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J. C. Penney Company, Inc. 2002 annual report38
Notes to the Consolidated Financial Statements
20 SEGMENT REPORTING
Reportable segments were determined based on similar economic characteristics, the nature of products and services and the method of
distribution. Performance of the segments is evaluated based on segment operating profit/(loss). Segment operating profit/(loss) is LIFO gross
margin less SG&A expenses. Segment assets include goodwill and other intangibles; however, segment operating profit does not include the
amortization related to these assets. Other unallocated is provided for purposes of reconciling to total Company amounts. Segments are as follows:
Business Segment Information
Department Eckerd Other Total
($ in millions) Stores and Catalog Drugstores Unallocated Company
2002
Retail sales, net $ 17,704 $ 14,643 $ — $ 32,347
Segment operating profit 695 412 — 1,107
Other unallocated (93) (93)
Net interest expense (388) (388)
Acquisition amortization (42) (42)
Income from continuing operations before income taxes 584
Total assets 10,974 6,724 169 17,867
Capital expenditures 317 341 — 658
Depreciation and amortization expense 368 253 46 667
2001
Retail sales, net $ 18,157 $ 13,847 $ — $ 32,004
Segment operating profit 548 208 — 756
Other unallocated (46) (46)
Net interest expense (386) (386)
Acquisition amortization (121) (121)
Income from continuing operations before income taxes 203
Total assets 11,178 6,688 182 18,048
Capital expenditures 332 299 — 631
Depreciation and amortization expense 370 226 121 717
2000
Retail sales, net $ 18,758 $ 13,088 $ — $ 31,846
Segment operating profit/(loss) 254 (76) — 178
Other unallocated (515) (515)
Net interest expense (427) (427)
Acquisition amortization (122) (122)
(Loss) from continuing operations before income taxes (886)
Total assets 9,640 6,966 3,185(1) 19,791
Capital expenditures 361 317 — 678
Depreciation and amortization expense 360 213 122 695
(1) Includes assets of discontinued operations of $3,027 million.
21 SUBSEQUENT EVENTS
On February 28, 2003, JCP issued $600 million principal amount of 8.0% Notes Due 2010 priced at 99.342% of their principal amount to yield
8.125%. The Notes pay interest on March 1 and September 1 each year. The Notes are redeemable in whole or in part, at the Company’s option
at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of such Notes and (ii) the sum of the present values
of the remaining scheduled payments, discounted to the redemption date on a semi-annual basis at the “treasury rate” plus 50 basis points
together in either case with accrued interest to the date of redemption. In addition, the Company received approximately $50 million of cash
proceeds on February 3, 2003 when additional Eckerd managed care receivables were securitized under an amended agreement. See Note 5 for
further discussion.