Delaware
|
26-0037077
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
|
|
|
Page
|
|||||||
Part I.
|
|
Financial
Information
|
|
|||||||
|
Item
1.
|
|
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|||||||
|
|
a
|
)
|
|
1
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|||||
|
|
b
|
)
|
|
2
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|||||
|
|
c
|
)
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|
3
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|||||
|
|
d
|
)
|
|
4
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|||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 13 | ||||||||
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Item
3.
|
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20
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||||||
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Item
4.
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|
20
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||||||
Part II.
|
|
Other
Information
|
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|||||||
|
Item 1A.
|
|
|
21
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||||||
|
Item
2.
|
|
|
21
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||||||
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Item
6.
|
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22
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||||||
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23
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|||||||||
|
($
in millions, except per share data)
|
13
weeks ended
|
|||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Total
net sales
|
$ | 4,127 | $ | 4,350 | ||||
Cost
of goods sold
|
2,477 | 2,543 | ||||||
Gross
margin
|
1,650 | 1,807 | ||||||
Operating
expenses:
|
||||||||
Selling,
general and administrative (SG&A)
|
1,295 | 1,291 | ||||||
Depreciation
and amortization
|
110 | 100 | ||||||
Pre-opening
|
6 | 6 | ||||||
Real
estate and other (income), net
|
(9 | ) | (9 | ) | ||||
Total
operating expenses
|
1,402 | 1,388 | ||||||
Operating
income
|
248 | 419 | ||||||
Net
interest expense
|
53 | 32 | ||||||
Income
before income taxes
|
195 | 387 | ||||||
Income
tax expense
|
75 | 149 | ||||||
Net
income
|
$ | 120 | $ | 238 | ||||
Earnings
per share:
|
||||||||
Basic
|
$ | 0.54 | $ | 1.05 | ||||
Diluted
|
$ | 0.54 | $ | 1.04 | ||||
($
in millions)
|
May
3,
|
May
5,
|
Feb.
2,
|
|||||||||
2008
|
2007
|
2008
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(1)
|
||||||||||
Assets
|
||||||||||||
Current
assets
|
||||||||||||
Cash
and short-term investments
|
$ | 1,940 | $ | 3,068 | $ | 2,471 | ||||||
Receivables
|
431 | 501 | 430 | |||||||||
Merchandise
inventory (net of LIFO reserves of
|
||||||||||||
of
$1, $8 and $1)
|
3,694 | 3,497 | 3,641 | |||||||||
Prepaid
expenses
|
200 | 205 | 209 | |||||||||
Total
current assets
|
6,265 | 7,271 | 6,751 | |||||||||
Property
and equipment (net of accumulated
|
||||||||||||
depreciation
of $2,316, $2,205 and $2,219)
|
5,042 | 4,294 | 4,959 | |||||||||
Prepaid
pension
|
1,548 | 1,259 | 2,030 | |||||||||
Other
assets
|
593 | 629 | 569 | |||||||||
Total
Assets
|
$ | 13,448 | $ | 13,453 | $ | 14,309 | ||||||
Liabilities
and Stockholders’ Equity
|
||||||||||||
Current
liabilities
|
||||||||||||
Trade
payables
|
$ | 1,307 | $ | 1,497 | $ | 1,472 | ||||||
Accrued
expenses and other current liabilities
|
1,350 | 1,370 | 1,663 | |||||||||
Current
maturities of long-term debt
|
202 | 410 | 203 | |||||||||
Total
current liabilities
|
2,859 | 3,277 | 3,338 | |||||||||
Long-term
debt
|
3,505 | 3,706 | 3,505 | |||||||||
Deferred
taxes
|
1,289 | 1,139 | 1,463 | |||||||||
Other
liabilities
|
702 | 809 | 691 | |||||||||
Total
Liabilities
|
8,355 | 8,931 | 8,997 | |||||||||
Stockholders'
Equity
|
||||||||||||
Common
stock(2)
|
111 | 113 | 111 | |||||||||
Additional
paid-in-capital
|
3,464 | 3,472 | 3,453 | |||||||||
Reinvested
earnings at beginning of year
|
1,540 | 922 | 922 | |||||||||
SFAS
158–change in measurement date(3)
|
26 | - | - | |||||||||
Adjustment
to initially apply FIN 48
|
- | 5 | 5 | |||||||||
Net
income
|
120 | 238 | 1,111 | |||||||||
Dividends
declared
|
(44 | ) | (45 | ) | (178 | ) | ||||||
Retirement
of common stock
|
- | - | (320 | ) | ||||||||
Reinvested
earnings at end of period
|
1,642 | 1,120 | 1,540 | |||||||||
Accumulated
other comprehensive (loss)/income
|
(124 | ) | (183 | ) | 208 | |||||||
Total
Stockholders’ Equity
|
5,093 | 4,522 | 5,312 | |||||||||
Total
Liabilities and Stockholders’ Equity
|
$ | 13,448 | $ | 13,453 | $ | 14,309 |
($
in millions)
|
13
weeks ended
|
|||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 120 | $ | 238 | ||||
Adjustments
to reconcile net income to net cash (used in) operating
activities:
|
||||||||
Asset
impairments, PVOL and other unit closing costs
|
- | 1 | ||||||
Depreciation
and amortization
|
110 | 100 | ||||||
Benefit
plans (income)
|
(28 | ) | (16 | ) | ||||
Stock-based
compensation
|
12 | 14 | ||||||
Tax
benefits from stock-based compensation
|
4 | 7 | ||||||
Deferred
taxes
|
42 | 28 | ||||||
Change
in cash from:
|
||||||||
Receivables
|
(25 | ) | (25 | ) | ||||
Inventory
|
(53 | ) | (98 | ) | ||||
Prepaid
expenses and other assets
|
7 | 39 | ||||||
Trade
payables
|
(165 | ) | 130 | |||||
Current
income taxes payable
|
(2 | ) | (110 | ) | ||||
Accrued
expenses and other
|
(196 | ) | (337 | ) | ||||
Net
cash (used in) operating activities
|
(174 | ) | (29 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Capital
expenditures
|
(269 | ) | (244 | ) | ||||
Net
cash (used in) investing activities
|
(269 | ) | (244 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of long-term debt
|
- | 980 | ||||||
Payments
of long-term debt, including capital leases
|
(1 | ) | (328 | ) | ||||
Dividends
paid, common
|
(87 | ) | (86 | ) | ||||
Proceeds
from stock options exercised
|
3 | 26 | ||||||
Excess
tax benefits from stock-based compensation
|
- | 10 | ||||||
Tax
withholding payments reimbursed by restricted stock
|
(3 | ) | (7 | ) | ||||
Net
cash (used in)/ provided by financing activities
|
(88 | ) | 595 | |||||
Cash
flows from discontinued operations
|
||||||||
Operating
cash flows
|
- | 1 | ||||||
Investing
cash flows
|
- | (2 | ) | |||||
Financing
cash flows
|
- | - | ||||||
Total
cash (paid for) discontinued operations
|
- | (1 | ) | |||||
Net
(decrease)/increase in cash and short-term investments
|
(531 | ) | 321 | |||||
Cash
and short-term investments at beginning of year
|
2,471 | 2,747 | ||||||
Cash
and short-term investments at end of period
|
$ | 1,940 | $ | 3,068 |
(in
millions, except per share data)
|
13
weeks ended
|
||||||
May
3,
|
May
5,
|
||||||
2008
|
2007
|
||||||
Earnings:
|
|||||||
Net
income, basic and diluted
|
$
|
120
|
$
|
238
|
|||
Shares:
|
|||||||
Average
common shares outstanding (basic shares)
|
222
|
226
|
|||||
Adjustment
for assumed dilution:
|
|||||||
Stock
options and restricted stock awards
|
1
|
3
|
|||||
Average
shares assuming dilution (diluted shares)
|
223
|
229
|
|||||
EPS:
|
|||||||
Basic
|
$
|
0.54
|
$
|
1.05
|
|||
Diluted
|
$
|
0.54
|
$
|
1.04
|
($ in
millions)
|
Assets
at Fair Value as of May 3, 2008
|
||||||||||||
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||
Total
REIT assets
|
$
|
271
|
$
|
-
|
$
|
-
|
$
|
271
|
($
in millions)
|
May
3,
|
May
5,
|
Feb.
2,
|
|||||||||
2008
|
2007
|
2008
|
||||||||||
Cash
|
$ | 115 | $ | 124 | $ | 119 | ||||||
Short-term
investments
|
1,825 | 2,944 | 2,352 | |||||||||
Total
cash and short-term investments
|
$ | 1,940 | $ | 3,068 | $ | 2,471 |
($
in millions)
|
13
weeks ended
|
||||||
May
3,
|
May
5,
|
||||||
2008
|
2007
|
||||||
Interest
paid by continuing operations
|
$
|
117
|
$
|
111
|
|||
Interest
received by continuing operations
|
$
|
7
|
$
|
34
|
|||
Total
income taxes paid
|
$
|
30
|
$
|
230
|
|||
Less:
income taxes (received) attributable to discontinued
operations
|
-
|
(1
|
)
|
||||
Income
taxes paid by continuing operations
|
$
|
30
|
$
|
231
|
Accumulated
Other Comprehensive Income/(Loss)
|
|||||||||||||
($ in millions)
|
Unrealized
Gain/(Loss) in REITs (1)
|
Net actuarial gain/(loss) and
prior service (cost)/credit for pension and post- retirement
plans(2)
|
Total
|
Total
Comprehensive Income
|
|||||||||
First Quarter
2008
|
|||||||||||||
February
2, 2008
|
$
|
115
|
$
|
93
|
$
|
208
|
|||||||
SFAS
158 - change in measurement date
|
-
|
(343)
|
|
(343)
|
|
||||||||
Adjusted
balances - February 3, 2008
|
115
|
(250)
|
|
(135)
|
|
||||||||
Net
unrealized gain in REITs
|
11
|
-
|
11
|
$
|
11
|
||||||||
Net
income
|
-
|
-
|
-
|
120
|
|||||||||
May
3, 2008
|
$
|
126
|
$
|
(250)
|
|
$
|
(124)
|
|
$
|
131
|
|||
First
Quarter 2007
|
|||||||||||||
February
3, 2007
|
$
|
166
|
$
|
(342)
|
|
$
|
(176)
|
|
|||||
Net
unrealized (loss) in REITs
|
(7
|
)
|
-
|
(7)
|
|
$
|
(7
|
)
|
|||||
Net
income
|
-
|
-
|
-
|
238
|
|||||||||
May
5, 2007
|
$
|
159
|
$
|
(342)
|
|
$
|
(183)
|
|
$
|
231
|
($
in millions)
|
13
weeks ended
|
||||||
May
3,
|
May
5,
|
||||||
2008
|
2007
|
||||||
Stock
awards (shares and units)
|
$
|
5
|
$
|
8
|
|||
Stock
options
|
7
|
6
|
|||||
Total
stock-based compensation cost
|
$
|
12
|
$
|
14
|
|||
Total
income tax benefit recognized in the
|
|||||||
Consolidated
Statements of Operations for
|
|||||||
stock-based
compensation arrangements
|
$
|
5
|
$
|
5
|
(options
in thousands)
|
Stock
Options
|
Weighted-Average
Exercise
Price
|
|||||
Outstanding
at February 2, 2008
|
8,233
|
$
|
50
|
||||
Granted
|
2,197
|
40
|
|||||
Exercised
|
(106
|
)
|
30
|
||||
Forfeited
or expired
|
(545
|
)
|
66
|
||||
Outstanding
at May 3, 2008
|
9,779
|
47
|
|||||
Exercisable
at May 3, 2008
|
6,206
|
44
|
(awards
in thousands)
|
Non-Vested
|
Weighted-
Average Grant
|
|||||
Stock
Awards
|
Date
Fair Value
|
||||||
Non-vested
at February 2, 2008
|
894
|
$
|
58
|
||||
Granted
|
825
|
40
|
|||||
Vested
|
(285
|
)
|
59
|
||||
Forfeited
|
(25
|
)
|
50
|
||||
Non-vested
at May 3, 2008
|
1,409
|
48
|
(shares
in millions)
|
May
3,
|
May
5,
|
|||||
2008
|
2007
|
||||||
Shares
outstanding at beginning of year
|
221.7
|
225.5
|
|||||
Exercise
of stock options
|
0.1
|
0.6
|
|||||
Vesting
of restricted stock units
|
0.2
|
0.2
|
|||||
Shares
terminated for tax withholding
|
-
|
(0.1
|
)
|
||||
Shares
outstanding at end of period
|
222.0
|
226.2
|
Pension
Plans
|
||||||||||||||||||||||||
Qualified
|
Supplemental
(Nonqualified)
|
Postretirement
Plan
|
||||||||||||||||||||||
($
in millions)
|
13
weeks ended
|
13
weeks ended
|
13
weeks ended
|
|||||||||||||||||||||
May
3,
|
May
5,
|
May
3,
|
May
5,
|
May
3,
|
May
5,
|
|||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||||||||
Service
cost
|
$ | 22 | $ | 23 | $ | 1 | $ | 1 | $ | - | $ | - | ||||||||||||
Interest
cost
|
59 | 55 | 5 | 6 | - | - | ||||||||||||||||||
Expected
return on plan assets
|
(114 | ) | (104 | ) | - | - | - | - | ||||||||||||||||
Net
amortization
|
- | 2 | 5 | 6 | (6 | ) | (8 | ) | ||||||||||||||||
Net
periodic benefit (income)/expense
|
$ | (33 | ) | $ | (24 | ) | $ | 11 | $ | 13 | $ | (6 | ) | $ | (8 | ) | ||||||||
($
in millions)
|
May
3,
|
May
5,
|
||||||
2008
|
2007
|
|||||||
Real
estate activities
|
$ | (10 | ) | $ | (10 | ) | ||
Other
|
1 | 1 | ||||||
Total
|
$ | (9 | ) | $ | (9 | ) |
($
in millions, except EPS)
|
13
weeks ended
|
|||||||
May 3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Total
net sales
|
$ | 4,127 | $ | 4,350 | ||||
Gross
margin
|
1,650 | 1,807 | ||||||
Operating
expenses:
|
||||||||
Selling,
general and administrative (SG&A)
|
1,295 | 1,291 | ||||||
Depreciation
and amortization
|
110 | 100 | ||||||
Pre-opening
|
6 | 6 | ||||||
Real
estate and other (income), net
|
(9 | ) | (9 | ) | ||||
Total
operating expenses
|
1,402 | 1,388 | ||||||
Operating
income
|
248 | 419 | ||||||
Net
interest expense
|
53 | 32 | ||||||
Income
before income taxes
|
195 | 387 | ||||||
Income
tax expense
|
75 | 149 | ||||||
Net
income
|
$ | 120 | $ | 238 | ||||
Diluted
EPS
|
$ | 0.54 | $ | 1.04 | ||||
Ratios
as a percent of sales:
|
||||||||
Gross
margin
|
40.0 | % | 41.5 | % | ||||
SG&A
|
31.4 | % | 29.7 | % | ||||
Total
operating expenses
|
34.0 | % | 31.9 | % | ||||
Operating
income
|
6.0 | % | 9.6 | % |
Total Net Sales | ||||||||
($
in millions)
|
13
weeks ended
|
|||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Total
Net Sales
|
$ | 4,127 | $ | 4,350 | ||||
Sales
percent (decrease)/increase:
|
||||||||
Total
net sales
|
(5.1 | )% | 3.1 | % | ||||
Comparable
store sales(1)
|
(7.4 | )% | 3.4 | % |
($
in millions)
|
13
weeks ended
|
|||||||
May
3,
|
May
5,
|
|||||||
2008
|
2007
|
|||||||
Net
cash (used in)/ provided by:
|
||||||||
Continuing
operations:
|
||||||||
Operating
activities
|
$ | (174) | $ | (29 | ) | |||
Investing
activities
|
(269) | (244 | ) | |||||
Financing
activities
|
(88) | 595 | ||||||
Discontinued
operations:
|
||||||||
Operating
activities
|
- | 1 | ||||||
Investing
activities
|
- | (2 | ) | |||||
Financing
activities
|
- | - | ||||||
Net
(decrease)/increase in cash and short-term
investments
|
$ | (531) | $ | 321 |
2008
|
2007
|
|||||||||||||||
Per
Share
|
Total
(in
millions)
|
Per
Share
|
Total
(in
millions)
|
|||||||||||||
February
4, 2008 and February 5, 2007
|
$ | 0.20 | $ | 44 | $ | 0.18 | $ | 41 | ||||||||
May
1, 2008 and May 1, 2007
|
0.20 | 43 | 0.20 | 45 | ||||||||||||
$ | 87 | $ | 86 |
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid Per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Approximate Dollar Value of Shares that May Yet Be Purchased Under the
Plans or Programs
($
in millions)
|
|||||||
Feb.
3, 2008 through
|
|||||||||||
March
8, 2008
|
9,821
|
(1)
|
$
|
46.35
|
-
|
$
|
-
|
||||
March
9, 2008 through
|
|||||||||||
April
5, 2008
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||
April
6, 2008 through
|
|||||||||||
May
3, 2008
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||
Total
|
9,821
|
-
|
(1)
|
Shares
withheld to cover tax-withholding requirements relating to the vesting of
restricted stock awarded under the Company’s equity compensation
plans.
|
Incorporated
by Reference
|
||||||||||||
Exhibit
No.
|
Exhibit
Description
|
Form
|
SEC
File
No.
|
Exhibit
|
Filing
Date
|
Filed
Herewith
|
||||||
3.1
|
Restated
Certificate of Incorporation of J. C. Penney Company, Inc., as amended to
May 19, 2006
|
10-Q
|
001-15274
|
3.1
|
06/07/2006
|
|||||||
3.2
|
J.
C. Penney Company, Inc. Bylaws, as amended to March 27,
2008
|
8-K
|
001-15274
|
3.1
|
04/02/2008
|
|||||||
10.1**
|
2008
Form of Notice of Grant of Stock Options under the J. C. Penney Company,
Inc. 2005 Equity Compensation Plan
|
8-K
|
001-15274
|
10.1
|
03/07/2008
|
|||||||
10.2**
|
2008
Form of Notice of Special Restricted Stock Unit Award under the J. C.
Penney Company, Inc. 2005 Equity Compensation Plan
|
8-K
|
001-15274
|
10.2
|
03/07/2008
|
|||||||
10.3**
|
Form
of Notice of 2008 Performance Unit Grant under the J C. Penney Company,
Inc. 2005 Equity Compensation Plan
|
8-K
|
001-15274
|
10.3
|
03/07/2008
|
|||||||
10.4**
|
J.
C. Penney Company, Inc. Deferred Compensation Plan for Directors, as
amended and restated effective February 27, 2008
|
10-K
|
001-15274
|
10.59
|
04/01/2008
|
|||||||
10.5**
|
2008
Base Salaries, 2008 Target Incentive Opportunity Percentages and 2008
Equity Awards for Named Executive Officers
|
10-K
|
001-15274
|
10.60
|
04/01/2008
|
|||||||
10.6**
|
J.
C. Penney Corporation, Inc. Change in Control Plan, as amended
and restated as of March 27, 2008
|
8-K
|
001-15274
|
10.1
|
04/02/2008
|
|||||||
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||
32.2
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
X
|
J.
C. PENNEY COMPANY, INC.
|
|
By /s/
Dennis P.
Miller
|
|
Dennis P. Miller
|
|
Senior
Vice President and Controller
|
|
(Principal
Accounting Officer)
|