jcp q4 2012 financial results (deleted 98d92b6d9bb8ddf8dcccb933fbcf9f02)

8/21/2019 JCP Q4 2012 Financial Results (Deleted 98d92b6d9bb8ddf8dcccb933fbcf9f02)

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welcome


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FINANCIALUPDATE


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$

3

.88

Bsales


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sales metrics

sales

Q1 12 Q2 12 Q3 12

comps*

traffic

conversion

$3.88B

Q4 12

(31.7%)

(17%)

(10%)

*comps for Q4 12 calculated on a 13-week basis and FY 12 calculated on a 52-week basis

$3.15B $3.02B $2.93B

(18.9%) (21.7%)

(10%)

(5%)

(12%)

(8%)

(26.1%)

(12%)

(10%)


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2

3

.8%gaap gross margin


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gross margincause of change

Q4 11 gross margin 30.2%

everyday selling margin impact 0.8%

other (1.1%)

Q4 12 gross margin 23.8%

clearance selling margin impact (1.2%)

cost concessions (0.6%)

clearance mix impact (4.3%)


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selling margin

bps

100QQ4 11

everyday % 43.7% 4

% revenue 86%


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selling margin

bps

(830)clearance % 7.7% (

% revenue 14%

QQ4 11


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selling margin

bps

(490)

QQ4 11

selling margin % 38.2% 3

bps(430)mix impact 86/14% 7


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quarterly selling margin

85%everyday

83%

Q1 12 Q2 12

77%

Q3 12

15%clearance 17% 23%

76%

Q4 12

24%

mix of business

51.6%everyday 51.2% 51.7%

(26.8%)clearance 5.9% (5.9%)

44.7%

(0.6%)

selling margin


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sg&a

$1.21B


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gross sg&a savings

$175M


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marketing ($22M)

sg&a savings

gross savings

shop labor ($6M)

net savings

technology investment ($13M)

Q4 12


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marketing ($22M)

sg&a savings

gross savings

shop labor ($6M)

net savings

technology investment ($13M)

($25M)

($18M)

($25M)

Q4 12 FY 12


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primary pension

primary pension expense $28M

lump sum settlements $148M

Q4 12


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restructuring charges

management transition $5M

other $2M

home office/store severance $4M

home office/store $18Mstore fixtures

Q4 12


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eps

gaap eps

pension $0.49

restructuring $0.08

adjusted (non-gaap) eps

Q4 12

$0.88

$0.83

FY 12

gain on sale of non-core assets $0.00

transition markdowns $0.00

($1.14)

$0.43


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BALANCESHEET


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balance sheet$ in millionsassets

1,507cash and equivalents 525

Q4 11 Q3 12

930

Q4

2,916merchandise inventory 3,362 2,34

168income tax receivable 69 57

245deferred income tax 409 106

245prepaid expenses 265 249

5,176properties 5,493 5,35

1,167other assets 767 745


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balance sheet$ in millions

$405

QQ3 12

cash and equivalents 525

assets

operating cash flow in Q4 of $645M

capex spend in Q4 of $230M


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merchandise inventory

assets

(20%)

QQ4 11

2,916

reduced inventory by $575M

reduced weeks of supply and improved aging


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deferred income tax

assets

($139)

QQ4 11

245

reclassification of our net operating loss tax benefits to londeferred tax liability


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other assets

assets

($422)

QQ4 11

1,167

reduction due to monetization of non-core assets


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balance sheet$ in millionsassets

1,022merch accounts payables 1,408

Q4 11 Q3 12

1,16

Q4

1,503accrued expenses 1,344 1,39

1capital leases/notes payable current 22 26

230current maturities 0 0

2,868long-term debt 2,868 2,86

3capital leases/notes payable non-current 75 88

888long-term deferred tax 786 388

899other liabilities 885 683

4,010equity 3,502 3,17


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14%

QQ4 11

merch accounts payables 1,022

liabilities & equity

reduction in inventory weeks of supply

realignment of vendor payment schedules of $129M

one-time deferral of select vendor payments of $85M


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($500)

QQ4 11

long-term deferred tax 888

liabilities & equity

increased future benefits from net operating losses


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CASHFLOW


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depreciation 157

gaap net income (552)

cash flow from operating activities$ in millio

restructuring/management transition 19

inventory 1,021

supplier payables (246)

other working capital 211

income/deferred tax (234)

asset impairments & other charges 107

Q4 12

primary pension plan/benefit plans 162


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capital expenditures (230)

cash flow $ in millions

sale of non-core assets 1

investing

capital leases/other (11)

financing

operating

net increase in cash 405

Q4 12


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depreciation 543

gaap net income (985)

cash flow from operating activities$ in millio

restructuring/management transition 121

inventory 575

merch accounts payable 140

other working capital (46)

income/deferred tax (350)

asset impairments & other charges 117

FY 12

primary pension plan/benefit plans 272

gain on sale of non-core assets (397)


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capital expenditures (810)

cash flow $ in millions

sale of non-core assets 526

investing

payment of debt (250)

financing

operating

net decrease in cash (577)

FY 12

acquisition (9)

other (24)


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line of creditfebruary amendment

increased size by $350M to $1.85B

increased accordion feature from $250M to $400M

increased flexibility for third-party financing

no change in covenant structure

updated representations and warranties section acknowledthe business results of the first year of transformation

secured by receivables and inventory

continued support from our banking partners


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liquidity

line of cred

year-end ad

liquidity*

accordion

*does not include $0.3B of outstanding letters of credit


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reduced expenses by $671M

reduced inventory by $575M

monetized $526M of non-core assets

invested $810M of capital

reduced debt by $250M


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q&a


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thank you


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appendix

Reconciliation of Non-GAAP Financial Measures(U dit d)


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ADJUSTED OPERATING INCOME/(LOSS), NON-GAAP FINANCIAL MEASURE

Feb. 2, Jan. 28, Feb. 2, Jan. 28,2013 2012 2013 2012

Operating income/(loss) (745)$ (73)$ (1,310)$ (2)$As a percent of sales (19.2)% (1.3)% (10.1)% (0.0)%

Add: - - 155 -

charges 29 154 298 451

176 22 315 87Less:

assets - - (397) -

(540)$ 103$ (939)$ 536$

As a percent of sales (13.9)% 1.9% (7.2)% 3.1%

Feb. 2, Jan. 28, Feb. 2, Jan. 28,2013 2012 2013 2012

Net income/(loss) (552)$ (87)$ (985)$ (152)$

Earnings/(loss) per share - diluted (2.51)$ (0.41)$ (4.49)$ (0.70)$

Add:- - 95 -

17 119 182 306

#$9, $122, $34 108 13 193 53

Less:

- - (251) -

(427)$ 45$ (766)$ 207$

Adjusted earnings/(loss) per share - diluted (non-GAAP) (1.95)$ 0.21$ (3.49)$ 0.94$

FINANCIAL MEASURES

Three months ended Twelve months ended

Markdowns - inventory strategy alignment, netof tax of $-, $-, $60 and $-

Restructuring and management transitioncharges, net of tax of $12, $35, $116 and $145

Primary pension plan expense, net of tax of $68,

Net gain on sale or redemption of non-operating

assets, net of tax of $-, $-, $146 and $-

Adjusted net income/loss (non-GAAP)

ADJUSTED NET INCOME/(LOSS) AND ADJUSTED EARNINGS/(LOSS) PER SHARE - DILUTED, NON-GAAP

(Unaudited)(Amounts in millions except per share data)

Three months ended Twelve months ended

Markdowns - inventory strategy alignment

Restructuring and management transition

Primary pension plan expense

Net gain on sale or redemption of non-operating

Adjusted operating income/(loss) (non-GAAP)

We define (1) adjusted operating income/(loss) as operating income/(loss) excluding the impact of markdowns related to the alignment of inventory with ournew strategy, restructuring and management transition charges, the non-cash impact of the primary pension plan expense and the net gain on sale orredemption of non-operating assets and (2) adjusted net income/(loss) and adjusted earnings/(loss) per share - diluted as net income/(loss) and earnings/(loss) per share - diluted, respectively, excluding the after-tax impacts of markdowns related to the alignment of inventory with our new strategy,restructuring and management transition charges, the non-cash impact of the primary pension plan expense and the net gain on sale or redemption of non-operating assets. We believe that the presentation of these non-GAAP financial measures is useful in order to better understand our financial performanceas well as facilitate the comparison of our results to the results of our peer companies. It is important to view each of these non-GAAP financial measuresin addition to, rather that as a substitute for, the GAAP measures of operating income/(loss), net income/(loss) and earnings/(loss) per share - diluted,respectively.

The following table reconciles operating income/(loss), the most directly comparable GAAP measure, to adjusted operating income/(loss), anon-GAAP financial measure:

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:

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:


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FREE CASH FLOW, NON-GAAP FINANCIAL MEASURE

Feb. 2, Jan. 28, Feb. 2,2013 2012 2013

Net cash provided by/(used in) operating activities 645$ # 953$ (10)$ Add: Proceeds from sale of operating assets - 14 -

Less: Capital expenditures (230) # (165) (810)

Dividends paid - # (43) (86)

Free cash flow (non-GAAP) 415$ # 759$ (906)$

(Unaudited)(Amounts in millions except per share data)

The following table reconciles cash flow from operating activities, the most directly comparable GAAP measure, to free cash flow, a non-GAAP fin

Three months ended Twelve mo

Reconciliation of Non-GAAP Financial Measures

Free cash flow is a key financial measure of our ability to generate additional cash from operating our business and in evaluating our financial perfoWe define free cash flow as cash flow from operating activities, less capital expenditures and dividends paid, plus the proceeds from the sale of opassets. Free cash flow is a relevant indicator of our ability to repay matur ing debt, revise our dividend policy or fund other uses of capital that we b

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 drepresent remaining cash flow available for discretionary expenditures due to the fact that the measure does not deduct payments required for debtpay-down of off-balance sheet pension debt, and other obligations or payments made for business acquisitions. Therefore, it is important to view freflow 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 is a key financial measure of our ability to generate additional cash from operating our business and in evaluating our financial perfoWe define free cash flow as cash flow from operating activities, less capital expenditures and dividends paid, plus the proceeds from the sale of opassets. Free cash flow is a relevant indicator of our ability to repay matur ing debt, revise our dividend policy or fund other uses of capital that we b

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 drepresent remaining cash flow available for discretionary expenditures due to the fact that the measure does not deduct payments required for debtpay-down of off-balance sheet pension debt, and other obligations or payments made for business acquisitions. Therefore, it is important to view freflow in addition to, rather than as a substitute for, our entire statement of cash flows and those measures prepared in accordance with GAAP.


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jcp q4 2012 financial results (deleted 98d92b6d9bb8ddf8dcccb933fbcf9f02)

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