JC Penney announces Q2 earnings, total sales boost 5.4%
16 Aug '05
7 min read
Discontinued Operations
On July 5, 2005, the company completed the sale of its interest in Lojas Renner S.A. Historical financial statements and restated comparable store sales percents reflecting Renner as a discontinued operation are included as part of this release (Attachment 1). Discontinued operations contributed $0.04 per share to net income in the second quarter, principally related to adjustments associated with the earlier sales of the Eckerd drugstore operation and international operations.
Financial Condition
As of July 30, 2005, the company had cash investments of $3.4 billion, which will be reduced over the balance of the year as the capital structure-repositioning program is completed. Long-term debt totaled $3.5 billion and reflects the payment at maturity of the $193 million aggregate principal amount of 7.05 percent notes due May 23, 2005, as well as $56 million of open market debt repurchases in the second quarter. Free cash flow is trending higher than original guidance, principally as a result of strong operating performance in the first half. The company now expects to generate free cash flow of approximately $250 million for the fiscal year.
Capital Structure Repositioning
Since announcing the sale of Eckerd last year, the company's BOD has authorized common stock repurchases that aggregate $4.15 billion. During the second quarter, the company repurchased 12.5 million shares of its common stock under this program, which brings the total repurchases in the first half of 2005 to approximately 20 million shares for about $1 billion. Since initiating the program in August 2004, the company has repurchased approximately 70 million shares for about $3 billion. The remaining $1.15 billion share repurchase authorization, which includes the additional $400 million authorized in connection with the July sale of Renner, is expected to be completed by the end of fiscal 2005.
marketing@alchempro.com
