filings.toolsItem 1. Consolidated Financial Statements
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Item 1. Consolidated Financial Statements
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
IN MILLIONS EXCEPT PER SHARE AMOUNTS
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||
| August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | |||||||||||
| Net sales | $ | 13,468 | $ | 12,758 | $ | 25,947 | $ | 24,541 | ||||||
| Cost of sales, including buying and occupancy costs | 9,380 | 8,910 | 18,119 | 17,284 | ||||||||||
| Selling, general and administrative expenses | 2,666 | 2,559 | 5,066 | 4,797 | ||||||||||
| Interest (income) expense, net | (46) | (38) | (96) | (75) | ||||||||||
| Income before income taxes | 1,468 | 1,327 | 2,858 | 2,535 | ||||||||||
| Provision for income taxes | 369 | 338 | 689 | 655 | ||||||||||
| Net income | $ | 1,099 | $ | 989 | $ | 2,169 | $ | 1,880 | ||||||
| Basic earnings per share | $ | 0.97 | $ | 0.86 | $ | 1.92 | $ | 1.63 | ||||||
| Weighted average common shares – basic | 1,130 | 1,148 | 1,131 | 1,151 | ||||||||||
| Diluted earnings per share | $ | 0.96 | $ | 0.85 | $ | 1.89 | $ | 1.62 | ||||||
| Weighted average common shares – diluted | 1,144 | 1,161 | 1,145 | 1,163 |
The accompanying notes are an integral part of the unaudited Consolidated Financial Statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
IN MILLIONS
| Thirteen Weeks Ended | ||||||||||||||
| August 3, 2024 | July 29, 2023 | |||||||||||||
| Net income | $ | 1,099 | $ | 989 | ||||||||||
| Additions to other comprehensive income, net of tax: | ||||||||||||||
| Foreign currency translation adjustments, net of related tax benefit of $2 in fiscal 2025 and tax provision of $1 in fiscal 2024 | 18 | 40 | ||||||||||||
| Reclassifications from other comprehensive income, net of tax, to net income: | ||||||||||||||
| Amortization of prior service cost and deferred gains/(losses), net of related tax benefit of $0.0 in fiscal 2025 and tax provision of $0.1 in fiscal 2024 | (0) | 1 | ||||||||||||
| Other comprehensive income, net of tax | 18 | 41 | ||||||||||||
| Total comprehensive income | $ | 1,117 | $ | 1,030 |
| Twenty-Six Weeks Ended | ||||||||
| August 3, 2024 | July 29, 2023 | |||||||
| Net income | $ | 2,169 | $ | 1,880 | ||||
| Additions to other comprehensive (loss) income, net of tax: | ||||||||
| Foreign currency translation adjustments, net of related tax benefit of $2 in fiscal 2025 and tax provision of $0.4 in fiscal 2024 | (0) | 54 | ||||||
| Reclassifications from other comprehensive (loss) income, net of tax, to net income: | ||||||||
| Amortization of prior service cost and deferred gains/(losses), net of related tax benefit of $0.0 in fiscal 2025 and tax provision of $0.2 in fiscal 2024 | (0) | 1 | ||||||
| Other comprehensive (loss) income, net of tax | (0) | 55 | ||||||
| Total comprehensive income | $ | 2,169 | $ | 1,935 |
The accompanying notes are an integral part of the unaudited Consolidated Financial Statements.
THE TJX COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
IN MILLIONS, EXCEPT SHARE AMOUNTS
| August 3, 2024 | February 3, 2024 | July 29, 2023 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 5,250 | $ | 5,600 | $ | 4,550 | |||||
| Accounts receivable, net | 521 | 529 | 548 | ||||||||
| Merchandise inventories | 6,470 | 5,965 | 6,585 | ||||||||
| Prepaid expenses and other current assets | 536 | 511 | 507 | ||||||||
| Federal, state and foreign income taxes recoverable | 113 | 59 | 148 | ||||||||
| Total current assets | 12,890 | 12,664 | 12,338 | ||||||||
| Net property at cost | 6,968 | 6,571 | 6,166 | ||||||||
| Non-current deferred income taxes, net | 147 | 172 | 149 | ||||||||
| Operating lease right of use assets | 9,513 | 9,396 | 9,406 | ||||||||
| Goodwill | 95 | 95 | 95 | ||||||||
| Other assets | 942 | 849 | 768 | ||||||||
| Total assets | $ | 30,555 | $ | 29,747 | $ | 28,922 | |||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,503 | $ | 3,862 | $ | 4,438 | |||||
| Accrued expenses and other current liabilities | 4,458 | 4,870 | 4,244 | ||||||||
| Current portion of operating lease liabilities | 1,621 | 1,620 | 1,618 | ||||||||
| Federal, state and foreign income taxes payable | 39 | 99 | 17 | ||||||||
| Total current liabilities | 10,621 | 10,451 | 10,317 | ||||||||
| Other long-term liabilities | 960 | 924 | 915 | ||||||||
| Non-current deferred income taxes, net | 162 | 148 | 132 | ||||||||
| Long-term operating lease liabilities | 8,166 | 8,060 | 8,089 | ||||||||
| Long-term debt | 2,864 | 2,862 | 2,861 | ||||||||
| 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 1,127,978,175; 1,133,586,545 and 1,144,948,031 respectively | 1,128 | 1,134 | 1,145 | ||||||||
| Additional paid-in capital | — | — | — | ||||||||
| Accumulated other comprehensive (loss) income | (532) | (532) | (551) | ||||||||
| Retained earnings | 7,186 | 6,700 | 6,014 | ||||||||
| Total shareholders’ equity | 7,782 | 7,302 | 6,608 | ||||||||
| Total liabilities and shareholders’ equity | $ | 30,555 | $ | 29,747 | $ | 28,922 |
The accompanying notes are an integral part of the unaudited Consolidated Financial Statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN MILLIONS
| Twenty-Six Weeks Ended | |||||||||||
| August 3, 2024 | July 29, 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 2,169 | $ | 1,880 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 529 | 467 | |||||||||
| Loss on property disposals and impairment charges | 2 | 21 | |||||||||
| Deferred income tax provision | 43 | 16 | |||||||||
| Share-based compensation | 84 | 70 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Decrease in accounts receivable | 8 | 19 | |||||||||
| (Increase) in merchandise inventories | (512) | (734) | |||||||||
| (Increase) in income taxes recoverable | (54) | (28) | |||||||||
| (Increase) in prepaid expenses and other current assets | (22) | (34) | |||||||||
| Increase in accounts payable | 648 | 619 | |||||||||
| (Decrease) in accrued expenses and other liabilities | (388) | (170) | |||||||||
| (Decrease) in income taxes payable | (61) | (36) | |||||||||
| (Decrease) increase in net operating lease liabilities | (11) | 0 | |||||||||
| Other, net | (69) | (4) | |||||||||
| Net cash provided by operating activities | 2,366 | 2,086 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Property additions | (982) | (820) | |||||||||
| Purchases of investments | (23) | (17) | |||||||||
| Sales and maturities of investments | 15 | 18 | |||||||||
| Net cash (used in) investing activities | (990) | (819) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayment of debt | — | (500) | |||||||||
| Payments for repurchase of common stock | (1,068) | (1,041) | |||||||||
| Cash dividends paid | (803) | (725) | |||||||||
| Proceeds from issuance of common stock | 191 | 81 | |||||||||
| Other | (42) | (29) | |||||||||
| Net cash (used in) financing activities | (1,722) | (2,214) | |||||||||
| Effect of exchange rate changes on cash | (4) | 20 | |||||||||
| Net (decrease) in cash and cash equivalents | (350) | (927) | |||||||||
| Cash and cash equivalents at beginning of year | 5,600 | 5,477 | |||||||||
| Cash and cash equivalents at end of period | $ | 5,250 | $ | 4,550 |
The accompanying notes are an integral part of the unaudited Consolidated Financial Statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
IN MILLIONS
| Thirteen Weeks Ended | ||||||||||||||||||||
| Common Stock | ||||||||||||||||||||
| Shares | Par Value $1 | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total | |||||||||||||||
| Balance, May 4, 2024 | 1,131 | $ | 1,131 | $ | — | $ | (550) | $ | 6,921 | $ | 7,502 | |||||||||
| Net income | — | — | — | — | 1,099 | 1,099 | ||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 18 | — | 18 | ||||||||||||||
| Cash dividends declared on common stock | — | — | — | — | (423) | (423) | ||||||||||||||
| Recognition of share-based compensation | — | — | 46 | — | — | 46 | ||||||||||||||
| Issuance of common stock under stock incentive plan and related tax effect | 2 | 2 | 99 | — | — | 101 | ||||||||||||||
| Common stock repurchased | (5) | (5) | (145) | — | (411) | (561) | ||||||||||||||
| Balance, August 3, 2024 | 1,128 | $ | 1,128 | $ | — | $ | (532) | $ | 7,186 | $ | 7,782 |
| Thirteen Weeks Ended | ||||||||||||||||||||
| Common Stock | ||||||||||||||||||||
| Shares | Par Value $1 | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total | |||||||||||||||
| Balance, April 29, 2023 | 1,150 | $ | 1,150 | $ | — | $ | (592) | $ | 5,864 | $ | 6,422 | |||||||||
| Net income | — | — | — | — | 989 | 989 | ||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 41 | — | 41 | ||||||||||||||
| Cash dividends declared on common stock | — | — | — | — | (381) | (381) | ||||||||||||||
| Recognition of share-based compensation | — | — | 36 | — | — | 36 | ||||||||||||||
| Issuance of common stock under stock incentive plan and related tax effect | 2 | 2 | 54 | — | (1) | 55 | ||||||||||||||
| Common stock repurchased | (7) | (7) | (90) | — | (457) | (554) | ||||||||||||||
| Balance, July, 29, 2023 | 1,145 | $ | 1,145 | $ | — | $ | (551) | $ | 6,014 | $ | 6,608 |
The accompanying notes are an integral part of the unaudited Consolidated Financial Statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
IN MILLIONS
| Twenty-Six Weeks Ended | ||||||||||||||||||||
| Common Stock | ||||||||||||||||||||
| Shares | Par Value $1 | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total | |||||||||||||||
| Balance, February 3, 2024 | 1,134 | $ | 1,134 | $ | — | $ | (532) | $ | 6,700 | $ | 7,302 | |||||||||
| Net income | — | — | — | — | 2,169 | 2,169 | ||||||||||||||
| Other comprehensive (loss), net of tax | — | — | — | (0) | — | (0) | ||||||||||||||
| Cash dividends declared on common stock | — | — | — | — | (849) | (849) | ||||||||||||||
| Recognition of share-based compensation | — | — | 84 | — | — | 84 | ||||||||||||||
| Issuance of common stock under stock incentive plan and related tax effect | 4 | 4 | 145 | — | — | 149 | ||||||||||||||
| Common stock repurchased | (10) | (10) | (229) | — | (834) | (1,073) | ||||||||||||||
| Balance, August 3, 2024 | 1,128 | $ | 1,128 | $ | — | $ | (532) | $ | 7,186 | $ | 7,782 |
| Twenty-Six Weeks Ended | ||||||||||||||||||||
| Common Stock | ||||||||||||||||||||
| Shares | Par Value $1 | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total | |||||||||||||||
| Balance, January 28, 2023 | 1,155 | $ | 1,155 | $ | — | $ | (606) | $ | 5,815 | $ | 6,364 | |||||||||
| Net income | — | — | — | — | 1,880 | 1,880 | ||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 55 | — | 55 | ||||||||||||||
| Cash dividends declared on common stock | — | — | — | — | (764) | (764) | ||||||||||||||
| Recognition of share-based compensation | — | — | 70 | — | — | 70 | ||||||||||||||
| Issuance of common stock under stock incentive plan and related tax effect | 3 | 3 | 51 | — | (1) | 53 | ||||||||||||||
| Common stock repurchased | (13) | (13) | (121) | — | (916) | (1,050) | ||||||||||||||
| Balance, July, 29, 2023 | 1,145 | $ | 1,145 | $ | — | $ | (551) | $ | 6,014 | $ | 6,608 |
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. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (“fiscal 2024”).
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 February 3, 2024 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 February 1, 2025 (“fiscal 2025”) and is a 52-week fiscal year. Fiscal 2024 was a 53-week fiscal year. “Fiscal 2026” will be a 52-week fiscal year and will end January 31, 2026.
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.
Deferred Gift Card Revenue
The following table presents deferred gift card revenue activity:
| In millions | August 3, 2024 | July 29, 2023 | ||||||
| Balance, beginning of year | $ | 773 | $ | 721 | ||||
| Deferred revenue | 889 | 858 | ||||||
| Effect of exchange rates changes on deferred revenue | (2) | 1 | ||||||
| Revenue recognized | (940) | (916) | ||||||
| Balance, end of period | $ | 720 | $ | 664 |
TJX recognized $485 million in gift card revenue for the three months ended August 3, 2024 and $472 million for the three months ended July 29, 2023. 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:
| Twenty-Six Weeks Ended | ||||||||
| In millions | August 3, 2024 | July 29, 2023 | ||||||
| Operating cash flows paid for operating leases | $ | 1,046 | $ | 999 | ||||
| Lease liabilities arising from obtaining right of use assets | $ | 1,001 | $ | 1,148 |
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”). Unless otherwise discussed, 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.
Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued guidance related to improvements to reportable segment disclosures. The new standard improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis to enable investors to develop more decision-useful financial analyses. This standard is effective retrospectively for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will adopt this standard for the fiscal 2025 Form 10-K and does not anticipate a material impact on its financial statement disclosures.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued guidance related to improvements to income tax disclosures. The new standard updates the income tax disclosure related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The standard also provides for further disclosure comparability. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will adopt this standard for the fiscal 2026 Form 10-K and is currently evaluating the impact of the adoption of this standard on its financial statement disclosures.
SEC Rule Changes
In March 2024, the SEC adopted new rules phasing in for fiscal years beginning on or after January 1, 2025 that will require registrants to provide certain climate-related information in their registration statements and annual reports. In April 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. The Company is currently evaluating the potential impact of these rules on its Consolidated Financial Statements and, subject to such new rules taking effect, are expected to result in additional disclosures.
Note B. Property at Cost
The following table presents the components of property at cost:
| In millions | August 3, 2024 | February 3, 2024 | July 29, 2023 | ||||||||
| Land and buildings | $ | 2,400 | $ | 2,179 | $ | 2,086 | |||||
| Leasehold costs and improvements | 4,539 | 4,306 | 4,147 | ||||||||
| Furniture, fixtures and equipment | 8,425 | 8,134 | 7,797 | ||||||||
| Total property at cost | $ | 15,364 | $ | 14,619 | $ | 14,030 | |||||
| Less: accumulated depreciation and amortization | 8,396 | 8,048 | 7,864 | ||||||||
| Net property at cost | $ | 6,968 | $ | 6,571 | $ | 6,166 |
Depreciation expense was $264 million for the three months ended August 3, 2024 and $234 million for the three months ended July 29, 2023. Depreciation expense was $527 million for the six months ended August 3, 2024 and $464 million for the six months ended July 29, 2023.
Non-cash investing activities consist of accrued capital additions of $186 million and $192 million as of the periods ended August 3, 2024 and July 29, 2023, respectively.
Note C. Accumulated Other Comprehensive (Loss) Income
Amounts included in Accumulated other comprehensive (loss) income are recorded net of taxes. The following table details the changes in Accumulated other comprehensive (loss) income for the twelve months ended February 3, 2024 and the six months ended August 3, 2024:
| In millions and net of immaterial taxes | Foreign Currency Translation | Deferred Benefit Costs | Accumulated Other Comprehensive (Loss) Income | |||||||||||
| Balance, January 28, 2023 | $ | (544) | $ | (62) | $ | (606) | ||||||||
| Additions to other comprehensive (loss): | ||||||||||||||
| Foreign currency translation adjustments, net of taxes | 30 | — | 30 | |||||||||||
| Recognition of net gains on benefit obligations, net of taxes | — | 43 | 43 | |||||||||||
| Reclassifications from other comprehensive (loss) to net income: | ||||||||||||||
| Amortization of prior service cost and deferred gains, net of taxes | — | 1 | 1 | |||||||||||
| Balance, February 3, 2024 | $ | (514) | $ | (18) | $ | (532) | ||||||||
| Additions to other comprehensive (loss): | ||||||||||||||
| Foreign currency translation adjustments, net of taxes | (0) | — | (0) | |||||||||||
| Reclassifications from other comprehensive (loss) to net income: | ||||||||||||||
| Amortization of prior service cost and deferred (losses), net of taxes | — | (0) | (0) | |||||||||||
| Balance, August 3, 2024 | $ | (514) | $ | (18) | $ | (532) |
Note D. Capital Stock and Earnings Per Share
Capital Stock
In February 2024, the Company announced that its Board of Directors had approved a new stock repurchase program that authorizes the repurchase of up to an additional $2.5 billion of TJX common stock from time to time. Under this program, TJX had approximately $2.5 billion available for repurchase as of August 3, 2024.
During the second quarter of fiscal 2025, the Company completed stock repurchases representing all of the $1 billion that remained as of February 3, 2024 from the previously announced stock repurchase program.
The following table provides share repurchases, excluding applicable excise tax:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||
| In millions | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||||||||
| Total number of shares repurchased and retired | 5.1 | 6.7 | 10.4 | 13.2 | ||||||||||
| Total cost(a) | $ | 559 | $ | 550 | $ | 1,068 | $ | 1,050 |
(a) Prior year amounts are recast to conform with current year presentation and exclude applicable excise tax.
All shares repurchased under the stock repurchase programs have been retired. These expenditures were funded by cash generated from operations.
Earnings Per Share
The following table presents the calculation of basic and diluted earnings per share:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||
| Amounts in millions, except per share amounts | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||||||||
| Basic earnings per share: | ||||||||||||||
| Net income | $ | 1,099 | $ | 989 | $ | 2,169 | $ | 1,880 | ||||||
| Weighted average common shares outstanding for basic earnings per share calculation | 1,130 | 1,148 | 1,131 | 1,151 | ||||||||||
| Basic earnings per share | $ | 0.97 | $ | 0.86 | $ | 1.92 | $ | 1.63 | ||||||
| Diluted earnings per share: | ||||||||||||||
| Net income | $ | 1,099 | $ | 989 | $ | 2,169 | $ | 1,880 | ||||||
| Weighted average common shares outstanding for basic earnings per share calculation | 1,130 | 1,148 | 1,131 | 1,151 | ||||||||||
| Assumed exercise/vesting of stock options and awards | 14 | 13 | 14 | 12 | ||||||||||
| Weighted average common shares outstanding for diluted earnings per share calculation | 1,144 | 1,161 | 1,145 | 1,163 | ||||||||||
| Diluted earnings per share | $ | 0.96 | $ | 0.85 | $ | 1.89 | $ | 1.62 | ||||||
| Cash dividends declared per share | $ | 0.375 | $ | 0.3325 | $ | 0.75 | $ | 0.665 |
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 periods. Such options are excluded because they would have an antidilutive effect. There were 5 million options excluded for the thirteen weeks and twenty-six weeks ended August 3, 2024, respectively. There were no such options excluded for the thirteen weeks and twenty-six weeks ended July 29, 2023.
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) income or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged. Gains and losses on derivative instruments are reported in the Consolidated Statements of Cash Flows in operating activities, under Other, net.
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 2024, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for fiscal 2025, and during the first six months of fiscal 2025, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for the first six months of fiscal 2026. The hedge agreements outstanding at August 3, 2024 relate to approximately 50% of TJX’s estimated notional diesel fuel requirements for the remainder of fiscal 2025 and the first six months of fiscal 2026. These diesel fuel hedge agreements will settle throughout fiscal 2025 and throughout the first seven months of fiscal 2026. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in Cost of sales, including buying and occupancy costs. 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 August 3, 2024 cover merchandise purchases the Company is committed to over the next several months in fiscal 2025. 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 Euro denominated merchandise purchases from third-party vendors. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this excess exposure. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in Cost of sales, including buying and occupancy costs.
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 August 3, 2024:
| In millions | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at August 3, 2024 | ||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Intercompany balances, primarily debt: | |||||||||||||||||||||||||||||
| € | 78 | £ | 67 | 0.8546 | Prepaid Exp / (Accrued Exp) | $ | 0.3 | $ | (0.7) | $ | (0.4) | ||||||||||||||||||
| A$ | 210 | U.S.$ | 139 | 0.6637 | Prepaid Exp | 2.2 | — | 2.2 | |||||||||||||||||||||
| U.S.$ | 70 | £ | 55 | 0.7898 | Prepaid Exp | 0.7 | — | 0.7 | |||||||||||||||||||||
| £ | 100 | U.S.$ | 127 | 1.2712 | Prepaid Exp / (Accrued Exp) | 0.5 | (1.6) | (1.1) | |||||||||||||||||||||
| € | 200 | U.S.$ | 219 | 1.0949 | Prepaid Exp / (Accrued Exp) | 0.6 | (1.3) | (0.7) | |||||||||||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||||||||||||||
| Diesel fuel contracts | Fixed on 3.1M – 4.2M gal per month | Float on 3.1M – 4.2M gal per month | N/A | (Accrued Exp) | — | (15.6) | (15.6) | ||||||||||||||||||||||
| Intercompany billings in TJX International, primarily merchandise: | |||||||||||||||||||||||||||||
| € | 157 | £ | 132 | 0.8408 | (Accrued Exp) | — | (2.4) | (2.4) | |||||||||||||||||||||
| Merchandise purchase commitments: | |||||||||||||||||||||||||||||
| C$ | 899 | U.S.$ | 660 | 0.7340 | Prepaid Exp | 10.5 | — | 10.5 | |||||||||||||||||||||
| C$ | 33 | € | 22 | 0.6745 | Prepaid Exp | 0.5 | — | 0.5 | |||||||||||||||||||||
| £ | 434 | U.S.$ | 551 | 1.2704 | Prepaid Exp / (Accrued Exp) | 0.8 | (5.8) | (5.0) | |||||||||||||||||||||
| zł | 554 | £ | 109 | 0.1970 | Prepaid Exp / (Accrued Exp) | 0.2 | (1.1) | (0.9) | |||||||||||||||||||||
| A$ | 120 | U.S.$ | 80 | 0.6677 | Prepaid Exp | 1.8 | — | 1.8 | |||||||||||||||||||||
| U.S.$ | 136 | € | 125 | 0.9200 | Prepaid Exp / (Accrued Exp) | 1.0 | (0.1) | 0.9 | |||||||||||||||||||||
| Total fair value of derivative financial instruments | $ | 19.1 | $ | (28.6) | $ | (9.5) |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at February 3, 2024:
| In millions | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at February 3, 2024 | ||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Intercompany balances, primarily debt: | |||||||||||||||||||||||||||||
| € | 78 | £ | 67 | 0.8622 | Prepaid Exp / (Accrued Exp) | $ | 0.1 | $ | (0.1) | $ | 0.0 | ||||||||||||||||||
| A$ | 140 | U.S.$ | 95 | 0.6751 | Prepaid Exp | 2.7 | — | 2.7 | |||||||||||||||||||||
| U.S.$ | 70 | £ | 55 | 0.7898 | (Accrued Exp) | — | (0.2) | (0.2) | |||||||||||||||||||||
| £ | 100 | U.S.$ | 127 | 1.2727 | Prepaid Exp | 0.8 | — | 0.8 | |||||||||||||||||||||
| € | 200 | U.S.$ | 219 | 1.0969 | Prepaid Exp / (Accrued Exp) | 3.0 | (0.3) | 2.7 | |||||||||||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||||||||||||||
| Diesel fuel contracts | Fixed on 3.0M – 3.8M gal per month | Float on 3.0M– 3.8M gal per month | N/A | (Accrued Exp) | — | (7.2) | (7.2) | ||||||||||||||||||||||
| Intercompany billings in TJX International, primarily merchandise: | |||||||||||||||||||||||||||||
| € | 130 | £ | 112 | 0.8604 | Prepaid Exp | 0.9 | — | 0.9 | |||||||||||||||||||||
| Merchandise purchase commitments: | |||||||||||||||||||||||||||||
| C$ | 668 | U.S.$ | 495 | 0.7408 | Prepaid Exp / (Accrued Exp) | 1.4 | (3.6) | (2.2) | |||||||||||||||||||||
| C$ | 29 | € | 20 | 0.6797 | (Accrued Exp) | — | (0.3) | (0.3) | |||||||||||||||||||||
| £ | 353 | U.S.$ | 443 | 1.2549 | Prepaid Exp / (Accrued Exp) | 1.5 | (5.0) | (3.5) | |||||||||||||||||||||
| zł | 508 | £ | 98 | 0.1930 | Prepaid Exp / (Accrued Exp) | 0.0 | (3.1) | (3.1) | |||||||||||||||||||||
| A$ | 82 | U.S.$ | 55 | 0.6620 | Prepaid Exp / (Accrued Exp) | 0.8 | (0.1) | 0.7 | |||||||||||||||||||||
| U.S.$ | 109 | € | 100 | 0.9191 | Prepaid Exp / (Accrued Exp) | 0.3 | (1.0) | (0.7) | |||||||||||||||||||||
| Total fair value of derivative financial instruments | $ | 11.5 | $ | (20.9) | $ | (9.4) |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at July 29, 2023:
| In millions | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at July 29, 2023 | ||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Intercompany balances, primarily debt: | |||||||||||||||||||||||||||||
| € | 60 | £ | 52 | 0.8738 | Prepaid Exp | $ | 0.6 | $ | — | $ | 0.6 | ||||||||||||||||||
| A$ | 162 | U.S.$ | 112 | 0.6926 | Prepaid Exp | 3.5 | — | 3.5 | |||||||||||||||||||||
| U.S.$ | 69 | £ | 55 | 0.8010 | Prepaid Exp | 2.0 | — | 2.0 | |||||||||||||||||||||
| £ | 200 | U.S.$ | 244 | 1.2191 | (Accrued Exp) | — | (13.4) | (13.4) | |||||||||||||||||||||
| € | 200 | U.S.$ | 219 | 1.0964 | Prepaid Exp / (Accrued Exp) | 0.3 | (3.3) | (3.0) | |||||||||||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||||||||||||||
| Diesel fuel contracts | Fixed on 3.0M – 3.8M gal per month | Float on 3.0M – 3.8M gal per month | N/A | (Accrued Exp) | — | (2.0) | (2.0) | ||||||||||||||||||||||
| Intercompany billings in TJX International, primarily merchandise: | |||||||||||||||||||||||||||||
| € | 107 | £ | 91 | 0.8526 | (Accrued Exp) | — | (0.8) | (0.8) | |||||||||||||||||||||
| Merchandise purchase commitments: | |||||||||||||||||||||||||||||
| C$ | 876 | U.S.$ | 655 | 0.7473 | Prepaid Exp / (Accrued Exp) | 0.2 | (9.0) | (8.8) | |||||||||||||||||||||
| C$ | 28 | € | 19 | 0.6799 | Prepaid Exp / (Accrued Exp) | 0.1 | (0.3) | (0.2) | |||||||||||||||||||||
| £ | 376 | U.S.$ | 468 | 1.2462 | Prepaid Exp / (Accrued Exp) | 0.5 | (15.5) | (15.0) | |||||||||||||||||||||
| zł | 605 | £ | 114 | 0.1878 | (Accrued Exp) | — | (4.4) | (4.4) | |||||||||||||||||||||
| A$ | 96 | U.S.$ | 65 | 0.6810 | Prepaid Exp | 1.3 | — | 1.3 | |||||||||||||||||||||
| U.S.$ | 110 | € | 101 | 0.9139 | Prepaid Exp / (Accrued Exp) | 1.3 | (0.3) | 1.0 | |||||||||||||||||||||
| Total fair value of derivative financial instruments | $ | 9.8 | $ | (49.0) | $ | (39.2) |
The impact of derivative financial instruments on the Consolidated Statements of Income is presented below:
| Amount of (Loss) Gain Recognized in Income by Derivative | |||||||||||||||||
| Location of (Loss) Gain Recognized in Income by Derivative | Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||
| In millions | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | |||||||||||||
| Fair value hedges: | |||||||||||||||||
| Intercompany balances, primarily debt | Selling, general and administrative expenses | $ | (0) | $ | (3) | $ | 1 | $ | 3 | ||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||
| Diesel fuel contracts | Cost of sales, including buying and occupancy costs | (11) | 10 | (16) | (8) | ||||||||||||
| Intercompany billings in TJX International, primarily merchandise | Cost of sales, including buying and occupancy costs | 1 | 4 | 1 | 4 | ||||||||||||
| Merchandise purchase commitments | Cost of sales, including buying and occupancy costs | 3 | (30) | 14 | (22) | ||||||||||||
| (Loss) gain recognized in income | $ | (7) | $ | (19) | $ | 0 | $ | (23) |
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 (also referred to as 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 millions | August 3, 2024 | February 3, 2024 | July 29, 2023 | ||||||||
| Level 1 | |||||||||||
| Assets: | |||||||||||
| Executive Savings Plan investments | $ | 453.1 | $ | 405.7 | $ | 394.8 | |||||
| Level 2 | |||||||||||
| Assets: | |||||||||||
| Foreign currency exchange contracts | $ | 19.1 | $ | 11.5 | $ | 9.8 | |||||
| Liabilities: | |||||||||||
| Foreign currency exchange contracts | $ | 13.0 | $ | 13.7 | $ | 47.0 | |||||
| Diesel fuel contracts | 15.6 | 7.2 | 2.0 |
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 inputs. These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that might affect TJX’s ability to settle these obligations.
The following table summarizes the carrying value and fair value estimates of our components of long-term debt:
| August 3, 2024 | February 3, 2024 | July 29, 2023 | ||||||||||||||||||
| In Millions | Carrying Value | Fair Value | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||
| Level 2 | ||||||||||||||||||||
| Long-term debt | $ | 2,864 | $ | 2,676 | $ | 2,862 | $ | 2,630 | $ | 2,861 | $ | 2,590 |
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 August 3, 2024, February 3, 2024 and July 29, 2023, the Company did not record any material impairments to long-lived assets.
Note G. Segment Information
TJX operates four main business segments. In the United States, the Marmaxx segment operates TJ Maxx, Marshalls, tjmaxx.com and marshalls.com and the HomeGoods segment operates HomeGoods and Homesense. The TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and the TJX International segment operates TK Maxx, Homesense, tkmaxx.com, tkmaxx.de, and tkmaxx.at in Europe and TK 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 (income) 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 | Twenty-Six Weeks Ended | |||||||||||||
| In millions | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||||||||
| Net sales: | ||||||||||||||
| In the United States: | ||||||||||||||
| Marmaxx | $ | 8,445 | $ | 7,903 | $ | 16,195 | $ | 15,269 | ||||||
| HomeGoods | 2,101 | 2,011 | 4,180 | 3,977 | ||||||||||
| TJX Canada | 1,244 | 1,223 | 2,357 | 2,261 | ||||||||||
| TJX International | 1,678 | 1,621 | 3,215 | 3,034 | ||||||||||
| Total net sales | $ | 13,468 | $ | 12,758 | $ | 25,947 | $ | 24,541 | ||||||
| Segment profit: | ||||||||||||||
| In the United States: | ||||||||||||||
| Marmaxx | $ | 1,191 | $ | 1,084 | $ | 2,288 | $ | 2,112 | ||||||
| HomeGoods | 191 | 175 | 389 | 319 | ||||||||||
| TJX Canada | 187 | 192 | 324 | 309 | ||||||||||
| TJX International | 73 | 32 | 134 | 70 | ||||||||||
| Total segment profit | 1,642 | 1,483 | 3,135 | 2,810 | ||||||||||
| General corporate expense | 220 | 194 | 373 | 350 | ||||||||||
| Interest (income) expense, net | (46) | (38) | (96) | (75) | ||||||||||
| Income before income taxes | $ | 1,468 | $ | 1,327 | $ | 2,858 | $ | 2,535 |
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 millions | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||||||||
| Service cost | $ | 9 | $ | 9 | $ | 0 | $ | 0 | ||||||
| Interest cost | 18 | 18 | 2 | 2 | ||||||||||
| Expected return on plan assets | (20) | (20) | — | — | ||||||||||
| Amortization of net actuarial loss and prior service cost/(credit) | (1) | 0 | 1 | 1 | ||||||||||
| Total expense | $ | 6 | $ | 7 | $ | 3 | $ | 3 | ||||||
| Funded Plan | Unfunded Plan | |||||||||||||
| Twenty-Six Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||
| In millions | August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||||||||||
| Service cost | $ | 16 | $ | 17 | $ | 1 | $ | 1 | ||||||
| Interest cost | 36 | 36 | 3 | 3 | ||||||||||
| Expected return on plan assets | (39) | (40) | — | — | ||||||||||
| Amortization of net actuarial loss and prior service cost/(credit) | (1) | 0 | 1 | 1 | ||||||||||
| Total expense | $ | 12 | $ | 13 | $ | 5 | $ | 5 |
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 2025 for the funded plan. The Company anticipates making contributions of $11 million to provide current benefits coming due under the unfunded plan in fiscal 2025.
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) income 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 August 3, 2024, February 3, 2024 and July 29, 2023. All amounts are net of unamortized debt discounts.
| In millions and net of immaterial unamortized debt discounts | August 3, 2024 | February 3, 2024 | July 29, 2023 | ||||||||
| General corporate debt: | |||||||||||
| 2.250% senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32% after reduction of unamortized debt discount) | $ | 998 | $ | 998 | $ | 998 | |||||
| 1.150% senior unsecured notes, maturing May 15, 2028 (effective interest rate of 1.18% after reduction of unamortized debt discount) | 500 | 499 | 499 | ||||||||
| 3.875% senior unsecured notes, maturing April 15, 2030 (effective interest rate of 3.89% after reduction of unamortized debt discount) | 496 | 496 | 496 | ||||||||
| 1.600% senior unsecured notes, maturing May 15, 2031 (effective interest rate of 1.61% after reduction of unamortized debt discount) | 500 | 500 | 500 | ||||||||
| 4.500% senior unsecured notes, maturing April 15, 2050 (effective interest rate of 4.52% after reduction of unamortized debt discount) | 383 | 383 | 383 | ||||||||
| Total debt | 2,877 | 2,876 | 2,876 | ||||||||
| Debt issuance costs | (13) | (14) | (15) | ||||||||
| Long-term debt | $ | 2,864 | $ | 2,862 | $ | 2,861 |
Credit Facilities
The Company has two TJX 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 was set to mature in May 2024 (the “2024 Revolving Credit Facility”). On May 8, 2023, the Company amended the 2024 Revolving Credit Facility (as amended, the “2028 Revolving Credit Facility”) to (i) extend the maturity to May 8, 2028 and (ii) replace the London Interbank Offered Rate (“LIBOR”) with a term secured overnight financing rate plus a 0.10% credit spread adjustment (“Adjusted Term SOFR”). Term SOFR borrowings under the 2028 Revolving Credit Facility bear interest at the Adjusted Term SOFR plus a margin of 45.0 - 87.5 basis points and a quarterly facility fee payment of 5.0 - 12.5 basis points on the total commitments under the 2028 Revolving Credit Facility, in each case, based on the Company’s long-term debt ratings. All other material terms and conditions of the 2028 Revolving Credit Facility were unchanged from the 2024 Revolving Credit Facility.
Additionally, on May 8, 2023, the Company amended its 2026 Revolving Credit Facility to replace the LIBOR with Adjusted Term SOFR. Term SOFR borrowings under the 2026 Revolving Credit Facility, as amended, bear interest at the Adjusted Term SOFR plus a variable margin based on the Company’s long-term debt ratings. All other material terms and conditions of the 2026 Revolving Credit Facility were unchanged.
Under these credit facilities, the Company has maintained a borrowing capacity of $1.5 billion. As of August 3, 2024, February 3, 2024 and July 29, 2023, and during the quarters and year then ended, there were no amounts outstanding under these 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.
In addition, as of August 3, 2024, February 3, 2024 and July 29, 2023, TJX Canada had two credit lines, a C$10 million facility for operating expenses and a C$10 million letter of credit facility. As of August 3, 2024, February 3, 2024 and July 29, 2023, and during the quarters and year then ended, there were no amounts outstanding on the Canadian credit line for operating expenses. As of August 3, 2024, February 3, 2024 and July 29, 2023, the Company’s European business at TJX International had a credit line of £5 million. As of August 3, 2024, February 3, 2024 and July 29, 2023, and during the quarters and year then ended, there were no amounts outstanding on the European credit line.
Note J. Income Taxes
In 2021, the Organization for Economic Co-operation and Development announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption of additional components in later years or announced their plans to enact legislation in future years. Considering we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules did not have a material impact on our financial statements for the second quarter of fiscal 2025 and are not expected to materially increase our global tax costs on our fiscal 2025 financial statements. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions we operate in.
The effective income tax rate was 25.1% for the second quarter of fiscal 2025 and 25.5% for the second quarter of fiscal 2024. The decrease in the effective income tax rate in the second quarter of fiscal 2025 was primarily due to the increase in excess tax benefit from share-based compensation, partially offset by the resolution of various tax matters in the second quarter of fiscal 2024 and the change of jurisdictional mix of profits and losses.
TJX had net unrecognized tax benefits of $202 million as of August 3, 2024, $228 million as of February 3, 2024 and $264 million as of July 29, 2023.
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 were $26 million as of August 3, 2024, $32 million as of February 3, 2024 and $39 million as of July 29, 2023.
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 August 3, 2024. During the next twelve months, it is reasonably possible that tax audit resolutions may reduce unrecognized tax benefits by up to $25 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.
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