Execution of Bridge Plan improves JCPenney cash flow metrics

21 Feb '09

4 min read

As a percent of sales, total operating expenses were 27.8 percent in the fourth quarter. Beginning with this earnings release, the Company will report the expenses associated with its qualified and supplemental pension plans on a separate line from other selling, general and administrative expenses on the statement of operations to clarify and enhance the reporting of non-cash pension expenses and enable comparability in reporting of SG&A expenses. The attached schedule shows the effects of this reclassification for prior year periods.

The Real Estate and Other line item for the fourth quarter reflects a negative swing of $26 million versus last year's fourth quarter, primarily resulting from impairments recorded this year for one existing department store and a real estate joint venture property compared with gains from the sale of assets in last year's fourth quarter.

Interest expense for the quarter was $61 million, and the effective tax rate was 36.6 percent.

2009 First Quarter Sales and Earnings Guidance

Management's 2009 first quarter guidance is as follows:

Total sales: decrease 10 to 13 percent.
Comparable store sales: decrease 12 to 15 percent.
Operating income: expected to decline versus last year as a result of lower sales volume and higher non-cash pension expense.
Interest expense: approximately $65 million.
Income tax rate: 36.5 percent.
Average diluted shares: approximately 223 million average diluted shares of common stock, including about 1 million common stock equivalents.
Earnings per share: loss in the range of ($0.20) to ($0.30) per share.

J. C. Penney Company Inc

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