JCPenney 2004 Annual Report Download - page 6

J.C. PENNEY COMPANY, INC.2 004 ANNUAL REPORT
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gram that is providing enhanced value for both stockholders and
bondholders.
Specifically, combining the Eckerd sale proceeds with cash on
hand, the Company was able to undertake a $3.0 billion common
stock buyback program and retire $1.7 billion of outstanding
long-term debt, including $650 million of convertible debt that
was converted into common stock.
At this point, the initial capital structure repositioning program
is substantially complete, and the Company has announced
planned additional common stock repurchases of $750 million
and long-term debt retirements of $250 million to be completed
during 2005.
Free cash flow from continuing operations was approximately
$600 million in 2004, representing the fifth consecutive year of
positive free cash flow and raising the total cash generated by the
business to almost $2.3 billion over this period. The Company’s
ability to improve its liquidity during a turnaround situation bodes
well for our goal of maintaining a strong financial position as we
enter the next phase of our long-range business plan.
As we look ahead, the Company’s financing initiatives have
placed us in good position to continue to support the strategic
and operational needs of our business. In addition to preserving
strong liquidity and financial flexibility, management will continue
to evaluate opportunities to deliver value to stockholders,
strengthen the financial position, and improve the credit profile in
support of the objective to restore the Company’s credit ratings to
an investment grade level.
WHAT’S NEXT FOR JCPENNEY?
As we focus on the next phase of the Company’s growth, we
are proud of our team and pleased with the foundation we have
built in recent years. But there is still more to be done and a lot
more opportunity ahead of us.
Our long-term objective is to be the preferred shopping choice
for Middle America serving the middle market shopper – the very
customer base with whom we have made so many gains over the
past few years, and indeed, throughout our long history.
JCPenney now has the opportunity to serve this customer and
grow our business in ways that may not have been imagined a
few years ago. We must grasp this opportunity. Now is the time
to accelerate our efforts and take our performance to the next
level.
Becoming the preferred shopping choice for Middle America
requires that we make an emotional connection with our customer
– through our merchandise, compelling assortments, and strong
and consistent marketing and advertising messages. In every
way we interact with our customer, we must be respectful of – and
relevant to – our customer’s preferences, aspirations, and
lifestyle.
We must continue to make it easier – and more exciting – for
our customer to do business with us. Across our three shopping
channels, the customer’s experience with us must be enjoyable,
easy, and satisfying.
JCPenney must also become a leader among its peers in per-
formance – including comparable store sales growth, profitability,
inventory productivity, and expense management.
And, we are committed to being a great place to work.
In my first months at JCPenney, I have conducted a number of
town-hall type meetings. As I listen and learn from associates
across this Company, I am firmly convinced that at JCPenney we
have the resources and the resolve to accomplish our mission –
and much more.
In closing, with their retirement this past year, four distinguished
members of our Company’s Board of Directors should be recog-
nized and appreciated. To Jane C. Pfeiffer, Ann W. Richards, and
Charles S. Sanford, Jr., we extend our deepest gratitude for their
counsel and expertise throughout their years of dedicated serv-
ice. We wish each of them, and their families, the very best in the
years ahead.
To Allen Questrom, on behalf of the stockholders and associ-
ates of JCPenney, we extend our appreciation for his four years of
dedicated service as the Company’s Chairman of the Board and
Chief Executive Officer. On his watch, JCPenney regained favor
with the American consumer and recovered its course. We are
grateful for his outstanding leadership – and wish him continued
success in the years to come.
Finally, to our stockholders, we thank you for your continued
support and look forward to delivering increasing value to you as
we build JCPenney’s leadership position in American retailing.
Myron (Mike) E. Ullman, III
Chairman of the Board and
Chief Executive Officer