J. C. PENNEY COMPANY, INC. REPORTS 2012 FISCAL FOURTH QUARTER AND FULL YEAR RESULTS

Wed Feb 27, 2013 4:30pm EST

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PLANO, Texas, Feb. 27, 2013 -- J. C. Penney Company, Inc. (NYSE: JCP) today announced financial
results for its fiscal fourth quarter and full year ended February 2, 2013.  For the quarter,
jcpenney reported a net loss of $552 million or $2.51 per share.  Excluding restructuring and
management transition charges and non-cash primary pension plan expense, the Company's adjusted
net loss for the quarter was $427 million or $1.95 per share.  

For the year, jcpenney reported a net loss of $985 million or $4.49 per share.  Excluding
markdowns related to the alignment of inventory with the Company's new strategy, restructuring and
management transition charges, non-cash primary pension plan expense and the net gain on the sale
or redemption of non-operating assets, the Company's adjusted net loss for the year was $766
million or $3.49 per share.  A reconciliation of GAAP to non-GAAP financial measures is included
in the schedules accompanying the consolidated financial statements included with this release.

Ron Johnson, chief executive officer of jcpenney said, "Sales and customer traffic were below our
expectations in 2012, but as we execute our ambitious transformation plan, we are pleased with the
great strides we made to improve jcpenney's cost structure, technology platforms and the overall
customer experience.  We have accomplished so much in the last twelve months.  We believe the bold
actions taken in 2012 will materially improve the Company's long-term growth and profitability."  

Johnson continued, "Looking ahead, we are energized by our shop roll out plans for 2013 and the
exciting work our teams are undertaking to transform the store.   Combining a new marketing
campaign focused on style and value, incredible new brands and updated merchandise, with continued
enhancements to the customer experience both in our stores and on jcp.com, we are working towards
reconnecting with our core customer while attracting new customers to jcpenney."

Fourth Quarter Results: 
Total sales for the fourth quarter, which included $163 million of sales in the 53rd week,
decreased 28.4 percent to $3.884 billion.  Comparable store sales, which exclude the 53rd week,
declined 31.7 percent.  Internet sales through jcp.com were $315 million in the fourth quarter,
decreasing 34.4 percent from last year.

Gross margin was 23.8 percent of sales, compared to 30.2 percent in the same period last year. 
Gross margin was impacted by lower than expected sales and a higher level of clearance merchandise
sales related to inventory reductions in 2012.

The Company's SG&A expenses decreased $134 million compared to last year's fourth quarter.

The Company incurred a charge of $148 million, or $0.41 per share, in the fourth quarter related
to lump-sum settlements from its primary pension plan, elected by participants who have separated
from the Company.

Additionally during the quarter, the Company recognized charges totaling approximately $86
million, or $0.24 per share, related to the impairment and write-off of certain store and
store-related assets.

For the fourth quarter, the Company incurred $29 million, or $0.08 per share, in restructuring and
management transition charges. These charges comprised the following:

*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.

Operating cash flow in the fourth quarter was $645 million compared to $953 million in last year's
fourth quarter.  Investing cash flow was a use of $229 million compared to a use of $455 million
in the same quarter last year.

Fiscal 2012 Results: 
Total sales for the fiscal year, which included $163 million of sales in the 53rd week, decreased
24.8 percent to $12.985 billion.  Comparable store sales, which exclude the 53rd week, declined
25.2 percent.  Internet sales through jcp.com were $1.020 billion, decreasing 33.0 percent from
last year. 

Gross margin was 31.3 percent of sales, compared to 36.0 percent last year.  Gross margin was
impacted by lower than expected sales, a higher level of clearance merchandise sales and markdowns
taken during the year to clear discontinued inventory in preparation for new product and brands
being introduced as part of the transformation.

The Company's SG&A expenses decreased $603 million compared to last year.

As noted above, the Company incurred a charge of $148 million, or $0.41 per share, related to
lump-sum settlements from its primary pension plan, elected by participants who have separated
from the Company.

Additionally, the Company realized net gains on the sale or redemption of non-operating assets of
$397 million and recognized charges totaling approximately $86 million, or $0.24 per share,
related to the impairment and write-off of certain store and store-related assets.

For the year, the Company incurred $298 million, or $0.83 per share, in restructuring and
management transition charges. These charges comprised the following:

*Home office and stores $109 million, or $0.30 per share; 
*Store fixtures $78 million, or $0.22 per share;
*Management transition $41 million, or $0.12 per share; 
*Software and systems $36 million, or $0.10 per share;
*Supply chain $19 million, or $0.05 per share; 
*Other $15 million, or $0.04 per share.

Despite the impacts of reduced sales and gross margin and restructuring charges associated with
the Company's transformation throughout 2012, full year operating cash flow was a use of $10
million.  This takes into account the non-cash nature of a number of restructuring charges, the
positive impacts of reduced expenses, reduction in inventory levels, specific steps taken to
improve overall working capital, including the realignment of vendor payment schedules of $129
million and a one-time deferral of select vendor payments in the fourth quarter of $85 million. 
Investing cash flow for the year was a use of $293 million as capital investments of $810 million
were partially offset by cash from the sale and redemption of non-operating assets.  The Company
reduced its debt by $250 million in 2012 and ended the year with $930 million in cash and cash
equivalents.  

Spring 2013 Shops Outlook:
During spring 2013, the Company anticipates opening close to 20 shops designated for home products
in 505 stores with brand partners such as Michael Graves, Jonathan Adler and Sir Terence Conran,
among others.  In addition to transforming the home area, the Company will open nearly 700 Joe
FreshTM apparel shops on March 15, 2013 as it transforms nearly 11 million square feet of retail
space in the spring.

During the year, the Company anticipates opening 60 Sephora inside jcpenney stores, bringing the
total to 446.

Earnings Event Today/Webcast Details:
At 5:00 p.m. ET today, the Company will host a live conference call and streaming video webcast
conducted by Chief Executive Officer Ron Johnson and Chief Financial Officer Ken Hannah.  The
event will include a formal slide presentation followed by a live question-and-answer session. 
The webcast will be available live on the Company's investor relations website at
http://ir.jcpenney.com http://ir.jcpenney.com/ .  Replays of the webcast will be available for up
to 90 days after the event.  To access the conference call, please dial (866) 202-4683, or (617)
213-8846 for international callers, and reference 59362622 participant code.  

Telephone playback will be available for seven days beginning approximately two hours after the
conclusion of the meeting by dialing (888) 286-8010, or (617) 801-6888 for international callers,
and referencing 81990309 participant code.

For further information, contact:

Investor Relations: (972) 431.5500
jcpinvestorrelations@jcpenney.com mailto:jcpinvestorrelations@jcpenney.com 

Public Relations: (972) 431.3400 
jcpcorpcomm@jcpenney.com mailto:jcpcorpcomm@jcpenney.com   

Corporate Website
ir.jcpenney.com http://www.jcpenney.net/ 

About jcpenney:
More than a century ago, James Cash Penney founded his company on the principle of the Golden
Rule: treat others the way you'd like to be treated - Fair and Square. His legacy continues to
this day, as J. C. Penney Company, Inc. (NYSE: JCP) boldly transforms the retail experience across
1,100 stores and jcp.com to become America's favorite store. Focused on making the customer
experience better every day, jcpenney is dreaming up new ways to make customers love shopping
again. On every visit, customers will discover great prices every day in a unique Shops
environment that features exceptionally curated merchandise, a dynamic presentation and unmatched
customer service. For more information, visit us at jcp.com.

This release may contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements, which reflect the Company's
current views of future events and financial performance, involve known and unknown risks and
uncertainties that may cause the Company's actual results to be materially different from planned
or expected results. Those risks and uncertainties include, but are not limited to, general
economic conditions, including inflation, recession, unemployment levels, consumer spending
patterns, credit availability and debt levels, changes in store traffic trends, the cost of goods,
trade restrictions, the impact of changes designed to transform our business, customer acceptance
of our new strategies, the impact of cost reduction initiatives, implementation of new systems and
platforms, changes in tariff, freight and shipping rates, changes in the cost of fuel and other
energy and transportation costs, increases in wage and benefit costs, competition and retail
industry consolidations, interest rate fluctuations, dollar and other currency valuations, the
impact of weather conditions, risks associated with war, an act of terrorism or pandemic, a
systems failure and/or security breach that results in the theft, transfer or unauthorized
disclosure of customer, employee or Company information and legal and regulatory proceedings. 
Please refer to the Company's most recent Form 10-K and subsequent filings for a further
discussion of risks and uncertainties. Investors should take such risks into account when making
investment decisions. We do not undertake to update these forward-looking statements as of any
future date.

#  #  #

                                                                  SUMMARY OF OPERATING RESULTS                                                                   
                                                                           (Unaudited)                                                                           
                                                                   J. C. PENNEY COMPANY, INC.                                                                    
                                                                                                                                                                 
                                                                                                                                                                 
                                                                                                                                                                 
                                                                                  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 


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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Source: J. C. Penney Company, Inc. via Thomson Reuters ONE


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