<PAGE>
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 29, 1995
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 29, 1995.
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.
<PAGE> 1
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 28, 1995.
<TABLE>
<CAPTION>
Statements of Income and Reinvested Earnings
(Dollars in millions)
13 weeks ended 26 weeks ended
-------------- --------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest earned from
JCPenney and affiliates $ 48 $ 32 $ 96 $ 56
Interest expense 32 21 63 37
---- ---- ---- ----
Income before income taxes 16 11 33 19
Income taxes 6 4 12 7
---- ---- ---- ----
Net income 10 7 21 12
Reinvested earnings at
beginning of period 894 856 883 851
---- ---- ---- ----
Reinvested earnings at
end of period $904 $863 $904 $863
==== ==== ==== ====
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Balance Sheets
(Dollars in millions)
July 29, July 30, Jan. 28,
1995 1994 1995
-------- -------- --------
<S> <C> <C> <C>
ASSETS (Current)
Loans to JCPenney and affiliates $3,209 $2,993 $3,114
------ ------ ------
$3,209 $2,993 $3,114
====== ====== ======
LIABILITIES AND EQUITY OF JCPENNEY
Short-term debt $2,149 $1,937 $2,074
Due to JCPenney 11 48 12
------ ------ ------
Total liabilities 2,160 1,985 2,086
Equity of JCPenney:
Common stock (including contributed
capital), par value $100:
Authorized, 750,000 shares
Issued, 500,000 shares 145 145 145
Reinvested earnings 904 863 883
------ ------ ------
Total equity of JCPenney 1,049 1,008 1,028
------ ------ ------
$3,209 $2,993 $3,114
====== ====== ======
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Statements of Changes in Short-Term Investments
(Dollars in millions)
26 weeks ended
----------------------
July 29, July 30,
1995 1994
-------- --------
<S> <C> <C>
Operating Activities
Net income $ 21 $ 12
(Increase) Decrease in loans to JCPenney (95) (670)
(Decrease) Increase in amount due to JCPenney (1) 5
------- --------
(75) (653)
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Financing Activities
Increase in short-term debt 75 653
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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>
<PAGE> 4
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 1995 second quarter and the six-month period, income, expenses,
and provision for taxes increased, as compared with the same periods of
1994, as a result of higher interest rates and higher average borrowing
levels. Borrowing levels averaged $2,099 million in the second quarter
and $2,076 million during the first half of 1995 as compared with $1,838
million and $1,786 million during the comparable 1994 periods.
Borrowings throughout the first half of 1995 increased in support of
JCPenney's working capital requirements. At the end of the second
quarter of 1995, borrowing levels were $2,149 million as compared with
$1,937 million at the end of the 1994 second quarter.
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 six months ended July 29,
1995.
(b) Reports on Form 8-K
-------------------
None
<PAGE> 5
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 1, 1995
<TABLE> <S> <C>
<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 29, 1995, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> JUL-29-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,209
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,209
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,209
<CURRENT-LIABILITIES> 2,160
<BONDS> 0
<COMMON> 145
0
0
<OTHER-SE> 904
<TOTAL-LIABILITY-AND-EQUITY> 3,209
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (33)
<INCOME-PRETAX> 33
<INCOME-TAX> 12
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
