Delaware
(State or other jurisdiction
of incorporation )
|
1-15274
(Commission File No.)
|
26-0037077
(IRS Employer
Identification No.)
|
6501 Legacy Drive
Plano, Texas
(Address of principal executive offices)
|
75024-3698
(Zip code)
|
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02
|
Results of Operations and Financial Condition.
|
Item 9.01 Financial Statements and Exhibits.
|
|
(d)
|
Exhibit 99.1 J. C. Penney Company, Inc. News Release issued February 27, 2013
|
·
|
Store fixtures $18 million, or $0.05 per share;
|
·
|
Management transition $5 million, or $0.01 per share;
|
·
|
Home office and stores $4 million, or $0.01 per share;
|
·
|
Other $2 million, or $0.01 per share.
|
J. C. PENNEY COMPANY, INC.
|
||||||||||||||
SUMMARY OF OPERATING RESULTS
|
||||||||||||||
(Unaudited)
|
||||||||||||||
(Amounts in millions except per share data)
|
||||||||||||||
Three months ended (1)
|
Twelve months ended (1)
|
|||||||||||||
Feb. 2,
|
Jan. 28,
|
% Inc.
|
Feb. 2,
|
Jan. 28,
|
% Inc.
|
|||||||||
2013
|
2012
|
(Dec.)
|
2013
|
2012
|
(Dec.)
|
|||||||||
STATEMENTS OF OPERATIONS:
|
||||||||||||||
Total net sales
|
$ 3,884
|
$ 5,425
|
(28.4)%
|
$ 12,985
|
$ 17,260
|
(24.8)%
|
||||||||
Cost of goods sold
|
2,960
|
3,788
|
(21.9)%
|
8,919
|
11,042
|
(19.2)%
|
||||||||
Gross margin
|
924
|
1,637
|
(43.6)%
|
4,066
|
6,218
|
(34.6)%
|
||||||||
Operating expenses/(income):
|
||||||||||||||
Selling, general and administrative (SG&A)
|
1,209
|
1,343
|
(10.0)%
|
4,506
|
5,109
|
(11.8)%
|
||||||||
Primary pension plan
|
176
|
22
|
100+%
|
315
|
87
|
100+%
|
||||||||
Supplemental pension plans
|
10
|
11
|
(9.1)%
|
38
|
34
|
11.8%
|
||||||||
Total pension
|
186
|
33
|
100+%
|
353
|
121
|
100+%
|
||||||||
Depreciation and amortization
|
157
|
135
|
16.3%
|
543
|
518
|
4.8%
|
||||||||
Real estate and other, net
|
88
|
45
|
95.6%
|
(324)
|
21
|
(100+)%
|
||||||||
Restructuring and management transition
|
29
|
154
|
(81.2)%
|
298
|
451
|
(33.9)%
|
||||||||
Total operating expenses
|
1,669
|
1,710
|
(2.4)%
|
5,376
|
6,220
|
(13.6)%
|
||||||||
Operating income/(loss)
|
(745)
|
(73)
|
(100+)%
|
(1,310)
|
(2)
|
(100+)%
|
||||||||
Net interest expense
|
57
|
57
|
0.0%
|
226
|
227
|
(0.4)%
|
||||||||
Income/(loss) before income taxes
|
(802)
|
(130)
|
(100+)%
|
(1,536)
|
(229)
|
(100+)%
|
||||||||
Income tax expense/(benefit)
|
(250)
|
(43)
|
(100+)%
|
(551)
|
(77)
|
(100+)%
|
||||||||
Net income/(loss)
|
$ (552)
|
$ (87)
|
(100+)%
|
$ (985)
|
$ (152)
|
(100+)%
|
||||||||
Earnings/(loss) per share - basic and diluted
|
$ (2.51)
|
$ (0.41)
|
(100+)%
|
$ (4.49)
|
$ (0.70)
|
(100+)%
|
||||||||
FINANCIAL DATA:
|
||||||||||||||
Comparable store sales increase/(decrease)
|
(31.7)%
|
(2)
|
(1.8)%
|
|
(25.2)%
|
(2)
|
0.2%
|
|
||||||
Total net sales increase/(decrease)
|
(28.4)%
|
(3)
|
(4.9)%
|
(24.8)%
|
(3)
|
(2.8)%
|
||||||||
Ratios as a percentage of sales:
|
||||||||||||||
Gross margin
|
23.8%
|
30.2%
|
31.3%
|
36.0%
|
||||||||||
SG&A expenses
|
31.1%
|
24.8%
|
34.7%
|
29.6%
|
||||||||||
Total operating expenses
|
43.0%
|
31.5%
|
41.4%
|
36.0%
|
||||||||||
Operating income/(loss)
|
(19.2)%
|
(1.3)%
|
|
(10.1)%
|
(0.0)%
|
|||||||||
Effective income tax rate
|
31.2%
|
33.1%
|
35.9%
|
33.6%
|
||||||||||
COMMON SHARES DATA:
|
||||||||||||||
Outstanding shares at end of period
|
219.3
|
215.9
|
219.3
|
215.9
|
||||||||||
Weighted average shares outstanding (basic and diluted)
|
219.5
|
213.7
|
219.2
|
217.4
|
||||||||||
(1) Three months ended February 2, 2013 and January 28, 2012 contained 14 weeks and 13 weeks, respectively, and the twelve months ended February 2, 2013 and January 28, 2012 contained 53 and 52 weeks, respectively.
|
||||||||||||||
(2) Comparable store sales are calculated on a 13-week and 52-week basis and include sales from new and relocated stores that have been opened for 12 consecutive full fiscal months and Internet sales. Stores closed for an extended period are not included in the comparable stores sales calculation, while stores remodeled and minor expansions not requiring store closures remain in the calculation.
|
||||||||||||||
(3) Excluding the 53rd week, total net sales decreased 31.4.% and 25.7% for the three months and twelve months ended February 2, 2013, respectively.
|
SUMMARY BALANCE SHEETS
|
||||||||||||
(Unaudited)
|
||||||||||||
(Amounts in millions)
|
||||||||||||
Feb. 2,
|
Jan. 28,
|
|||||||||||
2013
|
2012
|
|||||||||||
SUMMARY BALANCE SHEETS:
|
||||||||||||
Current assets
|
||||||||||||
Cash in banks and in transit
|
$ 121
|
$ 175
|
||||||||||
Cash short-term investments
|
809
|
1,332
|
||||||||||
Cash and cash equivalents
|
930
|
1,507
|
||||||||||
Merchandise inventory
|
2,341
|
2,916
|
||||||||||
Income tax receivable
|
57
|
168
|
||||||||||
Deferred income taxes
|
106
|
245
|
||||||||||
Prepaid expenses and other
|
249
|
245
|
||||||||||
Total current assets
|
3,683
|
5,081
|
||||||||||
Property and equipment, net
|
5,353
|
5,176
|
||||||||||
Other assets
|
745
|
1,167
|
||||||||||
Total assets
|
$ 9,781
|
$ 11,424
|
||||||||||
Liabilities and stockholders' equity
|
||||||||||||
Current liabilities
|
||||||||||||
Merchandise accounts payable
|
$ 1,162
|
$ 1,022
|
||||||||||
Other accounts payable and accrued expenses
|
1,395
|
1,503
|
||||||||||
Current maturities of capital leases and note payable
|
26
|
1
|
||||||||||
Current maturities of long-term debt
|
-
|
230
|
||||||||||
Total current liabilities
|
2,583
|
2,756
|
||||||||||
Long-term capital leases and note payable
|
88
|
3
|
||||||||||
Long-term debt
|
2,868
|
2,868
|
||||||||||
Deferred taxes
|
388
|
888
|
||||||||||
Other liabilities
|
683
|
899
|
||||||||||
Total liabilities
|
6,610
|
7,414
|
||||||||||
Stockholders' equity
|
3,171
|
4,010
|
||||||||||
Total liabilities and stockholders' equity
|
$ 9,781
|
$ 11,424
|
SUMMARY STATEMENTS OF CASH FLOWS
|
||||||||||||
(Unaudited)
|
||||||||||||
(Amounts in millions)
|
||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||
Feb. 2,
|
Jan. 28,
|
Feb. 2,
|
Jan. 28,
|
|||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||
STATEMENTS OF CASH FLOWS:
|
||||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income/(loss)
|
$ (552)
|
$ (87)
|
$ (985)
|
$ (152)
|
||||||||
Adjustments to reconcile net income/(loss) to net cash
|
||||||||||||
provided by/(used in) operating activities:
|
||||||||||||
Restructuring and management transition
|
19
|
84
|
121
|
314
|
||||||||
Asset impairments and other charges
|
107
|
59
|
117
|
67
|
||||||||
Net gain on sale of operating assets
|
-
|
(6)
|
-
|
(6)
|
||||||||
Net gain on sale or redemption of non-operating assets
|
-
|
-
|
(397)
|
-
|
||||||||
Depreciation and amortization
|
157
|
135
|
543
|
518
|
||||||||
Benefit plans
|
162
|
9
|
272
|
55
|
||||||||
Stock-based compensation
|
12
|
13
|
50
|
46
|
||||||||
Excess tax benefits from stock-based compensation
|
5
|
(5)
|
(12)
|
(10)
|
||||||||
Deferred taxes
|
(243)
|
(57)
|
(467)
|
(153)
|
||||||||
Change in cash from:
|
||||||||||||
Inventory
|
1,021
|
1,460
|
575
|
297
|
||||||||
Prepaid expenses and other assets
|
36
|
19
|
(5)
|
(67)
|
||||||||
Merchandise accounts payable
|
(246)
|
(809)
|
140
|
(111)
|
||||||||
Current income taxes
|
9
|
19
|
117
|
(15)
|
||||||||
Accrued expenses and other
|
158
|
119
|
(79)
|
37
|
||||||||
Net cash provided by/(used in) operating activities
|
645
|
953
|
(10)
|
820
|
||||||||
Cash flows from investing activities:
|
||||||||||||
Capital expenditures
|
(230)
|
(165)
|
(810)
|
(634)
|
||||||||
Proceeds from the sale or redemption of non-operating
|
||||||||||||
|
assets
|
1
|
-
|
526
|
-
|
|||||||
Acquisition
|
-
|
(268)
|
(9)
|
(268)
|
||||||||
Proceeds from sale of operating assets
|
-
|
14
|
-
|
15
|
||||||||
Cost investment, net
|
-
|
(36)
|
-
|
(36)
|
||||||||
Proceeds from joint venture distribution
|
-
|
-
|
-
|
53
|
||||||||
Net cash provided by/(used in) investing activities
|
(229)
|
(455)
|
(293)
|
(870)
|
||||||||
Cash flows from financing activities:
|
||||||||||||
Payment of long-term debt
|
-
|
-
|
(230)
|
-
|
||||||||
Payment of capital leases and note payable
|
(7)
|
-
|
(20)
|
|||||||||
Financing costs
|
-
|
(5)
|
(4)
|
(20)
|
||||||||
Stock repurchase program
|
-
|
-
|
-
|
(900)
|
||||||||
Proceeds from issuance of stock warrant
|
-
|
-
|
-
|
50
|
||||||||
Proceeds from stock options exercised
|
1
|
6
|
71
|
18
|
||||||||
Other changes in stockholders' equity
|
(5)
|
(34)
|
(5)
|
(35)
|
||||||||
Dividends paid
|
-
|
(43)
|
(86)
|
(178)
|
||||||||
Net cash provided by/(used in) financing activities
|
(11)
|
(76)
|
(274)
|
(1,065)
|
||||||||
Net increase/(decrease) in cash and cash equivalents
|
405
|
422
|
(577)
|
(1,115)
|
||||||||
Cash and cash equivalents at beginning of period
|
525
|
1,085
|
1,507
|
2,622
|
||||||||
Cash and cash equivalents at end of period
|
$ 930
|
$ 1,507
|
$ 930
|
$ 1,507
|
Reconciliation of Non-GAAP Financial Measures
|
||||||||||||
(Unaudited)
|
||||||||||||
(Amounts in millions except per share data)
|
||||||||||||
We define (1) adjusted operating income/(loss) as operating income/(loss) excluding the impact of markdowns related to the alignment of inventory with our new strategy, restructuring and management transition charges, the non-cash impact of the primary pension plan expense and the net gain on sale or redemption of non-operating assets and (2) adjusted net income/(loss) and adjusted earnings/(loss) per share - diluted as net income/(loss) and earnings/(loss) per share - diluted, respectively, excluding the after-tax impacts of markdowns related to the alignment of inventory with our new strategy, restructuring and management transition charges, the non-cash impact of the primary pension plan expense and the net gain on sale or redemption of non-operating assets. We believe that the presentation of these non-GAAP financial measures is useful in order to better understand our financial performance as well as facilitate the comparison of our results to the results of our peer companies. It is important to view each of these non-GAAP financial measures in addition to, rather that as a substitute for, the GAAP measures of operating income/(loss), net income/(loss) and earnings/(loss) per share - diluted, respectively.
|
||||||||||||
ADJUSTED OPERATING INCOME/(LOSS), NON-GAAP FINANCIAL MEASURE
|
||||||||||||
The following table reconciles operating income/(loss), the most directly comparable GAAP measure, to adjusted operating income/(loss), a non-GAAP financial measure:
|
||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||
Feb. 2,
|
Jan. 28,
|
Feb. 2,
|
Jan. 28,
|
|||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||
Operating income/(loss)
|
$ (745)
|
$ (73)
|
$ (1,310)
|
$ (2)
|
||||||||
As a percent of sales
|
(19.2)%
|
(1.3)%
|
(10.1)%
|
(0.0)%
|
||||||||
Add:
|
Markdowns - inventory strategy alignment
|
-
|
-
|
155
|
-
|
|||||||
Restructuring and management transition
|
||||||||||||
charges
|
29
|
154
|
298
|
451
|
||||||||
Primary pension plan expense
|
176
|
22
|
315
|
87
|
||||||||
Less:
|
Net gain on sale or redemption of non-operating
|
|||||||||||
assets
|
-
|
-
|
(397)
|
-
|
||||||||
Adjusted operating income/(loss) (non-GAAP)
|
$ (540)
|
$ 103
|
$ (939)
|
$ 536
|
||||||||
As a percent of sales
|
(13.9)%
|
1.9%
|
(7.2)%
|
3.1%
|
||||||||
ADJUSTED NET INCOME/(LOSS) AND ADJUSTED EARNINGS/(LOSS) PER SHARE - DILUTED, NON-GAAP
|
||||||||||||
FINANCIAL MEASURES
|
||||||||||||
The following table reconciles net income/(loss) and earnings/(loss) per share-diluted, the most directly comparable GAAP measures, to adjusted net income/(loss) and adjusted earnings/(loss) per share - diluted, non-GAAP financial measures:
|
||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||
Feb. 2,
|
Jan. 28,
|
Feb. 2,
|
Jan. 28,
|
|||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||
Net income/(loss)
|
$ (552)
|
$ (87)
|
$ (985)
|
$ (152)
|
||||||||
Earnings/(loss) per share - diluted
|
$ (2.51)
|
$ (0.41)
|
$ (4.49)
|
$ (0.70)
|
||||||||
Add:
|
Markdowns - inventory strategy alignment, net
|
|||||||||||
|
of tax of $-, $-, $60 and $-
|
-
|
-
|
95
|
-
|
|||||||
Restructuring and management transition
|
||||||||||||
charges, net of tax of $12, $35, $116 and $145
|
17
|
119
|
182
|
306
|
||||||||
Primary pension plan expense, net of tax of $68,
|
|
|||||||||||
$9, $122, $34
|
108
|
13
|
193
|
53
|
||||||||
Less:
|
Net gain on sale or redemption of non-operating
|
|||||||||||
assets, net of tax of $-, $-, $146 and $-
|
-
|
-
|
(251)
|
-
|
||||||||
Adjusted net income/loss (non-GAAP)
|
$ (427)
|
$ 45
|
$ (766)
|
$ 207
|
||||||||
Adjusted earnings/(loss) per share - diluted (non-GAAP)
|
$ (1.95)
|
$ 0.21
|
$ (3.49)
|
$ 0.94
|
Reconciliation of Non-GAAP Financial Measures
|
||||||||||||
(Unaudited)
|
||||||||||||
(Amounts in millions except per share data)
|
||||||||||||
Free cash flow is a key financial measure of our ability to generate additional cash from operating our business and in evaluating our financial performance. We define free cash flow as cash flow from operating activities, less capital expenditures and dividends paid, plus the proceeds from the sale of operating assets. Free cash flow is a relevant indicator of our ability to repay maturing debt, revise our dividend policy or fund other uses of capital that we believe will enhance stockholder value. Free cash flow is considered a non-GAAP financial measure under the rules of the SEC. Free cash flow is limited and does not represent remaining cash flow available for discretionary expenditures due to the fact that the measure does not deduct payments required for debt maturities, pay-down of off-balance sheet pension debt, and other obligations or payments made for business acquisitions. Therefore, it is important to view free cash flow in addition to, rather than as a substitute for, our entire statement of cash flows and those measures prepared in accordance with GAAP.
|
||||||||||||
FREE CASH FLOW, NON-GAAP FINANCIAL MEASURE
|
||||||||||||
The following table reconciles cash flow from operating activities, the most directly comparable GAAP measure, to free cash flow, a non-GAAP financial measure:
|
||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||
Feb. 2,
|
Jan. 28,
|
Feb. 2,
|
Jan. 28,
|
|||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||
Net cash provided by/(used in) operating activities
|
$ 645
|
|
$ 953
|
$ (10)
|
$ 820
|
|||||||
Add:
|
Proceeds from sale of operating assets
|
-
|
14
|
-
|
15
|
|||||||
Less:
|
Capital expenditures
|
(230)
|
|
(165)
|
(810)
|
(634)
|
||||||
Dividends paid
|
-
|
|
(43)
|
(86)
|
(178)
|
|||||||
Free cash flow (non-GAAP)
|
$ 415
|
|
$ 759
|
$ (906)
|
|
$ 23
|
||||||
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