JCPenney 2002 Annual Report Download - page 20

2002 annual report J. C. Penney Company, Inc. 17
COMPANY STATEMENT ON FINANCIAL INFORMATION
The Company is responsible for the information presented in this
Annual Report. The consolidated financial statements have been
prepared in accordance with accounting principles generally accept-
ed in the United States of America and present fairly, in all material
respects, the Company’s results of operations, financial position and
cash flows. The Company’s CEO and CFO have signed certification
statements as required by Sections 302 and 906 of the Sarbanes-
Oxley Act of 2002. These signed certifications have been filed with
the Securities and Exchange Commission as part of the Company’s
2002 Form 10-K. Certain amounts included in the consolidated
financial statements are estimated based on currently available infor-
mation and judgment as to the outcome of future conditions and
circumstances. Financial information elsewhere in this Annual Report
is consistent with that in the consolidated financial statements.
The Company’s system of internal controls is supported by written
policies and procedures and supplemented by a staff of internal audi-
tors. This system is designed to provide reasonable assurance, at suit-
able costs, that assets are safeguarded and that transactions are exe-
cuted in accordance with appropriate authorization and are record-
ed and reported properly. The system is continually reviewed, evalu-
ated and where appropriate, modified to accommodate current con-
ditions. Emphasis is placed on the careful selection, training and
development of professional finance and internal audit managers.
An organizational alignment that is premised upon appropriate
delegation of authority and division of responsibility is fundamental
to this system. Communication programs are aimed at assuring that
established policies and procedures are disseminated and under-
stood throughout the Company.
The consolidated financial statements have been audited by inde-
pendent auditors whose report appears below. Their audit was con-
ducted in accordance with auditing standards generally accepted in
the United States of America, which include the consideration of
the Company’s internal controls to the extent necessary to form an
independent opinion on the consolidated financial statements pre-
pared by management.
The Audit Committee of the Board of Directors is composed
solely of directors who are not officers or employees of the
Company. The Audit Committee’s responsibilities include selection
of the independent auditors for the annual audit of the Company’s
consolidated financial statements, actually appointing the inde-
pendent auditors and monitoring their audit activities. The
Committee also reviews the independent auditors’ audit strategy
and plan, scope, fees, audit results, performance, independence and
non-audit services and related fees; internal audit reports on the
adequacy of internal controls; the Company’s ethics program; sta-
tus of significant legal matters; the scope of the internal auditors’
plans and budget and results of their audits and the effectiveness of
the Company’s program for correcting audit findings. The inde-
pendent auditors and Company personnel, including internal audi-
tors, meet periodically with the Audit Committee to discuss audit-
ing and financial reporting matters.
Robert B. Cavanaugh
Executive Vice President and Chief Financial Officer
INDEPENDENT AUDITORS’ REPORT
To the Stockholders and Board of Directors of
J. C. Penney Company, Inc.:
We have audited the accompanying consolidated balance
sheets of J. C. Penney Company, Inc. and Subsidiaries as of
January 25, 2003 and January 26, 2002, and the related consoli-
dated statements of operations, stockholders’ equity and cash
flows for each of the years in the three-year period ended
January 25, 2003. These consolidated financial statements are
the responsibility of the Company’s management. Our responsi-
bility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evi-
dence supporting the amounts and disclosures in the financial state-
ments. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as eval-
uating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
J. C. Penney Company, Inc. and Subsidiaries as of January 25, 2003
and January 26, 2002, and the results of their operations and their
cash flows for each of the years in the three-year period ended
January 25, 2003, in conformity with accounting principles general-
ly accepted in the United States of America.
As discussed in Note 1 of the Notes to the Consolidated
Financial Statements, the Company changed its method of deter-
mining inflation/deflation rates used in the valuation of LIFO inven-
tories in fiscal year 2002, and the Company adopted the provisions
of the Financial Accounting Standards Board’s Statement of
Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets” in fiscal year 2002.
Dallas, Texas
February 20, 2003, except as to Note 21, which is as
of February 28, 2003