Inventory Declines
(6.8) % Over the Same Period Last Year
Company
Strengthens Balance Sheet through Successful Early Retirement of
$300 Million in Outstanding Debt and Extension of its $2.35 Billion
Revolving Credit Facility
PLANO, Texas -
(Aug. 11, 2017) - J. C. Penney Company, Inc. (NYSE: JCP) today
announced financial results for its fiscal second quarter ended
July 29, 2017. Total net sales increased 1.5 % to $3.0
billion in the second quarter compared to $2.9 billion in the same
period last year. Comparable sales declined (1.3) % for the
second quarter, resulting in a positive two-year stack of 0.9
%.
Marvin R. Ellison, chairman and
chief executive officer said, "We are pleased to deliver a top line
sales increase of 1.5 % and quarterly sequential improvement of 220
basis points in our comp sales performance in go forward
stores. While broader retail remains challenged, we are
encouraged by the improved performance in our total apparel
business, including a significant acceleration in kids'
apparel. Nearly all categories delivered improved sales
results during the quarter, with our growth initiatives in beauty,
home refresh and omnichannel continuing to deliver positive sales
growth."
Ellison continued, "During the
second quarter, we liquidated inventory in 127 of our closing
stores which had a negative impact on gross margin and EPS. These
events were isolated to the second quarter. As such, we are
reaffirming our EPS guidance for the year, and remain confident in
our ability to further strengthen our balance sheet, while driving
sustainable growth and long-term profitability for JCPenney. To
that end, we are pleased that we are off to a strong start in
August for the all-important back to school season. We are
excited by this momentum and expect to deliver improved results in
the back half of the year."
Home, Fine Jewelry, Footwear and
Handbags, Sephora and Salon were the Company's top performing
divisions during the quarter. Geographically, the Southwest and
Southeast were the best performing regions of the country.
For the second quarter, cost of
goods sold, which excludes depreciation and amortization, was $1.9
billion, or 64.9 % of sales, compared to $1.8 billion, or 62.9 % of
sales in the same period last year. This increase was primarily
driven by the liquidation of inventory in closing stores.
SG&A expenses for the quarter
declined $11 million to $842 million, or 28.4 % of sales, and
leveraged 80 basis points as a percentage of sales compared to the
same period last year. These savings were primarily driven by
reductions in store controllable costs and corporate overhead and
an increase in private label credit card income.
For the second quarter, the
Company's net loss was ($62) million, or ($0.20) per share,
compared to a net loss of ($56) million, or ($0.18) per share in
the same period last year.
Adjusted net loss was ($28)
million, or ($0.09) per share, for the second quarter this year
compared to an adjusted net loss of ($16) million, or ($0.05) per
share, last year.
Adjusted EBITDA for the second
quarter was $196 million compared to $233 million last year.
A reconciliation of GAAP to non-GAAP financial measures is included
in the schedules accompanying the consolidated financial statements
in this release.
Inventory at the end of the second
quarter 2017 was $2.8 billion, a decrease of 6.8 % compared to the
end of the second quarter last year. This reduction was
driven by liquidation of inventory in closing stores, and a
decrease of 3.7 % in comparable store inventory. Free cash
flow was a positive $303 million, an increase of $234 million
versus last year.
Cash and cash equivalents at the
end of the second quarter were $314 million. During the
second quarter, the Company successfully completed its tender offer
for $300 million aggregate principal amount of its outstanding 2018
and 2019 bonds, which is expected to reduce annualized interest
expense by approximately $23 million. In addition, the
Company successfully amended its $2.35 billion senior secured
asset-based revolving credit facility with an extended maturity and
improved pricing terms. The Company ended the quarter with
liquidity of approximately $2.3 billion.
Outlook
The Company has updated its cost
of goods sold guidance and reaffirmed the remaining 2017 full year
guidance. As a reminder, fiscal 2017 is a 53-week year which
has been incorporated into the full year guidance, with the
exception of comparable store sales which are calculated on a
comparable 52-week basis. The following guidance also
includes the impact of the Company's store closures. The
fiscal 2017 full year guidance has been updated as
follows:
-
Comparable store sales: expected to be
-1 % to +1 %;
-
Cost of goods sold: now expected to be
up 30 to 50 basis points versus 2016;
-
SG&A dollars: expected to be down 1
to 2 % versus 2016;
-
Adjusted earnings per share1: expected to
be $0.40 to $0.65.
1 A
reconciliation of non-GAAP forward-looking projections to GAAP
financial measures is not available as the nature or amount of
potential adjustments, which may be significant, cannot be
determined at this time.
Second Quarter
Earnings Conference Call Details
At 8:30 a.m. ET today, the Company will host a live conference call
conducted by Chairman and Chief Executive Officer Marvin R. Ellison
and select members of management. Management will discuss the
Company's performance during the quarter and take questions from
participants. To access the conference call, please dial
(844) 243-9275, or (225) 283-0394 for international callers, and
reference 61085984 conference ID or visit the Company's investor
relations website at http://ir.jcpenney.com. Supplemental
slides will be available on the Company's investor relations
website approximately 10 minutes before the start of the conference
call.
Telephone playback will be
available for seven days beginning approximately two hours after
the conclusion of the conference call by dialing (855) 859-2056, or
(404) 537-3406 for international callers, and referencing 61085984
conference ID.
Investors and others should note
that we currently announce material information using SEC filings,
press releases, public conference calls and webcasts. In the
future, we will continue to use these channels to distribute
material information about the Company and may also utilize our
website and/or various social media to communicate important
information about the Company, key personnel, new brands and
services, trends, new marketing campaigns, corporate initiatives
and other matters. Information that we post on our website or
on social media channels could be deemed material; therefore, we
encourage investors, the media, our customers, business partners
and others interested in our Company to review the information we
post on our website as well as the following social media
channels:
Facebook
(https://www.facebook.com/jcp) and Twitter
(https://twitter.com/jcpnews).
Any updates to the list of social
media channels we may use to communicate material information will
be posted on the Investor Relations page of the Company's website
at www.jcpenney.com.
Media
Relations:
(972) 431-3400 or jcpnews@jcp.com; Follow us @jcpnews
Investor Relations:
(972) 431-5500 or jcpinvestorrelations@jcpenney.com
About
JCPenney:
J. C. Penney Company, Inc. (NYSE: JCP), one of the nation's largest
apparel and home furnishings retailers, combines an expansive
footprint of approximately 875 stores across the United States and
Puerto Rico with a powerful e-commerce site, jcp.com, to connect
with shoppers how, when and where they prefer to shop. At every
customer touchpoint, she will get her Penney's worth of a broad
assortment of products from an extensive portfolio of private,
exclusive and national brands. Powering this shopping experience is
the customer service and warrior spirit of over 100,000 associates
across the globe, all driving toward the Company's three strategic
priorities of strengthening private brands, becoming a world-class
omnichannel retailer and increasing revenue per customer. For
additional information, please visit jcp.com.
Forward-Looking
Statements
This release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Words such as "expect" and similar expressions identify
forward-looking statements, which include, but are not limited to,
statements regarding sales, cost of goods sold, selling, general
and administrative expenses, earnings, cash flows and interest
expense. Forward-looking statements are based only on the
Company's current assumptions and views of future events and
financial performance. They are subject to known and unknown risks
and uncertainties, many of which are outside of the Company's
control 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 confidence and spending patterns, credit availability and
debt levels, changes in store traffic trends, the cost of goods,
more stringent or costly payment terms and/or the decision by a
significant number of vendors not to sell us merchandise on a
timely basis or at all, trade restrictions, the ability to monetize
non-core assets on acceptable terms, the ability to implement our
strategic plan including our omnichannel initiatives, customer
acceptance of our strategies, our ability to attract, motivate and
retain key executives and other associates, the impact of cost
reduction initiatives, our ability to generate or maintain
liquidity, 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, disruptions and congestion
at ports through which we import goods, 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, the ability of the federal government to
fund and conduct its operations, a systems failure and/or security
breach that results in the theft, transfer or unauthorized
disclosure of customer, employee or Company information, legal and
regulatory proceedings and the Company's ability to access the debt
or equity markets on favorable terms or at all. There can be
no assurances that the Company will achieve expected results, and
actual results may be materially less than expectations. Please
refer to the Company's most recent Form 10-Q for a further
discussion of risks and uncertainties. Investors should take such
risks into account and should not rely on forward-looking
statements when making investment decisions. Any
forward-looking statement made by us in this press release is based
only on information currently available to us and speaks only as of
the date on which it is made. We do not undertake to update
these forward-looking statements as of any future date.
###
J. C. PENNEY
COMPANY, INC.
SUMMARY OF OPERATING RESULTS
(Unaudited)
(Amounts in millions except per share data)
|
Three Months
Ended |
|
|
Six Months
Ended |
|
Statements of Operations: |
July 29, 2017 |
|
July 30, 2016 |
|
% Inc. (Dec.) |
|
|
July 29, 2017 |
|
July 30, 2016 |
|
% Inc. (Dec.) |
|
Total net sales |
$ |
2,962 |
|
|
$ |
2,918 |
|
|
1.5 |
% |
|
|
$ |
5,668 |
|
|
$ |
5,729 |
|
|
(1.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses/(income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold (exclusive of depreciation and amortization shown
separately below) |
1,923 |
|
|
1,834 |
|
|
4.9 |
% |
|
|
3,646 |
|
|
3,627 |
|
|
0.5 |
% |
|
Selling, general and administrative (SG&A) |
842 |
|
|
853 |
|
|
(1.3 |
)% |
|
|
1,685 |
|
|
1,725 |
|
|
(2.3 |
)% |
|
Pension |
(4 |
) |
|
2 |
|
|
(100.0 |
)% |
+ |
|
(6 |
) |
|
4 |
|
|
(100.0 |
)% |
+ |
Depreciation and amortization |
144 |
|
|
153 |
|
|
(5.9 |
)% |
|
|
289 |
|
|
307 |
|
|
(5.9 |
)% |
|
Real
estate and other, net |
(19 |
) |
|
(9 |
) |
|
100.0 |
% |
+ |
|
(137 |
) |
|
(47 |
) |
|
100.0 |
% |
+ |
Restructuring and management transition |
23 |
|
|
9 |
|
|
100.0 |
% |
+ |
|
243 |
|
|
15 |
|
|
100.0 |
% |
+ |
Total
costs and expenses |
2,909 |
|
|
2,842 |
|
|
2.4 |
% |
|
|
5,720 |
|
|
5,631 |
|
|
1.6 |
% |
|
Operating income/(loss) |
53 |
|
|
76 |
|
|
(30.3 |
)% |
|
|
(52 |
) |
|
98 |
|
|
(100.0 |
)% |
+ |
(Gain)/loss on extinguishment of debt |
35 |
|
|
34 |
|
|
2.9 |
% |
|
|
35 |
|
|
30 |
|
|
16.7 |
% |
|
Net interest expense |
79 |
|
|
93 |
|
|
(15.1 |
)% |
|
|
166 |
|
|
188 |
|
|
(11.7 |
)% |
|
Income/(loss) before income taxes |
(61 |
) |
|
(51 |
) |
|
19.6 |
% |
|
|
(253 |
) |
|
(120 |
) |
|
100.0 |
% |
+ |
Income tax expense/(benefit) (1) |
1 |
|
|
5 |
|
|
(80.0 |
)% |
|
|
(11 |
) |
|
4 |
|
|
(100.0 |
)% |
+ |
Net
income/(loss) |
$ |
(62 |
) |
|
$ |
(56 |
) |
|
10.7 |
% |
|
|
$ |
(242 |
) |
|
$ |
(124 |
) |
|
95.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share - basic and diluted |
$ |
(0.20 |
) |
|
$ |
(0.18 |
) |
|
11.1 |
% |
|
|
$ |
(0.78 |
) |
|
$ |
(0.40 |
) |
|
95.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable store sales increase/(decrease)
(2) |
(1.3 |
)% |
|
2.2 |
% |
|
|
|
|
(2.4 |
)% |
|
0.9 |
% |
|
|
|
Ratios
as a percentage of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
64.9 |
% |
|
62.9 |
% |
|
|
|
|
64.3 |
% |
|
63.3 |
% |
|
|
|
SG&A expenses |
28.4 |
% |
|
29.2 |
% |
|
|
|
|
29.7 |
% |
|
30.1 |
% |
|
|
|
Operating income/(loss) |
1.8 |
% |
|
2.6 |
% |
|
|
|
|
(0.9 |
)% |
|
1.7 |
% |
|
|
|
Effective income tax rate (1) |
1.6 |
% |
|
9.8 |
% |
|
|
|
|
(4.3 |
)% |
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares at end of period |
310.3 |
|
|
307.6 |
|
|
|
|
|
310.3 |
|
|
307.6 |
|
|
|
|
Weighted average shares - basic |
310.8 |
|
|
308.0 |
|
|
|
|
|
310.2 |
|
|
307.6 |
|
|
|
|
Weighted average shares - diluted |
310.8 |
|
|
308.0 |
|
|
|
|
|
310.2 |
|
|
307.6 |
|
|
|
|
-
For the three and six months
ended July 29, 2017, the Company increased its net valuation
allowance by $16 million and $80 million, respectively, against
certain federal and state net operating loss carry forward
assets. For the three and six months ended July 30, 2016, the
Company increased its net valuation allowance by $19 million and
$32 million, respectively, against certain federal and state net
operating loss carry forward assets.
-
Comparable store sales include
sales from all stores, including sales from services and
commissions earned from our in-store licensed departments, that
have been open for 12 consecutive full fiscal months and Internet
sales. Stores closed for an extended period are not included
in comparable store sales calculations, while stores remodeled and
minor expansions not requiring store closure remain in the
calculations. Certain items, such as sales return estimates
and store liquidation sales, are excluded from the Company's
calculation. Our definition and calculation of comparable store
sales may differ from other companies in the retail
industry.
SUMMARY BALANCE
SHEETS
(Unaudited)
(Amounts in millions)
Summary Balance Sheets: |
July 29, 2017 |
|
July 30, 2016 |
Current assets: |
|
|
|
Cash
in banks and in transit |
$ |
186 |
|
|
$ |
171 |
|
Cash short-term investments |
128 |
|
|
258 |
|
Cash
and cash equivalents |
314 |
|
|
429 |
|
Merchandise inventory |
2,777 |
|
|
2,981 |
|
Prepaid expenses and other |
223 |
|
|
235 |
|
Total current assets |
3,314 |
|
|
3,645 |
|
Property and equipment, net |
4,390 |
|
|
4,686 |
|
Other assets |
622 |
|
|
604 |
|
Total assets |
$ |
8,326 |
|
|
$ |
8,935 |
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
Current liabilities: |
|
|
|
Merchandise accounts payable |
$ |
950 |
|
|
$ |
1,094 |
|
Other accounts payable and accrued expenses |
1,091 |
|
|
1,121 |
|
Current portion of capital leases, financing obligation and note
payable |
9 |
|
|
18 |
|
Current maturities of long-term debt |
232 |
|
|
341 |
|
Total
current liabilities |
2,282 |
|
|
2,574 |
|
Long-term capital leases, financing obligation and
note payable |
216 |
|
|
10 |
|
Long-term debt |
3,836 |
|
|
4,356 |
|
Deferred taxes |
202 |
|
|
194 |
|
Other
liabilities |
635 |
|
|
604 |
|
Total liabilities |
7,171 |
|
|
7,738 |
|
Stockholders' equity |
1,155 |
|
|
1,197 |
|
Total liabilities and
stockholders' equity |
$ |
8,326 |
|
|
$ |
8,935 |
|
SUMMARY STATEMENTS
OF CASH FLOWS
(Unaudited)
(Amounts in millions)
|
Three Months
Ended |
|
Six Months
Ended |
Statements of Cash Flows: |
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income/(loss) |
$ |
(62 |
) |
|
$ |
(56 |
) |
|
$ |
(242 |
) |
|
$ |
(124 |
) |
Adjustments to reconcile net income/(loss) to net
cash provided by/(used in) operating activities: |
|
|
|
|
|
|
|
Restructuring and management transition |
(4 |
) |
|
- |
|
|
73 |
|
|
(1 |
) |
Asset impairments and other charges |
2 |
|
|
1 |
|
|
3 |
|
|
2 |
|
Net
gain on sale of non-operating assets |
- |
|
|
- |
|
|
- |
|
|
(5 |
) |
Net gain on sale of operating assets |
(1 |
) |
|
(2 |
) |
|
(118 |
) |
|
(10 |
) |
(Gain)/loss on extinguishment of debt |
35 |
|
|
34 |
|
|
35 |
|
|
30 |
|
Depreciation and amortization |
144 |
|
|
153 |
|
|
289 |
|
|
307 |
|
Benefit plans |
(15 |
) |
|
(15 |
) |
|
96 |
|
|
(27 |
) |
Stock-based compensation |
9 |
|
|
10 |
|
|
16 |
|
|
20 |
|
Deferred taxes |
(1 |
) |
|
3 |
|
|
(19 |
) |
|
- |
|
Change in cash from: |
|
|
|
|
|
|
|
Inventory |
172 |
|
|
(56 |
) |
|
77 |
|
|
(260 |
) |
Prepaid expenses and other assets |
7 |
|
|
(9 |
) |
|
(64 |
) |
|
(68 |
) |
Merchandise accounts payable |
57 |
|
|
99 |
|
|
(27 |
) |
|
169 |
|
Current income taxes |
(2 |
) |
|
(3 |
) |
|
3 |
|
|
(4 |
) |
Accrued expenses and other |
61 |
|
|
27 |
|
|
(66 |
) |
|
(237 |
) |
Net cash provided by/(used in) operating
activities |
402 |
|
|
186 |
|
|
56 |
|
|
(208 |
) |
Cash
flows from investing activities: |
|
|
|
|
|
|
|
Capital expenditures |
(109 |
) |
|
(121 |
) |
|
(192 |
) |
|
(160 |
) |
Proceeds from sale of non-operating assets |
- |
|
|
- |
|
|
- |
|
|
2 |
|
Proceeds from sale of operating assets |
10 |
|
|
4 |
|
|
146 |
|
|
16 |
|
Joint
venture return of investment |
1 |
|
|
1 |
|
|
9 |
|
|
15 |
|
Net cash provided by/(used in) investing
activities |
(98 |
) |
|
(116 |
) |
|
(37 |
) |
|
(127 |
) |
Cash
flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
- |
|
|
2,188 |
|
|
- |
|
|
2,188 |
|
Proceeds from borrowings under the credit facility |
272 |
|
|
- |
|
|
272 |
|
|
- |
|
Payments of borrowings under the credit
facility |
(272 |
) |
|
- |
|
|
(272 |
) |
|
- |
|
Premium on early retirement of long-term debt |
(30 |
) |
|
- |
|
|
(30 |
) |
|
- |
|
Payments of capital leases, financing obligation
and note payable |
(6 |
) |
|
(5 |
) |
|
(12 |
) |
|
(19 |
) |
Payments of long-term debt |
(311 |
) |
|
(2,188 |
) |
|
(541 |
) |
|
(2,250 |
) |
Financing costs |
(9 |
) |
|
(49 |
) |
|
(9 |
) |
|
(49 |
) |
Proceeds from stock issued under stock plans |
3 |
|
|
- |
|
|
3 |
|
|
1 |
|
Tax withholding payments for vested restricted
stock |
- |
|
|
(2 |
) |
|
(3 |
) |
|
(7 |
) |
Net
cash provided by/(used in) financing activities |
(353 |
) |
|
(56 |
) |
|
(592 |
) |
|
(136 |
) |
Net increase/(decrease) in cash and cash
equivalents |
(49 |
) |
|
14 |
|
|
(573 |
) |
|
(471 |
) |
Cash
and cash equivalents at beginning of period |
363 |
|
|
415 |
|
|
887 |
|
|
900 |
|
Cash and cash equivalents at end of period |
$ |
314 |
|
|
$ |
429 |
|
|
$ |
314 |
|
|
$ |
429 |
|
Reconciliation of
Non-GAAP Financial Measures
(Unaudited)
(Amounts in millions except per share data)
We report our financial information in accordance
with generally accepted accounting principles in the United States
(GAAP). However, we present certain financial measures and
ratios identified as non-GAAP under the rules of the Securities and
Exchange Commission (SEC) to assess our results. We believe
the presentation of these non-GAAP financial measures and ratios is
useful in order to better understand our financial performance as
well as to facilitate the comparison of our results to the results
of our peer companies. In addition, management uses these
non-GAAP financial measures and ratios to assess the results of our
operations. It is important to view non-GAAP financial
measures in addition to, rather than as a substitute for, those
measures and ratios prepared in accordance with GAAP. We have
provided reconciliations of the most directly comparable GAAP
measures to our non-GAAP financial measures presented.
The following non-GAAP financial measures are
adjusted to exclude restructuring and management transition
charges, the impact of our qualified defined benefit pension plan
(Primary Pension Plan), the (gain)/loss on extinguishment of debt,
the net gain on the sale of non-operating assets, the proportional
share of net income from our joint venture formed to develop the
excess property adjacent to our home office facility in Plano,
Texas (Home Office Land Joint Venture) and the tax impact for the
allocation of income taxes to other comprehensive income items
related to our Primary Pension Plan and interest rate swaps.
Unlike other operating expenses, restructuring and management
transition charges, the (gain)/loss on extinguishment of debt, the
net gain on the sale of non-operating assets, the proportional
share of net income from the Home Office Land Joint Venture and the
tax impact for the allocation of income taxes to other
comprehensive income items related to our Primary Pension Plan and
interest rate swaps are not directly related to our ongoing core
business operations. Primary Pension Plan expense/(income) is
determined using numerous complex assumptions about changes in
pension assets and liabilities that are subject to factors beyond
our control, such as market volatility. Accordingly, we
eliminate our Primary Pension Plan expense/(income) in its entirety
as we view all components of net periodic benefit expense/(income)
as a single, net amount, consistent with its presentation in our
Consolidated Financial Statements. We believe it is useful
for investors to understand the impact of restructuring and
management transition charges, Primary Pension Plan
expense/(income), the (gain)/loss on extinguishment of debt, the
net gain on the sale of non-operating assets, the proportional
share of net income from the Home Office Land Joint Venture and the
tax impact for the allocation of income taxes to other
comprehensive income items related to our Primary Pension Plan and
interest rate swaps on our financial results and therefore are
presenting the following non-GAAP financial measures: (1)
adjusted net income/(loss) before net interest expense, income tax
(benefit)/expense and depreciation and amortization (adjusted
EBITDA); (2) adjusted net income/(loss); and (3) adjusted
earnings/(loss) per share-diluted.
ADJUSTED EBITDA, NON-GAAP
FINANCIAL MEASURE:
The following table reconciles net income/(loss),
the most directly comparable GAAP measure, to adjusted EBITDA, a
non-GAAP financial measure:
|
Three Months
Ended |
|
Six Months
Ended |
|
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
Net income/(loss) |
$ |
(62 |
) |
|
$ |
(56 |
) |
|
$ |
(242 |
) |
|
$ |
(124 |
) |
Add:
Net interest expense |
79 |
|
|
93 |
|
|
166 |
|
|
188 |
|
Add: (Gain)/loss on extinguishment of debt |
35 |
|
|
34 |
|
|
35 |
|
|
30 |
|
Add:
Income tax expense/(benefit) |
1 |
|
|
5 |
|
|
(11 |
) |
|
4 |
|
Add: Depreciation and amortization |
144 |
|
|
153 |
|
|
289 |
|
|
307 |
|
Add:
Restructuring and management transition charges |
23 |
|
|
9 |
|
|
243 |
|
|
15 |
|
Add: Primary pension plan expense/(income) |
(5 |
) |
|
- |
|
|
(9 |
) |
|
- |
|
Less:
Net gain on the sale of non-operating assets |
- |
|
|
- |
|
|
- |
|
|
(5 |
) |
Less: Proportional share of net income from the
home office land joint venture |
(19 |
) |
|
(5 |
) |
|
(20 |
) |
|
(29 |
) |
Adjusted EBITDA (non-GAAP) |
$ |
196 |
|
|
$ |
233 |
|
|
$ |
451 |
|
|
$ |
386 |
|
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 |
|
Six Months
Ended |
|
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
Net income/(loss) |
$ |
(62 |
) |
|
$ |
(56 |
) |
|
$ |
(242 |
) |
|
$ |
(124 |
) |
Earnings/(loss) per share-diluted |
$ |
(0.20 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.40 |
) |
|
|
|
|
|
|
|
|
Add:
Restructuring and management transition charges (1) |
23 |
|
|
9 |
|
|
243 |
|
|
15 |
|
Add: Primary pension plan expense/(income)
(1) |
(5 |
) |
|
- |
|
|
(9 |
) |
|
- |
|
Add:
(Gain)/loss on extinguishment of debt (1) |
35 |
|
|
34 |
|
|
35 |
|
|
30 |
|
Less: Net gain on the sale of non-operating
assets (1) |
- |
|
|
- |
|
|
- |
|
|
(5 |
) |
Less:
Proportional share of net income from the home office land joint
venture (1) |
(19 |
) |
|
(5 |
) |
|
(20 |
) |
|
(29 |
) |
Less: Tax impact resulting from other comprehensive
income allocation (2) |
- |
|
|
2 |
|
|
(16 |
) |
|
- |
|
Adjusted net income/(loss) (non-GAAP) |
$ |
(28 |
) |
|
$ |
(16 |
) |
|
$ |
(9 |
) |
|
$ |
(113 |
) |
Adjusted earnings/(loss) per
share-diluted (non-GAAP) |
$ |
(0.09 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.37 |
) |
-
Reflects no tax effect due to
the impact of the Company's tax valuation allowance.
-
Represents the net tax benefit
that resulted from our other comprehensive income allocation
between our Operating loss and Accumulated other comprehensive
income.
Reconciliation of
Non-GAAP Financial Measures
(Unaudited)
(Amounts in millions)
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, 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, payments made for
business acquisitions or required pension contributions, if
any. 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 sets forth a reconciliation of
cash flow from operating activities, the most directly comparable
GAAP measure, to free cash flow, a non-GAAP financial measure, as
well as information regarding net cash provided by/(used in)
investing activities and net cash provided by/(used in) financing
activities:
|
Three Months
Ended |
|
Six Months
Ended |
|
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
Net cash provided by/(used in) operating
activities |
$ |
402 |
|
|
$ |
186 |
|
|
$ |
56 |
|
|
$ |
(208 |
) |
Add: Proceeds from sale of operating assets |
10 |
|
|
4 |
|
|
146 |
|
|
16 |
|
Less: Capital expenditures |
(109 |
) |
|
(121 |
) |
|
(192 |
) |
|
(160 |
) |
Free cash flow (non-GAAP) |
$ |
303 |
|
|
$ |
69 |
|
|
$ |
10 |
|
|
$ |
(352 |
) |
|
|
|
|
|
|
|
|
Net
cash provided by/(used in) investing activities (1) |
$ |
(98 |
) |
|
$ |
(116 |
) |
|
$ |
(37 |
) |
|
$ |
(127 |
) |
Net cash provided by/(used in) financing
activities |
$ |
(353 |
) |
|
$ |
(56 |
) |
|
$ |
(592 |
) |
|
$ |
(136 |
) |
(1)
Net cash provided by/(used in) investing
activities includes capital expenditures and proceeds from sale of
operating assets, which are also included in our computation of
free cash flow.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: J. C. Penney Company, Inc. via Globenewswire
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