JCPenney 2003 Annual Report Download - page 23

J. C. Penney Company, Inc. 21
COMPANY STATEMENT ON FINANCIAL INFORMATION
The Company is responsible for the integrity and objectivity of the
consolidated financial statements and other information contained
in this Annual Report. The consolidated financial statements have
been prepared in accordance with accounting principles generally
accepted in the United States of America and present fairly, in all
material respects, the Company’s results of operations, financial posi-
tion and cash flows. 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 contained elsewhere in this
Annual Report is consistent with that included in the consolidated
financial statements.
The Company has established and maintains a system of internal
accounting controls that provides reasonable assurance as to the
integrity of the financial statements, the protection of assets from
unauthorized use or disposition, and the prevention and detection of
fraudulent financial reporting. The internal accounting control sys-
tem includes careful selection and development of employees,
appropriate division of duties, and written accounting and operating
policies and procedures. The system is enhanced by periodic reviews
by the Company’s internal auditors and independent auditors, and a
written Code of Ethics adopted by the Company’s Board of
Directors, applicable to and communicated to all management
employees of the Company. The system is continually reviewed,
evaluated and where appropriate, modified to accommodate cur-
rent conditions. In addition, the Company has an internal Disclosure
and Controls Review Committee, comprised of management from
each functional area within the Company, which performs a separate
review of the Company’s disclosure controls.
KPMG LLP, independent auditors, are appointed by the Audit
Committee of the Company’s Board of Directors and ratified by the
Company’s stockholders. They were engaged to render an opinion
regarding the fair presentation of the Company’s consolidated finan-
cial statements. Their audit, the report upon which appears below,
was conducted in accordance with auditing standards generally
accepted in the United States of America, and included a review of
the system of internal accounting controls to the extent they consid-
ered necessary to determine the audit procedures required to sup-
port their opinion.
The Audit Committee of the Board of Directors is composed sole-
ly of directors who are not officers or employees of the Company.
The Committee meets periodically with the independent auditors,
internal auditors and financial officers of the Company to review the
quality of the financial reporting of the Company, the internal
accounting controls and the scope and results of audits. In addition,
the Committee is responsible for the appointment, compensation,
retention and oversight of the Company’s independent auditors.
Both the internal auditors and the independent auditors have free
access to the Audit Committee without management present.
Robert B. Cavanaugh
Executive Vice President and Chief Financial Officer
INDEPENDENT AUDITORS’ REPORT
To the Sto ckholders 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 31, 2004 and January 25, 2003, 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 31, 2004. 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 stan-
dards 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 material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclo-
sures in the financial statements. An audit also includes assess-
ing the accounting principles used and significant estimates
made by management, as well as evaluating 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 posi-
tion of J. C. Penney Company, Inc. and Subsidiaries as of January
31, 2004 and January 25, 2003, and the results of their operations
and their cash flows for each of the years in the three-year peri-
od ended January 31, 2004, in conformity with accounting prin-
ciples generally 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
determining inflation/deflation rates used in the valuation of
LIFO inventories 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 26, 2004