8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

June 26, 2020

Date of Report (date of earliest event reported)

J. C. PENNEY COMPANY, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-15274	26-0037077
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6501 Legacy Drive Plano, Texas	75024-3698
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (972) 431-1000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock of 50 cents par value	*	*
Preferred Stock Purchase Rights	*	*

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

* On May 20, 2020, NYSE Regulation, Inc. filed a Form 25 with the Securities and Exchange Commission (the “SEC”) to delist J. C. Penney Company, Inc.’s common stock (the “common stock”) from the New York Stock Exchange. The deregistration of the common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be effective 90 days, or such shorter period as the SEC may determine, after filing of the Form 25. Upon deregistration of the common stock under Section 12(b) of the Exchange Act, the common stock will remain registered under Section 12(g) of the Exchange Act.

Item 7.01. Regulation FD Disclosure.

As previously reported, on June 8, 2020, J. C. Penney Corporation, Inc. (“JCP”), as borrower, and J. C. Penney Company, Inc. (the “Company”) and certain of its subsidiaries, as guarantors, entered into a Superpriority Senior Secured Debtor-In-Possession Credit and Guaranty Agreement (the “DIP Credit Agreement”) with the financial institutions identified therein as lenders (the “Lenders”), GLAS USA LLC, as administrative agent (the “Administrative Agent”), and GLAS Americas LLC, as collateral agent. Pursuant to the DIP Credit Agreement, the Company and JCP are required to deliver to the Administrative Agent for distribution to each Lender, among other things, the Company’s consolidated monthly financial statements and certain other financial information as specified therein (the “Monthly Information”). Certain portions of the Monthly Information as of and for the month ended June 6, 2020 (the “May 2020 Monthly Information”) is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The Company cautions investors and potential investors not to rely upon the May 2020 Monthly Information, as it was not prepared for the purpose of providing any basis for an investment decision relating to any of the securities of the Company. The May 2020 Monthly Information does not include certain quarterly adjustments and other important explanatory notes, has not been audited or reviewed by any independent public accounting firm, and may be subject to future reconciliation or adjustments, including adjustments related to the Company’s bankruptcy filing. In addition, the May 2020 Monthly Information is limited in scope and covers a limited time period, and accordingly, should not be viewed as indicative of future results.

The information disclosed in this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibit 99.1	May 2020 Monthly Information
	Exhibit 104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURE

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

J. C. PENNEY COMPANY, INC.
By:	/s/ Bill Wafford
	Bill Wafford
	Executive Vice President, Chief Financial Officer

Date: June 26, 2020

EX-99.1

Exhibit 99.1

J. C. PENNEY COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Month Ended						Four Months Ended
	June 6,			June 8,			June 6,			June 8,
(In millions, except per share data)	2020			2019			2020			2019
Total net sales	$	266		$	1,003		$	1,348		$	3,442
Credit income and other		7			32			121			148
Total revenues		273			1,035			1,469			3,590
Costs and expenses/(income):
Cost of goods sold (exclusive of depreciation and amortization shown separately below)		166			645			979			2,275
Selling, general and administrative (SG&A)		113			313			685			1,169
Depreciation and amortization		50			56			185			203
Real estate and other, net		(3	)		6			(5	)		1
Restructuring and management transition		7			2			162			22
Total costs and expenses		333			1,022			2,006			3,670
Operating income/(loss)		(60	)		13			(537	)		(80	)
Other components of net periodic pension cost/(income)		(8	)		(4	)		(31	)		(18	)
Net interest expense		25			27			100			100
Loss due to discontinuance of hedge accounting		—			—			77			—
Reorganization items, net		72			—			72			—
Income/(loss) before income taxes		(149	)		(10	)		(755	)		(162	)
Income tax expense/(benefit)		(1	)		1			(61	)		3
Net income/(loss)	$	(148	)	$	(11	)	$	(694	)	$	(165	)
Earnings/(loss) per share - basic	$	(0.46	)	$	(0.03	)	$	(2.14	)	$	(0.52	)
Earnings/(loss) per share - diluted	$	(0.46	)	$	(0.03	)	$	(2.14	)	$	(0.52	)

J. C. PENNEY COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 6,			June 8,
	2020			2019
(In millions)
Assets
Current assets:
Cash in banks and in transit	$	154		$	148
Cash short-term investments		583			7
Cash and cash equivalents		737			155
Merchandise inventory		2,124			2,398
Prepaid expenses and other		300			297
Total current assets		3,161			2,850
Property and equipment, net		3,306			3,626
Operating lease assets		929			912
Prepaid pension		144			159
Other assets		626			662
Total assets	$	8,166		$	8,209
Liabilities and stockholders’ equity
Current liabilities:
Merchandise accounts payable	$	583		$	807
Other accounts payable and accrued expenses		919			881
Current operating lease liabilities		101			83
Current portion of finance leases and note payable		—			2
Current portion of long-term debt, net		4,884			92
Total current liabilities		6,487			1,865
Noncurrent operating lease liabilities		1,080			1,076
Long-term debt		—			3,793
Deferred taxes		47			119
Other liabilities		355			330
Total liabilities		7,969			7,183
Stockholders’ equity
Common stock		161			159
Additional paid-in capital		4,721			4,719
Reinvested earnings/(accumulated deficit)		(4,363	)		(3,566	)
Accumulated other comprehensive income/(loss)		(322	)		(286	)
Total stockholders’ equity		197			1,026
Total liabilities and stockholders’ equity	$	8,166		$	8,209

J. C. PENNEY COMPANY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

								Reinvested			Accumulated
	Number of				Additional			Earnings/			Other
	Common		Common		Paid-in			(Accumulated			Comprehensive			Total Stockholders’
(In millions)	Shares		Stock		Capital			Deficit)			Income/(Loss)			Equity
February 1, 2020		320.5	$	160	$	4,723		$	(3,667	)	$	(387	)	$	829
Net income/(loss)		—		—		—			(546	)		—			(546	)
Discontinuance of hedge accounting		—		—		—			—			63			63
Other comprehensive income/(loss)		—		—		—			—			1			1
Stock-based compensation and other		1.4		1		2			(2	)		—			1
May 2, 2020		321.9		161		4,725			(4,215	)		(323	)		348
Net income/(loss)		—		—		—			(148	)		—			(148	)
Other comprehensive income/(loss)		—		—		—			—			1			1
Stock-based compensation and other		—		—		(4	)		—			—			(4	)
June 6, 2020		321.9	$	161	$	4,721		$	(4,363	)	$	(322	)	$	196
								Reinvested			Accumulated
	Number of				Additional			Earnings/			Other
	Common		Common		Paid-in			(Accumulated			Comprehensive			Total Stockholders’
(In millions)	Shares		Stock		Capital			Deficit)			Income/(Loss)			Equity
February 2, 2019		316.1	$	158	$	4,713		$	(3,373	)	$	(328	)	$	1,170
ASC 842 (Leases) and ASU 2018-02 (Stranded Taxes) adoption		—		—		—			(26	)		53			27
Net income/(loss)		—		—		—			(154	)		—			(154	)
Other comprehensive income/(loss)		—		—		—			—			(11	)		(11	)
Stock-based compensation and other		0.7		—		2			—			—			2
May 4, 2019		316.8		158		4,715			(3,553	)		(286	)		1,034
Net income/(loss)		—		—		—			(11	)		—			(11	)
Stock-based compensation and other		0.3		1		4			(2	)		—			3
June 8, 2019		317.1	$	159	$	4,719		$	(3,566	)	$	(286	)	$	1,026

J. C. PENNEY COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Month Ended						Four Months Ended
	June 6,			June 8,			June 6,			June 8,
(In millions)	2020			2019			2020			2019
Cash flows from operating activities:
Net income/(loss)	$	(148	)	$	(11	)	$	(694	)	$	(165	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Restructuring and management transition		—			—			139			15
Net gain on sale of operating assets		—			7			—			3
Discontinuance of hedge accounting		—			—			77			—
Depreciation and amortization		50			56			185			203
Benefit plans		(5	)		(9	)		(27	)		(23	)
Stock-based compensation		(5	)		3			(3	)		5
Deferred taxes		—			—			(60	)		(3	)
Change in cash from:
Inventory		97			79			42			39
Prepaid expenses and other assets		(28	)		(10	)		(126	)		(108	)
Merchandise accounts payable		4			(35	)		(203	)		(40	)
Income taxes		—			(4	)		(1	)		(1	)
Accrued expenses and other		124			(44	)		(54	)		(98	)
Net cash provided by/(used in) operating activities		89			32			(725	)		(173	)
Cash flows from investing activities:
Capital expenditures		—			(18	)		(33	)		(89	)
Proceeds from sale of operating assets		—			4			—			12
Net cash provided by/(used in) investing activities		—			(14	)		(33	)		(77	)
Cash flows from financing activities:
Proceeds from borrowings under the credit facility		—			221			1,950			629
Payments of borrowings under the credit facility		—			(255	)		(771	)		(545	)
Payments of finance leases and note payable		—			—			(1	)		(1	)
Payments of long-term debt		—			—			(19	)		(11	)
Debtor-in-possession financing costs		(50	)		—			(50	)		—
Net cash provided by/(used in) financing activities		(50	)		(34	)		1,109			72
Net increase/(decrease) in cash and cash equivalents		39			(16	)		351			(178	)
Cash and cash equivalents at beginning of period		698			171			386			333
Cash and cash equivalents at end of period	$	737		$	155		$	737		$	155

(1)     4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Monthly 4-Wall EBITDA numbers do not reflect certain allocations made only on an annual basis.

(1)     Operating Profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

(1)     Controllable expenses include store salaries, facilities expenses and utilities expenses, among others.

(1)     Noncontrollable expenses include expenses relating to marketing, display, maintenance and repairs, among others.

(1)     4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Monthly 4-Wall EBITDA numbers do not reflect certain allocations made only on an annual basis.

(1)     Operating Profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

(1)     Controllable expenses include store salaries, facilities expenses and utilities expenses, among others.

(1)     Noncontrollable expenses include expenses relating to marketing, display, maintenance and repairs, among others.

(1)     4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Monthly 4-Wall EBITDA numbers do not reflect certain allocations made only on an annual basis.

(1)     Operating Profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

(1)     Controllable expenses include store salaries, facilities expenses and utilities expenses, among others.

(1)     Noncontrollable expenses include expenses relating to marketing, display, maintenance and repairs, among others.

(1)     4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Monthly 4-Wall EBITDA numbers do not reflect certain allocations made only on an annual basis.

(1)     Operating Profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

(1)     Controllable expenses include store salaries, facilities expenses and utilities expenses, among others.

(1)     Noncontrollable expenses include expenses relating to marketing, display, maintenance and repairs, among others.

XML

Document and Entity Information	Jun. 26, 2020
Document And Entity Information [Line Items]
Entity Registrant Name	J C PENNEY CO INC
Entity Central Index Key	0001166126
Amendment Flag	false
Document Type	8-K
Document Period End Date	Jun. 26, 2020
Entity Incorporation State Country Code	DE
Entity File Number	1-15274
Entity Tax Identification Number	26-0037077
Entity Address, Address Line One	6501 Legacy Drive
Entity Address, City or Town	Plano
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75024-3698
City Area Code	972
Local Phone Number	431-1000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document And Entity Information [Line Items]
Security Exchange Name	NONE
Security 12b Title	Common Stock of 50 cents par value
No Trading Symbol Flag	true
Preferred Stock [Member]
Document And Entity Information [Line Items]
Security Exchange Name	NONE
Security 12b Title	Preferred Stock Purchase Rights
No Trading Symbol Flag	true