Delaware
|
26-0037077
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
6501 Legacy Drive, Plano, Texas | 75024 - 3698 |
(Address of principal executive offices) | (Zip Code) |
|
|
|
Page
|
|||||||
|
|
|
||||||||
|
|
|
|
|||||||
|
|
|
|
1
|
||||||
|
|
|
|
2
|
||||||
|
|
|
|
3
|
||||||
|
|
|
4
|
|||||||
|
|
|
|
15
|
||||||
|
|
|
|
28
|
||||||
|
|
|
28
|
|||||||
|
|
|
||||||||
|
|
|
|
29
|
||||||
|
34
|
|||||||||
|
|
|
35
|
|||||||
|
||||||||||
|
($ in millions, except per share data)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30, | July 31, |
July 30,
|
July 31, | ||||||||||
2011 | 2010 |
2011
|
2010 | ||||||||||
Total net sales
|
$
|
3,906
|
$
|
3,938
|
$
|
7,849
|
$
|
7,867
|
|||||
Cost of goods sold
|
2,409
|
2,386
|
4,757
|
4,685
|
|||||||||
Gross margin
|
1,497
|
1,552
|
3,092
|
3,182
|
|||||||||
Operating expenses:
|
|||||||||||||
Selling, general and administrative (SG&A)
|
1,243
|
1,275
|
2,524
|
2,567
|
|||||||||
Pension
|
28
|
63
|
57
|
127
|
|||||||||
Depreciation and amortization
|
128
|
126
|
256
|
251
|
|||||||||
Real estate and other, net
|
17
|
(7
|
)
|
13
|
(13
|
)
|
|||||||
Total operating expenses
|
1,416
|
1,457
|
2,850
|
2,932
|
|||||||||
Operating income
|
81
|
95
|
242
|
250
|
|||||||||
Net interest expense
|
57
|
57
|
115
|
116
|
|||||||||
Bond premiums and unamortized costs
|
-
|
20
|
-
|
20
|
|||||||||
Income before income taxes
|
24
|
18
|
127
|
114
|
|||||||||
Income tax expense
|
10
|
4
|
49
|
40
|
|||||||||
Net income
|
$
|
14
|
$
|
14
|
$
|
78
|
$
|
74
|
|||||
Earnings per share:
|
|||||||||||||
Basic
|
$
|
0.07
|
$
|
0.06
|
$
|
0.35
|
$
|
0.31
|
|||||
Diluted
|
$
|
0.07
|
$
|
0.06
|
$
|
0.35
|
$
|
0.31
|
($ in millions)
|
July 30,
|
July 31,
|
Jan. 29,
|
|||||||
2011
|
2010
|
2011
|
||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||
Assets
|
||||||||||
Current assets
|
||||||||||
Cash in banks and in transit
|
$
|
244
|
$
|
226
|
$
|
169
|
||||
Cash short-term investments
|
1,307
|
1,777
|
2,453
|
|||||||
Cash and cash equivalents
|
1,551
|
2,003
|
2,622
|
|||||||
Merchandise inventory
|
3,572
|
3,490
|
3,213
|
|||||||
Income taxes receivable
|
334
|
499
|
334
|
|||||||
Prepaid expenses and other
|
194
|
205
|
201
|
|||||||
Total current assets
|
5,651
|
6,197
|
6,370
|
|||||||
Property and equipment (net of accumulated
|
||||||||||
depreciation of $2,930, $2,800 and $2,854)
|
5,237
|
5,298
|
5,231
|
|||||||
Prepaid pension
|
788
|
387
|
763
|
|||||||
Other assets
|
753
|
627
|
678
|
|||||||
Total Assets
|
$
|
12,429
|
$
|
12,509
|
$
|
13,042
|
||||
Liabilities and Stockholders’ Equity
|
||||||||||
Current liabilities
|
||||||||||
Merchandise accounts payable
|
$
|
1,386
|
$
|
1,410
|
$
|
1,133
|
||||
Other accounts payable and accrued expenses
|
1,381
|
1,422
|
1,514
|
|||||||
Total current liabilities
|
2,767
|
2,832
|
2,647
|
|||||||
Long-term debt
|
3,099
|
3,099
|
3,099
|
|||||||
Deferred taxes
|
1,216
|
982
|
1,192
|
|||||||
Other liabilities
|
644
|
710
|
644
|
|||||||
Total Liabilities
|
7,726
|
7,623
|
7,582
|
|||||||
Stockholders' Equity
|
||||||||||
Common stock(1)
|
107
|
118
|
118
|
|||||||
Additional paid-in capital
|
3,605
|
3,896
|
3,925
|
|||||||
Reinvested earnings
|
1,728
|
2,002
|
2,222
|
|||||||
Accumulated other comprehensive (loss)
|
(737
|
)
|
(1,130
|
)
|
(805
|
)
|
||||
Total Stockholders’ Equity
|
4,703
|
4,886
|
5,460
|
|||||||
Total Liabilities and Stockholders’ Equity
|
$
|
12,429
|
$
|
12,509
|
$
|
13,042
|
($ in millions)
|
Six Months Ended
|
||||||
July 30,
|
July 31,
|
||||||
2011
|
2010
|
||||||
Cash flows from operating activities:
|
|||||||
Net income
|
$
|
78
|
$
|
74
|
|||
Adjustments to reconcile net income to net cash provided by/(used in)
operating activities:
|
|||||||
Restructuring and other charges
|
24
|
4
|
|||||
Depreciation and amortization
|
256
|
251
|
|||||
Benefit plans expense
|
28
|
97
|
|||||
Voluntary pension contribution
|
-
|
(392
|
)
|
||||
Stock-based compensation
|
26
|
26
|
|||||
Excess tax benefits from stock-based compensation
|
(4
|
)
|
(1
|
)
|
|||
Deferred taxes
|
(36
|
)
|
117
|
||||
Change in cash from:
|
|||||||
Inventory
|
(359
|
)
|
(466
|
)
|
|||
Prepaid expenses and other assets
|
3
|
21
|
|||||
Merchandise accounts payable
|
253
|
184
|
|||||
Current income taxes payable
|
5
|
(127
|
)
|
||||
Accrued expenses and other
|
(102
|
)
|
(167
|
)
|
|||
Net cash provided by/(used in) operating activities
|
172
|
(379)
|
|||||
Cash flows from investing activities:
|
|||||||
Capital expenditures
|
(295
|
)
|
(229
|
)
|
|||
Proceeds from sale of assets
|
-
|
4
|
|||||
Net cash (used in) investing activities
|
(295
|
)
|
(225
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Proceeds from issuance of long-term debt
|
-
|
392
|
|||||
Payments of long-term debt
|
-
|
(693
|
)
|
||||
Financing costs
|
(15
|
)
|
(14
|
)
|
|||
Dividends paid, common
|
(92
|
)
|
(94
|
)
|
|||
Proceeds from issuance of stock warrant
|
50
|
-
|
|||||
Stock repurchase program
|
(900
|
)
|
-
|
||||
Proceeds from stock options exercised
|
11
|
5
|
|||||
Excess tax benefits from stock-based compensation
|
4
|
1
|
|||||
Tax withholding payments reimbursed by restricted stock
|
(6
|
)
|
(1
|
)
|
|||
Net cash (used in) financing activities
|
(948
|
)
|
(404
|
)
|
|||
Net (decrease) in cash and cash equivalents
|
(1,071
|
)
|
(1,008
|
)
|
|||
Cash and cash equivalents at beginning of year
|
2,622
|
3,011
|
|||||
Cash and cash equivalents at end of period
|
$
|
1,551
|
$
|
2,003
|
|||
Supplemental cash flow information: | |||||||
Income taxes paid | $ | 81 | $ | 50 | |||
Interest paid | 113 | 144 | |||||
Interest received | 1 | 3 |
(in millions, except per share data)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Earnings:
|
|||||||||||||
Net income
|
$
|
14
|
$
|
14
|
$
|
78
|
$
|
74
|
|||||
Shares:
|
|||||||||||||
Average common shares outstanding (basic shares)
|
213
|
236
|
221
|
236
|
|||||||||
Adjustment for assumed dilution:
|
|||||||||||||
Stock options, restricted stock awards and stock warrant
|
3
|
2
|
3
|
2
|
|||||||||
Average shares assuming dilution (diluted shares)
|
216
|
238
|
224
|
238
|
|||||||||
EPS:
|
|||||||||||||
Basic
|
$
|
0.07
|
$
|
0.06
|
$
|
0.35
|
$
|
0.31
|
|||||
Diluted
|
$
|
0.07
|
$
|
0.06
|
$
|
0.35
|
$
|
0.31
|
(Shares in millions)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Stock options and restricted awards
|
9
|
12
|
8
|
11
|
($ in millions)
|
REIT Assets at Fair Value
|
||||||||||
Quoted Prices in Active Markets of Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
|||||||||
July 30, 2011
|
$
|
300
|
$
|
-
|
$
|
-
|
|||||
July 31, 2010
|
224
|
-
|
-
|
||||||||
January 29, 2011
|
253
|
-
|
-
|
(in millions)
|
Number
of
Common
Shares
|
Common
Stock
|
Additional
Paid-in
Capital
|
Reinvested
Earnings
|
Accumulated
Other
Comprehensive
(Loss)/Income
|
Total
Stockholders’
Equity
|
||||||||||
January 29, 2011
|
237
|
$
|
118
|
$
|
3,925
|
$
|
2,222
|
$
|
(805
|
)(1)
|
$
|
5,460
|
||||
Net income
|
-
|
-
|
-
|
78
|
-
|
78
|
||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
68
|
68
|
||||||||||
Dividends declared, common
|
-
|
-
|
-
|
(88
|
)
|
-
|
(88)
|
|||||||||
Stock warrant issued
|
-
|
-
|
50
|
-
|
-
|
50
|
||||||||||
Common stock repurchased
and retired
|
(24)
|
(12)
|
(404)
|
(484
|
)
|
-
|
(900)
|
|||||||||
Stock-based compensation
|
-
|
1
|
34
|
-
|
-
|
35
|
||||||||||
July 30, 2011
|
213
|
$
|
107
|
$
|
3,605
|
$
|
1,728
|
$
|
(737
|
)(2)
|
$
|
4,703
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
($ in millions)
|
July 30,
2011
|
July 31,
2010
|
July 30,
2011
|
July 31,
2010
|
||||||||||
Net income
|
$
|
14
|
$
|
14
|
$
|
78
|
$
|
74
|
||||||
Other comprehensive income – net of tax:
|
||||||||||||||
Amortization of net actuarial loss and prior service cost
|
19
|
35
|
38
|
70
|
||||||||||
Unrealized gain in REITs
|
7
|
-
|
30
|
30
|
||||||||||
Total other comprehensive income
|
26
|
35
|
68
|
100
|
||||||||||
Total comprehensive income
|
$
|
40
|
$
|
49
|
$
|
146
|
$
|
174
|
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Stock awards
|
$
|
6
|
$
|
8
|
$
|
12
|
$
|
12
|
|||||
Stock options
|
7
|
6
|
14
|
14
|
|||||||||
Total stock-based compensation cost
|
$
|
13
|
$
|
14
|
$
|
26
|
$
|
26
|
|||||
Total related income tax benefit recognized in the
|
|||||||||||||
Consolidated Statements of Operations
|
$
|
5
|
$
|
5
|
$
|
10
|
$
|
10
|
(options in thousands)
|
Stock Options
|
Weighted-Average
Exercise Price
|
|||
Outstanding at January 29, 2011
|
15,013
|
$
|
36
|
||
Granted
|
2,410
|
37
|
|||
Exercised
|
(563
|
)
|
20
|
||
Forfeited or expired
|
(386
|
)
|
37
|
||
Outstanding at July 30, 2011
|
16,474
|
37
|
|||
Exercisable at July 30, 2011
|
10,871
|
41
|
(awards in thousands) |
Non-Vested
Stock Awards
|
Weighted- Average
Grant
Date Fair Value
|
|||||
Outstanding at January 29, 2011
|
2,028
|
$
|
27
|
||||
Granted
|
913
|
36
|
|||||
Vested
|
(585
|
)
|
34
|
||||
Forfeited
|
(57
|
)
|
32
|
||||
Outstanding at July 30, 2011
|
2,299
|
30
|
Pension Plans
|
||||||||||||||||||
Primary Plan
|
Supplemental
|
Total
|
||||||||||||||||
($ in millions)
|
Three Months Ended
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service cost
|
$
|
22
|
$
|
22
|
$
|
-
|
$
|
-
|
$
|
22
|
$
|
22
|
||||||
Interest cost
|
62
|
62
|
3
|
3
|
65
|
65
|
||||||||||||
Expected return on plan assets
|
(97
|
)
|
(88
|
)
|
-
|
-
|
(97
|
)
|
(88
|
)
|
||||||||
Net amortization
|
34
|
59
|
4
|
5
|
38
|
64
|
||||||||||||
Net periodic benefit expense
|
$
|
21
|
$
|
55
|
$
|
7
|
$
|
8
|
$
|
28
|
$
|
63
|
Pension Plans
|
||||||||||||||||||
Primary Plan
|
Supplemental
|
Total
|
||||||||||||||||
($ in millions)
|
Six Months Ended
|
Six Months Ended
|
Six Months Ended
|
|||||||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service cost
|
$
|
44
|
$
|
44
|
$
|
1
|
$
|
1
|
$
|
45
|
$
|
45
|
||||||
Interest cost
|
124
|
124
|
6
|
7
|
130
|
131
|
||||||||||||
Expected return on plan assets
|
(193
|
)
|
(176
|
)
|
-
|
-
|
(193
|
)
|
(176
|
)
|
||||||||
Net amortization
|
68
|
118
|
7
|
9
|
75
|
127
|
||||||||||||
Net periodic benefit expense
|
$
|
43
|
$
|
110
|
$
|
14
|
$
|
17
|
$
|
57
|
$
|
127
|
Postretirement Health and Welfare Plan
|
|||||||||||||
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Service cost
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Interest cost
|
-
|
-
|
-
|
-
|
|||||||||
Expected return on plan assets
|
-
|
-
|
-
|
-
|
|||||||||
Net amortization
|
(7
|
)
|
(6
|
)
|
(13
|
)
|
(12
|
)
|
|||||
Net periodic (income)
|
$
|
(7
|
)
|
$
|
(6
|
)
|
$
|
(13
|
)
|
$
|
(12
|
)
|
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Real estate activities
|
$
|
(7
|
)
|
$
|
(8
|
)
|
$
|
(22
|
)
|
$
|
(16
|
)
|
|
Restructuring charges
|
23
|
-
|
32
|
-
|
|||||||||
Other
|
1
|
1
|
3
|
3
|
|||||||||
Total expense/(income)
|
$
|
17
|
$
|
(7
|
)
|
$
|
13
|
$
|
(13
|
)
|
·
|
Net income of $14 million, or $0.07 per share, for the quarter was flat with last year’s second quarter results of $14 million, or $0.06 per share. Earnings per share for the second quarter of this year included restructuring charges of approximately $0.07 per share.
|
·
|
Comparable store sales increased 1.5% for the quarter driven by our merchandise initiatives and sales of private and exclusive branded merchandise.
|
·
|
Gross margin declined 110 basis points to 38.3% of sales compared to peak margins achieved in last year’s second quarter primarily as a result of higher markdowns due to increased promotional activity.
|
·
|
Selling, general and administrative expenses (SG&A) were 31.8% of sales, an improvement of 60 basis points compared to last year’s second quarter.
|
·
|
We opened 22 Sephora inside jcpenney locations, bringing our total to 276 locations.
|
·
|
We repurchased three million shares of common stock during the quarter and completed our $900 million stock repurchase program with a total of 24.4 million shares repurchased during the first half of 2011. EPS benefited by $0.01 and $0.02 for the second quarter and first half, respectively, as a result of fewer average shares outstanding.
|
·
|
Our non-cash primary pension plan expense for the second quarter was $34 million lower than last year.
|
($ in millions, except EPS)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||
Total net sales
|
$
|
3,906
|
$
|
3,938
|
$
|
7,849
|
$
|
7,867
|
||||||
Percent (decrease)/increase from prior year
|
(0.8)%
|
(0.1)%
|
(0.2)%
|
0.5%
|
||||||||||
Comparable store sales increase(1)
|
1.5%
|
0.9%
|
2.7%
|
1.3%
|
||||||||||
Gross margin
|
1,497
|
1,552
|
3,092
|
3,182
|
||||||||||
Operating expenses:
|
||||||||||||||
SG&A(2)
|
1,243
|
1,275
|
2,524
|
2,567
|
||||||||||
Primary pension plan
|
21
|
55
|
43
|
110
|
||||||||||
Supplemental pension plans
|
7
|
8
|
14
|
17
|
||||||||||
Total pension plans
|
28
|
63
|
57
|
127
|
||||||||||
Depreciation and amortization
|
128
|
126
|
256
|
251
|
||||||||||
Real estate and other, net
|
17
|
(7) |
13
|
(13
|
)
|
|||||||||
Total operating expenses
|
1,416
|
1,457
|
2,850
|
2,932
|
||||||||||
Operating income
|
81
|
95
|
242
|
250
|
||||||||||
Adjusted operating income (non-GAAP)(3)
|
102
|
150
|
285
|
360
|
||||||||||
Net interest expense
|
57
|
57
|
115
|
116
|
||||||||||
Bond premiums and unamortized costs
|
-
|
20
|
-
|
20
|
||||||||||
Income before income taxes
|
24
|
18
|
127
|
114
|
||||||||||
Income tax expense
|
10
|
4
|
49
|
40
|
||||||||||
Net income
|
$
|
14
|
$
|
14
|
$
|
78
|
$
|
74
|
||||||
Adjusted net income (non-GAAP)(3)
|
$
|
27
|
$
|
48
|
$
|
104
|
$
|
143
|
||||||
Diluted EPS
|
$
|
0.07
|
$
|
0.06
|
$
|
0.35
|
$
|
0.31
|
||||||
Adjusted diluted EPS (non-GAAP)(3)
|
$
|
0.13
|
$
|
0.20
|
$
|
0.47
|
$
|
0.60
|
||||||
Ratios as a percent of sales:
|
||||||||||||||
Gross margin
|
38.3%
|
39.4%
|
39.4%
|
40.4%
|
||||||||||
SG&A(2)
|
31.8%
|
32.4%
|
32.2%
|
32.6%
|
||||||||||
Total operating expenses
|
36.2%
|
37.0%
|
36.3%
|
37.2%
|
||||||||||
Operating income
|
2.1%
|
2.4%
|
3.1%
|
3.2%
|
||||||||||
Adjusted operating income (non-GAAP)(3)
|
2.6%
|
3.8%
|
3.6%
|
4.6%
|
(1)
|
Comparable store sales include sales from new and relocated stores that have been opened for 12 consecutive full fiscal months and Internet sales through jcp.com. Stores closed for an extended period are not included in comparable store sales calculations, while stores remodeled and minor expansions not requiring store closures remain in the calculations.
|
(2)
|
Beginning in 2011, pre-opening expenses, previously reported as a separate operating expense line, are included in SG&A due to the immaterial nature of such expense in recent years. The impact to the SG&A ratio for the three months ended July 31, 2010 was an increase of 10 basis points.
|
(3)
|
See “Non-GAAP Financial Measures” on the following page for a discussion of these non-GAAP measures and reconciliation to their most directly comparable GAAP financial measures.
|
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||
Operating income (GAAP)
|
$
|
81
|
$
|
95
|
$
|
242
|
$
|
250
|
||||||
As a percent of sales
|
2.1%
|
2.4%
|
3.1%
|
3.2%
|
||||||||||
Add: primary pension plan expense
|
21
|
55
|
43
|
110
|
||||||||||
Adjusted operating income (non-GAAP)
|
$
|
102
|
$
|
150
|
$
|
285
|
$
|
360
|
||||||
As a percent of sales
|
2.6%
|
3.8%
|
3.6%
|
4.6%
|
||||||||||
($ in millions, except EPS)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||
Net income (GAAP)
|
$
|
14
|
$
|
14
|
$
|
78
|
$
|
74
|
||||||
Diluted EPS (GAAP)
|
$
|
0.07
|
$
|
0.06
|
$
|
0.35
|
$
|
0.31
|
||||||
Add: primary pension plan expense, net of
|
||||||||||||||
income tax of $8, $21, $17 and $41
|
13
|
34
|
26
|
69
|
||||||||||
Adjusted net income (non-GAAP)
|
$
|
27
|
$
|
48
|
$
|
104
|
$
|
143
|
||||||
Adjusted diluted EPS (non-GAAP)
|
$
|
0.13
|
$
|
0.20
|
$
|
0.47
|
$
|
0.60
|
||||||
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||
Total net sales
|
$
|
3,906
|
$
|
3,938
|
$
|
7,849
|
$
|
7,867
|
||||
Sales percent (decrease)/increase:
|
||||||||||||
Total net sales
|
(0.8)%
|
(0.1)%
|
(0.2)%
|
0.5%
|
||||||||
Comparable store sales
|
1.5%
|
0.9%
|
2.7%
|
1.3%
|
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||
Comparable store sales increase
|
$
|
56
|
$
|
34
|
$
|
199
|
$
|
90
|
||||
Non-comparable store sales increase
|
10
|
29
|
17
|
75
|
||||||||
Sales through catalog print media and outlet stores (decrease)
|
(98
|
)
|
(68
|
)
|
(234
|
)
|
(125
|
)
|
||||
Total net sales (decrease)/increase
|
$
|
(32
|
)
|
$
|
(5
|
)
|
$
|
(18
|
)
|
$
|
40
|
·
|
We opened 22 Sephora inside jcpenney locations, bringing our total to 276 locations compared to 215 locations at the end of the second quarter 2010. Early in the third quarter we opened another 21 Sephora inside jcpenney locations and plan to open an additional 11 for the remainder of 2011 bringing the total to 308 at year end.
|
·
|
In our Growth Brands Division, we opened four additional The Foundry Big & Tall Supply Co. specialty stores catering to men’s big and tall customers, bringing our total store count to 10.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
jcpenney department stores
|
||||||||||||||||
Beginning of period
|
1,108
|
1,109
|
1,106
|
1,108
|
||||||||||||
Stores opened
|
-
|
-
|
2
|
2
|
||||||||||||
Closed stores
|
(5
|
)
|
(2
|
)
|
(5
|
)
|
(3
|
)
|
||||||||
End of period(1)
|
1,103
|
1,107
|
1,103
|
1,107
|
||||||||||||
The Foundry Big & Tall Supply Co.(2)
|
10
|
-
|
10
|
-
|
||||||||||||
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
|||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||
Primary pension plan
|
$
|
21
|
$
|
55
|
$
|
43
|
$
|
110
|
||||
Supplemental pension plans
|
7
|
8
|
14
|
17
|
||||||||
Total
|
$
|
28
|
$
|
63
|
$
|
57
|
$
|
127
|
($ in millions)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 30,
|
July 31,
|
July 30,
|
July 31,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Real estate activities
|
$
|
(7
|
)
|
$
|
(8
|
)
|
$
|
(22
|
)
|
$
|
(16
|
)
|
|
Restructuring charges
|
23
|
-
|
32
|
-
|
|||||||||
Other
|
1
|
1
|
3
|
3
|
|||||||||
Total expense/(income)
|
$
|
17
|
$
|
(7
|
)
|
$
|
13
|
$
|
(13
|
)
|
Six Months Ended
|
|||||||
($ in millions)
|
July 30,
|
July 31,
|
|||||
2011
|
2010
|
||||||
Cash and cash equivalents
|
$
|
1,551
|
$
|
2,003
|
|||
Merchandise inventory
|
3,572
|
3,490
|
|||||
Property and equipment, net
|
5,237
|
5,298
|
|||||
|
|||||||
Long-term debt
|
3,099
|
3,099
|
|||||
Stockholders’ equity
|
4,703
|
4,886
|
|||||
Total capital
|
7,802
|
7,985
|
|||||
Additional amounts available under our credit agreement
|
1,250
|
750
|
|||||
Cash flow from operating activities
|
172
|
(379
|
)
|
||||
Free cash flow (non-GAAP financial measure)(1)
|
(215
|
)
|
(306
|
)
|
|||
Capital expenditures
|
295
|
229
|
|||||
Dividends paid
|
92
|
94
|
|||||
Ratios:
|
|||||||
Debt-to-total capital(2)
|
39.7
|
%
|
38.8
|
%
|
|||
Cash-to-debt(3)
|
50.0
|
%
|
64.6
|
%
|
(1)
|
See the following page for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure and further information on its uses and limitations.
|
(2)
|
Long-term debt divided by total capitalization.
|
(3)
|
Cash and cash equivalents divided by long-term debt.
|
($ in millions)
|
Six Months Ended
|
|||||||
July 30,
|
July 31,
|
|||||||
2011
|
2010
|
|||||||
Net cash provided by/(used in) operating activities (GAAP)
|
$
|
172
|
$
|
(379
|
)
|
|||
Add:
|
||||||||
Discretionary pension contribution
|
-
|
392
|
||||||
Proceeds from sale of assets
|
-
|
4
|
||||||
Less:
|
||||||||
Capital expenditures
|
(295
|
)
|
(229
|
)
|
||||
Dividends paid, common
|
(92
|
)
|
(94
|
)
|
||||
Free cash flow (non-GAAP)
|
$
|
(215
|
)
|
$
|
(306
|
)
|
($ in millions)
|
Six Months Ended
|
||||||
July 30,
|
July 31,
|
||||||
Net cash (used in)/provided by:
|
2011
|
2010
|
|||||
Capital expenditures
|
$
|
(295
|
)
|
$
|
(229
|
)
|
|
Proceeds from sale of assets
|
-
|
4
|
|||||
Investing activities
|
$
|
(295
|
)
|
$
|
(225
|
)
|
($ in millions)
|
Six Months Ended
|
||||||
July 30,
|
July 31,
|
||||||
Net cash provided by/(used in):
|
2011
|
2010
|
|||||
Proceeds from issuance of long-term debt
|
-
|
392
|
|||||
Payments of long-term debt and financing costs
|
(15
|
)
|
(707
|
)
|
|||
Dividends paid
|
(92
|
)
|
(94
|
)
|
|||
Proceeds from the issuance of stock warrant
|
50
|
-
|
|||||
Stock repurchase program
|
(900
|
)
|
-
|
||||
Other
|
9
|
5
|
|||||
Financing activities
|
$
|
(948
|
)
|
$
|
(404
|
)
|
Long-Term Debt
|
Outlook
|
||
Moody’s Investors Service, Inc.
|
Ba1
|
Stable
|
|
Standard & Poor’s Ratings Services
|
BB+
|
Stable
|
|
Fitch Ratings
|
BBB-
|
Stable
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
|
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in millions)
|
||||
May 1, 2011 through
|
||||||||
June 4, 2011
|
2,950,468
|
$ 38.28
|
2,950,468
|
-
|
||||
June 5, 2011 through
|
||||||||
July 2, 2011
|
-
|
|
-
|
-
|
-
|
|||
July 3, 2011 through
|
||||||||
July 30, 2011
|
-
|
-
|
-
|
-
|
||||
Total
|
2,950,468
|
2,950,468
|
(1)
|
In February 2011, the Board of Directors approved a common stock repurchase program of up to $900 million, of which $787 million was purchased in the first quarter of 2011. This program, which did not have an expiration date, was completed on May 6, 2011.
|
Incorporated by Reference
|
||||||||||||
Exhibit No.
|
Exhibit Description
|
Form
|
SEC
File No.
|
Exhibit
|
Filing
Date
|
Filed (†)
Herewith
(as indicated)
|
||||||
3.1
|
Restated Certificate of Incorporation of
J. C. Penney Company, Inc., as amended to May 20, 2011
|
10-Q
|
001-15274
|
3.1
|
6/8/2011
|
|||||||
3.2
|
J. C. Penney Company, Inc. Bylaws, as amended to July 15, 2011
|
8-K
|
001-15274
|
3.1
|
7/18/2011
|
|||||||
4.1
|
Warrant Purchase Agreement dated as of June 13, 2011 between J. C. Penney Company, Inc. and Ronald B. Johnson
|
8-K
|
001-15274
|
4.1
|
6/14/2011
|
|||||||
4.2
|
Warrant dated as of June 13, 2011 between J. C. Penney Company, Inc. and Ronald B. Johnson
|
8-K
|
001-15274
|
4.2
|
6/14/2011
|
|||||||
10.1
|
J. C. Penney Corporation, Inc. Change in Control Plan, effective January 10, 2011
|
8-K
|
001-15274
|
10.1
|
6/14/2011
|
|||||||
10.2
|
Letter Agreement dated as of June 14, 2011 between J. C. Penney Company, Inc. and Ronald B. Johnson
|
†
|
||||||||||
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
†
|
||||||||||
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
†
|
||||||||||
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
†
|
||||||||||
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
†
|
||||||||||
101.INS
|
XBRL Instance Document
|
†
|
||||||||||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
†
|
Incorporated by Reference
|
||||||||||||
Exhibit No.
|
Exhibit Description
|
Form
|
SEC
File No.
|
Exhibit
|
Filing
Date
|
Filed (†) Herewith
(as indicated)
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
†
|
||||||||||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
†
|
||||||||||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
†
|
||||||||||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
†
|
J. C. PENNEY COMPANY, INC.
|
|
By /s/ Dennis P. Miller
|
|
Dennis P. Miller
|
|
Senior Vice President and Controller
|
|
(Principal Accounting Officer)
|
·
|
25% of the annual incentive will be based on the achievement of the Company’s Revenue goal.
|
·
|
25% of the annual incentive will be based on the achievement of the Company’s Operating Profit goal.
|
·
|
50% of the annual incentive will be based on the achievement of your individual annual performance objectives.
|
·
|
Your target incentive opportunity is 125% of your Base Salary and your maximum incentive opportunity is 2 times your target incentive opportunity, or 250% of your Base Salary. Assuming employment for a full fiscal year, your incentive compensation amount at target would be $1,875,000, for total earnings of $3,375,000. If maximum results are achieved, your incentive compensation would be $3,750,000, for total earnings of $5,250,000. If threshold level results are not achieved, the incentive compensation opportunity is $0.
|
·
|
Incentive compensation under this program for the current year is prorated based upon the actual number of months you participate in the program.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Michael P. Dastugue
Michael P. Dastugue
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
|
/s/ Michael P. Dastugue
Michael P. Dastugue
Executive Vice President and
Chief Financial Officer
|
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
In Millions |
Jul. 30, 2011
|
Jan. 29, 2011
|
Jul. 31, 2010
|
|||||
---|---|---|---|---|---|---|---|---|
Current assets | ||||||||
Cash in banks and in transit | $ 244 | $ 169 | $ 226 | |||||
Cash short-term investments | 1,307 | 2,453 | 1,777 | |||||
Cash and cash equivalents | 1,551 | 2,622 | 2,003 | |||||
Merchandise inventory | 3,572 | 3,213 | 3,490 | |||||
Income taxes receivable | 334 | 334 | 499 | |||||
Prepaid expenses and other | 194 | 201 | 205 | |||||
Total current assets | 5,651 | 6,370 | 6,197 | |||||
Property and equipment (net of accumulated depreciation of $2,930, $2,800 and $2,854) | 5,237 | 5,231 | 5,298 | |||||
Prepaid pension | 788 | 763 | 387 | |||||
Other assets | 753 | 678 | 627 | |||||
Total Assets | 12,429 | 13,042 | 12,509 | |||||
Current liabilities | ||||||||
Merchandise accounts payable | 1,386 | 1,133 | 1,410 | |||||
Other accounts payable and accrued expenses | 1,381 | 1,514 | 1,422 | |||||
Total current liabilities | 2,767 | 2,647 | 2,832 | |||||
Long-term debt | 3,099 | 3,099 | 3,099 | |||||
Deferred taxes | 1,216 | 1,192 | 982 | |||||
Other liabilities | 644 | 644 | 710 | |||||
Total Liabilities | 7,726 | 7,582 | 7,623 | |||||
Stockholders' Equity | ||||||||
Common stock(1) | 107 | [1] | 118 | [1] | 118 | [1] | ||
Additional paid-in capital | 3,605 | 3,925 | 3,896 | |||||
Reinvested earnings | 1,728 | 2,222 | 2,002 | |||||
Accumulated other comprehensive (loss) | (737) | (805) | (1,130) | |||||
Total Stockholders' Equity | 4,703 | 5,460 | 4,886 | |||||
Total Liabilities and Stockholders' Equity | $ 12,429 | $ 13,042 | $ 12,509 | |||||
|
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)
In Millions, except Per Share data |
Jul. 30, 2011
|
Jan. 29, 2011
|
Jul. 31, 2010
|
---|---|---|---|
Balance Sheets Parenthetical [Abstract] | |||
Accumulated depreciation | $ 2,930 | $ 2,854 | $ 2,800 |
Common stock, authorized | 1,250 | 1,250 | 1,250 |
Common stock, par value per share | $ 0.5 | $ 0.5 | $ 0.5 |
Common stock, issued and outstanding | 213 | 237 | 236 |
Real Estate and Other, Net (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Other, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Other, Net |
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jul. 30, 2011
|
Sep. 01, 2011
Common Stock [Member]
|
|
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | J C PENNEY CO INC | |
Entity Central Index Key | 0001166126 | |
Current Fiscal Year End Date | --01-28 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 213,315,702 |
Credit Facility (Details) (USD $)
In Millions |
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Line of credit facility, initiation date | April 29, 2011 |
Line of credit facility, maximum borrowing capacity | $ 1,250 |
Line of credit facility, term (years) | five |
Credit facility financial covenants | The leverage ratio, which is calculated as of the last day of the quarter and measured on a trailing four-quarter basis, cannot exceed 3.0 to 1. The fixed charge coverage ratio, which is calculated as of the last day of the quarter and measured on a trailing four-quarter basis, cannot be less than 2.5 to 1 through October 29, 2011; and 3.0 to 1 thereafter. The asset coverage ratio cannot be less than 3.0 to 1. |
Line of Credit Facility, Covenant Compliance | As of July 30, 2011, we were in compliance with these requirements with a leverage ratio of 2.1 to 1, a fixed charge coverage ratio of 3.7 to 1 and an asset coverage ratio of 18 to 1. |
Standby and Import Letters of Credit [Member]
|
|
Total standby and import letters of credit | $ 196 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Stock-Based Compensation
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
Note 7 – Stock-Based Compensation
We grant stock-based compensation to employees (associates) and non-employee directors under our 2009 Long-Term Incentive Plan (2009 Plan). As of July 30, 2011, there were approximately eight million shares of stock available for future grant under the 2009 Plan.
The following table presents total stock-based compensation costs and related income tax benefits:
Stock-Based Compensation Costs
Stock Options On March 15, 2011, we made an annual grant of stock options covering approximately 2.4 million shares to associates at an option price of $36.58, with a fair value of $11.40 per option.
The following table summarizes stock options outstanding as of July 30, 2011, as well as activity during the six months then ended:
As of July 30, 2011, there was $40 million of unrecognized compensation expense, net of estimated forfeitures, for unvested stock options, which will be recognized over the remaining weighted-average vesting period of approximately one year.
Stock Awards On March 15, 2011, we made a grant of approximately 822,000 restricted stock unit awards to associates, representing the annual grant. These awards consisted of approximately 367,000 time-based restricted stock units and approximately 455,000 performance-based restricted stock units. The time-based restricted stock units vest one-third on each of the first three anniversaries of the grant date provided that the associate remains continuously employed with the Company during that time. The performance-based unit grant is a target award with a payout matrix ranging from 0% to 200% based on 2011 EPS (defined as per common share income from continuing operations, excluding any unusual and/or extraordinary items as determined by the Human Resources and Compensation Committee of the Board). A payment of 100% of the target award would be achieved at EPS of $2.17. In addition to the performance requirement, this award also includes a time-based vesting requirement, which is the same as the requirement for the time-based restricted stock unit award. Upon vesting, both the time-based restricted stock units and the performance-based restricted stock units will be paid out in shares of Company common stock.
On May 25, 2011, we granted approximately 38,000 restricted stock units to non-employee Board members. Restricted stock unit grants during the first half of 2011 also included 53,000 restricted stock units, consisting of ad-hoc awards to associates and dividend equivalents on outstanding awards.
Stock awards that vested during the first half of 2011 included the final one-third, or approximately 107,000, of our March 2008 annual grant of time-based restricted stock unit awards and one-third, or approximately 379,000, of our March 2010 restricted stock unit awards (time-based and performance-based), as well as the vesting of approximately 99,000 individual restricted stock unit awards.
The following table summarizes the non-vested stock awards as of July 30, 2011 and activity during the six months then ended:
As of July 30, 2011, there was $44 million of unrecognized compensation expense related to unearned associate stock awards, which will be recognized over the remaining weighted-average vesting period of approximately one year.
On June 14, 2011, we announced that Ronald B. Johnson had been elected our next Chief Executive Officer. Upon commencement of his employment, Mr. Johnson will be granted approximately 1.7 million restricted stock units, which will vest on January 27, 2012, so long as he remains continuously employed by us through such date, provided, however, that the restricted stock units will immediately vest if his employment with us terminates as a result of his death or disability, if he terminates his employment with us for good reason or if we terminate his employment other than for cause. The restricted stock units will be valued based on the price of our common stock on his start date and the associated stock-based compensation will be recognized over the expected service period to the vesting date. |
Long-Term Debt (Details) (USD $)
In Millions |
0 Months Ended | 6 Months Ended | 0 Months Ended | 0 Months Ended | ||
---|---|---|---|---|---|---|
May 24, 2010
|
Jul. 31, 2010
|
Mar. 01, 2010
8.0% Notes due 2010 [Member]
|
May 24, 2010
5.65% Senior Notes Due 2020 [Member]
|
May 24, 2010
6.375% Senior Notes Due 2036 [Member]
|
May 25, 2010
6.375% Senior Notes Due 2036 [Member]
|
|
Notes and debentures | $ 400 | |||||
Voluntary cash contribution to Pension Plan | 392 | 392 | ||||
Senior debt repayment at maturity | 393 | |||||
Amount of cash tender offer for purchase | 314 | |||||
Purchase principal amount of notes purchased | $ 300 |
Income Taxes (Details) (USD $)
In Millions |
6 Months Ended | |
---|---|---|
Jul. 30, 2011
|
Jan. 29, 2011
|
|
Unrecognized tax benefits | $ 146 | $ 162 |
Unrecognized Tax Benefits, Decreases Resulting from Settlements with Taxing Authorities | 20 | |
Additions for tax positions of prior years | 4 | |
Amount of unrecognized tax benefits that would impact effective tax rate if recognized | 64 | |
Benefit of federal tax deduction of state taxes | 22 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Decrease to Unrecorded Benefit | 41 | |
Accrued Interest for Unrecognized Tax Benefits | 4 | 3 |
Potential Impact to Effective Tax Rate Next 12 Months [Member]
|
||
Amount of unrecognized tax benefits that would impact effective tax rate if recognized | $ 1 |
Stock-Based Compensation (Stock Options) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified |
0 Months Ended | 6 Months Ended | |
---|---|---|---|
Mar. 15, 2011
|
Jul. 30, 2011
|
Jan. 29, 2011
|
|
Grants of stock options - fair value per option | $ 11.40 | ||
Granted, shares | 2,410 | ||
Granted, weighted-average exercise price per share | $ 36.58 | $ 37 | |
Exercised, shares | (563) | ||
Exercised, weighted-average exercise price per share | $ 20 | ||
Forfeited or expired, shares | (386) | ||
Forfeited or expired, weighted-average exercise price per share | $ 37 | ||
Outstanding, shares | 16,474 | 15,013 | |
Outstanding, weighted-average exercise price per share | $ 37 | $ 36 | |
Exercisable, shares | 10,871 | ||
Exercisable, weighted-average exercise price per share | $ 41 | ||
Employee Stock Option [Member]
|
|||
Unrecognized compensation expense | $ 40 | ||
Weighted average period over which unrecognized compensation is expected to be recognized (years) | 1 |
Earnings per Share (Shares excluded from diluted EPS) (Details)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
|
Earnings per share: | ||||
Stock options and restricted awards | 9 | 12 | 8 | 11 |
Effect of New Accounting Standards
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Effect of New Accounting Standards [Abstract] | |
Effect of New Accounting Standards | Note 12 – Effect of New Accounting Standards
In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-05, "Comprehensive Income (Topic 220)," which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in existing guidance and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income ("OCI"). The update does not change the items that must be reported in OCI and its amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The guidance must be applied retrospectively for all periods presented in the financial statements. Early adoption is permitted. As this update only relates to financial statement presentation, we do not expect the adoption to have a material effect on our results of operations, cash flows or financial position.
In May 2011, the FASB issued Accounting Standards Update 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U. S. GAAP and IFRS," which amends the current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This guidance will be effective for interim and annual periods beginning after December 15, 2011. We do not expect the adoption to have a material impact on our consolidated net earnings, cash flows and financial position.
|
Credit Facility
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Credit Facility | |
Credit Facility | Note 3 – Credit Facility
On April 29, 2011, J. C. Penney Company, Inc., JCP and J. C. Penney Purchasing Corporation entered into an amended and restated five-year, $1,250 million revolving credit agreement (2011 Credit Facility) with a syndicate of lenders with JPMorgan Chase Bank, N.A., as administrative agent. The facility is secured by our inventory, which security interest can be released upon attainment of certain credit rating levels. The 2011 Credit Facility is available for general corporate purposes, including the issuance of letters of credit. Pricing under the 2011 Credit Facility is tiered based on JCP's senior unsecured long-term credit ratings issued by Moody's Investors Service, Inc. and Standard & Poor's Ratings Services. JCP's obligations under the 2011 Credit Facility are guaranteed by J. C. Penney Company, Inc.
The 2011 Credit Facility requires that we maintain certain financial covenants, which include a leverage ratio, a fixed charge coverage ratio and an asset coverage ratio (each as defined in the 2011 Credit Facility). Under the terms of the 2011 Credit Facility, non-cash charges or credits related to retirement plans are not included in the calculation of EBITDA (consolidated earnings before interest, income taxes, depreciation and amortization), which is used in the leverage ratio and fixed charge coverage ratio. The leverage ratio, which is calculated as of the last day of the quarter and measured on a trailing four-quarter basis, cannot exceed 3.0 to 1. The fixed charge coverage ratio, which is calculated as of the last day of the quarter and measured on a trailing four-quarter basis, cannot be less than 2.5 to 1 through October 29, 2011; and 3.0 to 1 thereafter. The asset coverage ratio cannot be less than 3.0 to 1.
As of July 30, 2011, we were in compliance with these requirements with a leverage ratio of 2.1 to 1, a fixed charge coverage ratio of 3.7 to 1 and an asset coverage ratio of 18 to 1.
No borrowings, other than the issuance of standby and import letters of credit totaling $196 million as of the end of the first half of 2011, have been made under the 2011 Credit Facility. |
Stockholders' Equity (Common Stock Repurchase Program) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jul. 30, 2011
|
Apr. 30, 2011
|
Jul. 30, 2011
|
|
Stock Repurchased and Retired, Value | $ 113 | $ 787 | $ 900 |
Share Repurchase Program, Average Share Price | 36.98 | ||
Common Stock [Member]
|
|||
Stock Repurchased and Retired, Value | 12 | ||
Stock Repurchased and Retired, Shares | 3 | 21 | 24 |
Additional Paid-in Capital [Member]
|
|||
Stock Repurchased and Retired, Value | 404 | ||
Reinvested Earnings [Member]
|
|||
Stock Repurchased and Retired, Value | $ 484 |
Real Estate and Other, Net
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Other, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Other, Net |
Note 9 – Real Estate and Other, Net
Real estate and other consists of ongoing operating income from our real estate subsidiaries whose primary investments are in REITs, as well as investments in 13 joint ventures that own regional mall properties. Real estate and other also includes net gains from the sale of facilities and equipment that are no longer used in operations, other non-operating charges and credits, as well as asset impairments and restructuring related charges.
Real estate and other, net for the second quarter of 2011 was a charge of $17 million versus income of $7 million for the second quarter of 2010. The current period loss included $23 million of restructuring charges related to previously announced activities to streamline our supply chain and custom decorating operations, exit the catalog business, reduce home office expenses, as well as close five underperforming stores. Real estate and other for the first half of 2011 was a loss of $13 million versus income of $13 million for the same period last year. The year-over-year change was primarily the result of $32 million of restructuring charges in 2011, somewhat offset by income from certain joint venture transactions in the first quarter of 2011.
We announced a voluntary early retirement program (VERP) in August 2011. The approximately 8,400 eligible associates will have between September 1 and October 15, 2011 to elect to participate. The one-time cost for the enhanced retirement benefits will be determined and recognized following the close of the election period in the third quarter of 2011.
|
Fair Value Disclosures (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REIT assets at Fair Value, Recurring |
|
Income Taxes
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Income Taxes [Abstract] | |
Income Taxes | Note 10 – Income Taxes
The total amount for unrecognized tax benefits as of July 30, 2011 was $146 million compared to $162 million as of January 29, 2011. The decrease included $20 million for settlements reached with tax authorities partially offset by an increase of $4 million based on additional amounts related to prior period tax positions. As of the end of the first half of 2011, the uncertain tax position balance included $64 million that, if recognized, would lower the effective tax rate and would be reduced upon settlement by $22 million related to the federal tax deduction of state taxes. The remaining amounts reflect tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing. Due to deferred tax accounting, other than any interest or penalties incurred, the disallowance of the shorter deductibility period would not impact the effective tax rate, but would accelerate payment to the taxing authority.
Over the next 12 months, it is reasonably possible that the amount of unrecognized tax benefits could be reduced by approximately $41 million ($1 million of which would impact the effective tax rate) if our tax position is sustained upon audit, the controlling statute of limitations expires or we agree to a disallowance.
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. Our accrued interest was $4 million as of July 30, 2011 and $3 million as of January 29, 2011. We did not have any penalties accrued as of either date. |
Stockholders' Equity (Accumulated Other Comprehensive (Loss)/Income) (Details) (Accumulated Other Comprehensive (Loss)/Income [Member], USD $)
In Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jul. 30, 2011
|
Jan. 29, 2011
|
|
Accumulated Other Comprehensive (Loss)/Income [Member]
|
||
Net unrealized gains on REITs, Net of Tax | $ 142 | $ 112 |
Net unrealized gains on REITs, Deferred Tax Liability | 79 | 62 |
Net actuarial (loss)/gain and prior service (cost)/credit - pension and postretirement plans, Net of Tax | (879) | (917) |
Net actuarial (loss)/gain and prior service (cost)/credit - pension and postretirement plans, Deferred Tax Asset | $ 561 | $ 585 |
Retirement Benefit Plans
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Plans | Note 8 – Retirement Benefit Plans
The components of net periodic benefit costs for our non-contributory qualified defined benefit pension plan (primary plan) and non-contributory supplemental pension plans for the three and six months ended July 30, 2011 and July 31, 2010 were as follows:
Pension Plans Net Periodic Benefit Expense
Postretirement Health and Welfare Plan Net Periodic (Income)
Defined Contribution Plans Our defined contribution plans include a qualified Savings, Profit-Sharing and Stock Ownership Plan (a 401(k) plan), which includes a non-contributory retirement account, and a non-qualified contributory unfunded mirror savings plan offered to certain management associates. Total expense for our defined contribution plans for the second quarters of 2011 and 2010 was $16 million and $12 million, respectively, and is predominantly included in SG&A expense on the Consolidated Statements of Operations. Total expense for the first halves of 2011 and 2010 was $32 million and $26 million, respectively.
Employer Contributions Our policy with respect to funding the primary plan is to fund at least the minimum required by the Employee Retirement Income Security Act of 1974 (ERISA) rules, as amended by the Pension Protection Act of 2006, and not more than the maximum amount deductible for tax purposes. Based on the funded status of our primary plan, we were not required to make a mandatory cash contribution to the primary plan under ERISA rules in 2010 or 2011.
|
Basis of Presentation and Consolidation
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Basis of Presentation and Consolidation | |
Basis of Presentation and Consolidation |
Note 1 – Basis of Presentation and Consolidation
Basis of Presentation J. C. Penney Company, Inc. is a holding company whose principal operating subsidiary is J. C. Penney Corporation, Inc. (JCP). JCP was incorporated in Delaware in 1924, and J. C. Penney Company, Inc. was incorporated in Delaware in 2002, when the holding company structure was implemented. The holding company has no independent assets or operations, and no direct subsidiaries other than JCP. The holding company and its consolidated subsidiaries, including JCP, are collectively referred to in this quarterly report as "we," "us," "our," "ourselves," "jcpenney" or the "Company," unless otherwise indicated.
J. C. Penney Company, Inc. is a co-obligor (or guarantor, as appropriate) regarding the payment of principal and interest on JCP's outstanding debt securities. The guarantee of certain of JCP's outstanding debt securities by J. C. Penney Company, Inc. is full and unconditional.
These Interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). The accompanying Interim Consolidated Financial Statements are unaudited but, in our opinion, include all material adjustments necessary for a fair presentation and should be read in conjunction with the Consolidated Financial Statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended January 29, 2011 (2010 Form 10-K). We follow substantially the same accounting policies to prepare quarterly financial statements as are followed in preparing annual financial statements. A description of such significant accounting policies is included in the 2010 Form 10-K. The January 29, 2011 financial information was derived from the audited Consolidated Financial Statements, with related footnotes, included in the 2010 Form 10-K. Because of the seasonal nature of the retail business, operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Fiscal Year Our fiscal year ends on the Saturday nearest to January 31. As used herein, "three months ended July 30, 2011" and "three months ended July 31, 2010" refer to the 13-week periods ended July 30, 2011 and July 31, 2010, respectively. "Six months ended July 30, 2011," or "2011 first half," and "six months ended July 31, 2010," or "2010 first half," refer to the 26-week periods ended July 30, 2011 and July 31, 2010, respectively.
Basis of Consolidation All significant intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications were made to prior year amounts to conform to the current period presentation. None of the reclassifications affected our net income in any period.
|
Long-Term Debt
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Long-Term Debt Disclosure [Abstract] | |
Long-Term Debt |
Note 4 – Long-Term Debt
During the first half of 2011, there were no scheduled debt maturities or issuances of debt.
During the first half of 2010, we had the following debt issuance and debt reductions:
Debt Issuance On May 24, 2010, we closed on our offering of $400 million aggregate principal amount of 5.65% Senior Notes due 2020 and used proceeds of the offering, net of underwriting discounts, of approximately $392 million to make a voluntary cash contribution to the J. C. Penney Corporation, Inc. Pension Plan.
Debt Reductions On May 24, 2010, we accepted for purchase $300 million principal amount of JCP's outstanding 6.375% Senior Notes due 2036 (2036 Notes), which were validly tendered pursuant to a cash tender offer. We paid approximately $314 million aggregate consideration, including accrued and unpaid interest, for the accepted 2036 Notes on May 25, 2010.
On March 1, 2010 we repaid at maturity the $393 million outstanding principal amount of JCP's 8.0% Notes due 2010.
|
Retirement Benefit Plans (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
|
Service cost | $ 22 | $ 22 | $ 45 | $ 45 |
Interest cost | 65 | 65 | 130 | 131 |
Expected return on plan assets | (97) | (88) | (193) | (176) |
Net amortization | 38 | 64 | 75 | 127 |
Net periodic benefit expense / (income) | 28 | 63 | 57 | 127 |
Benefits Plan Primary Plan [Member]
|
||||
Service cost | 22 | 22 | 44 | 44 |
Interest cost | 62 | 62 | 124 | 124 |
Expected return on plan assets | (97) | (88) | (193) | (176) |
Net amortization | 34 | 59 | 68 | 118 |
Net periodic benefit expense / (income) | 21 | 55 | 43 | 110 |
Benefits Supplemental Plan [Member]
|
||||
Service cost | 1 | 1 | ||
Interest cost | 3 | 3 | 6 | 7 |
Net amortization | 4 | 5 | 7 | 9 |
Net periodic benefit expense / (income) | 7 | 8 | 14 | 17 |
Postretirement Health and Welfare Plan [Member]
|
||||
Net amortization | (7) | (6) | (13) | (12) |
Net periodic benefit expense / (income) | $ (7) | $ (6) | $ (13) | $ (12) |
Fair Value Disclosures
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Note 5 – Fair Value Disclosures
REIT Assets Measured on a Recurring Basis We determined the fair value of our real estate investment trusts (REITs) using quoted market prices. Primarily, the market value of our investments in public REITs are accounted for as available-for-sale securities. As of July 30, 2011, July 31, 2010 and January 29, 2011, the cost basis of these investments was $80 million. Our REIT assets measured at fair value on a recurring basis were as follows:
Other Financial Instruments Our financial instruments include cash and cash equivalents and long-term debt. The carrying amount of our cash and cash equivalents approximates fair value because of the short maturity of these instruments. The fair value of long-term debt is estimated by obtaining quotes from brokers or is based on current rates offered for similar debt. At July 30, 2011 and January 29, 2011, long-term debt had a carrying value and fair value of $3.1 billion. |
Real Estate and Other, Net (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
|
Real Estate and Other, Net [Abstract] | ||||
Real estate activities | $ (7) | $ (8) | $ (22) | $ (16) |
Restructuring charges | 23 | 32 | ||
Other | 1 | 1 | 3 | 3 |
Total expense/(income) | $ 17 | $ (7) | $ 13 | $ (13) |
Fair Value Disclosures (Narrative) (Details) (USD $)
In Millions |
Jul. 30, 2011
|
Jan. 29, 2011
|
Jul. 31, 2010
|
---|---|---|---|
Fair Value Disclosures | |||
Cost basis of real estate investments | $ 80 | $ 80 | $ 80 |
Stockholders' Equity (Comprehensive Income) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
|
Stockholders Equity Disclosure [Abstract] | ||||
Net income | $ 14 | $ 14 | $ 78 | $ 74 |
Amortization of net actuarial loss and prior service cost | 19 | 35 | 38 | 70 |
Unrealized gain in REITs | 7 | 30 | 30 | |
Total other comprehensive income | 26 | 35 | 68 | 100 |
Total comprehensive income | $ 40 | $ 49 | $ 146 | $ 174 |
Retirement Benefit Plans (Defined Contribution Plans) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
|
Retirement Benefit Plans | ||||
Defined contribution plan, total expense | $ 16 | $ 12 | $ 32 | $ 26 |
Fair Value Disclosures (Other Non-Financial Assets) (Details) (USD $)
|
Jul. 30, 2011
|
Jan. 29, 2011
|
---|---|---|
Fair Value Disclosures | ||
Carrying value of long-term debt | $ 3,100,000,000 | $ 3,100,000,000 |
Fair value of long-term debt | $ 3,100,000,000 | $ 3,100,000,000 |
Earnings per Share (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Antidilutive common stock |
|
Stockholders' Equity
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders Equity Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
Note 6 – Stockholders' Equity
The following table shows the change in the components of stockholders' equity for the first six months of 2011:
(1) Includes an unrealized gain in REITs of $112 million (shown net of a $62 million deferred tax liability) and actuarial (loss) and prior service (cost) for the pension and postretirement plans of $(917) million (shown net of a $585 million deferred tax asset). (2) Includes an unrealized gain in REITs of $142 million (shown net of a deferred tax liability of $79 million) and actuarial (loss) and prior service (cost) for the pension and postretirement plans of $(879) million (shown net of a $561 million deferred tax asset).
Comprehensive Income
Stock Warrant On June 13, 2011, we entered into a warrant purchase agreement with Ronald B. Johnson, pursuant to which he purchased a warrant to acquire approximately 7.3 million shares of J. C. Penney Company, Inc. common stock for a purchase price of approximately $50 million at a fair value of $6.89 per share. The warrant has an exercise price of $29.92 per share, subject to customary adjustments resulting from a stock split, reverse stock split, or other extraordinary distribution with respect to J. C. Penney Company, Inc. common stock. The warrant has a term of seven and one-half years and is exercisable after the sixth anniversary, or June 13, 2017, provided that the warrant is immediately exercisable upon a change in control of J. C. Penney Company, Inc. or, if applicable, upon the termination of Mr. Johnson's employment with us. The warrant is also subject to transfer restrictions. The proceeds from the sale of the warrant have been recorded as additional paid-in capital and the dilutive effect of the warrant has been included in the EPS calculation from the date of issuance.
Common Stock Repurchase Program In February 2011, our Board of Directors authorized a program to repurchase up to $900 million of Company common stock using existing cash and cash equivalents. In the first quarter of 2011, we repurchased through open market transactions approximately 21 million shares or $787 million. In the second quarter, we purchased an additional three million shares for $113 million and completed the program on May 6, 2011. As a result of this repurchase program, approximately 24 million total shares were purchased for a total of $900 million at an average share price of $36.98, including commision. Repurchased shares were retired on the date of purchase, and the excess of the purchase price over par value was allocated between reinvested earnings and additional paid-in capital.
|
Stock-Based Compensation (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] |
|
Stock-Based Compensation (Stock Awards) (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 28, 2012
|
Jul. 30, 2011
|
Jan. 29, 2011
|
Mar. 15, 2011
Long-Term Incentive Plan 2009 [Member]
|
May 25, 2011
Non-Employee Board Members [Member]
|
Mar. 15, 2011
March 2010 Time-Based Awards [Member]
|
Mar. 15, 2011
March 2010 Performance-Based Awards [Member]
|
Jul. 30, 2011
March 2010 Time- and Performance-Based Awards [Member]
|
Jul. 30, 2011
March 2008 Time-Based Awards [Member]
Stock Awards [Member]
|
Jul. 30, 2011
Ad-Hoc Awards [Member]
|
Jul. 30, 2011
Unearned Associated Stock Awards [Member]
|
Jul. 30, 2011
Stock Awards [Member]
|
|
Granted, shares | 1,700,000 | 913,000 | 822,000 | 38,000 | 367,000 | 455,000 | 53,000 | |||||
Granted, weighted-average grant date fair value | $ 36 | |||||||||||
Vested, shares | (585,000) | (379,000) | (107,000) | (99,000) | ||||||||
Vested, weighted-average grant date fair value | $ 34 | |||||||||||
Forfeited, shares | (57,000) | |||||||||||
Forfeited, weighted-average grant date fair value | $ 32 | |||||||||||
Non-vested, shares | 2,299,000 | 2,028,000 | ||||||||||
Non-vested, weighted-average grant date fair value | $ 30 | $ 27 | ||||||||||
Unrecognized compensation expense | $ 44 | |||||||||||
Weighted average period over which unrecognized compensation is expected to be recognized (years) | 1 |
Fair Value Disclosures (REIT Assets Measured on Recurring Basis) (Details) (Fair Value, Inputs, Level 1 [Member], USD $)
In Millions |
Jul. 30, 2011
|
Jan. 29, 2011
|
Jul. 31, 2010
|
---|---|---|---|
Fair Value, Inputs, Level 1 [Member]
|
|||
REIT assets | $ 300 | $ 253 | $ 224 |
G.E!T^3TRN^)[9%_[(^U,EGP[>)'U).$Z@UZ]=?\9;-WY0M5$
M=;\3>*!MWL=#1D].7:E](#*XU^-J0L*:.H51L:O7,DC?']6UM!F.CJ]==6;[
MS*UN\1J^+T^`\(@/+F&L4.O6)0':'@DX97TL&PKWL0*A<3?HTZV'%Z,]WIC:
MP/@'XT1AQN45K,;I<\Q^S&-1";7G?_/&7-WT&+GCD00E+,.HW](J4H'U]H>:
MUI46C-:BGL5MWSZP\%-H$9 WVZJTI,=,#\3D,!X9@@09Z%X2]Z6PNZH:(Q]68&-2G,=VJ,KR(Y`]FMTGE)KPKW5<$$JW,-P36H[Q-.GS`@L<%G%MJMHXQH/V(EM
M8E[`EU'"]UWN`HO9`ZX`>236LH)YW!9!![Z!3ESG6);PU19;!4.6BB6#^`4<
MO$`79NW'4^!N9"?R/'[K47N^U@?6L?N)CP@6EX2OD6S(OGTXW=1N;?(-5NN=
MWL5*.7A>)ERE\TV_8L\KUY!#^TA[6V?9D5FXCY30YV>7/?/%(BS_;-V<4VMM
M4W&_->C_7Q*Z
)'BTW\Z"?!
MM1])IS]NC?M;2Z)_/E+[G=[P_A6YV&W
NRZ$`%-MT#$`!SUM@BD$^=+K+Q\+]
M;EP+K*46^PZ@%WLQG<"SWF&NMA/8.OR^.LB"7P)/8'1FF383F.L%\SE<#<\"
M;@DL"3PP],2`P4=(LXY$[,WTQ>1TZE/+>29/@0>/\N!/@$&!SL@T),C$A,]1
M1GP3F'2+@_G$?&$DL,$3@:<#Q6;\3?!F-PGP+B@\,5W/)U-J3;:8)J@H6-8]
MP+*U/RYY1N%O"U90>/@[H^XVR_AOEPX\[Y)_XK0#Y!9O#DT4R+EX&,PEL'SQ
MJF[G.!^!`7P*%^`FSMBK,$^3"0?QI_<-4ZF#?>+?XR,I?`:9K-YXKZ:DG@&P!D:R6%G=.3PZN%C=?PX7]Y$75"RH[UC)%",I
M?@J9N+#C$)4Z!2]FN9MJ/I]J"2ADJ&;ZS?'9*IXP(N+SWT8=3>/AX&7H*:(+
MX1+NQ80TGV0(;NX)BZ1(9BVNWOH]G,SFC!=?PK]%D10%0DDB"P)FPK%%FM*9
MB.1,&`LT]46,400C/1&-Y'D+G@SEXN^:3X'ON.\\3FB9$Y,9H*<3$8!8U^$]I^N]3_0
M9NF`\9?:=)5K_`]U,4JA_E*[3VC\)6(&&G^)Z'6P?4Z*I7X##R'"I;[TTHM+
M_;2^_H$.+RF,O>PG[*"Q;U2^`^L^)YWQLXVKMO;A6_.LG!ZF+F/D&UP_
M]
E(#.??J$^32:96U[GIHK"4PMY27C[
M\BW+IR5Y^-K?<[WKX,/5AI^''=E:$\"%U',?<*EP<+]/#/J^^/X?L#@@Z$(D
M9^"N".O*)9N`%P7J"$9[`F[/Y>(Z,,PF:`&X.%S1V)L.MFK3^^NVVEPYM19)
M":5+"10>V'[UJ':*3YS"GH!I>U-E.JV^F"C\R76"YRFYU7WGB;EKKO_X0B#<
MW\6[%X3A@W(9G<"[6FMPR6<="\QQ`UD2>2L(L*5:TDGW`4<@)2K(-K4K(7^_
M!M;[VJJ_'?+_@MOW5R:LBCB@PC*%;RV6-"`-'ENX`V%Y8K0,VK(:SN3X\JW3
MVEQK"B$YYA4D>7"W-=Q]\$%_(LE3M='N0UO;+D0CI%NVL?[F\$BHZ[QRG^>"
M.!R30FC97OUY?(T$JQ'.:W,&RT9_=T$(C/.I0-+]<8+Q9L_!991@!=RPT%]\
MG)BNYZ_H.:76A/\I5*8IA<7]$V,V^,S@!!]>5[6R6JY\:L^21QG[==EUCG
M*NG-I?@]"9VNO6-)0LLD'F;:SW%A["/QY7UA:5"P*UUW`INO].]
M$Z>^]
5X%6Y;(OWJ>^T[0O"'2E:_,"C;%$8R(LI8#1+4Y`26(,V*5,9WS"-HI1K
ME(;#X]W@52[E6S2@21_+47G6*\DON.].PN1C:H
+\&:0[+50>KB.(87'G7.-2L(Q24FH*#0GUZ`BYT.R0
/U]F;/>7,NQ)=$W$H;^^;[%%S0+5I_`@D=?FA(R2;+X)7(-9^R:U
M@(+.9`)WD:=WGGB`MX?#.)1MV)/R>!*Y!&<]113QE8_%$J%_('-X.O%<()D8
MUGP!62V>I(GR"B1#FY67X)\NT__QQ$OWQG_"%O(F?_/