Company reaffirms its
2016 guidance
PLANO, Texas -
(Aug. 12, 2016) - J. C. Penney Company, Inc. (NYSE: JCP) today
announced financial results for its second quarter ended July 30,
2016. Comparable sales increased 2.2 % for the second quarter,
delivering a two-year stack of 6.3%. Net loss improved 52% to $(56)
million versus the prior year.
Marvin R. Ellison, chairman and
chief executive officer, said, "We are pleased with the sequential
improvement we achieved throughout the second quarter, and our
solid performance across all key metrics is encouraging. We
exceeded our profitability expectations, achieving an $85 million
or 59 % increase in EBITDA to $229 million for the quarter. We are
continuing to win market share and improve the bottom line of our
business thanks to the commitment and hard work of our over 100,000
associates."
Ellison continued, "We are excited
about the initiatives we have in place to drive incremental growth
in the back half of the year with our appliance rollouts, new
Sephora locations, center core refreshes, in-store .com fulfillment
and our chain wide rollout of buy online, pick up in store same
day. These and other initiatives reinforce our confidence in our
ability to achieve $1 billion in EBITDA for 2016."
For the quarter, Sephora, Home,
and Footwear and Handbags were the Company's top performing
divisions. Geographically, the Ohio Valley and Pacific were the
best performing regions of the country.
For the second quarter, gross
margin was 37.1 % of sales, a 10 basis point improvement compared
to the same period last year.
SG&A expenses for the quarter
decreased $48 million to $853 million, or 29.2 % of sales,
representing a 210 basis point improvement from last year. These
savings were primarily driven by lower corporate overhead,
incentive compensation, store controllable costs and more efficient
advertising spend.
For the second quarter, the
Company delivered a 52% improvement in net loss over the prior year
to $(56) million or $(0.18) per share. Excluding the
previously announced write-off of unamortized debt issuance costs
of $34 million related to the closing of the real estate term loan
refinancing and other items, adjusted earnings per share improved
88% to a loss of $(0.05) per share for the second quarter this year
compared to a loss of $(0.40) per share last year.
EBITDA improved $85 million to
$229 million for the quarter, a 59 % improvement from the same
period last year. Excluding restructuring charges and the
proportional share of net income from the home office land joint
venture, adjusted EBITDA improved 69 % to $233 million, a $95
million improvement from the same period last year.
A reconciliation of GAAP to
non-GAAP financial measures is included in the schedules
accompanying the consolidated financial statements in this
release.
Outlook
The Company reaffirms its 2016
full year guidance as follows:
-
Comparable store sales: expected to
increase 3% to 4%;
-
Gross margin: expected to increase 10
to 30 basis points;
-
SG&A dollars: expected to decrease
versus 2015;
-
EBITDA1: expected to
be $1 billion;
-
Adjusted earnings per share1: expected to
be positive;
-
Free cash flow1: expected to
improve versus 2015.
The Company also announced an
upcoming new store location in San Bernardino, Calif. at Inland
Center, and the relocation of its store in Salinas, Calif. to a new
space within Northridge Mall. The new store and relocation
are both landlord funded projects, and are expected to be complete
this fall. Each location will offer an appliance showroom, an
expansive Sephora inside JCPenney and a flagship Salon by
InStyle.
[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 chief financial officer Ed Record. 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 56348291 conference ID or visit the
Company's investor relations website at http://ir.jcpenney.com.
Telephone playback will be
available for 7 days beginning approximately two hours after the
conclusion of the meeting by dialing (855) 859-2056, or (404)
537-3406 for international callers, and referencing 56348291
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, is on a mission to ensure
every shopping experience is worth the customer's time, money and
effort. Whether shopping jcp.com or visiting one of over 1,000
store locations across the United States and Puerto Rico, customers
will discover a broad assortment of products from a leading
portfolio of private, exclusive and national brands.
Supporting this value proposition is the warrior spirit of
over 100,000 JCPenney associates worldwide, who are focused on 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, gross margin, selling, general and
administrative expenses, earnings and cash flows.
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 including
EMV chip technology, 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-K 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 30, 2016 |
|
August 1, 2015 |
(1) |
% Inc. (Dec.) |
|
|
July 30, 2016 |
|
August 1, 2015 |
(1) |
% Inc. (Dec.) |
|
Total net sales |
$ |
2,918 |
|
|
$ |
2,875 |
|
|
1.5 |
% |
|
|
$ |
5,729 |
|
|
$ |
5,732 |
|
|
(0.1 |
)% |
|
Cost
of goods sold |
1,834 |
|
|
1,810 |
|
|
1.3 |
% |
|
|
3,627 |
|
|
3,626 |
|
|
- |
% |
|
Gross margin |
1,084 |
|
|
1,065 |
|
|
1.8 |
% |
|
|
2,102 |
|
|
2,106 |
|
|
(0.2 |
)% |
|
Operating expenses/(income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative (SG&A) |
853 |
|
|
901 |
|
|
(5.3 |
)% |
|
|
1,725 |
|
|
1,866 |
|
|
(7.6 |
)% |
|
Pension |
2 |
|
|
(16 |
) |
|
(100.0 |
)% |
+ |
|
4 |
|
|
(35 |
) |
|
(100.0 |
)% |
+ |
Depreciation and amortization |
153 |
|
|
153 |
|
|
- |
% |
|
|
307 |
|
|
307 |
|
|
- |
% |
|
Real
estate and other, net |
(9 |
) |
|
19 |
|
|
(100.0 |
)% |
+ |
|
(47 |
) |
|
(16 |
) |
|
100.0 |
% |
+ |
Restructuring and management transition |
9 |
|
|
17 |
|
|
(47.1 |
)% |
|
|
15 |
|
|
39 |
|
|
(61.5 |
)% |
|
Total
operating expenses |
1,008 |
|
|
1,074 |
|
|
(6.1 |
)% |
|
|
2,004 |
|
|
2,161 |
|
|
(7.3 |
)% |
|
Operating income/(loss) |
76 |
|
|
(9 |
) |
|
100.0 |
% |
+ |
|
98 |
|
|
(55 |
) |
|
100.0 |
% |
+ |
(Gain)/loss on extinguishment of debt |
34 |
|
|
- |
|
|
100.0 |
% |
+ |
|
30 |
|
|
- |
|
|
100.0 |
% |
+ |
Net interest expense |
93 |
|
|
103 |
|
|
(9.7 |
)% |
|
|
188 |
|
|
201 |
|
|
(6.5 |
)% |
|
Income/(loss) before income taxes |
(51 |
) |
|
(112 |
) |
|
(54.5 |
)% |
|
|
(120 |
) |
|
(256 |
) |
|
(53.1 |
)% |
|
Income tax expense/(benefit) (2) |
5 |
|
|
5 |
|
|
- |
% |
|
|
4 |
|
|
11 |
|
|
(63.6 |
)% |
|
Net
income/(loss) |
$ |
(56 |
) |
|
$ |
(117 |
) |
|
(52.1 |
)% |
|
|
$ |
(124 |
) |
|
$ |
(267 |
) |
|
(53.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share - basic and diluted |
$ |
(0.18 |
) |
|
$ |
(0.38 |
) |
|
(52.6 |
)% |
|
|
$ |
(0.40 |
) |
|
$ |
(0.87 |
) |
|
(54.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable store sales increase/(decrease)
(3) |
2.2 |
% |
|
4.1 |
% |
|
|
|
|
0.9 |
% |
|
3.7 |
% |
|
|
|
Ratios
as a percentage of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
37.1 |
% |
|
37.0 |
% |
|
|
|
|
36.7 |
% |
|
36.7 |
% |
|
|
|
SG&A expenses |
29.2 |
% |
|
31.3 |
% |
|
|
|
|
30.1 |
% |
|
32.6 |
% |
|
|
|
Total operating expenses |
34.5 |
% |
|
37.4 |
% |
|
|
|
|
35.0 |
% |
|
37.7 |
% |
|
|
|
Operating income/(loss) |
2.6 |
% |
|
(0.3 |
)% |
|
|
|
|
1.7 |
% |
|
(1.0 |
)% |
|
|
|
Effective income tax rate (2) |
9.8 |
% |
|
4.5 |
% |
|
|
|
|
3.3 |
% |
|
4.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
and outstanding shares at end of period |
307.6 |
|
|
305.5 |
|
|
|
|
|
307.6 |
|
|
305.5 |
|
|
|
|
Weighted average shares - basic |
308.0 |
|
|
305.9 |
|
|
|
|
|
307.6 |
|
|
305.7 |
|
|
|
|
Weighted average shares - diluted |
308.0 |
|
|
305.9 |
|
|
|
|
|
307.6 |
|
|
305.7 |
|
|
|
|
-
Prior year amounts have been
adjusted to reflect the retrospective application of accounting
policy change for recognizing pension expense.
-
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. For the three and six months ended August 1, 2015,
the Company increased its net valuation allowance by $46 million
and $90 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 30, 2016 |
|
August 1, 2015 |
(1) |
Current assets: |
|
|
|
|
Cash
in banks and in transit |
$ |
171 |
|
|
$ |
178 |
|
|
Cash short-term investments |
258 |
|
|
795 |
|
|
Cash
and cash equivalents |
429 |
|
|
973 |
|
|
Merchandise inventory |
2,981 |
|
|
3,005 |
|
|
Deferred taxes |
231 |
|
|
184 |
|
|
Prepaid expenses and other |
235 |
|
|
200 |
|
|
Total
current assets |
3,876 |
|
|
4,362 |
|
|
Property and equipment, net |
4,686 |
|
|
4,989 |
|
|
Prepaid pension |
- |
|
|
266 |
|
|
Other assets |
604 |
|
|
615 |
|
|
Total assets |
$ |
9,166 |
|
|
$ |
10,232 |
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Merchandise accounts payable |
$ |
1,094 |
|
|
$ |
1,122 |
|
|
Other accounts payable and accrued expenses |
1,121 |
|
|
1,170 |
|
|
Current maturities of capital leases and note payable |
18 |
|
|
27 |
|
|
Current maturities of long-term debt |
341 |
|
|
28 |
|
|
Total
current liabilities |
2,574 |
|
|
2,347 |
|
|
Long-term capital leases and note payable |
10 |
|
|
18 |
|
|
Long-term debt |
4,356 |
|
|
5,225 |
|
|
Deferred taxes |
425 |
|
|
378 |
|
|
Other
liabilities |
604 |
|
|
604 |
|
|
Total liabilities |
7,969 |
|
|
8,572 |
|
|
Stockholders' equity |
1,197 |
|
|
1,660 |
|
|
Total liabilities and
stockholders' equity |
$ |
9,166 |
|
|
$ |
10,232 |
|
|
-
Prior year amounts have been
adjusted to reflect the retrospective application of accounting
policy change for recognizing pension expense.
SUMMARY STATEMENTS
OF CASH FLOWS
(Unaudited)
(Amounts in millions)
|
Three Months Ended |
|
Six Months Ended |
|
Statements of Cash Flows: |
July 30, 2016 |
|
August 1, 2015 |
(1) |
July 30, 2016 |
|
August 1, 2015 |
(1) |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income/(loss) |
$ |
(56 |
) |
|
$ |
(117 |
) |
|
$ |
(124 |
) |
|
$ |
(267 |
) |
|
Adjustments to reconcile net income/(loss) to net
cash provided by/(used in) operating activities: |
|
|
|
|
|
|
|
|
Restructuring and management transition |
- |
|
|
1 |
|
|
(1 |
) |
|
4 |
|
|
Asset impairments and other charges |
1 |
|
|
1 |
|
|
2 |
|
|
2 |
|
|
Net
gain on sale of non-operating assets |
- |
|
|
(6 |
) |
|
(5 |
) |
|
(8 |
) |
|
Net gain on sale of operating assets |
(2 |
) |
|
- |
|
|
(10 |
) |
|
(8 |
) |
|
(Gain)/loss on extinguishment of debt |
34 |
|
|
- |
|
|
30 |
|
|
- |
|
|
Depreciation and amortization |
153 |
|
|
153 |
|
|
307 |
|
|
307 |
|
|
Benefit plans |
(15 |
) |
|
(23 |
) |
|
(27 |
) |
|
(48 |
) |
|
Stock-based compensation |
10 |
|
|
11 |
|
|
20 |
|
|
21 |
|
|
Deferred taxes |
3 |
|
|
2 |
|
|
- |
|
|
3 |
|
|
Change in cash from: |
|
|
|
|
|
|
|
|
Inventory |
(56 |
) |
|
(194 |
) |
|
(260 |
) |
|
(353 |
) |
|
Prepaid expenses and other assets |
(9 |
) |
|
26 |
|
|
(68 |
) |
|
(11 |
) |
|
Merchandise accounts payable |
99 |
|
|
59 |
|
|
169 |
|
|
125 |
|
|
Current income taxes |
(3 |
) |
|
2 |
|
|
(4 |
) |
|
6 |
|
|
Accrued expenses and other |
27 |
|
|
127 |
|
|
(237 |
) |
|
43 |
|
|
Net cash provided by/(used in) operating
activities |
186 |
|
|
42 |
|
|
(208 |
) |
|
(184 |
) |
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
(121 |
) |
|
(95 |
) |
|
(160 |
) |
|
(141 |
) |
|
Proceeds from sale of non-operating assets |
- |
|
|
7 |
|
|
2 |
|
|
13 |
|
|
Proceeds from sale of operating assets |
4 |
|
|
- |
|
|
16 |
|
|
5 |
|
|
Joint
venture return of investment |
1 |
|
|
- |
|
|
15 |
|
|
- |
|
|
Net cash provided by/(used in) investing
activities |
(116 |
) |
|
(88 |
) |
|
(127 |
) |
|
(123 |
) |
|
Cash
flows from financing activities: |
|
|
|
|
|
|
|
|
Net proceeds from issuance of long-term debt |
2,188 |
|
|
- |
|
|
2,188 |
|
|
- |
|
|
Payments of capital leases and note payable |
(5 |
) |
|
(18 |
) |
|
(19 |
) |
|
(23 |
) |
|
Payments of long-term debt |
(2,188 |
) |
|
(7 |
) |
|
(2,250 |
) |
|
(13 |
) |
|
Financing costs |
(49 |
) |
|
- |
|
|
(49 |
) |
|
- |
|
|
Proceeds from stock options exercised |
- |
|
|
- |
|
|
1 |
|
|
- |
|
|
Other
changes in stockholders' equity |
(2 |
) |
|
- |
|
|
(7 |
) |
|
(2 |
) |
|
Net cash provided by/(used in) financing
activities |
(56 |
) |
|
(25 |
) |
|
(136 |
) |
|
(38 |
) |
|
Net
increase/(decrease) in cash and cash equivalents |
14 |
|
|
(71 |
) |
|
(471 |
) |
|
(345 |
) |
|
Cash and cash equivalents at beginning of
period |
415 |
|
|
1,044 |
|
|
900 |
|
|
1,318 |
|
|
Cash
and cash equivalents at end of period |
$ |
429 |
|
|
$ |
973 |
|
|
$ |
429 |
|
|
$ |
973 |
|
|
-
Prior year amounts have been
adjusted to reflect the retrospective application of accounting
policy change for recognizing pension expense.
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 tax expense to other comprehensive income.
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 tax expense to other comprehensive
income 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 tax expense to other comprehensive
income 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.
In addition, we believe that EBITDA is a useful
measure in assessing our operating performance and are therefore
presenting this non-GAAP financial measure in addition to the
non-GAAP financial measures listed above.
EBITDA AND ADJUSTED EBITDA,
NON-GAAP FINANCIAL MEASURES:
The following table reconciles net income/(loss),
the most directly comparable GAAP measure, to EBITDA and adjusted
EBITDA, non-GAAP financial measures:
|
Three Months Ended |
|
Six Months Ended |
|
|
July 30, 2016 |
|
August 1, 2015 |
(1) |
July 30, 2016 |
|
August 1, 2015 |
(1) |
Net income/(loss) |
$ |
(56 |
) |
|
$ |
(117 |
) |
|
$ |
(124 |
) |
|
$ |
(267 |
) |
|
Add:
Net interest expense |
93 |
|
|
103 |
|
|
188 |
|
|
201 |
|
|
Add: (Gain)/loss on extinguishment of debt |
34 |
|
|
- |
|
|
30 |
|
|
- |
|
|
Total
interest expense |
127 |
|
|
103 |
|
|
218 |
|
|
201 |
|
|
Add: Income tax expense/(benefit) |
5 |
|
|
5 |
|
|
4 |
|
|
11 |
|
|
Add:
Depreciation and amortization |
153 |
|
|
153 |
|
|
307 |
|
|
307 |
|
|
EBITDA (non-GAAP) |
229 |
|
|
144 |
|
|
405 |
|
|
252 |
|
|
Add:
Restructuring and management transition charges |
9 |
|
|
17 |
|
|
15 |
|
|
39 |
|
|
Add: Primary pension plan expense/(income) |
- |
|
|
(17 |
) |
|
- |
|
|
(38 |
) |
|
Less:
Net gain on the sale of non-operating assets |
- |
|
|
(6 |
) |
|
(5 |
) |
|
(8 |
) |
|
Less: Proportional share of net income from the
home office land joint venture |
(5 |
) |
|
- |
|
|
(29 |
) |
|
(22 |
) |
|
Adjusted EBITDA (non-GAAP) |
$ |
233 |
|
|
$ |
138 |
|
|
$ |
386 |
|
|
$ |
223 |
|
|
-
Prior year amounts have been
adjusted to reflect the retrospective application of accounting
policy change for recognizing pension expense.
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 30, 2016 |
|
August 1, 2015 |
(1) |
July 30, 2016 |
|
August 1, 2015 |
(1) |
Net income/(loss) |
$ |
(56 |
) |
|
$ |
(117 |
) |
|
$ |
(124 |
) |
|
$ |
(267 |
) |
|
Earnings/(loss) per share-diluted |
$ |
(0.18 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.87 |
) |
|
|
|
|
|
|
|
|
|
|
Add:
Restructuring and management transition charges (2) |
9 |
|
|
17 |
|
|
15 |
|
|
39 |
|
|
Add: Primary pension plan expense/(income)
(2) |
- |
|
|
(17 |
) |
|
- |
|
|
(38 |
) |
|
Add:
(Gain)/loss on extinguishment of debt (2) |
34 |
|
|
- |
|
|
30 |
|
|
- |
|
|
Less: Net gain on the sale of non-operating
assets (2) |
- |
|
|
(6 |
) |
|
(5 |
) |
|
(8 |
) |
|
Less:
Proportional share of net income from the home office land joint
venture (2) |
(5 |
) |
|
- |
|
|
(29 |
) |
|
(22 |
) |
|
Less: Tax impact resulting from other comprehensive
income allocation (3) |
2 |
|
|
- |
|
|
- |
|
|
- |
|
|
Adjusted net income/(loss) (non-GAAP) |
$ |
(16 |
) |
|
$ |
(123 |
) |
|
$ |
(113 |
) |
|
$ |
(296 |
) |
|
Adjusted earnings/(loss) per
share-diluted (non-GAAP) |
$ |
(0.05 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.97 |
) |
|
-
Prior year amounts have been
adjusted to reflect the retrospective application of accounting
policy change for recognizing pension expense.
-
Reflects no tax effect due to
the impact of the Company's tax valuation allowance.
-
Represents the net tax expense
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, pay-down of
off-balance sheet pension debt, and other obligations or payments
made for business acquisitions. 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 30, 2016 |
|
August 1, 2015 |
|
July 30, 2016 |
|
August 1, 2015 |
Net cash provided by/(used in) operating
activities |
$ |
186 |
|
|
$ |
42 |
|
|
$ |
(208 |
) |
|
$ |
(184 |
) |
Add: Proceeds from sale of operating assets |
4 |
|
|
- |
|
|
16 |
|
|
5 |
|
Less: Capital expenditures |
(121 |
) |
|
(95 |
) |
|
(160 |
) |
|
(141 |
) |
Free cash flow (non-GAAP) |
$ |
69 |
|
|
$ |
(53 |
) |
|
$ |
(352 |
) |
|
$ |
(320 |
) |
|
|
|
|
|
|
|
|
Net
cash provided by/(used in) investing activities (1) |
$ |
(116 |
) |
|
$ |
(88 |
) |
|
$ |
(127 |
) |
|
$ |
(123 |
) |
Net cash provided by/(used in) financing
activities |
$ |
(56 |
) |
|
$ |
(25 |
) |
|
$ |
(136 |
) |
|
$ |
(38 |
) |
(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 OMX Corporate Solutions on
behalf of NASDAQ OMX 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
HUG#2034813
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