J.C. Penney Denies Rumors of CEO Resignation: Full Transcript

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J.C. Penney Denies Rumors of CEO Resignation: Full Transcript
By J.C. Penney (Brand New design website See article here) [Public domain], via Wikimedia Commons

finding our everyday value and our new brands intriguing.

Now transformation takes time; this is a multiyear journey. And we’ve certainly made our mistakes. I think Ron has stood up and taken full responsibility and accountability for our 2012 results. We understand it is unacceptable, it’s unacceptable in the short term and it’s unacceptable in the long term.

But this does take time and we are adapting our day-to-day tactics in a way that allows us to continue to achieve the long-term vision without compromising the present.

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So one thing on the financial side that I want to just bring to everyone’s attention, because sometimes it gets lost in looking at quarterly earnings and adding it up. So we lost almost $1 billion in earnings last year. A number of the things that we did were restructuring-related, they were impairment-related, they were things that were non-cash in nature. And so at the operating cash flow line, and this has been adjusted for the $526 million that we received from the disposition of the non-core assets, from an operating cash flow standpoint, we only used $10 million.

And so there is a number of expenses in here that were non-cash-related. In restructuring, we had a term vested reduction in our pension where we allowed people to elect a lump sum payment from our pension plan, a pension plan with $5 billion of assets with $1.2 billion or $1.3 billion of credits, which means we can get into an underfunded situation by over $1 billion and not have to put any more money into our pension plan. So we wrote off a couple hundred million dollars of expense, accelerated pension expense by doing that. And then you guys have seen the restructuring-related charges.

So on the investment side, we did invest $810 million of capital. I mentioned the sale of the non-core assets of that $526 million of cash. It was almost $500 million of gain. So these were very strategic discussions with people that have been trying to buy these assets for a number of years.

We were creating losses and had a way to really protect the tax and so we decided to go ahead and monetize them in 2012 and then we mentioned the paydown of the debt.

Okay, so with that, I’m going to turn it over to Lorraine and she is going to ask a few questions and then we will open it up to the floor and address your questions as well. Okay? Thank you.

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