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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 week and 39 week periods Commission file number 1-4947-1
ended October 29, 1994
J. C. PENNEY FUNDING CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 51-0101524
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6501 Legacy Drive, Plano, Texas 75024-3698
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 214-431-1000
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___________________
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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
500,000 shares of Common Stock of $100 par value, as of October 29, 1994.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1) (a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH
THE REDUCED DISCLOSURE FORMAT.
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
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The following interim financial information of J. C. Penney Funding Corporation
("Funding"), a wholly owned subsidiary of J. C. Penney Company, Inc.
("JCPenney"), is unaudited; however, in the opinion of Funding, it includes all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation. The financial information should be read in conjunction with the
audited financial statements included in Funding's Annual Report on Form 10-K
for the 52 weeks ended January 29, 1994.
Statements of Income and Reinvested Earnings
(Amounts in millions)
<TABLE>
<CAPTION>
13 weeks ended 39 weeks ended
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Oct. 29, Oct. 30, Oct. 29, Oct. 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest earned from
JCPenney and affiliates $ 38 $ 22 $ 94 $ 50
Interest and administrative
expenses 25 14 62 33
---- ---- ---- ----
Income before income taxes 13 8 32 17
Income taxes 4 3 11 6
---- ---- ---- ----
Net income 9 5 21 11
Reinvested earnings at
beginning of period 863 841 851 835
---- ---- ---- ----
Reinvested earnings at
end of period $872 $846 $872 $846
==== ==== ==== ====
</TABLE>
1
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Balance Sheets
(Amounts in millions except share data)
<TABLE>
<CAPTION>
Oct. 29, Oct. 30, Jan. 29,
1994 1993 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS (Current)
Loans to JCPenney and affiliates $3,296 $3,027 $2,323
------ ------ ------
$3,296 $3,027 $2,323
====== ====== ======
LIABILITIES AND EQUITY OF JCPENNEY
Short-term debt $2,235 $1,995 $1,284
Due to JCPenney 44 41 43
------ ------ ------
Total liabilities 2,279 2,036 1,327
Equity of JCPenney:
Common stock (including contributed
capital), par value $100:
Authorized, 750,000 shares
Issued, 500,000 shares 145 145 145
Reinvested earnings 872 846 851
------ ------ ------
Total equity of JCPenney 1,017 991 996
------ ------ ------
$3,296 $3,027 $2,323
====== ====== ======
</TABLE>
2
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Statements of Cash Flows
(Amounts in millions)
<TABLE>
<CAPTION>
39 weeks ended
------------------------
Oct. 29, Oct. 30,
1994 1993
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<S> <C> <C>
Operating Activities
Net income $ 21 $ 11
(Increase) Decrease in loans to JCPenney (973) (1,115)
and affiliates
(Decrease) Increase in amount due to JCPenney 1 (4)
------ -------
(951) (1,108)
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Financing Activities
Increase in short-term debt 951 1,108
------ -----
Increase (Decrease) in cash -0- -0-
Cash at beginning of year -0- -0-
------- ------
Cash at end of third quarter $ -0- $ -0-
======= ======
</TABLE>
3
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Under the terms of the loan agreement which provides for unsecured loans to be
made by Funding to JCPenney and the receivables agreement pursuant to which
Funding may purchase an undivided interest in certain JCPenney customer
receivables, Funding derives earnings on loans to JCPenney and income from
charges to JCPenney. This income, when combined with other income of Funding, is
designed to cover Funding's fixed charges, principally interest expense, at a
coverage ratio mutually agreed upon by Funding and JCPenney. The earnings to
fixed charges coverage ratio has historically been at least one and one-half
times.
Since 1986, Funding has provided financing to JCPenney in accordance with the
loan agreement and no receivable balances have been purchased.
Funding is not and has not been involved in the administration of JCPenney's
retail credit operation and does not bear any expenses or receive any finance
charge revenue connected therewith.
For the 1994 third quarter and the nine-month period ended October 29, 1994,
income, expenses, and provision for taxes increased, as compared with the same
periods of 1993, as a result of higher average borrowing levels and higher
interest rates. Borrowing levels averaged $2,082 million in the 1994 third
quarter and $1,885 million during the 1994 nine-month period as compared with
$1,711 million and $1,259 million, respectively, during the comparable 1993
periods. Borrowings increased throughout 1994 in support of JCPenney's working
capital requirements. At the end of the third quarter of 1994, borrowing levels
were $2,235 million as compared with $1,995 million at the end of the 1993 third
quarter. For the third quarter and nine-month periods in 1994, average interest
rates increased 160 basis points and 105 basis points, respectively, as compared
with the same periods in 1993.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
The following document is filed as an exhibit to this report:
27 Financial Data Schedule for the nine months ended October 29,
1994.
(b) Reports on Form 8-K
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None
4
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SIGNATURES
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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 FUNDING CORPORATION
By: /s/ L. A. Gispanski
--------------------------------
L. A. Gispanski
Controller
(Principal Accounting Officer)
Date: December 9, 1994
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENT OF INCOME OF
J. C. PENNEY FUNDING CORPORATION AS OF OCTOBER 29, 1994, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> OCT-29-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,296
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,296
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,296
<CURRENT-LIABILITIES> 2,279
<BONDS> 0
<COMMON> 145
0
0
<OTHER-SE> 872
<TOTAL-LIABILITY-AND-EQUITY> 3,296
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (32)
<INCOME-PRETAX> 32
<INCOME-TAX> 11
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
