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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 26 week periods Commission file number 1-4947-1
ended July 30, 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 July 30, 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.
Statements of Income and Reinvested Earnings
(Dollars in millions)
<TABLE>
<CAPTION>
13 weeks ended 26 weeks ended
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July 30, July 31, July 30, July 31,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest earned from
JCPenney and affiliates $ 32 $ 15 $ 56 $ 28
Interest and administrative
expenses 21 10 37 19
---- ---- ---- ----
Income before income taxes 11 5 19 9
Income taxes 4 2 7 3
---- ---- ---- ----
Net income 7 3 12 6
Reinvested earnings at
beginning of period 856 838 851 835
---- ---- ---- ----
Reinvested earnings at
end of period $863 $841 $863 $841
==== ==== ==== ====
</TABLE>
1
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Balance Sheet
(Dollars in millions)
<TABLE>
<CAPTION>
July 30, July 31, Jan. 29,
1994 1993 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS (Current)
Loans to JCPenney and affiliates $2,993 $2,416 $2,323
------ ------ ------
$2,993 $2,416 $2,323
====== ====== ======
</TABLE>
LIABILITIES AND EQUITY OF JCPENNEY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Short-term debt $1,937 $1,391 $1,284
Due to JCPenney 48 39 43
------ ------ ------
Total liabilities 1,985 1,430 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 863 841 851
------ ------ ------
Total equity of JCPenney 1,008 986 996
------ ------ ------
$2,993 $2,416 $2,323
====== ====== ======
</TABLE>
2
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Statements of Changes in Short-Term Investments
(Dollars in millions)
<TABLE>
<CAPTION>
26 weeks ended
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July 30, July 31,
1994 1993
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<S> <C> <C>
Operating Activities
Net income $ 12 $ 6
(Increase) Decrease in loans to JCPenney (670) (504)
and affiliates
(Decrease) Increase in amount due to JCPenney 5 (6)
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(653) (504)
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Financing Activities
Increase in short-term debt 653 504
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Increase (Decrease) in cash -0- -0-
Cash at beginning of year -0- -0-
----- -----
Cash at end of second 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 second quarter and the six-month period, income, expenses, and
provision for taxes increased as compared with the same periods of 1993, as a
result of higher average borrowing levels. Borrowing levels averaged $1,838
million in the second quarter and $1,786 million during the first half of 1994
as compared with $1,138 million and $1,033 million during the comparable 1993
period, respectively. Borrowings throughout the first half of 1994 increased
significantly in support of JCPenney's working capital requirements. At the
end of the second quarter of 1994, borrowing levels were $1,937 million as
compared with $1,391 million at the end of the 1993 second quarter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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The following document is filed as an exhibit to this
report:
27 Financial Data Schedule for the six months ended July 30,
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
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L. A. Gispanski
Controller
(Principal Accounting Officer)
Date: September 2, 1994
5
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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Exhibit 27
<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 JULY 30, 1994, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JUL-30-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,993
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,993
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,993
<CURRENT-LIABILITIES> 1,985
<BONDS> 0
<COMMON> 145
0
0
<OTHER-SE> 863
<TOTAL-LIABILITY-AND-EQUITY> 2,993
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19)
<INCOME-PRETAX> 19
<INCOME-TAX> 7
<INCOME-CONTINUING> 12
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
