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Financial Instruments | 9 Months Ended
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Oct. 31, 2015
Financial Instruments | Note F. Financial Instruments As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. When and to the extent deemed appropriate, TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments. 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 statements of financial position and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of other comprehensive income or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged. TJX does not hedge its net investments in foreign subsidiaries. Diesel Fuel Contracts: TJX hedges portions of its estimated notional diesel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing (and the resulting per mile surcharges payable by TJX) by setting a fixed price per gallon for the period being hedged. During fiscal 2015 and the first nine months of fiscal 2016, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2016. In addition, during fiscal 2016, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first nine months of the fiscal year ending January 28, 2017 (fiscal 2017). The hedge agreements outstanding at October 31, 2015 relate to approximately 58% of TJX’s estimated notional diesel requirements for the remainder of fiscal 2016 and approximately 39% of TJX’s estimated notional diesel requirements for the first nine months of the fiscal 2017. These diesel fuel hedge agreements will settle throughout the remainder of fiscal 2016 and the first ten months of fiscal 2017. TJX elected not to apply hedge accounting rules 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 TJX Europe (United Kingdom, Ireland, Germany, Poland, Austria and the Netherlands), TJX Canada (Canada), Marmaxx (U.S.) and HomeGoods (U.S.) in currencies other than their respective functional currencies. These contracts typically have a term of twelve months or less. The contracts outstanding at October 31, 2015 cover a portion of such actual and anticipated merchandise purchases throughout the remainder of fiscal 2016 and the first two quarters of fiscal 2017. TJX elected not to apply hedge accounting rules to these contracts. TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt and intercompany interest payable. The changes in fair value of these contracts are recorded in selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in selling, general and administrative expenses. The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at October 31, 2015:
In thousands |  | Pay |  |  | Receive |  |  | Blended Contract Rate |  |  | Balance Sheet Location |  | Current Asset U.S.$ |  |  | Current (Liability) U.S.$ |  |  | Net Fair Value in U.S.$ at October 31, 2015 |
Fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Intercompany balances, primarily debt and related interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | zł |  |  | 87,073 |  |  | C$ | 29,560 |  |  |  | 0.3395 |  |  | Prepaid Exp / (Accrued Exp) |  | $ | 270 |  |  | $ | (198 | ) |  | $ | 72 |
|  | zł |  |  | 35,000 |  |  | £ | 6,279 |  |  |  | 0.1794 |  |  | Prepaid Exp |  |  | 635 |  |  |  | — |  |  |  | 635 |
|  | € |  |  | 45,000 |  |  | £ | 33,294 |  |  |  | 0.7399 |  |  | Prepaid Exp |  |  | 1,726 |  |  |  | — |  |  |  | 1,726 |
|  | € |  |  | 19,850 |  |  | U.S.$ | 22,647 |  |  |  | 1.1409 |  |  | Prepaid Exp |  |  | 762 |  |  |  | — |  |  |  | 762 |
|  | U.S.$ |  |  | 83,400 |  |  | £ | 55,000 |  |  |  | 0.6595 |  |  | Prepaid Exp |  |  | 1,424 |  |  |  | — |  |  |  | 1,424 |
Economic hedges for which hedge accounting was not elected: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diesel contracts |  |  |  |  | Fixed on 975K – 3.0M gal per month |  |  |  | Float on 975K – 3.0M gal per month |  |  |  | N/A |  |  | (Accrued Exp) |  |  | — |  |  |  | (10,437 | ) |  |  | (10,437 | )
Merchandise purchase commitments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | C$ |  |  | 530,307 |  |  | U.S.$ | 410,904 |  |  |  | 0.7748 |  |  | Prepaid Exp / (Accrued Exp) |  |  | 6,470 |  |  |  | (906 | ) |  |  | 5,564 |
|  | C$ |  |  | 18,574 |  |  | € | 12,700 |  |  |  | 0.6838 |  |  | Prepaid Exp / (Accrued Exp) |  |  | 2 |  |  |  | (224 | ) |  |  | (222 | )
|  | £ |  |  | 160,365 |  |  | U.S.$ | 247,900 |  |  |  | 1.5458 |  |  | Prepaid Exp / (Accrued Exp) |  |  | 1,218 |  |  |  | (689 | ) |  |  | 529 |
|  | zł |  |  | 213,967 |  |  | £ | 36,670 |  |  |  | 0.1714 |  |  | Prepaid Exp |  |  | 1,275 |  |  |  | — |  |  |  | 1,275 |
|  | U.S.$ |  |  | 29,338 |  |  | € | 26,318 |  |  |  | 0.8971 |  |  | Prepaid Exp / (Accrued Exp) |  |  | 19 |  |  |  | (379 | ) |  |  | (360 | )
Total fair value of financial instruments |  |  |  |  |  |  |  |  | $ | 13,801 |  |  | $ | (12,833 | ) |  | $ | 968 |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at November 1, 2014:
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 November 1, 2014 |
Fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Intercompany balances, primarily debt and related interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | zł |  |  | 87,073 |  |  | C$ | 30,519 |  |  |  | 0.3505 |  |  | Prepaid Exp |  | $ | 1,313 |  |  | $ | — |  |  | $ | 1,313 |
|  | € |  |  | 39,000 |  |  | £ | 31,968 |  |  |  | 0.8197 |  |  | Prepaid Exp |  |  | 2,151 |  |  |  | — |  |  |  | 2,151 |
|  | € |  |  | 44,850 |  |  | U.S.$ | 61,842 |  |  |  | 1.3789 |  |  | Prepaid Exp |  |  | 5,635 |  |  |  | — |  |  |  | 5,635 |
|  | U.S.$ |  |  | 90,309 |  |  | £ | 55,000 |  |  |  | 0.6090 |  |  | (Accrued Exp) |  |  | — |  |  |  | (2,393 | ) |  |  | (2,393 | )
Economic hedges for which hedge accounting was not elected: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diesel contracts |  |  |  |  | Fixed on 390K - 1.8M gal per month |  |  |  | Float on 390K - 1.8M gal per month |  |  |  | N/A |  |  | (Accrued Exp) |  |  | — |  |  |  | (5,360 | ) |  |  | (5,360 | )
Merchandise purchase commitments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | C$ |  |  | 293,187 |  |  | U.S.$ | 267,020 |  |  |  | 0.9107 |  |  | Prepaid Exp |  |  | 7,060 |  |  |  | — |  |  |  | 7,060 |
|  | C$ |  |  | 7,206 |  |  | € | 5,000 |  |  |  | 0.6939 |  |  | Prepaid Exp / (Accrued Exp) |  |  | 4 |  |  |  | (135 | ) |  |  | (131 | )
|  | £ |  |  | 103,088 |  |  | U.S.$ | 168,500 |  |  |  | 1.6345 |  |  | Prepaid Exp / (Accrued Exp) |  |  | 3,690 |  |  |  | (5 | ) |  |  | 3,685 |
|  | zł |  |  | 151,572 |  |  | £ | 28,638 |  |  |  | 0.1889 |  |  | Prepaid Exp |  |  | 992 |  |  |  | — |  |  |  | 992 |
|  | U.S.$ |  |  | 21,525 |  |  | € | 16,401 |  |  |  | 0.7620 |  |  | (Accrued Exp) |  |  | — |  |  |  | (981 | ) |  |  | (981 | )
Total fair value of financial instruments |  |  |  |  |  |  |  |  | $ | 20,845 |  |  | $ | (8,874 | ) |  | $ | 11,971 |
Presented below is the impact of derivative financial instruments on the statements of income for the periods shown:
|  |  |  | Amount of Gain (Loss) Recognized in Income by Derivative |
|  | Location of Gain (Loss) Recognized in Income by Derivative |  | Thirteen Weeks Ended |
In thousands |  |  | October 31, 2015 |  |  | November 1, 2014 |
Fair value hedges: |  |  |  |  |  |  |  |  |  |
Intercompany balances, primarily debt and related interest |  | Selling, general and administrative expenses |  | $ | (730 | ) |  | $ | 1,842 |
Economic hedges for which hedge accounting was not elected: |  |  |  |  |
Diesel fuel contracts |  | Cost of sales, including buying and occupancy costs |  |  | (2,405 | ) |  |  | (5,614 | )
Merchandise purchase commitments |  | Cost of sales, including buying and occupancy costs |  |  | 5,311 |  |  |  | 16,476 |
Gain / (loss) recognized in income |  |  |  | $ | 2,176 |  |  | $ | 12,704 |
|  |  |  | Amount of Gain (Loss) Recognized in Income by Derivative |
|  | Location of Gain (Loss) Recognized in Income by Derivative |  | Thirty-Nine Weeks Ended |
In thousands |  |  | October 31, 2015 |  |  | November 1, 2014 |
Fair value hedges: |  |  |  |  |  |  |  |  |  |
Intercompany balances, primarily debt and related interest |  | Selling, general and administrative expenses |  | $ | 6,978 |  |  | $ | 5,720 |
Economic hedges for which hedge accounting was not elected: |  |  |  |  |
Diesel fuel contracts |  | Cost of sales, including buying and occupancy costs |  |  | (11,696 | ) |  |  | (4,709 | )
Merchandise purchase commitments |  | Cost of sales, including buying and occupancy costs |  |  | 12,854 |  |  |  | 780 |
Gain / (loss) recognized in income |  |  |  | $ | 8,136 |  |  | $ | 1,791 |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=56946850&loc=d3e41620-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624163-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5579240-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624177-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=56946850&loc=d3e41641-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5579245-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624258-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5708775-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5708773-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5618551-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=56946850&loc=SL5624181-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56946850&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 + Details
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