-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J/Zv0tuSTwEbAKRN7E+QhwkKULHHNk7qSgk2RX/3far0jUfqm+D5sXEmAdLrA6DG WeTWzZHD53QzTkRpaIzPgg== 0000930661-97-002154.txt : 19970912 0000930661-97-002154.hdr.sgml : 19970912 ACCESSION NUMBER: 0000930661-97-002154 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970726 FILED AS OF DATE: 19970909 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENNEY J C CO INC CENTRAL INDEX KEY: 0000077182 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 135583779 STATE OF INCORPORATION: DE FISCAL YEAR END: 0126 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00777 FILM NUMBER: 97677363 BUSINESS ADDRESS: STREET 1: 6501 LEGACY DR CITY: PLANO STATE: TX ZIP: 75024-3698 BUSINESS PHONE: 2144311000 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 --------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the 13 and 26 week periods Commission file number 1-777 ended July 26, 1997 J. C. PENNEY COMPANY, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-5583779 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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 ------------------------- ------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 248,897,288 shares of Common Stock of 50c par value, as of July 26, 1997. -1- PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS. The following interim financial information is unaudited but, in the opinion of the Company, includes all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation. Certain amounts have been reclassified to conform with the current period presentation. The financial information should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the 52 weeks ended January 25, 1997. Statements of Income (Amounts in millions except per share data)
13 weeks ended 26 weeks ended -------------------------- -------------------------- Jul. 26, Jul. 27, Jul. 26, Jul. 27, 1997 1996 1997 1996 ---------- ---------- ------------ --------- Retail sales $6,420 $4,507 $12,901 $8,959 Insurance revenue 229 201 453 393 ------ ------ ------- ------ Total revenue 6,649 4,708 13,354 9,352 ------ ------ ------- ------ Costs and expenses Cost of goods sold, occupancy, buying, and warehousing costs 4,711 3,195 9,388 6,307 Selling, general, and administrative expenses 1,471 1,160 2,985 2,314 Costs and expenses of insurance operations 175 154 347 304 Other (19) (13) (29) (35) Net interest expense and credit operations 122 62 203 85 Amortization of intangible assets and minority interest 17 -- 58 -- Business acquisition and consolidation expenses, net 25 -- 27 -- ------ ------ ------- ------ Total costs and expenses 6,502 4,558 12,979 8,975 ------ ------ ------- ------ Income before income taxes 147 150 375 377 Income taxes 57 57 146 142 ------ ------ ------- ------ Net income $ 90 $ 93 $ 229 $ 235 ====== ====== ======= ====== Net income per common share Primary $ .32 $ .37 $ .85 $ .95 ====== ====== ======= ====== Fully diluted $ .32 $ .37 $ .85 $ .94 ====== ====== ======= ====== Weighted average common shares outstanding Primary 250.7 227.8 246.7 227.6 ====== ====== ======= ====== Fully diluted 269.7 247.6 266.3 247.3 ====== ====== ======= ======
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Balance Sheets (Amounts in millions) Jul. 26, Jul. 27, Jan. 25, 1997 1996 1997 -------- -------- -------- ASSETS Current assets Cash and short term investments of $678, $212, and $131 $ 703 $ 239 $ 131 Receivables, net 4,261 4,563 5,757 Merchandise inventory (LIFO reserves of $219, $226, and $265) 6,224 4,637 5,722 Prepaid expenses 88 95 102 ------- ------- ------- Total current assets 11,276 9,534 11,712 Properties, net of accumulated depreciation of $3,069, $2,127, and $2,701 5,098 4,317 5,014 Investments, primarily insurance operations 1,682 1,626 1,605 Deferred insurance policy acquisition costs 704 624 666 Goodwill and other intangible assets 3,116 -- 1,861 Other assets 1,369 1,322 1,230 ------- ------- ------- $23,245 $17,423 $22,088 ======= ======= =======
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Balance Sheets (Amounts in millions) Jul. 26, Jul. 27, Jan. 25, 1997 1996 1997 --------- --------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 3,215 $ 2,271 $ 3,738 Short term debt 1,241 1,948 3,950 Current maturities of long term debt 250 -- 250 Deferred taxes 81 106 28 ------- ------- ------- Total current liabilities 4,787 4,325 7,966 Long term debt 7,492 4,032 4,565 Deferred taxes 1,503 1,234 1,362 Insurance policy and claims reserves 817 728 781 Other liabilities 1,451 1,219 1,383 ------- ------- ------- Total liabilities 16,050 11,538 16,057 Minority interest in Eckerd -- -- 79 Stockholders' equity Preferred stock, without par value: Authorized, 25 million shares - issued, 1 million shares of Series B ESOP convertible preferred 547 581 568 Guaranteed ESOP obligation (97) (186) (142) Common stock, par value 50c: Authorized, 1,250 million shares - issued, 249, 225, and 224 million shares 2,697 1,154 1,416 ------- ------- ------- Total capital stock 3,147 1,549 1,842 ------- ------- ------- Reinvested earnings at beginning of year 4,110 4,397 4,397 Net income 229 235 565 Net unrealized change in debt and equity securities, and currency translation adjustments (6) (42) (21) Retirement of common stock --- -- (320) Common stock dividends declared (265) (234) (471) Preferred stock dividends declared, net of taxes (20) (20) (40) ------- ------- ------- Reinvested earnings at end of period 4,048 4,336 4,110 ------- ------- ------- Total stockholders' equity 7,195 5,885 5,952 ------- ------- ------- $23,245 $17,423 $22,088 ======= ======= =======
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Statements of Cash Flows (Amounts in millions) 26 weeks ended ------------------- Jul. 26, Jul. 27, 1997 1996 -------- -------- Operating activities Net income $ 229 $ 235 Depreciation and amortization, including intangibles 267 173 Deferred taxes 170 46 Change in cash from: Customer receivables 759 693 Inventories, net of trade payables (634) (565) Other assets and liabilities, net (313) (357) ------- ----- 478 225 ------- ----- Investing activities Capital expenditures (487) (295) Proceeds from the sale of bank receivables 684 -- Purchases of investment securities (271) (235) Proceeds from sales of investment securities 184 197 ------- ----- 110 (333) ------- ----- Financing activities Increase/(decrease) in short term debt (2,709) 439 Net proceeds from the issuance of long term debt 2,979 -- Payment of long term debt (45) (42) Common stock issued, net 51 42 Preferred stock retired (21) (22) Dividends paid, preferred and common (271) (243) ------- ----- (16) 174 ------- ----- Net increase in cash and short term investments 572 66 Cash and short term investments at beginning of year 131 173 ------- ----- Cash and short term investments at end of second quarter $ 703 $ 239 ======= =====
Non-cash transaction - -------------------- On February 27, 1997, the Company completed the acquisition of Eckerd Corporation through the exchange of 23.2 million shares of JCPenney common stock for the remaining 49.9 per cent of the outstanding common stock of Eckerd. The value of the non-cash portion of the acquisition was approximately $1.3 billion. -5- ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Financial Condition - ------------------- The Company completed the acquisition of Eckerd Corporation (Eckerd) on February 27, 1997. The acquisition was accomplished through a two step transaction consisting of a cash tender offer for 50.1 per cent of the outstanding Eckerd common stock (completed in December 1996), followed by the exchange of approximately 23.2 million shares of JCPenney common stock for the remaining 49.9 per cent of Eckerd common stock (completed in February 1997). The total value of the acquisition, including Eckerd debt assumed by the Company, was approximately $3.3 billion. The pro forma effects of the Company's recent drugstore acquisitions, assuming the acquisitions had occurred at the beginning of fiscal 1996, for the 13 and 26 weeks ended July 27, 1996 would have been as follows: ($ in millions, except per share information)
13 weeks ended 26 weeks ended July 27, 1996 July 27, 1996 ---------------------- --------------------- Historical Pro forma Historical Pro forma ---------- --------- ---------- --------- Retail sales $4,507 $6,013 $8,959 $12,068 FIFO EBIT 212 263 462 592 Net income 93 79 235 218 Earnings per share fully diluted .37 .29 .94 .81
Merchandise inventory on a FIFO basis totaled $6,443 million at July 26, 1997 compared with $4,863 million a year earlier. The majority of the increase is related to the Company's drugstore acquisitions. Merchandise inventory for JCPenney stores and catalog totaled $4,599 million at the end of the 1997 second quarter compared with $4,434 million at the end of last year's second quarter, an increase of 3.7 per cent. During the second quarter, the Company cleared seasonal merchandise and inventory positions are now in line with sales estimates for the second half of the year. Drugstore merchandise inventories totaled $1,844 million at the end of the second quarter compared with $429 million at the end of last year's second quarter. Properties, net of accumulated depreciation, totaled $5,058 million at the end of the 1997 second quarter compared with $4,317 million a year earlier. The increase is principally related to the addition of 30 new and relocated JCPenney stores and the drugstore acquisitions, including Eckerd's second quarter acquisition of 114 former Revco drugstores in the Norfolk and Richmond, Virginia markets. As of July 26, 1997, the Company operated 1,226 JCPenney stores and 2,798 drugstores. Goodwill and other intangible assets, net, which is principally related to the Company's drugstore acquisitions, totaled $3,116 million at July 26, 1997. -6- Long term debt totaled $7,492 million at the end of the second quarter compared with $4,032 million a year earlier. The Company issued $3.0 billion of debt securities in the first quarter of 1997, with the proceeds used principally to fund the Eckerd acquisition. The new debt lowered the average interest rate and extended the average maturity for the Company's aggregate outstanding long term debt. Total debt, both on and off-balance sheet, was $11.0 billion at July 26, 1997, up $4.1 billion from a year earlier. Results of Operations - --------------------- Ratios useful in analyzing the results of operations are as follows:
13 weeks ended 26 weeks ended ------------------------ ----------------------- Jul. 26, Jul. 27, Jul. 26, Jul. 27, 1997 1996 1997 1996 -------- -------- -------- -------- Sales and revenue, per cent increase/(decrease) JCPenney stores 3.2 1.6 4.5 1.1 Eckerd drugstores 13.2 (1) 10.4 (1) 12.2 (1) 10.6 (1) Catalog 4.8 (4.7) 2.7 (1.7) Insurance 13.9 22.7 15.3 22.9 Comparable store sales, per cent increase/(decrease) JCPenney stores 2.0 0.4 3.3 (0.2) Eckerd drugstores 7.8 7.9 7.7 8.5 FIFO gross margin, per cent of sales JCPenney stores and catalog 29.6 29.9 30.3 30.6 Eckerd drugstores 21.5 21.8 (1) 21.8 22.0 (1) LIFO gross margin, per cent of sales Eckerd drugstores 21.2 21.5 (1) 21.7 21.8 (1) Selling, general, and administrative expenses, per cent of sales JCPenney stores and catalog 25.8 26.6 26.5 26.7 Eckerd drugstores 17.6 18.4 (1) 17.1 17.9 (1) FIFO operating profit, per cent of revenue (2) JCPenney stores and catalog 3.8 3.3 3.8 3.9 Eckerd drugstores 3.9 3.4 (1) 4.7 4.1 (1) Insurance 23.6 23.4 23.4 22.6 Effective income tax rate 38.9 37.5 39.0 37.6
(1) The percentage shown has been calculated using 1996 pro forma data, assuming the Company's drugstore acquisitions had occurred at the beginning of fiscal 1996. (2) FIFO operating profit by segment excludes net interest and credit operations, amortization of intangible assets and minority interest, LIFO adjustments, business acquisition and consolidation expenses, net, and income taxes. -7- Operating profit, excluding net interest and credit operations, amortization of intangible assets and minority interest, business acquisition and consolidation expenses, net, and income taxes (EBIT) totaled $311 million for the 13 weeks ended July 26, 1997, an increase of $99 million, or 46.7 per cent compared with the prior year's second quarter. Operating earnings before business acquisition and consolidation expenses, net, totaled $105 million, or 38 cents per share, in the second quarter, and net income totaled $90 million, or 32 cents per share compared with $93 million, or 37 cents per share in last year's second quarter. For the 26 weeks ended July 26, 1997 EBIT totaled $663 million compared with $462 million in the prior year, a 43.5 per cent increase. Operating earnings before business acquisition and consolidation expenses, net, totaled $245 million, or 91 cents per share, and net income totaled $229 million, or 85 cents per share, compared with $235 million, or 94 cents per share, in last year's first half. The average number of fully diluted shares increased by 22.1 million shares for the second quarter, and 19.0 million shares for the first six months compared with the prior year, principally as a result of the exchange of common stock in the Eckerd acquisition. JCPenney Stores and Catalog Sales of JCPenney stores for the second quarter totaled $3,349 million, an increase of 3.2 per cent compared with second quarter 1996. On a comparable store basis, including only stores open at least a year, sales increased 2.0 per cent for the period. Catalog sales totaled $795 million in the second quarter, an increase of 4.8 per cent over last year's comparable period. FIFO gross margin for JCPenney stores and catalog totaled $1,227 million, an increase of $29 million over last year's second quarter. FIFO gross margin as a per cent of sales declined by 30 basis points for the quarter compared with last year. Second quarter margins were impacted by the clearance of seasonal merchandise. SG&A expenses were well managed and leveraged during the quarter, improving by 80 basis points compared with last year's second quarter. Improvements were primarily related to reductions in advertising, including printing and paper costs. For the six months ended July 26, 1997 sales of JCPenney stores totaled $6,681 million, an increase of 4.5 per cent (3.3 per cent for comparable stores), and Catalog sales totaled $1,605 million, an increase of 2.7 per cent compared with the first half of 1996. On a year to date basis, FIFO gross margin increased by $79 million to $2,511 million. As a per cent of sales, FIFO gross margin declined by 30 basis points compared with last year, primarily as a result of clearance activities associated with higher inventory levels. SG&A expenses were leveraged in the first half, improving by 20 basis points compared with last year. Eckerd Drugstores The following discussion of operations compares 1997 results with 1996 pro forma results, assuming the drugstore acquisitions had occurred at the beginning of fiscal 1996. Drugstore sales totaled $2,276 million for the second quarter, an increase of 13.2 per cent compared with last year's second quarter. The increase is primarily related to increases in prescription sales, in particular managed care sales, store acquisitions and new store expansion, and increased sales productivity from stores which have been relocated to free standing locations. On a comparable store basis, sales increased by 7.8 per cent for the quarter. FIFO gross margin totaled $489 million for the second quarter, an increase of -8- $52 million, or 11.9 per cent compared with the 1996 period. As a per cent of sales, FIFO gross margin decreased by 30 basis points for the quarter. Second quarter margin declines were related primarily to promotional activities, including the grand re-opening of the former Fay's drugstores. In addition, the Company recorded a $7 million LIFO charge in the second quarter related to Eckerd Drugstores. It is anticipated that LIFO adjustments will be recorded on a quarterly basis going forward to reflect the inflationary environment for prescription drugs. SG&A expenses were well managed and leveraged during the quarter, improving as a per cent of sales by 80 basis points. Drugstore sales for the first six months totaled $4,615 million, an increase of 12.2 per cent over the comparable period last year, with comparable store sales increasing by 7.7 per cent. For the first half, gross margin totaled $1,009 million, an increase of $105 million, or 11.6 per cent over 1996 first half pro forma results. For the first six months, gross margin has also been impacted by higher levels of managed care sales which carry lower margins. SG&A expenses were leveraged for the first half, improving by 80 basis points as a per cent of sales. Insurance Revenue totaled $229 million in the second quarter, an increase of $28 million, or 13.9 per cent, over the comparable 1996 period. EBIT for the quarter totaled $54 million compared with $47 million in last year's second quarter. For the first six months of 1997, revenue was $453 million, an increase of 15.3 per cent over the prior year, and EBIT was $106 million, an increase of 19.1 per cent over 1996's first half. These results continue the strong performance that has been experienced over the past five years, and are primarily attributable to successful marketing programs with businesses which offer credit cards, principally banks, oil companies, and retailers. Other Other unallocated operating profits totaled $19 million in the second quarter compared with $13 million last year, and consisted principally of gains on real estate and insurance company investment transactions. For the 26 weeks ended July 26, 1997, the Company had recognized unallocated gains of $29 million compared with $36 million in last year's first half. Net Interest Expense and Credit Operations Net interest expense and credit operations increased for both the second quarter and for the first half of 1997 compared with last year's comparable periods. The increase for both the quarter and half was principally attributable to higher interest costs associated with the drugstore acquisitions and to working capital requirements for JCPenney stores and catalog. Finance charge revenue has increased in 1997 compared with 1996 levels as a result of modifications made to credit terms in selected states, and has offset increases in credit operating expenses, including bad debt. Net bad debt, which is the largest single component of credit costs, has increased by $3 million for the quarter and $10 million for the first half compared with the comparable 1996 periods. The 90-day delinquency rate for customer receivables at the end of the second quarter was 4.8 per cent, and was level with the comparable period in 1996. -9- Business Acquisition and Consolidation Expenses Business acquisition and consolidation expenses, net, totaled $25 million for the second quarter. These expenses were comprised principally of costs associated with the integration of the drugstore operations which were partially offset by a supplemental payment related to the 1995 sale of the Company's Business Services operation. Also, during the quarter, the Company recorded $17 million of amortization of goodwill and other intangible assets in connection with its drugstore acquisitions. The Company's business depends to a great extent on the last quarter of the year. Historically, sales for that period have averaged approximately one third of annual sales. Accordingly, the results of operations for the 13 and 26 weeks ended July 26, 1997 are not necessarily indicative of the results for the entire year. Early Retirement Program - ------------------------ On August 11, 1997, the Company announced that it is offering a voluntary early retirement program to approximately 1,500, or about five per cent, of its management workforce. This program, which will be available to managers in JCPenney Stores, Catalog, and corporate support functions, will enable the Company to significantly reduce operating expenses and enhance its competitive position. The Company expects to record a one-time, pre-tax charge of up to $200 million for the early retirement program later this year, and will reduce its cost structure by up to $120 million annually if all eligible managers participate. The size of the charge will be determined by the number of managers who elect to participate in the program. New Accounting Rules - -------------------- The Financial Accounting Standards Board (FASB) has issued several Statements of Financial Accounting Standards (SFAS) in 1997 which may impact the Company's accounting treatment and/or disclosure as follows: SFAS No. 128, "Earnings Per Share" was issued in February 1997 and supersedes Accounting Principles Board Opinion No. 15, "Earnings Per Share". The new rules will replace primary and fully diluted earnings per share with basic and diluted earnings per share. The new rules, which are effective for periods ending after December 15, 1997, are not expected to have a material impact on the Company. SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997. The new rules establish standards for reporting and displaying comprehensive income and its components in a full set of general-purpose financial statements. The new rules, which are effective for fiscal years beginning after December 15, 1997, are not expected to have a material impact on the Company. SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" was issued in June 1997 and supersedes SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise". The new rules change the -10- manner in which operating segments are defined and reported externally to be consistent with the basis on which they are reported and evaluated internally. The impact that this statement will have on the Company has not been fully determined. The new rules are effective for periods beginning after December 15, 1997. -11- PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS. The Company has no material legal proceedings pending against it. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Annual Meeting of Stockholders of the Company was held on May 16, 1997, at which the five matters described below were submitted to a vote of stockholders with the voting results as indicated. (1) Election of directors for a three-year term expiring at the Year 2000 Annual Meeting of the Company's stockholders: NOMINEE FOR AUTHORITY WITHHELD ------- --- ------------------ V. E. Jordan, Jr. 230,642,631 4,830,154 J. C. Pfeiffer 233,354,918 2,117,867 R. G. Turner 233,334,710 2,138,075 W. B. Tygart 233,277,081 2,195,704 (2) The Board of Directors' proposal concerning the employment of KPMG Peat Marwick LLP as auditors for the fiscal year ending January 31, 1998: FOR AGAINST ABSTAIN --- ------- ------- 232,351,598 2,198,033 923,154 (3) The Board of Directors' proposal concerning the adoption of the J. C. Penney Company, Inc. 1997 Equity Compensation Plan: BROKER FOR AGAINST ABSTAIN NON-VOTES --- --------- ------- --------- 203,491,172 15,648,423 3,007,933 13,325,257 (4) A stockholder resolution concerning the elimination of the classification of the Board of Directors: BROKER FOR AGAINST ABSTAIN NON-VOTES --- --------- ------- --------- 92,109,655 125,617,837 3,433,079 14,312,214 (5) A stockholder resolution concerning the submission to a stockholder vote of the Company's stockholder rights plan: BROKER FOR AGAINST ABSTAIN NON-VOTES --- --------- ------- --------- 113,323,506 103,783,458 4,053,607 14,312,214 -12- ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits -------- The following documents are filed as exhibits to this report: 11 Computation of net income per common share. 12(a) Computation of ratios of available income to combined fixed charges and preferred stock dividend requirement. 12(b) Computation of ratios of available income to fixed charges. 27 Financial Data Schedule for the six months ended July 26, 1997. (b) Reports on Form 8-K ------------------- None. -13- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. J. C. PENNEY COMPANY, INC. By /S/ W. J. Alcorn ----------------------- W. J. Alcorn Vice President and Controller (Principal Accounting Officer) Date: September 5, 1997 EX-11 2 COMPUTATION OF NET INCOME PER COMMON SHARE Exhibit 11 J. C. PENNEY COMPANY, INC. and Consolidated Subsidiaries Computation of Net Income Per Common Share ------------------------------------------ (Amounts in millions except per common share data)
26 Weeks Ended -------------------------------------------------------- July 26, 1997 July 27, 1996 -------------------------- ------------------------- Shares Income Shares Income ---------- ---------- --------- ---------- Primary: - -------- Net income $ 229 $ 235 Dividend on Series B ESOP convertible preferred stock (after-tax) (20) (20) ---------- ---------- Adjusted net income 209 215 Weighted average number of shares outstanding 244.5 224.9 Common stock equivalents: Stock options and other dilutive effect 2.2 2.7 ---------- ---------- --------- ---------- 246.7 $ 209 227.6 $ 215 ========== ========== ========= ========== Net income per common share $0.85 $0.95 ===== ===== Fully diluted: - -------------- Net income $ 229 $ 235 Tax benefit differential on ESOP dividend assuming stock is fully converted - (1) Assumed additional contribution to ESOP if preferred stock is fully converted (1) (1) ---------- ---------- Adjusted net income 228 233 Weighted average number of shares outstanding (primary) 246.7 227.6 Maximum dilution 1 0.1 Convertible preferred stock 18.6 19.6 ---------- ---------- --------- ---------- 266.3 $ 228 247.3 $ 233 ========== ========== ========= ========== Net income per common share $0.85 $0.94 ===== =====
EX-12.A 3 COMPUTATION OF RATIOS--COMBINED FIXED CHARGES Exhibit 12 (a) J. C. Penney Company, Inc. and Consolidated Subsidiaries Computation of Ratios of Available Income to Combined Fixed Charges and Preferred Stock Dividend Requirement
52 weeks ended --------------------------------------- Jul. 26 Jul. 27 ($ Millions) 1997 1996 ------------- --------------- Income from continuing operations $ 856 $ 1,218 (before income taxes, before capitalized interest, but after preferred stock dividend) Fixed charges Interest (including capitalized interest) on: Operating leases 110 102 Short term debt 124 110 Long term debt 412 281 Capital leases 7 6 Credit facility 19 - Other, net (3) 2 ------------- --------------- Total fixed charges 669 501 Preferred stock dividend, before taxes 47 47 Combined fixed charges and preferred ------------- --------------- stock dividend requirement 716 548 Total available income $ 1,572 $ 1,766 ============= =============== Ratio of available income to combined fixed charges and preferred stock dividend requirement 2.2 3.2 ============= ===============
The interest cost of the LESOP notes guaranteed by the Company is not included in fixed charges above. The Company believes that, due to the seasonal nature of its business, ratios for a period of time other than a 52 week period are inappropriate. EX-12.B 4 COMPUTATION OF RATIOS--INCOME TO FIXED CHARGES Exhibit 12 (b) J. C. Penney Company, Inc. and Consolidated Subsidiaries Computation of Ratios of Available Income to Fixed Charges
52 weeks ended --------------------------------------------- Jul. 26 Jul. 27 ($ Millions) 1997 1996 ------------- --------------- Income from continuing operations $ 903 $ 1,265 (before income taxes and capitalized interest) Fixed charges Interest (including capitalized interest) on: Operating leases 110 102 Short term debt 124 110 Long term debt 412 281 Capital leases 7 6 Credit facility 19 - Other, net (3) 2 ------------- --------------- Total fixed charges 669 501 ------------- --------------- Total available income $ 1,572 $ 1,766 ============= =============== Ratio of available income to combined fixed charges and preferred stock dividend requirement 2.3 3.5 ============= ===============
The interest cost of the LESOP notes guaranteed by the Company is not included in fixed charges above. The Company believes that, due to the seasonal nature of its business, ratios for a period of time other than a 52 week period are inappropriate. EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENT OF INCOME OF J.C. PENNEY COMPANY, INC. AND SUBSIDIARIES AS OF JULY 26, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 6-MOS JAN-31-1998 JUL-26-1997 703 0 4,354 93 6,224 11,276 8,167 3,069 23,245 4,787 7,492 2,697 0 547 3,951 23,245 12,901 13,354 9,388 12,373 201 127 278 375 146 229 0 0 0 229 .85 .85
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