<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 39 week periods Commission file number 1-4947-1
ended October 28, 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 October 28,
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.
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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 28, 1995.
<TABLE>
Statements of Income and Reinvested Earnings
(Amounts in millions)
<CAPTION>
13 weeks ended 39 weeks ended
------------------ ------------------
Oct. 28, Oct. 29, Oct. 28, Oct. 29,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest earned from
JCPenney and affiliates $ 52 $ 38 $148 $ 94
Interest expense 34 25 97 62
---- ---- ---- ----
Income before income taxes 18 13 51 32
Income taxes 6 4 18 11
---- ---- ---- ----
Net income 12 9 33 21
Reinvested earnings at
beginning of period 904 863 883 851
---- ---- ---- ----
Reinvested earnings at
end of period $916 $872 $916 $872
==== ==== ==== ====
</TABLE>
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<TABLE>
Balance Sheets
(Amounts in millions except share data)
<CAPTION>
Oct. 28, Oct. 29, Jan. 28,
1995 1994 1995
-------- -------- --------
<S> <C> <C> <C>
ASSETS (Current)
Loans to JCPenney and affiliates $3,403 $3,296 $3,114
-------- -------- --------
$3,403 $3,296 $3,114
======== ======== ========
LIABILITIES AND EQUITY OF JCPENNEY
Short-term debt $2,338 $2,235 $2,074
Due to JCPenney 4 44 12
------ ------ ------
Total liabilities 2,342 2,279 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 916 872 883
------ ------ ------
Total equity of JCPenney 1,061 1,017 1,028
------ ------ ------
$3,403 $3,296 $3,114
====== ====== ======
</TABLE>
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<TABLE>
Statements of Changes in Short-Term Investments
(Amounts in millions)
<CAPTION>
39 weeks ended
----------------------
Oct. 28, Oct. 29,
1995 1994
-------- --------
<S> <C> <C>
Operating Activities
Net income $ 33 $ 21
(Increase) Decrease in loans to JCPenney (289) (973)
(Decrease) Increase in amount due to JCPenney (8) 1
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(264) (951)
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Financing Activities
Increase in short-term debt 264 951
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Increase (Decrease) in cash -0- -0-
Cash at beginning of year -0- -0-
------- -------
Cash at end of third quarter $ -0- $ -0-
======= =======
</TABLE>
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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 principally on loans to
JCPenney and income from charges to JCPenney. The income of Funding is
designed to cover Funding's fixed charges, 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 third quarter and the nine-month period ended
October 28, 1995, income, expenses, and provision for taxes increased,
as compared with the same periods of 1994, as a result of higher average
borrowing levels and higher interest rates. Borrowing levels averaged
$2,334 million in the 1995 third quarter and $2,162 million during the
1995 nine-month period as compared with $2,082 million and $1,885
million, respectively, during the comparable 1994 periods. Borrowings
increased throughout 1995 in support of JCPenney's working capital
requirements. At the end of the third quarter of 1995, borrowing levels
were $2,338 million as compared with $2,235 million at the end of the
1994 third quarter. For the third quarter and nine-month periods in
1995, average interest rates increased 107 basis points and 178 basis
points, respectively, as compared with the same periods in 1994.
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 28, 1995.
(b) Reports on Form 8-K
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None
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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: December 8, 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 OCTOBER 28, 1995 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-27-1996
<PERIOD-END> OCT-28-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,403
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,403
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,403
<CURRENT-LIABILITIES> 2,342
<BONDS> 0
<COMMON> 145
0
0
<OTHER-SE> 916
<TOTAL-LIABILITY-AND-EQUITY> 3,403
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (51)
<INCOME-PRETAX> 51
<INCOME-TAX> 18
<INCOME-CONTINUING> 33
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
