-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M/nVn1ruJRv1yfk1Cu6rBhVv3e6txtJfnYVSNU4ZMXcPRA881T01he+Gsw4bjYDl QLJbWdcSuBs1GUwQHUXNag== 0001166126-03-000015.txt : 20030813 0001166126-03-000015.hdr.sgml : 20030813 20030813105547 ACCESSION NUMBER: 0001166126-03-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030812 ITEM INFORMATION: FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: J C PENNEY CO INC CENTRAL INDEX KEY: 0001166126 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 260037077 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15274 FILM NUMBER: 03839434 BUSINESS ADDRESS: STREET 1: 6501 LEGACY DRIVE CITY: PLANO STATE: TX ZIP: 75024-3698 BUSINESS PHONE: 9722431100 FORMER COMPANY: FORMER CONFORMED NAME: J C PENNEY HOLDINGS INC DATE OF NAME CHANGE: 20020128 8-K 1 jcpenney8k81203.txt J. C. PENNEY COMPANY, INC. 8K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 12, 2003 J. C. PENNEY COMPANY, INC. (Exact name of registrant as specified in its charter) Delaware 1-15274 26-0037077 (State or other jurisdiction (Commission File No.) (I.R.S. Employer of incorporation ) Identification No.) 6501 Legacy Drive Plano, Texas 75024-3698 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (972) 431-1000 Item 12. Results of Operations and Financial Condition. J. C. Penney Company, Inc. issued a news release on August 12, 2003, announcing its 2003 second quarter consolidated earnings. This information is attached as exhibit 99.1. SIGNATURES 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 hereunto duly authorized. J. C. PENNEY COMPANY, Inc. By: /s/ Robert B. Cavanaugh ------------------------ Robert B. Cavanaugh Executive Vice President, Chief Financial Officer Date: August 13, 2003 EXHIBIT INDEX Exhibit Number Description 99.1 J. C. Penney Company, Inc. News Release issued August 12, 2003 EX-99 4 pressrelease8k.txt PRESS RELEASE Exhibit 99.1 JCPenney News Release CONTACT Rita Trevino Flynn Tim Lyons Eli Akresh Bob Johnson Public Relations Public Relations Investor Relations Investor Relations (972) 431-4753 (972) 431-4834 (972) 431-2207 (972) 431-2217 rflynn@jcpenney.com tmlyons@jcpenney.com eakresh@jcpenney.com rvjohnso@jcpenney.com
JCPENNEY REPORTS SECOND QUARTER EARNINGS Department Stores and Catalog Operating Profits Double Catalog/Internet Performance Improves Financial Condition Remains Strong PLANO, TX, August 12, 2003 -- J. C. Penney Company, Inc. (NYSE: JCP) today reported a second quarter loss of $0.02 per share compared with a loss of $0.05 per share in last year's quarter. Allen Questrom, Chairman and Chief Executive Officer said, "I am pleased with the rebound in Department Stores and encouraged by the turnaround in Catalog/Internet sales. Eckerd's sales and operating profits were clearly disappointing. As we begin the second half, we anticipate benefits from a more favorable consumer environment supported by the positive impacts that the tax package will have on our customers. We believe our Department Store and Catalog/Internet business will continue to improve in the second half, beginning with the back-to-school selling season. This improvement reflects greater experience working with our centralized business model, and delivering a more compelling value to both Department Store and Catalog/Internet customers. At Eckerd, we are making changes to improve the business, but recognize that it will take time for these changes to register with our customers. Accordingly, Eckerd's operating profits are likely to be below last year's level in the third quarter, and about equal to last year's profit in the fourth quarter. On a consolidated basis, we currently expect third quarter earnings to be in the range of $0.25 to $0.30 per share, and the full year to be in the range of $1.25 to $1.35 per share." Department Stores and Catalog Second quarter LIFO operating profit more than doubled to $51 million compared with $22 million last year, an increase of 80 basis points as a percent of sales. Comparable department store sales increased 2.1 percent in a challenging retail environment. All merchandise divisions had comparable store sales increases. Catalog/Internet sales increased 3.9 percent, representing the first quarterly sales gain in three years. Sales benefited from improved print media, including a positive early customer response to the Fall/Winter Big Book. In addition, Internet sales continue to experience strong growth, increasing by more than 60 percent during the quarter and 40 percent year-to-date. Department Stores and Catalog gross margin decreased by 20 basis points as a percent of sales, reflecting a more aggressive merchandise clearance strategy. Comparable department store inventory levels increased about three percent over last year, and are balanced and in line with current sales expectations. SG&A expense dollars were $22 million lower than last year, and were leveraged, improving by 100 basis points as a percent of sales. The decrease related primarily to salary savings and lower Catalog expenses that more than offset transition costs for the new store distribution network and higher non-cash pension expense. Eckerd Drugstores LIFO operating profit was $54 million in this year's second quarter compared with $73 million last year. Operating profit margin decreased by 60 basis points as a percent of sales. Total drugstore sales increased 2.3 percent. Comparable store sales decreased 0.8 percent during the quarter, with pharmacy sales increasing 1.7 percent and non-pharmacy, or front-end, sales decreasing 6.0 percent. Pharmacy sales were negatively impacted by approximately 430 basis points from the effects of higher generic dispensing rates and other changes in branded drugs. The best performing front-end categories for the quarter were seasonal items and over-the-counter medications, while photo and cigarette sales declined significantly. Eckerd's sales reflect increased competitor store openings, particularly in Florida and south Texas, coupled with execution issues. These issues are being addressed through merchandise and marketing changes, as well as a more competitive store opening program beginning in 2003. Gross margin for the quarter decreased by 40 basis points as a percent of sales. Gross margin for the quarter includes a LIFO charge of $11 million compared with a charge of $9 million last year. SG&A expenses increased 3.2 percent and were not leveraged as a percent of sales. Other Unallocated Other unallocated in this year's second quarter was a net credit of $11 million. The credit includes $30 million of real estate gains on the sale of closed department store facilities and the charges include $24 million of previously announced Catalog restructuring and department store closings. Financial Condition The Company's financial condition and liquidity remain strong. At the end of the quarter, cash investments were approximately $2.6 billion and represented in excess of 40 percent of long-term debt. Capital expenditures are currently expected to be at the lower end of previous guidance of $900 million to $1.1 billion. Full year free cash flow is expected to be in line with previous guidance. Senior management will host a live conference call and real-time webcast on Tuesday, August 12, 2003, beginning at 9:30 a.m. EDT. Access to the conference call is open to the press and general public in a listen only mode. To access the conference call, please dial 416-695-5261 and reference the JCPenney Quarterly Earnings Conference Call. The telephone playback will be available for two days beginning approximately two hours after the conclusion of the call by dialing 416-695-6030 and entering the ID code 6308. The live webcast may be accessed via JCPenney's Investor Relations website (at JCPenney.net), or on StreetEvents.com (for members) and companyboardroom.com (for media and individual investors). Replays of the webcast will be available for up to 90 days after the event. J. C. Penney Corporation, Inc., the wholly-owned operating subsidiary of the Company, is one of America's largest department store, drugstore, catalog, and e-commerce retailers, employing approximately 230,000 associates. As of July 26, 2003, it operated 1,040 JCPenney department stores throughout the United States, Puerto Rico, and Mexico, and 56 Renner department stores in Brazil. Eckerd Corporation operated 2,710 drugstores throughout the Southeast, Sunbelt, and Northeast regions of the U.S. JCPenney Catalog, including e-commerce, is the nation's largest catalog merchant of general merchandise. J. C. Penney Corporation, Inc. is a contributor to JCPenney Afterschool Fund, a charitable organization committed to providing children with high quality after school programs to help them reach their full potential. This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which reflect the Company's current views of future events and financial performance, involve known and unknown risks and uncertainties that may cause the Company's actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, competition, consumer demand, seasonality, economic conditions, and government activity. Investors should take such risks into account when making investment decisions. J. C. PENNEY COMPANY, INC. SUMMARY OF OPERATING RESULTS (Amounts in millions except per share data) 13 weeks ended 26 weeks ended July 26, July 27, % Inc. July 26, July 27, % Inc. 2003 2002 (Dec.) 2003 2002 (Dec.) Comparable store sales increase/(decrease) Department stores 2.1% -2.4% -1.6% 2.5% Eckerd drugstores -0.8% 6.1% -1.0% 6.9% Total retail sales Department stores and catalog $ 3,658 $ 3,623 1.0% $ 7,381 $ 7,629 -3.3% Eckerd drugstores 3,655 3,575 2.3% 7,425 7,297 1.8% ----- ----- ----- ----- Total 7,313 7,198 1.6% 14,806 14,926 -0.8% Margins and expenses - -------------------- Gross margin - LIFO Department stores and catalog 1,314 1,307 0.5% 2,774 2,821 -1.7% Eckerd drugstores 833 828 0.6% 1,699 1,667 1.9% ----- ----- ----- ----- Total 2,147 2,135 0.6% 4,473 4,488 -0.3% Selling, general and administrative (SG&A) expenses Department stores and catalog (1,263) (1,285) -1.7% (2,640) (2,642) -0.1% Eckerd drugstores (779) (755) 3.2% (1,527) (1,494) 2.2% ----- ----- ----- ----- Total (2,042) (2,040) 0.1% (4,167) (4,136) 0.7% Segment operating profit - LIFO Department stores and catalog 51 22 100.0% + 134 179 -25.1% Eckerd drugstores 54 73 -26.0% 172 173 -0.6% ----- ----- ----- ----- Total 105 95 10.5% 306 352 -13.1% Other unallocated 11 (5) N/A 18 (15) N/A Net interest expense (108) (92) 17.4% (212) (194) 9.3% Acquisition amortization (8) (7) 14.3% (18) (17) 5.9% ----- ----- ----- ----- Income/(loss) before income taxes 0 (9) 100.0% + 94 126 -25.4% Income taxes 0 3 -100.0% +(33) (46) -28.2% ----- ----- ----- ----- Net income/(loss) $ 0 $(6) 100.0% +$61 $ 80 -23.8% ===== ===== ===== ===== (Loss)/earnings per share - diluted $(0.02) $(0.05) 60.0% $ 0.18 $ 0.24 -25.0%
13 weeks ended 26 weeks ended July 26, July 27, July 26, July 27, 2003 2002 2003 2002 SEGMENT FINANCIAL DATA: Department stores and catalog Ratios as a % of sales: FIFO/LIFO gross margin 35.9% 36.1% 37.6% 37.0% SG&A expenses 34.5% 35.5% 35.8% 34.6% Segment operating profit 1.4% 0.6% 1.8% 2.4% Depreciation and amortization (1) $ 88 $ 94 $ 177 $ 186 Eckerd drugstores Ratios as a % of sales: FIFO gross margin 23.1% 23.4% 23.2% 23.2% LIFO gross margin 22.8% 23.2% 22.9% 22.9% SG&A expenses 21.3% 21.1% 20.6% 20.5% Segment operating profit 1.5% 2.1% 2.3% 2.4% LIFO charge $ 11 $ 9 $ 18 $ 24 Depreciation and amortization 69 60 138 121 SUPPLEMENTAL DATA: Average shares outstanding (basic shares) 271.5 267.7 271.0 266.8 Average shares used for diluted EPS 271.5 267.7 273.0 269.8 Effective income tax rate 35.4% 36.5% 35.4% 36.5% BALANCE SHEET HIGHLIGHTS: Cash and short-term investments $ 2,631 $ 2,004 FIFO inventory: Department stores and catalog 3,166 3,100 Eckerd drugstores 2,430 2,303 Long-term debt, including current maturities (2) 5,803 5,186
(1) Excludes $10 million and $22 million of accelerated depreciation for catalog facilities for the 13 weeks and 26 weeks ended July 26, 2003, which is included in Other Unallocated. (2) Excludes present value of operating leases and Eckerd's securitized receivables -----END PRIVACY-ENHANCED MESSAGE-----