Item 1. Consolidated Financial Statements

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

IN THOUSANDS EXCEPT PER SHARE AMOUNTS

			Thirteen Weeks Ended						Thirty-Nine Weeks Ended
			October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021
Net sales			$	12,166,286		$	12,531,890		$	35,415,768		$	34,695,614
Cost of sales, including buying and occupancy costs			8,622,556			8,835,532			25,417,319			24,619,297
Selling, general and administrative expenses			2,184,946			2,296,649			6,454,389			6,585,333
Impairment on equity investment			—			—			217,619			—
Loss on early extinguishment of debt			—			—			—			242,248
Interest (income) expense, net			(427)			20,674			29,365			94,023
Income before income taxes			1,359,211			1,379,035			3,297,076			3,154,713
Provision for income taxes			296,405			356,035			837,457			812,102
Net income			$	1,062,806		$	1,023,000		$	2,459,619		$	2,342,611
Basic earnings per share			$	0.92		$	0.85		$	2.10		$	1.95
Weighted average common shares – basic			1,160,763			1,200,661			1,168,608			1,203,718
Diluted earnings per share			$	0.91		$	0.84		$	2.08		$	1.92
Weighted average common shares – diluted			1,172,267			1,215,690			1,179,892			1,219,238

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

IN THOUSANDS

			Thirteen Weeks Ended
			October 29, 2022			October 30, 2021
Net income			$	1,062,806		$	1,023,000
Additions to other comprehensive (loss):
Foreign currency translation adjustments, net of related tax benefit of $8,638 in fiscal 2023 and tax provision of $976 in fiscal 2022			(65,858)			(6,688)
Reclassifications from other comprehensive (loss) to net income:
Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $1,602 in fiscal 2023 and $1,156 in fiscal 2022			4,400			3,173
Other comprehensive (loss), net of tax			(61,458)			(3,515)
Total comprehensive income			$	1,001,348		$	1,019,485

			Thirty-Nine Weeks Ended
			October 29, 2022			October 30, 2021
Net income			$	2,459,619		$	2,342,611
Additions to other comprehensive (loss) income:
Foreign currency translation adjustments, net of related tax benefit of $8,803 in fiscal 2023 and tax provision of $2,734 in fiscal 2022			(154,405)			14,685
Reclassifications from other comprehensive (loss) to net income:
Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $4,353 in fiscal 2023 and $3,802 in fiscal 2022			11,956			10,442
Amortization of loss on cash flow hedge, net of related tax provision of $603 in fiscal 2022			—			(263)
Other comprehensive (loss) income, net of tax			(142,449)			24,864
Total comprehensive income			$	2,317,170		$	2,367,475

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

THE TJX COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

IN THOUSANDS, EXCEPT SHARE DATA

			October 29, 2022			January 29, 2022			October 30, 2021
Assets
Current assets:
Cash and cash equivalents			$	3,364,678		$	6,226,765		$	6,791,596
Accounts receivable, net			570,865			517,623			615,119
Merchandise inventories			8,328,680			5,961,573			6,633,328
Prepaid expenses and other current assets			582,389			438,099			449,377
Federal, state and foreign income taxes recoverable			142,181			114,537			86,690
Total current assets			12,988,793			13,258,597			14,576,110
Net property at cost			5,572,720			5,270,827			5,165,250
Non-current deferred income taxes, net			173,564			184,971			193,583
Operating lease right of use assets			8,985,593			8,853,934			9,143,834
Goodwill			94,501			96,662			98,604
Other assets			613,279			796,467			893,605
Total assets			$	28,428,450		$	28,461,458		$	30,070,986
Liabilities
Current liabilities:
Accounts payable			$	4,993,269		$	4,465,427		$	5,443,007
Accrued expenses and other current liabilities			4,083,434			4,244,997			4,140,660
Current portion of operating lease liabilities			1,574,384			1,576,561			1,606,480
Current portion of long-term debt			499,764			—			—
Federal, state and foreign income taxes payable			82,778			181,155			138,586
Total current liabilities			11,233,629			10,468,140			11,328,733
Other long-term liabilities			906,736			1,015,720			1,013,537
Non-current deferred income taxes, net			74,178			44,175			69,053
Long-term operating lease liabilities			7,691,225			7,575,590			7,861,023
Long-term debt			2,857,999			3,354,841			3,353,866
Commitments and contingencies (See Note K)
Shareholders’ equity
Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued			—			—			—
Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,156,263,970; 1,181,188,731 and 1,194,260,626 respectively			1,156,264			1,181,189			1,194,261
Additional paid-in capital			—			—			—
Accumulated other comprehensive loss			(829,599)			(687,150)			(581,207)
Retained earnings			5,338,018			5,508,953			5,831,720
Total shareholders’ equity			5,664,683			6,002,992			6,444,774
Total liabilities and shareholders’ equity			$	28,428,450		$	28,461,458		$	30,070,986

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

IN THOUSANDS

			Thirty-Nine Weeks Ended
			October 29, 2022			October 30, 2021
Cash flows from operating activities:
Net income			$	2,459,619		$	2,342,611
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			656,081			647,610
Loss on early extinguishment of debt			—			242,248
Impairment on equity investment			217,619			—
Loss on property disposals and impairment charges			6,664			526
Deferred income tax provision (benefit)			34,655			(44,285)
Share-based compensation			94,564			156,575
Changes in assets and liabilities:
(Increase) in accounts receivable			(68,729)			(155,554)
(Increase) in merchandise inventories			(2,544,990)			(2,287,326)
(Increase) in income taxes recoverable			(27,644)			(50,428)
(Increase) decrease in prepaid expenses and other current assets			(72,128)			20,779
Increase in accounts payable			647,264			611,934
(Decrease) increase in accrued expenses and other liabilities			(237,272)			557,065
(Decrease) increase in income taxes payable			(103,229)			56,426
Increase (decrease) in net operating lease liabilities			2,327			(105,494)
Other, net			(5,549)			(45,754)
Net cash provided by operating activities			1,059,252			1,946,933
Cash flows from investing activities:
Property additions			(1,099,748)			(715,542)
Purchases of investments			(26,183)			(16,979)
Sales and maturities of investments			15,691			16,896
Net cash (used in) investing activities			(1,110,240)			(715,625)
Cash flows from financing activities:
Payments on debt			—			(2,975,518)
Payments for repurchase of common stock			(1,799,802)			(1,093,399)
Cash dividends paid			(997,743)			(941,531)
Proceeds from issuance of common stock			114,501			146,393
Payments of employee tax withholdings for stock awards			(32,451)			(24,478)
Net cash (used in) financing activities			(2,715,495)			(4,888,533)
Effect of exchange rate changes on cash			(95,604)			(20,749)
Net (decrease) in cash and cash equivalents			(2,862,087)			(3,677,974)
Cash and cash equivalents at beginning of year			6,226,765			10,469,570
Cash and cash equivalents at end of period			$	3,364,678		$	6,791,596

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

IN THOUSANDS

			Thirteen Weeks Ended
			Common Stock
			Shares			Par Value $1			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance, July 30, 2022			1,161,887			$	1,161,887		$	—		$	(768,141)		$	5,002,903		$	5,396,649
Net income			—			—			—			—			1,062,806			1,062,806
Other comprehensive (loss), net of tax			—			—			—			(61,458)			—			(61,458)
Cash dividends declared on common stock			—			—			—			—			(341,614)			(341,614)
Recognition of share-based compensation			—			—			36,378			—			—			36,378
Issuance of common stock under stock incentive plan, and related tax effect			2,020			2,020			62,502			—			—			64,522
Common stock repurchased and retired			(7,643)			(7,643)			(98,880)			—			(386,077)			(492,600)
Balance, October 29, 2022			1,156,264			$	1,156,264		$	—		$	(829,599)		$	5,338,018		$	5,664,683

			Thirteen Weeks Ended
			Common Stock
			Shares			Par Value $1			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance, July 31, 2021			1,202,981			$	1,202,981		$	117,603		$	(577,692)		$	5,663,492		$	6,406,384
Net income			—			—			—			—			1,023,000			1,023,000
Other comprehensive (loss), net of tax			—			—			—			(3,515)			—			(3,515)
Cash dividends declared on common stock			—			—			—			—			(311,129)			(311,129)
Recognition of share-based compensation			—			—			42,454			—			—			42,454
Issuance of common stock under stock incentive plan, and related tax effect			2,970			2,970			80,910			—			—			83,880
Common stock repurchased and retired			(11,690)			(11,690)			(240,967)			—			(543,643)			(796,300)
Balance, October 30, 2021			1,194,261			$	1,194,261		$	—		$	(581,207)		$	5,831,720		$	6,444,774

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

IN THOUSANDS

			Thirty-Nine Weeks Ended
			Common Stock
			Shares			Par Value $1			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance, January 29, 2022			1,181,189			$	1,181,189		$	—		$	(687,150)		$	5,508,953		$	6,002,992
Net income			—			—			—			—			2,459,619			2,459,619
Other comprehensive (loss), net of tax			—			—			—			(142,449)			—			(142,449)
Cash dividends declared on common stock			—			—			—			—			(1,031,816)			(1,031,816)
Recognition of share-based compensation			—			—			94,564			—			—			94,564
Issuance of common stock under stock incentive plan, net of shares used to pay tax withholdings			4,187			4,187			77,987			—			(599)			81,575
Common stock repurchased and retired			(29,112)			(29,112)			(172,551)			—			(1,598,139)			(1,799,802)
Balance, October 29, 2022			1,156,264			$	1,156,264		$	—		$	(829,599)		$	5,338,018		$	5,664,683

			Thirty-Nine Weeks Ended
			Common Stock
			Shares			Par Value $1			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance, January 30, 2021			1,204,698			$	1,204,698		$	260,515		$	(606,071)		$	4,973,542		$	5,832,684
Net income			—			—			—			—			2,342,611			2,342,611
Other comprehensive income, net of tax			—			—			—			24,864			—			24,864
Cash dividends declared on common stock			—			—			—			—			(940,443)			(940,443)
Recognition of share-based compensation			—			—			156,575			—			—			156,575
Issuance of common stock under stock incentive plan, net of shares used to pay tax withholdings			5,764			5,764			116,465			—			(347)			121,882
Common stock repurchased and retired			(16,201)			(16,201)			(533,555)			—			(543,643)			(1,093,399)
Balance, October 30, 2021			1,194,261			$	1,194,261		$	—		$	(581,207)		$	5,831,720		$	6,444,774

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

THE TJX COMPANIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements and Notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These Consolidated Financial Statements and Notes thereto are unaudited and, in the opinion of management, reflect all normal recurring adjustments, accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by The TJX Companies, Inc. (together with its subsidiaries, “TJX”) for a fair statement of its Consolidated Financial Statements for the periods reported, all in conformity with GAAP consistently applied. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (“fiscal 2022”).

These interim results are not necessarily indicative of results for the full fiscal year. TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year.

The January 29, 2022 balance sheet data was derived from audited Consolidated Financial Statements and does not include all disclosures required by GAAP.

Fiscal Year

TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The current fiscal year ends January 28, 2023 (“fiscal 2023”) and is a 52-week fiscal year. Fiscal 2022 was also a 52-week fiscal year. Fiscal 2024 will be a 53-week fiscal year and will end February 3, 2024.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. TJX considers its accounting policies relating to inventory valuation, reserves for uncertain tax positions and loss contingencies to be the most significant accounting policies that involve management estimates and judgments. Actual amounts could differ from these estimates, and such differences could be material.

Equity Investment

In fiscal 2020, the Company acquired a minority ownership stake in privately held Familia, an off-price retailer of apparel and home fashions domiciled in Luxembourg that operates stores throughout Russia. During the quarter ended April 30, 2022, the Company announced that it had committed to divesting its minority investment and as a result, the Company performed an impairment analysis of this investment. Based on this analysis the Company concluded that there was an other-than-temporary impairment of this investment and recorded an impairment charge of $218 million representing the entirety of the Company’s investment. The Company completed the divestiture of this investment during the quarter ended October 29, 2022, resulting in a $54 million tax benefit. See Note F—Fair Value Measurements for additional information.

Deferred Gift Card Revenue

The following table presents deferred gift card revenue activity:

In thousands			October 29, 2022			October 30, 2021
Balance, beginning of year			$	685,202		$	576,187
Deferred revenue			1,258,784			1,169,729
Effect of exchange rates changes on deferred revenue			(9,466)			1,799
Revenue recognized			(1,317,335)			(1,201,704)
Balance, end of period			$	617,185		$	546,011

TJX recognized $412 million in gift card revenue for the three months ended October 29, 2022 and $400 million in gift card revenue for the three months ended October 30, 2021. Gift cards are combined in one homogeneous pool and are not separately identifiable. As such, the revenue recognized consists of gift cards that were part of the deferred revenue balance at the beginning of the period as well as gift cards that were issued during the period.

Leases

Supplemental cash flow information related to leases is as follows:

			Thirty-Nine Weeks Ended
In thousands			October 29, 2022			October 30, 2021
Operating cash flows paid for operating leases			$	1,453,151		$	1,571,815
Lease liabilities arising from obtaining right of use assets			$	1,696,883		$	1,427,486

Future Adoption of New Accounting Standards

From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has reviewed the new guidance and has determined that it will either not apply to TJX or is not expected to be material to its Consolidated Financial Statements upon adoption and therefore, the guidance is not disclosed.

Note B. Property at Cost

The following table presents the components of property at cost:

In thousands			October 29, 2022			January 29, 2022			October 30, 2021
Land and buildings			$	1,983,902		$	1,911,569		$	1,813,270
Leasehold costs and improvements			3,743,919			3,652,280			3,655,735
Furniture, fixtures and equipment			7,189,806			6,871,777			6,761,778
Total property at cost			$	12,917,627		$	12,435,626		$	12,230,783
Less: accumulated depreciation and amortization			7,344,907			7,164,799			7,065,533
Net property at cost			$	5,572,720		$	5,270,827		$	5,165,250

Depreciation expense was $217 million for the three months ended October 29, 2022 and $215 million for the three months ended October 30, 2021. Depreciation expense was $651 million for the nine months ended October 29, 2022 and $640 million for the nine months ended October 30, 2021.

Non-cash investing activities in the cash flows consist of accrued capital additions of $190 million and $148 million as of the periods ended October 29, 2022 and October 30, 2021, respectively.

Note C. Accumulated Other Comprehensive (Loss) Income

Amounts included in Accumulated other comprehensive loss are recorded net of taxes. The following table details the changes in Accumulated other comprehensive loss for the twelve months ended January 29, 2022 and the nine months ended October 29, 2022:

In thousands			Foreign Currency Translation			Deferred Benefit Costs			Cash Flow Hedge on Debt			Accumulated Other Comprehensive (Loss) Income
Balance, January 30, 2021			$	(441,532)		$	(164,802)		$	263		$	(606,071)
Additions to other comprehensive loss:
Foreign currency translation adjustments (net of taxes of $207)			(46,715)			—			—			(46,715)
Recognition of net gains/losses on benefit obligations (net of taxes of $17,659)			—			(48,504)			—			(48,504)
Reclassifications from other comprehensive loss to net income:
Amortization of loss on cash flow hedge (net of taxes of $603)			—			—			(263)			(263)
Amortization of prior service cost and deferred gains/losses (net of taxes of $4,588)			—			14,403			—			14,403
Balance, January 29, 2022			$	(488,247)		$	(198,903)		$	—		$	(687,150)
Additions to other comprehensive loss:
Foreign currency translation adjustments (net of taxes of $8,803)			(154,405)			—			—			(154,405)
Reclassifications from other comprehensive loss to net income:
Amortization of prior service cost and deferred gains/losses (net of taxes of $4,353)			—			11,956			—			11,956
Balance, October 29, 2022			$	(642,652)		$	(186,947)		$	—		$	(829,599)

Note D. Capital Stock and Earnings Per Share

Capital Stock

TJX repurchased and retired 7.7 million shares of its common stock at a cost of approximately $0.5 billion during the quarter ended October 29, 2022, on a “trade date” basis. During the nine months ended October 29, 2022, TJX repurchased and retired 29.1 million shares of its common stock at a cost of approximately $1.8 billion, on a “trade date” basis. TJX reflects stock repurchases in its consolidated financial statements on a “settlement date” or cash basis. TJX had cash expenditures under repurchase programs of $1.8 billion for the nine months ended October 29, 2022 and $1.1 billion for the nine months ended October 30, 2021. These expenditures were funded by cash generated from current and prior period operations.

In February 2022, the Company announced that its Board of Directors had approved a new stock repurchase program that authorizes the repurchase of up to an additional $3.0 billion of TJX common stock from time to time. Under this program TJX had approximately $2.0 billion available for repurchase as of October 29, 2022.

All shares repurchased under the stock repurchase programs have been retired.

Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share:

			Thirteen Weeks Ended						Thirty-Nine Weeks Ended
Amounts in thousands, except per share amounts			October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021
Basic earnings per share:
Net income			$	1,062,806		$	1,023,000		$	2,459,619		$	2,342,611
Weighted average common shares outstanding for basic earnings per share calculation			1,160,763			1,200,661			1,168,608			1,203,718
Basic earnings per share			$	0.92		$	0.85		$	2.10		$	1.95
Diluted earnings per share:
Net income			$	1,062,806		$	1,023,000		$	2,459,619		$	2,342,611
Weighted average common shares outstanding for basic earnings per share calculation			1,160,763			1,200,661			1,168,608			1,203,718
Assumed exercise / vesting of stock options and awards			11,504			15,029			11,284			15,520
Weighted average common shares outstanding for diluted earnings per share calculation			1,172,267			1,215,690			1,179,892			1,219,238
Diluted earnings per share			$	0.91		$	0.84		$	2.08		$	1.92
Cash dividends declared per share			$	0.295		$	0.26		$	0.885		$	0.78

The weighted average common shares for the diluted earnings per share calculation excludes the impact of outstanding stock options if the assumed proceeds per share of the option is in excess of the average price of TJX’s common stock for the related fiscal period. Such options are excluded because they would have an antidilutive effect. There were 11.2 million such options excluded for the thirteen weeks and thirty-nine weeks ended October 29, 2022. There were 5.3 million such options excluded for the thirteen weeks and thirty-nine weeks ended October 30, 2021.

Note E. Financial Instruments

As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments when and to the extent deemed appropriate. TJX does not use derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the Consolidated Balance Sheet and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of Accumulated other comprehensive loss or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged.

Diesel Fuel Contracts

TJX hedges portions of its estimated notional diesel fuel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing, and the resulting per mile surcharges payable by TJX, by setting a fixed price per gallon for the period being hedged. During fiscal 2022, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for fiscal 2023, and during the first nine months of fiscal 2023, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for the first nine months of fiscal 2024. The hedge agreements outstanding at October 29, 2022 relate to approximately 50% of TJX’s estimated notional diesel fuel requirements for the remainder of fiscal 2023 and the first nine months of fiscal 2024. These diesel fuel hedge agreements will settle throughout fiscal 2023 and throughout the first ten months of fiscal 2024. TJX elected not to apply hedge accounting to these contracts.

Foreign Currency Contracts

TJX enters into forward foreign currency exchange contracts to obtain economic hedges on portions of merchandise purchases made and anticipated to be made by the Company’s operations in currencies other than their respective functional currencies. The contracts outstanding at October 29, 2022 cover merchandise purchases the Company is committed to over the next several months. Additionally, TJX’s operations in Europe are subject to foreign currency exposure as a result of their buying function being centralized in the U.K. Merchandise is purchased centrally in the U.K. and then shipped and billed to the retail entities in other countries. This intercompany billing to TJX’s European businesses’ Euro denominated operations creates exposure to the central buying entity for changes in the exchange rate between the Euro and British Pound. A portion of the inflows of Euros to the central buying entity provides a natural hedge for merchandise purchased from third-party vendors that is denominated in Euros. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this exposure.

TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt. The changes in fair value of these contracts are recorded in Selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in Selling, general and administrative expenses.

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at October 29, 2022:

In thousands						Pay			Receive						Blended Contract Rate			Balance Sheet Location			Current Asset U.S.$			Current (Liability) U.S.$			Net Fair Value in U.S.$ at October 29, 2022
Fair value hedges:
Intercompany balances, primarily debt related:
			€			60,000			£			51,156			0.8526			(Accrued Exp)			$	—		$	(794)		$	(794)
			A$			170,000			U.S.$			119,579			0.7034			Prepaid Exp			10,612			—			10,612
			U.S.$			74,646			£			55,000			0.7368			(Accrued Exp)			—			(11,295)			(11,295)
			£			200,000			U.S.$			246,811			1.2341			Prepaid Exp / (Accrued Exp)			20,765			(4,074)			16,691
			€			200,000			U.S.$			217,236			1.0862			Prepaid Exp / (Accrued Exp)			17,655			(547)			17,108
Economic hedges for which hedge accounting was not elected:
			Diesel fuel contracts			Fixed on 3.1M – 3.9M gal per month						Float on 3.1M – 3.9M gal per month			N/A			Prepaid Exp			18,365			—			18,365
Intercompany billings in TJX International, primarily merchandise related:
			€			222,000			£			194,677			0.8769			Prepaid Exp			4,170			—			4,170
Merchandise purchase commitments:
			C$			710,029			U.S.$			542,000			0.7633			Prepaid Exp / (Accrued Exp)			22,308			(459)			21,849
			C$			16,101			€			12,000			0.7453			Prepaid Exp / (Accrued Exp)			151			(39)			112
			£			388,909			U.S.$			474,500			1.2201			Prepaid Exp / (Accrued Exp)			29,735			(2,977)			26,758
			A$			79,273			U.S.$			54,250			0.6843			Prepaid Exp			3,600			—			3,600
			zł			614,000			£			108,039			0.1760			(Accrued Exp)			—			(2,806)			(2,806)
			U.S.$			87,699			€			84,500			0.9635			Prepaid Exp / (Accrued Exp)			263			(3,953)			(3,690)
Total fair value of derivative financial instruments																					$	127,624		$	(26,944)		$	100,680

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at January 29, 2022:

In thousands						Pay			Receive						Blended Contract Rate			Balance Sheet Location			Current Asset U.S.$			Current (Liability) U.S.$			Net Fair Value in U.S.$ at January 29, 2022
Fair value hedges:
Intercompany balances, primarily debt related:
			zł			25,000			£			4,541			0.1816			Prepaid Exp			$	72		$	—		$	72
			€			60,000			£			50,568			0.8428			Prepaid Exp			111			—			111
			A$			170,000			U.S.$			122,061			0.7180			Prepaid Exp			2,047			—			2,047
			U.S.$			74,646			£			55,000			0.7368			(Accrued Exp)			—			(918)			(918)
			€			200,000			U.S.$			230,319			1.1516			Prepaid Exp			4,535			—			4,535
Economic hedges for which hedge accounting was not elected:
			Diesel fuel contracts			Fixed on 3.6M – 4.0M gal per month						Float on 3.6M– 4.0M gal per month			N/A			Prepaid Exp			23,649			—			23,649
Intercompany billings in TJX International, primarily merchandise related:
			€			91,000			£			75,894			0.8340			(Accrued Exp)			—			(145)			(145)
Merchandise purchase commitments:
			C$			987,756			U.S.$			783,000			0.7927			Prepaid Exp / (Accrued Exp)			6,641			(80)			6,561
			C$			38,138			€			26,500			0.6948			(Accrued Exp)			—			(248)			(248)
			£			325,482			U.S.$			442,100			1.3583			Prepaid Exp / (Accrued Exp)			6,023			(632)			5,391
			zł			453,000			£			82,112			0.1813			Prepaid Exp / (Accrued Exp)			744			(449)			295
			A$			65,551			U.S.$			47,500			0.7246			Prepaid Exp			1,270			—			1,270
			U.S.$			66,989			€			59,000			0.8807			(Accrued Exp)			—			(820)			(820)
Total fair value of derivative financial instruments																					$	45,092		$	(3,292)		$	41,800

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at October 30, 2021:

In thousands						Pay			Receive						Blended Contract Rate			Balance Sheet Location			Current Asset U.S.$			Current (Liability) U.S.$			Net Fair Value in U.S.$ at October 30, 2021
Fair value hedges:
Intercompany balances, primarily debt related:
			zł			45,000			£			8,846			0.1966			Prepaid Exp			$	780		$	—		$	780
			€			60,000			£			50,815			0.8469			(Accrued Exp)			—			(340)			(340)
			A$			170,000			U.S.$			127,603			0.7506			Prepaid Exp / (Accrued Exp)			1,866			(2,075)			(209)
			U.S.$			75,102			£			55,000			0.7323			Prepaid Exp			54			—			54
			€			200,000			U.S.$			239,776			1.1989			Prepaid Exp			6,957			—			6,957
Economic hedges for which hedge accounting was not elected:
			Diesel fuel contracts			Fixed on 3.7M – 4.0M gal per month						Float on 3.7M – 4.0M gal per month			N/A			Prepaid Exp			22,095			—			22,095
Intercompany billings in TJX International, primarily merchandise related:
			€			46,000			£			39,057			0.8491			(Accrued Exp)			—			(28)			(28)
Merchandise purchase commitments:
			C$			608,976			U.S.$			488,000			0.8013			Prepaid Exp / (Accrued Exp)			1,566			(5,909)			(4,343)
			C$			27,997			€			19,000			0.6786			(Accrued Exp)			—			(574)			(574)
			£			344,793			U.S.$			477,600			1.3852			Prepaid Exp / (Accrued Exp)			7,321			(732)			6,589
			A$			57,829			U.S.$			42,500			0.7349			(Accrued Exp)			—			(986)			(986)
			zł			442,000			£			82,252			0.1861			Prepaid Exp / (Accrued Exp)			1,349			(85)			1,264
			U.S.$			75,930			€			64,000			0.8429			(Accrued Exp)			—			(1,630)			(1,630)
Total fair value of derivative financial instruments																					$	41,988		$	(12,359)		$	29,629

The impact of derivative financial instruments on the Consolidated Statements of Income is presented below:

						Amount of Gain (Loss) Recognized in Income by Derivative
			Location of Gain (Loss) Recognized in Income by Derivative			Thirteen Weeks Ended						Thirty-Nine Weeks Ended
In thousands			October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021
Fair value hedges:
Intercompany balances, primarily debt related			Selling, general and administrative expenses			$	23,328		$	7,750		$	56,684		$	20,303
Economic hedges for which hedge accounting was not elected:
Diesel fuel contracts			Cost of sales, including buying and occupancy costs			(491)			9,908			53,038			30,754
Intercompany billings in TJX International, primarily merchandise related			Cost of sales, including buying and occupancy costs			(6,004)			887			(6,122)			4,432
Merchandise purchase commitments			Cost of sales, including buying and occupancy costs			65,215			3,760			113,609			(499)
Gain recognized in income						$	82,048		$	22,305		$	217,209		$	54,990

Note F. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date or “exit price”. The inputs used to measure fair value are generally classified into the following hierarchy:

Level 1:						Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2:						Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3:						Unobservable inputs for the asset or liability

The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis:

In thousands			October 29, 2022			January 29, 2022			October 30, 2021
Level 1
Assets:
Executive Savings Plan investments			$	342,621		$	387,666		$	405,290
Level 2
Assets:
Foreign currency exchange contracts			$	109,259		$	21,443		$	19,893
Diesel fuel contracts			18,365			23,649			22,095
Liabilities:
Foreign currency exchange contracts			$	26,944		$	3,292		$	12,359

Investments designed to meet obligations under the Executive Savings Plan are invested in registered investment companies traded in active markets and are recorded at unadjusted quoted prices.

Foreign currency exchange contracts and diesel fuel contracts are valued using broker quotations, which include observable market information. TJX does not make adjustments to quotes or prices obtained from brokers or pricing services but does assess the credit risk of counterparties and will adjust final valuations when appropriate. Where independent pricing services provide fair values, TJX obtains an understanding of the methods used in pricing. As such, these instruments are classified within Level 2.

The fair value of TJX’s general corporate debt was estimated by obtaining market quotes given the trading levels of other bonds of the same general issuer type and market perceived credit quality. These inputs are considered to be Level 2. The fair value of long-term debt as of October 29, 2022 was $2.5 billion compared to a carrying value of $2.9 billion primarily due to the recent increase in interest rates. The fair value of the current portion of long-term debt as of October 29, 2022 was $0.5 billion compared to a carrying value of $0.5 billion. The fair value of long-term debt as of January 29, 2022 was $3.5 billion compared to a carrying value of $3.4 billion. The fair value of long-term debt as of October 30, 2021 was $3.6 billion compared to a carrying value of $3.4 billion. These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that might affect TJX’s ability to settle these obligations. For additional information on long-term debt, see Note I—Long-Term Debt and Credit Lines.

TJX’s cash equivalents are stated at cost, which approximates fair value due to the short maturities of these instruments.

Certain assets and liabilities are measured at fair value on a nonrecurring basis, whereas the majority of assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of an impairment. For the periods ended October 29, 2022, January 29, 2022 and October 30, 2021, the Company did not record any material impairments to long-lived assets.

During the first quarter of fiscal 2023, the Company announced its intention to divest from its position in its minority investment in Familia and re-characterized this investment as held-for-sale valued as a Level 3 position. Given the lack of an active market or observable inputs, the Company derived an exit price which indicated that this investment had no market value. The Company recorded a $218 million charge in the first quarter of fiscal 2023, which represents the entirety of its investment. See Note A—Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Note G. Segment Information

TJX operates four main business segments. The Marmaxx segment (T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and the HomeGoods segment (HomeGoods, Homesense, and homegoods.com) both operate in the United States, the TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and the TJX International segment operates T.K. Maxx, Homesense and tkmaxx.com in Europe and T.K. Maxx in Australia. In addition to the Company’s four main business segments, Sierra operates retail stores and sierra.com in the U.S. The results of Sierra are included in the Marmaxx segment.

All of TJX’s stores, with the exception of HomeGoods and HomeSense/Homesense, sell family apparel and home fashions. HomeGoods and HomeSense/Homesense offer home fashions.

TJX evaluates the performance of its segments based on “segment profit or loss,” which it defines as pre-tax income or loss before general corporate expense, interest expense, net and certain separately disclosed unusual or infrequent items. “Segment profit or loss,” as defined by TJX, may not be comparable to similarly titled measures used by other entities. This measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of TJX’s performance or as a measure of liquidity.

Presented below is financial information with respect to TJX’s business segments:

			Thirteen Weeks Ended						Thirty-Nine Weeks Ended
In thousands			October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021
Net sales:
In the United States:
Marmaxx			$	7,454,907		$	7,213,681		$	21,562,396		$	21,203,098
HomeGoods			1,947,490			2,253,567			5,839,588			6,478,584
TJX Canada			1,285,049			1,301,272			3,615,283			3,088,357
TJX International			1,478,840			1,763,370			4,398,501			3,925,575
Total net sales			$	12,166,286		$	12,531,890		$	35,415,768		$	34,695,614
Segment profit:
In the United States:
Marmaxx			$	1,002,722		$	989,560		$	2,840,121		$	2,828,590
HomeGoods			172,741			262,640			344,342			696,768
TJX Canada			203,191			168,558			527,581			358,821
TJX International			98,445			127,074			216,292			78,972
Total segment profit			1,477,099			1,547,832			3,928,336			3,963,151
General corporate expense			118,315			148,123			384,276			472,167
Impairment on equity investment			—			—			217,619			—
Loss on early extinguishment of debt			—			—			—			242,248
Interest (income) expense, net			(427)			20,674			29,365			94,023
Income before income taxes			$	1,359,211		$	1,379,035		$	3,297,076		$	3,154,713

Note H. Pension Plans and Other Retirement Benefits

Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown:

			Funded Plan						Unfunded Plan
			Thirteen Weeks Ended						Thirteen Weeks Ended
In thousands			October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021
Service cost			$	11,946		$	11,900		$	238		$	309
Interest cost			14,806			13,073			1,018			764
Expected return on plan assets			(22,236)			(24,017)			—			—
Amortization of net actuarial loss and prior service cost			5,050			3,358			952			1,076
Total expense			$	9,566		$	4,314		$	2,208		$	2,149
			Funded Plan						Unfunded Plan
			Thirty-Nine Weeks Ended						Thirty-Nine Weeks Ended
In thousands			October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021
Service cost			$	36,282		$	36,837		$	1,693		$	1,819
Interest cost			43,658			39,073			2,880			2,324
Expected return on plan assets			(66,693)			(72,001)			—			—
Amortization of net actuarial loss and prior service cost			13,600			10,858			2,709			3,385
Total expense			$	26,847		$	14,767		$	7,282		$	7,528

TJX’s policy with respect to the funded plan is to fund, at a minimum, the amount required to maintain a funded status of 80% of the applicable pension liability (the Funding Target pursuant to the Internal Revenue Code section 430) or such other amount as is sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code. The Company does not anticipate any required funding in fiscal 2023 for the funded plan. The Company anticipates making contributions of $4 million to provide current benefits coming due under the unfunded plan in fiscal 2023.

The amounts included in Amortization of net actuarial loss and prior service cost in the table above have been reclassified in their entirety from Accumulated other comprehensive loss to the Consolidated Statements of Income, net of related tax effects, for the periods presented.

Note I. Long-Term Debt and Credit Lines

The table below presents long-term debt as of October 29, 2022, January 29, 2022 and October 30, 2021. All amounts are net of unamortized debt discounts.

In thousands			October 29, 2022			January 29, 2022			October 30, 2021
General corporate debt:
2.500% senior unsecured notes, maturing May 15, 2023 (effective interest rate of 2.51% after reduction of unamortized debt discount of $22 at October 29, 2022, $56 at January 29, 2022 and $67 at October 30, 2021)			$	499,978		$	499,944		$	499,933
2.250% senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32% after reduction of unamortized debt discount of $2,860 at October 29, 2022, $3,419 at January 29, 2022 and $3,606 at October 30, 2021)			997,140			996,581			996,394
1.150% senior unsecured notes, maturing May 15, 2028 (effective interest rate of 1.18% after reduction of unamortized debt discount of $715 at October 29, 2022, $811 at January 29, 2022, and $843 at October 30, 2021)			499,285			499,189			499,157
3.875% senior unsecured notes, maturing April 15, 2030 (effective interest rate of 3.89% after reduction of unamortized debt discount of $460 at October 29, 2022, $506 at January 29, 2022 and $522 at October 30, 2021)			495,390			495,344			495,328
1.600% senior unsecured notes, maturing May 15, 2031 (effective interest rate of 1.61% after reduction of unamortized debt discount of $507 at October 29, 2022, $551 at January 29, 2022, and $566 at October 30, 2021)			499,493			499,449			499,434
4.500% senior unsecured notes, maturing April 15, 2050 (effective interest rate of 4.52% after reduction of unamortized debt discount of $2,075 at October 29, 2022, $2,132 at January 29, 2022 and $2,151 at October 30, 2021)			383,424			383,367			383,348
Total debt			3,374,710			3,373,874			3,373,594
Current maturities of long-term debt, net of debt issuance costs			(499,764)			—			—
Debt issuance costs			(16,947)			(19,033)			(19,728)
Long-term debt			$	2,857,999		$	3,354,841		$	3,353,866

Credit Facilities

The Company has two revolving credit facilities, a $1 billion senior unsecured revolving credit facility maturing in June 2026 (the “2026 Revolving Credit Facility”) and a $500 million revolving credit facility that matures in May 2024 (the “2024 Revolving Credit Facility”). Under these credit facilities, the Company has maintained a borrowing capacity of $1.5 billion. The terms of these revolving credit facilities require quarterly payments on the committed amount and payment of interest on borrowings at rates based on LIBOR or a base rate plus a variable margin, in each case based on the Company’s long-term debt ratings. The 2024 Revolving Credit Facility requires usage fees based on total credit extensions under the facility. As of October 29, 2022, January 29, 2022 and October 30, 2021, there were no amounts outstanding under any of the Company’s facilities. Each of these facilities require TJX to maintain a ratio of funded debt to earnings before interest, taxes, depreciation and amortization and rentals (EBITDAR) of not more than 3.50 to 1.00 on a rolling four-quarter basis. TJX was in compliance with all covenants related to its credit facilities at the end of all periods presented.

As of October 29, 2022, January 29, 2022 and October 30, 2021, TJX Canada had two uncommitted credit lines, a C$10 million facility for operating expenses and a C$10 million letter of credit facility. As of October 29, 2022, January 29, 2022 and October 30, 2021, and during the quarters and year then ended, there were no amounts outstanding on the Canadian credit lines for operating expenses. As of October 29, 2022, January 29, 2022 and October 30, 2021, the Company’s European business at TJX International had an uncommitted credit line of £5 million. As of October 29, 2022, January 29, 2022 and October 30, 2021, and during the quarters and year then ended, there were no amounts outstanding on the European credit line.

Note J. Income Taxes

The effective income tax rate was 21.8% for the third quarter of fiscal 2023 and 25.8% for the third quarter of fiscal 2022. The effective income tax rate was 25.4% for the first nine months of fiscal 2023 and 25.7% for the first nine months of fiscal 2022. The decrease in the third quarter and first nine months of fiscal 2023 effective income tax rate is primarily due to the $54 million benefit from the completion of the divestiture of our minority investment in Familia, the change of jurisdictional mix of profits and losses and the resolution of various tax matters, partially offset by a reduction of excess tax benefits from share-based compensation.

TJX had net unrecognized tax benefits of $262 million as of October 29, 2022, $288 million as of January 29, 2022 and $287 million as of October 30, 2021.

TJX is subject to U.S. federal income tax as well as income tax in multiple state, local and foreign jurisdictions. In the U.S. and India, fiscal years through 2010 are no longer subject to examination. In all other jurisdictions, fiscal years through 2011 are no longer subject to examination.

TJX’s accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The accrued amounts for interest and penalties on the Consolidated Balance Sheets was $37 million as of October 29, 2022, $43 million as of January 29, 2022 and $43 million as of October 30, 2021.

Based on the final resolution of tax examinations, judicial or administrative proceedings, changes in facts or law, expirations of statutes of limitations in specific jurisdictions or other resolutions of, or changes in, tax positions, it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those represented on the consolidated financial statements as of October 29, 2022. During the next 12 months, it is reasonably possible that tax audit resolutions may reduce unrecognized tax benefits by up to $41 million, which would reduce the provision for taxes on earnings.

Note K. Contingent Obligations, Contingencies, and Commitments

Contingent Contractual Obligations

TJX is a party to various agreements under which it may be obligated to indemnify the other party with respect to certain losses related to matters including title to assets sold, specified environmental matters or certain income taxes. These obligations are sometimes limited in time or amount. There are no amounts reflected in the Company’s Consolidated Balance Sheets with respect to these contingent obligations.

Legal Contingencies

TJX is subject to certain legal proceedings, lawsuits, disputes and claims that arise from time to time in the ordinary course of its business. TJX has accrued immaterial amounts in the accompanying Consolidated Financial Statements for certain of its legal proceedings.