprofitability.Wedependuponstrongcashflowsfromouroperationstosupportnewcapitalexpansion,operations,debtrepayment,stockrepurchaseprogramanddividends.Ourbusinessdependsuponouroperationstogeneratestrongcashflowsandupontheavailabilityoffinancingsourcestosupportourcapitalexpansionrequirements,generaloperatingactivities,stockrepurchaseprogramanddividendsandtofunddebtrepayment.Ourinabilitytocontinuetogeneratesufficientcashflowstosupporttheseactivitiesorthelackofavailabilityoffinancinginadequateamountsandonappropriatetermscouldadverselyaffectourfinancialperformanceorourearningspersharegrowth.Generaleconomicandotherfactorsadverselyaffectconsumerspending,whichcouldadverselyaffectoursalesandoperatingresults.Interestrates;recession;inflation;deflation;consumercreditavailability;consumerdebtlevels;energycosts;taxratesandpolicy;unemploymenttrends;threatsorpossibilitiesofwar,terrorismorotherglobalornationalunrest;actualorthreatenedepidemics;politicalorfinancialinstability;andgeneraleconomic,politicalandotherfactorsbeyondourcontrolhavesignificanteffectsonconsumerconfidenceandspending.Consumerspending,inturn,affectssalesatretailers,whichcouldincludeTJX.Thesefactorscouldadverselyaffectoursalesandperformanceifwedonotsuccessfullyimplementstrategiestomitigatethem.Issueswithmerchandisequalityorsafetycoulddamageourreputation,salesorfinancialresults.Variousgovernmentalauthoritiesregulatethequalityandsafetyofthemerchandisewesellinourstores.Regulationsandstandardsinthisarea,includingthoserelatedtotherecentlyenactedConsumerProductSafetyImprovementActof2008intheUnitedStates,maychangefromtimetotime.Ourinabilitytocomplyonatimelybasiswithregulatoryrequirementscouldresultinsignificantfinesorpenalties,whichcouldhaveamaterialadverseeffectonourfinancialresults.Issueswiththequalityandsafetyofmerchandisewesellinourstores,regardlessofourfault,orcustomerconcernsaboutsuchissues,couldcausedamagetoourreputation,lostsales,uninsuredproductliabilityclaimsorlosses,merchandiserecallsandincreasedcosts,andregulatory,civilorcriminalfinesorpenalties,whichcouldhaveamaterialadverseeffectonourfinancialresults.13Wearesubjecttoimportrisksassociatedwithimportingmerchandisefromabroad.Manyoftheproductssoldinourstoresaresourcedbyourvendorsandtoalimitedextentbyusinmanyforeigncountries.Asaresult,wearesubjecttothevariousrisksofdoingbusinessinforeignmarketsandimportingmerchandisefromabroad,suchas:—potentialdisruptionsinsupply;—changesinduties,tariffs,quotasandvoluntaryexportrestrictionsonimportedmerchandise;—strikesandothereventsaffectingdelivery;—consumerperceptionsofthesafetyofimportedmerchandise,particularlymerchandiseimportedfromthePeople’sRepublicofChina;and—economic,politicalorotherproblemsincountriesfromorthroughwhichmerchandiseisimported.Politicalorfinancialinstability,traderestrictions,tariffs,currencyexchangerates,transportcapacityandcostsandotherfactorsrelatingtointernationaltradeandimportedmerchandisecouldaffecttheavailabilityandthepriceofourinventory.Ourexpandinginternationaloperationsexposeustorisksinherentinforeignoperations.WehaveasignificantretailpresenceinCanada,theUnitedKingdomandIreland,andhaverecentlyexpandedintoGermany.Ourgoalistocontinuetoexpandintootherinternationalmarketsinthefuture.OurforeignoperationsencounterriskssimilartothosefacedbyourU.S.operations,aswellasrisksinherentinforeignoperations,suchasunderstandingtheretailclimateandtrends,localcustomsandcompetitiveconditionsinforeignmarkets,complyingwithforeignlaws,rulesandregulations,andforeigncurrencyfluctuations,whichcouldhaveanadverseimpactonourprofitability.Ourresultsmaybeadverselyaffectedbyfluctuationsinthepriceofoil.Pricesofoilhavefluctuateddramaticallyinthepast.Thesefluctuationsmayresultinanincreaseinourtransportationcostsfordistribution,utilitycostsforourretailstoresandcoststopurchaseourproductsfromsuppliers.Acontinuedriseinoilpricescouldadverselyaffectconsumerspendinganddemandforourproductsandincreaseouroperatingcosts,bothofwhichcouldhaveanadverseeffectonourperformance.Changesinlawsandregulationsandoutcomesoflitigationandproceedingscouldnegativelyaffectourbusinessoperationsandfinancialperformance.Wearesubjecttofederal,state,provincialorlocallaws,rulesandregulationsintheUnitedStatesandabroad,anyofwhichmaychangefromtimetotimeinwayswhichcouldmateriallyadverselyaffectouroperationsandourfinancialresultsandcondition.Wearefromtimetotimeinvolvedinlitigationandproceedings,theoutcomesofwhichifdeterminedadverselytouscouldmateriallyadverselyaffectouroperationsandourfinancialresultsandcondition.Inaddition,U.S.generallyacceptedaccountingprinciplesinaccordancewithwhichweprepareourfinancialstatementsmaychangefromtimetotime,andthesechangescouldhavematerialeffectsonourreportedfinancialresultsandcondition.Weownandleaseforlongperiodssignificantamountsofrealestate,whichsubjectsustovariousfinancialrisks.Weleasevirtuallyallofourstorelocationsgenerallyforlongtermsandeitherownorleaseforlongperiodsourprimarydistributioncentersandadministrativeoffices.Accordingly,wearesubjecttotherisksassociatedwithowningandleasingrealestate.Whilewehavetherighttoterminatesomeofourleasesunderspecifiedconditionsbymakingspecifiedpayments,wemaynotbeabletoterminateaparticularleaseiforwhenwewouldliketodoso.Ifanexistingorfuturestoreisnotprofitable,andwedecidetocloseit,wemaybecommittedtoperformobligationsundertheapplicablelease,including,amongotherthings,payingrentandoperatingexpensesforthebalanceoftheleaseterm,orexercisingrightstoterminate,andtheperformanceofanyoftheseobligationsmaybeexpensive.Whenweassignorsubleaseleasedproperty,wecanremainliableontheleaseobligationsiftheassigneeorsublesseedoesnotperform.In14addition,whenleasesexpire,wemaybeunabletonegotiaterenewals,eitheroncommerciallyacceptabletermsoratall,whichcouldcauseustoclosestores.Ourstockpricemayfluctuatebasedonmarketexpectations.Thepublictradingofourstockisbasedinlargepartonmarketexpectationsthatourbusinesswillcontinuetogrowandthatwewillachievecertainlevelsofnetincome.Ifthesecuritiesanalyststhatregularlyfollowourstocklowertheirratingorlowertheirprojectionsforfuturegrowthandfinancialperformance,themarketpriceofourstockislikelytodrop.Inaddition,ifourquarterlyfinancialperformancedoesnotmeettheexpectationsofsecuritiesanalysts,ourstockpricewouldlikelydecline.Thedecreaseinthestockpricemaybedisproportionatetotheshortfallinourfinancialperformance.ITEM1B.UNRESOLVEDSTAFFCOMMENTSNone.15ITEM2.PROPERTIESWeleasevirtuallyallofourover2,600storelocations,generallyfor10yearswithoptionstoextendtheleasetermforoneormore5-yearperiods.Wehavetherighttoterminatesomeoftheseleasesbeforetheexpirationdateunderspecifiedcircumstancesandsomewithspecifiedpayments.ThefollowingisasummaryofourprimarydistributioncentersandprimaryadministrativeofficelocationsbysegmentasofJanuary31,2009.Squarefootageinformationforthedistributioncentersrepresentstotal“groundcover”ofthefacility.Squarefootageinformationforofficespacerepresentstotalspaceoccupied:DISTRIBUTIONCENTERSMarmaxx:T.J.MaxxWorcester,Massachusetts500,000s.f.—ownedEvansville,Indiana983,000s.f.—ownedLasVegas,Nevada713,000s.f.sharedwithMarshalls—ownedCharlotte,NorthCarolina600,000s.f.—ownedPittstonTownship,Pennsylvania1,017,000s.f.—ownedMarshallsDecatur,Georgia780,000s.f.—ownedWoburn,Massachusetts473,000s.f.—leasedBridgewater,Virginia562,000s.f.—leasedPhiladelphia,Pennsylvania1,001,000s.f.—leasedHomeGoodsBrownsburg,Indiana805,000s.f.—ownedBloomfield,Connecticut803,000s.f.—ownedA.J.WrightFallRiver,Massachusetts501,000s.f.—ownedSouthBend,Indiana542,000s.f.—ownedCanadaBrampton,Ontario507,000s.f.—leasedMississauga,Ontario669,000s.f.—leasedEuropeMiltonKeynes,England108,000s.f.—leasedWakefield,England176,000s.f.—leasedStoke,England261,000s.f.—leasedWalsall,England275,000s.f.—leasedOFFICESPACECorporate,Marmaxx,HomeGoods,A.J.WrightFraminghamandWestboro,Massachusetts1,254,000s.f.—leasedinseveralbuildingsCanadaMississauga,Ontario140,000s.f.—leasedEuropeWatford,England61,000s.f.—leasedDusseldorf,Germany14,000s.f.—leased16ITEM3.LEGALPROCEEDINGSPutativeclassactionsconsolidatedintheUnitedStatesDistrictCourtfortheDistrictofMassachusetts,InreTJXCompaniesRetailSecurityBreachLitigation,07-cv-10162,werefiledagainstTJX(i)putativelyonbehalfofcustomersintheUnitedStates,PuertoRicoandCanadawhosetransactiondatawereallegedlycompromisedbytheComputerIntrusion(“CustomerTrack”)and(ii)putativelyonbehalfoffinancialinstitutionsthatreceivedalertsfromMasterCardorVisarelatedtotheComputerIntrusionidentifyingpaymentcardsissuedbysuchfinancialinstitutionsandthatthereaftersuffereddamagesfromactualreissuancecosts,monitoringexpensesorfraudloss(“FinancialInstitutionsTrack”).Theseputativeclassactionsassertedclaimsfornegligenceandrelatedcommon-lawand/orstatutorycausesofactionstemmingfromtheComputerIntrusion,andsoughtvariousformsofreliefincludingdamages,relatedinjunctiveorequitableremedies,multipleorpunitivedamages,andattorneys’fees.(cid:129)CustomerTrack.OnDecember30,2008,theDistrictCourtjudgmentintheCustomerTrackapprovingtheAmendedSettlementAgreement,datedasofNovember14,2007,amongTJX,itsacquiringbankandthenamedplaintiffs,individuallyandonbehalfofthesettlementclass,becamefinal.(cid:129)FinancialInstitutionsTrack.OnOctober12,2007,theDistrictCourtdismissedtheplaintiffs’claimsintheFinancialInstitutionsTrack,otherthantheirclaimsofnegligentmisrepresentationandviolationoftheMassachusettsconsumerprotectionstatute(Chapter93A)basedonnegligentmisrepresentation,anddeniedtheplaintiffs’motionforclasscertificationofthenon-dismissedclaims.Subsequently,theDistrictCourtdismissedtheFinancialInstitutionsTrackoftheactionforlackofsubjectmatterjurisdictionandorderedthecasetransferredtostatecourtinMassachusetts.OnMarch30,2009,theUnitedStatesCourtofAppealsfortheFirstCircuitaffirmedthedismissaloftheplaintiffs’claimsfornegligenceandbreachofcontract,affirmedthedenialoftheplaintiffs’motionforleavetoamendtheircomplainttoaddacountforconversion,andvacatedtheordertransferringthecasetostatecourtinMassachusetts.TheFirstCircuitfurtherupheldthedecisionnottodismissplaintiffs’claimsfornegligentmisrepresentationandforviolationofChapter93Abasedonnegligentmisrepresentation(butinsodoingnotedthattheplaintiffshadnotappealedfromthelowercourt’sdenialofclasscertificationofsuchclaims)andreversedthedismissaloftheplaintiffs’claimforbreachofChapter93Abasedonanunfairnesstheory.Finally,theFirstCircuitremandedtotheDistrictCourtforfurtherproceedingsonthoseclaimsthattheFirstCircuitruledwerenotsubjecttodismissal,notingthatduringsuchfurtherproceedingsTJXwillhaveanopportunitytomoveforsummaryjudgmentonallsuchclaimsandtochallengeclasscertificationoftheplaintiffs’claimforbreachofChapter93Abasedonanunfairnesstheory.Thosefinancialinstitutionsthat(forthemselvesand,inthecaseofMasterCardissuers,onbehalfoftheiraffiliatedandtheirsponsoredissuers)acceptedthesettlementofferundertheSettlementAgreementamongTJX,VisaU.S.A.Inc.andVisaInc.andTJX’sacquiringbankdatedasofNovember29,2007ortheSettlementAgreementbetweenTJXandMasterCardInternationalIncorporateddatedasofApril2,2008,releasedandindemnifiedTJXanditsacquiringbankswithrespecttoanyclaimsofsuchissuersasVisaissuersorMasterCardissuers,respectively,withrespecttoanyclaimsbyreasonofanymatter,occurrence,oreventpertainingtotheComputerIntrusion,includingbutnotlimitedtoclaimsintheFinancialInstitutionTrackandstatecourtcasedescribedbelow.Inaddition,thenamedplaintiffsintheFinancialInstitutionsTrackotherthanAmeriFirstBankpreviouslysettledwithTJX.OnJanuary16,2008,AmeriFirstBankandanadditionalplaintifffiledanactioninMassachusettsstatecourt,AmeriFirstBanketal.v.TheTJXCompanies,Inc.etal,MassachusettsSuperiorCourt08-0229,raisingallegationsandclaimsnearlyidenticaltothoseassertedintheFinancialInstitutionsTrackofthepurportedfederalclassaction.Thecomplaintstatedplaintiffs’intentiontobringclassallegationsdependingonpre-trialrulingsbythestatecourt.ThestatecourtstayedthestateactionpendingadjudicationbythefederalcourtoftheappealsintheFinancialInstitutionsTrack.OnMarch30,2009,theFirstCircuitissuedtheopiniondescribedaboveonthoseappeals.17Amulti-stategroupof41stateAttorneysGeneralisinvestigatingwhetherTJXmayhaveviolatedtheirrespectivestateconsumerprotectionlawswithrespecttotheComputerIntrusion.TJXhasrespondedtoCivilInvestigativeDemandswithrespecttothisinvestigation.ITEM4.SUBMISSIONOFMATTERSTOAVOTEOFSECURITYHOLDERSTherewasnomattersubmittedtoavoteofTJX’ssecurityholdersduringthefourthquarteroffiscal2009.18PartIIITEM5.MARKETFORTHEREGISTRANT’SCOMMONEQUITY,RELATEDSECURITYHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIESPriceRangeOfCommonStockOurcommonstockislistedontheNewYorkStockExchange(Symbol:TJX).Thequarterlyhighandlowsalepricesfortheequityforfiscal2009andfiscal2008areasfollows:QuarterHighLowHighLowFiscal2009Fiscal2008First$34.93$29.44$29.84$25.74Second$36.44$30.32$30.19$26.34Third$37.52$23.20$32.46$26.29Fourth$28.01$17.80$31.95$25.49TheapproximatenumberofcommonshareholdersatJanuary31,2009was54,000.Wedeclaredfourquarterlydividendsof$0.11pershareforfiscal2009and$0.09pershareforfiscal2008.WhileourdividendpolicyissubjecttoperiodicreviewbyourBoardofDirectors,wecurrentlyintendtocontinuetopaycomparabledividendsinthefuture.InformationOnShareRepurchasesThenumberofsharesofcommonstockrepurchasedbyTJXduringthefourthquarteroffiscal2009andtheaveragepricepaidpershareareasfollows:PeriodTotalNumberofSharesRepurchased(1)AveragePricePaidPerShare(2)TotalNumberofSharesPurchasedasPartofaPubliclyAnnouncedPlanorProgram(3)MaximumNumber(orApproximateDollarValue)ofSharesthatMayYetbePurchasedUnderthePlansorProgramsOctober26,2008throughNovember22,20082,736,300$23.752,736,300$744,893,130November23,2008throughDecember27,2008—$——$744,893,130December28,2008throughJanuary31,2009—$——$744,893,130Total:2,736,3002,736,300(1)Allshareswerepurchasedaspartofpubliclyannouncedplans.(2)Averagepricepaidpershareincludescommissionsandisroundedtothenearesttwodecimalplaces.(3)Ourfiscal2009repurchasescompletedthe$1billionstockrepurchaseprogramapprovedbytheBoardofDirectorsandannouncedinFebruary2007andincludedtherepurchaseof8.9millionsharesatacostof$255millionunderthe$1billionstockrepurchaseprogramapprovedbytheBoardofDirectorsandannouncedinFebruary2008.AsofJanuary31,2009,$745millionremainedavailableforpurchaseunderthecurrent$1billionprogram.19ThefollowingtableprovidescertaininformationasofJanuary31,2009withrespecttoourequitycompensationplans:EquityCompensationPlanInformationPlanCategoryNumberofSecuritiestobeIssuedUponExerciseofOutstandingOptions,WarrantsandRightsWeighted-AverageExercisePriceofOutstandingOptions,WarrantsandRightsNumberofSecuritiesRemainingAvailableforFutureIssuanceUnderEquityCompensationPlans(ExcludingSecuritiesReflectedinColumn(a))(a)(b)(c)Equitycompensationplansapprovedbysecurityholders31,772,628$24.8312,409,505Equitycompensationplansnotapprovedbysecurityholders(1)N/AN/AN/ATotal31,772,628$24.8312,409,505(1)Allequitycompensationplanshavebeenapprovedbyshareholders.Foradditionalinformationconcerningourequitycompensationplans,seeNoteHtoourconsolidatedfinancialstatements.20ITEM6.SELECTEDFINANCIALDATASelectedFinancialDataAmountsinthousandsexceptpershareamounts20092008200720062005FiscalYearEndedJanuary(1)(53Weeks)Incomestatementandpersharedata:Netsales$18,999,505$18,336,726$17,104,013$15,667,463$14,570,189Incomefromcontinuingoperations$914,886$782,432$787,172$706,653$620,838Weightedaveragecommonsharesfordilutedearningspersharecalculation442,255468,046480,045491,500509,661Dilutedearningspersharefromcontinuingoperations$2.08$1.68$1.65$1.45$1.23Cashdividendsdeclaredpershare$0.44$0.36$0.28$0.24$0.18Balancesheetdata:Cashandcashequivalents$453,527$732,612$856,669$465,649$307,187Workingcapital$858,238$1,231,301$1,365,833$888,276$701,008Totalassets$6,178,242$6,599,934$6,085,700$5,496,305$5,075,473Capitalexpenditures$582,932$526,987$378,011$495,948$429,133Long-termobligations(2)$383,782$853,460$808,027$807,150$598,540Shareholders’equity$2,134,557$2,131,245$2,290,121$1,892,654$1,746,556Otherfinancialdata:After-taxreturn(continuingoperations)onaverageshareholders’equity42.9%35.4%37.6%38.8%36.8%Totaldebtasapercentageoftotalcapitalization(3)26.7%28.6%26.1%29.9%28.6%Storesinoperationatyear-end:IntheUnitedStates:T.J.Maxx874847821799771Marshalls806776748715697HomeGoods318289270251216A.J.Wright(4)135129129152130InCanada:Winners202191184174168HomeSense7571685840InEurope:T.K.Maxx235226210197170HomeSense7————Total2,6522,5292,4302,3462,192SellingSquareFootageatyear-end:IntheUnitedStates:T.J.Maxx20,54320,02519,39018,78118,033Marshalls20,38819,75919,07818,20617,511HomeGoods6,2485,5695,1814,8594,159A.J.Wright(4)2,6802,5762,5773,0542,606InCanada:Winners4,6474,3894,2144,0123,811HomeSense1,4371,3581,2801,100747InEurope:T.K.Maxx5,4045,0964,6364,2163,491HomeSense107————Total61,45458,77256,35654,22850,358(1)Fiscal2008andpriorfiscalyearshavebeenadjustedtoreclassifytheoperatingresultsofBob’sStorestodiscontinuedoperations.Fiscal2006andpriorfiscalyearshavebeenadjustedtoreclassifytheoperatingresultsoftheA.J.Wrightstoreclosingstodiscontinuedoperations.SeeNoteCtotheconsolidatedfinancialstatements.Fiscal2005hasbeenadjustedtoreflecttheeffectofadoptingStatementofFinancialAccountingStandardsNo.123(R)infiscal2006.(2)Includeslong-termdebt,exclusiveofcurrentinstallmentsandcapitalleaseobligation,lessportionduewithinoneyear.(3)Totalcapitalizationincludesshareholders’equity,short-termdebt,long-termdebtandcapitalleaseobligation,includingcurrentmaturities.(4)A.J.Wrightstoresinoperationandsellingsquarefootageforfiscal2006andpriorfiscalyearsincludestorecountsandsquarefootageforthestoresthatarepartofdiscontinuedoperations.21ITEM7.MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONSThediscussionthatfollowsrelatestoour53-weekfiscalyearendedJanuary31,2009(fiscal2009),andthefiscalyearsendedJanuary26,2008(fiscal2008)andJanuary27,2007(fiscal2007),eachofwhichincluded52weeks.Ourresultsreflecttwodiscontinuedoperations:Bob’sStores,soldinfiscal2009and34A.J.Wrightstoresclosedinfiscal2007aspartofarepositioningofthechain.SeeNoteCtotheconsolidatedfinancialstatements.Allreferencesinthefollowingdiscussionaretocontinuingoperationsunlessotherwiseindicated.Ourresultsreflectthecostsoftheunauthorizedintrusionorintrusions(collectively,the“ComputerIntrusion”)intoportionsofourcomputersystem,whichwasdiscoveredinlatefiscal2007andinwhichwebelievecustomerdatawerestolen.See“ProvisionforComputerIntrusionrelatedcosts”below.RESULTSOFOPERATIONSOurfiscal2009performancewasadverselyaffectedinthesecondhalfoftheyearbytwomacroeconomicfactors:theworldwiderecessionwhichadverselyaffectedconsumerspendingandretailsalesatTJXandgenerallyandthesignificantstrengtheningoftheU.S.dollaragainsttheCanadiandollarandtheBritishpound,whichadverselyaffectedthetranslationoftheoperatingresultsofourCanadianandEuropeanbusinesses.Withtheflexibilityofouroff-pricebusinessmodel,infiscal2009weincreasedourinventoryturnsandmaintainedthevaluepropositionofourmerchandisebybuyingclosertoneedandoperatingwithleaner-than-usualinventories.Wealsocontinuedafocusontightexpensecontrolduringfiscal2009.Despitethechallengingenvironment,customertrafficinfiscal2009wasupacrossvirtuallyallofourdivisions,andmerchandisemarginsremainedstrong.Highlightsofourfinancialperformanceforfiscal2009includethefollowing:—Netsalesforfiscal2009were$19.0billion,a4%increaseoverfiscal2008.The53rdweekinfiscal2009increasednetsalesbyapproximately1%,whichwasmorethanoffsetbya2%declineinnetsalesduetotheimpactofforeigncurrencyexchangerates.Wecontinuedtogrowourbusiness,withbothstoresinoperationandsellingsquarefootageup5%attheendoffiscal2009comparedtolastfiscalyearend.—Samestoresalesona52-weekbasisforfiscal2009increased1%overtheprioryear.—Ourcostofsalesratioforfiscal2009increased0.3percentagepoints,asanincreaseinmerchandisemarginsandthebenefitofthe53rdweekweremorethanoffsetbybuyingandoccupancyexpensedeleverageona1%samestoresalesincrease.Selling,generalandadministrativeexpensesasapercentageofnetsalesforfiscal2009increasedby0.1percentagepointscomparedtotheprioryear,primarilyduetodeleverageonthe1%samestoresalesincrease.—Ourfiscal2009pre-taxmargin(theratioofpre-taxincometonetsales)was7.6%comparedto6.9%forfiscal2008.Thecomparisonofpre-taxmarginsforfiscal2009tofiscal2008wasaffectedbytheProvisionforComputerIntrusionrelatedcostsineachyear.Fiscal2009includeda$31millioncredit(pre-tax)totheprovision,whichincreasedpre-taxmarginby0.2percentagepoints,whilefiscal2008includedapre-taxchargeof$197million,whichreducedthefiscal2008pre-taxmarginby1.1percentagepoints.—Incomefromcontinuingoperationswas$914.9million,or$2.08perdilutedshare,forfiscal2009comparedto$782.4million,or$1.68perdilutedshare,lastyear.Thefiscal2009credittotheProvisionforComputerIntrusionrelatedcostsincreasedfiscal2009incomefromcontinuingoperationsby$18million,or$0.04perdilutedshare,whilethefiscal2008chargefortheProvisionforComputerIntrusionrelatedcostsreducedfiscal2008incomefromcontinuingoperationsby$119million,or$0.25perdilutedshare.—Duringfiscal2009,werepurchased24.0millionsharesofourcommonstockatacostof$741million.Ourdilutedearningspersharereflectthebenefitofourstockrepurchaseprogram.—Consolidatedaverageperstoreinventoriesofourcontinuingoperations,includinginventoryonhandatourdistributioncenters,weredown6%attheendoffiscal2009ascomparedtoanincreaseof2%attheprioryear22end.Onacomparablebasis,adjustingforcurrencyandacalendarshiftduetothe53rdweekinfiscal2009,averageperstoreinventories,includinginventoryonhandatourdistributioncenters,weredown4%infiscal2009ascomparedtofiscal2008andwereessentiallyflatinfiscal2008ascomparedtofiscal2007.WehaveimplementedstepstopositionourselvesforthefiscalyearendingJanuary30,2010(fiscal2010)inlightoftheongoingworldwiderecessionincluding:—Wehaveplannedourconsolidatedsamestoresalesconservatively,settingourinventoryandexpenseplansaroundnegativelowsingledigitcomparablestoresales.—Weplantocontinuetooperatewithhistoricallyleaninventoriesandtobuyclosertoneedthaninthepast,designedtoincreaseinventoryturnsanddrivetraffictoourstores.—Wearetakingmeasuresdesignedtoreduceexpensesinfiscal2010byupto$150millionincludingfurthersavingsinnon-merchandiseprocurement,implementingprocessestomoreefficientlymanagepayrollinourstoreanddistributioncenters,reducingmarketingexpenditureswhileincreasingpenetration,eliminatingopenpositions,eliminatingmeritpayincreasesacrossthemajorityoftheorganization,restructuringcertainareastoimproveproductivityandefficiencyandofferingavoluntaryretirementprogramforcertainemployees.Thefollowingisadiscussionofourconsolidatedoperatingresults,followedbyadiscussionofoursegmentoperatingresults.Netsales:Consolidatednetsalesforfiscal2009totaled$19.0billion,a4%increaseovernetsalesof$18.3billioninfiscal2008.Theincreasereflecteda4%increasefromnewstores,a1%increasefromthe53rdweekanda1%increaseinsamestoresales,offsetbya2%declinefromthenegativeimpactofforeigncurrencyexchangerates.Consolidatednetsalesforfiscal2008increased7%overnetsalesof$17.1billionforfiscal2007.Theincreasereflectedincreasesof3%fromnewstores,2%fromsamestoresalesanda2%favorableimpactduetoforeigncurrencyexchangerates.Newstoreshavebeenasignificantsourceofsalesgrowth.Bothourconsolidatedstorecountandoursellingsquarefootageincreasedby5%infiscal2009andby4%infiscal2008overtherespectiveprioryearperiods.Asaresultofeconomicconditions,wehaveplannedstoreopeningsmoreconservativelyandexpecttoadd64stores(netofstoreclosings)infiscal2010,a2%increaseinourconsolidatedstorebaseandanincreaseof2%inoursellingsquarefootage.The1%samestoresalesincreaseinfiscal2009reflectedastrongfirsthalfperformance,especiallyatourinternationalsegments,partiallyoffsetbysamestoresalesdecreasesinthesecondhalfoftheyearlargelyduetotheeconomicrecession.Customertrafficincreasedatvirtuallyallofourbusinessesinfiscal2009,eveninthethirdandfourthquarters,whichwaspartiallyoffsetbyareductioninthevalueoftheaveragetransaction.Asformerchandisecategories,shoes,accessoriesanddresseswerethestrongestperformers,whilehomefashionswereadverselyaffectedbytheweakhousingmarketandeconomicconditions.Geographically,samestoresalesinCanadaandtheUnitedKingdomwereabovetheconsolidatedaverageforfiscal2009,whileintheU.S.,samestoresalesintheWestCoastandFloridatrailedtheconsolidatedaverage.The2%increaseinsamestoresalesforfiscal2008wasdrivenbyastrongperformanceatourinternationalsegments.IntheU.S.,salesofdresses,footwearandaccessorieswerestrong,partiallyoffsetbysoftersalesinthebalanceofthewomen’sapparelcategory.AtMarmaxx,ourlargestbusiness,homecategorieswerealsoweak.SamestoresalesincreasesbenefitedfromthecontinuedexpansionoffootweardepartmentsinMarshalls.Duringfiscal2008,weopenedexpandedfootweardepartmentsinapproximately240additionalMarshallsstores.Samestoresalesforfiscal2008atourinternationalsegmentswereabovetheconsolidatedaverage.WithintheU.S.,thestrongestregionsweretheWestCoastandtheNortheast,whileFloridaandtheSoutheasttrailedtheU.S.average.Overalltransactionvolumewasslightlydowninfiscal2008,morethanoffsetbyanincreaseinthevalueoftheaveragetransaction.Wedefinesamestoresalestobesalesofthosestoresthathavebeeninoperationforalloraportionoftwoconsecutivefiscalyears,orinotherwords,storesthatarestartingtheirthirdfiscalyearofoperation.Weclassifyastoreasanewstoreuntilitmeetsthesamestoresalescriteria.Wedeterminewhichstoresareincludedinthesamestoresalescalculationatthebeginningofafiscalyearandtheclassificationremainsconstantthroughoutthatyear,unlessastoreis23closed.Wecalculatesamestoresalesresultsbycomparingthecurrentandprioryearweeklyperiodsthataremostcloselyaligned.Relocatedstoresandstoresthatareincreasedinsizearegenerallyclassifiedinthesamewayastheoriginalstore,andwebelievethattheimpactofthesestoresontheconsolidatedsamestorepercentageisimmaterial.Samestoresalesofourforeigndivisionsarecalculatedonaconstantcurrencybasis,whichremovestheeffectofchangesincurrencyexchangerates,andwebelieveitisamoreaccuratemeasureofthedivisionaloperatingperformance.Thefollowingtablesetsforthourconsolidatedoperatingresultsasapercentageofnetsales:200920082007FiscalYearEndedJanuaryNetsales100.0%100.0%100.0%Costofsales,includingbuyingandoccupancycosts75.875.575.8Selling,generalandadministrativeexpenses16.716.616.7ProvisionforComputerIntrusionrelatedcosts(0.2)1.1—Interest(income)expense,net0.1—0.1Incomefromcontinuingoperationsbeforeprovisionforincometaxes*7.6%6.9%7.4%*Duetorounding,theindividualitemsmaynotfoottoIncomefromcontinuingoperationsbeforeprovisionforincometaxes.Impactofforeigncurrencyexchangerates:OuroperatingresultscanbeadverselyaffectedbyforeigncurrencyexchangeratesasaresultofsignificantchangesinthevalueoftheU.S.dollarinrelationtoothercurrencies.Twoofthemoresignificantwaysinwhichforeigncurrencyimpactsusareasfollows:TranslationofforeignoperatingresultsintoU.S.dollars:Inourfinancialstatements,wetranslatetheoperationsofourstoresinCanadaandEuropefromlocalcurrenciesintoU.S.dollarsusingcurrencyratesineffectatdifferentpointsintime.Significantchangesinforeignexchangeratesfromcomparablepriorperiodscanresultinmeaningfulvariationsinconsolidatednetsales,incomefromcontinuingoperationsandearningspersharegrowthaswellasthenetsalesandoperatingresultsofourCanadianandEuropeansegments.Currencytranslationgenerallydoesnotaffectoperatingmargins,assalesandexpensesoftheforeignoperationsaretranslatedatessentiallythesamerateseachperiod.Inventoryhedges:Additionally,weroutinelyenterintoinventory-relatedhedginginstrumentstomitigatetheimpactofforeigncurrencyexchangeratesonmerchandisemarginswhenourinternationaldivisionspurchasegoodsincurrenciesthatarenottheirlocalcurrencies,primarilyU.S.dollarpurchases.Aswehavenotelected“hedgeaccounting”asdefinedbySFASNo.133(“AccountingforDerivativeInstrumentsandHedgingActivities”),undergenerallyacceptedaccountingprincipleswerecordamark-to-marketadjustmentonthehedginginstrumentsinourresultsofoperationsattheendofeachreportingperiod,priortothecurrencygainorlossbeingrecordedontheitemsbeinghedged.Insubsequentperiods,theincomestatementimpactofthehedgesareeffectivelyoffsetwhentherelatedinventoryissold.Whiletheseeffectsoccureveryreportingperiod,theyareofmuchgreatermagnitudewhentherearesuddenandsignificantchangesincurrencyexchangerates,astherewereinthethirdandfourthquartersoffiscal2009.Historically,theimpactonafull-yearbasishasnotbeenmaterial.Sincethemark-to-marketadjustmentonthesehedgeshasnoimpactonnetsales,itaffectsbothouroperatingmarginsandearningsgrowth.Costofsales,includingbuyingandoccupancycosts:Costofsales,includingbuyingandoccupancycosts,asapercentageofnetsaleswas75.8%infiscal2009,75.5%infiscal2008and75.8%infiscal2007.Thisratioforfiscal2009,ascomparedtofiscal2008,increased0.3percentagepointsprimarilyduetodeleverageofbuyingandoccupancycostsonthe1%samestoresalesincrease.Thisdeleveragemorethanoffsetabenefittothisexpenseratioduetothe53rdweek(estimatedatapproximately0.2percentagepoints)aswellasanimprovementinourconsolidatedmerchandisemarginof0.2percentagepoints.Throughoutfiscal2009,wesolidlyexecutedouroff-pricefundamentals,buyingclosetoneed,operatingwithleanerinventoriesandtakingadvantageofopportunitiesinthemarketplace.Costofsales,includingbuyingandoccupancycosts,asapercentageofnetsalesforfiscal2008,ascomparedtofiscal2007,reflectedanimprovementinourconsolidatedmerchandisemargin(0.4percentagepoints),duetoimprovedmarkonandlowermarkdowns.Throughoutfiscal2008,wesolidlyexecutedouroff-pricefundamentals,buyingclose24toneedandtakingadvantageofopportunitiesinthemarketplace.Thismerchandisemarginimprovementwaspartiallyoffsetbyaslightincreaseinoccupancycostsasapercentageofnetsales.Allotherbuyingandoccupancycostsremainedrelativelyflatascomparedtothesameperiodintheprioryear.Selling,generalandadministrativeexpenses:Selling,generalandadministrativeexpensesasapercentageofnetsaleswere16.7%infiscal2009,16.6%infiscal2008and16.7%infiscal2007.Theincreaseinfiscal2009comparedtofiscal2008reflectsdeleveragefromthelowsamestoresalesincrease,primarilyinstorepayrollandfieldcosts,partiallyoffsetbysavingsfromcostcontainmentinitiatives.Advertisingcostsasapercentageofnetsalesinfiscal2009wereessentiallyflattotheprioryear.Thefiscal2008expenseratiowasslightlydowncomparedtotheprioryearwithaplannedincreaseinadvertisingcosts(0.1percentagepoint)beingoffsetbycostcontainmentinitiatives.ProvisionforComputerIntrusionrelatedcosts:FromthetimeofthediscoveryoftheComputerIntrusionlateinfiscal2007,throughtheendoffiscal2009,wecumulativelyexpensed$171.5million(pre-tax)withrespecttotheComputerIntrusion,includinganetchargeof$159.2millioninfiscal2008toreserveforprobablelosses,costsof$42.8millionincurredpriortoestablishmentofthereserve($5millionofwhichwasrecordedinfiscal2007)anda$30.5millionreductioninthereserveinfiscal2009asaresultofnegotiations,settlements,insuranceproceedsandadjustmentsinourestimatedlosses.CostsrelatingtotheComputerIntrusionincurredandpaidafterestablishmentofthereservewerechargedagainstthereserve,whichisincludedinaccruedexpensesandotherliabilitiesonourbalancesheet.AsofJanuary31,2009,ourreservebalancewas$42.2million,whichreflectsourcurrentestimationofremainingprobablelosses(inaccordancewithU.S.generallyacceptedaccountingprinciples)withrespecttotheComputerIntrusion,includinglitigation,proceedings,investigationsandotherclaims,aswellaslegal,monitoring,reportingandothercosts.Asanestimate,ourreserveissubjecttouncertainty,ouractualcostsmayvaryfromourcurrentestimateandsuchvariationsmaybematerial.Wemaydecreaseorincreasetheamountofourreservetoadjustfordevelopmentsinthecourseandresolutionoflitigation,claimsandinvestigationsandrelatedexpensesandreceiptofinsuranceproceedsandforotherchanges.Interest(income)expense,net:Interest(income)expense,netamountedtoexpenseof$14.3millionforfiscal2009,incomeof$1.6millionforfiscal2008andexpenseof$15.6millionforfiscal2007.Thechangesfromyeartoyearrelateprimarilytointerestincomewhichtotaled$22.2millioninfiscal2009,$40.7millioninfiscal2008and$23.6millioninfiscal2007.Infiscal2008,wegeneratedmoreinterestincomeduetohighercashbalancesavailableforinvestmentaswellashigherinterestratesearnedonourinvestments.Incometaxes:Oureffectiveannualincometaxratewas36.9%infiscal2009,37.9%infiscal2008and37.7%infiscal2007.Thedecreaseinthetaxrateforfiscal2009ascomparedtofiscal2008reflectsthefavorableimpactofa$19millionreductionintheFIN48taxliability,whichreducedtheannualeffectiveincometaxrateforfiscal2009by1.3percentagepoints.Thisimprovementintheannualincometaxrateinfiscal2009wasoffsetbytheabsenceofafiscal2008favorabletaxbenefitof0.4percentagepointsrelatingtothetaxtreatmentofourPuertoRicosubsidiary.SeeNoteJtotheconsolidatedfinancialstatements.Theincreaseinthetaxrateforfiscal2008ascomparedtofiscal2007reflectstheabsenceofsomefiscal2007one-timebenefitsaswellasanincreaseduetocertainFIN48taxpositions,partiallyoffsetbythefavorableimpactofincreasedincomeatourforeignoperationsandincreasedforeigntaxcreditsrelatingtothetaxtreatmentofourPuertoRicosubsidiary.Incomefromcontinuingoperations:Incomefromcontinuingoperationswas$914.9millioninfiscal2009,$782.4millioninfiscal2008and$787.2millioninfiscal2007.Incomefromcontinuingoperationspersharewas$2.08infiscal2009,$1.68infiscal2008and$1.65infiscal2007.Unlikemanycompaniesintheretailindustry,wedidnothavea53rdweekinfiscal2007,butdidhavea53rdweekinfiscal2009.Weestimatethe53rdweekinfiscal2009favorablyaffectedearningspershareby$0.09pershare.25ThereductionintheProvisionforComputerIntrusionrelatedcostsinfiscal2009benefitedincomefromcontinuingoperationsbyapproximately$18million,after-tax,or$0.04pershare.ThechargerelatingtotheComputerIntrusionrelatedcostsinfiscal2008,adverselyaffectedincomefromcontinuingoperationsbyapprox-imately$119million,aftertax,or$0.25pershare.Changesinforeigncurrencyexchangeratesalsoaffectedthecomparabilityofourresults.Changesincurrencyratesreducedearningspershareby$0.05pershareinfiscal2009ascomparedtoanincreaseof$0.01pershareinfiscal2008.Changesinforeigncurrencyexchangeratesincreasedfiscal2008earningspershareby$0.05pershareincomparisontofiscal2007.Inaddition,oursharerepurchaseprogramaffectsthecomparabilityofearningspershare.Werepurchased24.0millionsharesofourstockatacostof$741millioninfiscal2009;werepurchased33.3millionsharesatacostof$950millioninfiscal2008;andwerepurchased22.0millionsharesatacostof$557millioninfiscal2007.Discontinuedoperationsandnetincome:AllhistoricalincomestatementshavebeenadjustedtoreflectthesaleofBob’sStoresinfiscal2009andtheclosureof34A.J.Wrightstoresinfiscal2007asdiscontinuedoperations.Includingtheimpactofdiscontinuedoperations,netincomewas$880.6million,or$2.00pershare,forfiscal2009,$771.8million,or$1.66pershare,forfiscal2008and$738.0million,or$1.55pershare,forfiscal2007.Segmentinformation:Thefollowingisadiscussionoftheoperatingresultsofourbusinesssegments.IntheUnitedStates,ourT.J.MaxxandMarshallsstoresareaggregatedastheMarmaxxsegment,andHomeGoodsandA.J.Wrighteachisreportedasaseparatesegment.TJX’sstoresoperatedinCanada(WinnersandHomeSense)arereportedastheCanadiansegment,andTJX’sstoresoperatedinEurope(T.K.MaxxandHomeSense)arereportedastheEuropeansegment.Weevaluatetheperformanceofoursegmentsbasedon“segmentprofitorloss,”whichwedefineaspre-taxincomebeforegeneralcorporateexpense,ProvisionforComputerIntrusionrelatedcostsandinterest.“Segmentprofitorloss,”aswedefinetheterm,maynotbecomparabletosimilarlytitledmeasuresusedbyotherentities.Inaddition,thismeasureofperformanceshouldnotbeconsideredanalternativetonetincomeorcashflowsfromoperatingactivitiesasanindicatorofourperformanceorasameasureofliquidity.Presentedbelowisselectedfinancialinformationrelatedtoourbusinesssegments:Marmaxx:Dollarsinmillions200920082007FiscalYearEndedJanuaryNetsales$12,362.1$11,966.7$11,531.8Segmentprofit$1,155.8$1,158.2$1,079.3Segmentprofitasapercentageofnetsales9.3%9.7%9.4%Percentincreaseinsamestoresales0%1%2%StoresinoperationatendofperiodT.J.Maxx874847821Marshalls806776748TotalMarmaxx1,6801,6231,569Sellingsquarefootageatendofperiod(inthousands)T.J.Maxx20,54320,02519,390Marshalls20,38819,75919,078TotalMarmaxx40,93139,78438,468NetsalesatMarmaxxincreased3%infiscal2009ascomparedtofiscal2008.SamestoresalesforMarmaxxwereflatinfiscal2009comparedtoa1%samestoresalesincreaseinfiscal2008.SalesatMarmaxxforfiscal2009reflectedincreasedcustomertrafficoffsetbyadecreaseinthevalueoftheaveragetransaction.Categoriesthatpostedsamestoresalesincreasesincludedfootwearandaccessories,children’sclothinganddresses.Duringfiscal2009,weaddedexpandedfootweardepartmentstoapproximately220Marshallsstores,whichnearlycompletestheexpansionoffootweardepartmentsatMarshalls.HomecategoriesatMarmaxxreportedsame26storesalesdecreasesinfiscal2009.Geographicallyinfiscal2009,samestoresalesintheNortheast,MidwestandMid-Atlanticregionswereabovethechainaverage,whilesamestoresalesintheWestCoast,FloridaandtheSoutheastwerebelowthechainaverage.Segmentprofitasapercentageofnetsales(“segmentmargin”or“segmentprofitmargin”)decreasedto9.3%infiscal2009from9.7%infiscal2008.Segmentmarginwasnegativelyimpactedbyanincreaseinoccupancycostsasapercentageofnetsales(0.5percentagepoints)duetodeleverageontheflatsamestoresales.Thisdecreasewaspartiallyoffsetbyanincreaseinmerchandisemargin(0.1percentagepoint)duetoincreasedmarkon.AsofJanuary31,2009,averageperstoreinventories,includinginventoryonhandatdistributioncenters,weredown4%comparedtoa2%decreaseattheprioryearend.Thedecreasesinaverageinventorieswereprimarilyduetocontinuedfocusonmaintainingaliquidinventoryposition.Segmentmarginforfiscal2008increasedto9.7%comparedto9.4%infiscal2007.Segmentmarginwasfavorablyimpactedbymerchandisemargins,whichincreased0.4percentagepoints(asapercentageofnetsales)duetolowermarkdownsandahighermarkon,aswellassomeexpenseleverageduetoourcostcontainmentmeasures.Theseimprovementsinsegmentmarginwerepartlyoffsetbyanincreaseinoccupancycostsandaplannedincreaseinadvertisingexpense.Weexpecttoopenapproximately17newstores(netofclosings)infiscal2010,increasingtheMarmaxxstorebaseby1%andincreasingitssellingsquarefootageby1%.Canada:U.S.Dollarsinmillions200920082007FiscalYearEndedJanuaryNetsales$2,139.4$2,040.8$1,740.8Segmentprofit$236.1$235.1$181.9Segmentprofitasapercentageofnetsales11.0%11.5%10.4%Percentincreaseinsamestoresales3%5%5%StoresinoperationatendofperiodWinners202191184HomeSense757168Total277262252Sellingsquarefootageatendofperiod(inthousands)Winners4,6474,3894,214HomeSense1,4371,3581,280Total6,0845,7475,494NetsalesfortheCanadiansegmentforfiscal2009increasedby5%overfiscal2008.Currencyexchangetranslationreducedfiscal2009salesbyapproximately$68million.Samestoresalesincreased3%infiscal2009comparedtoastrongincreaseof5%infiscal2008.Samestoresalesofouterwear,footwear,jewelryandaccessorieswereabovethesegmentaverage,whileHomeSensesamestoresaleswerebelowthesegmentaverageforfiscal2009.Segmentprofitforfiscal2009increasedslightlyto$236millioncomparedto$235millioninfiscal2008,whilesegmentmargindecreased0.5percentagepointsto11.0%.Currencyexchangetranslationreducedsegmentprofitby$11millionforfiscal2009,ascomparedtofiscal2008.However,becausecurrencytranslationimpactsbothsalesandexpenses,ithaslittleornoimpactonsegmentmargin.Inaddition,themark-to-marketadjustmentofinventoryrelatedhedgesreducedsegmentprofitinfiscal2009by$1million,incontrasttoa$5millionbenefitofthemark-to-marketadjustmentofinventoryrelatedhedgesinfiscal2008whichadverselyimpactedsegmentmargincomparisonsby0.3percentagepoints.Segmentmarginforfiscal2009,reflectedincreasesindistributioncentercostsandstorepayrollcostsasapercentageofnetsales,partiallyoffsetbyanincreaseinmerchandisemargins.Inthethirdquarteroffiscal2009,Winnersopened2StyleSensestores,anewconceptthatoffersfamilyfootwearandaccessories.WeanticipatethatmerchandisemarginsintheCanadiansegmentwillalsodeclineinfiscal2010asaresultofforeign27currencyexchange,duetothehighvolumeofmerchandisepurchasesbytheCanadiansegmentdenominatedinU.S.dollars.Segmentprofitmarginforfiscal2008increased1.1percentagepointsto11.5%comparedto10.4%forfiscal2007.Thisimprovementinsegmentmarginwasprimarilyduetoimprovedexpenseratios(leveragefromthe5%samestoresalesincreaseaswellascostcontainmentinitiatives).Currencyexchangeratesincreasedsegmentprofitbyapprox-imately$24millionforfiscal2008,ascomparedtofiscal2007.Mostofthisincreasewasduetocurrencytranslation,andasaresult,ithadnoimpactonsegmentmargin.Theincreaseinsegmentprofitinfiscal2008alsoincludedthefavorableimpactofamark-to-marketadjustmentofinventoryhedgecontracts,whichincreasedsegmentmarginby0.3percentagepoints.Thefiscal2008segmentmarginalsoreflectedanincreaseinmerchandisemargin,primarilyduetoincreasedmarkonaswellasthefavorableimpactofcostcontainmentinitiativesandstrongsamestoresalesresultsonexpenseratios.Weexpecttoaddanetof13storesinCanadainfiscal2010,whichisanincreaseof5%andwillincreasesellingsquarefootageby5%.Europe:U.S.Dollarsinmillions200920082007FiscalYearEndedJanuaryNetsales$2,242.1$2,216.2$1,864.5Segmentprofit$137.6$127.2$109.3Segmentprofitasapercentageofnetsales6.1%5.7%5.9%Percentincreaseinsamestoresales4%6%9%StoresinoperationatendofperiodT.K.Maxx235226210HomeSense7——Total242226210Sellingsquarefootageatendofperiod(inthousands)T.K.Maxx5,4045,0964,636HomeSense107——Total5,5115,0964,636Europeannetsalesforfiscal2009increased1%to$2.2billioncomparedtofiscal2008.Currencyexchangeratetranslationnegativelyaffectedfiscal2009salesbyapproximately$282million.Samestoresalesincreased4%forfiscal2009comparedtoa6%increaselastyear.Samestoresalesforfootwearandaccessoriesandmostotherwomen’sapparelcategoriesperformedabovethechainaverage,whilehomefashionswerebelowthechainaverage.Segmentprofitforfiscal2009increased8%to$137.6million,andsegmentmarginincreased0.4percentagepointsto6.1%comparedtolastyear.Currencyexchangeratetranslationnegativelyaffectedsegmentprofitbyapproximately$26millioninfiscal2009.Theincreaseinsegmentmarginreflectsimprovedmerchandisemargins,partiallyoffsetbyanincreaseinoccupancycostsasapercentageofsalesandthecostofoperationsinGermany.WeareencouragedbytheperformanceofourGermanstoresbutastheyarenewstores,theyreducethesegmentmargingeneratedbythemoreestablishedstoresintheU.K.andIreland.Duringfiscal2009,T.K.Maxxadded4morestoresinGermany,followingtheopeningofitsfirst5storesinGermanyinfiscal2008.T.K.MaxxalsointroducedtheHomeSenseconceptintotheU.K.with7newstores.Segmentprofitforfiscal2008increased16%to$127.2million,whilesegmentmargindecreasedslightlyto5.7%comparedtofiscal2007.Currencyexchangeratetranslationfavorablyimpactedsegmentprofitbyapproximately$10millioninfiscal2008,butdidnotimpactthesegmentprofitmargin.Theopeningof5storesinGermanyreducedsegmentprofitforfiscal2008by$11millionandreducedthefiscal2008segmentmarginby0.6percentagepoints,offsettingtheslightlyimprovedmerchandisemarginintheremainderofthesegment,aswellasthefavorableimpactofsamestoresalesgrowthonexpenseratiosandthesegment’scostcontainmentinitiatives.28Infiscal2010,weplantoopenanetof17T.K.Maxxstores,including10inGermanyand3HomeSensestoresintheU.K.andtoexpandsellingsquarefootageby8%.HomeGoods:Dollarsinmillions200920082007FiscalYearEndedJanuaryNetsales$1,578.3$1,480.4$1,365.1Segmentprofit$42.4$76.2$60.9Segmentprofitasapercentageofnetsales2.7%5.1%4.5%Percent(decrease)increaseinsamestoresales(3)%3%4%Storesinoperationatendofperiod318289270Sellingsquarefootageatendofperiod(inthousands)6,2485,5695,181HomeGoods’netsalesforfiscal2009increased7%comparedtofiscal2008,andsamestoresalesdecreased3%infiscal2009.Salesofhomefashionshavebeenparticularlyimpactedbytheweakhousingmarketandrecession.Segmentmarginof2.7%wasdownfrom5.1%forfiscal2008.Merchandisemarginsdeclinedinfiscal2009,primarilyduetoincreasedmarkdowns.Inaddition,HomeGoodsexperienceddeleverageonoperatingcostsasaresultofthedeclineinsamestoresales.Weareseekingtoaddressthedifficulthomeenvironmentbyoperatingwithveryleaninventoriesandfocusingonmerchandisecategoriesthatwebelievewillresonatewithconsumersinthesedifficulttimes.HomeGoods’netsalesforfiscal2008increased8%comparedtofiscal2007,andsamestoresalesincreased3%infiscal2008.Segmentmarginof5.1%forfiscal2008improvedoverfiscal2007,primarilyduetoimprovedmerchandisemarginsandtheleveragingofexpenses,particularlyoccupancycosts.Thesesegmentmarginimprovementswereoffsetinpartbyanincreaseinadvertisingexpensesasapercentageofnetsales.Infiscal2010,weplantoaddanetof4HomeGoodsstoresandincreasesellingsquarefootageby1%.A.J.Wright:Dollarsinmillions200920082007FiscalYearEndedJanuaryNetsales$677.6$632.7$601.8Segmentprofit(loss)$2.9$(1.8)$(10.3)Segmentprofit(loss)asapercentageofnetsales0.4%(0.3)%(1.7)%Percentincreaseinsamestoresales4%2%3%Storesinoperationatendofperiod135129129Sellingsquarefootageatendofperiod(inthousands)2,6802,5762,577A.J.Wright’snetsalesincreased7%forfiscal2009comparedtofiscal2008,andsegmentprofitincreasedto$2.9millioncomparedtoalossof$1.8millioninfiscal2008.Samestoresalesincreased4%forfiscal2009andA.J.Wrightrecordeditsfirstsegmentprofitinfiscal2009comparedtolossesintheprioryears.WebelieveA.J.Wrighthasimproveditsresultsthroughbettermerchandisingandadvertisingeffectiveness,asaresultofourimprovedunderstandingofA.J.Wright’scustomertastesandspendinghabits.A.J.Wright’snetsalesincreased5%forfiscal2008comparedtofiscal2007.A.J.Wright’ssamestoresalesincreased2%forfiscal2008,andsegmentlossforfiscal2008was$1.8millioncomparedto$10.3millionforfiscal2007.Thisimprovementwasprimarilyduetostrongermerchandisemargin,areductioninoccupancycostsasapercentageofnetsalesandtheimpactofcostcontainmentinitiatives.AsaresultofA.J.Wright’simprovedresults,weplantoincreasetherateofstoreopeningsforthischainforfiscal2010,currentlyplanningtoaddanetof13A.J.Wrightstoresandincreasesellingsquarefootageby10%.29GeneralCorporateExpense:Dollarsinmillions200920082007FiscalYearEndedJanuaryGeneralcorporateexpense$140.0$139.4$136.4Generalcorporateexpenseforsegmentreportingpurposesisthosecostsnotspecificallyrelatedtotheoperationsofourbusinesssegmentsandisincludedinselling,generalandadministrativeexpenses.Generalcorporateexpenseinfiscal2009versusfiscal2008wasvirtuallyflat.Thecomparisonofgeneralcorporateexpenseinfiscal2008versusfiscal2007reflectedanincreaseincorporatesupportcostsinfiscal2008anda$5millionchargeinfiscal2007relatingtothecostofaworkforcereductionandotherterminationbenefitsatthecorporatelevel.LIQUIDITYANDCAPITALRESOURCESOperatingActivities:Netcashprovidedbyoperatingactivitieswas$1,155millioninfiscal2009,$1,375millioninfiscal2008,and$1,213millioninfiscal2007.Thecashgeneratedfromoperatingactivitiesineachofthesefiscalyearswaslargelyduetooperatingearnings.Operatingcashflowsforfiscal2009decreasedby$220millionascomparedtotheprioryear.Netincome,afteradjustingforthenon-cashimpactofdepreciationandthesaleofBob’sStoresassetsof$31millioninfiscal2009(includingthebenefitofthe53rdweek),providedcashof$1,314million,anincreaseof$173millionfromtheadjusted$1,141millioninfiscal2008.Thechangeindeferredincometaxesfavorablyimpactedcashflowsinfiscal2009by$132million,whilelastyear’sdeferredincometaxesreducedcashflowsby$102million.Deferredtaxesinfiscal2008reflectedthenon-cashtaxbenefitof$47millionrelatingtotheestablishmentoftheComputerIntrusionreserve.Thefavorableimpactondeferredincometaxesinfiscal2009reflectedthetaxtreatmentofpaymentsagainsttheComputerIntrusionreserveandfavorableimpactoftaxdepreciation.Thechangeinmerchandiseinventory,netoftherelatedchangeinaccountspayableoffsetthefavorablechangesincashflowsinfiscal2009,asitresultedinauseofcashof$210millioninfiscal2009,comparedtoasourceofcashof$5millionlastyear.Thechangeinmerchandiseinventoriesandaccountspayableinfiscal2009wasprimarilydrivenbyatimingdifferenceinthepaymentofouraccountspayableduetochangeinourbuyingpattern.Thechangeinaccruedexpensesandotherliabilitiesresultedinauseofcashof$35millioninfiscal2009versusasourceofcashof$203millioninfiscal2008.Lastyear,theincreaseinaccruedexpensesandotherliabilitiesreflected$117millionforthepre-taxreserveestablishedfortheComputerIntrusion,whichfavorablyimpactedcashflows,whilefiscal2009’scashflowswerereducedby$75millionforpaymentsagainstandadjustmentstothereserve.Changesincurrentincometaxespayable/recoverablereducedcashinfiscal2009by$49millioncomparedtoanincreaseof$56millioninfiscal2008andthechangeinprepaidexpensesreducedfiscal2009operatingcashflowsbyanadditional$65million,primarilyduetothetimingofFebruaryrentalpayments.Operatingcashflowsforfiscal2008increasedby$162millionovertheprioryear.Netincome,afteradjustingforthenon-cashimpactofdepreciation,forfiscal2008increased$50million.Thechangeininventory,netofaccountspayable,fromprioryear-endlevelswasasignificantcomponentofoperatingcashflows.Infiscal2008,thechangeinmerchandiseinventory,netoftherelatedchangeinaccountspayable,favorablyimpactedoperatingcashflowsby$5millioncomparedtoauseofcashof$151millioninfiscal2007.Additionally,fiscal2008operatingcashflowswerefavorablyimpactedbythechangeinincometaxespayable.Theseincreasesinfiscal2008operatingcashflowsascomparedtofiscal2007wereoffsetbytheunfavorablecashflowimpactofthedeferredincometaxprovision,changesinaccruedexpensesandotherliabilitiesandchangesinaccountsreceivable.Discontinuedoperationsreserve:Wehaveareserveforfutureobligationsofdiscontinuedoperationsthatrelatesprimarilytorealestateleasesassociatedwiththeclosureof34A.J.WrightstoresaswellasleasesofformerTJXbusinesses.Infiscal2009,wereservedanadditional$3millionfor2Bob’sStoreslocations,whichthebuyerofBob’s30Storeshastherighttoputbacktousandwhichweconsiderprobable.ThiswasoffsetbyacomparableamountduetofavorablesettlementsonseveralA.J.Wrightlocations.Thebalanceinthereserveandtheactivityforthelastthreefiscalyearsispresentedbelow:Inthousands200920082007FiscalYearEndedJanuaryBalanceatbeginningofyear$46,076$57,677$14,981Additionstothereservechargedtonetincome:A.J.Wrightstoreclosings(2,908)—61,968Otherleaserelatedobligations2,908—1,555Interestaccretion1,8201,820400Chargesagainstthereserve:Leaserelatedobligations(7,323)(11,214)(1,696)Fixedassetwrite-off(non-cash)——(18,732)Terminationbenefitsandallother(9)(2,207)(799)Balanceatendofyear$40,564$46,076$57,677Weadded$62millioninfiscal2007fortheexitcostsrelatedtotheclosingof34A.J.Wrightstores(seeNoteCtoourconsolidatedfinancialstatements).Theadditionstothereserveforotherleaserelatedobligationsinfiscal2007weretheresultofperiodicadjustmentstotheestimatedleaseobligationsofourformerbusinessesandwereoffsetbyincomefromcreditorrecoveriesofasimilaramount.Theleaserelatedchargesagainstthereserveduringfiscal2007relatedprimarilytoourformerbusinesses.Thefixedassetwrite-offsandotherchargesagainstthereserveforfiscal2007andallofthechargesagainstthereserveinfiscal2008andfiscal2009,relatedprimarilytothe34A.J.Wrightclosedstores.Approximately$25millionofthefiscal2009reservebalancerelatestotheA.J.Wrightstoreclosings,primarilyourestimationofleasecosts,netofestimatedsubtenantincome.Approximately$3millionofthereserveatfiscal2009relatesto2Bob’sStoreslocationswhichareconsideredprobableforbeingputbacktoTJXbythebuyer.Theremainderofthereservereflectsourestimationofthecostofclaims,updatedquarterly,thathavebeen,orwebelievearelikelytobe,madeagainstusforliabilityasanoriginallesseeorguarantoroftheleasesofformerbusinesses,aftermitigationofthenumberandcostoftheseleaseobligations.AtJanuary31,2009,substantiallyalltheleasesofformerbusinessesthatwererejectedinbankruptcyandforwhichthelandlordsassertedliabilityagainstushadbeenresolved.Theactualnetcostoftheseleaseobligationsmaydifferfromouroriginalestimate.Althoughouractualcostswithrespecttotheleaseobligationsofformerbusinessesmayexceedamountsestimatedinourreserve,andwemayincurcostsforleasesfromtheseformerbusinessesthatwerenotterminatedorhadnotexpired,wedonotexpecttoincuranymaterialcostsrelatedtothesediscontinuedoperationsinexcessoftheamountsestimated.Weestimatethatthemajorityofthediscontinuedoperationsreservewillbepaidinthenextthreetofiveyears.Theactualtimingofcashoutflowswillvarydependingonhowtheremainingleaseobligationsareactuallysettled.Wemayalsobecontingentlyliableonupto15leasesofBJ’sWholesaleClub,aformerTJXbusiness,and8additionalBob’sStoresleases.Ourreservefordiscontinuedoperationsdoesnotreflecttheseleasesbecausewedonotbelievethatthelikelihoodofanyfutureliabilitytousisprobable.Off-balancesheetliabilities:Wehavecontingentobligationsonleases,forwhichwewerealesseeorguarantor,whichwereassignedtothirdpartieswithoutTJXbeingreleasedbythelandlords.Overmanyyears,wehaveassignednumerousleasesthatweoriginallyleasedorguaranteedtoasignificantnumberofthirdparties.Withtheexceptionofleasesofourformerbusinessesdiscussedabove,wehaverarelyhadaclaimwithrespecttoassignedleases,andaccordingly,wedonotexpectthatsuchleaseswillhaveamaterialadverseeffectonourfinancialcondition,resultsofoperationsorcashflows.Wedonotgenerallyhavesufficientinformationabouttheseleasestoestimateourpotentialcontingentobligationsunderthem,whichcouldbetriggeredintheeventthatoneormoreofthecurrenttenantsdoesnotfulfilltheirobligationsrelatedtooneormoreoftheseleases.31Wealsohavecontingentobligationsinconnectionwithsomeassignedorsubletpropertiesthatweareabletoestimate.Weestimatetheundiscountedobligations,notreflectedinourreserves,ofleasesofclosedstoresofcontinuingoperations,BJ’sWholesaleClubandBob’sStoresleasesdiscussedabove,andpropertiesofourdiscontinuedoperationsthatwehavesublet,ifthesubtenantsdidnotfulfilltheirobligations,tobeapproximately$100millionasofJanuary31,2009.Webelievethatmostorallofthesecontingentobligationswillnotreverttousand,totheextenttheydo,willberesolvedforsubstantiallylessduetomitigatingfactors.Weareapartytovariousagreementsunderwhichwemaybeobligatedtoindemnifyotherpartieswithrespecttobreachofwarrantyorlossesrelatedtosuchmattersastitletoassetssold,specifiedenvironmentalmattersorcertainincometaxes.Theseobligationsaretypicallylimitedintimeandamount.Therearenoamountsreflectedinourbalancesheetswithrespecttothesecontingentobligations.InvestingActivities:Ourcashflowsforinvestingactivitiesincludecapitalexpendituresforthelastthreeyearsassetforthinthetablebelow:Inmillions200920082007FiscalYearEndedJanuaryNewstores$147.6$120.7$123.0Storerenovationsandimprovements264.3269.8190.2Officeanddistributioncenters171.0136.564.8Capitalexpenditures$582.9$527.0$378.0Weexpectthatcapitalexpenditureswillapproximate$450millionforfiscal2010,whichweexpecttofundthroughinternallygeneratedfunds.Thisincludes$153millionfornewstores,$182millionforstorerenovations,expansionsandimprovementsand$115millionforourofficeanddistributioncenters.Theplanneddecreaseincapitalexpendituresisattributabletofewerplannedstoreopeningsandreducedspendingonrenovationsandimprovementstoexistingstores.Investingactivitiesalsoincludecashflowsassociatedwithournetinvestmenthedges.Duringfiscal2009,wesuspendedourpolicyofhedgingthenetinvestmentinourforeignsubsidiariesandsettledsuchhedgesduringthefourthquarter.Thenetcashreceivedonnetinvestmenthedgesduringfiscal2009amountedto$14.4millionversusnetcashpaymentsof$13.7millioninfiscal2008and$17.7millioninfiscal2007.FinancingActivities:Cashflowsfromfinancingactivitiesresultedinnetcashoutflowsof$769millioninfiscal2009,$953millioninfiscal2008and$418millioninfiscal2007.Themajorityofthisoutflowrelatestooursharerepurchaseprogram.Wespent$741millioninfiscal2009,$950millioninfiscal2008and$557millioninfiscal2007underourstockrepurchaseprograms.Werepurchased24.0millionsharesinfiscal2009,33.3millionsharesinfiscal2008and22.0millionsharesinfiscal2007.Allsharesrepurchasedwereretired.Werecordtherepurchaseofourstockonacashbasis,andtheamountsreflectedinthefinancialstatementsmayvaryfromtheaboveduetothetimingofthesettlementofourrepurchases.Ourfiscal2009repurchasescompletedthe$1billionstockrepurchaseprogramapprovedbytheBoardofDirectorsinJanuary2007andincludedtherepurchaseof8.9millionsharesatacostof$255millionunderthe$1billionstockrepurchaseprogramapprovedbytheBoardofDirectorsinFebruary2008.AsofJanuary31,2009,$745millionremainedavailableforpurchaseunderthecurrentprogram.ThetimingofpurchasesunderthisprogramisdeterminedbyTJXfromtimetotimebasedonitsassessmentofvariousfactorsincludingexcesscashflow,liquidityandmarketconditions.Wearetakingamoreconservativeapproachtoourstockrepurchaseprogramandcurrentlyplantorepurchaseuptoapproximately$250millionofourstockinfiscal2010.Thistimingandamountofthesepurchasesaresubjecttochangedependingupontheeconomicenvironmentandotherfactors.The$464.9millionaggregateprincipalamountoutstandingofourzerocouponconvertiblesubordinatednotes(whicharedueinFebruary2021)areconvertibleinto15.2millionsharesofcommonstockundercertainconditions,32includingiftheclosingsalepriceofourcommonstockreachesspecifiedtriggerprices.Thetriggerpricewasmetduringaportionoffiscal2009and52,552noteswereconvertedduringfiscal2009,resultingintheissuanceof1.7millionsharesofcommonstock.Thenoteswerenotconvertibleduringthefourthquarteroffiscal2009becauseourstockpricedidnotmeetthetriggerpricesduringrelevantperiods.Thetriggerpriceswillhavetobemetduringapplicablefutureperiodsforthenotestobeconvertibleinfuturequarters.Wedeclaredquarterlydividendsonourcommonstockwhichtotaled$0.44pershareinfiscal2009,$0.36pershareinfiscal2008and$0.28pershareinfiscal2007.Cashpaymentsfordividendsonourcommonstocktotaled$177millioninfiscal2009,$151millioninfiscal2008and$123millioninfiscal2007.Financingactivitiesalsoincludedproceedsof$142millioninfiscal2009,$134millioninfiscal2008and$260millioninfiscal2007fromtheexerciseofemployeestockoptions.Wetraditionallyhavefundedourseasonalmerchandiserequirementsthroughcashgeneratedfromoperations,short-termbankborrowingsandtheissuanceofshort-termcommercialpaper.Wehavea$500millionrevolvingcreditfacilitymaturinginMay2010anda$500millionrevolvingcreditfacilitymaturinginMay2011.Theseagreementshavenocompensatingbalancerequirementsandhavevariouscovenantsincludingarequirementofaspecifiedratioofdebttoearnings.Theseagreementsserveasbackuptoourcommercialpaperprogram.AsofJanuary31,2009therewerenooutstandingamountsunderourcreditfacilities.ThemaximumamountofourU.S.short-termborrowingsoutstandingwas$222millionduringfiscal2009.TheweightedaverageinterestrateonourU.S.short-termborrowingswas3.92%infiscal2009.Therewerenoborrowingsonourcreditfacilitiesduringfiscal2008.AsofJanuary31,2009andJanuary26,2008,Winnershadtwocreditlines,oneforC$10millionforoperatingexpensesandoneC$10millionletterofcreditfacility.Winnersdidnotborrowunderthecreditlineforoperatingexpensesinfiscal2009.ThemaximumamountoutstandingunderourCanadiancreditlineforoperatingexpenseswasC$5.7millioninfiscal2008andC$3.8millioninfiscal2007.Therewerenoamountsoutstandingonthislineattheendoffiscal2009orfiscal2008.AsofJanuary31,2009,T.K.Maxxhadacreditlineof£20million.Themaximumamountoutstandingwas£6.1millioninfiscal2009and£16.4millioninfiscal2008.Therewerenooutstandingborrowingsonthiscreditlineattheendoffiscal2009orfiscal2008.Webelievethatinternallygeneratedfundsandourcurrentcreditfacilitiesaremorethanadequatetomeetouroperating,debtandcapitalneedsforatleastthenexttwelvemonths.SeeNoteDtotheconsolidatedfinancialstatementsforfurtherinformationregardingourlong-termdebtandotherfinancingsources.Contractualobligations:AsofJanuary31,2009,wehadpaymentobligations(includingcurrentinstallments)underlong-termdebtarrangements,leasesforpropertyandequipmentandpurchaseobligationsthatwillrequirecashoutflowsasfollows(inthousands):TabularDisclosureofContractualObligationsTotalLessThan1Year1-3Years3-5YearsMoreThan5YearsPaymentsDuebyPeriodLong-termdebtobligationsincludingestimatedinterestandcurrentinstallments$806,654$410,125$—$396,529$—Operatingleasecommitments5,071,283913,4461,582,3971,137,9411,437,499Capitalleaseobligation26,6713,7267,6237,8247,498Purchaseobligations1,922,5371,803,500112,2044,6352,198TotalObligations$7,827,145$3,130,797$1,702,224$1,546,929$1,447,195Thelong-termdebtobligationsaboveincludeestimatedinterestcostsandassumethatallholdersofthezerocouponconvertiblesubordinatednotesexercisetheirputoptionsinfiscal2014.Ifnoneoftheputoptionsareexercisedandthenotesarenotredeemedorconverted,thenoteswillmatureinfiscal2022.TheeffectoftheinterestrateswapagreementswasestimatedbasedontheirvaluesasofJanuary31,2009.33Theleasecommitmentsintheabovetableareforminimumrentanddonotincludecostsforinsurance,realestatetaxes,otheroperatingexpensesand,insomecases,rentalsbasedonapercentageofsales,whichtogetherwereapproximatelyone-thirdofthetotalminimumrentforthefiscalyearendedJanuary31,2009.Ourpurchaseobligationsprimarilyconsistofpurchaseordersformerchandise;purchaseordersforcapitalexpenditures,suppliesandotheroperatingneeds;commitmentsundercontractsformaintenanceneedsandotherservices;andcommitmentsunderexecutiveemploymentandotheragreements.Weexcludedlong-termagreementsforservicesandoperatingneedsthatcanbecancelledwithoutpenalty.Wealsohavelong-termliabilitieswhichinclude$272.9millionforemployeecompensationandbenefits,themajorityofwhichwillcomeduebeyondfiveyears,$137.9millionforaccruedrent,thecashflowrequirementsofwhichareincludedintheleasecommitmentsintheabovetableand$240.6millionforuncertaintaxpositionsforwhichitisnotreasonablypossibletopredictwhenitmaybepaid.CRITICALACCOUNTINGPOLICIESWemustevaluateandselectapplicableaccountingpolicies.Weconsiderourmostcriticalaccountingpolicies,involvingmanagementestimatesandjudgments,tobethoserelatingtotheareasdescribedbelow.Webelievethatwehaveselectedthemostappropriateassumptionsineachofthefollowingareasandthattheresultswewouldhaveobtained,hadalternativeassumptionsbeenselected,wouldnotbemateriallydifferentfromtheresultswehavereported.Inventoryvaluation:Weusetheretailmethodforvaluinginventoryonafirst-infirst-outbasis.Undertheretailmethod,thecostvalueofinventoryandgrossmarginsaredeterminedbycalculatingacost-to-retailratioandapplyingittotheretailvalueofinventory.Thismethodiswidelyusedintheretailindustryandinvolvesmanagementestimateswithregardtosuchthingsasmarkdownsandinventoryshrinkage.Asignificantfactorinvolvestherecordingandtimingofpermanentmarkdowns.Undertheretailmethod,permanentmarkdownsarereflectedintheinventoryvaluationwhenthepriceofanitemischanged.Webelievetheretailmethodresultsinamoreconservativeinventoryvaluationthanotheraccountingmethods.Inaddition,asanormalbusinesspractice,wehaveaspecificpolicyastowhenmarkdownsaretobetaken,greatlyreducingtheneedformanagementestimates.Inventoryshortageinvolvesestimatingashrinkagerateforinterimperiods,butisbasedonafullphysicalinventorynearthefiscalyearend.Thus,thedifferencebetweenactualandestimatedamountsmaycausefluctuationsinquarterlyresults,butisnotasignificantfactorinfullyearresults.Overall,webelievethattheretailmethod,coupledwithourdisciplinedpermanentmarkdownpolicyandafullphysicalinventorytakenateachfiscalyearend,resultsinaninventoryvaluationthatisfairlystated.Lastly,manyretailershavearrangementswithvendorsthatprovideforrebatesandallowancesundercertainconditions,whichultimatelyaffectthevalueoftheinventory.Ouroff-pricebusinesseshavehistoricallynotenteredintosucharrangementswithourvendors.Impairmentoflong-livedassets:Wereviewtherecoverabilityofthecarryingvalueofourlong-livedassetsatleastannuallyandwhenevereventsorcircumstancesoccurthatwouldindicatethattheircarryingamountsarenotrecoverable.Significantjudgmentsareinvolvedinprojectingthecashflowsofindividualstoresandourbusinessunitsandinvolveanumberoffactorsincludinghistoricaltrends,recentperformanceandgeneraleconomicassumptions.Ifitisdeterminedthatanimpairmentoflong-livedassetshasoccurred,werecordanimpairmentchargeequaltotheexcessofthecarryingvalueoftheassetsovertheestimatedfairvalueoftheassets.Retirementobligations:Retirementcostsareaccruedovertheservicelifeofanemployeeandrepresent,intheaggregate,obligationsthatwillultimatelybesettledfarinthefutureandarethereforesubjecttoestimates.Wearerequiredtomakeassumptionsregardingvariables,suchasthediscountrateforvaluingpensionobligationsandthelong-termrateofreturnassumedtobeearnedonpensionassets,bothofwhichimpactthenetperiodicpensioncostfortheperiod.Thediscountrate,whichwedetermineannuallybasedonmarketinterestrates,andourestimatedlong-termrateofreturn,whichcandifferconsiderablyfromactualreturns,aretwofactorsthatcanhaveaconsiderableimpactontheannualcostofretirementbenefitsandthefundedstatusofourqualifiedpensionplan.Themarketperformanceonplanassetsduringfiscal2009wasconsiderablyworsethanourexpectedreturnandasaresultthe34unfundedstatusofourqualifiedplanincreasedsignificantly.Despitethiswewerenotrequiredtofundourplanduringfiscal2009,primarilyduetovoluntaryfundinginprioryears.Asofthedateofthisreportwehavefunded$50millionintothequalifiedpensionplanandmaymakeadditionalvoluntarycontributionsduringfiscal2010.Sharebasedcompensation:InaccordancewithSFASNo.123(revised2004)“Share-BasedPayment”(“SFASNo.123R”)TJXestimatesthefairvalueofstockawardsissuedtoemployeesanddirectorsunderitsstockincentiveplan.Thefairvalueoftheawardsisamortizedas“stockcompensationcost”overthevestingperiodsduringwhichtherecipientsarerequiredtoprovideservice.WeusetheBlackScholesmethodfordeterminingthefairvalueofstockoptionsgrantedwhichrequiresmanagementtomakesignificantjudgmentsandestimates.Theuseofdifferentassumptionsandestimatescouldhaveamaterialimpactontheestimatedfairvalueofstockoptiongrantsandtherelatedexpense.Casualtyinsurance:InJuly2007,weenteredintoafixedpremiumprogramforourcasualtyinsurance.Ourcasualtyinsuranceprogrampriorto2007requiredustoestimatethetotalclaimswewillincurasacomponentofourannualinsurancecost.Theestimatedclaimsaredeveloped,withtheassistanceofanactuary,basedonhistoricalexperienceandotherfactors.Theseestimatesinvolvesignificantjudgmentsandassumptionsandactualresultscoulddifferfromtheseestimates.Ifourestimatefortheclaimscomponentofourcasualtyinsuranceexpenseforfiscal2009weretochangeby10%,thefiscal2009pre-taxcostwouldincreaseordecreasebyapproximately$2million.Alargeportionoftheseclaimsarefundedwithanon-refundablepaymentduringthepolicyyear,offsettingourestimatedclaimsaccrual.Wehadanetaccrualof$20.8millionfortheunfundedportionofourcasualtyinsuranceprogramasofJanuary31,2009.Incometaxes:Likemanylargecorporations,ourincometaxreturnsareregularlyauditedbyfederal,stateandlocaltaxauthoritiesintheUnitedStatesandinforeigncountrieswhereweoperate.Suchauthoritiesmaychallengepositionswetake,andweareengagedinvariousproceedingswithsuchauthoritieswithrespecttoassessments,claims,deficienciesandrefunds.Inaccordancewithgenerallyacceptedaccountingprinciples,weevaluateuncertaintaxpositionsbasedonourevaluationofthefacts,circumstancesandinformationavailableatthereportingdateandweaccrueforexposureswhenwebelievethatitismorelikelythannot,basedonthetechnicalmerits,thatthepositionswillnotbesustaineduponexamination.However,itispossiblethattheactualresultsofproceedingswithtaxauthoritiesandincourts,changesinfacts,expirationofstatutesoflimitationsorotherresolutionsoftaxpositionswilldifferfromtheamountswehaveaccruedineitherapositiveoranegativemanner,whichcouldmateriallyaffectoureffectiveincometaxrateinagivenfinancialperiod,theamountoftaxeswearerequiredtopayandourresultsofoperations.ReservesforComputerIntrusionrelatedcostsandfordiscontinuedoperations:AsdiscussedinNoteBandNoteMtotheconsolidatedfinancialstatementsandelsewhereintheManagement’sDiscussionandAnalysis,wehavereservesestablishedforprobablelossesarisingoutoftheComputerIntrusionandforleasesrelatingtooperationsdiscontinuedbyuswhereweweretheoriginallesseeoraguarantorandwhichhavebeenassignedorsublettothirdparties.TheComputerIntrusionreserverequiresustomakeestimatesandassumptionsabouttheoutcomeandcostsofclaims,litigationandinvestigationsandcostsandexpenseswewillincur.Wemaketheseestimatesbasedonourbestjudgmentsoftheoutcomeofsuchclaims,litigationandinvestigationandtheamountofsuchcostsandexpenses.Theleasesrelatingtodiscontinuedoperationsarelong-termobligationsandtheestimatedcosttousinvolvesnumerousestimatesandassumptionsincludingwhetherandforhowlongweremainobligatedwithrespecttoaparticularleasetheextenttowhichanassigneeorsubtenantwillassumeourobligationsundertheleases,amountsofsubtenantincome,howaparticularobligationmayultimatelybesettledandwhatmitigatingfactors,includingindemnification,mayexisttoanyliability.Wedeveloptheseassumptionsbasedonpastexperienceandbyevaluatingvariousprobableoutcomesandthecircumstancessurroundingeachsituationandlocation.Webelievethatourcurrentreservesareareasonableestimateofthemostlikelyoutcomesandthatthereservesshouldbeadequatetocovertheultimatecashcostswewillincur.However,actualresultsmaydifferfromourcurrentestimates,andsuchdifferencescouldbematerial.Wemaydecreaseorincreasetheamountofourreservestoadjustfordevelopmentsrelatingtotheunderlyingassumptions.35Losscontingencies:Certainconditionsmayexistasofthedatethefinancialstatementsareissued,whichmayresultinalosstousbutwhichwillnotberesolveduntiloneormorefutureeventsoccurorfailtooccur.Ourmanagement,whererelevant,withtheassistanceofourlegalcounsel,assessessuchcontingentliabilities,andsuchassessmentinherentlyinvolvesanexerciseofjudgment.Inassessinglosscontingenciesrelatedtolegalproceedingsthatarependingagainstusorclaimsthatmayresultinsuchproceedings,ourlegalcounselassistsusinevaluatingtheperceivedmeritsofanylegalproceedingsorclaimsaswellastheperceivedmeritsofthereliefsoughtorexpectedtobesoughttherein.Iftheassessmentofacontingencyindicatesthatitisprobablethatamateriallosshasbeenincurredandtheamountoftheliabilitycanbeestimated,thentheestimatedliabilitywouldbeaccruedinthefinancialstatements.Iftheassessmentindicatesthatapotentiallymateriallosscontingencyisnotprobable,butisreasonablypossible,orisprobablebutcannotbeestimated,thenwewilldisclosethenatureofthecontingentliability,togetherwithanestimateoftherangeofthepossiblelossorastatementthatsuchlossisnotestimable.RECENTACCOUNTINGPRONOUNCEMENTSSeeNoteAtoourconsolidatedfinancialstatementsincludedinthisannualreportforrecentlyissuedaccountingstandards,includingtheexpecteddatesofadoptionandestimatedeffectsonourconsolidatedfinancialstatements.ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSUREABOUTMARKETRISKWedonotenterintoderivativesforspeculativeortradingpurposes.FOREIGNCURRENCYEXCHANGERISKWeareexposedtoforeigncurrencyexchangerateriskonourinvestmentinourCanadian(WinnersandHomeSense)andEuropean(T.K.MaxxandHomeSense)operationsandonthetranslationoftheseforeignoperationsintotheU.S.dollar.AsmorefullydescribedinNotesAandEtotheconsolidatedfinancialstatementstotheAnnualReportonForm10-KforthefiscalyearendedJanuary31,2009,wehedgeasignificantportionofourintercompanytransactionswithforeignoperationsandcertainmerchandisepurchasecommitmentsincurredbytheseoperations,withderivativefinancialinstruments.Duringfiscal2009weceasedhedgingournetinvestmentpositioninourforeignoperations.Weenterintoderivativecontractsonlywhenthereisanunderlyingeconomicexposure.Weutilizecurrencyforwardandswapcontracts,designedtooffsetthegainsorlossesintheunderlyingexposures.Thecontractsareexecutedwithbankswebelievearecreditworthyandaredenominatedincurrenciesofmajorindustrialcountries.Wehaveperformedasensitivityanalysisassumingahypothetical10%adversemovementinforeigncurrencyexchangeratesappliedtothehedgingcontractsandtheunderlyingexposuresdescribedaboveaswellasthetranslationofourforeignoperationsintoourreportingcurrency.AsofJanuary31,2009,theanalysisindicatedthatsuchanadversemovementwouldnothaveamaterialeffectonourconsolidatedfinancialpositionbutcouldhavereducedourpre-taxincomefromcontinuingoperationsforfiscal2009byapproximately$37million.INTERESTRATERISKOurcashequivalentsandshort-terminvestmentsandcertainlinesofcreditbearvariableinterestrates.Changesininterestratesaffectinterestearnedandpaidbyus.Inaddition,changesinthegrossamountofourborrowingsandfuturechangesininterestrateswillaffectourfutureinterestexpense.Weoccasionallyenterintofinancialinstrumentstomanageourcostofborrowing;however,webelievethattheuseofprimarilyfixedratedebtminimizesourexposuretomarketconditions.Wehaveperformedasensitivityanalysisassumingahypothetical10%adversemovementininterestratesappliedtothemaximumvariableratedebtoutstanding.AsofJanuary31,2009,theanalysisindicatedthatsuchanadversemovementwouldnothaveamaterialeffectonourconsolidatedfinancialposition,resultsofoperationsorcashflows.36EQUITYPRICERISKTheassetsofourqualifiedpensionplan,alargeportionofwhichisinvestedinequitysecurities,aresubjecttotherisksanduncertaintiesofthepublicstockmarket.Weallocatethepensionassetsinamannerthatattemptstominimizeandcontrolourexposuretothesemarketuncertainties.Investments,ingeneral,areexposedtovariousrisks,suchasinterestrate,credit,andoverallmarketvolatility.Asaresultofthesignificantdeclineinthecapitalmarketsin2009thevalueofourpensionplanassetsdecreasedsubstantiallyincreasingtheunfundedstatusofourplanandreducingshareholder’sequityonourbalancesheet.ITEM8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATATheinformationrequiredbythisitemmaybefoundonpagesF-1throughF-34ofthisAnnualReportonForm10-K.ITEM9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURENotapplicable.ITEM9A.CONTROLSANDPROCEDURES(a)EvaluationofDisclosureControlsandProceduresWehavecarriedoutanevaluation,underthesupervisionandwiththeparticipationofourmanagement,includingourChiefExecutiveOfficerandChiefFinancialOfficer,oftheeffectivenessofthedesignandoperationofourdisclosurecontrolsandprocedures,asdefinedinRules13a-15(e)and15d-15(e)undertheExchangeAct,asoftheendoftheperiodcoveredbythisreportpursuanttoRules13a-15and15d-15oftheExchangeAct.Baseduponthatevaluation,ourChiefExecutiveOfficerandChiefFinancialOfficerconcludedthatourdisclosurecontrolsandproceduresareeffectiveinensuringthatinformationrequiredtobedisclosedbyusinthereportsthatwefileorsubmitundertheExchangeActis(i)recorded,processed,summarizedandreported,withinthetimeperiodsspecifiedintheSEC’srulesandforms;and(ii)accumulatedandcommunicatedtoourmanagement,includingourprincipalexecutiveandprincipalfinancialofficers,orpersonsperformingsimilarfunctions,asappropriatetoallowtimelydecisionsregardingrequireddisclosures.Managementrecognizesthatanycontrolsandprocedures,nomatterhowwelldesignedandoperated,canprovideonlyreasonableassuranceofachievingtheirobjectivesandmanagementnecessarilyappliesitsjudgmentinevaluatingthecost-benefitrelationshipofimplementingpossiblecontrolsandprocedures.(b)ChangesinInternalControlOverFinancialReportingTherewerenochangesinourinternalcontroloverfinancialreporting(asdefinedinRules13a-15(f)and15d-15(f)undertheExchangeAct)duringthefourthquarteroffiscal2009identifiedinconnectionwithourChiefExecutiveOfficer’sandChiefFinancialOfficer’sevaluationthathavemateriallyaffected,orarereasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting.(c)Management’sAnnualReportonInternalControlOverFinancialReportingOurmanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.InternalcontroloverfinancialreportingisdefinedinRules13a-15(f)and15d-15(f)promulgatedundertheExchangeActasaprocessdesignedby,orunderthesupervisionof,ourprincipalexecutiveandprincipalfinancialofficers,orpersonsperformingsimilarfunctions,andeffectedbyourboardofdirectors,managementandotherpersonnel,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciplesandincludesthosepoliciesandproceduresthat:—PertaintothemaintenanceofrecordsthatinreasonabledetailaccuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofTJX;37—Providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofTJXarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofTJX;and—Providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,useordispositionofTJX’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.OurinternalcontrolsystemisdesignedtoprovidereasonableassurancetoourmanagementandBoardofDirectorsregardingthepreparationandfairpresentationofpublishedfinancialstatements.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Therefore,eventhosesystemsdeterminedtobeeffectivecanprovideonlyreasonableassurancewithrespecttofinancialstatementpreparationandpresentation.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.Underthesupervisionandwiththeparticipationofourmanagement,includingourChiefExecutiveOfficerandChiefFinancialOfficer,weconductedanevaluationoftheeffectivenessofourinternalcontroloverfinancialreportingasofJanuary31,2009basedontheframeworkinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(“COSO”).Basedonthatevaluation,managementconcludedthatitsinternalcontroloverfinancialreportingwaseffectiveasofJanuary31,2009.(d)AttestationReportoftheIndependentRegisteredPublicAccountingFirmPricewaterhouseCoopersLLP,theindependentregisteredpublicaccountingfirmthatauditedandreportedonourconsolidatedfinancialstatementscontainedherein,hasauditedtheeffectivenessofourinternalcontroloverfinancialreportingasofJanuary31,2009,andhasissuedanattestationreportontheeffectivenessofourinternalcontroloverfinancialreportingincludedherein.ITEM9B.OTHERINFORMATIONNone.38PartIIIITEM10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCEThefollowingaretheExecutiveOfficersofTJXasofMarch31,2009:NameAgeOfficeandEmploymentDuringLastFiveYearsBernardCammarata69ChairmanoftheBoardsince1999.ActingChiefExecutiveOfficerfromSeptember2005toJanuary2007andChiefExecutiveOfficerfrom1989to2000.LedTJXanditsformerTJXsubsidiaryandT.J.MaxxDivisionfromtheorganizationofthebusinessin1976until2000,includingservingasChiefExecutiveOfficerandPresidentofTJX,ChairmanandPresidentofTJX’sT.J.MaxxDivision,andChairmanofTheMarmaxxGroup.DonaldG.Campbell57ViceChairmansinceSeptember2006,SeniorExecutiveVicePresident,ChiefAdministrativeandBusinessDevelopmentOfficerfromMarch2004toSeptember2006.ExecutiveVicePresident—Financefrom1996to2004andChiefFinancialOfficerofTJXfrom1989to2004.SeniorVicePresident—Finance,from1989to1996.VariousfinancialpositionswithTJXanditspredecessorssincejoiningin1973.ErnieHerrman48SeniorExecutiveVicePresident,GroupPresidentSinceAugust2008.SeniorExecutiveVicePresidentsinceJanuary2007andPresident,MarmaxxfromJanuary2005toAugust2008.SeniorExecutiveVicePresident,ChiefOperatingOfficer,Marmaxxfrom2004to2005.ExecutiveVicePresident,Merchandising,Marmaxxfrom2001to2004.VariousmerchandisingpositionswithTJXsincejoiningin1989.CarolMeyrowitz55ChiefExecutiveOfficersinceJanuary2007,DirectorsinceSeptember2006andPresidentsinceOctober2005.ConsultanttoTJXfromJanuary2005toOctober2005.SeniorExecutiveVicePresidentfromMarch2004toJanuary2005.PresidentofMarmaxxfrom2001toJanuary2005.ExecutiveVicePresidentofTJXfrom2001to2004.JeffreyG.Naylor50SeniorExecutiveVicePresident,ChiefFinancialandAdministrativeOfficersinceFebruary2009.SeniorExecutiveVicePresident,ChiefAdministrativeandBusinessDevelopmentOfficer,June2007toFebruary2009.ChiefFinancialandAdministrativeOfficer,September2006toJune2007.SeniorExecutiveVicePresident,ChiefFinancialOfficer,fromMarch2004toSeptember2006,ExecutiveVicePresident,ChiefFinancialOfficereffectiveFebruary2004.JeromeRossi65SeniorExecutiveVicePresident,GroupPresident,sinceJanuary2007.SeniorExecutiveVicePresident,ChiefOperatingOfficer,Marmaxxfrom2005toJanuary2007.President,HomeGoods,from2000to2005.ExecutiveVicePresident,StoreOperations,HumanResourcesandDistributionServices,Marmaxxfrom1996to2000.PaulSweetenham44SeniorExecutiveVicePresident,GroupPresident,Europe,sinceJanuary2007.President,T.K.Maxxsince2001.SeniorVicePresident,MerchandisingandMarketing,T.K.Maxxfrom1999to2001.VariousmerchandisingpositionswithT.K.Maxxfrom1993to1999.AllofficersholdofficeuntilthenextannualmeetingoftheBoardinJune2009anduntiltheirsuccessorsareelected,orappointed,andqualified.TJXwillfilewiththeSecuritiesandExchangeCommissionadefinitiveproxystatementnolaterthan120daysafterthecloseofitsfiscalyearendedJanuary31,2009(theProxyStatement).TheinformationrequiredbythisItemandnotgiveninthisItemwillappearundertheheadings“ElectionofDirectors,”“CorporateGovernance,”“AuditCommitteeReport”and“Section16(a)BeneficialOwnershipReportingCompliance”inourProxyStatement,whichsectionsareincorporatedinthisitembyreference.39TJXhasaCodeofEthicsforTJXExecutivesgoverningitsChairman,ViceChairman,ChiefExecutiveOfficer,President,ChiefAdministrativeOfficer,ChiefFinancialOfficer,PrincipalAccountingOfficerandothersenioroperating,financialandlegalexecutives.TheCodeofEthicsforTJXExecutivesisdesignedtoensureintegrityinitsfinancialreportsandpublicdisclosures.TJXalsohasaCodeofConductandBusinessEthicsforDirectorswhichpromoteshonestandethicalconduct,compliancewithapplicablelaws,rulesandregulationsandtheavoidanceofconflictsofinterest.Bothofthesecodesofconductarepublishedatwww.tjx.com.Weintendtodiscloseanyfutureamendmentsto,orwaiversfrom,theCodeofEthicsforTJXExecutivesortheCodeofBusinessConductandEthicsforDirectorswithinfourbusinessdaysofthewaiveroramendmentthroughawebsitepostingorbyfilingaCurrentReportonForm8-KwiththeSecuritiesandExchangeCommission.ITEM11.EXECUTIVECOMPENSATIONTheinformationrequiredbythisItemwillappearundertheheading“ExecutiveCompensation”inourProxyStatement,whichsectionisincorporatedinthisitembyreference.ITEM12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDERMATTERSTheinformationrequiredbythisItemwillappearundertheheading“BeneficialOwnership”inourProxyStatement,whichsectionisincorporatedinthisitembyreference.ITEM13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCETheinformationrequiredbythisItemwillappearundertheheadings“TransactionswithRelatedPersons”and“CorporateGovernance”inourProxyStatement,whichsectionsareincorporatedinthisitembyreference.ITEM14.PRINCIPALACCOUNTANTFEESANDSERVICESTheinformationrequiredbythisItemwillappearundertheheading“AuditCommitteeReport”inourProxyStatement,whichsectionisincorporatedinthisitembyreference.40PartIVITEM15.EXHIBITS,FINANCIALSTATEMENTSCHEDULES(a)FinancialStatementSchedulesForalistoftheconsolidatedfinancialinformationincludedherein,seeIndextotheConsolidatedFinancialStatementsonpageF-1.ScheduleII—ValuationandQualifyingAccountsInthousandsBalanceBeginningofPeriodAmountsChargedtoNetIncomeWrite-OffsAgainstReserveBalanceEndofPeriodSalesReturnReserve:FiscalYearEndedJanuary31,2009$15,298$866,757$868,049$14,006FiscalYearEndedJanuary26,2008$14,182$841,687$840,571$15,298FiscalYearEndedJanuary27,2007$14,101$795,941$795,860$14,182DiscontinuedOperationsReserve:FiscalYearEndedJanuary31,2009$46,076$1,820$7,332$40,564FiscalYearEndedJanuary26,2008$57,677$1,820$13,421$46,076FiscalYearEndedJanuary27,2007$14,981$63,923$21,227$57,677CasualtyInsuranceReserve:FiscalYearEndedJanuary31,2009$26,373$1,232$6,846$20,759FiscalYearEndedJanuary26,2008$31,443$17,673$22,743$26,373FiscalYearEndedJanuary27,2007$34,707$54,429$57,693$31,443ComputerIntrusionReserve:FiscalYearEndedJanuary31,2009$117,266$(13,000)$62,055$42,211FiscalYearEndedJanuary26,2008$—$159,200$41,934$117,26641(b)ExhibitsListedbelowareallexhibitsfiledaspartofthisreport.SomeexhibitsarefiledbytheRegistrantwiththeSecuritiesandExchangeCommissionpursuanttoRule12b-32undertheExchangeAct.ExhibitNo.DescriptionofExhibit3(i).1FourthRestatedCertificateofIncorporationisincorporatedhereinbyreferencetoExhibit99.1totheForm8-A/AfiledSeptember9,1999.CertificateofAmendmentofFourthRestatedCertificateofIncorporationisincorporatedhereinbyreferencetoExhibit3(i)totheForm10-QfiledforthequarterendedJuly28,2005.3(ii).1By-lawsofTJX,asamended,areincorporatedhereinbyreferencetoExhibit3.1totheForm8-KfiledonDecember8,2008.4.1IndenturebetweenTJXandTheBankofNewYorkdatedasofFebruary13,2001,incorporatedbyreferencetoExhibit4.1oftheRegistrationStatementonFormS-3filedonMay9,2001.10.14-yearRevolvingCreditAgreementdatedMay5,2005amongvariousfinancialinstitutionsaslenders,includingBankofAmerica,N.A.,JPMorganChaseBank,NationalAssociation,TheBankofNewYork,CitizensBankofMassachusetts,KeyBankNationalAssociationandUnionBankofCalifornia,N.A.,asco-agentsisincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledMay6,2005.TherelatedAmendmentNo.1tothe4-yearRevolvingCreditAgreementdatedMay12,2006isincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledMay17,2006.10.25-yearRevolvingCreditAgreementdatedMay5,2005amongvariousfinancialinstitutionsaslenders,includingBankofAmerica,N.A.,JPMorganChaseBank,NationalAssociation,TheBankofNewYork,CitizensBankofMassachusetts,KeyBankNationalAssociationandUnionBankofCalifornia,N.A.,asco-agentsisincorporatedhereinbyreferencetoExhibit10.2totheForm8-KfiledMay6,2005.TherelatedAmendmentNo.1tothe5-yearRevolvingCreditAgreementdatedMay12,2006isincorporatedhereinbyreferencetoExhibit10.2totheForm8-KfiledMay17,2006.10.3TheEmploymentAgreementdatedasofJune6,2006betweenBernardCammarataandTJXisincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledJune9,2006.*10.4TheEmploymentAgreementdatedasofJune6,2008withDonaldG.CampbellisincorporatedhereinbyreferencetoExhibit10.1toForm8-KfiledonJune6,2008.*10.5TheEmploymentAgreementdatedasofJanuary28,2007withCarolMeyrowitzisincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledonApril10,2007.TheLetterAgreementdatedasofJanuary31,2009withCarolMeyrowitzisfiledherewith.*10.6TheEmploymentAgreementdatedasofApril5,2008withJeffreyNaylorisincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledonApril7,2008.*10.7TheEmploymentAgreementdatedasofSeptember8,2006withErnieHerrmanisincorporatedhereinbyreferencetoExhibit10.9totheForm10-KforthefiscalyearendedJanuary26,2008.*10.8TheEmploymentAgreementdatedasofJune11,2007withNirmalTripathyisincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledonJune15,2007.TheLetterAgreementdatedasofJanuary28,2009withNirmalTripathyisfiledherewith.*10.9TheFormof409AAmendmenttoEmploymentAgreementsforthenamedexecutiveofficersisfiledherewith.*10.10TheTJXCompanies,Inc.ManagementIncentivePlan,asamended,isincorporatedhereinbyreferencetoExhibit10.1totheForm10-QfiledforthequarterendedApril28,2007.The409AAmendmenttotheManagementIncentivePlan,effectiveasofJanuary1,2008isfiledherewith.*10.11TheStockIncentivePlan,asamendedandrestatedthroughJune1,2004,isincorporatedhereinbyreferencetoExhibit10.1totheForm10-QfiledforthequarterendedJuly31,2004.TherelatedFirstAmendmenttotheStockIncentivePlanisincorporatedhereinbyreferencetoExhibit10.11totheForm10-KfiledforthefiscalyearendedJanuary28,2006.TheStockIncentivePlan,asamendedthroughJune5,2006,isincorporatedhereinbyreferencetoExhibit10.1totheForm10-QfiledforthequarterendedJuly29,2006.*10.12TheFormofaNon-QualifiedStockOptionCertificateGrantedUndertheStockIncentivePlanisincorporatedhereinbyreferencetoExhibit10.2totheForm10-QfiledforthequarterendedJuly31,2004.*42ExhibitNo.DescriptionofExhibit10.13TheFormofaPerformance-BasedRestrictedStockAwardGrantedUnderStockIncentivePlanisincorporatedhereinbyreferencetoExhibit10.3totheForm10-QfiledforthequarterendedJuly31,2004*10.14TheFormofaPerformance-BasedRestrictedStockAwardGrantedUnderStockIncentivePlanisincorporatedhereinbyreferencetoExhibit10.2totheForm8-KfiledNovember17,2005.*10.15DescriptionofDirectorCompensationArrangementsisincorporatedhereinbyreferencetoExhibit10.15totheForm10-KforthefiscalyearendedJanuary26,2008.*10.16TheTJXCompanies,Inc.LongRangePerformanceIncentivePlan,asamended,isincorporatedhereinbyreferencetoExhibit10.3totheForm10-QfiledforthequarterendedJuly26,1997.TheAmendmenttoTheLongRangePerformanceIncentivePlanadoptedonSeptember7,2005isincorporatedhereinbyreferencetoExhibit10.2totheForm10-QfiledforthefiscalquarterendedApril28,2007.The409AAmendmenttotheLongRangePerformanceIncentivePlan,effectiveasofJanuary1,2008isfiledherewith.*10.17TheGeneralDeferredCompensationPlan(1998Restatement)andrelatedFirstAmendment,effectiveJanuary1,1999,areincorporatedhereinbyreferencetoExhibit10.9totheForm10-KforthefiscalyearendedJanuary30,1999.TherelatedSecondAmendment,effectiveJanuary1,2000,isincorporatedhereinbyreferencetoExhibit10.10totheForm10-KfiledforthefiscalyearendedJanuary29,2000.TherelatedThirdandFourthAmendmentsareincorporatedhereinbyreferencetoExhibit10.17totheForm10-KforthefiscalyearendedJanuary28,2006.TherelatedFifthAmendment,effectiveJanuary1,2008isfiledherewith.*10.18TheSupplementalExecutiveRetirementPlan,asamended,isincorporatedhereinbyreferencetoExhibit10(l)totheForm10-KfiledforthefiscalyearendedJanuary25,1992.The2005RestatementtotheSupplementalExecutiveRetirementPlanisincorporatedhereinbyreferencetoExhibit10.18totheForm10-KforthefiscalyearendedJanuary28,2006.The2008RestatementtotheSupplementalExecutiveRetirementPlanisfiledherewith.*10.19TheExecutiveSavingsPlan,asamendedandrestated,effectiveJanuary1,2008,isfiledherewith.*10.20TheRestorationAgreementandrelatedletteragreementregardingconditionalreimbursementdatedDecember31,2002betweenTJXandBernardCammarataareincorporatedhereinbyreferencetoExhibit10.17totheForm10-KfiledforthefiscalyearendedJanuary25,2003.*10.21TheformofIndemnificationAgreementbetweenTJXandeachofitsofficersanddirectorsisincorporatedhereinbyreferencetoExhibit10(r)totheForm10-KfiledforthefiscalyearendedJanuary27,1990.*10.22TheTrustAgreementdatedasofApril8,1988betweenTJXandStateStreetBankandTrustCompanyisincorporatedhereinbyreferencetoExhibit10(y)totheForm10-KfiledforthefiscalyearendedJanuary30,1988.*10.23TheTrustAgreementdatedasofApril8,1988betweenTJXandFleetBank(formerlyShawmutBankofBoston,N.A.)isincorporatedhereinbyreferencetoExhibit10(z)totheForm10-KfiledforthefiscalyearendedJanuary30,1988.*10.24TheTrustAgreementforExecutiveSavingsPlandatedasofJanuary1,2005betweenTJXandWellsFargoBank,N.A.isincorporatedhereinbyreferencetoExhibit10.26totheForm10-KfiledforthefiscalyearendedJanuary29,2005.*10.25TheDistributionAgreementdatedasofMay1,1989betweenTJXandHomeBase,Inc.(formerlyWabanInc.)isincorporatedhereinbyreferencetoExhibit3toTJX’sCurrentReportonForm8-KdatedJune21,1989.TheFirstAmendmenttoDistributionAgreementdatedasofApril18,1997betweenTJXandHomeBase,Inc.(formerlyWabanInc.)isincorporatedhereinbyreferencetoExhibit10.22totheForm10-KfiledforthefiscalyearendedJanuary25,1997.10.26TheIndemnificationAgreementdatedasofApril18,1997byandbetweenTJXandBJ’sWholesaleClub,Inc.isincorporatedhereinbyreferencetoExhibit10.23totheForm10-KfiledforthefiscalyearendedJanuary25,1997.43ExhibitNo.DescriptionofExhibit10.27TheAmendedSettlementAgreement,datedasofNovember14,2007,byandamongthenamedplaintiffs,individuallyandonbehalfoftheSettlementClass,TheTJXCompanies,Inc.andFifthThirdBancorpisincorporatedhereinbyreferencetoExhibit10.1totheForm10-QfiledforthequarterendedOctober27,2007.10.28TheSettlementAgreementamongTheTJXCompanies,Inc.,VisaU.S.A.Inc.andVisaInc.andFifthThirdBank,datedNovember29,2007isincorporatedhereinbyreferencetoExhibit10.1totheForm8-KfiledonNovember30,2007.21Subsidiaries:AlistoftheRegistrant’ssubsidiariesisfiledherewith.23ConsentsofIndependentRegisteredPublicAccountingFirm:TheConsentofPricewaterhouseCoopersLLPisfiledherewith.24PowerofAttorney:ThePowerofAttorneygivenbytheDirectorsandcertainExecutiveOfficersofTJXisfiledherewith.31.1CertificationStatementofChiefExecutiveOfficerpursuanttoSection302oftheSarbanes-OxleyActof2002isfiledherewith.31.2CertificationStatementofChiefFinancialOfficerpursuanttoSection302oftheSarbanes-OxleyActof2002isfiledherewith.32.1CertificationStatementofChiefExecutiveOfficerpursuanttoSection906oftheSarbanes-OxleyActof2002isfiledherewith.32.2CertificationStatementofChiefFinancialOfficerpursuanttoSection906oftheSarbanes-OxleyActof2002isfiledherewith.*Managementcontractorcompensatoryplanorarrangement.44SIGNATURESPursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theRegistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.THETJXCOMPANIES,INC./s/JEFFREYG.NAYLORJeffreyG.Naylor,ChiefFinancialandAdministrativeOfficer,onbehalfofTheTJXCompanies,Inc.Dated:March31,200945PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonbehalfoftheRegistrantandinthecapacitiesandonthedateindicated./S/CAROLMEYROWITZCarolMeyrowitz,PresidentandChiefExecutiveOfficerandDirectorJEFFREYG.NAYLOR*JeffreyG.Naylor,ChiefFinancialandAccountingOfficerJOSÉB.ALVAREZ*JoséB.Alvarez,DirectorAMYB.LANE*AmyB.Lane,DirectorALANM.BENNETT*AlanM.Bennett,DirectorJOHNF.O’BRIEN*JohnF.O’Brien,DirectorDAVIDA.BRANDON*DavidA.Brandon,DirectorROBERTF.SHAPIRO*RobertF.Shapiro,DirectorBERNARDCAMMARATA*BernardCammarata,ChairmanoftheBoardofDirectorsWILLOWB.SHIRE*WillowB.Shire,DirectorDAVIDT.CHING*DavidT.Ching,DirectorFLETCHERH.WILEY*FletcherH.Wiley,DirectorMICHAELF.HINES*MichaelF.Hines,Director*BY/S/JEFFREYG.NAYLORJeffreyG.Naylorforhimselfandasattorney-in-factDated:March31,200946TheTJXCompanies,Inc.INDEXTOCONSOLIDATEDFINANCIALSTATEMENTSForFiscalYearsEndedJanuary31,2009,January26,2008andJanuary27,2007ReportofIndependentRegisteredPublicAccountingFirm.................................F-2ConsolidatedFinancialStatements:ConsolidatedStatementsofIncomeforthefiscalyearsendedJanuary31,2009,January26,2008andJanuary27,2007...........................................................F-3ConsolidatedBalanceSheetsasofJanuary31,2009andJanuary26,2008.....................F-4ConsolidatedStatementsofCashFlowsforthefiscalyearsendedJanuary31,2009,January26,2008andJanuary27,2007.......................................................F-5ConsolidatedStatementsofShareholders’EquityforthefiscalyearsendedJanuary31,2009,January26,2008andJanuary27,2007..............................................F-6NotestoConsolidatedFinancialStatements..............................................F-7FinancialStatementSchedules:ScheduleII—ValuationandQualifyingAccounts........................................41F-1ReportofIndependentRegisteredPublicAccountingFirmToTheBoardofDirectorsandShareholdersofTheTJXCompanies,Inc:Inouropinion,theconsolidatedfinancialstatementslistedintheaccompanyingindexpresentfairly,inallmaterialrespects,thefinancialpositionofTheTJXCompanies,Inc.anditssubsidiaries(the“Company”)asofJanuary31,2009andJanuary26,2008,andtheresultsoftheiroperationsandtheircashflowsforeachofthethreeyearsintheperiodendedJanuary31,2009inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Inaddition,inouropinion,thefinancialstatementschedulelistedintheaccompanyingindexpresentsfairly,inallmaterialrespects,theinformationsetforththereinwhenreadinconjunctionwiththerelatedconsolidatedfinancialstatements.Alsoinouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofJanuary31,2009,basedoncriteriaestablishedinInternalControl—IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).TheCompany’smanagementisresponsibleforthesefinancialstatementsandfinancialstatementschedule,formaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedinManagement’sAnnualReportonInternalControloverFinancialReportingappearingunderItem9A.Ourresponsibilityistoexpressopinionsonthesefinancialstatements,onthefinancialstatementschedule,andontheCompany’sinternalcontroloverfinancialreportingbasedonourintegratedaudits.WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheauditstoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatementandwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditsofthefinancialstatementsincludedexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,andevaluatingtheoverallfinancialstatementpresentation.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk.Ourauditsalsoincludedperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditsprovideareasonablebasisforouropinions.AsdiscussedinNoteKtotheaccompanyingconsolidatedfinancialstatements,theCompanychangeditsmethodofaccountingfordefinedbenefitpensionandotherpostretirementobligationsasofJanuary27,2007.Inaddition,asdiscussedinNoteJtotheaccompanyingconsolidatedfinancialstatements,theCompanychangeditsmethodofaccountingforuncertaintaxpositionsasofJanuary28,2007.Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(i)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(ii)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(iii)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstate-ments.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate./s/PricewaterhouseCoopersLLPBoston,MassachusettsMarch31,2009F-2TheTJXCompanies,Inc.ConsolidatedStatementsofIncomeAmountsinthousandsexceptpershareamountsJanuary31,2009January26,2008January27,2007FiscalYearEnded(53weeks)Netsales$18,999,505$18,336,726$17,104,013Costofsales,includingbuyingandoccupancycosts14,394,75613,841,69512,969,996Selling,generalandadministrativeexpenses3,170,0183,039,5202,849,283ProvisionforComputerIntrusionrelatedcosts(30,500)197,0224,960Interest(income)expense,net14,291(1,598)15,566Incomefromcontinuingoperationsbeforeprovisionforincometaxes1,450,9401,260,0871,264,208Provisionforincometaxes536,054477,655477,036Incomefromcontinuingoperations914,886782,432787,172(Loss)fromdiscontinuedoperations,netofincometaxes(34,269)(10,682)(49,133)Netincome$880,617$771,750$738,039Basicearningspershare:Incomefromcontinuingoperations$2.18$1.77$1.73(Loss)fromdiscontinuedoperations,netofincometaxes$(0.08)$(0.03)$(0.10)Netincome$2.10$1.74$1.63Weightedaveragecommonshares—basic419,076443,050454,044Dilutedearningspershare:Incomefromcontinuingoperations$2.08$1.68$1.65(Loss)fromdiscontinuedoperations,netofincometaxes$(0.08)$(0.02)$(0.10)Netincome$2.00$1.66$1.55Weightedaveragecommonshares—diluted442,255468,046480,045Cashdividendsdeclaredpershare$0.44$0.36$0.28Theaccompanyingnotesareanintegralpartofthefinancialstatements.F-3TheTJXCompanies,Inc.ConsolidatedBalanceSheetsInthousandsJanuary31,2009January26,2008FiscalYearEndedASSETSCurrentassets:Cashandcashequivalents$453,527$732,612Accountsreceivable,net143,500143,289Merchandiseinventories2,619,3362,737,378Prepaidexpensesandothercurrentassets274,091215,550Currentdeferredincometaxes,net135,675163,465Totalcurrentassets3,626,1293,992,294Propertyatcost:Landandbuildings280,278277,988Leaseholdcostsandimprovements1,728,3621,785,429Furniture,fixturesandequipment2,784,3162,675,009Totalpropertyatcost4,792,9564,738,426Lessaccumulateddepreciationandamortization2,607,2002,520,973Netpropertyatcost2,185,7562,217,453Propertyundercapitallease,netofaccumulatedamortizationof$17,124and$14,890,respectively15,44817,682Otherassets171,381190,981Goodwillandtradename,netofamortization179,528181,524TOTALASSETS$6,178,242$6,599,934LIABILITIESCurrentliabilities:Currentinstallmentsoflong-termdebt$392,852$—Obligationundercapitalleaseduewithinoneyear2,1752,008Accountspayable1,276,0981,516,754Accruedexpensesandothercurrentliabilities1,096,7661,213,987Federal,foreignandstateincometaxespayable—28,244Totalcurrentliabilities2,767,8912,760,993Otherlong-termliabilities765,004811,333Non-currentdeferredincometaxes,net127,00842,903Obligationundercapitallease,lessportionduewithinoneyear18,19920,374Long-termdebt,exclusiveofcurrentinstallments365,583833,086Commitmentsandcontingencies——SHAREHOLDERS’EQUITYCommonstock,authorized1,200,000,000shares,parvalue$1,issuedandoutstanding412,821,592and427,949,533,respectively412,822427,950Additionalpaid-incapital——Accumulatedothercomprehensiveincome(loss)(217,781)(28,685)Retainedearnings1,939,5161,731,980Totalshareholders’equity2,134,5572,131,245TOTALLIABILITIESANDSHAREHOLDERS’EQUITY$6,178,242$6,599,934Theaccompanyingnotesareanintegralpartofthefinancialstatements.F-4TheTJXCompanies,Inc.ConsolidatedStatementsofCashFlowsInthousandsJanuary31,2009January26,2008January27,2007FiscalYearEnded(53weeks)Cashflowsfromoperatingactivities:Netincome$880,617$771,750$738,039Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:Depreciationandamortization401,707369,396353,110Assetsofdiscontinuedoperationsold31,328——Lossonpropertydisposalsandimpairmentcharges23,90325,94432,743Amortizationofsharebasedcompensationexpense51,22957,37069,804Excesstaxbenefitsfromstockcompensationexpense(18,879)(6,756)(3,632)Deferredincometax(benefit)provision132,480(101,799)6,286Changesinassetsandliabilities:(Increase)decreaseinaccountsreceivable(8,245)(25,516)26,397(Increase)inmerchandiseinventories(68,489)(112,411)(201,413)(Increase)decreaseinprepaidexpensesandothercurrentassets(118,830)2,144(23,179)Increase(decrease)inaccountspayable(141,580)117,30450,165Increase(decrease)inaccruedexpensesandotherliabilities(34,525)202,893170,592Increase(decrease)inincometaxespayable(10,488)37,909(42,558)Other,net34,34436,54636,392Netcashprovidedbyoperatingactivities1,154,5721,374,7741,212,746Cashflowsfrominvestingactivities:Propertyadditions(582,932)(526,987)(378,011)Proceeds(payments)tosettlenetinvestmenthedges14,379(13,667)(17,713)Other(34)753700Netcash(usedin)investingactivities(568,587)(539,901)(395,024)Cashflowsfromfinancingactivities:Paymentsoncapitalleaseobligation(2,008)(1,854)(1,712)Proceedsfromsaleandissuanceofcommonstock142,154134,109260,197Cashpaymentsforrepurchaseofcommonstock(751,097)(940,208)(557,234)Excesstaxbenefitsfromstockcompensationexpense18,8796,7563,632Cashdividendspaid(176,749)(151,492)(122,927)Netcash(usedin)financingactivities(768,821)(952,689)(418,044)Effectofexchangeratechangesoncash(96,249)(6,241)(8,658)Net(decrease)increaseincashandcashequivalents(279,085)(124,057)391,020Cashandcashequivalentsatbeginningofyear732,612856,669465,649Cashandcashequivalentsatendofyear$453,527$732,612$856,669Theaccompanyingnotesareanintegralpartofthefinancialstatements.F-5TheTJXCompanies,Inc.ConsolidatedStatementsofShareholders’EquityInthousandsSharesParValue$1AdditionalPaid-InCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotalCommonStockBalance,January28,2006460,967$460,967—$(44,296)$1,475,983$1,892,654Comprehensiveincome:Netincome————738,039738,039Gainduetoforeigncurrencytranslationadjustments———20,433—20,433(Loss)onnetinvestmenthedgecontracts———(5,626)—(5,626)(Loss)oncashflowhedgecontracts———(3,950)—(3,950)Amountofcashflowhedgereclassifiedfromothercomprehensiveincometonetincome———5,011—5,011Totalcomprehensiveincome753,907Recognitionofunfundedpostretirementliabilities———(5,561)—(5,561)Cashdividendsdeclaredoncommonstock————(127,024)(127,024)Performancebasedrestrictedstockawardsgranted236236(236)———Amortizationofstockcompensationexpense——69,804——69,804Issuanceofcommonstockunderstockincentiveplanandrelatedtaxeffect14,45314,453249,122——263,575Commonstockrepurchased(22,006)(22,006)(318,690)—(216,538)(557,234)Balance,January27,2007453,650453,650—(33,989)1,870,4602,290,121Comprehensiveincome:Netincome————771,750771,750Gainduetoforeigncurrencytranslationadjustments———20,998—20,998(Loss)onnetinvestmenthedgecontracts———(15,823)—(15,823)(Loss)oncashflowhedgecontracts———(1,526)—(1,526)Recognitionofpriorservicecostandgains(losses)———1,393—1,393Amountofcashflowhedgereclassifiedfromothercomprehensiveincometonetincome———429—429Totalcomprehensiveincome777,221ImplementationofFIN48(seenoteJ)————(27,178)(27,178)ImplementationofSFASNo.158measurementprovisions(seenoteK)———(167)(1,641)(1,808)Cashdividendsdeclaredoncommonstock————(158,202)(158,202)Performancebasedrestrictedstockandotherstockawardsissued285285(285)———Amortizationofstockcompensationexpense——57,370——57,370StockoptionsrepurchasedbyTJX——(3,266)——(3,266)Issuanceofcommonstockunderstockincentiveplanandrelatedtaxeffect6,9686,968130,227——137,195Commonstockrepurchased(32,953)(32,953)(184,046)—(723,209)(940,208)Balance,January26,2008427,950427,950—(28,685)1,731,9802,131,245Comprehensiveincome:Netincome————880,617880,617(Loss)duetoforeigncurrencytranslationadjustments———(171,225)—(171,225)Gainonnetinvestmenthedgecontracts———68,816—68,816Recognitionofpriorservicecostandgains(losses)———(1,206)—(1,206)Recognitionofunfundedpostretirementliabilities———(86,158)—(86,158)Amountofcashflowhedgereclassifiedfromothercomprehensiveincometonetincome———677—677Totalcomprehensiveincome691,521Cashdividendsdeclaredoncommonstock————(183,694)(183,694)Performancebasedrestrictedstockandotherstockawardsissued170170(170)———Amortizationofstockcompensationexpense——51,229——51,229Issuanceofcommonstockuponconversionofconvertibledebt1,7171,71739,326——41,043StockoptionsrepurchasedbyTJX——(987)——(987)Issuanceofcommonstockunderstockincentiveplanandrelatedtaxeffect7,2697,269148,028——155,297Commonstockrepurchased(24,284)(24,284)(237,426)—(489,387)(751,097)Balance,January31,2009412,822$412,822$—$(217,781)$1,939,516$2,134,557Theaccompanyingnotesareanintegralpartofthefinancialstatements.F-6TheTJXCompanies,Inc.NotestoConsolidatedFinancialStatementsA.SummaryofAccountingPoliciesBasisofPresentation:TheconsolidatedfinancialstatementsofTheTJXCompanies,Inc.(referredtoas“TJX”or“we”)includethefinancialstatementsofallofTJX’ssubsidiaries,allofwhicharewhollyowned.AllofTJX’sactivitiesareconductedwithinTJXoritssubsidiariesandareconsolidatedinthesefinancialstatements.Allintercompanytransactionshavebeeneliminatedinconsolidation.FiscalYear:TJX’sfiscalyearendsonthelastSaturdayinJanuary.ThefiscalyearendedJanuary31,2009(“fiscal2009”)included53weeks,whilethefiscalyearsendedJanuary26,2008(“fiscal2008”)andJanuary27,2007(“fiscal2007”)eachincluded52weeks.EarningsPerShare:Allearningspershareamountsdiscussedrefertodilutedearningspershareunlessotherwiseindicated.UseofEstimates:Thepreparationofthefinancialstatements,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilities,anddisclosureofcontingentliabilities,atthedateofthefinancialstatementsaswellasthereportedamountsofrevenuesandexpensesduringthereportingperiod.TJXconsidersthemoresignificantaccountingpoliciesthatinvolvemanagementestimatesandjudgmentstobethoserelatingtoinventoryvaluation,impairmentsoflong-livedassets,retirementobligations,sharebasedcompensation,casualtyinsurance,accountingfortaxes,reservesforComputerIntrusionrelatedcostsandfordiscontinuedoperations,andlosscontingencies.Actualamountscoulddifferfromthoseestimates,andsuchdifferencescouldbematerial.RevenueRecognition:TJXrecordsrevenueatthetimeofsaleandreceiptofmerchandisebythecustomer,netofareserveforestimatedreturns.Weestimatereturnsbaseduponourhistoricalexperience.Wedeferrecognitionofalayawaysaleanditsrelatedprofittotheaccountingperiodwhenthecustomerreceivesthelayawaymerchandise.Proceedsfromthesaleofstorecardsaswellasthevalueofstorecardsissuedtocustomersasaresultofareturnorexchange,aredeferreduntilthecustomersusethecardstoacquiremerchandise.Basedonhistoricalexperience,weestimatetheamountofstorecardsthatwillnotberedeemed(“breakage”)and,totheextentallowedbylocallaw,theseamountsareamortizedintoincomeovertheredemptionperiod.Revenuerecognizedfromstorecardbreakagewas$10.7millioninfiscal2009,$10.1millioninfiscal2008and$7.6millioninfiscal2007.ConsolidatedStatementsofIncomeClassifications:Costofsales,includingbuyingandoccupancycosts,includethecostofmerchandisesoldandgainsandlossesoninventoryandfuel-relatedderivativecontracts;storeoccupancycosts(includingrealestatetaxes,utilityandmaintenancecostsandfixedassetdepreciation);thecostsofoperatingourdistributioncenters;payroll,benefitsandtravelcostsdirectlyassociatedwithbuyinginventory;andsystemscostsrelatedtothebuyingandtrackingofinventory.Selling,generalandadministrativeexpensesincludestorepayrollandbenefitcosts;communicationcosts;creditandcheckexpenses;advertising;administrativeandfieldmanagementpayroll,benefitsandtravelcosts;corporateadministrativecostsanddepreciation;gainsandlossesonnon-inventoryrelatedforeigncurrencyexchangecontracts;andothermiscellaneousincomeandexpenseitems.CashandCashEquivalents:TJXgenerallyconsidershighlyliquidinvestmentswithamaturityofthreemonthsorlessatthedateofpurchasetobecashequivalents.Ourinvestmentsareprimarilyhigh-gradecommercialpaper,institutionalmoneymarketfundsandtimedepositswithmajorbanks.MerchandiseInventories:Inventoriesarestatedatthelowerofcostormarket.TJXusestheretailmethodforvaluinginventoriesonthefirst-infirst-outbasis.Wealmostexclusivelyutilizeapermanentmarkdownstrategyandlowerthecostvalueoftheinventorythatissubjecttomarkdownatthetimetheretailpricesareloweredinourstores.WeaccrueforinventoryobligationsatthetimeinventoryisshippedratherthanwhenreceivedandacceptedbyTJX.F-7AtJanuary31,2009andJanuary26,2008,in-transitinventoryincludedinmerchandiseinventorieswas$329.9millionand$362.9million,respectively.Comparableamountswerereflectedinaccountspayableatthosedates.CommonStockandEquity:Equitytransactionsconsistprimarilyoftherepurchaseofourcommonstockunderourstockrepurchaseprogramsandtheamortizationofexpenseandissuanceofcommonstockunderourstockincentiveplan.Underourstockrepurchaseprogramswerepurchaseourcommonstockontheopenmarket.Theparvalueofthesharesrepurchasedischargedtocommonstockwiththeexcessofthepurchasepriceoverparfirstchargedagainstanyavailableadditionalpaid-incapital(“APIC”)andthebalancechargedtoretainedearnings.Duetothehighvolumeofrepurchasesoverthepastseveralyears,wehavenoremainingbalanceinAPICinanyoftheyearspresented.Allsharesrepurchasedhavebeenretired.SharesissuedunderTJX’sstockincentiveplanareissuedfromauthorizedbutunissuedshares,andproceedsreceivedarerecordedbyincreasingcommonstockfortheparvalueoftheshareswiththeexcessoverparaddedtoAPIC.Incometaxbenefitsupontheexpensingofoptionsresultinthecreationofadeferredtaxasset,whileincometaxbenefitsduetotheexerciseofstockoptionsreducedeferredtaxassetstotheextentthatanassetfortherelatedgranthasbeencreated.AnytaxbenefitgreaterthanthedeferredtaxassetcreatedatthetimeofexpensingtheoptioniscreditedtoAPIC;anydeficienciesinthetaxbenefitisdebitedtoAPICtotheextenta‘pool’forsuchdeficienciesexists.Intheabsenceofapoolanydeficienciesarerealizedintherelatedperiods’statementsofincomethroughtheprovisionforincometaxes.Theexcessincometaxbenefits,ifany,areincludedincashflowsfromfinancingactivitiesinthestatementsofcashflows.Theparvalueofrestrictedstockawardsisalsoaddedtocommonstockwhenthestockisissued,generallyatgrantdate.ThefairvalueoftherestrictedstockawardsinexcessofparvalueisaddedtoAPICastheawardisamortizedintoearningsovertherelatedvestingperiod.ShareBasedCompensation:TJXaccountsforsharebasedcompensationundertheprovisionsofStatementofFinancialAccountingStandardsNo.123(revised2004)“Share-BasedPayment”(SFASNo.123(R)).ForpurposesofapplyingtheprovisionsofSFASNo.123(R),thefairvalueofeachoptiongrantedisestimatedonthedateofgrantusingtheBlackScholesoptionpricingmodel.SeeNoteHforadetaileddiscussionofsharebasedcompensation.Interest:TJX’sinterest(income)expense,netwasexpenseof$14.3millioninfiscal2009,incomeof$1.6millioninfiscal2008andexpenseof$15.6millioninfiscal2007.Interest(income)expenseispresentedasanetamount.TJXhadgrossinterestincomeof$22.2million,$40.7millionand$23.6millioninfiscal2009,2008and2007,respectively.Wecapitalizeinterestduringtheactiveconstructionperiodofmajorcapitalprojects.Capitalizedinterestisaddedtothecostoftherelatedassets.TJXcapitalizedinterestof$1.6millioninfiscal2009and$799,000infiscal2008.Nointerestwascapitalizedinfiscal2007.DebtdiscountandrelatedissueexpensesareamortizedtointerestexpenseusingtheeffectiveinterestmethodoverthelivesoftherelateddebtissuesortothefirstdatetheholdersofthedebtmayrequireTJXtorepurchasesuchdebt.DepreciationandAmortization:Forfinancialreportingpurposes,TJXprovidesfordepreciationandamortizationofpropertybytheuseofthestraight-linemethodovertheestimatedusefullivesoftheassets.Buildingsaredepreciatedover33years.Leaseholdcostsandimprovementsaregenerallyamortizedovertheirusefullifeorthecommittedleaseterm(typically10years),whicheverisshorter.Furniture,fixturesandequipmentaredepreciatedover3to10years.Depreciationandamortizationexpenseforpropertywas$398.0millionforfiscal2009,$364.2millionforfiscal2008and$347.0millionforfiscal2007.Amortizationexpenseforpropertyheldunderacapitalleasewas$2.2millioninfiscal2009,2008and2007.Maintenanceandrepairsarechargedtoexpenseasincurred.Significantcostsincurredforinternallydevelopedsoftwarearecapitalizedandamortizedover3to10years.Uponretirementorsale,thecostofdisposedassetsandtherelatedaccumulateddepreciationareeliminatedandanygainorlossisincludedinnetincome.Pre-openingcosts,includingrent,areexpensedasincurred.LeaseAccounting:TJXrecordsrentexpensewhenittakespossessionofastore,whichoccursbeforethecommencementoftheleaseterm,asspecifiedinthelease,andgenerally30to60dayspriortotheopeningofthestore.Thisresultsinanaccelerationofthecommencementofrentexpenseforeachlease,aswerecordrentexpenseduringthepre-openingperiod,butareductioninmonthlyrentexpense,asthetotalrentdueundertheleaseisamortizedoveragreaternumberofmonths.F-8GoodwillandTradename:Goodwillisprimarilytheexcessofthepurchasepricepaidoverthecarryingvalueoftheminorityinterestacquiredinfiscal1990inTJX’sformer83%-ownedsubsidiaryandrepresentsgoodwillassociatedwiththeT.J.Maxxchain,whichisincludedintheMarmaxxsegmentinallperiodspresented.Inaddition,goodwillincludestheexcessofcostovertheestimatedfairmarketvalueofthenetassetsofWinnersacquiredbyTJXinfiscal1991.Goodwilltotaled$71.8millionasofJanuary31,2009,$72.2millionasofJanuary26,2008and$71.9millionasofJanuary27,2007.Goodwillisconsideredtohaveanindefinitelifeandaccordinglyisnotamortized.ChangesingoodwillareattributabletotheeffectofexchangeratechangesonWinners’reportedgoodwill.Tradenameisthevalueassignedtothename“Marshalls,”acquiredbyTJXinfiscal1996aspartoftheacquisitionoftheMarshallschain.Thevalueofthetradenamewasdeterminedbythediscountedpresentvalueofassumedafter-taxroyaltypayments,offsetbyareductionfortheirpro-ratashareofnegativegoodwillacquired.TheMarshallstradenameiscarriedatavalueof$107.7million,andisconsideredtohaveanindefinitelife.TJXoccasionallyacquiresorlicensesothertrademarkstobeusedinconnectionwithprivatelabelmerchandise.Suchtrademarksareincludedinotherassetsandareamortizedtocostofsales,includingbuyingandoccupancycosts,overtheirusefullife,generallyfrom7to10years.Trademarksandtherelatedamortizationareincludedintheoperatingsegmentforwhichtheywereacquired.ImpairmentofLong-LivedAssets,GoodwillandTradename:TJXevaluatesitslong-livedassetsandassetswithindefinitelives(otherthanGoodwillandTradename)forindicatorsofimpairmentwhenevereventsorchangesincircumstancesindicatetheircarryingamountsmaynotberecoverable,andatleastannuallyinthefourthquarterofafiscalyear.Theevaluationforlong-livedassetsisperformedatthelowestlevelofidentifiablecashflows,whichisgenerallyattheindividualstorelevel.Ifindicatorsofimpairmentareidentified,anundiscountedcashflowanalysisisperformedtodetermineifanimpairmentexists.Thestorebystoreevaluationsdidnotindicateanyrecoverabilityissues(foranyofourcontinuingoperations)duringthepastthreefiscalyears.Animpairmentexistswhentheundiscountedcashflowofanassetorassetgroupislessthanthecarryingcostofthatassetorassetgroup.GoodwillistestedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountofGoodwillmayexceeditsfairvalueandatleastannuallyinthefourthquarterofafiscalyear,bycomparingthecarryingvalueoftherelatedreportingunittoitsfairvalue.Animpairmentexistswhenthisanalysisshowsthatthefairvalueislessthanitscarryingcost.Thefairvalueofourreportingunits,usingtypicalvaluationmodelssuchasthediscountedcashflowmethod,isconsiderablyhigherthanthebookvaluesandnoimpairmenthasoccurredinthelastthreefiscalyears.TradenameisalsotestedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountoftheTradenamemayexceeditsfairvalueandatleastannuallyinthefourthquarterofafiscalyear.Testingisperformedbycomparingthediscountedpresentvalueofassumedafter-taxroyaltypaymentstothecarryingvalueoftheTradename.Noimpairmenthasoccurredinthelastthreefiscalyears.AdvertisingCosts:TJXexpensesadvertisingcostsasincurred.Advertisingexpensewas$254.0million,$255.0millionand$221.0millionforfiscal2009,2008and2007,respectively.AccumulatedOtherComprehensiveIncome(Loss):TJX’sforeignassetsandliabilitiesaretranslatedatthefiscalyearendexchangerate.Activityoftheforeignoperationsthataffectsthestatementsofincomeandcashflowsistranslatedattheaverageexchangeratesprevailingduringthefiscalyear.Thetranslationadjustmentsassociatedwiththeforeignoperationsareincludedinshareholders’equityasacomponentofaccumulatedothercomprehensiveincome.Cumulativeforeigncurrencytranslationadjustmentsincludedinshareholders’equityamountedtoalossof$152.9million,netofrelatedtaxeffectof$2.6million,asofJanuary31,2009;againof$17.8million,netofrelatedtaxeffectof$23.7million,asofJanuary26,2008;andalossof$3.2million,netofrelatedtaxeffectof$15.8million,asofJanuary27,2007.F-9TJXentersintofinancialinstrumentstomanageourcostofborrowingandtomanageourexposuretochangesinforeigncurrencyexchangerates.TJXrecognizesallderivativeinstrumentsaseitherassetsorliabilitiesinthestatementsoffinancialpositionandmeasuresthoseinstrumentsatfairvalue.Changestothefairvalueofderivativecontractsthatdonotqualifyforhedgeaccountingarereportedinearningsintheperiodofthechange.Forderivativesthatqualifyforhedgeaccounting,changesinthefairvalueofthederivativesareeitherrecordedinshareholders’equityasacomponentofothercomprehensiveincomeorarerecognizedcurrentlyinearnings,alongwithanoffsettingadjustmentagainstthebasisoftheitembeinghedged.Cumulativegainsandlossesonderivativesthathedgedournetinvestmentinforeignoperationsanddeferredgainsandlossesoncashflowhedgesthathavebeenrecordedinothercomprehensiveincomeamountedtoagainof$27.3million,netofrelatedtaxeffectsof$18.2millionatJanuary31,2009;alossof$42.1million,netofrelatedtaxeffectsof$28.1millionatJanuary26,2008;andalossof$25.2million,netofrelatedtaxeffectsof$16.8millionatJanuary27,2007.TherequirementtorecognizethefundedstatusofTJX’spostretirementbenefitplansinaccordancewithSFASNo.158(discussedinNoteK)resultedinalossadjustmenttoaccumulatedothercomprehensiveincomeof$92.2million,netofrelatedtaxeffectsof$61.5millionatJanuary31,2009.ThecumulativelossadjustmentatJanuary26,2008was$4.4million,netofrelatedtaxeffectsof$3.7millionandwas$5.6million,netofrelatedtaxeffectsof$3.7millionatJanuary27,2007.LossContingencies:TJXrecordsareserveforlosscontingencieswhenitisbothprobablethatalosshasbeenincurredandtheamountofthelossisreasonablyestimable.TJXreviewspendinglitigationandothercontingenciesatleastquarterlyandadjuststhereserveforsuchcontingenciesforchangesinprobableandreasonablyestimablelosses.TJXincludesanestimateforrelatedlegalcostsatthetimesuchcostsarebothprobableandreasonablyestimable.NewAccountingStandards:InDecember2008,theFinancialAccountingStandardsBoard,orFASB,issuedFASBStaffPosition(FSP)No.FAS132(R)-1Employers’DisclosuresaboutPostretirementBenefitPlanAssetswhichiseffectiveforfiscalyearsendingafterDecember15,2009.ThisFSPrequiresadditionaldisclosuressuchastheinvestmentallocationdecisionmakingprocess;thefairvalueofeachmajorcategoryofplanassets;inputsandvaluationtechniquesusedtomeasurethefairvalueofplanassetsandsignificantconcentrationsofriskwithinplanassets.WeareintheprocessofassessingtheimpactofFSPNo.FAS132(R)-1onourfinancialstatementdisclosures.InDecember2007,theFASBissuedSFASNo.141(revised2007)“BusinessCombinations”(SFAS141R).SFAS141Restablishesprinciplesandrequirementsforhowtheacquirerofabusinessrecognizesandmeasuresinitsfinancialstatementstheidentifiableassetsacquired,theliabilitiesassumed,andanynoncontrollinginterestintheacquiree.SFAS141Ralsoprovidesguidanceforrecognizingandmeasuringthegoodwillacquiredinbusinesscombinationsandwhatinformationtodisclosetoenableusersofthefinancialstatementstoevaluatethenatureandfinancialeffectsofthebusinesscombination.SFAS141RiseffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterDecember15,2008andistobeappliedprospectively.TJXwillconsiderthepotentialimpact,ifany,oftheadoptionofSFAS141Ronitsfuturebusinesscombinations.InApril2008,theFASBissuedFSP142-3,whichamendsthefactorsthatshouldbeconsideredindevelopingrenewalorextensionassumptionsusedtodeterminetheusefullifeofarecognizedintangible.FSP142-3iseffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterDecember15,2008,andinterimperiodswithinthosefiscalyears.Asthisguidanceappliesonlytoassetswemayacquireinthefuture,wearenotabletopredictitsimpact,ifany,onourconsolidatedfinancialstatements.AtitsJune2008meetingtheFASBratifiedEmergingIssuesTaskForce(EITF)issue08-03:AccountingbyLesseesforMaintenanceDeposits,whichclarifieshowalesseeshallaccountforamaintenancedepositunderanarrangementaccountedforasalease.EITF08-03iseffectiveforusinthefirstquarteroffiscal2010.WeareintheprocessofassessingtheimpactofEITF08-03anddonotbelieveitwillhaveamaterialimpactonourresultsofoperationsorfinancialcondition.InMarch2008,theFASBissuedSFAS161,whichrequiresdisclosuresofhowandwhyanentityusesderivativeinstruments,howderivativeinstrumentsandrelatedhedgeditemsareaccountedforandhowderivativeinstrumentsF-10andrelatedhedgeditemsaffectanentity’sfinancialposition,financialperformance,andcashflows.SFAS161iseffectiveforTJXinthefirstquarteroffiscal2010.WeareintheprocessofassessingtheimpactofSFAS161onourfinancialstatementdisclosures.Reclassifications:ForcomparativepurposeswereclassifiedactivityontheConsolidatedStatementsofCashFlowsinfiscal2008and2007for“Proceeds(payments)tosettlenetinvestmenthedges”fromoperatingactivitiestoinvestingactivities.Thisreclassificationhadnoimpactonnetincomeortotalcashflowsaspreviouslyreported.B.ProvisionforComputerIntrusionrelatedcostsTJXhasincurredlossesasaresultofanunauthorizedintrusionorintrusions(theintrusionorintrusions,collectively,the“ComputerIntrusion”)intoportionsofitscomputersystem,whichwasdiscoveredlateinfiscal2007andinwhichTJXbelievescustomerdatawerestolen.Duringthefirstsixmonthsoffiscal2008,weexpensedpre-taxcostsof$37.8millionforcostsweincurredrelatedtotheComputerIntrusion.Inthesecondquarteroffiscal2008,weestablishedapre-taxreserveof$178.1milliontoreflectourestimationofprobablelossesinaccordancewithgenerallyacceptedaccountingprincipleswithrespecttotheComputerIntrusionandrecordedapre-taxchargeinthatamount.WereducedtheProvisionforComputerIntrusionrelatedcostsby$30.5millioninfiscal2009and$18.9millioninfiscal2008asaresultofnegotiations,settlements,insuranceproceedsandadjustmentsinourestimatedlosses.Ourreserveof$42.2millionatJanuary31,2009includesourcurrentestimationoftotalpotentialcashliabilities,frompendinglitigation,proceedings,investigationsandotherclaims,aswellaslegal,ongoingmonitoringandothercostsandexpenses,arisingfromtheComputerIntrusion.Asanestimate,ourreserveissubjecttouncertainty,andouractualcostsmayvaryfromourcurrentestimateandsuchvariationsmaybematerial.Wemaydecreaseorincreasetheamountofourreservetoadjustfordevelopmentsinthecourseandresolutionoflitigation,claimsandinvestigationsandrelatedexpenses,insuranceproceedsandchangesinourestimates.C.DiscontinuedOperationsSaleofBob’sStores:Infiscal2009,TJXsoldBob’sStoresandrecordedasacomponentofdiscontinuedoperationsalossondisposal(includingexpensesrelatingtothesale)of$19.0million,netoftaxbenefitsof$13.0million.ThenetcarryingvalueofBob’sStoresassetssoldwas$33million,whichconsistedprimarilyofmerchandiseinventoryof$56million,offsetbymerchandisepayableof$21million.Thelossondisposalreflectssalesproceedsof$7.2millionaswellasexpensesrelatingtothesaleof$5.8million.TJXremainscontingentlyliableonseveraloftheBob’sStoresleaseswhicharediscussedinNoteMtotheconsolidatedfinancialstatements.TJXalsoreclassifiedtheoperatingresultsofBob’sStoresforallperiodspriortothesaleasacomponentofdiscontinuedoperations.Thefollowingtablepresentsthenetsales,segmentprofit(loss)andafter-taxlossfromoperationsreclassifiedtodiscontinuedoperationsforallperiodspriortothesaleofBob’sStores:Inthousands200920082007FiscalYearEndedJanuaryNetsales$148,040$310,400$300,624Segmentprofit(loss)(25,524)(17,398)(17,360)After-taxlossfromoperations(15,314)(10,682)(10,416)A.J.WrightStoreClosings:Duringthefourthquarteroffiscal2007,managementdevelopedaplantoclose34underperformingA.J.Wrightstores.TheplanwasapprovedbytheExecutiveCommitteeoftheBoardofDirectorsonNovember27,2006,andvirtuallyallofthestoreswereclosedasoftheendoffiscal2007.Theafter-taxcostofthestoreclosingsof$38.1million,or$0.08pershare,wasrecordedasalossondisposalofdiscontinuedoperationsinthefourthquarteroffiscal2007.TJXalsoclassifiedtheoperatingincome(loss)ofthe34closedstoresforfiscal2007,aswellasallpriorperiods,asacomponentofdiscontinuedoperations.Theoperatinglossoftheclosedstoresforfiscal2007includedindiscontinuedoperationswas$1.0million.F-11Thetablebelowsummarizesthepre-taxandafter-taxlossfromalldiscontinuedoperationsforthelastthreefiscalyears:Inthousands200920082007FiscalYearEndedJanuary(Loss)fromdiscontinuedoperationsbeforeprovisionforincometaxes$(56,980)$(17,398)$(81,888)Taxbenefits22,7116,71632,755(Loss)fromdiscontinuedoperations,netofincometaxes$(34,269)$(10,682)$(49,133)D.Long-TermDebtandCreditLinesThetablebelowpresentslong-termdebt,exclusiveofcurrentinstallments,asofJanuary31,2009andJanuary26,2008.Allamountsarenetofunamortizeddebtdiscounts.CapitalleaseobligationsareseparatelypresentedinNoteG.InthousandsJanuary31,2009January26,2008Generalcorporatedebt:7.45%unsecurednotes,maturingDecember15,2009(effectiveinterestrateof7.50%afterreductionofunamortizeddebtdiscountof$119infiscal2008)$—$199,881Marketvalueadjustmenttodebthedgedwithinterestrateswap—1,215C$235termcreditfacilitydueJanuary11,2010(interestrateCanadianDollarBanker’sAcceptancerateplus0.35%)—233,120Totalgeneralcorporatedebt—434,216Subordinateddebt:ZerocouponconvertiblesubordinatednotesdueFebruary13,2021(netofreductionofunamortizeddebtdiscountof$99,360and$118,625infiscal2009and2008,respectively)365,583398,870Totalsubordinateddebt365,583398,870Long-termdebt,exclusiveofcurrentinstallments$365,583$833,086Theaggregatematuritiesoflong-termdebt,exclusiveofcurrentinstallmentsatJanuary31,2009areasfollows:InthousandsLong-TermDebtFiscalYear2011$—2012—2013—2014396,529Lateryears—Lessamountrepresentingunamortizeddebtdiscount(30,946)Aggregatematuritiesoflong-termdebt,exclusiveofcurrentinstallments$365,583Theabovematuritytableassumesthatallholdersofthezerocouponconvertiblesubordinatednotesexercisetheirputoptionsinfiscal2014.Anyofthenotesonwhichputoptionsarenotexercised,redeemedorconvertedwillmatureinfiscal2022.InJanuary2006,TJXenteredintoaC$235.0milliontermcreditfacility(throughourCanadiansubsidiary,Winners)dueinJanuary2010.ThisdebtisguaranteedbyTJX.InterestispayableonborrowingsunderthisfacilityatratesequaltoorlessthanCanadianprimerate.Thevariablerateonthisfacilitywas1.69%atJanuary31,2009.TheproceedswereusedtofundtherepatriationofearningsfromWinnersaswellasothergeneralcorporatepurposesofWinners.InFebruary2001,TJXissued$517.5millionzerocouponconvertiblesubordinatednotesdueinFebruary2021andraisedgrossproceedsof$347.6million.Theissuepriceofthenotesrepresentedayieldtomaturityof2%peryear.DuetothefirstputoptiononFebruary13,2002,weamortizedthedebtdiscountassuminga1.5%yieldforfiscal2002.F-12ThenotesaresubordinatedtoallexistingandfutureseniorindebtednessofTJX.Theoutstandingnotesareconvertibleinto15.2millionsharesofcommonstockofTJXifthesalepriceofourcommonstockreachesspecifiedthresholds,ifthecreditratingofthenotesisbelowinvestmentgrade,ifthenotesarecalledforredemptionorifcertainspecifiedcorporatetransactionsoccur.EachholderofthenoteshastherighttorequireustopurchasethenotesonFebruary13,2013atoriginalpurchasepriceplusaccruedoriginalissuediscountforatotalof$396.5millionforallnotes.Wemaypaythepurchasepriceincash,TJXstockoracombinationofthetwo.Iftheholdersexercisetheirputoptions,weexpecttofundthepaymentwithcash,financingfromourshort-termcreditfacility,newlong-termborrowingsoracombinationthereof.Atotalof52,552noteswereconvertedintocommonsharesinfiscal2009.ThereweretwonotesputtoTJXonFebruary13,2007andthreeonFebruary13,2004.Inaddition,ifachangeincontrolofTJXoccursonorbeforeFebruary13,2013,eachholdermayrequireTJXtopurchaseforcashalloraportionofsuchholder’snotes.AsofFebruary13,2007TJXcanredeemforcashall,oraportionof,thenotesatanytimefortheoriginalpurchasepriceplusaccruedoriginalissuediscount.Includedincurrentinstallmentsoflong-termdebtarethefairvalueofinterestrateswapsof$1.6million;$199.9millionof7.45%unsecurednotes(netofdebtdiscountof$55,000)whichmatureinDecember2009andatermcreditfacilityof$191.3million(C$235.0million)whichmaturesinJanuary2010.TJXhasa$500millionrevolvingcreditfacilitymaturingMay2010anda$500millionrevolvingcreditfacilitymaturingMay2011.Theseagreementshavenocompensatingbalancerequirementsandhavevariouscovenantsincludingarequirementofaspecifiedratioofdebttoearnings.TheseagreementsserveasbackuptoTJX’scommercialpaperprogram.AsofJanuary31,2009,therewerenooutstandingamountsunderourcreditfacilities,andthemaximumamountofourU.S.short-termborrowingsoutstandingwas$222.0millionduringfiscal2009.TheweightedaverageinterestrateonourU.S.short-termborrowingswas3.92%infiscal2009.Wedidnotborrowunderthesecreditfacilitiesduringfiscal2008,andthemaximumamountofourU.S.short-termborrowingsoutstandingwas$204.5millionduringfiscal2007.AsofJanuary31,2009andJanuary26,2008,Winnershadtwocreditlines,oneforC$10millionforoperatingexpensesandoneC$10millionletterofcreditfacility.Winnersdidnotborrowunderthecreditlineforoperatingexpensesinfiscal2009.ThemaximumamountoutstandingunderWinners’CanadiancreditlineforoperatingexpenseswasC$5.7millioninfiscal2008andC$3.8millioninfiscal2007.Therewerenoamountsoutstandingonthislineattheendoffiscal2009orfiscal2008.AsofJanuary31,2009,T.K.Maxxhadacreditlineof£20million.Themaximumamountoutstandingunderthislinewas£6.1millioninfiscal2009and£16.4millioninfiscal2008.Therewerenooutstandingborrowingsonthiscreditlineattheendoffiscal2009orfiscal2008.E.FinancialInstrumentsTJXentersintofinancialinstrumentstomanageitscostofborrowingandtomanageitsexposuretochangesinfuelcostsandforeigncurrencyexchangerates.InterestRateContracts:InDecember1999,priortotheissuanceof$200millionten-yearnotes,TJXenteredintoarate-lockagreementtohedgetheunderlyingtreasuryrateofthenotes.Thecostofthisagreementisbeingamortizedtointerestexpenseoverthetermofthenotesandresultsinaneffectivefixedrateof7.60%onthesenotes.Duringfiscal2004,TJXenteredintointerestrateswapson$100millionofthe$200millionten-yearnoteseffectivelyconvertingtheinterestonthatportionoftheunsecurednotesfromfixedtoafloatingrateofinterestindexedtothesix-monthLIBORrate.Thematuritydatesoftheinterestrateswapsarethesameasthematuritydateoftheunderlyingdebt.Undertheseswaps,TJXpaysaspecifiedvariableinterestrateandreceivesthefixedrateapplicabletotheunderlyingdebt.Theinterestincome/expenseontheswapsisaccruedasearnedandrecordedasanadjustmenttotheinterestexpenseaccruedonthefixed-ratedebt.Theinterestrateswapsaredesignatedasfairvaluehedgesoftheunderlyingdebt.Thefairvalueofthecontracts,excludingthenetinterestaccrual,amountedtoanassetof$1.6millionasofJanuary31,2009,anassetof$1.2millionatJanuary26,2008,andaliabilityof$4.4million,asofJanuary27,2007.Thevaluationoftheswapsresultsinanoffsettingfairvalueadjustmenttothedebthedged.Accordingly,currentinstallmentsoflong-termdebthasbeenincreasedby$1.6millioninfiscal2009.Thelong-termdebthasbeenincreasedby$1.2millioninfiscal2008andreducedby$4.4millioninfiscal2007.TheaverageeffectiveinterestrateonF-13$100millionofthe7.45%unsecurednotes,inclusiveoftheeffectofhedgingactivity,wasapproximately6.54%infiscal2009,8.77%infiscal2008and9.42%infiscal2007.ConcurrentwiththeissuanceoftheC$235millionthree-yearnoteinfiscal2006,TJXenteredaninterestrateswapontheprincipalamountofthenoteeffectivelyconvertingtheinterestonthenotefromfloatingtoafixedrate.InJanuary2009thisinterestrateswapsettled,oneyearbeforethematuritydateoftheunderlyingdebtwhichwasextendedoneyeartoJanuary2010.UnderthisswapTJXpaidaspecifiedfixedinterestrateandreceivedthefloatingrateapplicabletotheunderlyingdebt.Theinterestincome/expenseontheswapwasaccruedasearnedandrecordedasanadjustmenttotheinterestexpenseaccruedonthefloating-ratedebt.Theinterestrateswapwasdesignatedasacashflowhedgeoftheunderlyingdebt.Thefairvalueoftheinterestrateswap,excludingthenetinterestaccrual,amountedtoanassetof$1.1million(C$1.1million)asofJanuary26,2008andanassetof$699,000(C$825,000)asofJanuary27,2007.Thevaluationoftheswapresultedinanadjustmenttoothercomprehensiveincomeofasimilaramount.Theaverageeffectiveinterestrateonthenote,inclusiveoftheeffectofhedgingactivity,wasapproximately4.50%inbothfiscal2009and2008.DieselFuelContracts:Duringfiscal2009,TJXenteredintothreeagreementstohedgeapproximately30%ofitsnotionaldieselfuelrequirementsforfiscal2010,basedonthedieselfuelconsumedbyindependentfreightcarrierstransportingtheCompany’sinventory.ThesecarrierschargeTJXamileagesurchargefordieselfuelpriceincreasesasincurredbythefreightcarrier.Thehedgeagreementsaredesignedtomitigatethevolatilityofdieselfuelpricing(andtheresultingpermilesurchargespayablebyTJX)bysettingafixedpricepergallonfortheyear.TJXelectednottoapplyhedgeaccountingrulestothesecontracts.Thechangeinthemarketvalueofthehedgeagreementsresultedina$4.9millionlossinfiscal2009,whichisreflectedincostofsales,includingbuyingandoccupancycosts.AllofthedieselfuelhedgeagreementsexpireinFebruary2010.ForeignCurrencyContracts:TJXentersintoforwardforeigncurrencyexchangecontractstoobtaineconomichedgesonfirmU.S.dollarandEurodenominatedmerchandisepurchasecommitmentsmadebyitsforeignsubsidiaries,T.K.Maxx(UnitedKingdom,IrelandandGermany)andWinners(Canada).Thesecommitmentsaretypicallysixmonthsorlessinduration.ThecontractsoutstandingatJanuary31,2009coveredcertaincommitmentsforthefirstquarteroffiscal2010.TJXelectednottoapplyhedgeaccountingrulestothesecontracts.Thechangeinthefairvalueofthesecontractsresultedinalossof$2.3millioninfiscal2009,incomeof$6.6millioninfiscal2008andincomeof$1.2millioninfiscal2007andisincludedinearningsasacomponentofcostofsales,includingbuyingandoccupancycosts.Effectiveinthefourthquarteroffiscal2009,TJXnolongerenteredintocontractstohedgeitsnetinvestmentsinforeignsubsidiariesandsettledallexistingcontracts.Asaresult,therewerenonetinvestmentcontractsasofJanuary31,2009.Untilthefourthquarteroffiscal2009,TJXenteredintoforeigncurrencyforwardandswapcontractsinbothCanadiandollarsandBritishpoundsterlingandaccountedforthemashedgesofthenetinvestmentinandbetweenforeignsubsidiariesorcashflowhedgesofWinnerslong-termintercompanydebt.TJXappliedhedgeaccountingtothesehedgecontractsofourinvestmentinforeignsubsidiaries,andchangesinfairvalueofthesecontracts,aswellasgainsandlossesuponsettlement,wererecordedinaccumulatedothercomprehensiveincome,offsettingchangesinthecumulativeforeigntranslationadjustmentsoftheforeignsubsidiaries.Thechangeinfairvalueofthecontractsdesignatedashedgesoftheinvestmentinforeignsubsidiariesresultedinagainof$68.8million,netofincometaxes,infiscal2009,alossof$15.8million,netofincometaxes,infiscal2008,andalossof$5.6million,netofincometaxes,infiscal2007.Thechangeinthecumulativeforeigncurrencytranslationadjustmentresultedinagainof$171.2million,netofincometaxes,infiscal2009,againof$21.0million,netofincometaxes,infiscal2008,andagainof$20.4million,netofincometaxes,infiscal2007.Amountsincludedinothercomprehensiveincomerelatingtocashflowhedgeswerereclassifiedtoearningsastheunderlyingexposureonthedebthadanimpactonearnings.Thenetamountreclassifiedfromothercomprehensiveincometotheincomestatementinfiscal2009relatedtocashflowhedgeswas$677,368,netofincometaxes.Thenetlossrecognizedinfiscal2008relatedtocashflowhedgeswas$1.1million,netofincometaxes.Thenetlossrecognizedinfiscal2007relatedtoF-14cashflowhedgeswas$5.0million,netofincometaxes,whichwasoffsetbyanon-taxablegainof$4.6million,relatedtotheunderlyingexposure.OnJuly20,2006TJXdeterminedthattheC$355millionintercompanyloan,duefromWinnerstoTJX,wouldnotbepayableintheforeseeablefutureduetothecapitalandcashflowneedsofWinners.Asaresult,thatintercompanyloanandtherelatedcurrencyswapthathadbeendesignatedasacashflowhedgeoflong-termintercompanydebtwerere-designatedasanetinvestmentinaforeignoperation.Accordingly,foreigncurrencygainsorlossesontheintercompanyloanandgainsorlossesontherelatedcurrencyswapfromre-designationdatetodateofsettlementinthefourthquarteroffiscal2009,totheextenteffective,havebeenrecordedinothercomprehensiveincome.Theineffectiveportionofthecurrencyswapresultedinpre-taxchargestotheincomestatementof$2.2millioninfiscal2009,$9.1millioninfiscal2008and$2.9millioninfiscal2007.TJXalsoentersintoderivativecontracts,generallydesignatedasfairvaluehedges,tohedgeintercompanydebtandintercompanyinterestpayable.Thechangesinfairvalueofthesecontractsarerecordedinthestatementsofincomeandareoffsetbymarkingtheunderlyingitemtofairvalueinthesameperiod.Uponsettlement,therealizedgainsandlossesonthesecontractsareoffsetbytherealizedgainsandlossesoftheunderlyingiteminthestatementofincome.Thenetimpactontheincomestatementofhedgingactivityrelatedtotheseintercompanypayableswasimmaterial.Thevalueofforeigncurrencyexchangecontractsrelatingtoinventorycommitmentsisreportedinearningsasacomponentofcostofsales,includingbuyingandoccupancycosts.Theincomestatementimpactofallotherforeigncurrencyderivativecontractsandunderlyingexposuresisreportedasacomponentofselling,generalandadmin-istrativeexpenses.FollowingisasummaryofTJX’sderivativefinancialinstrumentsandrelatedfairvaluesoutstandingatJanuary31,2009:CurrencyamountsinthousandsPayReceiveBlendedContractRateFairValueAsset(Liability)Fairvaluehedges:Interestrateswapfixedtofloatingonnotionalof$50,000LIBOR+4.17%7.45%N/AUS$766Interestrateswapfixedtofloatingonnotionalof$50,000LIBOR+3.42%7.45%N/AUS$1,093Intercompanybalancehedges,primarilyshort-termdebtandrelatedinterestC$37,795US$33,8260.8950US$3,051US$114,990C$143,0510.8038US$1,300US$39,997S30,9361.2929US$(370)Hedgeaccountingnotelected:DieselcontracthedgesFixedon750KgalFloaton750KgalN/AUS$(4,931)MerchandisepurchasecommitmenthedgesC$206,109US$172,5000.8369US$4,837C$4,828S2,9500.6110US$(149)£19,394US$28,0001.4437US$(204)£7,273S8,0001.1000US$(343)US$441S3271.3486US$(23)US$5,027F-15Thefairvalueofthederivativesisclassifiedasassetsorliabilities,currentornon-current,baseduponvaluationresultsandsettlementdatesoftheindividualcontracts.Followingarethebalancesheetclassificationsofthefairvalueofourderivatives:InthousandsJanuary31,2009January26,2008Currentassets$11,772$53,094Non-currentassets——Currentliabilities(6,745)(1,267)Non-currentliabilities—(143,091)Netfairvalueasset(liability)$5,027$(91,264)TJX’sforwardforeigncurrencyexchangeandswapcontractsrequireTJXtomakepaymentsofcertainforeigncurrenciesorU.S.dollarsforreceiptofCanadiandollars,U.S.dollarsorEuros.AllofthecontractsoutstandingatJanuary31,2009matureduringfiscal2010.Thecounterpartiestotheforwardexchangecontractsandswapagreementsaremajorinternationalfinancialinstitutionsandthecontractscontainrightsofoffset,whichminimizeourexposuretocreditlossintheeventofnonperformancebyoneofthecounterparties.Wedonotrequirecounterpartiestomaintaincollateralforthesecontracts.Weperiodicallymonitorourpositionandthecreditratingsofthecounterpartiesanddonotanticipatelossesresultingfromthenonperformanceoftheseinstitutions.F.DisclosuresaboutFairValueofFinancialInstrumentsInSeptember2006,theFASBissuedStatementofFinancialAccountingStandardNo.157,“FairValueMeasurements”(SFAS157).SFAS157establishesacommondefinitionforfairvaluetobeappliedtoU.S.GAAPrequiringuseoffairvalue,establishesaframeworkformeasuringfairvalue,andexpandsdisclosureaboutsuchfairvaluemeasurements.SFAS157waseffectiveforfinancialassetsandfinancialliabilitiesforfiscalyearsbeginningafterNovember15,2007.IssuedinFebruary2008,FSP157-1“ApplicationofFASBStatementNo.157toFASBStatementNo.13andOtherAccountingPronouncementsThatAddressFairValueMeasurementsforPurposesofLeaseClassificationorMeasurementunderStatement13”removedleasingtransactionsaccountedforunderFASBStatementNo.13andrelatedguidancefromthescopeofSFAS157.FSP157-2“PartialDeferraloftheEffectiveDateofStatement157,”deferredtheeffectivedateofSFAS157forallnonfinancialassetsandnonfinancialliabilitiesexceptforthosethatarerecognizedordisclosedatfairvalueonarecurringbasis(atleastannually)tofiscalyearsbeginningafterNovember15,2008.TheimplementationofSFAS157forfinancialassetsandfinancialliabilities,effectiveJanuary27,2008forTJX,didnothaveamaterialimpactonitsconsolidatedfinancialpositionandresultsofoperations.TJXiscurrentlyassessingtheimpactofSFAS157fornonfinancialassetsandnonfinancialliabilitiesonitsconsolidatedfinancialpositionandresultsofoperations.SFAS157definesfairvalueasthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate(exitprice).SFAS157classifiestheinputsusedtomeasurefairvalueintothefollowinghierarchy:Level1:Unadjustedquotedpricesinactivemarketsforidenticalassetsorliabilities.Level2:Unadjustedquotedpricesinactivemarketsforsimilarassetsorliabilities,orunadjustedquotedpricesforidenticalorsimilarassetsorliabilitiesinmarketsthatarenotactive,orinputsotherthanquotedpricesthatareobservablefortheassetorliability.Level3:Unobservableinputsfortheassetorliability.Financialassetsandliabilitiesareclassifiedintheirentiretybasedonthelowestlevelofinputthatissignificanttothefairvaluemeasurement.TJXhasdeterminedthatitsfinancialassetsandliabilitiesatJanuary31,2009weregenerallyF-16classifiedwithinlevel1orlevel2inthefairvaluehierarchy.ThefollowingtablesetsforthTJX’sfinancialassetsandliabilitiesthatwereaccountedforatfairvalueonarecurringbasis:InthousandsAsofJanuary31,2009Level1Assets:Cashequivalents$161,592Executivesavingsplanassets40,636Level2Assets:Foreigncurrencyexchangecontracthedges$9,534Interestrateswaps1,859Liabilities:Foreigncurrencyexchangecontracthedges$1,435Dieselfuelcontracthedges4,931Thefairvalueofourgeneralcorporatedebt,includingcurrentinstallments,isestimatedbyobtainingmarketvaluequotesgiventhetradinglevelsofotherbondsofthesamegeneralissuertypeandmarketperceivedcreditquality.Thefairvalueofthezerocouponconvertiblesubordinatednotesisestimatedbyobtainingmarketquotes.Thefairvalueofthecurrentinstallmentsoflong-termdebtatJanuary31,2009is$399.9millionversusacarryingvalueof$392.9million.ThefairvalueofthezerocouponconvertiblesubordinatednotesasofJanuary31,2009,is$358.3millionversusacarryingvalueof$365.6million.Theseestimatesdonotnecessarilyreflectprovisionsorrestrictionsinthevariousdebtagreementsthatmightaffectourabilitytosettletheseobligations.Asaresultofitsinternationaloperatingandfinancingactivities,TJXisexposedtomarketrisksfromchangesininterestandforeigncurrencyexchangerates,whichmayadverselyaffectitsoperatingresultsandfinancialposition.Whenitdeemsappropriate,TJXminimizesrisksfrominterestandforeigncurrencyexchangeratefluctuationsthroughtheuseofderivativefinancialinstruments.DerivativefinancialinstrumentsareusedtomanageriskandarenotusedfortradingorotherspeculativepurposesandTJXdoesnotuseleveragedderivativefinancialinstruments.Theforwardforeigncurrencyexchangecontractsandinterestrateswapsarevaluedusingbrokerquotationswhichincludeobservablemarketinformation.TJXmakesnoadjustmentstoquotesorpricesobtainedfrombrokersorpricingservicesbutdoesassessthecreditriskofcounterpartiesandwilladjustfinalvaluationswhenappropriate.Whereindependentpricingservicesprovidefairvalues,TJXobtainedanunderstandingofthemethodsusedinpricing.Assuch,thesederivativeinstrumentsareclassifiedwithinlevel2.InFebruary2007,theFASBissuedSFAS159,“TheFairValueOptionforFinancialAssetsandFinancialLiabilities—includinganamendmentofFASBStatementNo.115”(SFAS159).SFAS159providescompanieswithanoptiontoreportselectedfinancialassetsandliabilitiesatfairvalueandestablishespresentationanddisclosurerequirementsdesignedtofacilitatecomparisonsbetweencompaniesthatchoosedifferentfairvaluemeasurementattributesforsimilartypesofassetsandliabilities.SFAS159iseffectiveforfiscalyearsbeginningafterNovember15,2007,andinterimperiodswithinthoseyearsandwasadoptedbyTJXinthefirstquarteroffiscal2009.Uponadoption,TJXelectednottoadjustanyfinancialassetsorliabilitiesnotpreviouslyrecordedatfairvalueandtherefore,theadoptionofSFAS159didnothaveanimpactonTJX’sconsolidatedbalancesheetorstatementofoperations.G.CommitmentsTJXiscommittedunderlong-termleasesrelatedtoitscontinuingoperationsfortherentalofrealestateandfixturesandequipment.Mostofourleasesarestoreoperatingleaseswithaten-yearinitialtermandoptionstoextendforoneormorefive-yearperiods.CertainMarshallsleases,acquiredinfiscal1996,hadthenremainingtermsranginguptotwenty-fiveyears.T.K.Maxxleasesaregenerallyforfifteentotwenty-fiveyearswithten-yearkick-outoptions.Manyofourleasescontainescalationclausesandearlyterminationpenalties.Inaddition,wearegenerallyrequiredtopayinsurance,realestatetaxesandotheroperatingexpensesincluding,insomecases,rentalsbasedonapercentageofF-17sales.Theseexpensesintheaggregatewereapproximatelyone-thirdofthetotalminimumrentforthefiscalyearendedJanuary31,2009,thefiscalyearendedJanuary26,2008andthefiscalyearendedJanuary27,2007.FollowingisascheduleoffutureminimumleasepaymentsforcontinuingoperationsasofJanuary31,2009:InthousandsCapitalLeaseOperatingLeasesFiscalYear2010$3,726$913,44620113,726840,45720123,897741,94020133,912624,87220143,912513,069Lateryears7,4981,437,499Totalfutureminimumleasepayments26,671$5,071,283Lessamountrepresentinginterest6,297Netpresentvalueofminimumcapitalleasepayments$20,374Thecapitalleaserelatestoa283,000-square-footadditiontoTJX’shomeofficefacility.RentalpaymentscommencedJune1,2001,andwerecognizedacapitalleaseassetandrelatedobligationequaltothepresentvalueoftheleasepaymentsof$32.6million.Rentalexpenseunderoperatingleasesforcontinuingoperationsamountedto$936.6millionforfiscal2009,$875.6millionforfiscal2008and$816.4millionforfiscal2007.Rentalexpenseincludescontingentrentandisreportednetofsubleaseincome.Contingentrentpaidwas$8.3millioninfiscal2009,$9.7millioninfiscal2008and$9.0millioninfiscal2007.Subleaseincomewas$2.1millioninfiscal2009,$2.9millioninfiscal2008,and$3.0millioninfiscal2007.ThetotalnetpresentvalueofTJX’sminimumoperatingleaseobligationsapproximated$3,962.2millionasofJanuary31,2009.TJXhadoutstandinglettersofcredittotaling$32.0millionasofJanuary31,2009and$32.7millionasofJanuary26,2008.LettersofcreditareissuedbyTJXprimarilyforthepurchaseofinventory.H.StockIncentivePlanTotalcompensationcostrelatedtosharebasedcompensationwas$31.2millionnetofincometaxesof$20.1millioninfiscal2009,$37.0millionnetofincometaxesof$20.3millioninfiscal2008and$45.1millionnetofincometaxesof$24.7millioninfiscal2007.AsofJanuary31,2009,therewas$77.5millionoftotalunrecognizedcompensationcostrelatedtononvestedsharebasedcompensationarrangementsgrantedundertheplan.Thatcostisexpectedtoberecognizedoveraweighted-averageperiodof2.0years.TJXhasastockincentiveplanunderwhichoptionsandothersharebasedawardsmaybegrantedtoitsdirectors,officersandkeyemployees.ThisplanhasbeenapprovedbyTJX’sshareholders,andallstockcompensationawardsaremadeunderthisplan.TheStockIncentivePlan,asamendedwithshareholderapproval,providesfortheissuanceofupto145.3millionshareswith12.4millionsharesavailableforfuturegrantsasofJanuary31,2009.TJXissuessharesfromauthorizedbutunissuedcommonstock.Optionsforthepurchaseofcommonstockhavebeengrantedat100%ofmarketpriceonthegrantdateandgenerallyvestinthirdsoverathree-yearperiodstartingoneyearafterthegrant,andhaveatenyearterm.ForpurposesF-18ofapplyingtheprovisionsofSFASNo.123(R),thefairvalueofoptionsisestimatedasofthedateofgrantusingtheBlack-Scholesoptionpricingmodelwiththefollowingweightedaverageassumptions:January31,2009January26,2008January27,2007FiscalYearEndedRiskfreeinterestrate2.96%4.00%4.75%Dividendyield1.3%1.2%1.1%Expectedvolatilityfactor33.9%31.0%32.0%Expectedoptionlifeinyears4.84.54.5Weightedaveragefairvalueofoptionsissued$10.46$8.38$8.35Expectedvolatilityisbasedonacombinationofimpliedvolatilityfromtradedoptionsonourstock,andhistoricalvolatilityduringatermapproximatingtheexpectedtermoftheoptiongranted.Weusehistoricaldatatoestimateoptionexercise,employeeterminationbehavioranddividendyieldwithinthevaluationmodel.Separateemployeegroupsandoptioncharacteristicsareconsideredseparatelyforvaluationpurposeswhenapplicable.Nosuchdistinctionsexistedduringthefiscalyearspresented.Theexpectedoptionliferepresentsanestimateoftheperiodoftimeoptionsareexpectedtoremainoutstandingbaseduponhistoricalexercisetrends.TheriskfreerateisforperiodswithinthecontractuallifeoftheoptionbasedontheU.S.Treasuryyieldcurveineffectatthetimeofthegrant.StockOptions:AsummaryofthestatusofTJX’sstockoptionsandrelatedWeightedAverageExercisePrices(“WAEP”)ispresentedbelow(sharesinthousands):OptionsWAEPOptionsWAEPOptionsWAEPJanuary31,2009January26,2008January27,2007FiscalYearEndedOutstandingatbeginningofyear35,153$22.1737,854$20.5047,902$18.97Granted5,19935.025,71629.235,78827.03Exercisedandrepurchased(7,533)19.08(7,473)18.84(14,524)17.92Forfeitures(1,046)27.59(944)24.25(1,312)21.93Outstandingatendofyear31,773$24.8335,153$22.1737,854$20.50Optionsexercisableatendofyear21,664$21.5624,243$19.8824,848$18.69Includedintheexercisedandrepurchasedamountinthetableaboveareapproximately77,000optionsrepurchasedfromoptioneesbyTJXduringfiscal2009and341,000optionsrepurchasedduringfiscal2008.Cashpaidforsuchrepurchasedoptionsamountedto$659,305infiscal2009and$2.3millioninfiscal2008.Thetotalintrinsicvalueofoptionsexercisedwas$108.1millioninfiscal2009,$79.7millioninfiscal2008and$131.6millioninfiscal2007.ThefollowingtablesummarizesinformationaboutstockoptionsoutstandingthatareexpectedtovestandstockoptionsoutstandingthatareexercisableatJanuary31,2009.Optionsoutstandingexpectedtovestrepresentstotalunvestedoptionsof10.1millionadjustedforanticipatedforfeitures.InthousandsexceptyearsandpershareamountsSharesAggregateIntrinsicValueWeightedAverageRemainingContractLifeWeightedAverageExercisePriceOptionsoutstandingexpectedtovest9,396$08.9years$31.71Optionsexercisable21,664$05.4years$21.56Totaloutstandingoptionsvestedandexpectedtovest31,060$06.5years$24.63PerformanceBasedRestrictedStockandOtherAwards:TJXhasissuedperformance-basedrestrictedstockawardsundertheStockIncentivePlan.Performance-basedrestrictedstockawardsareissuedatnocosttotherecipientoftheaward,andhaverestrictionsthatgenerallylapseoveronetofouryearsfromdateofgrantwhenandifspecifiedF-19performancecriteriaaremet.Thegrantdatefairvalueoftheawardischargedtoincomeratablyovertheperiodduringwhichtheseawardsvest.Thefairvalueoftheawardsisdeterminedatdateofgrantandassumesthatperformancegoalswillbeachieved.Ifsuchgoalsarenotmet,nocompensationcostisrecognizedandanyrecognizedcompensationcostisreversed.Asummaryofthestatusofournonvestedperformance-basedrestrictedstockandchangesduringfiscal2009ispresentedbelow:SharesinthousandsPerformanceBasedRestrictedStockWeightedAverageGrantDateFairValueNonvestedatbeginningofyear593$24.82Granted17333.49Vested(251)23.49Forfeited(73)28.35Nonvestedatendofyear442$28.37Therewere173,000sharesofperformance-basedrestrictedstock,withaweightedaveragegrantdatefairvalueof$33.49,grantedinfiscal2009;200,000shareswithaweightedaveragegrantdatefairvalueof$28.04weregrantedinfiscal2008and236,000shareswithaweightedaveragegrantdatefairvalueof$27.16weregrantedinfiscal2007.Thefairvalueofperformance-basedrestrictedstockthatvestedwas$5.9millioninfiscal2009,$3.9millioninfiscal2008and$4.9millioninfiscal2007.InNovember2005,TJXissuedamarket-baseddeferredshareawardforupto94,000sharestoitsactingchiefexecutiveofficerwhichwasindexedtoTJX’sstockpriceforthesixty-dayperiodbeginningFebruary22,2007(“measurementperiod”).Theweightedaveragegrantdatefairvalueofthisawardwas$9.90pershare.InJune2007,58,750shareswereissuedunderthisaward.InSeptember2007,thisofficerreceivedaspecialawardof25,000sharesofcommonstock.TJXalsoawardsdeferredsharestoitsoutsidedirectorsundertheStockIncentivePlan.Theoutsidedirectorsareawardedtwoannualdeferredshareawards,eachrepresentingsharesofTJXcommonstockvaluedat$50,000.Oneawardvestsimmediatelyandispayablewithaccumulateddividendsinstockattheearlierofseparationfromserviceasadirectororchangeofcontrol.Thesecondawardvestsbasedonserviceasadirectoruntiltheannualmeetingnextfollowingtheawardandispayablewithaccumulateddividendsinstockatvestingdate,unlessanirrevocableadvanceelectionismadewherebyitispayableatthesametimeasthefirstaward.Asoftheendoffiscal2009,atotalof144,588deferredshareswereoutstandingundertheplan.I.CapitalStockandEarningsPerShareCapitalStock:InAugust2008,wecompleteda$1billionstockrepurchaseprogrambeguninfiscal2007andinitiatedanothermulti-year$1billionstockrepurchaseprogramthathadbeenapprovedinFebruary2008.Werepurchasedandretired24.0millionsharesofourcommonstockatacostof$741.1millionduringfiscal2009.TJXreflectsstockrepurchasesinitsfinancialstatementsona“settlement”basis.Wehadcashexpendituresunderourrepurchaseprogramsof$751.1millioninfiscal2009,$940.2millioninfiscal2008and$557.2millioninfiscal2007,fundedprimarilybycashgeneratedfromoperations.Thetotalcommonsharesrepurchasedamountedto24.3millionsharesinfiscal2009,33.0millionsharesinfiscal2008and22.0millionsharesinfiscal2007.AsofJanuary31,2009,wehadrepurchased8.9millionsharesofourcommonstockatacostof$255.1millionunderthecurrent$1billionstockrepurchaseprogram.Allsharesrepurchasedunderourstockrepurchaseprogramshavebeenretired.TJXhas5millionsharesofauthorizedbutunissuedpreferredstock,$1parvalue.F-20EarningsPerShare:Thefollowingschedulepresentsthecalculationofbasicanddilutedearningspershareforincomefromcontinuingoperations:AmountsinthousandsexceptpershareamountsJanuary31,2009January26,2008January27,2007(53weeks)Basicearningspershare:Incomefromcontinuingoperations$914,886$782,432$787,172Weightedaveragecommonstockoutstandingforbasicearningspersharecalculation419,076443,050454,044Basicearningspershare$2.18$1.77$1.73Dilutedearningspershare:Incomefromcontinuingoperations$914,886$782,432$787,172Addback:Interestexpenseonzerocouponconvertiblesubordinatednotes,netofincometaxes4,6534,7164,623Incomefromcontinuingoperationsusedfordilutedearningspersharecalculation$919,539$787,148$791,795Weightedaveragecommonstockoutstandingforbasicearningspersharecalculation419,076443,050454,044Assumedconversion/exerciseof:Convertiblesubordinatednotes16,43416,90516,905Stockoptionsandawards6,7458,0919,096Weightedaveragecommonstockoutstandingfordilutedearningspersharecalculation442,255468,046480,045Dilutedearningspershare$2.08$1.68$1.65Theweightedaveragecommonsharesforthedilutedearningspersharecalculationexcludetheincrementaleffectrelatedtooutstandingstockoptions,theexercisepriceofwhichisinexcessoftherelatedfiscalyear’saveragepriceofTJX’scommonstock.Suchoptionsareexcludedbecausetheywouldhaveanantidilutiveeffect.Therewere5.2millionsuchoptionsexcludedasofJanuary31,2009and5.7millionexcludedatbothJanuary26,2008andJanuary27,2007.J.IncomeTaxesTheprovisionforincometaxesincludesthefollowing:InthousandsJanuary31,2009January26,2008January27,2007FiscalYearEnded(53weeks)Current:Federal$259,857$375,799$327,716State27,37694,72758,170Foreign97,97687,26060,149Deferred:Federal126,816(64,363)28,923State23,955(15,698)397Foreign74(70)1,681Provisionforincometaxes$536,054$477,655$477,036F-21TJXhadnetdeferredtaxassetsasfollows:InthousandsJanuary31,2009January26,2008FiscalYearEndedDeferredtaxassets:Foreigntaxcreditcarryforward$37,611$12,409Reservefordiscontinuedoperations14,85920,264Pension,stockcompensation,postretirementandemployeebenefits238,557189,619Leases38,88939,373Foreigncurrencyhedges4,57136,654ComputerIntrusionreserve16,74946,531Other83,48385,199Totaldeferredtaxassets$434,719$430,049Deferredtaxliabilities:Property,plantandequipment$203,829$139,396Safeharborleases6,5217,548Tradename42,87340,761Undistributedforeignearnings111,50677,198Other61,32344,584Totaldeferredtaxliabilities426,052309,487Netdeferredtaxasset$8,667$120,562Thefiscal2009netdeferredtaxassetispresentedonthebalancesheetasacurrentassetof$135.7millionandanon-currentliabilityof$127.0million.Forfiscal2008,thenetdeferredtaxassetispresentedonthebalancesheetasacurrentassetof$163.5millionandanon-currentliabilityof$42.9million.TJXchangeditsassertionduringfiscal2008regardingtheundistributedearningsofitsMarshallsPuertoRicosubsidiaryandthereforetheearningsofthissubsidiaryarenolongerconsideredindefinitelyreinvested.Asaresult,TJXrecognizeda$5.5milliontaxbenefitinfiscal2008afterprovidingfordeferredU.S.taxesforthissubsidiary.TJXhasprovidedfordeferredU.S.taxesonallundistributedearningsfromitsWinnersCanadiansubsidiaryanditsMarshallsPuertoRicosubsidiarythroughJanuary31,2009.AllearningsofTJX’sotherforeignsubsidiariesareconsideredindefinitelyreinvestedandnoU.S.deferredtaxeshavebeenprovidedonthoseearnings.Thenetdeferredtaxassetsummarizedaboveincludesdeferredtaxesrelatingtotemporarydifferencesatourforeignoperationsandamountedtoa$19.9millionnetliabilityasofJanuary31,2009anda$26.7millionnetliabilityasofJanuary26,2008.Infiscal2009,TJX’sHomeGoodssubsidiaryutilizedaPuertoRiconetoperatinglosscarryforwardofapprox-imately$1.1millionwhichhadnotbeenpreviouslyrecognized.TherearenofurtherPuertoRiconetoperatinglossesasofthefiscalyearendedJanuary31,2009.TJX’sGermansubsidiary,whichistreatedasabranchforU.S.taxpurposes,incurrednetoperatinglossesof$15.0millioninfiscal2009and$14.4millioninfiscal2008fortaxandfinancialreportingpurposes.ThelosseswerefullyutilizedineachyeartoreduceTJX’scurrentU.S.taxableincome.AnyfutureutilizationofthelossesinGermanywillresultinacorrespondingamountoftaxableincomeforU.S.taxpurposes.TJXestablishedvaluationallowancesagainstcertaindeferredtaxassetswhichmaynotberealizedinfutureyears.Theamountofthevaluationallowanceswas$6.2millionasofJanuary31,2009and$4.0millionasofJanuary26,2008.F-22TJX’sworldwideeffectiveincometaxratewas36.9%forfiscal2009,37.9%forfiscal2008and37.7%forfiscal2007.ThedifferencebetweentheU.S.federalstatutoryincometaxrateandTJX’sworldwideeffectiveincometaxrateisreconciledbelow:January31,2009January26,2008January27,2007FiscalYearEndedU.S.federalstatutoryincometaxrate35.0%35.0%35.0%Effectivestateincometaxrate2.84.14.0Impactofforeignoperations(0.1)(0.6)(0.4)Impactofrepatriationofforeignearnings—(0.4)—Impactoftaxfreecurrency(gains)lossesonintercompanyloans0.1(0.1)(0.2)Allother(0.9)(0.1)(0.7)Worldwideeffectiveincometaxrate36.9%37.9%37.7%ThedecreaseinTJX’seffectivestateincometaxrateforfiscal2009ascomparedtofiscal2008isprimarilyattributedtothesettlementofseveralstatetaxauditsandtheresultingreductiontoFIN48reservesforuncertaintaxpositions.TJXadoptedtheprovisionsofFASBInterpretationNo.48,“AccountingforUncertaintyinIncomeTaxes”(FIN48),inthefirstquarteroffiscal2008.FIN48clarifiestheaccountingforincometaxesbyprescribingaminimumthresholdforbenefitrecognitionofataxpositionforfinancialstatementpurposes.FIN48alsoestablishestaxaccountingrulesformeasurement,classification,interestandpenalties,disclosureandinterimperiodaccounting.Asaresultoftheimplementation,TJXrecognizedachargeofapproximately$27.2milliontoitsretainedearningsbalanceatthebeginningoffiscal2008.TJXhadnetunrecognizedtaxbenefitsof$129.9millionasofJanuary31,2009,$140.7millionasofJanuary26,2008and$124.4millionasofJanuary28,2007.Areconciliationofthebeginningandendinggrossamountofunrecognizedtaxbenefitsisasfollows:InthousandsJanuary31,2009January26,2008Balanceatbeginningofyearordateofimplementation$232,859$188,671Additionsforuncertaintaxpositionstakenincurrentyear59,80730,811Additionsforuncertaintaxpositionstakeninprioryears1,84852,328Reductionsforuncertaintaxpositionstakeninprioryears(80,959)(36,474)Reductionsresultingfromlapseofstatuteoflimitation(2,002)(307)Settlementswithtaxauthorities(9,010)(2,170)Balanceatendofyear$202,543$232,859Includedinthegrossamountofunrecognizedtaxbenefitsareitemsthatwillnotimpactfutureeffectivetaxratesuponrecognition.Theseitemsamountto$49.3millionasofJanuary31,2009and$67.8millionasofJanuary26,2008.TJXissubjecttoU.S.federalincometaxaswellasincometaxinmultiplestate,localandforeignjurisdictions.Innearlyalljurisdictions,thetaxyearsthroughfiscal2001arenolongersubjecttoexamination.TJX’saccountingpolicyistoclassifyinterestandpenaltiesrelatedtoincometaxmattersaspartofincometaxexpense.Theamountofinterestandpenaltiesexpensedwas$15.3millionfortheyearendedJanuary31,2009and$16.2millionfortheyearendedJanuary26,2008.Theaccruedamountsforinterestandpenaltiesare$51.1millionasofJanuary31,2009and$52.5millionasofJanuary26,2008.Basedontheoutcomeoftaxexaminations,judicialproceedingsorasaresultoftheexpirationofstatuteoflimitationsinspecificjurisdictions,itisreasonablypossiblethatunrecognizedtaxbenefitsforcertaintaxpositionstakenonpreviouslyfiledtaxreturnsmaychangemateriallyfromthoserepresentedonthefinancialstatementsasofJanuary31,2009.Duringthenext12months,itisreasonablypossiblethatsuchcircumstancesmayoccurthatwouldhaveamaterialeffectonpreviouslyunrecognizedtaxbenefits.Asaresult,thetotalnetamountofunrecognizedtaxF-23benefitsmaydecrease,whichwouldreducetheprovisionfortaxesonearningsbyarangeestimatedat$2.0millionto$70.0million.K.PensionPlansandOtherRetirementBenefitsPension:TJXhasafundeddefinedbenefitretirementplancoveringthemajorityofitsfull-timeU.S.employees.Employeeswhohaveattainedtwenty-oneyearsofageandhavecompletedoneyearofservicearecoveredundertheplan.Noemployeecontributionsarerequiredandbenefitsarebasedoncompensationearnedineachyearofservice.Asaresultofanamendmenttotheplan,employeeshiredafterFebruary1,2006donotparticipateinthisplanbutareeligibletoreceiveenhancedemployercontributionstotheir401(k)plans.Thisplanamendmentdidnothaveamaterialimpactonpensionexpenseforthelastthreefiscalyears,butisexpectedtograduallyreducenetperiodicpensioncostsinsubsequentyearsduetoareductioninparticipants.Ourfundeddefinedbenefitretirementplanassetsareinvestedindomesticandinternationalequityandfixedincomesecurities,bothdirectlyandthroughinvestmentfunds.TheplandoesnotinvestinthesecuritiesofTJX.TJXalsohasanunfundedsupplementalretirementplanwhichcoverskeyemployeesandprovidesforadditionalretirementbenefitsbasedonaveragecompensationforcertainemployees.InSeptember2006,theFASBissuedStatementofFinancialAccountingStandardsNo.158,“Employers’AccountingforDefinedBenefitPensionandOtherPostretirementPlans—AnamendmentofFASBStatementsNo.87,88,106and132(R)”(SFASNo.158).SFASNo.158requirestherecognitionofthefundedstatusofabenefitplaninthebalancesheet;therecognitioninothercomprehensiveincomeofgainsorlossesandpriorservicecostsorcreditsarisingduringtheperiodbutwhicharenotincludedascomponentsofperiodicbenefitcost;themeasurementofdefinedbenefitplanassetsandobligationsasofthebalancesheetdate(themeasurementprovisions);anddisclosureofadditionalinformationabouttheeffectsonperiodicbenefitcostforthefollowingfiscalyeararisingfromdelayedrecognitioninthecurrentperiod.TherecognitionofthefundedstatusofplansonthebalancesheetwasrequiredforourfiscalyearendedJanuary27,2007.TheadjustmenttoaccumulatedothercomprehensiveincomeofinitiallyapplyingtherecognitionprovisionsofSFASNo.158forourpensionandpostretirementplanswasareduction,netoftaxes,of$5.6millioninfiscal2007.TJXdeferredtheimplementationofthemeasurementprovisionsofSFASNo.158untilfiscal2008.Theimpactofadoptingthemeasurementprovisionswastoincreaseourpostretirementliabilitiesby$2.7millionandanadjustmenttoretainedearningsof$1.6million,netofincometaxesof$1.1million,whichrepresentsthenetbenefitcostfromJanuary1,2007toJanuary27,2007.Thevaluationdateforbothplansinfiscal2007wasasofDecember31,2006.PresentedbelowisfinancialinformationrelatingtoTJX’sfundeddefinedbenefitretirementplan(fundedplan)anditsunfundedsupplementalpensionplan(unfundedplan)forthefiscalyearsindicated:InthousandsJanuary31,2009January26,2008January31,2009January26,2008(53weeks)(53weeks)FundedPlanFiscalYearEndedUnfundedPlanFiscalYearEndedChangeinprojectedbenefitobligation:Projectedbenefitobligationatbeginningofyear$447,684$417,436$51,588$53,109Effectofchangeinmeasurementdate—4,395—152Servicecost30,40634,7041,069992Interestcost28,71124,6323,3662,867Actuarial(gains)losses(1,411)(21,673)2,252(3,420)Settlements————Specialterminationbenefits———168Benefitspaid(10,713)(9,586)(2,812)(2,280)Expensespaid(2,264)(2,224)——Projectedbenefitobligationatendofyear$492,413$447,684$55,463$51,588Accumulatedbenefitobligationatendofyear$451,260$408,437$42,560$46,023F-24InthousandsJanuary31,2009January26,2008January31,2009January26,2008FundedPlanFiscalYearEndedUnfundedPlanFiscalYearEnded(53weeks)(53weeks)Changeinplanassets:Fairvalueofplanassetsatbeginningofyear$436,416$410,318$—$—Effectofchangeinmeasurementdate—1,840—(175)Actualreturnonplanassets(109,227)11,068——Employercontribution—25,0002,8122,455Benefitspaid(10,713)(9,586)(2,812)(2,280)Expensespaid(2,264)(2,224)——Fairvalueofplanassetsatendofyear$314,212$436,416$—$—Reconciliationoffundedstatus:Projectedbenefitobligationatendofyear$492,413$447,684$55,463$51,588Fairvalueofplanassetsatendofyear314,212436,416——Fundedstatus—excessobligation178,20111,26855,46351,588Employercontributionsaftermeasurementdate,andonorbeforefiscalyearend————Unrecognizedpriorservice(cost)————Unrecognizedactuarial(losses)————Netliabilityrecognizedonconsolidatedbalancesheets$178,201$11,268$55,463$51,588Amountsnotyetreflectedinnetperiodicbenefitcostandincludedinaccumulatedothercomprehensiveincome(loss):Priorservicecost$15$59$218$342Accumulatedactuariallosses176,27434,0888,9587,976Amountsincludedinaccumulatedothercomprehensiveincome(loss)$176,289$34,147$9,176$8,318Theconsolidatedbalancesheetsreflectthefundedstatusoftheplanswithanyunrecognizedpriorservicecostandactuarialgainsandlossesrecordedinaccumulatedothercomprehensiveincome(loss).Thecombinednetaccruedliabilityof$233.7millionatJanuary31,2009isreflectedonthebalancesheetasofthatdateasacurrentliabilityof$13.1millionandalong-termliabilityof$220.6million.Thecombinednetaccruedliabilityof$62.9millionatJanuary26,2008isreflectedonthebalancesheetasofthatdateasacurrentliabilityof$2.7millionandalong-termliabilityof$60.2million.Theestimatedpriorservicecostthatwillbeamortizedfromaccumulatedothercomprehensiveincome(loss)intonetperiodicbenefitcostinfiscal2010is$15,354forthefundedplanand$124,652fortheunfundedplan.Theestimatednetactuariallossthatwillbeamortizedfromaccumulatedothercomprehensiveincome(loss)intonetperiodicbenefitcostinfiscal2010is$13.6millionforthefundedplanand$861,926fortheunfundedplan.Weightedaverageassumptionsformeasurementpurposesfordeterminingtheobligationatmeasurementdate:January31,2009January26,2008January31,2009January26,2008FundedPlanFiscalYearEndedUnfundedPlanFiscalYearEndedDiscountrate6.50%6.50%6.50%6.25%Expectedreturnonplanassets8.00%8.00%N/AN/ARateofcompensationincrease4.00%4.00%6.00%6.00%F-25TJXselectstheassumeddiscountrateusingtheCitigroupPensionLiabilityIndex.TJXdevelopsitslong-termrateofreturnassumptionbyevaluatinginputfromprofessionaladvisorstakingintoaccounttheassetallocationoftheportfolioandlong-termassetclassreturnexpectations,aswellaslong-terminflationassumptions.TJXmadeaggregatecashcontributionsof$2.8millioninfiscal2009,$27.5millioninfiscal2008and$7.4millioninfiscal2007tothedefinedbenefitretirementplanandtofundcurrentbenefitandexpensepaymentsundertheunfundedsupplementalretirementplan.Thecashcontributionsmadeinfiscal2009and2007weresolelytofundcurrentbenefitandexpensepaymentsundertheunfundedsupplementalretirementplan.Throughfiscal2008ourfundingpolicyforthefundedplanwastofundanyrequiredcontributiontotheplanatthefullfundinglimitationandgenerallytofundcontributionsinexcessofanyrequiredcontributionsoastofullyfundtheaccumulatedbenefitobligationtotheextentsuchcontributionisallowedfortaxpurposes.Asaresultofvoluntaryfundingcontributionsmadeinprioryears,therewasnorequiredfundingduringthelastthreefiscalyears.Infiscal2009thePensionProtectionAct(PPA)becameeffectiveandTJX’spolicywillbetofund,ataminimum,theamountrequiredtomaintainafundedstatusof75%to80%ofthepensionliabilityasdefinedbythePPA.Asofthedateofthisreport,TJXhadcontributed$50milliontothefundedplanandmaymakeadditionalvoluntarycontributionsduringfiscal2010.Weanticipatemakingcontributionsof$13.1milliontofundcurrentbenefitandexpensepaymentsundertheunfundedsupplementalretirementplaninfiscal2010.Thefollowingisasummaryofourtargetallocationforplanassetsalongwiththeactualallocationofplanassetsasofthevaluationdateforthefiscalyearspresented:TargetAllocationJanuary31,2009January26,2008ActualAllocationforFiscalYearEndedEquitysecurities60%48%53%Fixedincome40%50%40%Allother—primarilycash—2%7%Weemployatotalreturninvestmentapproachwherebyamixofequitiesandfixedincomeinvestmentsisusedtoseektomaximizethelong-termreturnonplanassetswithaprudentlevelofrisk.Risksaremitigatedthroughassetdiversificationandtheuseofmultipleinvestmentmanagers.Investmentriskismeasuredandmonitoredonanongoingbasisthroughquarterlyinvestmentportfolioreviews,annualliabilitymeasurementsandperiodicasset/liabilitystudies.F-26Followingarethecomponentsofnetperiodicbenefitcostandotheramountsrecognizedinothercomprehensiveincomerelatedtoourpensionplans:DollarsinthousandsJanuary31,2009January26,2008January27,2007January31,2009January26,2008January27,2007FundedPlanFiscalYearEndedUnfundedPlanFiscalYearEnded(53weeks)(53weeks)NetPeriodicPensionCost:Servicecost$30,406$34,704$37,528$1,069$992$1,043Interestcost28,71124,63221,9823,3662,8672,929Expectedreturnonplanassets(34,369)(32,259)(29,395)———Amortizationoftransitionobligation——————Settlementcost————1681,421Amortizationofpriorservicecosts435757124125124Recognizedactuariallosses——5,6561,2707891,686Netperiodicpensioncost$24,791$27,134$35,828$5,829$4,941$7,203OtherChangesinPlanAssetsandBenefitObligationsRecognizedinOtherComprehensiveIncomeNet(gain)loss$142,186$(482)$40,226$2,252$(3,420)$13,976Priorservicecost(credit)——178——602Amortizationofrecognizedloss——(5,656)(1,270)(893)(1,686)Amortizationofpriorservicecost(44)(62)(57)(125)(135)(125)Totalrecognizedinothercomprehensiveincome$142,142$(544)$34,691$857$(4,448)$12,767Totalrecognizedinnetperiodicbenefitcostandothercomprehensiveincome$166,933$26,590$70,519$6,686$493$19,970Weightedaverageassumptionsforexpensepurposes:Discountrate6.50%6.00%5.50%6.25%5.75%5.50%Expectedrateofreturnonplanassets8.00%8.00%8.00%N/AN/AN/ARateofcompensationincrease4.00%4.00%4.00%6.00%6.00%6.00%Theunrecognizedgainsandlossesinexcessof10%oftheprojectedbenefitobligationareamortizedovertheaverageremainingservicelifeofparticipants.Inaddition,fortheunfundedplan,unrecognizedactuarialgainsandlossesthatexceed30%oftheprojectedbenefitobligationarefullyrecognizedinnetperiodicpensioncost.Followingisascheduleofthebenefitsexpectedtobepaidineachofthenextfivefiscalyearsandintheaggregateforthefivefiscalyearsthereafter:InthousandsFundedPlanExpectedBenefitPaymentsUnfundedPlanExpectedBenefitPaymentsFiscalYear2010$14,511$13,059201116,1493,613201217,9683,633201320,4383,301201422,9943,3692015through2019161,36320,242TJXalsosponsorsanemployeesavingsplanunderSection401(k)oftheInternalRevenueCodeforalleligibleU.S.employees.Assetsundertheplantotaled$529.5millionasofDecember31,2008and$688.3millionasofDecember31,2007andareinvestedinavarietyoffunds.Employeesmaycontributeupto50%ofeligiblepay,subjecttolimitation.TJXmatchesemployeecontributions,upto5%ofeligiblepay,atratesrangingfrom25%toF-2750%,baseduponTJX’sperformance.EmployeeshiredafterFebruary1,2006areeligibleforparticipationinthe401(k)planwithanenhancedmatchingformulabeginningfiveyearsafterhiredate.TJXcontributed$8.6millioninfiscal2009,$10.2millioninfiscal2008and$11.4millioninfiscal2007tothe401(k)plan.EmployeescannotinvesttheircontributionsintheTJXstockfundoptioninthe401(k)plan,andmayelecttoinvestuptoonly50%ofTJX’scontributionintheTJXstockfund.TheTJXstockfundhasnoothertradingrestrictions.TheTJXstockfundrepresents3.3%ofplaninvestmentsatDecember31,2008,3.5%atDecember31,2007and3.8%atDecember31,2006.TJXalsohasanonqualifiedsavingsplanforcertainU.S.employees.TJXmatchesemployeecontributionsatvariousrateswhichamountedto$425,432infiscal2009,$1.2millioninfiscal2008and$1.2millioninfiscal2007.TJXtransfersemployeewithholdingsandtherelatedcompanymatchtoaseparatetrustdesignatedtofundthefutureobligations.Thetrustassets,whichareinvestedinavarietyofmutualfunds,areincludedinotherassetsonthebalancesheets.Inadditiontotheplansdescribedabove,wealsomaintainretirement/deferredsavingsplansforalleligibleassociatesatourforeignsubsidiaries.Wecontributed$4.2millionfortheseplansinfiscal2009,$4.1millioninfiscal2008and$3.6millioninfiscal2007.PostretirementMedical:TJXhasanunfundedpostretirementmedicalplanthatprovideslimitedpostretirementmedicalandlifeinsurancebenefitstoemployeeswhoparticipateinitsretirementplanandwhoretiredatage55orolderwithtenormoreyearsofservice.Duringthefourthquarteroffiscal2006,TJXeliminatedthisbenefitforallactiveassociatesandmodifiedthebenefittocurrentretireesenrolledintheplan.Theplanamendmentreplacesthepreviousmedicalbenefitswithadefinedamount(upto$35.00permonth)thatapproximatesthecostofenrollmentintheMedicarePlanforretireesenrolledintheplanatthetimeofmodification.Thecompanypaid$262,000ofbenefitsinfiscal2009andwillpaysimilaramountsoverthenextseveralyears.ThepostretirementmedicalliabilityasofJanuary31,2009isestimatedat$2.3million,ofwhich$2.0millionisincludedinnon-currentliabilitiesonthebalancesheet.Theamendmenttoplanbenefitsinfiscal2006resultedinanegativeplanamendmentof$46.8millionwhichisbeingamortizedintoincomeovertheaverageremaininglifeoftheactiveplanparticipants.Theunamortizedbalanceof$29.8millionasofJanuary31,2009isincludedinaccumulatedothercomprehensiveincome(loss)ofwhich$3.8millionwillbeamortizedintoincomeinfiscal2010.Duringfiscal2009therewasapre-taxnetbenefitof$3.4millionreflectedintheincomestatementasitrelatestothispostretirementmedicalplan.L.AccruedExpensesandOtherLiabilities,CurrentandLong-TermThemajorcomponentsofaccruedexpensesandothercurrentliabilitiesareasfollows:InthousandsJanuary31,2009January26,2008FiscalYearEndedEmployeecompensationandbenefits,current$300,366$335,180ComputerIntrusion42,211117,266Rent,utilitiesandoccupancy,includingrealestatetaxes151,273158,870Merchandisecreditsandgiftcertificates133,104141,528Insurance40,42848,954SalestaxcollectionsandV.A.T.taxes88,528117,585Allothercurrentliabilities340,856294,604Accruedexpensesandothercurrentliabilities$1,096,766$1,213,987Allothercurrentliabilitiesincludeaccrualsforoutstandingchecks,advertising,propertyadditions,dividends,freight,reserveforsalesreturns,purchasedservices,andotheritems,eachofwhichareindividuallylessthan5%ofcurrentliabilities.F-28Themajorcomponentsofotherlong-termliabilitiesareasfollows:InthousandsJanuary31,2009January26,2008FiscalYearEndedEmployeecompensationandbenefits,long-term$272,881$125,421Reserverelatedtodiscontinuedoperations40,56446,076Accruedrent137,876150,530Landlordallowances53,76158,797Fairvalueofderivatives—143,091Taxreserve,long-term240,582269,157Long-termliabilities—other19,34018,261Otherlong-termliabilities$765,004$811,333M.DiscontinuedOperationsReserveandRelatedContingentLiabilitiesTJXhasareserveforfutureobligationsofdiscontinuedoperationsthatrelatesprimarilytorealestateleasesassociatedwithour34discontinuedA.J.Wrightstores(seeNoteC)aswellasleasesofformerTJXbusinesses.Thebalanceinthereserveandtheactivityforthelastthreefiscalyearsispresentedbelow:InthousandsJanuary31,2009January26,2008January27,2007FiscalYearEndedBalanceatbeginningofyear$46,076$57,677$14,981Additions(reductions)tothereservechargedtonetincome:A.J.Wrightstoreclosings(2,908)—61,968Otherleaserelatedobligations2,908—1,555Interestaccretion1,8201,820400Chargesagainstthereserve:Leaserelatedobligations(7,323)(11,214)(1,696)Fixedassetwrite-offs——(18,732)Terminationbenefitsandallother(9)(2,207)(799)Balanceatendofyear$40,564$46,076$57,677Theexitcostsrelatedtoour34discontinuedA.J.Wrightstores(seeNoteC)resultedinanadditiontothereserveof$62millioninfiscal2007.Theotheradditionstothereserveforleaserelatedobligationsinfiscal2007weretheresultofperiodicadjustmentstoourestimatedleaseobligationsofourformerbusinessesandwereoffsetbyincomefromcreditorrecoveriesofasimilaramount.Theleaserelatedchargesagainstthereserveduringfiscal2007relateprimarilytoourformerbusinesses.Thefixedassetwrite-offsandotherchargesagainstthereserveforfiscal2007andallofthechargesagainstthereserveinfiscal2008andfiscal2009,relateprimarilytothe34A.J.Wrightclosedstores.Ofthereservebalance,approximately$25millionatfiscal2009yearend,$32millionatfiscal2008yearendand$43millionatfiscal2007yearendrelatetotheA.J.Wrightstoreclosings,primarilyourestimationofleasecosts,netofestimatedsubtenantincome.Approximately$3millionofthereserveatfiscal2009relatesto2Bob’sStoreslocationswhichareconsideredprobableforbeingputbacktoTJXbythebuyer.Theremainderofthereservereflectsourestimationofthecostofclaims,updatedquarterly,thathavebeen,orwebelievearelikelytobe,madeagainstTJXforliabilityasanoriginallesseeorguarantoroftheleasesofformerbusinesses,aftermitigationofthenumberandcostofleaseobligations.AtJanuary31,2009,substantiallyalltheleasesoftheformerbusinessesthatwererejectedinbankruptcyandforwhichthelandlordsassertedliabilityagainstTJXhadbeenresolved.Theactualnetcostofthevariousleaseobligationsincludedinthereservemaydifferfromourinitialestimate.AlthoughTJX’sactualcostswithrespecttotheseleaseobligationsmayexceedamountsestimated,andTJXmayincurcostsforotherleasesfromdiscontinuedoperations,TJXdoesnotexpecttoincuranymaterialcostsrelatedtothesediscontinuedoperationsinexcessoftheamountsestimated.WeestimatethatthemajorityofthediscontinuedoperationsreservewillbepaidinF-29thenextthreetofiveyears.Theactualtimingofcashoutflowswillvarydependingonhowtheremainingleaseobligationsareactuallysettled.TJXmayalsobecontingentlyliableonupto15leasesofBJ’sWholesaleClub,anotherformerTJXbusinessforwhichBJ’sWholesaleClubisprimarilyliable,andon8additionalBob’sStoresleases.Ourreservefordiscontinuedoperationsdoesnotreflecttheseleases,becausewecurrentlybelievethatthelikelihoodofanyfutureliabilitytoTJXwithrespecttotheseleasesisnotprobable.N.GuaranteesandContingentObligationsTJXhascontingentobligationsonleases,forwhichitwasalesseeorguarantor,whichwereassignedtothirdpartieswithoutourbeingreleasedbythelandlords.Overmanyyears,wehaveassignednumerousleasesthatweoriginallyleasedorguaranteedtoasignificantnumberofthirdparties.Withtheexceptionofleasesofourdiscontinuedoperationsdiscussedabove,wehaverarelyhadaclaimwithrespecttoassignedleases,andaccordingly,wedonotexpectthatsuchleaseswillhaveamaterialadverseimpactonourfinancialcondition,resultsofoperationsorcashflows.Wedonotgenerallyhavesufficientinformationabouttheseleasestoestimateourpotentialcontingentobligationsunderthem,whichcouldbetriggeredintheeventthatoneormoreofthecurrenttenantsdoesnotfulfilltheirobligationsrelatedtooneormoreoftheseleases.TJXalsohascontingentobligationsinconnectionwithsomeassignedorsubletpropertiesthatTJXisabletoestimate.Weestimatetheundiscountedobligations(notreflectedinourreserves)ofleasesofclosedstoresofcontinuingoperations,BJ’sWholesaleClubandBob’sStoresleases(discussedinNoteM)andpropertiesofourdiscontinuedoperationsthatwehavesublet,ifthesubtenantsdidnotfulfilltheirobligations,isapproximately$100millionasofJanuary31,2009.WebelievethatmostorallofthesecontingentobligationswillnotreverttoTJXand,totheextenttheydo,willberesolvedforsubstantiallylessduetomitigatingfactors.TJXisapartytovariousagreementsunderwhichwemaybeobligatedtoindemnifytheotherpartywithrespecttobreachofwarrantyorlossesrelatedtosuchmattersastitletoassetssold,specifiedenvironmentalmattersorcertainincometaxes.Theseobligationsaretypicallylimitedintimeandamount.Therearenoamountsreflectedinourbalancesheetswithrespecttothesecontingentobligations.O.SupplementalCashFlowsInformationThecashflowsrequiredtosatisfycontingentobligationsofthediscontinuedoperationsasdiscussedinNoteM,areclassifiedasareductionincashprovidedbycontinuingoperations.Therearenoremainingoperatingactivitiesrelatingtotheseoperations.TJX’scashpaymentsforinterestandincometaxesandnon-cashinvestingandfinancingactivitiesareasfollows:InthousandsJanuary31,2009January26,2008January27,2007FiscalYearEnded(53weeks)Cashpaidfor:Interestondebt$28,269$31,190$31,489Incometaxes449,916463,835510,274Changesinaccruedexpensesdueto:Dividendspayable6,9456,7104,097Propertyadditions(19,829)23,557(6,149)Therewerenonon-cashfinancingorinvestingactivitiesduringfiscal2009,2008or2007.P.SegmentInformationTJXoperatesfivebusinesssegments,threeintheUnitedStatesandoneeachinCanadaandEurope.Eachofoursegmentshasitsownadministrative,buyinganddistributionnetwork.OfourU.S.basedstorechains,T.J.MaxxandMarshalls,referredtoasMarmaxx,aremanagedtogetherandreportedasasinglesegmentandA.J.WrightandF-30HomeGoodseachisreportedasaseparatesegment.OutsidetheU.S.,ourstorechainsinCanada(WinnersandHomeSense)areundercommonmanagementandreportedasourCanadiansegmentandourstorechainsinEurope(T.K.MaxxandHomeSense)arealsoundercommonmanagementandreportedasourEuropeansegment.Forfiscal2009,ourCanadianandEuropeansegmentsaccountedfor23%ofTJX’snetsales,24%ofsegmentprofitand21%ofallconsolidatedassets.Allofourstores,withtheexceptionofHomeGoodsandHomeSense,sellapparelfortheentirefamily,includingfootwear,jewelryandaccessoriesandalimitedofferingofgiftwareandhomefashions.TheHomeGoodsandHomeSensestoresofferexclusivelyhomefashionsandhomefurnishings.Bymerchandisecategory,wederivedapproximately62%ofoursalesfromclothing(includingfootwear),25%fromhomefashionsand13%fromjewelryandaccessoriesinfiscal2009.TJXevaluatestheperformanceofitssegmentsbasedon“segmentprofitorloss,”whichitdefinesaspre-taxincomebeforegeneralcorporateexpense,ProvisionforComputerIntrusionrelatedcostsandinterest.“Segmentprofitorloss,”asdefinedbyTJX,maynotbecomparabletosimilarlytitledmeasuresusedbyotherentities.Inaddition,thismeasureofperformanceshouldnotbeconsideredanalternativetonetincomeorcashflowsfromoperatingactivitiesasanindicatorofourperformanceorasameasureofliquidity.F-31Presentedbelowisselectedfinancialinformationrelatedtoourbusinesssegments:InthousandsJanuary31,2009January262008January27,2007FiscalYearEnded(53weeks)Netsales:(1)Marmaxx$12,362,122$11,966,651$11,531,785Canada2,139,4432,040,8141,740,796Europe2,242,0572,216,2181,864,502HomeGoods1,578,2861,480,3821,365,103A.J.Wright677,597632,661601,827$18,999,505$18,336,726$17,104,013Segmentprofit(loss):(1)Marmaxx$1,155,838$1,158,179$1,079,275Canada236,086235,128181,863Europe137,612127,218109,305HomeGoods42,37076,22460,938A.J.Wright2,862(1,801)(10,250)1,574,7681,594,9481,421,131Generalcorporateexpense140,037139,437136,397ProvisionforComputerIntrusionrelatedcosts(2)(30,500)197,0224,960Interest(income)expense,net14,291(1,598)15,566Incomefromcontinuingoperationsbeforeprovisionforincometaxes$1,450,940$1,260,087$1,264,208Identifiableassets:Marmaxx$3,538,663$3,407,240$3,257,019Canada609,363659,004483,505Europe675,283847,107694,071HomeGoods455,045435,605377,692A.J.Wright242,657204,808193,619Discontinuedoperations(1)—87,29199,459Corporate(3)657,231958,879980,335$6,178,242$6,599,934$6,085,700Capitalexpenditures:Marmaxx$328,965$287,558$221,158Canada61,48640,92843,879Europe122,902127,64672,656HomeGoods47,51950,06225,888A.J.Wright19,09815,42510,838Discontinuedoperations(1)2,9625,3683,592$582,932$526,987$378,011Depreciationandamortization:Marmaxx$241,940$215,439$201,504Canada43,52742,41836,743Europe59,94956,16356,909HomeGoods28,89224,26122,825A.J.Wright16,29815,29618,400Discontinuedoperations(1)2,6107,3618,411Corporate(4)8,4918,4588,318$401,707$369,396$353,110(1)AdjustedtoreclassifytheresultsofoperationsfromBob’sStoresthroughthedateofsaletodiscontinuedoperations.(2)TJXhasincurredlossesasaresultoftheComputerIntrusion.Inthesecondquarteroffiscal2008,TJXestablishedapre-taxreserveof$178.1milliontoreflectitsestimationofprobablelosses.Infiscal2009and2008,TJXreducedourreserveby$30.5millionand$18.9million,respectively.(3)Corporateidentifiableassetsconsistprimarilyofcash,receivables,prepaidinsurance,prepaidpensionexpense,anotereceivable,andreflectsthedecreaseincashfromfiscal2008tofiscal2009.(4)Includesdebtdiscountanddebtexpenseamortization.F-32Q.SelectedQuarterlyFinancialData(Unaudited)Presentedbelowisselectedquarterlyconsolidatedfinancialdataforfiscal2009and2008whichwaspreparedonthesamebasisastheauditedconsolidatedfinancialstatementsandincludesalladjustmentsnecessarytopresentfairly,inallmaterialrespects,theinformationsetforththereinonaconsistentbasis.InthousandsexceptpershareamountsFirstQuarterSecondQuarterThirdQuarterFourthQuarter(4)FiscalYearEndedJanuary31,2009(53weeks)—AsAdjusted(1)Netsales$4,303,555$4,554,395$4,761,530$5,380,025Grossearnings(2)1,037,4341,114,4811,233,5211,219,313Incomefromcontinuingoperations(3)198,000212,073254,117250,696Netincome(3)193,849200,223235,849250,696IncomefromcontinuingoperationsBasicearningspershare0.470.500.610.61Dilutedearningspershare0.440.480.580.58NetincomeBasicearningspershare0.460.480.570.61Dilutedearningspershare0.430.450.540.58FiscalYearEndedJanuary31,2009(53weeks)—AsReportedNetsales$4,364,125$4,621,292$4,761,530$5,380,025Grossearnings(2)1,048,3901,128,4771,233,5211,219,313Incomefromcontinuingoperations(3)193,849200,223254,117250,696Netincome(3)193,849200,223235,849250,696IncomefromcontinuingoperationsBasicearningspershare0.460.480.610.61Dilutedearningspershare0.430.450.580.58NetincomeBasicearningspershare0.460.480.570.61Dilutedearningspershare0.430.450.540.58FiscalYearEndedJanuary26,2008—AsAdjusted(1)Netsales$4,044,073$4,242,059$4,658,718$5,391,876Grossearnings(2)977,3111,020,5301,178,1111,319,079Incomefromcontinuingoperations(3)166,14161,167251,261303,863Netincome(3)162,10859,032249,461301,149IncomefromcontinuingoperationsBasicearningspershare0.370.140.570.70Dilutedearningspershare0.350.130.540.67NetincomeBasicearningspershare0.360.130.570.70Dilutedearningspershare0.340.130.540.66FiscalYearEndedJanuary26,2008—AsReportedNetsales$4,108,081$4,313,298$4,737,491$5,488,256Grossearnings(2)990,8661,035,6011,195,9931,342,218Incomefromcontinuingoperations(3)162,10859,032249,461301,149Netincome(3)162,10859,032249,461301,149IncomefromcontinuingoperationsBasicearningspershare0.360.130.570.70Dilutedearningspershare0.340.130.540.66NetincomeBasicearningspershare0.360.130.570.70Dilutedearningspershare0.340.130.540.66F-33(1)AdjustedtoreclassifytheresultsofoperationsfromBob’sStorestodiscontinuedoperations—SeeNoteC.ThefollowingtablesummarizesthequarterlyamountsofnetincomethathavebeenreclassifiedfromcontinuingoperationstodiscontinuedoperationsasaresultofthesaleoftheBob’sStoreschain:InmillionsexceptpershareamountsIncome(loss)ofdiscontinuedoperationsAmountpershareIncome(loss)ofdiscontinuedoperationsAmountpershareFiscal2009Fiscal2008QuarterFirst$(4.2)$(0.01)$(4.0)$(0.01)Second(11.8)(0.03)(2.1)—Third0.7—(1.8)—Fourth—N/A(2.8)(0.01)FullYear$(15.3)$(0.04)$(10.7)$(0.02)TheBob’sStoreschainwassoldinthethirdquarteroffiscal2009.TJXincurredalossondisposalof$19.0million,netoftaxes,or$0.04pershare.(2)Grossearningsequalnetsaleslesscostofsales,includingbuyingandoccupancycosts.(3)ThefollowingtablesummarizesthequarterlynetoftaxamountschargedtonetincomerelatingtocostsincurredinconnectionwiththeComputerIntrusion—SeeNoteB.InmillionsexceptpershareamountsCharge(benefit)tonetincomeAmountpershareCharge(benefit)tonetincomeAmountpershareFiscal2009Fiscal2008QuarterFirst$—$—$12$0.03Second——1180.25Third(4)(0.01)——Fourth(14)(0.03)(11)(0.02)FullYear$(18)$(0.04)$119$0.25Note:Duetoroundingindividualitemsmaynotfoot.(4)Thefourthquarteroffiscal2009includes14weeks.F-34BOARD OF DIRECTORSBernard CammarataChairman of the Board,The TJX Companies, Inc.José B. AlvarezMember of the Faculty,Harvard Business SchoolAlan M. BennettFormer Interim Chief Executive Ofﬁ cer,H&R Block Inc.David A. BrandonChairman and Chief Executive Ofﬁ cer,Domino’s Pizza, Inc.David T. ChingSenior Vice President and Chief Information Ofﬁ cer,Safeway Inc.Michael F. HinesFormer Executive Vice Presidentand Chief Financial Ofﬁ cer,Dick’s Sporting Goods, Inc.Amy B. LaneRetired Managing Director,Global RetailingInvestment Banking GroupMerrill Lynch & Co., Inc.Carol MeyrowitzPresident and Chief Executive Ofﬁ cer,The TJX Companies, Inc.John F. O’BrienLead Director,The TJX Companies, Inc.Retired Chief Executive Ofﬁ cer,Allmerica Financial CorporationRobert F. ShapiroVice Chairman,Klingenstein, Fields & Co., L.L.C.Willow B. ShireExecutive Consultant,Orchard Consulting GroupFletcher H. WileyPrincipal, PRWT Services, Inc.Of Counsel,Bingham McCutchen LLPCOMMITTEES OF THE BOARD OF DIRECTORSEXECUTIVE COMMITTEEBernard Cammarata, ChairmanJohn F. O’BrienRobert F. ShapiroAUDIT COMMITTEEMichael F. Hines, ChairmanJosé B. AlvarezDavid T. ChingAmy B. LaneRobert F. Shapiro Fletcher H. WileyEXECUTIVE COMPENSATION COMMITTEEDavid A. Brandon, ChairmanJosé B. Alvarez John F. O’BrienWillow B. ShireFINANCE COMMITTEEAmy B. Lane, ChairpersonAlan M. BennettDavid A. BrandonMichael F. HinesCORPORATE GOVERNANCE COMMITTEEWillow B. Shire, ChairpersonAlan M. BennettDavid T. ChingRobert F. ShapiroFletcher H. WileyBernard CammarataChairman of the BoardCarol MeyrowitzPresident and Chief Executive Ofﬁ cerSENIOR EXECUTIVE VICEPRESIDENTSErnie HerrmanGroup PresidentJeffrey NaylorChief Financial and Administrative Ofﬁ cerJerome R. RossiGroup PresidentPaul SweetenhamGroup President EXECUTIVE VICEPRESIDENTSPaul ButkaGlobal Application DevelopmentGregorio R. FloresChief Human Resources Ofﬁ cerKathy S. LaneChief Information Ofﬁ cerPeter LindenmeyerChief Logistics Ofﬁ cerAnn McCauleyGeneral Counsel and SecretarySENIOR VICE PRESIDENTSAlfred AppelCorporate Tax and InsuranceMarc BoeschProcurement DirectorScott GoldenbergCorporate ControllerPaul KangasEnterprise Risk Management and Chief Compliance Ofﬁ cerLynn JackGlobal Talent ManagementSherry LangInvestor and Public RelationsChristina LofgrenReal Estate and Property Development DirectorMary B. ReynoldsTreasurerBarry ZelmanBrand Development DirectorDIVISIONAL LEADERSHIPThe Marmaxx Group*Michael MacMillanPresidentHomeGoodsNan StutzPresidentA.J. WrightCelia ClancyPresidentWinners/HomeSenseRobert CataldoPresidentT.K. MaxxSusanne GivenManaging Director,U.K. and IrelandGino BarreaManaging Director,GermanyHomeSense (U.K.)David AlvesDirector*Combination of T.J. Maxx and MarshallsSENIOR CORPORATE OFFICERSSHAREHOLDER INFORMATIONTRANSFER AGENT AND REGISTRARCommon StockBNY Mellon Shareowner Services1-866-606-8365 1-800-231-5469 (TDD services for the hearing impaired) 1-201-680-6578 (Outside the U.S.)Address shareholder inquiries and send certiﬁ cates for transfer and address changes to:BNY Mellon Shareowner ServicesP.O. Box 358015Pittsburgh, PA 15252-8015E-mail address:shrrelations@bnymellon.comBNY Mellon Shareowner Services website: www.bnymellon.com/shareowner/isdTRUSTEES Public Notes7.45% Promissory NotesThe Bank of New York Mellon6.95% NotesU.S. Bank National AssociationZero Coupon ConvertibleSubordinated NotesThe Bank of New York Mellon Trust Company, N.A.INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRMPricewaterhouseCoopers LLPINDEPENDENT COUNSELRopes & Gray LLPFORM 10-KInformation concerning the Company’s operations and ﬁ nancial position is provided in this report and in the Form 10–K ﬁ led with the Securities and Exchange Commission. A copy of the Form 10–K is included in this report and additional copies may be obtained without charge by accessing the Company’s website at www.tjx.com or by writing or calling: The TJX Companies, Inc.Investor Relations770 Cochituate RoadFramingham, MA 01701508-390-2323INVESTOR RELATIONSAnalysts and investors seeking ﬁ nancial data about the Company are asked to visit our corporate website at www.tjx.com or to contact:Sherry LangSenior Vice President,Investor and Public Relations508-390-2323EXECUTIVE OFFICESFramingham, Massachusetts 01701PUBLIC INFORMATION AND SEC FILINGS:Visit our corporate website: www.tjx.comFOR THE STORE NEAREST YOU, CALL OR VISIT US ONLINE AT:In the U.S. T.J. Maxx: 1-800-2-TJMAXX www.tjmaxx.com Marshalls: 1-800-MARSHALLS www.marshallsonline.com HomeGoods: 1-800-614-HOME www.homegoods.com A.J. Wright: 1-888-SHOPAJW www.aj-wright.comIn Canada Winners: 1-800-646-9466 www.winners.ca HomeSense: 1-800-646-9466 www.homesense.ca STYLESENSE: 1-800-646-9466 www.stylesense.caIn Europe T.K. Maxx: 01923 473561 (U.K. and Ireland) www.tkmaxx.com (U.K. and Ireland) T.K. Maxx: 0211 88223100 (Germany) www.tkmaxx.de (Germany) HomeSense: 0800 328 2601 (U.K.) www.homesense.com (U.K.)T.J. Maxx was founded in 1976, and together with Marshalls, forms The Marmaxx Group, the largest off-price retailer of apparel and home fashions in the U.S. T.J. Maxx operated 874 stores in 48 states at year-end 2008. T.J. Maxx sells brand name family apparel, including women’s shoes, and home fashions, and differentiates itself with an expanded assortment of ﬁ ne jew- elry and accessories. T.J. Maxx stores average approximately 30,000 square feet in size. Marshalls was acquired by TJX in 1995, and together with T.J. Maxx, forms The Marmaxx Group, the largest off-price retailer of apparel and home fashions in the U.S. Marshalls oper- ated 806 stores in 42 states and Puerto Rico at 2008’s year-end. With a product assortment similar to T.J. Maxx, Marshalls differentiates itself with a full line of footwear as well as a broader men’s selection. In 2008, Marshalls launched a new concept called Shoe MegaShop by Marshalls, which is a standalone store featuring shoes and accessories. Marshalls stores average approximately 32,000 square feet in size. HomeGoods, introduced in 1992, is a U.S. off-price retailer of home fashions including a broad and ever-fresh array of giftware, home basics, accent furniture, lamps, rugs, decora- tive accessories, children’s furniture, seasonal merchandise, and other fashions for the home. This chain operates in a standalone and superstore format, which couples HomeGoods with T.J. Maxx or Marshalls. At 2008’s year-end, HomeGoods operated 318 stores, with standalone stores averaging approximately 27,000 square feet. Launched in 1998, A.J. Wright, like T.J. Maxx and Marshalls, sells off-price family apparel, home fashions and other merchandise. Catering to the entire family, key apparel categories for A.J. Wright include basics, children’s, women’s plus sizes, juniors apparel, young men’s, and footwear. Unlike our other chains, A.J. Wright primarily targets the moderate-income customer. A.J. Wright operated 135 stores at 2008’s year-end, with an average size of approxi- mately 26,000 square feet. Winners is the leading off-price apparel and home fashions retailer in Canada, having been acquired by TJX in 1990. Winners offers a merchandise mix similar to T.J. Maxx and Marshalls, including women’s, children’s and men’s apparel, which consists of family foot- wear, ﬁ ne jewelry, lingerie, and accessories, as well as home fashions. Winners operated 200 stores at 2008’s year-end, which average approximately 29,000 square feet in size. In 2008, Winners opened two STYLESENSE stores, which offer exclusively shoes and accessories in a standalone format. HomeSense, launched in 2001, introduced the home fashions off-price concept to Canada. Similar to HomeGoods in the U.S., HomeSense offers customers a wide and rapidly changing selection of off-price home fashions, including giftware, home basics, accent furniture, lamps, and accessories for the home. This chain operates in a standalone and superstore format, which pairs HomeSense with Winners. At 2008’s year-end, HomeSense operated 75 stores in Canada, with standalone stores averaging approximately 25,000 square feet. Launched in 1994, T.K. Maxx introduced off-price retailing to Europe, and is Europe’s only major off-price retailer. T.K. Maxx operates stores in the U.K. and Ireland, and has recently expanded to Germany. T.K. Maxx offers a merchandise mix similar to T.J. Maxx and Marshalls in the U.S. and Winners in Canada, including brand name family apparel, which consists of women’s footwear, lingerie and accessories, as well as home fashions. T.K. Maxx ended 2008 with 235 stores, which average approximately 32,000 square feet in size. HomeSense introduced the home fashions off-price concept to the U.K. in 2008. Patterned after HomeGoods in the U.S. and HomeSense in Canada, this business offers a wide, ever- fresh selection of top quality and branded home fashions at great values to our U.K. cus- tomers. Selections include giftware, home basics, accent furniture, lamps, and accessories. At 2008’s year-end, HomeSense operated seven stores in the U.K., averaging approximately 19,000 square feet. The TJX Companies, Inc. 770 Cochituate Road Framingham, MA 01701 508-390-1000 www.tjx.com

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