FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

þ Quarterly Report under Section 13 and 15(d)
Of the Securities Exchange Act of 1934
Or
o Transition Report Pursuant to Section 13 and 15(d)
Of the Securities Exchange Act of 1934

For Quarter Ended July 31, 2004
Commission file number 1-4908

The TJX Companies, Inc.

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ. No o.

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act).

The number of shares of Registrant’s common stock outstanding as of July 31, 2004: 488,750,610

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Table of Contents

PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS

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

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PART I FINANCIAL INFORMATION
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(UNAUDITED)
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS

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

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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS

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

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THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS

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

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NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.		The results for the first six months are not necessarily indicative of results for the full fiscal year, because TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year.
2.		The consolidated interim financial statements are unaudited and, in the opinion of management, reflect all normal recurring adjustments, the use of retail statistics, and accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by TJX for a fair presentation of its financial statements for the periods reported, all in accordance with generally accepted accounting principles and practices consistently applied. The consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements, including notes thereto, contained in TJX’s Annual Report on Form 10-K for the year ended January 31, 2004.
3.		TJX’s cash payments for interest and income taxes are as follows:

4.		We have a reserve for future obligations of discontinued operations that relates primarily to real estate leases of the former House2Home, Zayre Stores and Hit or Miss divisions, for which TJX is an original lessee or guarantor. These discontinued operations are either in liquidation or have been liquidated by third parties.
		When discontinued operations were sold to third parties, TJX generally remained secondarily liable with respect to lease obligations if the purchasers failed to perform, unless circumstances terminate or reduce TJX’s potential liability. The reserve reflects TJX’s estimation of its cost for claims that have been, or are likely to be, made against TJX after mitigation of the number and cost of lease obligations.
		At July 31, 2004, substantially all of the House2Home, Zayre Stores and Hit or Miss leases that were rejected in their respective bankruptcies and for which the landlords asserted liability against TJX had been resolved as a result of negotiated buyouts, assignments to third parties, leasing for TJX’s own use or for sublease and lease expirations. It is possible that there will be future costs for other leases from these discontinued operations that have not been terminated or expired, but TJX does not expect any such costs to be material. We do not expect to incur any material costs related to our discontinued operations for leases that have been resolved, or for other leases, in excess of our reserve.
		The reserve for discontinued operations as of July 31, 2004 and July 26, 2003 is summarized below:

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		During the second quarter ended July 31, 2004, we received a $2.3 million creditor recovery in the House2Home bankruptcy. The receipt of these proceeds was offset by a $2.3 million addition to our reserve. We expect to receive some additional funds under the creditor recovery, but the amount has not yet been determined.
		We may also be contingently liable on up to 20 leases of BJ’s Wholesale Club, Inc. for which BJ’s Wholesale Club is primarily liable. Our reserve for discontinued operations does not reflect these leases, because we believe that the likelihood of any future liability to TJX with respect to these leases is remote due to the current financial condition of BJ’s Wholesale Club.
5.		TJX’s comprehensive income for the periods ended July 31, 2004 and July 26, 2003 is presented below:

6.

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

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		The weighted average common shares for the diluted earnings per share calculation excludes the incremental effect related to outstanding stock options when the exercise price of the option is in excess of the related period’s average price of TJX’s common stock. There were no such options excluded for either the thirteen week or the twenty-six week calculations as of July 31, 2004, and there were 11.0 million such options excluded for both the thirteen and twenty-six week calculations as of July 26, 2003.
		In February 2001, TJX issued $517.5 million zero coupon convertible subordinated notes. The notes are convertible into 16.9 million shares of common stock of TJX if the sale price of our stock reaches certain levels or other contingencies are met. The 16.9 million shares were excluded from the diluted earnings per share calculation in all periods presented because criteria for conversion had not been met. There are proposed accounting rules that may take effect before year-end, which would require that the dilutive impact on earnings per share of the conversion of the zero coupon convertible debt be retroactively included for all periods, even if the contingent conversion conditions have not been met. Inclusion of these shares in the calculation of our diluted earnings per share would reduce our quarterly earnings per share by approximately $.01.
7.		During the second quarter ended July 31, 2004, TJX repurchased and retired 7.3 million shares of its common stock at a cost of $171.5 million. For the six months ended July 31, 2004, TJX repurchased and retired 12.9 million shares at a cost of $308.6 million. During May 2004, we completed our $1 billion stock repurchase program and announced a new stock repurchase program, approved by the Board of Directors on May 24, 2004, pursuant to which we may repurchase up to an additional $1 billion of common stock. Through July 31, 2004, under the current $1 billion stock repurchase program, TJX has repurchased 5.5 million shares at a cost of $127.2 million.
8.		TJX evaluates the performance of its segments based on “segment profit or loss” which TJX defines as pre-tax income before general corporate expense and interest. “Segment profit or loss” as defined by TJX may not be comparable to similarly titled measures used by other entities. In addition, this measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity. Presented below is financial information on TJX’s business segments (in thousands):

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9.

TJX has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” and continues to apply the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for compensation expense under our stock option plan. In March 2004, the Financial Accounting Standards Board (“FASB”) issued a proposed statement entitled “Share-Based Payment” that would amend SFAS No. 123 and require the expensing of options and other stock-based compensation. Until the FASB adopts final rules, we are continuing to account for stock-based compensation in accordance with APB Opinion No. 25. We grant options at fair market value on the date of the grant; accordingly, no compensation expense is recognized for the stock options issued during the fiscal year ending January 29, 2005 or the fiscal year ended January 31, 2004. Compensation expense determined in accordance with SFAS No. 123, net of related income tax effect, would have amounted to $13.8 million and $13.1 million for the fiscal quarters ended July 31, 2004 and July 26, 2003, respectively, and $28.6 million and $26.4 million for the six months ended July 31, 2004 and July 26, 2003, respectively.

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

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10.

The following represents the net periodic pension and postretirement benefit costs and related components for the twenty-six weeks ended July 31, 2004 and July 26, 2003 (in thousands):

		TJX made voluntary funding contributions in the fiscal years ended in January 2004 and 2003, and we do not anticipate any funding will be required for our current fiscal year.
11.		At July 31, 2004, TJX had interest rate swap agreements outstanding with a notional amount of $100 million. The agreements entitle TJX to receive biannual payments of interest at a fixed rate of 7.45% and pay a floating rate of interest indexed to the six-month LIBOR rate with no exchange of the underlying notional amounts.
		The interest rate swap agreements converted a portion of TJX’s long-term debt from a fixed rate obligation to a floating rate obligation. TJX has designated the interest rate swaps as a fair value hedge of the related long-term debt. The fair value of the swap agreements outstanding at July 31, 2004, excluding the estimated net interest receivable, was a liability of $4.9 million. The valuation of the derivative instruments results in an offsetting fair value adjustment to the debt hedged; accordingly, long-term debt has been reduced by $4.9 million.
12.		In March 2002, we entered into a $370 million five-year revolving credit facility and in March 2004, we renewed our $330 million 364-day revolving credit facility with substantially all of the terms and conditions of the original facility unchanged. Combined availability under our revolving credit facilities at July 31, 2004 and July 26, 2003 was $700 million, and we were undrawn on both facilities.
13.		Accrued expenses and other current liabilities as of July 31, 2004 includes $96 million of checks outstanding in excess of the book balance in certain cash accounts. These are zero balance cash accounts maintained with certain financial institutions which we fund as checks clear and for which no right of offset exists.
14.		Certain amounts in the financial statements of the prior period have been reclassified for comparative purposes.

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

The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended July 31, 2004
Versus
The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended July 26, 2003

Results of Operations

Overview: Highlights of our financial performance for second quarter and six months ended July 31, 2004, include the following:

	•		Net sales increased 12% to $3.4 billion for the quarter and 16% to $6.8 billion for the six months.
	•		Consolidated same store sales increased 3% for the second quarter and 6% on a year-to-date basis.
	•		Overall sales reflect strong demand for women’s apparel, footwear, jewelry and accessories, but sales trends for men’s apparel and home fashions were weaker.
	•		We continued to grow our business, with store counts up 8% at July 31, 2004 from stores in operation one year ago, excluding our acquisition in December 2003 of 31 Bob’s Stores.
	•		While net sales and consolidated same store sales were consistent with plan for the six months, second quarter net sales and same store sales fell below plan across all of our divisions except Winners, leading to higher-than-planned markdowns taken as part of our inventory management discipline and higher expenses as a percentage of sales.
	•		Our second quarter pre-tax margin (the ratio of pre-tax income to net sales) declined from 6.6% last year to 5.7% in the current year. The decline was driven by cost of sales, including buying and occupancy costs, which increased 0.6% as a percent of sales over last year, and selling, general and administrative costs which were up 0.3% as a percent of sales over the prior year, both of which reflect the negative impact on expense ratios of low-single-digit same store sales increases across most of our divisions.
	•		Year-to-date, our pre-tax margin improved from 6.6% last year to 6.9% in the current year, primarily due to expense leverage on our 6% same store sales increase.
	•		Net income was $118 million for the quarter, slightly less than last year’s second quarter and below plan. Diluted earnings per share, which reflect the benefits of our stock repurchase program, was $.24 per share for the second quarter, the same as last year, and also below plan.
	•		Net income increased 21% to $286 million and diluted earnings per share increased 24% to $.57 per share for the six month period. Earnings per share for the first six months were in line with our plan.
	•		Strong cash flow from operations allowed us to actively pursue our stock buyback program while simultaneously funding our capital investment needs. During the second quarter, we repurchased 7.3 million shares at a cost of $171.5 million and for the year-to-date period, we repurchased 12.9 million shares at a cost of $308.6 million.
	•		Inventory levels on an average per-store basis, including distribution center inventories, as of July 31, 2004 were flat with the prior year. Our liquid inventory position enhances our ability to take advantage of buying opportunities in the marketplace as we enter the third quarter of fiscal 2005.

The following is a summary of the operating results of TJX at the consolidated level. This discussion is followed by an overview of operating results by segment. All references to earnings per share are diluted earnings per share unless otherwise indicated.

Net sales: Consolidated net sales for the quarter ended July 31, 2004 were $3,414.3 million, up 12% from $3,046.2 million in last year’s second quarter. Consolidated net sales for last year’s second quarter ended July 26, 2003 increased 10% over the comparable prior-year period. The 12% increase in net sales for the second quarter ended July 31, 2004 includes 7% from new stores, 3% from same store sales, and 2% from the acquisition of Bob’s Stores. Bob’s Stores was acquired on December 24, 2003, and was therefore not included in our results last year. The increase in consolidated net sales for last year’s second quarter included 8% from new stores and 2% from same store sales. Same store sales for the quarters ended July 31, 2004 and July 26, 2003 benefited by approximately 1 percentage point and 1 1/2 percentage points, respectively, from foreign currency exchange rates.

On a year-to-date basis, consolidated net sales for the six months ended July 31, 2004 were $6,767.0 million, up 16% from $5,834.9 million in last year’s comparable period. Last year, for the six months ended July 26, 2003,

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consolidated net sales increased 7% over the comparable prior-year period. The 16% increase in net sales for the six months ended July 31, 2004 includes 8% from new stores, 6% from same store sales, and 2% from the acquisition of Bob’s Stores. The increase in net sales for the six months ended July 26, 2003 was attributable entirely to new stores. Same store sales for the six months ended July 31, 2004 and July 26, 2003 benefited by approximately 1 1/2 percentage points and 1 percentage point, respectively, from foreign currency exchange rates.

Overall sales for both the three and six month periods ended July 31, 2004 reflect strong demand for women’s apparel, footwear, jewelry and accessories, partially offset by weaker demand for men’s apparel and home fashions categories. Sales in the year-to-date period benefited from improved weather patterns this year compared to last year when weather was unusually harsh across much of the United States.

We define same store sales to be sales of those stores that have been in operation for all or a portion of two consecutive fiscal years, or in other words, stores that are starting their third fiscal year of operation. We classify a store as a new store until it meets the same store criteria. We determine which stores are included in the same store sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year, unless a store is closed. We calculate same store sales results by comparing the current and prior year weekly periods that are most closely aligned. Relocated stores and expanded stores are generally classified in the same way as the original store. We believe that the impact of relocated or expanded stores on the same store percentage is immaterial. Consolidated and divisional same store sales are calculated in U.S. dollars. We also show divisional same store sales in local currency for our foreign divisions, because this removes the effect of changes in currency exchange rates, and we believe it is a more appropriate measure of their operating performance.

The following table sets forth operating results expressed as a percentage of net sales:

Cost of sales, including buying and occupancy costs: Cost of sales, including buying and occupancy costs, as a percentage of net sales, increased by 0.6% for the quarter ended July 31, 2004 and was unchanged on a year-to-date basis, as compared to the same periods last year. This ratio was higher than planned in both periods ended July 31, 2004. The increase in this ratio for the quarter reflects an increase in both occupancy costs and distribution costs as a percentage of net sales, primarily due to the negative impact on expense ratios of lower-than-planned same store sales increases across most of our divisions. This increase was partially offset by improvement in merchandise margin. Although merchandise margins improved during the quarter, they were less than we had planned, primarily due to higher-than-planned markdowns taken as part of our disciplined inventory management to maintain inventory turns. Year-to-date, improved merchandise margins reduced our consolidated cost of sales ratio by approximately 0.4%, but were offset by higher occupancy costs and distribution costs as a percent of sales.

Selling, general and administrative expenses: Selling, general and administrative expenses, as a percentage of net sales, were on plan for the quarter ended July 31, 2004 and increased 0.3% over the second quarter last year. The increase in this ratio for the second quarter, as compared to last year, is primarily due to increases in administrative costs and store payroll, as a percentage of net sales, due to the negative impact on expense ratios of lower-than-planned same store sales increases across most of our divisions. Disciplined expense management during the period helped to partially offset this negative impact on expense ratios. Selling, general and administrative expenses as a percentage of net sales, for the six months ended July 31, 2004, decreased by 0.2% from last year’s comparable period, and was favorable to plan. This improvement in the ratio, which reflects the levering effect of our strong year-to-date sales performance as well as disciplined expense management, was spread across many areas, with the most leverage coming from store payroll and administrative expenses.

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Interest expense, net: Interest expense, net of interest income, for the periods ended July 31, 2004 is slightly less than the comparable prior year periods. Both periods reflect reduced interest costs as a result of medium term notes that matured in October 2003. In addition, for the year-to-date period, the reduction in interest expense reflects the favorable impact of interest rate swap agreements into which we entered in the latter part of last year’s second quarter.

Income taxes: Our effective income tax rate was 38.8% for both periods ended July 31, 2004, as compared to 38.7% for both periods ended July 26, 2003.

Net income: Net income for this year’s second quarter was $118.2 million, or $.24 per diluted share, versus $123.3 million, or $.24 per diluted share, in last year’s second quarter. Net income for the six months ended July 31, 2004 was $286.4 million, or $.57 per diluted share, compared to $236.8 million, or $.46 per diluted share last year. The change in earnings per share, year over year, reflects the favorable impact of our share repurchase program.

Segment information: The following is a discussion of the operating results of our business segments. We consider each of our operating divisions to be a segment. We evaluate the performance of our segments based on “segment profit or loss” which we define as pre-tax income before general corporate expense and interest. “Segment profit or loss” as defined by TJX may not be comparable to similarly titled measures used by other entities. In addition, this measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity. Presented below is selected financial information related to our business segments (U.S. dollars in millions):

Marmaxx had a 2% same store sales increase for the second quarter ended July 31, 2004, and a 4% increase for the six months ended July 31, 2004. Same store sales growth in the second quarter was driven by strong sales of women’s apparel, footwear, jewelry and accessories, partially offset by weaker demand for men’s apparel and home fashions. Segment profit for the second quarter grew 6% to $202.6 million. Segment profit margin for the quarter ended July 31, 2004 was consistent with last year’s second quarter. Marmaxx’s execution of its inventory management strategies led to an increase in second quarter merchandise margins. This improvement was offset by an increase in distribution costs, occupancy costs and store payroll costs, as a percentage of net sales, primarily due to the negative impact, on the ratio of expenses to sales, of a 2% increase in same store sales for the second quarter.

For the six months ended July 31, 2004 segment profit grew 23% to $474.5 million and segment profit margin grew from 8.7% to 9.8%. The increase in segment profit and segment profit margin on a year-to-date basis reflect both the strong sales growth in the first quarter, as well as improved merchandise margins and expense leverage for the six-month period. Merchandise margin improvement was the result of effective execution of our merchandising and inventory management strategies. Expense leverage was the result of the positive impact of a strong year-to-date same store sales increase on the ratio of expenses to sales, as well as disciplined cost management.

Marmaxx’s operating results for the prior year’s second quarter and six months ended July 26, 2003, were negatively impacted by the harsh weather across many regions of the country during much of that period. Last year’s segment profit was impacted by second quarter markdowns as well as increased distribution costs associated with the opening of a new T.J. Maxx distribution center in Pittston, PA. As of July 31, 2004, average per store inventories, including distribution centers, were down 5% compared to the end of the quarter last year. This inventory position gives us the ability to take advantage of buying opportunities in the marketplace as we enter the third quarter.

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Same store sales (in local currency) for Winners and HomeSense increased by 11% during this year’s second quarter, and 8% for the six months ended July 31, 2004. Same store sales were strong across most major product categories. Net sales grew 19% for the second quarter and 26% for the six month period. Winners’ sales results reflect strong execution of our merchandising and inventory strategies. Segment profit for the quarter increased 16%, and was adversely impacted by currency exchange rates that had a $1.5 million negative impact on segment profit compared to the second quarter last year. For the six month period, segment profit increased 52% over last year. This growth, as well as the increase in segment profit margins, was primarily due to strong same store sales and improved merchandise margins reflecting solid execution of our merchandising strategies. Currency exchange rates did not have a significant impact on the year-to-date growth in segment profit.

T.K. Maxx’s same store sales increased 1% for the quarter and 3% for the six month period, in local currency, compared to a 4% increase for the quarter ended July 26, 2003 and a 6% increase for the six months ended July 26, 2003. Favorable weather patterns aided T.K. Maxx’s sales growth in each of the periods ended July 26, 2003. Segment profit for this year’s second quarter increased 16% over the prior year, primarily due to the growth in the number of stores. Currency exchange rates contributed approximately one-third of the year-over-year growth in segment profit for the second quarter. Segment profit margins declined from 3.9% to 3.5%, with improved merchandise margins more than offset by the negative impact on expense ratios of the 1% same store sales increase. Segment profit for the year-to-date period grew 26%, with the majority of the growth due to the increase in the number of stores. Currency exchange rates contributed approximately one-quarter of the year-over-year growth for the six-month period.

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HomeGoods total sales increased 15% and same store sales decreased 1% for the quarter ended July 31, 2004. On a year-to-date basis, total sales increased 21% and same store sales increased 2% over the comparable period last year. Sales for both periods were impacted by unfavorable merchandise mix, specifically lighter-than-optimal inventories in summer-themed product. Segment profit declined for each of the periods ended July 31, 2004, primarily due to lower merchandise margins, which were impacted by the higher markdowns associated with below-plan sales. Segment profit and margins were also impacted by an increase in occupancy costs and distribution center costs as a percentage of net sales, partially offset by levering of administrative expenses and lower preopening costs.

A.J. Wright’s same store sales for the quarter ended July 31, 2004 increased 2% on top of a strong 11% increase in the prior year. A.J Wright’s segment loss for the quarter ended July 31, 2004 was primarily due to the sales shortfall to plan and the resultant higher markdown activity. We believe the A.J. Wright customer is more sensitive to economic factors such as higher gas prices and tax rebates, and that this business is more holiday-driven than our other businesses. Economic conditions, a weak Father’s Day and lower demand for urban fashion negatively impacted sales in the second quarter. Segment profit (loss) and margins for each of the periods ended July 31, 2004 were also impacted by expense increases related to A.J. Wright’s new distribution facility in Indiana. Segment profit (loss) for the prior year periods ended July 26, 2003, included a $1.7 million gain from a store closing.

Bob’s Stores

This was the second full quarter for Bob’s Stores as a TJX division. Bob’s Stores, which operates 31 stores, recorded net sales of $63.8 million and a segment loss of $8.2 million for the quarter ended July 31, 2004, and net sales of $125.2 million and a segment loss of $7.0 million for the six months ended July 31, 2004. Sales and segment loss for the quarter and six month periods were impacted by higher markdowns, the result of below plan sales. We continue to evaluate and develop this concept prior to initiating significant expansion plans.

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General corporate expense

General corporate expense for segment reporting purposes are those costs not specifically related to the operations of our business segments, and is included in selling, general and administrative expenses. General corporate expense increased 17% to $20.8 million for the second quarter ended July 31, 2004 and increased 21% to $41.6 million for the year-to-date period. The increase in general corporate expense for both periods is due to several factors, including additional costs for audit fees and additional foreign exchange losses for the quarter and six month period as well as increased expense for restricted stock for the year-to-date period.

Financial Condition

Operating activities for the six months ended July 31, 2004 provided cash of $350.3 million while operating activities for the six months ended July 26, 2003 provided cash of $41.7 million. Of this $308.6 million increase in cash flows from operating activities, $73.1 million was due to an increase in net income and depreciation expense. In addition, the net change in inventory and accounts payable from year-end levels had a favorable impact on cash from operations of $133.1 million for the six months ended July 31, 2004 as compared to the prior year. Inventories per store as of July 31, 2004 increased by 11% from January 2004 year-end levels which compares to an inventory per store level as of July 26, 2003 that increased 23% from January 2003 year-end levels. This planned increase in last year’s inventory levels resulted in a greater use of cash in that period. The net increase in accrued expenses and other current liabilities for the six months ended July 31, 2004 reflects the impact of classifying as a current liability $96 million of checks outstanding in excess of the book balance in certain cash accounts. These are zero-balance cash accounts maintained with certain financial institutions which we fund as checks clear, and for which no other right of offset exists.

Cash flows from operating activities were reduced by $1 million (net of a $2.3 million creditor recovery) for payments against our reserve for discontinued operations during the six months ended July 31, 2004, and by $19 million during the six months ended July 26, 2003. Please see Note 4 to the consolidated interim financial statements for more information on our discontinued operations and related contingent liabilities.

Investing activities relate primarily to property additions for new stores, store improvements and renovations and expansion of our distribution network.

Financing activities for the period ended July 31, 2004, include cash expenditures of $315.8 million for the repurchase of common stock as compared to $277.3 million last year. During May 2004, we completed our $1 billion stock repurchase program and announced our intention to repurchase up to an additional $1 billion of common stock. Since the inception of the new $1 billion stock repurchase program, through July 31, 2004, we have repurchased 5.5 million shares at a total cost of $127.2 million. During the quarter ended July 31, 2004, we repurchased and retired 7.3 million shares at a cost $171.5 million.

In March 2002, we entered into a $370 million five-year revolving credit facility and in March 2004 we renewed our $330 million 364-day revolving credit facility with substantially all of the terms and conditions of the original facility unchanged. Combined availability under our revolving credit facilities at July 31, 2004 and July 26, 2003 was $700 million, and we were undrawn on both facilities. We believe our internally generated funds and our revolving credit facilities are more than adequate to meet our operating needs.

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Forward Looking Information

Various statements made in this report are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements:

•		Our ability to continue our successful expansion of our operations including expansion of our store base across all chains at the projected rate, and our ability to continue to increase both total sales and same store sales and to manage rapid growth.
•		Risk of expansion of existing businesses in existing and new markets and of entry into new businesses.
•		Our ability to successfully implement our opportunistic inventory strategies including availability, selection and acquisition of appropriate merchandise on favorable terms and at the appropriate times.
•		Our ability to effectively manage our inventories including effective and timely distribution to stores and maintenance of appropriate levels of inventory and effective management of pricing and mark-downs.
•		Consumer confidence, demand, spending habits and buying preferences.
•		Effects of unseasonable weather patterns on consumer demand.
•		Competitive factors, including pricing and promotional activities of competitors and in the retail industry generally, changes in competitive practices, new competitors, competition from alternative distribution channels and excess retail capacity.
•		Factors affecting the availability of adequate numbers of desirable store and distribution center locations on suitable terms.
•		Factors affecting our recruitment and employment of associates including our ability to recruit, retain and develop quality sales associates and management personnel in adequate numbers; results of labor contract negotiations; and effects of immigration, wage, entitlement and other governmental regulation of employment.
•		Factors affecting expenses including pressure on wages, health care costs and other benefits, pension plan returns, energy and fuel costs and availability and costs of insurance.
•		Success of our acquisition and divestiture activities.
•		Our ability to successfully implement new technologies and systems and maintain adequate disaster recovery systems.
•		Our ability to continue to generate cash flows to support capital expansion, general operating activities and stock repurchase programs.
•		General economic conditions in countries and regions where we operate including consumer credit availability, consumer debt levels and delinquencies and default rates, financial market performance, inflation, commodity prices and unemployment that affect consumer demand.
•		Potential disruptions due to wars, other military actions and terrorist incidents.
•		Changes in currency and exchange rates in our foreign and buying operations and with respect to our financial statements.
•		Import risks, including potential disruptions in supply, changes in duties, tariffs and quotas on imported merchandise including the scheduled expiration of quotas under the Multifiber Agreement, and economic, political or other problems in countries from which merchandise is imported.
•		Adverse outcomes for any significant litigation.
•		Changes in laws and regulations and accounting rules and principles.

We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.

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PART I		(Continued)
Item 3		Quantitative and Qualitative Disclosure about Market Risk
		We are exposed to foreign currency exchange rate risk on our investment in our Canadian (Winners and HomeSense) and European (T.K. Maxx) operations. As more fully described in Note D to our consolidated financial statements, on page F-16 of the Annual Report on Form 10-K for the fiscal year ended January 31, 2004, we hedge a significant portion of our net investment and certain merchandise commitments in these operations with derivative financial instruments. We enter into derivative contracts only when there is an underlying economic exposure. We utilize currency forward and swap contracts, designed to offset the gains or losses in the underlying exposures, most of which are recorded directly in shareholders’ equity. The contracts are executed with banks we believe are creditworthy and are denominated in currencies of major industrial countries. We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign currency exchange rates applied to the hedging contracts and the underlying exposures described above. As of January 31, 2004, the analysis indicated that such market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.
		Our cash equivalents and short-term investments and certain lines of credit bear variable interest rates. Changes in interest rates affect interest earned and paid by the Company. We periodically enter into financial instruments to manage our cost of borrowing, however, we believe that the use of primarily fixed rate debt minimizes our exposure to market conditions.
		We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in interest rates applied to the maximum variable rate debt outstanding during the previous year. As of January 31, 2004, the analysis indicated that such market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.

Item 4		Controls and Procedures
		The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of July 31, 2004 pursuant to Rule 13a-15 and 15d-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There were no changes in internal controls over financial reporting during the fiscal quarter ended July 31, 2004 identified in connection with the Chief Executive Officer’s and Chief Financial Officer’s evaluation that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.

Other Information

Item 2		Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
		Information on Share Repurchases
		The number of shares of common stock repurchased by TJX during the second quarter of fiscal 2005 and the average price paid per share is as follows:

		In May 2004 we completed our $1 billion share repurchase program announced in 2002, and on May 24, 2004 we announced a new $1 billion share repurchase program. As of July 31, 2004, we had repurchased 5.5 million shares at a cost of $127.2 million under our $1 billion share repurchase program announced in May 2004.
Item 4		Submission of Matters to a vote of Security Holders
		The Company held its Annual Meeting of stockholders on June 1, 2004. The following actions were taken at the Annual Meeting:

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Item 6(a)

Exhibits

	10.1		The Stock Incentive Plan (2004 Restatement) is filed herewith.
	10.2		The Form of a Non-Qualified Stock Option Certificate Granted Under Stock Incentive Plan is filed herewith.
	10.3		The Form of a Performance-Based Restricted Stock Award Granted Under Stock Incentive Plan is filed herewith.
	31.1		Certification Statement of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification Statement of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1		Certification Statement of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2		Certification Statement of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Item 6(b)		Reports on Form 8-K
		On May 18, 2004 the Company furnished to the Commission a current report on Form 8-K appending a press release issued on May 18, 2004 which included financial results of The TJX Companies, Inc. for the quarter ended May 1, 2004.
		On May 26, 2004 the Company furnished to the Commission a current report on Form 8-K appending a press release issued on May 24, 2004 which announced a new $1 billion stock repurchase program.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE TJX COMPANIES, INC.
	(Registrant)
Date: September 8, 2004
	/s/ Jeffrey G. Naylor
	Jeffrey G. Naylor, Senior Executive Vice President — Finance, on behalf of The TJX Companies, Inc. and as Principal Financial and Accounting Officer of The TJX Companies, Inc.

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