JCPenney 2015 Annual Report Download - page 48
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Table of Contents
All of our outstanding notes and debentures as of January 30, 2016 are at fixed interest rates and would not be affected by interest rate changes. On June 20,
2014, J. C. Penney Company, Inc., JCP and J. C. Penney Purchasing Corporation (Purchasing) entered into a $2,350 million senior secured asset-based credit
facility (2014 Credit Facility), comprised of a $1,850 million revolving line of credit (Revolving Facility) and a $500 million term loan (2014 Term Loan).
During 2015, the Company amended the 2014 Credit Facility to increase the Revolving Facility from $1,850 million to $2,350 million. In connection with
upsizing the Revolving Facility, the Company prepaid and retired the outstanding principal amount of the 2014 Term Loan. Borrowings under the
Revolving Facility, to the extent that fluctuating rate loans are used, are affected by interest rate changes. As of January 30, 2016, we had no borrowings
outstanding under the Revolving Facility.
In addition, in May 2013, we entered into a $2.25 billion senior secured term loan facility (2013 Term Loan Facility), which bears interest at a rate of LIBOR
plus 5.0%. As of January 30, 2016, we had $2.194 billion outstanding under the 2013 Term Loan Facility. During the second quarter of 2015, we entered into
interest rate swap agreements with notional amounts totaling $1,250 million to fix a portion of our variable LIBOR-based interest payments. The interest rate
swap agreements, which were effective May 7, 2015, have a weighted-average fixed rate of 2.04%, mature on May 7, 2020 and have been designated as cash
flow hedges. Accordingly, a 100 basis point increase in LIBOR interest rates would result in additional annual interest expense of $14 million under the 2013
Term Loan Facility and $8 million in less annual interest expense under the interest rate swap agreements.
The fair value of long-term debt is estimated by obtaining quotes from brokers or is based on current rates offered for similar debt. As of January 30, 2016,
long-term debt, excluding unamortized debt issuance costs and including current maturities, had a carrying value of $4.8 billion and a fair value of $4.2
billion. As of January 31, 2015, long-term debt, excluding unamortized debt issuance costs and including current maturities, had a carrying value of $5.4
billion and a fair value of $4.8 billion.
The effects of changes in the U.S. equity and bond markets serve to increase or decrease the value of assets in our Primary Pension Plan. We seek to manage
exposure to adverse equity and bond returns by maintaining diversified investment portfolios and utilizing professional investment managers.
See the Index to Consolidated Financial Statements on Page 56.
None.
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