CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the 52 weeks ended January 29, 1994 Commission file number 1-777
J. C. PENNEY COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-5583779
(State of incorporation) (I.R.S. Employer ID No.)
6501 LEGACY DRIVE, PLANO, TEXAS 75024-3698
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 431-1000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock of $.50 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X)
State the aggregate market value of the voting stock held by non-affiliates of the registrant: $14.583 billion as of March 21, 1994.
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 236,591,970 shares of Common Stock of $ .50 par value, as of March 21, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Documents from which portions Parts of the Form 10-K
are incorporated by reference into which incorporated
1. J. C. Penney Company, Inc. Part I, Part II, and
1993 Annual Report to Stockholders Part IV
2. J. C. Penney Company, Inc. Part III
1994 Proxy Statement
3. J. C. Penney Funding Corporation Part I and Part IV
Form 10-K for fiscal year 1993
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PART I
1. BUSINESS.
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J. C. Penney Company, Inc. ("Company") was founded by James Cash Penney in 1902. Incorporated in Delaware in 1924, the Company has grown to be a major retailer. The dominant portion of the Company's business consists of providing merchandise and services to consumers through department stores that include catalog departments. The Company markets predominantly family apparel, shoes, jewelry, accessories, and home furnishings.
The business of marketing merchandise and services is highly competitive. Although the Company is one of the largest department store retailers in the United States, it has numerous competitors. Many factors enter into the competition for the consumer's patronage, including price, quality, style, service, product mix, convenience, and credit availability. The Company's annual earnings depend to a significant extent on the results of operations for the last quarter of its fiscal year. Sales for that period average approximately one-third of annual sales.
Information about certain aspects of the business of the Company included under the captions of "Receivables" (page 19), "Merchandise inventories" (page 20), "Properties" (page 20), "Capital expenditures" (page 20), and "Investments" (page 21), which appear in the section of the Company's 1993 Annual Report to Stockholders entitled "Notes to the Financial Statements", "Supplemental Information (Unaudited)" (page 30), "Five Year Financial Summary" (page 32), and "Five Year Operations Summary" (page 33), which appear in the Company's 1993 Annual Report to Stockholders on the pages indicated in the parenthetical references, is incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 1 of Form 10-K.
In addition, information about J. C. Penney Funding Corporation, a wholly-owned consolidated subsidiary of the Company, which appears in Item 1 of its separate Annual Report on Form 10-K for the fiscal year ended January 29, 1994, is incorporated herein by reference and filed hereto as Exhibit 99 in response to Item 1 of Form 10-K.
Suppliers. The Company purchases its merchandise from over 7,000 domestic and foreign suppliers, most of whom have done business with the Company for many years. In addition to its Plano, Texas, home office, the Company maintains domestic buying offices in New York City and Los Angeles and foreign buying offices in Guatemala, Hong Kong, India, Italy, Japan, Korea, Mexico, Singapore, Taiwan and Thailand.
Employment. The Company and its consolidated subsidiaries employed approximately 193,000 persons as of January 29, 1994.
Environment. While environmental protection requirements did not have a material effect upon the Company's operations during fiscal 1993, it is possible that compliance with such requirements will lengthen lead time in expansion plans and increase construction, and therefore operating costs, due, in part, to the expense and time required to conduct environmental and ecological studies.
2. PROPERTIES.
At January 29, 1994, the Company operated 1,752 retail stores, comprised of 1,246 JCPenney department stores and 506 drug stores, in all 50 states and Puerto Rico, of which 227 JCPenney department stores and 18 drug stores were owned. The Company also operated six catalog distribution centers, of which four were owned, and owned one store distribution center and the insurance company corporate office building. The Company also owns its home office facility and approximately 244 acres of property in Plano, Texas, adjacent to the facility. Information relating to certain of the Company's facilities included under the captions of "Five Year Financial Summary" and "Five Year Operations Summary," which appear on pages 32 and 33, respectively, of the Company's 1993 Annual Report to Stockholders, is incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 2 of Form 10-K.
Additional information relating to certain aspects of the Company's properties included under the caption "Properties" (page 20), which appears in the section of the Company's 1993 Annual Report to Stockholders entitled "Notes to the Financial Statements", on the page indicated in the parenthetical reference, is also incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 2 of Form 10-K.
3. LEGAL PROCEEDINGS.
The Company has no material legal proceedings pending against it.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of stockholders during the fourth quarter of fiscal 1993.
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded principally on the New York Stock Exchange. It is also traded on other exchanges in the United
States and is listed and traded on the Brussels and Antwerp Stock Exchanges. In addition, the Company has issued approximately 1.2 million shares of Series B ESOP Convertible Preferred Stock pursuant to a leveraged employee stock ownership plan. Additional information relating to the Common Stock and Preferred Stock of the Company included under the captions of "Preferred stock" (page 23), "Common stock" (page 23), "Changes in outstanding common stock" (page 23), and "Quarterly Data (Unaudited)" (page 29), which appear in the Company's 1993 Annual Report to Stockholders on the pages indicated in the parenthetical references, is incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 5 of Form 10-K.
6. SELECTED FINANCIAL DATA.
Information for the fiscal years 1989-1993 included in the "Five Year Financial Summary" on page 32 of the Company's 1993 Annual Report to Stockholders is incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 6 of Form 10-K.
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The discussion and analysis included under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", which appears in the Company's 1993 Annual Report to Stockholders on pages 10 through 13 thereof, is incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 7 of Form 10-K.
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheets of the Company and subsidiaries as of January 29, 1994, January 30, 1993, and January 25, 1992, and the related Consolidated Statements of Income, Reinvested Earnings, and Cash Flows for the years then ended, appearing on pages 15 through 17 of the Company's 1993 Annual Report to Stockholders, together with the Independent Auditors' Report of KPMG Peat Marwick, independent certified public accountants, appearing on page 14 of the Company's 1993 Annual Report to Stockholders, the Notes to Consolidated Financial statements on pages 18 through 29, including the "Summary of Accounting Policies" and "Recent Accounting Standards" appearing on pages 18 and 19, respectively, the "Notes to the Financial Statements" appearing on pages 19 through 28, and the quarterly financial highlights ("Quarterly Data (Unaudited)") appearing on page 29 thereof, are incorporated herein by reference and filed hereto as Exhibit 13 in response to Item 8 of Form 10-K. The Independent Auditors' Report of KPMG Peat Marwick covering the aforementioned consolidated financial statements of the Company refers to the adoption by the Company (a) in 1991 of the provisions of the Financial Accounting Standards
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company has had no change in, or disagreements with, its independent certified public accountants on accounting and financial disclosure.
PART III*
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.*
The following is a list, as of January 29, 1994, of the names and ages of the executive officers of the Company and of the offices and other positions held by each such person with the Company. The terms of all executive officers will expire on May 20, 1994. There is no family relationship between any of the named persons.
Offices and other positions
Name held with the company Age
---------- ---------------------------- ---
William R. Howell........Chairman of the Board and Chief
Executive Officer; Director 58
James E. Oesterreicher...President of JCPenney Stores
and Catalog 52
W. Barger Tygart.........Senior Executive Vice President
and Director of Merchandising
and Support Operations 58
John T. Cody, Jr.........Executive Vice President and Director
of JCPenney Stores 54
Gale Duff-Bloom..........Executive Vice President and Director
of Administration 54
Thomas D. Hutchens.......Executive Vice President and
Director of Merchandising 53
Charles R. Lotter........Executive Vice President, Secretary
and General Counsel 56
Robert E. Northam........Executive Vice President and
Chief Financial Officer 63
Terry S. Prindiville.....Executive Vice President and
Director of Support Services 58
Ted L. Spurlock..........Senior Vice President and Director
of Financial Services and
Company Communications 55
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Mr. Howell was elected Chairman of the Board and Chief Executive Officer in 1983.
Mr. Oesterreicher was elected President of JCPenney Stores and Catalog in 1992. He was elected an Executive Vice President in 1988 and served as Director of JCPenney Stores from 1988 to 1992. He served as Western Regional President from 1987 to 1988.
Mr. Tygart was elected a Senior Executive Vice President and was named Director of Merchandising, Quality Assurance and Distribution in 1992. In 1993, he was appointed Director of Merchandising and Support Operations. He served as an Executive Vice President and Director of Merchandising from 1987 to 1992.
Mr. Cody was elected an Executive Vice President and was named Director of JCPenney Stores in 1992. He served as a Senior Vice President and Director of Real Estate, Construction Services and Specialty Retailing from 1991 to 1992. He served as a Regional President of the Northwest Region from 1987 to 1990.
Ms. Duff-Bloom was elected an Executive Vice President and appointed Director of Administration in 1993. She served as Senior Vice President and Associate Director of Merchandising from 1990 to 1993. She served as a Vice President and Director of Investor Relations from 1988 to 1990 and as a Regional Business Planning Manager for the Home and Leisure Division from 1985 to 1988.
Mr. Hutchens was elected an Executive Vice President and was named Director of Merchandising in 1992. He served as a President of Men's Division from 1987 to 1992.
Mr. Lotter was elected an Executive Vice President in 1993. He was elected Senior Vice President, General Counsel and Secretary in 1987.
Mr. Northam was elected an Executive Vice President in 1990. He was elected a Senior Vice President in 1981 and has served as the Chief Financial Officer since 1982.
Mr. Prindiville was elected an Executive Vice President and was appointed Director of Support Services in 1988. He served as Southwestern Regional President from 1987 to 1988.
Mr. Spurlock was elected a Senior Vice President and was named Director of Financial Services and Company Communications in 1992. He served as Director of Credit and Financial Services from 1989 to 1992. He served as a Vice President and Director of Credit and Consumer Banking Services from 1984 to 1989.
11. EXECUTIVE COMPENSATION.*
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.*
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.*
* Pursuant to General Instruction G to Form 10-K, the information called for by Items 10, with respect to directors of the Company (to the extent not set forth herein), 11, 12, and 13 is incorporated by reference to the Company's 1994 Proxy Statement, which involves the election of directors, the final copy of which the Company filed with the Securities and Exchange Commission, pursuant to Regulation 14A, on April 5, 1994.
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) All Financial Statements. See Item 8 of this Annual Report on Form 10-K for financial statements incorporated by reference to the Company's 1993 Annual Report to Stockholders.
(a)(2) Financial Statement Schedules. The following schedules are attached, beginning at Page F-1.
V. Properties and Property Rights
VI. Accumulated Depreciation and Amortization of Property and Equipment
VIII. Valuation and Qualifying Accounts and Reserves
See Independent Auditors' Report of KPMG Peat Marwick, independent certified public accountants, appearing on page 10 of this Annual Report on Form 10-K.
All other schedules have been omitted as they are inapplicable or not required under the rules, or the information has been submitted in the consolidated financial statements and related material to the Company's 1993 Annual Report to Stockholders incorporated herein by reference and filed hereto as Exhibit 13.
Separate financial statements are filed for J. C. Penney Funding Corporation, a wholly-owned consolidated subsidiary, in its separate Annual Report on Form 10-K for the 52 weeks ended January 29, 1994, which financial statements, together with the Independent Auditors' Report of KPMG Peat Marwick thereon, and are incorporated herein by reference and filed hereto as Exhibit 99.
(a)(3) Exhibits. See separate Exhibit Index on pages G-1 through G-8.
(b) One Current Report on Form 8-K dated November 16, 1993, was filed by the Company during the last quarter of the period covered by this Annual Report on Form 10-K, covering Item 5 (Other Events), describing the Company's November 23, 1993 public offering of debt securities.
(c) Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this form is filed as part of the separate Exhibit Index on pages G-1 through G-8 and specifically identified as such beginning on page G-4.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
J. C. PENNEY COMPANY, INC.
(Registrant)
By /s/ C. R. LOTTER
C. R. Lotter
Executive Vice President,
Secretary and General Counsel
Dated: April 6, 1994
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
W. R. Howell* Chairman of the Board and April 6, 1994
Chief Executive Officer
(principal executive
officer); Director
R. E. Northam* Executive Vice President and April 6, 1994
Chief Financial Officer
(principal financial
officer)
L. A. Gispanski* Vice President and April 6, 1994
Controller (principal
accounting officer)
M. A. Burns* Director April 6, 1994
C. H. Chandler* Director April 6, 1994
V. E. Jordan, Jr.* Director April 6, 1994
George Nigh* Director April 6, 1994
J. C. Pfeiffer* Director April 6, 1994
A. K. Pye* Director April 6, 1994
C. S. Sanford, Jr.* Director April 6, 1994
J. D. Williams* Director April 6, 1994
Boris Yavitz* Director April 6, 1994
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*By /s/ C. R. LOTTER
C. R. Lotter
Attorney-in-fact
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INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of J. C. Penney Company, Inc.:
Under date of February 24, 1994, we reported on the consolidated balance sheets of J. C. Penney Company, Inc. and subsidiaries as of January 29, 1994, January 30, 1993, and January 25, 1992, and the related consolidated statements of income, reinvested earnings, and cash flows for the years then ended, as contained in the 1993 Annual Report to Stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the Company's Annual Report on Form 10-K for the 1993 fiscal year. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in Item 14(a)(2) of the Annual Report on Form 10-K. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
Dallas, Texas
February 24, 1994
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SCHEDULE V
J. C. PENNEY COMPANY, INC.
AND SUBSIDIARIES
SCHEDULE V - PROPERTIES AND PROPERTY RIGHTS
(Amounts in millions)
Balance at Balance
beginning Retirements at end
Classification of period Additions or sales of period
- ---------------------------------------------------------------------------------------------------------
52 weeks ended January 29, 1994
-------------------------------
Land . . . . . . . . . . . . $ 212 $ 1 $ --- $ 213
Buildings
Owned . . . . . . . . . . 2,016 119 16 2,119
Capital lease property
rights . . . . . . . . . . 237 --- 18 219
Fixtures & equipment . . . . 2,703 276 286 2,693
Improvements to leased
properties . . . . . . . . 544 63 32 575
----- ----- ----- -----
$ 5,712 $ 459 $ 352 $ 5,819
===== ===== ===== =====
53 weeks ended January 30, 1993
-------------------------------
Land . . . . . . . . . . . . $ 205 $ 8 $ 1 $ 212
Buildings
Owned . . . . . . . . . . 1,838 189 11 2,016
Capital lease property
rights . . . . . . . . . . 244 -- 7 237
Fixtures & equipment . . . . 2,649 270 216 2,703
Improvements to leased
properties . . . . . . . . 569 27 52 544
----- ----- ----- -----
$ 5,505 $ 494 $ 287 $ 5,712
===== ===== ===== =====
52 weeks ended January 25, 1992
-------------------------------
Land . . . . . . . . . . . . $ 196 $ 7 $ (2) $ 205
Buildings
Owned . . . . . . . . . . 1,664 209 35 1,838
Capital lease property
rights . . . . . . . . . . 247 -- 3 244
Fixtures & equipment . . . . 2,567 238 156 2,649
Improvements to leased
properties . . . . . . . . 575 52 58 569
----- ----- ----- -----
$ 5,249 $ 506 $ 250 $ 5,505
===== ===== ===== =====
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SCHEDULE VI
J. C. PENNEY COMPANY, INC.
AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
(Amounts in millions)
Balance at Balance
beginning Retirements at end
Classification of period Additions or sales of period
- ---------------------------------------------------------------------------------------------------------
52 weeks ended January 29, 1994
-------------------------------
Accumulated depreciation
Buildings - Owned . . . . $ 361 $ 38 $ 8 $ 391
Fixtures & equipment . . . 1,274 241 232 1,283
----- ----- ----- -----
1,635 279 240 1,674
----- ----- ----- -----
Accumulated amortization
Capital lease property
rights . . . . . . . . . . 172 8 17 163
Improvements to leased
properties . . . . . . . . 150 29 15 164
----- ----- ----- -----
322 37 32 327
----- ----- ----- -----
$ 1,957 $ 316 $ 272 $ 2,001
===== ===== ===== =====
53 weeks ended January 30, 1993
-------------------------------
Accumulated depreciation
Buildings - Owned . . . . $ 331 $ 32 $ 2 $ 361
Fixtures & equipment . . . 1,216 239 181 1,274
----- ----- ----- -----
1,547 271 183 1,635
----- ----- ----- -----
Accumulated amortization
Capital lease property
rights . . . . . . . . . . 170 8 6 172
Improvements to leased
properties . . . . . . . . 155 31 36 150
----- ----- ----- -----
325 39 42 322
----- ----- ----- -----
$ 1,872 $ 310 $ 225 $ 1,957
===== ===== ===== =====
52 weeks ended January 25, 1992
-------------------------------
Accumulated depreciation
Buildings - Owned . . . . $ 310 $ 32 $ 11 $ 331
Fixtures & equipment . . . 1,094 245 123 1,216
----- ----- ----- -----
1,404 277 134 1,547
----- ----- ----- -----
Accumulated amortization
Capital lease property
rights . . . . . . . . . . 163 8 1 170
Improvements to leased
properties . . . . . . . . 150 31 26 155
----- ----- ----- -----
313 39 27 325
----- ----- ----- -----
$ 1,717 $ 316 $ 161 $ 1,872
===== ===== ===== =====
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SCHEDULE VIII
J. C. PENNEY COMPANY, INC.
AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in millions)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
January 29, January 30, January 25,
Description 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
Reserve deducted from assets
- ----------------------------
Allowance for doubtful accounts
Balance at beginning of period . . . $ 69 $ 79 $ 74
Additions charged to costs and
expenses . . . . . . . . . . . . . 95 122 175
Deductions - write-offs, less
recoveries . . . . . . . . . . . . (105) (132) (170)
----- ----- -----
Balance at end of period . . . . . . $ 59 $ 69 $ 79
===== ===== =====
Allowance for loan losses -
JCPenney National Bank
Balance at beginning of period . . . $ 32 $ 33 $ 27
Additions charged to costs
and expenses . . . . . . . . . . . 38 40 46
Deductions - write-offs, less
recoveries . . . . . . . . . . . . (35) (41) (40)
----- ----- -----
Balance at end of period . . . . . . $ 35 $ 32 $ 33
===== ===== =====
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EXHIBIT INDEX
Exhibit
3. Articles of Incorporation and By-laws
(a) Copy of Restated Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to Company's Annual Report on Form 10-K for the 52 week period ended January 26, 1985*).
(b) Copy of Certificate of Change of Location of Registered Office, effective July 27, 1984 (incorporated by reference to Exhibit 3(c) to Company's Annual Report on Form 10-K for the 52 week period ended January 26, 1985*).
(c) Copy of Certificate of Amendment of Restated Certificate of Incorporation of Company (incorporated by reference to Exhibit 3(c) to Company's Annual Report on Form 10-K for the 52 week period ended January 25, 1986*).
(d) Copy of Amended Certificate of Designations of Series A Junior Participating Preferred Stock of Company (incorporated by reference to Exhibit 3(d) to Company's Annual Report on Form 10-K for the 52 week period ended January 27, 1990*).
(e) Copy of Certificate of Amendment of Restated Certificate of Incorporation of Company (incorporated by reference to Exhibit 3(a) to Company's Quarterly Report on Form 10-Q for the 26 week period ended August 1, 1987*).
(f) Copy of Certificate of Designations of Series B ESOP Convertible Preferred Stock of Company (incorporated by reference to Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the 26 week period ended July 30, 1988*).
(g) By-laws of Company as amended to July 8, 1992 (incorporated by reference to Exhibit 3(a) to Company's Quarterly Report on Form 10-Q for the 26 week period ended July 25, 1992*).
4. Instruments defining the rights of security holders, including indentures
(a) Conformed copy of Indenture, dated as of October 1, 1982, between the Company and Bank of America National Trust and Savings Association, Trustee.
(b) Conformed copy of First Supplemental Indenture, dated as of March 15, 1983, between the Company and Bank of America National Trust and Savings Association, Trustee.
(c) Conformed copy of Second Supplemental Indenture, dated as of May 1, 1984, between the Company and Bank of America National Trust and Savings Association, Trustee.
(d) Conformed copy of Third Supplemental Indenture, dated as of March 7, 1986, between the Company and Bank of America National Trust and Savings Association, Trustee (incorporated by reference to Exhibit 4(d) to Registrant's Registration Statement on Form S-3, SEC file No. 33-3882*).
(e) Conformed copy of Fourth Supplemental Indenture, dated as of June 7, 1991, between the Company and Bank of America National Trust and Savings Association, Trustee (incorporated by reference to Exhibit 4(e) to Registrant's Registration Statement on Form S-3, SEC file No. 33-41186*).
(f) Conformed copy of Rights Agreement dated as of February 14, 1990 between Company and First Chicago Trust Company of New York, as Rights Agent (incorporated by reference to Exhibit 1 to Company's Current Report on Form 8-K, Date of Report - February 6, 1990*).
(g) Conformed copy of Amendment to Rights Agreement, dated as of February 14, 1990, between Company and First Chicago Trust Company of New York, as Rights Agent, effective as of January 13, 1992, among Company, First Chicago Trust Company of New York, and Manufacturers Hanover Trust Company of New York (now Chemical Bank), as successor Rights Agent (incorporated by reference to Exhibit 4(b) to Company's Annual Report on Form 10-K for the 52-week period ended January 25, 1992*).
(h) Copy of letter to Company stockholders dated May 1, 1993 explaining adjustments to Rights and to underlying Series A Junior Participating Preferred Stock, including exercise price of such Rights, and the voting rights and participating dividend on such Preferred Stock as a result of the two-for-one stock split payable May 1, 1993 to stockholders of record on April 12, 1993 (incorporated by reference to Exhibit 4(c) to Company's Annual Report on Form 10-K for the 53-week period ended January 30, 1993*).
(i) Explanation of adjustments to Rights and to underlying Series A Junior Participating Preferred Stock and changes to shares of Series B Convertible Preferred Stock held by Trustee of Company's Savings, Profit-Sharing and Stock Ownership Plan on behalf of Plan participants as a result of the two-for-one stock split payable May 1, 1993 to stockholders of record on April 12, 1993 (incorporated by reference to Item 5 of Company's Current Report on Form 8-K dated March 10, 1993*).
10. Material contracts
(i) Other than Compensatory Plans or Arrangements
(a) Conformed copy of Amended and Restated Receivables Agreement dated as of January 29, 1980 between Company and J. C. Penney Funding Corporation.
(b) Conformed copy of Amendment No. 1 to Amended and Restated Receivables Agreement dated as of January 25, 1983 between Company and J. C. Penney Funding Corporation.
(c) Conformed copy of Loan Agreement dated as of January 28, 1986 between Company and J. C. Penney Funding Corporation (incorporated by reference to Exhibit 4 to Company's Current Report on Form 8-K, Date of Report - January 28, 1986*).
(d) Conformed copy of Amendment No. 1 to Loan Agreement dated as of January 28, 1986 between Company and J. C. Penney Funding Corporation (incorporated by reference to Exhibit 1 to Company's Current Report on Form 8-K, Date of Report - December 31, 1986*).
(ii) Compensatory Plans or Arrangements required to be
filed as Exhibits to this Report pursuant to Item 14
(c) of this Report.
(a) J. C. Penney Company, Inc. 1989 Management Incentive Compensation Program as amended through March 27, 1990 (incorporated by reference to Exhibit 10(e) to Company's Annual Report on Form 10-K for the 52 week period ended January 27, 1990*).
(b) Supplemental Retirement Program for Management Profit-Sharing Associates of J. C. Penney Company, Inc., as amended through March 15, 1993 (incorporated by reference to Exhibit 10(ii)(b) to Company's Annual Report on Form 10-K for the 53-week period ended January 30, 1993*).
(c) J. C. Penney Company, Inc. 1980 Stock Option and Performance Unit Plan, as amended through January 31, 1989 (incorporated by reference to Exhibit 10(i) to Company's Annual Report on Form 10-K for the 52 week period ended January 28, 1989*).
(d) J. C. Penney Company, Inc. Retirement Plan for Non-Associate Directors, as amended through July 8, 1992 (incorporated by reference to Company's Quarterly Report on Form 10-Q for the 13 and 26 week periods ended July 25, 1992*).
(e) J. C. Penney Company, Inc. Directors' Equity Program Tandem Restricted Stock Award/Stock Option Plan (incorporated by reference to Exhibit 10(k) to Company's Annual Report on Form 10-K for the 52 week period ended January 28, 1989*).
(f) J. C. Penney Company, Inc. 1984 Equity Compensation Plan, as amended through January 31, 1989 (incorporated by reference to Exhibit 10(l) to Company's Annual Report on Form 10-K for the 52 week period ended January 28, 1989*).
(g) J. C. Penney Company, Inc. 1989 Equity Compensation Plan (incorporated by reference to Exhibit A to Company's definitive Proxy Statement for its Annual Meeting of Stockholders held on May 19, 1989*).
(h) J. C. Penney Company, Inc. 1993 Equity Compensation Plan (incorporated by reference to Exhibit A to Company's definitive Proxy Statement for its Annual Meeting of Stockholders held on May 21, 1993*).
(i) J. C. Penney Company, Inc. 1993 Non-Associate Directors' Equity Plan (incorporated by reference to Exhibit B to Company's definitive Proxy Statement for its Annual Meeting of Stockholders held on May 21, 1993*).
(j) J. C. Penney Company, Inc. 1984 Performance Unit Plan (incorporated by reference to Exhibit B to Company's definitive Proxy Statement for its Annual Meeting of Stockholders held on May 22, 1984*).
(k) J. C. Penney Company, Inc. Deferred Compensation Plan as amended through July 14, 1993 (incorporated by reference to Exhibit 10(a) to Company's Report on Form 10-Q for 13 and 26 week periods ended July 31, 1993*).
(l) J. C. Penney Company, Inc. Deferred Compensation Plan for Directors, as amended through July 8, 1992 (incorporated by reference to Exhibit 10(c) to Company's Quarterly Report on Form 10-Q for the 13 and 26 week periods ended July 25, 1992*).
(m) Directors' Charitable Award Program (incorporated by reference to Exhibit 10(r) to Company's Annual Report on Form 10-K for the 52 week period ended January 27, 1990*).
(n) Form of Indemnification Trust Agreement between Company and Chemical Bank dated as of July 30, 1986, as amended (incorporated by reference to Exhibit 1 to Exhibit B to Company's definitive Proxy Statement for its Annual Meeting of Stockholders held on May 29, 1987*).
(o) Form of Indemnification Agreement between Company and individual Indemnitees (incorporated by reference to Exhibit B to Company's definitive Proxy Statement for its Annual Meeting of Stockholders held on May 29, 1987*).
* SEC file number 1-777
Other instruments evidencing long-term debt have not been filed as exhibits hereto because none of the debt authorized under any such instrument exceeds 10 percent of the total assets of the Registrant and its consolidated subsidiaries. The Registrant agrees to furnish a copy of any of its long-term debt instruments to the Securities and Exchange Commission upon request.
11. Statement re: Computation of per share earnings
Computation of Net Income Per Common Share.
12. Statement re: Computation of ratios
(a) Computation of Ratios of Available Income to Combined Fixed Charges and Preferred Stock Dividend Requirements.
(b) Computation of Ratios of Available Income to Fixed Charges.
13. Annual report to security holders
Excerpt from Company's 1993 Annual Report to Stockholders.
21. Subsidiaries of the registrant
List of certain subsidiaries of the Company at January 29, 1994.
23. Consent of Independent Certified Public Accountants
24. Powers of Attorney
99. Additional Exhibits
Excerpt from J. C. Penney Funding Corporation 1993 Annual Report.
J. C. PENNEY COMPANY, INC.
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Trustee
INDENTURE
Dated as of October 1, 1982
Providing for Issuance of Securities in Series
TABLE OF CONTENTS*
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"THIS INDENTURE" AND CERTAIN OTHER TERMS . . . . . . . . . . . . . . . . . . 1
"ACT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"AFFILIATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"AUTHENTICATING AGENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"AUTHORIZED NEWSPAPER" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"BANKRUPTCY CODE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"BOARD OF DIRECTORS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"BOARD RESOLUTION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"BUSINESS DAY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"COMMISSION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"COMPANY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"COMPANY REQUEST" AND "COMPANY ORDER" . . . . . . . . . . . . . . . . . . . 3
"DEFAULTED" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"DEFAULTED INTEREST" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"EVENT OF DEFAULT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"FUNDED INDEBTEDNESS" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"INTEREST PAYMENT DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"MATURITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"NET TANGIBLE ASSETS" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"NON-RESTRICTED SUBSIDIARY" . . . . . . . . . . . . . . . . . . . . . . . . 5
"OFFICERS' CERTIFICATE" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"OPINION OF COUNSEL" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"OUTSTANDING" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"PAYING AGENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"PERSON" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"PLACE OF PAYMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"PREDECESSOR SECURITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"PRINCIPAL AMOUNT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"PRINCIPAL CORPORATE TRUST OFFICE" . . . . . . . . . . . . . . . . . . . . . 6
"PRINCIPAL PROPERTY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"REDEMPTION DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"REDEMPTION PRICE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"REGULAR RECORD DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"RESPONSIBLE OFFICER" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"RESTRICTED SUBSIDIARY" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"SALE AND LEASE-BACK TRANSACTION" . . . . . . . . . . . . . . . . . . . . . 8
"SECURITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"SECURITYHOLDER" OR "HOLDER" . . . . . . . . . . . . . . . . . . . . . . . . 8
"SECURITY REGISTER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"SECURITY REGISTRAR" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"SENIOR FUNDED INDEBTEDNESS" . . . . . . . . . . . . . . . . . . . . . . . . 8
"SPECIAL RECORD DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"STATED MATURITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"STOCKHOLDERS' EQUITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"SUBORDINATED FUNDED INDEBTEDNESS" . . . . . . . . . . . . . . . . . . . . . 9
|
* THIS TABLE OF CONTENTS IS NOT PART OF THE INDENTURE.
"SUBSIDIARY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"TRUSTEE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"TRUST INDENTURE ACT" OR "TIA" . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.02. COMPLIANCE CERTIFICATES AND OPINIONS . . . . . . . . . . . . . . . . 10
SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE . . . . . . . . . . . . . . . 11
SECTION 1.04. ACTS OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.05. NOTICES, ETC., TO TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . 12
SECTION 1.06. NOTICES TO SECURITYHOLDERS; WAIVER . . . . . . . . . . . . . . . . . 13
SECTION 1.07. CONFLICT WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . 13
SECTION 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS . . . . . . . . . . . . . . 13
SECTION 1.09. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.10. SEPARABILITY CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.11. BENEFITS OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.12. LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE TWO - ISSUANCE OF SECURITIES IN SERIES; FORMS;
OTHER PROVISIONS RELATING TO SECURITIES . . . . . . . . . . . . . . . . . . . 14
SECTION 2.01. ISSUANCE IN SERIES; FORMS OF SECURITIES . . . . . . . . . . . . . . . 14
SECTION 2.02. FORMS GENERALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION . . . . . .. . . . . 15
SECTION 2.04. DENOMINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.05. DATE, EXECUTION, AUTHENTICATION AND DELIVERY . . . . . . . . . . . . 16
SECTION 2.06. TEMPORARY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.07. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE . . . . . . . . . 17
SECTION 2.08. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES . . . . . . . . . . 18
SECTION 2.09. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED . . . . . . . . . . . 19
SECTION 2.10. PLACE OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.11. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.12. CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE THREE - ISSUE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.01. AUTHENTICATION AND DELIVERY OF SECURITIES . . . . . . . . . . . . . . 22
SECTION 3.02. DOCUMENTS REQUIRED FOR ISSUANCE OF SERIES OF SECURITIES . . . . . . . 22
ARTICLE FOUR - REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.01. RIGHT OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.02. APPLICABILITY OF ARTICLE . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.03. ELECTION TO REDEEM; NOTICE TO TRUSTEE . . . . . . . . . . . . . . . . 24
SECTION 4.04. SELECTION OF SECURITIES TO BE REDEEMED . . . . . . . . . . . . . . . 24
SECTION 4.05. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.06. DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.07. SECURITIES PAYABLE ON REDEMPTION DATE . . . . . . . . . . . . . . . . 25
SECTION 4.08. SECURITIES REDEEMED IN PART . . . . . . . . . . . . . . . . . . . . . 26
|
ARTICLE FIVE - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST . . . . . . . . . . . . 26
SECTION 5.02. MAINTENANCE OF AGENCY . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST . . . . . . . . . . 27
SECTION 5.04. PAYMENT OF TAXES AND OTHER CLAIMS . . . . . . . . . . . . . . . . . 28
SECTION 5.05. MAINTENANCE OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.06. STATEMENT AS TO COMPLIANCE . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.07. CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.08. LIMITATIONS ON LIENS . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.09. LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS . . . . . . . . . . 31
SECTION 5.10. LIMITATIONS ON SENIOR FUNDED INDEBTEDNESS . . . . . . . . . . . . . 32
SECTION 5.11. LIMITATIONS WITH RESPECT TO RESTRICTED SUBSIDIARIES . . . . . . . . 33
SECTION 5.12. WAIVER OF COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE SIX - SECURITYHOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . 35
SECTION 6.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF SECURITYHOLDERS . 35
SECTION 6.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO SECURITYHOLDERS . . 35
SECTION 6.03. REPORTS BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.04. REPORTS BY COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE SEVEN - REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT . . . . . . . . 40
SECTION 7.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE . . 42
SECTION 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . . . . 43
SECTION 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES . . . . 44
SECTION 7.06. APPLICATION OF MONEY COLLECTED . . . . . . . . . . . . . . . . . . 44
SECTION 7.07. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.08. UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.09. RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . 45
SECTION 7.10. RIGHTS AND REMEDIES CUMULATIVE . . . . . . . . . . . . . . . . . . 46
SECTION 7.11. DELAY OR OMISSION NOT WAIVER . . . . . . . . . . . . . . . . . . . 46
SECTION 7.12. CONTROL BY SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.13. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.14. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.15. WAIVER OF STAY OR EXTENSION LAWS . . . . . . . . . . . . . . . . . 48
|
ARTICLE EIGHT - THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.01. CERTAIN DUTIES AND RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . 48
SECTION 8.02. NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.03. CERTAIN RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES . . . . . . . . . 51
SECTION 8.05. MAY HOLD SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.06. MONEY HELD IN TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.07. COMPENSATION AND REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.08. DISQUALIFICATION; CONFLICTING INTERESTS . . . . . . . . . . . . . . . . . 52
SECTION 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY . . . . . . . . . . . . . . . . . 58
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR . . . . . . . . . . . . 58
SECTION 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR . . . . . . . . . . . . . . . . . 60
SECTION 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE . 61
SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY . . . . . . . . . . . . 62
SECTION 8.14. AUTHENTICATING AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE NINE - SECURITYHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.01. PURPOSES OF MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.02. CALL OF MEETINGS BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.03. CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS . . . . . . . . . . . . . 68
SECTION 9.04. QUALIFICATIONS FOR VOTING . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.05. REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.06. VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.07. ACTION BY SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE TEN - SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS . . . . . . . 71
SECTION 10.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS . . . . . . . . . 72
SECTION 10.03. EXECUTION OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . 73
SECTION 10.04. EFFECT OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.05. CONFORMITY WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . 74
SECTION 10.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES . . . . . . . . . . . 74
ARTICLE ELEVEN - CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER . . . . . . . . . . . . . . . . . . 74
SECTION 11.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS . . . . . . . . . . 74
SECTION 11.02. SUCCESSOR CORPORATION SUBSTITUTED . . . . . . . . . . . . . . . . . . . . 75
ARTICLE TWELVE - SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.01. SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . 75
SECTION 12.02. APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . . . . . . . . . 76
|
ARTICLE THIRTEEN. - IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.01. EXEMPTION FROM INDIVIDUAL LIABILITY . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE FOURTEEN. - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 14.01. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
|
TABLE SHOWING REFLECTION IN INDENTURE OF CERTAIN
PROVISIONS OF TRUST INDENTURE ACT OF 1939
Reflected in Indenture
---------------------------------
Section Page
------- ----
TIA
SECTION 303(1) . . . . . . . . . . . . . . . . . . . . . . 1.01(4) 2
(4) . . . . . . . . . . . . . . . . . . . . . . 8.08(d)(1) 56
(5) . . . . . . . . . . . . . . . . . . . . . . 8.08(d)(2) 56
(6) . . . . . . . . . . . . . . . . . . . . . . 8.08(d)(6) 57
(10) . . . . . . . . . . . . . . . . . . . . . . 1.01 1
(12) . . . . . . . . . . . . . . . . . . . . . . 8.08(d)(5) 57
8.13(c)(5) 66
(13) . . . . . . . . . . . . . . . . . . . . . . 1.01 1
(16) . . . . . . . . . . . . . . . . . . . . . . 8.08(d)(4) 56
8.08(e)(1) 57
SECTION 310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.09 58
(a)(2) . . . . . . . . . . . . . . . . . . . . . 8.09 58
(a)(3) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . 8.08 48
SECTION 311(a) . . . . . . . . . . . . . . . . . . . . . . 8.13(a) 62
8.13(c) 65
(b) . . . . . . . . . . . . . . . . . . . . . . 8.13(b) 64
8.13(c) 65
(b)(2) . . . . . . . . . . . . . . . . . . . . . 6.03(a)(2) 37
6.03(b) 37
SECTION 312(a) . . . . . . . . . . . . . . . . . . . . . . 6.01 35
6.02(a) 35
(b) . . . . . . . . . . . . . . . . . . . . . . 6.02(b) 35
(c) . . . . . . . . . . . . . . . . . . . . . . 6.02(c) 36
SECTION 313(a) . . . . . . . . . . . . . . . . . . . . . . 6.03(a) 36
(b) . . . . . . . . . . . . . . . . . . . . . . 6.03(b) 37
(c) . . . . . . . . . . . . . . . . . . . . . . 6.03(a) 36
6.03(b) 37
(d) . . . . . . . . . . . . . . . . . . . . . . 6.03(c) 38
SECTION 314(a) . . . . . . . . . . . . . . . . . . . . . . 6.04 38
(b) . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . 1.02 10
(c)(2) . . . . . . . . . . . . . . . . . . . . . 1.02 10
(c)(3) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . 1.02 10
|
Reflected in Indenture
-----------------------------
Section Page
------- ----
SECTION 315(a) . . . . . . . . . . . . . . . . . . . . . . 8.01(a) 48
8.01(c) 49
(b) . . . . . . . . . . . . . . . . . . . . . . 6.03(a)(6) 37
8.02 49
(c) . . . . . . . . . . . . . . . . . . . . . . 8.01(b) 48
(d) . . . . . . . . . . . . . . . . . . . . . . 8.01(c) 49
(d)(1) . . . . . . . . . . . . . . . . . . . . . 8.01(a) 48
(d)(2) . . . . . . . . . . . . . . . . . . . . . 8.01(c)(2) 49
(d)(3) . . . . . . . . . . . . . . . . . . . . . 8.01(c)(3) 49
(e) . . . . . . . . . . . . . . . . . . . . . . 7.14 47
SECTION 316(a)(1)(A) . . . . . . . . . . . . . . . . . . . 7.12 46
(a)(1)(B) . . . . . . . . . . . . . . . . . . . 7.02 42
7.13 47
(a)(2) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . 7.08 45
SECTION 317(a)(1) . . . . . . . . . . . . . . . . . . . . 7.03 42
(a)(2) . . . . . . . . . . . . . . . . . . . . . 7.04 43
(b) . . . . . . . . . . . . . . . . . . . . . . 5.03 27
SECTION 318(a) . . . . . . . . . . . . . . . . . . . . . . 1.07 13
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THIS INDENTURE is entered into as of October 1, 1982, between J. C. PENNEY COMPANY, INC., a Delaware corporation (hereinafter called the "Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a corporation organized and existing as a national banking association under the laws of the United States of America (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the Company in accordance with its terms have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Securities issuable hereunder from time to time are to be authenticated, issued and delivered, and in consideration of the premises, and of the sum of One Dollar to it duly paid by the Trustee at the execution of these presents, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the Securities issued hereunder, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
SECTION 1.01. DEFINITIONS
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the term "this Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities established as contemplated by SECTION 2.01;
(2) all references in this instrument to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Indenture. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(3) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;
(4) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; and
(5) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting practices.
Certain terms, used principally in ARTICLE EIGHT, are defined in that Article.
"ACT" when used with respect to any Securityholder has the meaning specified
in SECTION 1.04.
"AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"AUTHENTICATING AGENT" means any Person that may be appointed as Authenticating Agent in accordance with SECTION 8.14.
"AUTHORIZED NEWSPAPER" means a newspaper of general circulation in New York, New York, or in any other place specified pursuant to this Indenture, printed in the English language and customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays. Whenever successive weekly publications in an Authorized Newspaper are authorized hereunder, they may be made (unless otherwise expressly provided herein) on the same or different days of the week and in the same or different Authorized Newspapers.
"BANKRUPTCY CODE" means Title 11 of the United States Code.
"BOARD OF DIRECTORS" means either the board of directors of the Company or any duly authorized committee of that board.
"BOARD RESOLUTION" means a copy of a resolution or resolutions certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means each day which is neither a Saturday, Sunday nor other day on which banking institutions in the pertinent Place of Payment are authorized by law or required by executive order to remain closed.
"COMMISSION" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
"COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, a written request or order signed in the name of the Company by its Chairman of the Board, a Vice Chairman of the Board, President or a Vice President, and by its Treasurer, an Assistant Treasurer, Controller, an Assistant Controller, Secretary, or an Assistant Secretary, and delivered to the Trustee.
"DEFAULTED" means, when used with respect to any series of Securities, a series of Securities with respect to which an Event of Default shall have occurred and be continuing, but only if, in the case of the Events of Default referred to in SECTION 7.01(1),(2),(3),(4),(5) and (6), such Event of Default has occurred with respect to Securities of such series, and only if, in the case of an Event of Default referred to in SECTION 7.01(7), the written notice referred to in SECTION 7.01(7) has been given by the Trustee or by the Holders of at least 25% in Principal Amount of the Outstanding Securities of such series of Securities.
"DEFAULTED INTEREST" has the meaning specified in SECTION 2.09.
"EVENT OF DEFAULT" has the meaning specified in ARTICLE SEVEN.
"FUNDED INDEBTEDNESS" of a corporation means the principal of (a) all indebtedness created, incurred or assumed by such corporation (including the Securities in the case of the Company) which by its terms is not payable on demand and which matures by its terms, or which by its terms such corporation has the right at its option to renew or extend to a date, more than one year after the date of determination, whether outstanding on the date of execution of this Indenture or thereafter created, incurred or assumed, and which is (i) for money borrowed or (ii) evidenced by a note or similar instrument given in connection with the acquisition of any business, properties or assets, including securities, (b) any indebtedness of others of the kinds described in the preceding clause (a) for the payment of which such corporation is responsible or liable as guarantor or otherwise and (c) amendments, renewals and refundings of any such indebtedness, PROVIDED, HOWEVER, that such term shall not include any obligations under leases or any guarantees of obligations of others under leases. It is understood that for the purposes of this definition the term "principal" when used at any date with respect to any indebtedness shall mean the amount of principal of such indebtedness that could be declared due and payable on that date pursuant to the terms of such indebtedness.
"INTEREST PAYMENT DATE" when used with respect to any Security means the Stated Maturity of an instalment of interest on such Security.
"MATURITY" when used with respect to any Security means the date on which the principal of such Security becomes due and payable as herein or in such Security provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
"NET TANGIBLE ASSETS" means the aggregate amount at which the assets of the Company and all Restricted Subsidiaries are reflected, in accordance with generally accepted accounting practices in effect on the date of this Indenture, on the asset side of the consolidated balance sheet, as at the close of a monthly accounting period (selected by the Company) ending within 65 days next preceding the date of determination, of the Company and its Restricted Subsidiaries (after deducting all valuation and qualifying reserves relating to said assets), except any of the following described items that may be included among said assets:
(a) trademarks, patents, goodwill and similar intangibles;
(b) investments in and advances to Non-Restricted Subsidiaries; and
(c) capital lease property rights,
after deducting from such amount current liabilities (other than deferred tax effects) as reflected, in accordance with such practices, on said balance sheet.
"NON-RESTRICTED SUBSIDIARY" means any Subsidiary except a Restricted Subsidiary.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President of the Company, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Indenture) be counsel for the Company.
(a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
(c) Securities which have been paid pursuant to SECTION 2.08 or in exchange for or in lieu of which other securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;
authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest, if any, on any Securities on behalf of the Company.
"PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
"PLACE OF PAYMENT" means a city or any political subdivision thereof designated as such pursuant to SECTION 2.10.
"PREDECESSOR SECURITY" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security, and for the purposes of this definition, any Security authenticated and delivered under SECTION 2.08 in lieu of a destroyed, lost, or stolen Security shall be deemed to evidence the same debt as the destroyed, lost or stolen Security.
"PRINCIPAL AMOUNT" means, when used with respect to any Security, the amount of principal of such Security that could then be declared due and payable pursuant to SECTION 7.02 if such Security were then a Defaulted Security.
"PRINCIPAL CORPORATE TRUST OFFICE" means the office of the Corporate Agency Division of the Trustee in the City of Los Angeles, State of California at which at any particular time its corporate trust business shall be administered, except that with respect to presentation of Securities for payment or for registration of transfer or exchange or conversion and the location of the Security Register, such term shall mean the office or agency of the Trustee in the Borough of Manhattan, The City of New York, State of New York, at which, at any particular time, its corporate agency business shall be conducted.
"PRINCIPAL PROPERTY" means all real property and tangible personal property owned by the Company or a Restricted Subsidiary constituting a part of any store, warehouse or distribution center located within one of the 50 states of the United States or the District of Columbia, exclusive of motor vehicles, mobile
materials-handling equipment and other rolling stock, cash registers and other point of sale recording devices and related equipment, and data processing and other office equipment; PROVIDED, HOWEVER, that such term shall not include any such property constituting a part of any such store, warehouse or distribution center unless the net book value of all real property (including leasehold improvements) and store fixtures constituting a part of such store, warehouse or distribution center exceeds 0.25% of Stockholders' Equity.
"REDEMPTION DATE" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to this Indenture.
"REDEMPTION PRICE" when used with respect to any Security to be redeemed means the price at which it is to be redeemed pursuant to this Indenture.
"REGULAR RECORD DATE" for interest payable on a Security on any Interest Payment Date means the close of business on the date specified as such pursuant to this Indenture.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means the chairman or any vice chairman of the board of directors, the chairman or any vice chairman of the executive committee of the board of directors, the president, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company or of a Restricted Subsidiary which the Company shall, by an Officers' Certificate, have designated as a Restricted Subsidiary and the designation of which as a Restricted Subsidiary shall not have been canceled by an Officers' Certificate; PROVIDED, HOWEVER, that neither the designation of a Subsidiary as a Restricted Subsidiary nor the cancelation of such designation shall be operative if the effect of such designation or cancelation shall be to make Net Tangible Assets less than 200% of Senior Funded Indebtedness of the Company and its Restricted Subsidiaries on a pro forma basis (eliminating intercompany items), and PROVIDED FURTHER, that any Officers' Certificate of the designation of a Subsidiary as a Restricted Subsidiary or the cancelation of such designation shall set forth the Net Tangible Assets and Senior Funded Indebtedness of the
Company and its Restricted Subsidiaries on a pro forma basis and show compliance with the first proviso of this paragraph. Any such designation or cancelation of such designation may be made more than once with respect to any Subsidiary; PROVIDED, HOWEVER, that no Subsidiary which has previously been a Restricted Subsidiary shall be redesignated a Restricted Subsidiary if during any period following cancelation of its previous designation as a Restricted Subsidiary such Subsidiary shall have entered into a Sale and Lease-Back Transaction which would have been prohibited under SECTION 5.09(a) had such Subsidiary been a Restricted Subsidiary at the time of such Transaction.
"SALE AND LEASE-BACK TRANSACTION" of a corporation means any arrangement whereby (a) property has been or is to be sold or transferred by such corporation to any Person with the intention on the part of such corporation of taking back a lease of such property pursuant to which the rental payments are calculated to amortize the purchase price of such property substantially over the useful life of such property and (b) such property is in fact so leased by such corporation.
"SECURITY" has the meaning stated in the first recital of this Indenture and more particularly means any unsecured evidence of indebtedness authenticated and delivered under this Indenture.
"SECURITYHOLDER" or "HOLDER" when used with respect to any Security means the Person in whose name such Security is registered in the Security Register.
"SECURITY REGISTER" has the meaning specified in SECTION 2.07.
"SECURITY REGISTRAR" means the Person who keeps the Security Register specified in SECTION 2.07.
"SENIOR FUNDED INDEBTEDNESS" of the Company means any Funded Indebtedness of the Company unless in any instrument or instruments evidencing or securing such Funded Indebtedness or pursuant to which the same is outstanding, or in any amendment, renewal, extension or refunding of such Funded Indebtedness, it is provided that such Funded Indebtedness is subordinate in right of payment to the Securities (a) in the event of any dissolution or winding-up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary, or any bankruptcy, insolvency, receivership or similar proceedings relative to the Company, (b) in the event that any Subordinated Funded Indebtedness of the Company is declared due and payable before its expressed maturity because of the occurrence of an event of default with respect to such Subordinated Funded Indebtedness and (c) in the event of any default in the payment of principal (including any required prepayments or amortization) of or interest on any Senior Funded
Indebtedness of the Company. "SENIOR FUNDED INDEBTEDNESS" of a Restricted Subsidiary means any Funded Indebtedness of such Restricted Subsidiary and the aggregate preference on involuntary liquidation of any class of stock of such Restricted Subsidiary ranking, either as to payment of dividends or distribution of assets, prior to any other class of stock of such Restricted Subsidiary.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means the date fixed by the Trustee pursuant to SECTION 2.09.
"STATED MATURITY" when used with respect to any Security, or any instalment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security, or such instalment of principal or interest, is due and payable.
"STOCKHOLDERS' EQUITY" means the sum, as at the close of a monthly accounting period (selected by the Company) ending within 65 days next preceding the date of determination, of (a) the aggregate of capital, capital stock, capital surplus, capital in excess of par value of stock, reinvested earnings, earned surplus and net income retained for use in the business (however the foregoing may be designated), after deducting the cost of shares of capital stock of the Company held in its treasury, of the Company and consolidated Subsidiaries, determined in accordance with generally accepted accounting practices applied on the basis used in reports from time to time to stockholders of the Company, plus (b) the amount reflected in such determination as deferred tax effects.
"SUBORDINATED FUNDED INDEBTEDNESS" of the Company means Funded Indebtedness of the Company which is not Senior Funded Indebtedness.
"SUBSIDIARY" Means (a) any corporation of which the Company, directly or
indirectly, owns more than 50% of the outstanding stock, which at the time
shall have by the terms thereof ordinary voting power to elect directors of
such corporation, irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency, or (b) any such corporation of
which such percentage of shares of outstanding stock of the character described
in the foregoing clause (a) shall at the time be owned, directly or indirectly,
by the Company and one or more Subsidiaries as defined in the foregoing clause
(a) or by one or more such Subsidiaries.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each
Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939, as in force at the date as of which this instrument was executed.
SECTION 1.02. COMPLIANCE CERTIFICATES AND OPINIONS
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 1.04. ACTS OF SECURITYHOLDERS
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to SECTION 8.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
SECTION 1.05. NOTICES, ETC., TO TRUSTEE AND COMPANY
Any request, demand, authorization, direction, notice, consent, waiver or Act of Securityholders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with
(1) the Trustee by any Securityholder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Principal Corporate Trust Office, which at the date of this Indenture is located at 555 South Flower Street, Los Angeles, California 90071, or
(2) the Company by the Trustee or by any Securityholder shall be sufficient for every purpose hereunder (except as provided in SECTION 7.01(5) and (7)) if in writing and mailed, first-class, postage prepaid, to the Company addressed to it at its principal office, which at the date of this Indenture is located at 1301 Avenue of the Americas, New York, New York 10019, or at any other address previously furnished in writing to the Trustee by the Company.
SECTION 1.06. NOTICE TO SECURITYHOLDERS; WAIVER
Where this Indenture provides for notice to Securityholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid, to each Securityholder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Securityholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Securityholder shall affect the sufficiency of such notice with respect to other Securityholders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Securityholders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of publication of any Authorized Newspaper or the suspension of regular mail service, or by reason of any other cause, it shall be impossible to make publication of any notice in an Authorized Newspaper or Authorized Newspapers or to mail such notice as required by this Indenture, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication or mailing of such notice.
SECTION 1.07. CONFLICT WITH TRUST INDENTURE ACT
If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of TIA, such required provision shall control.
SECTION 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.09. SUCCESSORS AND ASSIGNS
All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 1.10. SEPERABILITY CLAUSE
In case any provision in this Indenture or in any of the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. BENEFITS OF INDENTURE
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Securityholders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.12. LEGAL HOLIDAYS
In any case where the date of any Interest Payment Date or Redemption Date or the Stated Maturity of any Security or any date on which any Defaulted Interest is proposed to be paid or the last day on which a Securityholder has the right to convert or exchange his Security at a particular conversion or exchange price shall not be a Business Day, then (notwithstanding any other provision of the Securities or this Indenture) payment of the principal of (and premium, if any) or interest on, or conversion or exchange of, such Security need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of any such Interest Payment Date or Redemption Date or Stated Maturity or on such date on which Defaulted Interest is proposed to be paid or on such last day for conversion or exchange, and no interest shall accrue for the period from and after any such nominal date.
SECTION 1.13. GOVERNING LAW
This Indenture shall be construed in accordance with and governed by the laws of the State of New York.
ARTICLE TWO
ISSUANCE OF SECURITIES IN SERIES; FORMS;
OTHER PROVISIONS RELATING TO SECURITIES
SECTION 2.01. ISSUANCE IN SERIES; FORMS OF SECURITIES
The Securities issued hereunder, which are unlimited in aggregate principal amount, may be issued in one or more series, the Securities of each series to bear such designations, which may or may not include the term "Security", and to have such terms, respectively (including, without limitation, additional covenants
and changes in or eliminations of covenants previously set forth in this Indenture), as shall be approved prior to the authentication thereof by or pursuant to a Board Resolution; PROVIDED, HOWEVER, that no Securities of any series shall be senior in right of payment to any payment to any Securities of any other series. The form of each series of Securities shall be substantially the form for such series approved by or pursuant to such Board Resolution, and each Security of such series shall be in substantially the form so approved.
SECTION 2.02. FORMS GENERALLY
Any Securities may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange on which such Securities may be listed, or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of such Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security.
Each definitive Security shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Security, as evidenced by their execution of such Security.
SECTION 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Trustee's certificate of authentication to be borne by each Security shall be substantially in either of the following forms:
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS TRUSTEE
By ___________________________
AUTHORIZED OFFICER
(FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS TRUSTEE
By: ___________________________
AUTHENTICATING AGENT
By: ___________________________
AUTHORIZED OFFICER
SECTION 2.04. DENOMINATIONS
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, each Security shall be issuable as a registered Security without coupons in the denomination of $1,000 or any integral multiple thereof.
SECTION 2.05. DATE, EXECUTION, AUTHENTICATION AND DELIVERY
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, the Securities of all series shall be dated the dates of their respective dates of authentication.
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, the Securities of all series shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen of the Board, its President or one of its Vice Presidents and by its Secretary or one of its Assistant Secretaries. The signatures of any or all of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
No Securities shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in one of the forms provided for herein manually executed by the Trustee or on its behalf as provided in SECTION 8.14, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.
SECTION 2.06. TEMPORARY SECURITIES
Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which may be printed, lithographed, typewritten, mimeographed or otherwise produced in any authorized denomination, substantially of the tenor of the definitive Securities and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any agency of the Company in a Place of Payment, without charge to the Holder. Upon surrender for cancelation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series and date of maturity and of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
SECTION 2.07. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
The Company shall keep or cause to be kept a register or registers (herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and the registration of transfer of Securities. Any such register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times the information contained in such register or registers shall be available for inspection by the Trustee at the agency to be maintained by the Company as provided in SECTION 5.02.
Upon surrender for registration of transfer of any Security at any agency of the Company in a Place of Payment, the Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees and in authorized denominations, one or more new Securities of the same series and date of maturity and of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for a like aggregate principal amount of other Securities, in authorized denominations, of the same series and date of maturity, upon surrender of the Securities to be exchanged at any such agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Securityholder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar (if other than the Company) duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to SECTION 2.06, 4.08 or 10.06 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or exchange any Securities of a particular series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under SECTION 4.04 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
SECTION 2.08. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES
If (i) any mutilated Security is surrendered to the Trustee, or if the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new Security of the same series, date of maturity and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Ssection, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series and date of maturity duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.09. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, interest on each Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered on the Regular Record Date for such interest payment as set forth in or determined pursuant to such Resolution.
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, all interest on each Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder of the relevant Regular Record Date by virture of having been such Holder; and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided in PARAGRAPH (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Person in whose name the Security (or a Predecessor Security) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Paragraph provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class, postage prepaid, to each holder of a Security in respect of which such Defaulted Interest is payable at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in an Authorized Newspaper in each Place of Payment, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities in respect of which such Defaulted Interest is payable (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following PARAGRAPH (2).
(2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the applicable requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to
this Clause, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, and except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, each Security delivered under this Indenture upon registration of transfer of, or in exchange for, or in lieu of, any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.10. PLACE OF PAYMENT
The principal and the Redemption Price of, and interest, if any, on, each Security shall be payable at the agency or agencies maintained by the Company for such purposes which shall be designated by the Company by written notice to the Trustee (the city or political subdivision in which each such agency is located being herein called a "Place of Payment"); PROVIDED, HOWEVER, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register.
SECTION 2.11. PERSONS DEEMED OWNERS
Prior to due presentment for registration of transfer of any Security, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of (and premium, if any), and (subject to SECTION 2.09) interest, if any, on, such Security and for all other purposes whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
SECTION 2.12. CANCELATION
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, each Security surrendered for payment, registration of transfer, conversion, exchange or redemption shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it, or if surrendered to the Trustee, shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancelation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order.
ARTICLE THREE
ISSUE OF SECURITIES
SECTION 3.01. AUTHENTICATION AND DELIVERY OF SECURITIES
Securities may be authenticated and delivered under this Indenture as permitted by the provisions of SECTIONS 2.06, 2.07, 2.08, 3.02, 4.08 and 10.06.
SECTION 3.02. DOCUMENTS REQUIRED FOR ISSUANCE OF SERIES OF SECURITIES
At any time, or from time to time, Securities may be executed by the Company and delivered to the Trustee for authentication upon original issue, and shall be authenticated by the Trustee and delivered by it as provided in the Company Order referred to below, upon receipt by the Trustee of the following:
(a) a Company Order,
(b) a Board Resolution authorizing the execution, authentication and delivery of Securities, and specifying the series, maturity or (if Securities of such series are of serial maturities) maturities, and principal amount of such Securities to be authenticated and delivered,
(c) in case the Securities to be authenticated and delivered are of a series none of the Securities of which has been previously authenticated by the Trustee, the Board Resolution by or pursuant to which the terms of such series shall have been approved,
(d) either (i) a certificate or other official document evidencing the due authorization, approval or consent of any governmental body or bodies at the time having jurisdiction in the premise, together with an Opinion of Counsel that the Trustee is entitled to rely thereon and that the authorization, approval or consent of no other governmental body is required, or (ii) an Opinion of Counsel that no authorization, approval or consent of any governmental body is required,
(e) an Opinion of Counsel that all instruments furnished the Trustee conform to the requirements of this Indenture and constitute sufficient authority hereunder for the Trustee to authenticate and deliver the Securities then applied for; that all conditions precedent provided for in this
Indenture relating to the authentication and delivery of such Securities have been complied with and the Company is duly entitled to the authentication and delivery of such Securities in accordance with the provisions of this Indenture; that all laws and requirements with respect to the execution and delivery by the Company of such Securities have been complied with; that the Company has corporate power to issue such Securities and has duly taken all necessary corporate action for those purposes; that such Securities, when issued, will be the valid, legal and binding obligations of the Company; and that such Securities, when issued, will be entitled to the benefits of this Indenture,
(f) an Officers' Certificate stating that the Company is not in default under this Indenture and that the issuance of the additional Securities applied for will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, the Company's certificate of incorporation or by-laws or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it is bound, or any order of any court or administrative agency entered in any proceeding to which the Company is a party or by which it may be bound or to which it may be subject; and that all conditions precedent provided for in this Indenture relating to the authentication and delivery of such Securities have been complied with, and
(g) such other documents as the Trustee may reasonably require.
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 4.01. RIGHT OF REDEMPTION
With respect to any series of Securities, the Company may reserve the right to redeem and pay prior to Stated Maturity all or any part of such Securities at such time or times and from time to time as may be permitted or required by the terms of the Securities of such series.
SECTION 4.02. APPLICABILITY OF ARTICLE
Redemption of all or any part of the Securities of any series at the election of the Company or otherwise, as permitted or required by the terms of the Securities of such series, shall be made in accordance with such terms and this Article.
SECTION 4.03. ELECTION TO REDEEM; NOTICE TO TRUSTEE
The election of the Company to redeem all or any part of the Securities of any series pursuant to the terms of the Securities of such series shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed.
SECTION 4.04. SELECTION OF SECURITIES TO BE REDEEMED
If less than all the Securities of any series are to be redeemed, the particular Securities of such series to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Company, or, if the Company shall so designate, by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by a method which shall be fair and appropriate in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances and which may provide for the selection for redemption of portions of the principal of Securities of a denomination larger than $1,000. The portions of the principal of Securities so selected for partial redemption shall be equal to $1,000 or an integral multiple thereof.
Unless the Company shall have designated the Trustee to select the Securities to be redeemed, the Company shall promptly notify the Trustee by an Officers' Certificate of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed, and the Trustee may conclusively rely upon such Officers' Certificate in connection with the selection of such Securities for redemption.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal of such Securities which has been or is to be redeemed.
SECTION 4.05. NOTICE OF REDEMPTION
Except as otherwise provided with respect to a series of Securities by or pursuant to the Board Resolution authorizing such series, notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to the Holder of each Security to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Securities of such series to be redeemed from the Holders to whom the notice is given,
(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security, and that interest thereon, if any, will cease to accrue on said date,
(5) if applicable, the current conversion or exchange price and the date on which the right to convert or exchange such Securities or portions thereof into shares of stock or other securities into which they are convertible or exchangeable will expire,
(6) each place where such Securities are to be surrendered for payment of the Redemption Price, which shall be an agency of the Company in a Place of Payment, and
(7) if such be the case, that such Securities are to be redeemed through operation of a mandatory or optional sinking fund.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, on Company Request, by the Trustee in the name and at the expense of the Company.
SECTION 4.06. DEPOSIT OF REDEMPTION PRICE
Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in SECTION 5.03) an amount of money sufficient to pay the Redemption Price of all the Securities which are to be redeemed on that date.
SECTION 4.07. SECURITIES PAYABLE ON REDEMPTION DATE
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and on such date (unless the Company shall default in the payment of the Redemption Price) such Securities shall cease to bear interest. Upon surrender of such Securities for redemption in accordance with
such notice, such Securities shall be paid by the Company at the Redemption Price. Installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities registered as such on the relevant Regular Record Dates according to their terms and the provisions of SECTION 2.09, except as otherwise provided in this Indenture with respect to such Securities.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate specified by the terms of such Security.
SECTION 4.08. SECURITIES REDEEMED IN PART
Any Security which is to be redeemed only in part shall be surrendered at an agency of the Company in a Place of Payment (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of the same series and date of maturity, of any authorized denominations as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE FIVE
COVENANTS
SECTION 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST
The Company will duly and punctually pay the principal of (and premium, if any) and interest, if any, on the Securities in accordance with the terms of the Securities and this Indenture.
SECTION 5.02. MAINTENANCE OF AGENCY
The Company will maintain an agency in the Borough of Manhattan, The City of New York, State of New York, where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such agency. If at any time the Company shall fail to maintain such agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Principal Corporate Trust Office of the Trustee.
SECTION 5.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST
(a) (1) If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest, if any, on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act.
(2) Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of (and premium, if any) or interest, if any, on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
(b) The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest, if any; and
(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
(c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
(d) Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security and remaining unclaimed for three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 5.04. PAYMENT OF TAXES AND OTHER CLAIMS
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income, profits or property, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon its property; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings.
SECTION 5.05. MAINTENANCE OF PROPERTIES
The Company will cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the Company from discontinuing the operation and maintenance of any of its properties no longer deemed useful in the conduct of the business of the Company.
SECTION 5.06. STATEMENT AS TO COMPLIANCE
The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officers' Certificate stating, as to each signer thereof, that
(1) a review of the activities of the Company during such year and of performance under this Indenture has been made under his supervision, and
(2) to the best of his knowledge, based on such review, the Company has fulfilled all its obligations under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to him and the nature and status thereof.
SECTION 5.07. COPORATE EXISTENCE
Subject to ARTICLE ELEVEN, the Company will do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate existence.
SECTION 5.08. LIMITATIONS ON LIENS
(a) The Company will not, and will not permit any Restricted Subsidiary to, issue, assume or guarantee any notes, bonds, debentures or other similar evidences of indebtedness for money borrowed (herein referred to as "indebtedness") secured by any mortgage, security interest, pledge or lien (herein referred to as "mortgage") of or upon any Principal Property, or shares of capital stock or evidences of indebtedness for borrowed money issued by any Restricted Subsidiary and owned by the Company or any Restricted Subsidiary, whether owned at the date of this Indenture or thereafter acquired, without making effective provision, and the Company in each case will make or cause to be made effective provision, whereby the Principal Amount of all of the Securities from time to time Outstanding shall be secured by such mortgage equally and ratably with any and all other indebtedness thereby secured, so long as such indebtedness shall be so secured; PROVIDED, HOWEVER, that the foregoing restriction shall not apply to indebtedness secured by any of the following:
(1) mortgages on any property existing at the time of acquisition thereof;
(2) mortgages on property of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to the Company or a Restricted Subsidiary, PROVIDED that such mortgage as a result of such merger, consolidation, sale, lease or other disposition is not extended to property owned by the Company or such Restricted Subsidiary immediately prior thereto;
(3) mortgages on property of a corporation existing at the time such corporation first becomes a Restricted Subsidiary;
(4) mortgages securing indebtedness of a Restricted Subsidiary to the Company or to another Restricted Subsidiary;
(5) mortgages on property to secure all or part of the cost of acquiring, substantially repairing or altering, constructing, developing or substantially improving such property, or to secure indebtedness incurred to provide funds for any such purpose or for reimbursement of funds previously expended for any such purpose, PROVIDED the commitment of the creditor to extend the credit secured by any such mortgage shall have been obtained not later than twelve months after the later of (a) the completion of the acquisition, substantial repair or alteration, construction, development or substantial improvement of such property or (b) the placing in operation of such property or of such property as so substantially repaired or altered, constructed, developed or substantially improved;
(6) mortgages securing indebtedness payable on demand or not more than one year after the date as of which the determination is made (excluding any indebtedness renewable or extendable at the option of the debtor for a period or periods ending more than one year after the date as of which such determination is made), which indebtedness in accordance with generally accepted accounting practices would be included among current liabilities; or
(7) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any mortgage referred to in the foregoing CLAUSES (1) to (6), inclusive; PROVIDED, HOWEVER that the principal amount of indebtedness secured thereby and not otherwise authorized by said CLAUSES (1) to (6), inclusive, shall not exceed the principal amount of indebtedness, plus any premium or fee payable in connection with any such extension, renewal or replacement, so secured at the time of such extension, renewal or replacement.
(b) Notwithstanding the provisions of SECTION 5.08(a), the Company or any Restricted Subsidiary may issue, assume or guarantee indebtedness secured by mortgages which would otherwise be subject
to the restrictions of SECTION 5.08(a) in an aggregate amount which, together with all attributable debt outstanding pursuant to SECTION 5.09(b), all Senior Funded Indebtedness outstanding pursuant to SECTION 5.11(b) and all indebtedness outstanding pursuant to this Subsection, does not exceed 5% of Stockholders' Equity.
SECTION 5.09. LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
deemed to be a redemption subject to any limitation contained in this Indenture or the terms of such Securities with respect to such Securities on the right to redeem such Securities from, or in anticipation of, moneys borrowed at an interest cost less than a specified rate per annum.
(b) Notwithstanding the provisions of SECTION 5.09(a), the Company or any Restricted Subsidiary may enter into a Sale and Lease-Back Transaction which would otherwise be subject to the restrictions of SECTION 5.09(a) so as to create an aggregate amount of attributable debt, as hereinafter defined, which, together with all indebtedness outstanding pursuant to SECTION 5.08(b), all Senior Funded Indebtedness outstanding pursuant to SECTION 5.11(b) and all attributable debt outstanding pursuant to this Subsection, does not exceed 5% of Stockholders' Equity. "Attributable debt" in respect of any Sale and Lease-Back Transaction means, as of the time of the determination, the lesser of (i) the sale price of the Principal Property so leased multiplied by a fraction the numerator of which is the remaining portion of the base term of the lease included in such transaction and the denominator of which is the base term of such lease, and (ii) the total obligation (discounted to present value at the highest rate of interest specified by the terms of any series of Securities then Outstanding compounded semiannually) of the lessee for rental payments (other than amounts required to be paid on account of property taxes as well as maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the base term of the lease included in such transaction.
SECTION 5.10. LIMITATIONS ON SENIOR FUNDED INDEBTEDNESS
The Company will not, and will not permit any Restricted Subsidiary to, issue, assume or guarantee any Senior Funded Indebtedness (otherwise than in connection with any renewal, extension or refunding of Senior Funded Indebtedness which does not, except for any premium or fee payable in connection with such renewal, extension or refunding, increase the unpaid principal amount of Senior Funded Indebtedness outstanding), or sell, transfer or otherwise dispose of any Senior Funded Indebtedness of a Restricted Subsidiary, unless, after giving effect thereto and to the retirement of any Senior Funded Indebtedness to be retired substantially concurrently therewith, Net Tangible Assets shall be at least 200% of Senior Funded Indebtedness of the Company and its Restricted Subsidiaries (eliminating intercompany items).
SECTION 5.11. LIMITATIONS WITH RESPECT TO RESTRICTED SUBSIDIARIES
(a) The Company will not permit any Restricted Subsidiary to issue, assume or guarantee any Senior Funded Indebtedness; PROVIDED, HOWEVER, that the foregoing restriction shall not apply to any of the following:
(1) Senior Funded Indebtedness secured by a mortgage permitted under
SECTION 5.08(a);
(2) Senior Funded Indebtedness of a corporation existing at the time such corporation is merged into or consolidated with a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or substantially as an entirety to a Restricted Subsidiary;
(3) Senior Funded Indebtedness of a corporation existing at the time such corporation first becomes a Restricted Subsidiary;
(4) Senior Funded Indebtedness of a Restricted Subsidiary to or held by the Company or another Restricted Subsidiary; or
(5) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Senior Funded Indebtedness referred to in the foregoing CLAUSES (1) to (4), inclusive; PROVIDED, HOWEVER, that the principal amount or the aggregate preference on involuntary liquidation, as the case may be, of Senior Funded Indebtedness issued pursuant to such extension, renewal or replacement and not otherwise authorized by said CLAUSES (1) to (4), inclusive shall not exceed the principal amount or the aggregate preference on involuntary liquidation, as the case may be, of the Senior Funded Indebtedness so extended, renewed or replaced, plus any premium or fee payable in connection with any such extension, renewal or replacement.
(b) Notwithstanding the provisions of SECTION 5.11(a), any Restricted
Subsidiary may issue, assume or guarantee Senior Funded Indebtedness which
would otherwise be subject to the restrictions of SECTION 5.11(a) in an
aggregate amount which, together with all indebtedness outstanding pursuant to
SECTION 5.08(b), all attributable debt outstanding pursuant to SECTION 5.09(b)
and all Senior Funded Indebtedness of Restricted Subsidiaries outstanding
pursuant to this Subsection, does not exceed 5% of Stockholders' Equity.
(c) The Company will not, and will not permit any Restricted Subsidiary to, sell or transfer (except to the Company or a Restricted Subsidiary) any Senior Funded Indebtedness of a Restricted Subsidiary, except Senior Funded Indebtedness secured by a mortgage permitted under SECTION 5.08(a) and except to carry out a transaction permitted by SECTION 5.11(d). The Company will not, and will not permit any Restricted Subsidiary to, sell or transfer (except, in each case, to the extent, if any, required to qualify directors of a Restricted Subsidiary under applicable law or to permit any Person to maintain his proportionate interest in a Restricted Subsidiary or except to effect dissolution of any such Restricted Subsidiary or to carry out a transaction permitted by SECTION 5.11(d) or except to the Company or a Restricted Subsidiary) any shares of common stock of a Restricted Subsidiary, unless all the common stock of such Restricted Subsidiary at the time owned by the Company and its Restricted Subsidiaries shall be sold or transferred at the same time and unless thereafter Net Tangible Assets shall be at least 200% of Senior Funded Indebtedness of the Company and its Restricted Subsidiaries (eliminating intercompany items).
(d) The Company will not permit any Restricted Subsidiary to sell or otherwise dispose of its assets substantially as an entirety or to consolidate with or merge into any other corporation, unless the corporation to which such assets shall be sold or otherwise disposed of or which shall be formed by or result from such consolidation or merger shall be the Company or a Restricted Subsidiary or unless thereafter Net Tangible Assets shall be at least 200% of Senior Funded Indebtedness of the Company and its Restricted Subsidiaries (eliminating intercompany items).
SECTION 5.12. WAIVER OF COVENANTS
The Company may omit in any particular instance to comply with any covenant or condition set forth in SECTIONS 5.04, 5.05, 5.08, 5.09, 5.10 and 5.11, inclusive, with respect to the Securities of any series, if before or after the time for such compliance the Holders of a majority (unless, with respect to any series of Securities, a requirement greater than a majority is specified for the purpose of this Section by or pursuant to the Board Resolution authorizing such series, in which case the greater requirement so specified) in Principal Amount of the Securities of such series at the time Outstanding shall either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect.
ARTICLE SIX
SECURITYHOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 6.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF SECURITYHOLDERS
The Company will furnish or cause to be furnished to the Trustee, semiannually, not more than 15 days after each June 15 and December 15 in each year beginning 1982, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of Securities of each series as of a date not more than 15 days prior to the time such information is furnished; PROVIDED, HOWEVER, that in case and so long as the Trustee is the Security Registrar, no such list shall be required to be furnished.
SECTION 6.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO SECURITYHOLDERS
(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Securities contained in the most recent list furnished to the Trustee as provided in SECTION 6.01 and the names and addresses of Holders of Securities received by the Trustee in its capacity as Security Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in SECTION 6.01 upon receipt of a new list so furnished.
(b) If three or more Holders of Securities (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants' desire to communicate with other Holders of Securities with respect to their rights under this Indenture or under Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at the time by the Trustee in accordance with SECTION 6.02(a), or
(ii) inform such applicants as to the approximate number of Holders of Securities whose names and addresses appear in the information preserved at the time by the Trustee in accordance with SECTION 6.02(a), and as to the approximate cost of
mailing to such Securityholders the form of proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder whose name and address appears in the information preserved at the time by the Trustee in accordance with SECTION 6.02(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Securities or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.
(c) Every Holder of the Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with SECTION 6.02(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under SECTION 6.02(b).
SECTION 6.03. REPORTS BY TRUSTEE
(a) The term "reporting date", as used in this Section, shall be February 1, commencing with February 1, 1983. Within 60 days after the reporting date in each year, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear in the Security Register, a brief report dated as of such reporting date with respect to:
(1) its eligibility under SECTION 8.09 and its qualification under SECTION 8.08, or in lieu thereof, if to the best of its knowledge it has continued to be eligible and
qualified under said Sections, a written statement to such effect;
(2) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the reporting date, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one half of 1% of the principal amount of the Securities Outstanding on the reporting date;
(3) the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Securities) to the Trustee in its individual capacity, on the reporting date, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in SECTION 8.13(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in the possession of the Trustee (as such) on the reporting date;
(5) any additional issue of Securities which the Trustee has not previously reported; and
(6) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with SECTION 8.02.
(b) The Trustee shall transmit by mail to all Securityholders, as their names and addresses appear in the Security Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to SUBSECTION (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this Subsection, except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Securities Outstanding at such time, such report to be transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with each securities exchange upon which Securities are listed, and also with the Commission. The Company will notify the Trustee when Securities are listed on any securities exchange.
SECTION 6.04. REPORTS BY COMPANY
The Company will
(1) file with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any
of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934; or if the Company is not required to file information, documents
or reports pursuant to either of said Sections, then it will file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and
(3) transmit by mail to all Securityholders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to PARAGRAPHS (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.
ARTICLE SEVEN
REMEDIES
SECTION 7.01. EVENTS OF DEFAULT
"Event of Default", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security when the same becomes due and payable, and continuance of such default for a period of 30 days; or
(2) default in making any mandatory or optional sinking fund payment when the same becomes due and payable, and continuance of such default for a period of 30 days; or
(3) default in the payment of the principal of (or premium, if any, on) any Security at its Maturity, except any Maturity occurring by reason of a call for redemption through a mandatory or optional sinking fund; or
(4) default in the performance, or breach, of any covenant of the Company contained in SECTION 7.03; or
(5) default in the performance, or breach, of any covenant of the Company contained in SECTION 5.01 or 5.03(a), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in Principal Amount of the Securities then Outstanding which were issued as part of the same series as any Security or Securities with respect to which such default occurred, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or
(6) any event specified as an "Event of Default" in any supplemental indenture relating to, or in the terms of, any Securities; or
(7) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in Principal Amount of the Outstanding Securities of any series of Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or
(8) the entry of an order for relief in respect of any petition filed against the Company under the Bankruptcy Code, or the entry of a decree or order by a court having competent jurisdiction in the premise in respect of any petition filed or action taken against the Company looking to reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any other present or future Federal or State statute, law or regulation, resulting in the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or of any substantial part of its property, or resulting in the winding-up or liquidation of its affairs, all without the consent or acquiescence of the Company, and the continuance of any such decree for order is unstayed and in effect for a period of 60 consecutive days; or
(9) the filing of a petition for relief under the Bankruptcy Code by the Company, or the consent, acquiescence or taking of any action by the Company in support of a petition filed by or against it looking to reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any other present or future Federal or State statute, law or regulation, or the appointment, with the consent of the Company, of any receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action.
SECTION 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
If an Event of Default occurs and is continuing, then, and in every such case, the Trustee or the Holders of not less than 25% (unless a different percentage with respect to any series of Securities is specified for the purpose of this paragraph by or pursuant to the Board Resolution authorizing such series, in which case the percentage so specified) in Principal Amount of the Outstanding Securities of a Defaulted series of Securities may declare so much of the principal of all of the Securities of such series as may, in accordance with the terms thereof, be declared to be due and payable upon the occurrence and continuation of an Event
of Default to be immediately due and payable, by a notice in writing to the Company (and to the Trustee if given by Securityholders of a Defaulted series of Securities), and upon any such declaration such principal, together with interest accrued thereon, shall become immediately due and payable.
At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority (unless, with respect to any series of Securities, a requirement greater than a majority is specified for the purpose of this paragraph by or pursuant to the Board Resolution authorizing such series, in which case the greater requirement so specified) in Principal Amount of the Outstanding Securities of such Defaulted series, by written notice to the Company and the Trustee, may rescind and annul, as to such series, such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue instalments of interest on all the Securities of such Defaulted series,
(B) the principal of (and premium, if any, on) any Securities of such Defaulted series which have become due otherwise than by such declaration of acceleration and interest thereon after the date such principal became due at the rate specified by the terms of such Securities,
(C) to the extent that payment of such interest is legally enforceable, interest upon overdue interest at the rate specified by the terms of the Securities of such Defaulted series, and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and
(2) all Events of Default by virtue of which such series of Securities is Defaulted, other than the non-payment of the principal of Securities which has become due solely by such acceleration, have been cured or waived as provided in SECTION 7.13.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
SECTION 7.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE
The Company covenants, but only for the benefit of the Holders of the Securities of the series with respect to which such default exists, that if
(1) default is made in the payment of any interest on any Security of such series when such interest becomes due and payable, and such default continues for a period of 30 days, or
(2) default is made in any mandatory or optional sinking fund payment in respect of any Security of such series, when the same becomes due and payable, and such default continues for a period of 30 days, or
(3) default is made in the payment of the principal of (or premium, if any, on) any Security of such series at the Maturity thereof, except any Maturity occurring by reason of a call for redemption through a mandatory or optional sinking fund,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securities of such series, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest shall be legally enforceable) upon overdue instalments of interest, at the rate of interest specified by the terms of such Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities of such series and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Securities of any Defaulted series of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon any Securities or the property of the Company or of such other obligor, the Trustee (irrespective of whether the principal of any Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities (or in the case of any such proceeding relative to any such other obligor or its property, in respect of the Securities affected) and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim or the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Securityholders allowed in such judicial proceeding, and
(ii) to collect and receive any money or other property payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, debtor in possession, disbursing agent, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Securityholder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under SECTION 8.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSIION OF SECURITIES
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
SECTION 7.06. APPLICATION OF MONEY COLLECTED
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee, and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities of the Defaulted series, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under SECTION 8.07;
SECOND: To the payment of the amounts then due and unpaid upon the Securities of the Defaulted series for principal (and premium, if any) and interest in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities, for principal (and premium, if any) and interest, respectively.
SECTION 7.07. LIMITATION ON SUITS
No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder is the Holder of a Security of a Defaulted series and has previously given written notice to the Trustee of a continuing Event of Default by virtue of which such series is Defaulted;
(2) the Holders of not less than 25% (unless a different percentage with
respect to any series of Securities is specified for the purpose of this
Section by or pursuant to the Board Resolution authorizing such series, in
which case
the percentage so specified) in Principal Amount of the Outstanding Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in Principal Amount of the Outstanding Securities of such series;
it being understood and intended that no one or more Holders of Securities of a Defaulted series shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities of such series or to obtain or to seek to obtain priority or preference over any other such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of the Securities of such series.
SECTION 7.08. UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO RECEIVED PRINCIPAL, PREMIUM AND INTEREST
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to SECTION 2.09) interest, if any, on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
SECTION 7.09. RESTORATION OF RIGHTS AND REMEDIES
If the Trustee or any Securityholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Securityholder, then and in every such case the Company, the Trustee, such Securityholder and all Holders of other Securities of the same series shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and such Securityholders shall continue as though no such proceeding has been instituted.
SECTION 7.10. RIGHTS AND REMEDIES CUMULATIVE
No right or remedy herein conferred upon or reserved to the Trustee or the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 7.11. DELAY OR OMMISSION NOT WAIVER
No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Securityholders, as the case may be.
SECTION 7.12. CONTROL BY SECURITYHOLDERS
The Holders of a majority (unless, with respect to any series of Securities,
a requirement greater than a majority is specified for the purpose of this
Section by or pursuant to the Board Resolution authorizing such series, in
which case the greater requirement so specified) in Principal Amount of the
Outstanding Securities of a Defaulted series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or with this Indenture,
(2) subject to the provisions of SECTION 8.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders of the Securities of such series not joining in any such direction or would involve the Trustee in personal liability, and
(3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
SECTION 7.13. WAIVER OF PAST DEFAULTS
The Holders of a majority (unless, with respect to any series of Securities,
a requirement greater than a majority is specified for the purpose of this
Section by or pursuant to the Board Resolution authorizing such series, in
which case the greater requirement so specified) in Principal Amount of the
Outstanding Securities of a Defaulted series may on behalf of the Holders of
all the Securities of such series waive, as to such series, any past default
hereunder and its consequences by virtue of which such series is, or with
notice or lapse of time or both would be, Defaulted, except a default not
theretofore cured
(1) in the payment of the principal of (or premium, if any) or interest, if any, on any Security of such series, or
(2) in respect of a covenant or provision hereof which under ARTICLE TEN cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall, as to such series, cease to exist, and any Event of Default arising therefrom shall, as to such series, be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
SECTION 7.14. UNDERTAKING FOR COSTS
All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest, if any, on any Security on or after the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).
SECTION 7.15. WAIVER OF STAY OR EXTENSION LAWS
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE EIGHT
THE TRUSTEE
SECTION 8.01. CERTAIN DUTIES AND RESPONSIBILITIES
(a) Except with respect to the Securities of a Defaulted series during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee shall with respect to Securities of a Defaulted series exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of SUBSECTION (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction pursuant to SECTION 7.12 of the Holders of the Outstanding Securities of a Defaulted series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(d) Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
SECTION 8.02. NOTICE OF DEFAULT
Within 90 days after the occurrence of any default referred to in SECTION 7.01(1),(2),(3),(4),(5) or (6), the Trustee shall transmit by mail to all Holders of Securities of each series with respect to which such default has occurred, as their names and addresses appear in the Security Register, notice of such default known to the Trustee, unless such default shall have been cured or waived, and within 90 days after the occurrence of any other default, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear in the Security Register, notice of such default known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest, if any, on any Security or in the payment of any sinking fund
instalment in respect of any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders to whom this subsection provides such notice is to be transmitted; and PROVIDED, FURTHER, that in the case of any default of the character specified in SECTION 7.01(5) or (7) no such notice shall be given until at least 60 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time, or both, would become, an Event of Default.
SECTION 8.03. CERTAIN RIGHTS OF TRUSTEE
Except as otherwise provided in SECTION 8.01:
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Securityholders pursuant to this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.
SECTION 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES
The recitals contained herein and in the Securities, except the certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.
SECTION 8.05. MAY HOLD SECURITIES
The Trustee, any Paying Agent, the Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to SECTIONS 8.08 and 8.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 8.06. MONEY HELD IN TURST
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.
SECTION 8.07. COMPENSATION AND REIMBURSEMENT
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under this
Section the Trustee shall have a lien prior to the Securities upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the payment of principal of (and premium, if any) or interest on the
Securities.
SECTION 8.08. DISQUALIFICATION; CONFLICTING INTERESTS
(a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, with respect to the Securities of any series, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with the provisions of SUBSECTION (a) of this Section with respect to the Securities of any series, the Trustee shall, within 10 days after the expiration of such 90-day period, transmit by mail to all Holders of Securities of that series, as their names and addresses appear in the Security Register, notice of such failure.
(c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to the Securities of any series if
(1) the Trustee is trustee under this Indenture with respect to the Outstanding Securities of any series other than that series or is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued under this Indenture, PROVIDED that there shall be excluded from the operation of this paragraph this Indenture with respect to the Securities of any series other than that series or any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures are wholly unsecured and such other indenture or indentures are qualified under TIA after the date this Indenture is qualified under TIA, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of TIA that differences exist between the provisions of this Indenture with respect to Securities of that series and one or more other series or the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Securities of that series and such other series or under such other indenture or indentures, or
(ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to the Securities of that series and such other series or such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Securities of that series and such other series or under such other indenture or indentures;
(2) the Trustee or any of its directors or executive officers is an obligor upon the Securities or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the Company
who is currently engaged in the business of underwriting, except that (i) one
individual may be a director or an executive officer, or both, of the Trustee
and a director or an executive officer, or both, of the Company but may not
be at the same time an executive officer of both the Trustee and the Company;
(ii) if and so long as the number of directors of the Trustee in office is
more than nine, one additional individual may be a director or an executive
officer, or both, of the Trustee and a director of the Company; and (iii) the
Trustee may be designated by the Company or by any underwriter for the
Company to act in the capacity of transfer agent, registrar, custodian,
paying agent, fiscal agent, escrow agent or depositary, or in any other
similar capacity, or, subject to the provisions of PARAGRAPH (1) of this
Subsection, to act as trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company, not including the Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the capacity of
executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of
25% or more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which would
have constituted a conflicting interest under PARAGRAPH (6), (7) or (8) of
this Subsection. As to any such securities of which the Trustee acquired
ownership through becoming executor, administrator or testamentary trustee of
an estate which included them, the provisions of the preceding sentence shall
not apply, for a period of two years from the date of such acquisition, to
the extent that such securities included in such estate do not exceed 25% of
such voting securities or 25% of any such class of security. Promptly after
May 15 in each calendar year, the Trustee shall make a check of its holdings
of such securities in any of the above-mentioned capacities as of such May
15. If the Company fails to make payment in full of the principal of (or the
premium, if any) or interest, if any, on any of the Securities when and as
the same becomes due and payable, and such failure continues for 30 days
thereafter, the trustee shall make a prompt check of its holdings of such
securities in any of the above-mentioned capacities as of the date of the
expiration of such 30-day period, and after such date, notwithstanding the
foregoing provisions of this Paragraph, all such securities so held by the
Trustee, with sole or joint control over such securities vested in it, shall,
but only so long as such failure shall continue, be considered as though
beneficially owned by the Trustee for the purposes of PARAGRAPHS (6), (7)
and (8) of this Subsection.
The specification of percentages in PARAGRAPHS (5) to (9), inclusive, of this
Subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purposes of PARAGRAPH (3) or
(7) of this Subsection.
For the purposes of PARAGRAPHS (6), (7), (8) and (9) of this Subsection only,
(i) the terms "security" and "securities" shall include only such securities as
are generally known as corporate securities, but shall not include any note or
other evidence of indebtedness issued to evidence an obligation to repay moneys
lent
to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "UNDERWRITER" when used with reference to the Company means every person who, within three years prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission.
(2) The term "DIRECTOR" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated.
(3) the term "PERSON" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.
(4) The term "VOTING SECURITY" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person.
(5) The term "COMPANY" means any obligor upon the Securities.
(6) The term "EXECUTIVE OFFICER" means the president, every vice president, every trust officer, the cashier, the secretary and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors.
(e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this Paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding.
(3) The term "AMOUNT", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares and the number of units if relating to any other kind of security.
(4) The term "OUTSTANDING" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer thereof; PROVIDED, HOWEVER, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; PROVIDED, HOWEVER, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and PROVIDED, FURTHER, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture.
SECTION 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY
There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under SECTION 8.11.
(b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities of any series by the Holders of a majority in Principal Amount of the Outstanding Securities of such series.
(d) If at any time:
(1) the Trustee shall fail to comply with SECTION 8.08(a) after written request therefor by the Company or by any Securityholder who has been a BONA FIDE Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under SECTION 8.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the Company by a
Board Resolution may remove the Trustee with respect to all Securities, or
(ii) subject to SECTION 7.14, any Securityholder who has been a BONA FIDE
Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series). If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any
series shall be appointed by the Holders of a majority in Principal Amount of the Outstanding Securities of such series, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Securityholders and accepted appointment in the manner hereinafter provided, subject to SECTION 7.14, any Securityholder who has been a BONA FIDE Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to the Holders of Securities of such series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Principal Corporate Trust Office.
SECTION 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
(a) In case of the appointment of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in SECTION 8.07.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall (subject to its lien, if any, provided for in SECTION 8.07) duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in the confirming to such successor Trustee all such rights, powers and trusts referred to in SUBSECTION (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
SECTION 8.12. MERGER, CONVERSATION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED that such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
(a) Subject to SUBSECTION (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within four months prior to a default, as defined in SUBSECTION (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Securities of each Defaulted series and the holders of other indenture securities (as defined in SUBSECTION (c) of this Section):
(1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in PARAGRAPH (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the rights of the Trustee
(B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four months' period;
(C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in SUBSECTION (c) of this Section would occur within four months, or
(D) to receive payment on any claim referred to in PARAGRAPH (B) or (C), against the release of any property held as security for such claim as provided in PARAGRAPH (B) or (C), as the case may be, to the extent of the fair value of such property.
For the purposes of PARAGRAPHS (B), (C) and (D), property substituted after the beginning of such four months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such Paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Holders of Securities of each Defaulted series and the holders of other indenture securities in such manner that the Trustee, the Holders of such Securities and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable State law, the same percentage of their respective claims figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders of such Securities and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable State law, but after crediting thereon receipts on account of the indebtedness
represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Bankruptcy Code or applicable State law, whether such distribution is made in cash, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceeding for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee and the Holders of such Securities and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders of such Securities and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such four months' period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four months' period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist:
(i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such four months' period; and
(ii) such receipt of property or reduction of claim occurred within four months after such resignation or removal.
(b) There shall be excluded from the operation of SUBSECTION (a) of this
Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Securityholders at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered or premises rented, or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in SUBSECTION (c) of this Section;
(5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in SUBSECTION (c) of this Section.
(c) For the purposes of this Section only:
(1) The term "DEFAULT" means any failure to make payment in full of the principal of (and premium, if any) or interest on any of the Securities or upon the other indenture securities when and as such principal (and premium, if any) or interest becomes due and payable.
(2) The term "OTHER INDENTURE SECURITIES" means securities upon which the Company is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of this Section, and (iii) under which a default exists at the time of the apportionment of the funds and property held in such special account.
(3) The term "CASH TRANSACTION" means any transaction in which full payment for goods or securities sold is made within seven days after deliver of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand.
(4) The term "SELF-LIQUIDATING PAPER" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, PROVIDED that the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
(5) The term "COMPANY" means any obligor upon the Securities.
SECTION 8.14. AUTHENTICATING AGENTS
The Trustee, from time to time upon receipt of a Company Request, shall promptly appoint one or more Authenticating Agents with power to act on its behalf and subject to its direction in the authentication and delivery of Securities of one or more series and in connection with registrations of transfers and exchanges of Securities of such series as fully to all intents and purposes as though each Authenticating Agent had been expressly authorized to authenticate and deliver such Securities. For all purposes of this Indenture, the authentication and delivery of Securities by any Authenticating Agent pursuant to this Section shall be deemed to be the authentication and delivery of such Securities "by the Trustee." Any Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State and authorized under such laws to act as authenticating agent, with a combined capital and surplus of at least $5,000,000 and subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or the requirements of such authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time and shall, upon receipt of a Company Request, terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee, upon receipt of a Company Request, shall promptly appoint a successor Authenticating Agent acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to the Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register, and shall publish notice of such appointment at least once in an Authorized Newspaper in the place where such successor Authenticating Agent has its principal office.
The provisions of SECTION 2.11, 8.04 and 8.05 shall be applicable to any Authenticating Agent.
The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services.
ARTICLE NINE
SECURITYHOLDERS' MEETINGS
SECTION 9.01. PURPOSES OF MEETINGS
A meeting of the Holders of one or more series of the Securities may be called at any time and from time to time pursuant to the provisions of this Article for any of the following purposes:
(1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to waive any default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of ARTICLE SEVEN;
(2) to remove the Trustee and appoint a successor trustee pursuant to the provisions of ARTICLE EIGHT;
(3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of SECTION 10.02; or
(4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate Principal Amount of the Securities under any other provision of this Indenture or under applicable law.
SECTION 9.02. CALL OF MEETINGS BY TRUSTEE
The Trustee may at any time call a meeting of Securityholders to take any action specified in SECTION 9.01, to be held at such time and at such place in the Borough of Manhattan, The City of New York, State of New York, as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of the Securities of all series that may be affected by the action proposed to be taken at the meeting at their addresses as they shall appear in the Security Register. Such notice shall be mailed not less than 20 nor more than 90 days prior to the date fixed for the meeting.
SECTION 9.03. CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS
In case at any time the Company, pursuant to a Board Resolution, or the holders of at least 10% in aggregate Principal Amount of the Securities then outstanding of all series that may be affected by the action proposed to be taken at the meeting, shall have requested the Trustee to call a meeting of Securityholders of all series that may be so affected by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place in said Borough of Manhattan for such meeting and may call such meeting to take any action authorized in SECTION 9.01, by mailing notice thereof as provided in SECTION 9.02.
SECTION 9.04. QUALIFICATIONS FOR VOTING
To be entitled to vote at any meeting of Securityholders a Person shall (a) be a Holder of one or more Securities of a series affected by the action proposed to be taken at the meeting or (b) be a Person appointed by an instrument in writing as proxy by a holder of one or more such Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
SECTION 9.05. REGULATIONS
Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders, as provided in SECTION 9.03, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of a majority in aggregate Principal Amount of the Securities represented at the meeting and entitled to vote.
At any meeting each Securityholder of a series or proxy shall be entitled to one vote for each $1,000 principal amount of Securities of such series held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities of such series held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders of such series. Any meeting of Securityholders duly called pursuant to the provisions of SECTION 9.02 or 9.03 may be adjourned from time to time, and the meeting may be held as so adjourned without further notice.
At any meeting of Securityholders, the presence of Persons holding or representing Securities in an aggregate Principal Amount sufficient to take action upon the business for the transaction of which such meeting was called shall be necessary to constitute a quorum; but, if less than a quorum be present, the Persons holding or representing a majority in aggregate Principal Amount of the Securities represented at the meeting and entitled to vote may adjourn such meeting with the same effect, for all intents and purposes, as though a quorum had been present.
SECTION 9.06. VOTING
The vote upon any resolution submitted to any meeting of Securityholders of a series shall be by written ballots on which shall be subscribed the signatures of the holders of Securities of such series or of their representatives by proxy and the serial number or numbers of the Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in SECTION 9.02. The record shall show the serial numbers of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee.
Any record so signed and verified shall be conclusive evidence of the matters therein stated.
SECTION 9.07. ACTION BY SECURITYHOLDERS
Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate Principal Amount of the Securities of any series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any Act of such Securityholders pursuant to SECTION 1.04, or (b) by the record of such Securityholders voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of this Article, or (c) by a combination of such Act and any such record of such a meeting of such Securityholders.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS
Without the consent of the Holders of any Securities, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or
(2) to add to the covenants of the Company, for the benefits of the Holders of the Securities of any one or more series, or to surrender any right or power herein conferred upon the Company; or
(3) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, PROVIDED that such action shall not adversely affect the interest of any of the Holders of the Securities; or
(4) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of the Indenture under TIA, or under any similar Federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by TIA, excluding, however, the provisions referred to in Section 316(a)(2) of TIA or any corresponding provisions in any similar Federal statute hereafter enacted; or
(5) to provide for the issuance under this Indenture of Securities in the form only of an entry or entries in the Security Register and without delivery thereof in any form (including all appropriate notification and publication and other provisions), and to provide for exchangeability of such Securities with the Securities of the same series issued hereunder; or
(6) to set forth the terms (including, without limitation, additional covenants and changes in or eliminations or covenants previously set forth in this
Indenture) of any one or more series of Securities not previously issued; or
(7) to change or eliminate any of the provisions of this Indenture, PROVIDED that any such change or elimination shall become effective only when there is no Security Outstanding of any series authorized prior to the execution of such supplemental indenture which is entitled to the benefit of such provisions; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of SECTION 8.11(b).
SECTION 10.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS
With the consent of the Holders of not less than 66 2/3% (unless a different percentage with respect to any series of Securities is specified for the purpose of this Section by or pursuant to the Board Resolution authorizing such series, in which case, as to such series, the percentage so specified) in Principal Amount of the Outstanding Securities of each series to be affected, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of such Securities under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment of
principal of or interest, if any, on, any Security, or reduce the principal
thereof payable at Stated Maturity or the rate of interest, if any, thereon,
or change any Redemption Price, or reduce the amount of principal of any
Security that may at any time be declared to be due and payable pursuant to
SECTION 7.02, or change any Place of Payment where, or the coin or currency
in which, any Security or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or alter adversely the terms and provisions, if
any, applicable to conversion or exchange of any Securities; or
(2) reduce the percentage in Principal Amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or
(3) modify any of the provisions of this Section, SECTION 5.12 or SECTION 7.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby; PROVIDED, HOWEVER, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of SECTIONS 8.11(b) and 10.01(8).
A supplemental indenture which changes or eliminates any covenants or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if Securityholders shall approve the substance thereof.
SECTION 10.03. EXECUTION OF SUPPLEMENTAL INDENTURES
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to SECTION 8.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by and complies with this Indenture. The Trustee may, but shall not (except to the extent required in the case of a supplemental indenture entered into under SECTION 10.01(4) be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 10.04. EFFECT OF SUPPLEMENTAL INDENTURES
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 10.05. CONFORMITY WITH TRUST INDENTURE ACT
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act of 1939 as then in effect.
SECTION 10.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES
Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE ELEVEN
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 11.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS
The Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless
(1) the corporation formed by such consolidation or into which the Company is merged for the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of principal of (and premium, if any) and interest, if any, on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.
SECTION 11.02. SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with SECTION 11.01, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein. In the event of any such conveyance or transfer, the Company as the predecessor corporation may be dissolved, wound up and liquidated at any time thereafter.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
SECTION 12.01. SATISFACTION AND DISCHARGE OF INDENTURE
This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer, exchange or conversion of Securities herein expressly provided for and any rights to receive payments of interest thereon), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in SECTION 2.08, and (ii) Securities for whose
payment money has theretofore been (aa) deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in SECTION 5.03(d), or (bb) paid to
any State or the
District of Columbia pursuant to its unclaimed property or similar laws) have been delivered to the Trustee for cancelation; or
(B) all such Securities not theretofore delivered to the Trustee for cancelation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee, as trust funds in trust for the purpose, an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancelation, for principal (and premium, if any) and interest, if any, to the date of such deposit (in the case of Securities which have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under SECTION 8.07 shall survive.
SECTION 12.02. APPLICATION OF TRUST MONEY
All money deposited with the Trustee pursuant to SECTION 12.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 13.01. EXEMPTION FROM INDIVIDUAL LIABILITY
No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations of the Company, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company or of any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of the Securities.
ARTICLE FOURTEEN
MISCELLANEOUS
SECTION 14.01. COUNTERPARTS
This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
Bank of America National Trust and Savings Association hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
J. C. PENNEY COMPANY, INC.
By: /S/Paull F. Hubbard
Vice President
(SEAL)
Attest:
/S/J. D. Silvers
Assistant Secretary
|
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /S/Peet Saaret
Assistant Vice President
|
(SEAL)
Attest:
/S/F. David Joyce Trust Officer |
State of New York )
County of New York ) ss:
On this 19th day of October, 1982, before me personally came PAULL F. HUBBARD, to me known, who, being by me duly sworn, did depose and say that he resides at 75 Buena Vista Ave., Rumson, N.J. 07660; that he is a Vice President of J.C. Penney Company, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
/S/Thomas M. Comerford
THOMAS M. COMERFORD
NOTARY PUBLIC
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(NOTARIAL SEAL) THOMAS M. COMERFORD
Notary Public,
State of New York
No. 41-5772725
Qualified in Queens County
Commission Expires March 30, 1984
|
State of California )
County of Los Angeles ) ss:
On this 21st day of October, 1982, before me personally came PEET SAARET, to me known, who, being by me duly sworn, did depose and say that he resides at 8117 Fletcher Green, Buena Park, California 90621; that he is an Assistant Vice President of Bank of America National Trust and Savings Association, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
/S/Annette Soderholm
ANNETTE SODERHOLM
NOTARY PUBLIC
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(NOTARIAL SEAL) Official Seal
ANNETTE SODERHOLM
Notary Public-California
Los Angeles County
My comm. expires JUN 17, 1986
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J.C. PENNEY COMPANY, INC.
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 15, 1983
TO
INDENTURE
Dated as of October 1, 1982
FIRST SUPPLEMENTAL INDENTURE dated as of March 15, 1983, between J. C. PENNEY COMPANY, INC., a Delaware corporation (hereinafter called the "Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a corporation organized and existing as a national banking association under the laws of the United States of America, Trustee (hereinafter called the "Trustee").
The Company and the Trustee have heretofore executed an Indenture dated as of October 1, 1982 (hereinafter called the "Original Indenture"), providing for the issuance of Securities of the Company in series.
Section 10.01 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of setting forth the terms of any one or more series of Securities not previously issued. The Company desires to provide for certain terms which may be made applicable to any series of Securities hereafter issued.
All things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That in order to provide for certain terms which may be made applicable to any series of Securities hereafter issued and in consideration of the premises, the Company covenants and agrees with the Trustee as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Supplemental Indenture:
"SECURITY" or "SECURITIES" means any Security or Securities, as defined in the Original Indenture, of a series to which the terms of this Supplemental Indenture have been made applicable by or pursuant to the Board Resolution approving the terms of such series.
"U.S. GOVERNMENT OBLIGATIONS" means securities which are (1) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, PROVIDED that the payment of such obligations is unconditionally guaranteed as a full faith and credit obligation by the United States of America
The Company, at any time or from time to time, may satisfy and fully
discharge its obligations with respect to any payment of principal (and
premium, if any) or interest that will become due on any Securities by
depositing with the Trustee money or U.S. Government Obligations which are not
callable or redeemable at the issuer's option and which shall be payable as to
principal and interest, or a combination of money and such U.S. Governmental
Obligations, in such amounts as will effectively provide no later than one day
prior to the due date of such payment no less than the dollar amount which the
Company, in the absence of this provision, would have been required, in respect
of such payment, to segregate and hold in trust or deposit with a Paying Agent:
PROVIDED, HOWEVER, that, at the time of deposit of such money or U.S.
Government Obligations or a combination thereof, as the case may be, the
Company shall advise the Trustee in writing of the payment or payments to which
such deposit (including any money to be received by the Trustee as principal or
interest on such U.S. Government Obligations) is to be applied; and PROVIDED,
FURTHER, that (1) any such deposit shall not affect the rights of the Holder of
any Security to receive payments due on such Security at the times provided
therein and in the Indenture and (2) any such satisfaction and discharge by the
Company of its obligations shall not reduce, terminate or otherwise affect
obligations of the Trustee as set forth in the Indenture. If in the case of
the deposit of money the amount deposited is, or in the case of the deposit of
U.S. Government Obligations the principal of such deposited U.S. Government
Obligations is, or the principal of such U.S. Government Obligations and
interest thereon when due are anticipated to be, or in the case of a combined
deposit the amount of money deposited plus the principal of deposited U.S.
Government Obligations and any anticipated interest thereon are sufficient to
make all payments of (1) interest on the Securities prior to their Maturity and
(2) principal of (and premium, if any) and interest on the Securities when due
at their Maturity, all the obligations of the Company under the Securities and
the Indenture as it relates to the Securities shall be discharged and
terminated, subject to the conditions set forth in the immediately preceding
sentence, simultaneously with the making of such deposit except for the
Company's obligations with respect to the Securities under SECTIONS 2.07, 2.08,
5.02 and 5.03 of the Indenture, and the Trustee, upon Company Request, shall
acknowledge in writing such discharge and satisfaction of the Company's
obligations under the Securities and the Indenture as it relates to the
Securities.
The Trustee shall, subject to the provisions of the Indenture, hold in trust any money and U.S. Government Obligations deposited with the Trustee pursuant to Section 2 of this Supplemental Indenture, and any money received by the Trustee as payment of principal or interest on such U.S. Government Obligations, and shall apply all such money, in accordance with the provisions of the Securities and the Indenture, to the payment, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such deposit (including any money to be received by the Trustee as principal or interest on such U.S. Government Obligations) was made with the Trustee; PROVIDED, HOWEVER, that, if the Trustee shall at any time hold in trust pursuant to this Section, as a result of a deposit made pursuant to Section 2 of this Supplemental Indenture, any money in excess of the amount required to make the payments to which such deposit (including any money to be received by the Trustee as principal or interest on any U.S. Government Obligations included within such deposit) was to be applied, the Trustee shall, upon Company Request, pay to the Company such excess money.
SECTION 4. GENERAL
This Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, and, as provided in the Original Indenture, this Supplemental Indenture forms a part thereof.
All terms used in this Supplemental Indenture which are defined in the Original Indenture shall have the meanings assigned to them in the Original Indenture except as otherwise provided in this Supplemental Indenture.
The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture.
All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
This Supplemental Indenture shall be construed in accordance with and governed by the laws of the State of New York.
This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
J. C. PENNEY COMPANY, INC.
( SEAL )
By /s/ ROBERT E. NORTHAM
Senior Vice President
Attest:
/s/ J. D. SILVERS
Assistant Secretary BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
( SEAL )
By /s/ PEET SAARET
Assistant Vice President
Attest:
/s/ F. DAVID JOYCE
Trust Officer
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
|
On this 30th day of March, 1983, before me personally came Robert E. Northam, to me known, who, being by me duly sworn, did depose and say that he resides at 904 Siems Court, North Bellmore, N.Y. 11710; that he is a Senior Vice President of J. C. Penney Company, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
( Notarial Seal ) /s/ JULIENE AMOROSA
Notary Public
Juliene Amorosa
Notary Public, State of New York
No. 41-4663738
Qualified in Queens County
Certified in New York County
Commission Expires March 30, 1984
|
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
|
On this 5th day of April, 1983, before me personally came Peet Saaret, to me known, who, being by me duly sworn, did depose and say that he resides at 8117 Fletcher Green, Buena Park, Calif. 90621; that he is an Ass't. Vice Pres. of Bank of America National Trust and Savings Association, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
( Notarial Seal ) /s/ ANNETTE SODERHOLM
Notary Public
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Exhibit 4(c)
CONFORMED COPY
J.C. PENNEY COMPANY, INC.
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of May 1, 1984
TO
INDENTURE
Dated as of October 1, 1982
SECOND SUPPLEMENTAL INDENTURE dated as of May 1, 1984, between J. C. PENNEY COMPANY, INC., a Delaware corporation (hereinafter called the "Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a corporation organized and existing as a national banking association under the laws of the United States of America, Trustee (hereinafter called the "Trustee").
The Company and the Trustee have heretofore executed an Indenture dated as of October 1, 1982 (hereinafter called the "Original Indenture"), providing for the issuance of Securities of the Company in series.
Section 10.01 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of setting forth the terms of any one or more series of Securities not previously issued. The Company desires to provide for certain terms which may be made applicable to any series of Securities hereafter issued.
All things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
That in order to provide for certain term which may be made applicable to any series of Securities hereafter issued and in consideration of the premises, the Company covenants and agrees with the Trustee as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Supplemental Indenture:
"SECURITY" or "SECURITIES" means any Security or Securities, as defined in the Original Indenture, of a series to which the terms of this Supplemental Indenture have been made applicable by or pursuant to the Board Resolution approving the terms of such series.
"U.S. GOVERNMENT OBLIGATIONS" means securities which are (1) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, provided that the payment of such obligations is unconditionally guaranteed as a full faith and credit obligation by the United States of America. The term "U.S. GOVERNMENT OBLIGATIONS" shall also include depositary receipts issued by a bank or trust company as custodian and evidencing ownership by the holders of such depository receipts of
SECTION 2. SATISFACTION AND DISCHARGE PRIOR TO MATURITY.
obligations under the Securities Indenture as it relates to the Securities.
SECTION 3. HOLDING AND DISPOSITION OF DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS.
SECTION 4. GENERAL.
This Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, and, as provided in the Original Indenture, this Supplemental Indenture forms a part thereof.
All terms used in this Supplemental Indenture which are defined in the Original Indenture shall have the meanings assigned to them in the Original Indenture except as otherwise provided in this Supplemental Indenture.
The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture.
All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
This Supplemental Indenture shall be construed in accordance with and governed by the laws of the State of New York.
This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
J. C. PENNEY COMPANY, INC.
( SEAL )
By /s/ PAULL F. HUBBARD
Vice President
Attest:
/s/ A. W. DRIVER
Secretary
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
( SEAL )
By /s/ L. OJEDA
Assistant Vice President
Attest:
/s/ VICKI HERRICK
Assistant Secretary
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
|
On this 31st day of May, 1984, before me personally came Paull F. Hubbard, to me known, who, being by me duly sworn, did depose and say that he resides at 75 Rumson Avenue, Rumson, New Jersey; that he is a Vice President of J. C. Penney Company, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
( Notarial Seal ) /s/ Juliene Amorosa
Notary Public
Juliene Amorosa
Notary Public, State of New York
No. 41-4663738
Qualified in Queens County
Certified in New York County
Commission Expires March 30, 1986
|
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
|
On this 8th day of June, 1984, before me personally came L. Ojeda, to me known, who, being by me duly sworn, did depose and say that he resides at 16335 E. Balassi Road Hacienda Heights, California; that she is an Assistant Vice President of Bank of America National Trust and Savings Association, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is said corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
( Notarial Seal ) /s/ Annette Soderholm
Notary Public
Annette Soderholm
Notary Public-California
Los Angeles County
Commission Expires June 17, 1986
|
Exhibit 10(i)(a)
CONFORMED COPY
RECEIVABLES AGREEMENT
BETWEEN
J. C. PENNEY COMPANY, INC.
AND
J. C. PENNEY FINANCIAL CORPORATION
AMENDED AND
RESTATED AS OF
JANUARY 29, 1980
J. C. PENNEY COMPANY, INC.
1301 AVENUE OF THE AMERICAS
NEW YORK, N.Y. 10019
As of January 29, 1980
J.C. PENNEY FINANCIAL CORPORATION
P.O. Box 3999
Wilmington, Delaware 19807
Dear Sirs:
In the course of our business of selling merchandise at retail throughout the United States, a portion of our sales is made on an installment payment basis pursuant to credit agreements with our customers. Said credit agreements are hereinafter called the Credit Agreements. At our offices listed on Exhibit A hereto we maintain the Credit Agreements and all instruments and records applicable to our credit sales. Account records at each office show balances due from each customer served by that office under outstanding Credit Agreements.
We hereby offer to sell to you, upon the terms and conditions hereinafter set forth, unpaid obligations of our customers under Credit Agreements.
As used in this Agreement, the term "Customer Obligation" shall mean as of any date the total recorded unpaid amount of the obligations (including assessed finance charges) of a customer under a Credit Agreement, whether or not all or part of such obligations shall have been conveyed to you hereunder, but such term shall not include: (i) any Defaulted Obligation (as hereinafter defined), or (ii) any Customer Obligation which we have conveyed, or are obligated, pursuant to a contract as to which no event of termination has occurred or is claimed to have occurred, to convey to any party other than you; the term "Conveyed Customer Obligation" shall mean as of any date the amount of a Customer Obligation conveyed to you hereunder, but such term shall not include any Conveyed Defaulted Obligation (as hereinafter defined); the term "Defaulted Obligation" shall mean as of any date an obligation which would otherwise be a Customer Obligation, except that as of such date a portion of the customer's balance is more than 180 days past due or the customer is, in our reasonable judgment, unable to make further payment; the term "Conveyed Defaulted Obligation" shall mean as of any date any Conveyed Customer Obligation which has become a Defaulted Obligation; and the term "Adjustments" shall mean any adjustments pursuant to paragraph 3 hereof.
1. Conveyance and Ownership of Obligations. (a) Promptly after the end of each interim accounting period mutually agreed upon from time to time by you and us (each such interim accounting
period hereinafter called an Accounting Period) and at such other times during the term of this Agreement as may be mutually agreed upon by you and us, we will convey to you, and you will purchase, as hereinafter provided, all our right, title and interest in and to such dollar amount of Customer Obligations (not theretofore conveyed to you) outstanding as of the end of the last complete Accounting Period as shall be specified in the instrument effecting such conveyance.
(b) At any time during the term of this Agreement, you shall own a portion equal to Your Share (as hereinafter defined) as of such date of each Customer Obligation outstanding as of the end of the last complete Accounting Period. As used in this Agreement, the words "Your Share" shall mean at any time during an Accounting Period the percentage which the amount of Conveyed Customer Obligations outstanding at such date shall bear to the total amount of Customer Obligations outstanding as of the end of the last complete Accounting Period. For the purposes of this Agreement, the amount of Customer Obligations outstanding at any time during an Accounting Period shall be determined as of the end of the last complete Accounting Period, after giving effect to the settlement as of the end of such last complete Accounting Period pursuant to paragraph 4 hereof.
(c) If, as of the end of any Accounting Period during the term hereof, you shall not have purchased any Customer Obligations pursuant to subparagraph (a) of this paragraph 1 or shall not have so purchased a sufficient dollar amount of Customer Obligations to maintain or increase Your Share of all Customer Obligations, you agree to release to us your interest in Customer Obligations in excess of Your Share (determined as of the end of such Accounting Period after giving effect to the settlement as of the end of such Accounting Period pursuant to paragraph 4 hereof), and we agree, in consideration of such release, to convey to you a like amount of Customer Obligations recorded since the beginning of such Accounting Period, so that you will own the same percentage interest in each Customer Obligation outstanding as of the end of such Accounting Period. Each such release and conveyance will be made in connection with a settlement pursuant to paragraph 4 hereof and shall be effective as of the end of the Accounting Period with respect to which such settlement is being made.
(d) Any conveyance to you of Customer Obligations pursuant to subparagraph (a) of this paragraph 1 and any release and conveyance pursuant to subparagraph (c) of this paragraph 1 shall be accomplished by the delivery to you and acceptance by you at your office in Wilmington, Delaware, of an instrument in substantially the form annexed hereto as Exhibit B.
2. Purchase Price; Deferred Discount. (a) The purchase price at which you shall acquire, as of the end of any Accounting Period, Conveyed Customer Obligations shall be the dollar amount
(hereinafter called the Stated Amount) of such Conveyed Customer Obligations;
provided, however, that a portion of such purchase price equal to the lesser of
(x) 5% of the Stated Amount of the Conveyed Customer Obligations then being
purchased by you or (y) the amount, if any, required to increase the amount in
the Contract Reserve Account (as hereinafter defined), after giving effect to
such purchase and all Adjustments being made as of the date of purchase, to 5%
of the total amount of Conveyed Customer Obligations outstanding on the date of
such purchase, shall be retained by you in an account (herein called the
Contract Reserve Account) to be set up on your books and used in the manner
described in paragraph 3 hereof, and the balance of such purchase price shall
be paid to us.
(b) In lieu of allowing you at the time of conveyance a discount on the purchase price of Conveyed Customer Obligations acquired by you, we will pay you in connection with the settlement after the end of each Accounting Period commencing with the next immediately succeeding Accounting Period, with respect to Conveyed Customer Obligations owned by you during such Accounting Period, such amount of deferred discount as shall be agreed upon by you and us, except that if you and we shall fail to agree, we will pay you as such deferred discount an amount equal to 1/2 of 1% of the average daily closing balance of Conveyed Customer Obligations owned by you during such Accounting Period, less the average daily closing balance of the Contract Reserve Account during such Accounting Period.
3. Adjustments. Promptly after the end of each Accounting Period, the following Adjustments shall be made (which Adjustments shall be deemed to be made immediately prior to the end of such Accounting Period):
(a) Collections. You shall be credited, on account of the amount of Conveyed Customer Obligations owned by you immediately prior to the end of such Accounting Period, with Your Share (determined immediately prior to the end of such Accounting Period) of total collections by us of Customer Obligations during such Accounting Period. If any amounts are collected during such Accounting Period with respect to Defaulted Obligations, Your Share (determined immediately prior to the end of such Accounting Period) of such collections shall be credited to the Contract Reserve Account.
(b) Returned, Rejected and Repossessed Merchandise. If merchandise to which Customer Obligations relate shall have been returned or rejected by, or repossessed from, customers during such Accounting Period, we will pay to you, in reduction of the amount of Conveyed Customer Obligations owned by you immediately prior to the end of such Accounting Period, Your Share (determined
immediately prior to the end of such Accounting Period) of the amount remaining to be paid by such customers with respect to such merchandise so returned, rejected or repossessed. If any returned, rejected or repossessed merchandise, the sale of which gave rise to a Customer Obligation which has become a Defaulted Obligation, is sold by us during such Accounting Period, Your Share (determined immediately prior to the end of such Accounting Period) of the proceeds of such sale shall be credited to the Contract Reserve Account.
(c) Breach of Warranties; Indemnities. If, in such Accounting Period, any breach of a warranty contained in paragraph 5 hereof shall have occurred or any amount on account of a Customer Obligation shall have become due to you under the indemnity contained in paragraph 6 hereof, we will pay to you, in reduction of the amount of Conveyed Customer Obligations owned by you immediately prior to the end of such Accounting Period or, if said breach of warranty or indemnity shall be with respect to a Conveyed Defaulted Obligation theretofore charged against the Contract Reserve Account, we will credit to said Account, the amount by which you have been damaged as a result of such breach of warranty or the amount due under such indemnity, as the case may be.
(d) Defaulted Customer Obligations. If, in such Accounting Period, any Customer Obligations shall have become Defaulted Obligations, Your Share (determined immediately prior to the end of such Accounting Period) of the amount remaining to be paid on account of such Defaulted Obligations shall be excluded from the amount of Conveyed Customer Obligations outstanding immediately prior to the end of such Accounting Period, and you shall reimburse yourself for the sum so excluded by charging such sum to the Contract Reserve Account (to the extent thereof). Any charge to the Contract Reserve Account in accordance with the provisions of this Agreement will be made regardless of whether any deficit results. We shall not be liable for payment of any deficit, but any subsequent credits to the Contract Reserve Account shall be first credited against any such deficit.
Notwithstanding the foregoing, in case of a termination pursuant to paragraph 11 hereof, (i) the percentage which shall constitute Your Share for the purposes of this paragraph 3 with respect to any Accounting Period ending after the effective date of such termination shall be the percentage constituting Your Share on the effective date of such termination and (ii) the Adjustments which shall thereafter be made pursuant to this paragraph 3 shall relate only to Customer Obligations outstanding on the effective date of such termination.
4. Settlement. (a) As promptly as practicable after the end of each Accounting Period, we will deliver to you a Settlement Statement in substantially the form annexed hereto as Exhibit C showing settlements to be made as of the end of such Accounting Period. The balance due between you and us shall thereupon be settled by payment in appropriate funds. All Adjustments with respect to any Accounting Period shall for all purposes hereof be deemed to have been made immediately prior to the end of such Accounting Period and at no other time. Each conveyance, and each release and conveyance, made at the time of the settlement for an Accounting Period covered by a Settlement Statement shall for all purposes hereof be deemed to have been made as of the end of such Accounting Period.
(b) If, as of the end of any Accounting Period, after giving effect to all settlements as of such time pursuant to subparagraph (a) of this paragraph 4, the amount in the Contract Reserve Account shall exceed 5% of the total amount of Conveyed Customer Obligations outstanding as of such time, the excess shall be promptly returned by you to us; provided, however, that no such return shall be made of any excess in the Contract Reserve Account arising after the effective date of a termination pursuant to paragraph 11 hereof so long as any Conveyed Customer Obligations shall be outstanding.
5. Representations and Warranties. We hereby represent and warrant to you as follows:
(a) the figures set forth in each Settlement Statement delivered to you hereunder will be true and correct (subject to minor adjustments);
(b) at the time of conveyance of Conveyed Customer Obligations, such Conveyed Customer Obligations will, to our knowledge, represent valid and legally enforceable obligations of customers in connection with sales of merchandise or services payable in accordance with the terms of their respective Credit Agreements;
(c) each instrument of conveyance executed and delivered to you by us hereunder will convey to you our entire right, title and interest in and to the Conveyed Customer Obligations covered by such instrument and the proceeds of collection thereof, in each case free and clear from claims of any third parties, except to the extent of any actions or infirmities on your part;
(d) at the time of conveyance of Conveyed Customer Obligations, such Conveyed Customer Obligations will be free and clear of all liens and encumbrances whatsoever and will not be the subject of any offset, counterclaim or other defense;
(e) to our knowledge at the time of conveyance of Conveyed Customer Obligations, such Conveyed Customer Obligations will conform with any and all applicable laws, official rulings and regulations; and
(f) at the time of conveyance of Conveyed Customer Obligations, all obligations to be performed by us or by any other person under or in connection with such Conveyed Customer Obligations, including obligations with respect to the merchandise or services the sale or performance of which gave rise to any of such Conveyed Customer Obligations, will have been or will promptly be fulfilled.
6. Authority to Collect, Repossess and Adjust. We shall at our
own cost and expense: (a) endeavor to collect, or cause to be collected, from
our customers as and when due any and all amounts owing under or on account of
Conveyed Customer Obligations (including Conveyed Defaulted Obligations) and
(b) take, or cause to be taken, such action to repossess merchandise and to
enforce rights under Conveyed Customer Obligations (including Conveyed
Defaulted Obligations) as we may deem proper, it being understood that we shall
have the right, without your consent, to assign all such services or to
subcontract various aspects of such services, including clerical, data
processing and statement mailing, provided that we shall remain liable for the
performance of such assignee or subcontractor pursuant to the terms hereof.
We may allow, or cause to be allowed, such adjustments to customers under Conveyed Customer Obligations (including Conveyed Defaulted Obligations), regardless of whether accompanied by the return or rejection of all or any part of the merchandise relating thereto, as we may determine to be right or proper, whether by reason of sound merchandising policy, or to facilitate maximum collections or otherwise, under Conveyed Customer Obligations (including Conveyed Defaulted Obligations) and may receive, or cause to be received, such merchandise as may be returned or rejected by, or repossessed from, customers. In acting with respect to Conveyed Customer Obligations (including Conveyed Defaulted Obligations), we will comply with all laws, official rulings and regulations and will indemnify and hold you harmless from and against any and all penalties or losses which might be incurred by you as the result of our failure to comply therewith.
In giving notice of termination pursuant to paragraph 11 hereof, or any time after the giving of such notice, you may by written notice revoke all or any of our authority under this paragraph 6 with respect to Conveyed Customer Obligations and Conveyed Defaulted Obligations, and, upon request in writing from you, unless we shall have repurchased Conveyed Customer Obligations and Conveyed Defaulted Obligations at a mutually agreed upon price pursuant to paragraph 9 hereof or otherwise, (i) we shall at our
own cost and expense, promptly notify, or cause to be notified, all customers whose Conveyed Customer Obligations and Conveyed Defaulted Obligations are outstanding on the effective date of such termination of your ownership of Your Share thereof (determined as provided in the last subparagraph of paragraph 3 hereof), instructing said customers thereafter to make payments of said portion of their then existing Conveyed Customer Obligations and Conveyed Defaulted Obligations to you or to whomsoever you may designate, (ii) all bills thereafter rendered by us to customers with respect to Conveyed Customer Obligations and Conveyed Defaulted Obligations outstanding on the effective date of such termination shall, to the extent practicable, show separately the proportion of each payment and of the aggregate obligation to be paid by each customer to each of you and us, respectively, and (iii) you may deduct from any amounts otherwise due us hereunder any costs which you incur in collecting or otherwise enforcing Conveyed Customer Obligations and Conveyed Defaulted Obligations.
At all times during and after the term of this Agreement, you will keep information concerning our customers confidential.
7. Records; Notices of Assignment. (a) We will (i) hold in trust and safely keep such documents as may be required for the enforcement of Conveyed Customer Obligations and Conveyed Defaulted Obligations from time to time owned by you; (ii) keep such accounts and other records as will enable you to determine at any time the status of the Conveyed Customer Obligations and Conveyed Defaulted Obligations from time to time owned by you; (iii) permit you during normal business hours to inspect, audit, check and make abstracts from our accounts, records, correspondence and other papers pertaining to Conveyed Customer Obligations and Conveyed Defaulted Obligations; and (iv) deliver to you, upon your request and at our own cost and expense, any of said accounts, records, correspondence and other papers as you may deem essential to enable you to enforce your rights with respect to Conveyed Customer Obligations and Conveyed Defaulted Obligations.
(b) So long as you shall own any Conveyed Customer Obligations and if you shall request, we shall mark appropriate master control accounts at each office listed on Exhibit A with words indicating those accounts or portions of accounts which have been assigned to you pursuant to this Agreement. In addition, we shall post such other notices as you reasonably request of conveyances pursuant to this agreement on our account records, on the receptacles in which such records are maintained or in the rooms in which such records are maintained.
8. Recording. Unless you request us in writing to do so, we shall not be obligated to file or record in any public office any instrument relating to Conveyed Customer Obligations (including Conveyed Defaulted Obligations) or the conveyance to you of Conveyed Customer Obligations (including Conveyed Defaulted
Obligations). Any filing or recording by you or us will be at our expense. In the event that there is any such filing or recording, upon any reconveyance in accordance with this Agreement, appropriate termination statements or other instruments evidencing such reconveyance will be filed at our expense.
9. Reconveyance. (a) At any time, and from time to time, at our request, you will sell and reconvey to us, on and as of the date specified in our request, and we will purchase from you, all your right, title and interest in, to and under all or any portion of Conveyed Customer Obligations and Conveyed Defaulted Obligations arising out of Credit Agreements assigned to one or more of our billing cycles as we shall designate ("Reconveyed Customer Obligations"). The purchase price at which we shall acquire Reconveyed Customer Obligations shall be their Stated Amount on such date, subject to adjustments in accordance with paragraph 2 hereof. As used in this Agreement, the term "billing cycle" shall mean all Customer Obligations arising out of Credit Agreements assigned from time to time by us in accordance with our customary procedures for billing as of the end of the approximately monthly time interval for which a periodic billing statement of charges and credits is rendered to a customer.
(b) Any reconveyance by you to us of Conveyed Customer Obligations and Conveyed Defaulted Obligations pursuant to subparagraph (a) of this paragraph 9 shall be accomplished by the delivery by you of an instrument in substantially the form annexed hereto as Exhibit D.
10. Waivers. We hereby waive any failure or delay on your part in asserting or enforcing any of your rights or in making any claims or demands hereunder.
11. Termination. This Agreement (except as it relates to Conveyed Customer Obligations and Conveyed Defaulted Obligations owned and not reconveyed by you on the effective date of termination) may be terminated by either party hereto by giving the other party prior written notice of such termination. No such termination shall affect any rights of the parties accruing up to the date of such termination.
12. Loans. From time to time upon request from us, you may make loans to us, in amounts and at interest rates to be mutually agreed upon.
13. Successors. The covenants, representations, warranties and agreements herein set forth shall be binding upon ourselves and our successors, and shall inure to your benefit and to that of your successors.
14. Governing Law. This Agreement has been entered into under, and shall be governed in all respects by, the laws of the State of Delaware.
If our foregoing proposal is agreeable to you, please so indicate by signing the enclosed copy and returning it to us, whereupon this Agreement shall become effective as of the date set forth on the first page hereof.
Very truly yours,
J. C. PENNEY COMPANY, INC.
/s/ PAULL F. Hubbard
By Paull F. Hubbard
Treasurer
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Agreed to:
J. C. PENNEY FINANCIAL CORPORATION
/s/ PHILIP G. RICKARDS
By Philip G. Rickards
President
|
EXHIBIT A
CREDIT REGIONAL OFFICES
715 Peachtree Street, N.E. P.O. Box 31 Atlanta, Georgia 30308 Mission, Kansas 66276 P.O. Box 4444 2150 Franklin Street Buena Park, California 90624 Oakland, California 94612 One IBM Plaza 7 Parkway Center Chicago, Illinois 60611 Pittsburgh, Pennsylvania 15262 P.O. Box 65 P.O. Box 3665 Dallas, Texas 75221 Portland, Oregon 97208 P.O. Box 1559 G.P.O. Box 4788 Denver, Colorado 80222 San Juan, Puerto Rico 00936 P.O. Box 1560 Four Echelon Plaza Minneapolis, Minnesota 55440 Voorhees, New Jersey 08043 |
EXHIBIT B
J. C. PENNEY COMPANY, INC.
1301 AVENUE OF THE AMERICAS
NEW YORK, N. Y. 10019
(A) ,19
J. C. PENNEY FINANCIAL CORPORATION
P. O. Box 3999
Wilmington, Delaware 19807
Dear Sirs:
This letter is being delivered to you pursuant to the Amended and Restated Agreement between us dated as of January 29, 1980 (all terms used herein which are defined in said Agreement being used herein as so defined).
(B) (1) The undersigned hereby assigns to you, pursuant to paragraph 1(a) of said Agreement, $ of Customer Obligations outstanding as of the close of business on (C) .
(B (2) The purchase price of said Stated Amount of Conveyed Customer Obligations is $ .
(3) (As a result of the foregoing conveyance and) after giving effect to all Adjustments to date, you own as of the close of business on the date hereof $ of Conveyed Customer Obligations constituting (D) % of the total of $ Customer Obligations outstanding as of the close of business on (C) . Therefore, Your Share of each such outstanding Customer Obligations is (D) %.
(E) (4) (Because you have not purchased any Customer Obligations as of the date hereof,) (After giving effect to the purchase by you of Customer Obligations as of the date hereof,) Your Share has decreased from % to (D) %. In order that you shall own (D) % of each Customer Obligation outstanding as of the close of business on the date hereof, you hereby release to us your interest in Customer Obligations in excess of (D) % and we hereby assign to you a like amount of Customer Obligations recorded since the end of the last complete Accounting Period.
(5) This instrument shall become effective as of the close of business on the date hereof upon your acceptance hereof.
Very truly yours,
J. C. PENNEY COMPANY, INC.
By................................. Accepted at Wilmington, Delaware, (Title) this day of ,19
J. C. PENNEY FINANCIAL CORPORATION
By........................
(Title)
(A) Insert last date of the respective Accounting Period, or, in
the case of a conveyance as of a date other than the end of an Accounting
Period, such other date as shall be mutually agreed upon.
(B) Include only if Customer Obligations are being conveyed
pursuant to paragraph I (a) of the Letter Agreement. (c) If
letter is dated as of the end of an Accounting Period, insert "the
date hereof"; otherwise insert date of end of
last Accounting Period.
(D) The new percentage constituting Your Share.
(E) Include only if Your Share decreases and readjustment is made
pursuant to paragraph 1(c) of the Agreement.
EXHIBIT C
SETTLEMENT STATEMENT AS OF ________, 19__
FOR THE ________ ACCOUNTING PERIOD
PURSUANT TO AMENDED AND RESTATED RECEIVABLES AGREEMENT DATED AS OF JANUARY 29, 1980 BETWEEN J. C. PENNEY COMPANY, INC. AND J. C. PENNEY FINANCIAL CORPORATION
1. Customer Obligations outstanding as of end of prior Period (item 11 previous report) .................. $________
5. Collections and other Adjustments on Customer
Obligations during Period.......................... $________
6. Customer Obligations which became Defaulted
Obligations during Period.......................... $________
7. Collections and other Adjustments on Defaulted
Obligations during Period.......................... $========
8. Total deductions during Period
(items 5 plus 6)................................... $________
9. Balance of Customer Obligations immediately prior
to end of Period (item 1 less item 8).............. $========
10. Amount of Customer Obligations created during
Period............................................. $________
11. Total Customer Obligations as of end of Period
(item 9 plus 10)................................... $========
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21. Conveyed Customer Obligations outstanding as of end
of prior Period (item 31 previous report).......... $________
22. Conveyed Customer Obligations conveyed during
Period............................................. $________
23. Total Conveyed Customer Obligations immediately
prior to end of Period (item 21 plus 22)........... $________
24. Your Share determined immediately prior to end of %
Period (% which item 23 bears on item 1)........... =========
25. Collections and other Adjustments or Conveyed
Customer Obligations during Period (Your Share
of item 5)......................................... $________
26. Conveyed Customer Obligations which became Conveyed
Defaulted Obligations during Period (Your Share of
item 6)............................................ $________
28. Total deductions during Period (item 25
plus 26)........................................... $________
29. Balance of Conveyed Customer Obligations
immediately prior to end of Period (item 23 less
item 28)........................................... $========
30. Amount of Conveyed Customer Obligations conveyed
as of end of Period................................ $________
31. Total Conveyed Customer Obligations as of end of
Period (items 29 plus 30).......................... $========
32. Your Share as of end of Period (% which item 31 %
bears to item 11).................................. _________
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41. Balance as of end of prior Period (item 54 from
previous report)................................... $________
42. Amount credited to Reserve during Period (5% of
item 22)........................................... $________
43. Total Reserve immediately prior to end of Period
(items 41 plus 42)................................. $========
46. Charge against Reserve (item 26)................... $________
47. Collections and other Adjustments on Conveyed
Defaulted Obligations during Period (Your Share of
item 7)............................................ $========
49. Balance in Reserve immediately prior to end of
Period (item 43 plus item 47, less item 46)........ $========
50. 5% of item 30...................................... $________
51. 5% of item 31...................................... $________
52. The excess, if any, of item 51 over item 49........ $________
53. If item 49 exceeds item 51, the amount of such
excess............................................. $________
54. Balance in Reserve as of end of Period (item 49
less any amount entered under item 53, otherwise
item 49 plus the smaller of item 50 or 52)......... $========
SETTLEMENT
----------
DUE
J.C.P DUE
CO., INC. J.C.P.F.C.
--------- ----------
65. Amount of item 25.................................. XXX $________
67. Amount of item 47 (for credit to Reserve).......... XXX $________
69. Deferred Discount.................................. XXX $________
70. Amount of item 30, less the smaller of item 50
or 52.............................................. $________ XXX
73. Amount of item 53.................................. $________ XXX
75. Totals............................................. $======== $========
76. Net balance due J.C.P. Co., Inc. .................. $________
77. Net balance due J.C.P.F.C. ........................ $________
Initials
J.C.P. Co., Inc.________________
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J.C.P.F.C.____________________
EXHIBIT D
BILL OF SALE AND ASSIGNMENT
For the consideration set forth above, Seller covenants with Purchaser that it will do, execute and deliver, or will cause to be done, executed and delivered, all such further transfers, assignments, conveyances, powers of attorney, and other acts and assurances necessary or desirable for the better assuring, conveying and confirming to Purchaser the property hereby assigned, transferred and conveyed which Purchaser shall reasonably require.
Seller warrants that since the date of purchase from Purchaser of such Conveyed Customer Obligations and Conveyed Defaulted Obligations, there are no liens, encumbrances or rights of others in and to any such Conveyed Customer Obligations and Conveyed Defaulted Obligations arising out of or resulting from any act, direct or indirect, by it.
All terms used herein which are defined in the Receivables Agreement are used herein as so defined.
Dated:
J. C. PENNEY FINANCIAL CORPORATION
Exhibit 10(i)(b)
CONFORMED COPY
As of January 25, 1983
J. C. Penney Financial Corporation
P.O. Box 3999
Wilmington, Delaware 19807
Amendment No. 1 to Amended and Restated Receivables Agreement
Dear Sirs:
Referring to the Receivables Agreement Amended and Restated as of January 29, 1980 between you and us ("Receivables Agreement"), you and we hereby agree that the Receivables Agreement shall be amended as follows:
(1) Paragraphs 3 and 4 of the Receivables Agreement are each hereby amended by deleting the number "11" which appears in the last sentence of each such paragraph and inserting the number "10" in place thereof.
(2) Paragraph 6 of the Receivables Agreement is hereby amended by deleting the number "11" which appears therein and inserting the number "10" in place thereof and by deleting the words "unless we shall have repurchased Conveyed Customer Obligations and Conveyed Defaulted Obligations at a mutually agreed upon price pursuant to paragraph 9 hereof or otherwise,".
(3) Paragraph 8 of the Receivables Agreement is hereby amended by deleting the final sentence thereof.
(4) Paragraph 9 of, and Exhibit D to, the Receivables Agreement are hereby deleted in their entirety.
(5) Paragraphs 10, 11, 12, 13, and 14 of the Receivables Agreement are hereby renumbered, respectively, 9, 10, 11, 12 and 13.
(6) Paragraph 10 (as renumbered) of the Receivables Agreement is hereby amended by deleting the words "and not reconveyed".
(7) Exhibit A to the Receivables Agreement is hereby amended in its entirety to read as set forth in Exhibit A hereto.
Very truly yours,
J. C. PENNEY COMPANY, INC.
By Paull F. Hubbard
Vice President
Agreed to at Wilmington,
Delaware, as of January 25, 1983.
J. C. PENNEY FINANCIAL CORPORATION
By /S/ Philip G. Richards
President
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EXHIBIT A
CREDIT REGIONAL OFFICES
4580 Paradise Boulevard P. O. Box 2989 Albuquerque, New Mexico 87114 Mission, Kansas 66202 715 Peachtree Street, N.E. 7 Parkway Center Atlanta, Georgia 30308 Pittsburgh, Pennsylvania 15262 P. O. Box 4444 P.O. Box 3665 Buena Park, California 90624 Portland, Oregon 97208 3300 Kearney Street G. P. O. Box 4788 Fremont, California 94538 San Juan, Puerto Rico 00936 One IBM Plaza Four Echelon Plaza Chicago, Illinois 60611 Voorhees, New Jersey 08043 P. O. Box 65 P. O. box 34866 Dallas, Texas 75221 San Antonio, Texas 78233 P. O. Box 1559 P. O. Box 1676 Denver, Colorado 80222 Honolulu, Hawaii 96806 P. O. Box 1560 Minneapolis, Minnesota 55402 |
Exhibit 11
J. C. PENNEY COMPANY, INC.
and Consolidated Subsidiaries
Computation of Net Income Per Common Share
(Amounts in millions except per common share data)
52 Weeks Ended 53 Weeks Ended 52 Weeks Ended
--------------------------- --------------------------- ----------------------------
January 29, 1994 January 30, 1993 January 25, 1992
--------------------------- --------------------------- ----------------------------
Shares Income Shares Income Shares Income
------ ------ ------ ------ ------ ------
Primary:
- -------
Income before extraordinary
charge and cumulative effect
of accounting change $ 944 $ 777 $ 264
Dividend on Series B ESOP
convertible preferred stock
(after-tax) (40) (33) (34)
----- ----- -----
Adjusted income before extra-
ordinary charge and cumulative
effect of accounting change 904 744 230
Weighted average number of
shares outstanding 235.7 234.0 233.2
Common stock equivalents:
Stock options and other
dilutive effects 3.3 2.0 0.4
----- ----- ----- ----- ----- -----
239.0 904 236.0 744 233.6 230
Income per common share before
extraordinary charge and
cumulative effect of
accounting change $3.79 $3.15 $0.99
Extraordinary charge on debt
redemption, net of income
taxes (0.23) (55) -- -- -- --
Cumulative effect of accounting
change 0.21 51 -- -- (0.79) (184)
----- ----- ----- ----- ----- ----- ----- ----- -----
239.0 236.0 233.6
===== ===== =====
Net income $ 900 $ 744 $ 46
===== ===== =====
Net income per common share $3.77 $3.15 $0.20
===== ===== =====
Fully diluted*:
- -------------
Income before extraordinary
charge and cumulative effect
of accounting change $ 944 $ 777 $ 264
Tax benefit differential on ESOP
dividend assuming stock is
fully converted (4) -- --
Assumed additional contribution
to ESOP if preferred stock is
fully converted (12) (14) --
Dividend on Series B ESOP
convertible preferred stock
(after-tax) -- -- (34)
----- ----- -----
Adjusted income before extra-
ordinary charge and cumulative
effect of accounting change 928 763 230
Weighted average number of
shares outstanding (primary) 239.0 236.0 233.6
Maximum dilution 0.6 0.2 --
Convertible preferred stock 21.9 22.4 --
----- ----- ----- ----- ----- -----
261.5 928 258.6 763 233.6 230
Income per common share before
extraordinary charge and
cumulative effect of
accounting change $3.55 $2.95 $0.99
Extraordinary charge on debt
redemption, net of income
taxes (0.21) (55) -- -- -- --
Cumulative effect of accounting
change 0.19 51 -- -- (0.79) (184)
----- ----- ----- ----- ----- ----- ----- ----- -----
261.5 258.6 233.6
===== ===== =====
Net income $ 924 $ 763 $ 46
===== ===== =====
Net income per common share $3.53 $2.95 $0.20
===== ===== =====
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* The Series B ESOP convertible preferred stock is antidilutive for the 52 weeks ended January 25, 1992. Consequently, conversion is not assumed in the
fully diluted earnings per share calculation.
Exhibit 12 (a)
J. C. PENNEY COMPANY, INC.
(the Company and all subsidiaries)
Computation of Ratios of Available Income to Combined Fixed Charges and Preferred Stock Dividend Requirement
52 Weeks 53 Weeks
Ended Ended 52 Weeks Ended
-------- -------- -----------------------------------
01/29/94 01/30/93 01/25/92 01/26/91 01/27/90
-------- -------- -------- -------- --------
($ Millions)
Income from continuing operations $ 1,498 $ 1,192 $ 402 $ 765 $ 1,107
(before income taxes, before ----- ----- ----- ----- -----
capitalized interest, but after
preferred stock dividend)
Fixed charges
Interest (including capitalized
interest)
On operating leases 97 96 95 92 87
On short term debt 43 43 42 103 113
On long term debt 246 281 288 228 232
On capital leases 9 10 11 12 13
Other, net 0 16 (3) (7) 3
----- ----- ----- ----- -----
Total fixed charges 395 446 433 428 448
Preferred stock dividend, before taxes 52 53 54 55 56
----- ----- ----- ----- -----
Combined fixed charges and preferred
stock dividend requirement 447 499 487 483 504
----- ----- ----- ----- -----
Total available income $ 1,945 $ 1,691 $ 889 $ 1,248 $ 1,611
===== ===== ===== ===== =====
Ratio of available income to combined
fixed charges and preferred stock
dividend requirement 4.3 3.4 1.8 2.6 3.2
===== ===== ===== ===== =====
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The interest cost of the LESOP notes guaranteed by the Company is not included
in fixed charges above.
Exhibit 12 (b)
J. C. PENNEY COMPANY, INC.
(the Company and all subsidiaries)
Computation of Ratios of Available Income to Fixed Charges
52 Weeks 53 Weeks
Ended Ended 52 Weeks Ended
-------- -------- -----------------------------------
01/29/94 01/30/93 01/25/92 01/26/91 01/27/90
-------- -------- -------- -------- --------
($ Millions)
Income from continuing operations $ 1,550 $ 1,245 $ 456 $ 820 $ 1,163
(before income taxes and ----- ----- ----- ----- -----
capitalized interest)
Fixed charges
Interest (including capitalized
interest)
On operating leases 97 96 95 92 87
On short term debt 43 43 42 103 113
On long term debt 246 281 288 228 232
On capital leases 9 10 11 12 13
Other, net 0 16 (3) (7) 3
----- ----- ----- ----- -----
Total fixed charges 395 446 433 428 448
----- ----- ----- ----- -----
Total available income $ 1,945 $ 1,691 $ 889 $ 1,248 $ 1,611
===== ===== ===== ===== =====
Ratio of available income to fixed charges 4.9 3.8 2.1 2.9 3.6
===== ===== ===== ===== =====
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The interest cost of the LESOP notes guaranteed by the Company is not included
in fixed charges above.
EXHIBIT 13
J.C. PENNEY COMPANY, INC.
1993 ANNUAL REPORT
(EXCERPT)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (In millions except per share data) 1993 1992 1991
---- ---- ----
Retail sales, per cent increase (decrease) 5.4 11.2 (1.0)
Gross margin, per cent of retail sales(1)
FIFO 31.3 31.5 30.9
LIFO 31.5 31.7 31.5
Selling, general, and administrative expenses,
per cent of retail sales(1) 23.7 24.7 25.6
Pre-tax income of other businesses $ 149 $ 125 $ 91
Effective income tax rate 39.3 38.3 43.5
Net income(2),(3) $ 940 $ 777 $ 80
Per share(2),(3) $ 3.53 $ 2.95 $ .20
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(1) Ratios for 1992 and 1991 reflect the reclassifications made to conform with 1993, as described on page 18.
(2) Excluding the effects of an extraordinary charge and the cumulative effect of an accounting change, after tax income was $944 million, or $3.55 per share, in 1993.
(3) Excluding the effects of nonrecurring items and the cumulative effect of an accounting change, after tax income was $528 million, or $2.00 per share, in 1991.
NET INCOME was $940 million in 1993, an increase of 20.9 per cent from $777
million in 1992. Fully diluted earnings per share improved to $3.53 per share
from $2.95 per share in 1992. Net income in 1993 was reduced by an
extraordinary charge, net of tax, of $55 million, or 21 cents per share, for
the premium and unamortized issuing costs related to retired debt. Net income
was increased by $51 million, or 19 cents per share, for the cumulative effect
of implementing Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. Excluding the impact of the extraordinary charge
and the cumulative effect of the accounting change, net income was $944
million, or $3.55 per share. 1993 net income also included a charge of $14
million, or 5 cents per share, for the impact of the tax rate increase on
deferred taxes. Increased sales volume in both stores and catalog, resulting
from the Company's strategy of offering fashion, quality, and price to its
customers, as well as an aggressive national advertising campaign, were largely
responsible for the improvement. Contributing to increased profits were well
managed selling, general, and administrative expenses. These expenses, as a per
cent of retail sales, declined significantly in 1993.
Net income was $777 million in 1992, an increase of 47.2 per cent from $528
million in 1991, excluding the impact in 1991 of nonrecurring items and the
cumulative effect of an accounting change. On a comparable basis, fully diluted
earnings per share improved to $2.95 per share from $2.00 per share in 1991.
Higher sales volume due to increased unit sales, resulting from the shift in
the Company's strategy to more affordable pricing, was largely responsible for
the improvement. Selling, general, and administrative expenses, as a per cent
of retail sales, declined significantly in 1992.
Net income was $80 million in 1991 and fully diluted earnings per share was
20 cents. Net income in 1991 was reduced by a provision for nonrecurring items
and the cumulative effect of an accounting change. Nonrecurring items in 1991
amounted to $395 million before income taxes, and reflected certain changes in
strategy. The Company made a strategic business decision in 1991 to hold only
regional shopping center joint ventures in its real estate investment portfolio
and to dispose of all other projects as soon as practicable. As a result of this
decision, a provision of $220 million was made to record the costs to dispose of
the properties the Company planned to exit. Also, in 1991, a decision was made
to downsize or discontinue several non-core retail operations. This decision
reflected a change in business strategy to deemphasize experimental businesses
and to focus on the Company's core business, resulting in a provision of $115
million. In addition, nonrecurring items included a provision of $60 million for
the costs associated with consolidating and streamlining various Company
activities. In 1993, the Company completed the disposition of all its
non-regional shopping center properties, and continued to close unproductive
stores and implement cost cutting measures. The restructuring was substantially
complete at the end of 1993. In 1991, the Company adopted Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, that resulted in a one-time charge to earnings of $184 million, net of
taxes, or 79 cents per share.
Excluding the effects of the nonrecurring items and the cumulative effect
of the accounting change in 1991, income declined 8.5 per cent to $528 million
from $577 million in 1990. The decline in 1991 was due to a 1.0 per cent decline
in sales volume and an increase in the income tax rate. On a comparable basis,
earnings per share declined from $2.16 in 1990 to $2.00 in 1991.
Per cent increase Per cent increase
REVENUE (In millions) 1993 (decrease) 1992 (decrease) 1991
---- ---------- ---- ---------- ----
JCPenney stores $14,056 4.4 $13,460 12.1 $12,007
Catalog 3,514 11.0 3,166 5.5 3,002
Drug stores 1,413 2.2 1,383 16.0 1,192
Total retail sales* 18,983 5.4 18,009 11.2 16,201
JCPenney Insurance 475 22.5 388 18.3 328
JCPenney National Bank 120 2.0 118 (1.1) 119
Total revenue $19,578 5.7 $18,515 11.2 $16,648
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1993 and 1991 comprised 52 weeks, and 1992 comprised 53 weeks.
*On a comparable 52-week basis, total retail sales increased 6.9 per cent in 1993 and 9.8 per cent in 1992.
SALES of all JCPenney stores in 1993 increased 4.4 per cent while comparable
store sales increased 4.0 per cent. The sales gain was primarily the result of
the Company's strategy of offering fashion and quality merchandise to its
customers at competitive, affordable prices; a new national television
advertising campaign; and the increased emphasis on developing its private
brands. On a comparable 52 week basis, sales of JCPenney stores increased 5.8
per cent in 1993, and comparable store sales increased 5.3 per cent. JCPenney
store sales increased approximately 6 per cent in each of the merchandise
divisions (women's, men's, children's and family shoes, and home and leisure).
Sales of all JCPenney stores, on a 52 week basis, increased 10.9 per cent in
1992, and comparable store sales increased 9.7 per cent.
Catalog sales increased 11.0 per cent in 1993 to a record $3,514
million. The results were impacted by significant growth in the number of new
customers, gains from specialty catalogs, and improved synergy with JCPenney
stores' merchandise mix. The Company's decision to accept the Discover Card in
April 1993 contributed to 1993's growth in attracting new customers.
Drug store sales increased 2.2 per cent in 1993. On a comparable 52 week
basis, drug store sales increased 4.2 per cent in 1993, primarily as a result
of higher mail order pharmacy sales.
GROSS MARGIN on a FIFO basis, as a per cent of retail sales, declined in 1993
to 31.3 per cent from 31.5 per cent in 1992, due to a more promotional
environment during the holiday season. This ratio increased in 1992 as compared
with 1991 due to lower markdowns. The decline in this ratio in 1991 as
compared with 1990 was due to increased markdowns in the first half of 1991.
In 1991, based on its strategy to lower retail prices, the Company
elected to apply an internally developed LIFO index (rather than one prepared
by the U.S. Government for all department stores) to measure more accurately
increases and decreases in JCPenney retail prices. Because of the continued
decline in retail prices, there was deflation in the Company's LIFO index in
1993, 1992, and in 1991. As a result, there was a LIFO credit of $36 million in
1993, as compared with a credit of $32 million in 1992 and a $91 million credit
in 1991.
Gross margin on a LIFO basis, as a per cent of retail sales, was 31.5
per cent in 1993, as compared with 31.7 per cent in 1992 and 31.5 per cent in
1991.
SG&A EXPENSES increased in 1993 by 1.4 per cent from 1992's level. As a per
cent of sales, SG&A expenses declined in 1993 to 23.7 per cent from 24.7 per
cent in 1992, reflecting the Company's continuing efforts to control costs
across all operating and support areas.
SG&A expenses increased in 1992 by 7.0 per cent, reflecting higher
salaries and personnel related costs resulting from increased sales volume and
planned increases in advertising associated with a national television
advertising campaign and increased distribution of circulars. SG&A expenses
declined in 1991 by 3.1 per cent, reflecting the Company's efforts to reduce
costs across all operating and support areas. In 1992, the SG&A expense ratio
declined to 24.7 per cent from 25.6 per cent in 1991 and 26.2 per cent in 1990,
as a result of higher sales volume and well managed expenses.
NET INTEREST EXPENSE AND CREDIT COSTS (In millions) 1993 1992 1991
---- ---- ----
Finance charge revenue $ (523) $ (509) $ (567)
Interest expense, net 241 258 308
Credit costs
Bad debt expense 95 122 175
Operating expenses (including third
party credit costs) 260 261 260
------- ------ -------
Net interest expense and credit costs $ 73 $ 132 $ 176
|
NET INTEREST EXPENSE AND CREDIT COSTS declined 44.7 per cent in 1993 to $73 million, primarily as a result of lower bad debt and interest expense. Interest expense declined as a result of the debt restructuring program (described on page 13) initiated by the Company to take advantage of declining interest rates. Net interest expense and credit costs was $132 million in 1992, a decline of 25.0 per cent from $176 million in 1991. The decline in 1992 was also due to lower bad debt and interest expense.
THE EFFECTIVE INCOME TAX RATE for 1993 was 39.3 per cent as compared with 38.3 per cent in 1992 and 43.5 per cent in 1991. The 1993 rate included a one-time, non-cash charge of $14 million for the revaluation of deferred taxes, as required by Statement No. 109, Accounting for Income Taxes. Excluding the adjustment for deferred taxes, the 1993 effective income tax rate was 38.3 per cent, which approximates the expected rate for 1994. The 1993 rate increased from 1992's rate due to the legislated Federal income tax rate increase from 34 per cent to 35 per cent. The 1993 rate was reduced by the tax effect of dividends on allocated leveraged employee stock ownership plan (LESOP) shares, in accordance with Statement No. 109. The 1992 effective income tax rate declined from 1991's rate primarily due to the $21 million charge to income tax expense in 1991 for prior years' tax audit adjustments.
PRE-TAX INCOME OF OTHER BUSINESSES (In millions) 1993 1992 1991
---- ---- ----
JCPenney Insurance $ 120 $ 101 $ 78
JCPenney National Bank 29 24 13
------ ------ ------
Total $ 149 $ 125 $ 91
|
JCPENNEY INSURANCE, which markets life, accident and health, and credit insurance, continued its growth trend which began in 1989. Pre-tax income was $120 million, an increase of $19 million or 19.3 per cent over 1992. This growth resulted from favorable trends in both premiums earned and lower loss ratios. Premium income for 1993 was $416 million, an increase of $83 million or 25 per cent over 1992. The growth in premium income resulted from an increase of 1.2 million policies, 25 per cent more than in 1992. Increases in renewal premiums of $59 million resulted from the increased sales over the past three years coupled with favorable policy retention. Pre-tax income was $101 million in 1992, an increase of 27.9 per cent over 1991, primarily due to increased premiums. During the past two years, JCPenney Insurance has expanded its market share through relationships with other credit card issuers in both the United States and Canada to solicit their customers. These relationships included 17 companies in the United States and three companies in Canada.
JCPENNEY NATIONAL BANK offers Visa and MasterCard credit cards. At the end of the year, about 403 thousand credit cards were active. Pre-tax income improved in both 1993 and 1992, as a result of lower interest rates and a reduction in bad debt expense.
FINANCIAL POSITION. The Company generated $286 million in cash from operating
activities in 1993 as compared with $1,574 million in 1992 and $911 million in
1991. The change in 1993 was due to an increase in customer accounts
receivable, particularly in the fourth quarter when the utilization of the
JCPenney credit card increased to 47.5 per cent of sales from 46.6 per cent in
1992's comparable period. Additionally, $425 million of securitized accounts
receivable were amortized. The primary contributions to increased cash flow in
1992 were higher net income and declines in customer accounts receivable.
Total customer receivables serviced by the Company were $4.4 billion at
the end of 1993, $352 million or 8.8 per cent higher than the level at the end
of 1992. The increase in customer receivables was due to the higher sales
volume in 1993. In 1993, the Company established the JCPenney Card Bank,
National Association, which issues JCPenney credit cards to customers in five
states. The customer accounts receivable owned by the Card Bank are fully
consolidated for reporting purposes in the total customer receivables serviced
by the Company. Customer receivables serviced totaled $4.0 billion at the end
of 1992, $411 million or 9.3 per cent below the level at the end of 1991. The
decline in 1992 customer receivables serviced reflected a reduction in the
utilization of the JCPenney credit card, increased usage of third party credit
cards, as well as faster repayments by customers. Customer receivables serviced
were $4.4 billion at the end of 1991, or 8.6 per cent below the level at the
end of 1990.
Merchandise inventories, on a FIFO basis, increased to $3.8 billion in
1993, up 7.1 per cent from 1992 and are in line with recent sales volumes. FIFO
inventories increased 10.2 per cent in 1992 and 4.9 per cent in 1991.
Net property, plant, and equipment, at $3.8 billion, was $63 million
above the level of the preceding year. Cash requirements for capital
expenditures in 1993 were $480 million, $26 million above 1992. Capital
expenditures were $516 million in 1991. The Company presently expects capital
expenditures of approximately $500 million in each of the next three years.
Investments, at $1.2 billion, increased $191 million in 1993, primarily
due to growth in JCPenney Insurance investments.
Accounts payable and accrued expenses increased 5 per cent to $2.1 billion
in 1993 primarily as a result of the increase in trade accounts payable due to
the $287 million increase in merchandise inventories. Accounts payable and
accrued expenses were $2.0 billion in 1992 and $1.6 billion in 1991.
During 1993, the Company continued a program to restructure its debt and
securitized accounts receivable portfolio to take advantage of the lower
interest rate environment. The program, which was initiated in 1992,
restructured and refinanced $2.6 billion of high cost debt, including both on
and off- balance-sheet debt, through various methods including calls, open
market purchases, defeasance, and scheduled retirements. Additionally, in
February 1994, $350 million of zero coupon notes yielding 13 per cent matured.
The restructured debt was financed with operating cash flow and lower cost
debt. The weighted average annual interest rate on the restructured and
refinanced debt was 10 per cent. In connection with the program, the Company
issued $1.25 billion of fixed rate debt in 1993 and 1992 with maturities of
five, 10, and 30 years, with a weighted average annual interest rate of 6.1 per
cent. As a result, the program will produce annual financing cost savings in
excess of $120 million.
Total debt at year end 1993 included $379 million of borrowings by the
LESOP, which is guaranteed by the Company. The source of funds to repay the
LESOP debt will be dividends from the Series B preferred stock and cash
contributions by the Company, totaling approximately $50 million semi-annually
through July 1998.
Stockholders' equity was $5.4 billion at the end of 1993, an increase of
$660 million from the previous year due primarily to the increase in net
income.
On March 9, 1994, the Board of Directors declared an increase in the
regular quarterly dividend to 42 cents per share, or an indicated annual rate
of $1.68 per share. The regular quarterly dividend on the Company's outstanding
stock was payable on May 1, 1994, to stockholders of record on April 8, 1994.
The Board also approved on March 9, 1994, the purchase of up to 10 million
shares of the Company's common stock to offset dilution caused by the issuance
of common shares under the Company's equity compensation and benefit plans. The
shares will be purchased from time to time on the open market or through
privately negotiated transactions. On March 10, 1993, the Board of Directors
declared a two-for-one split of the Company's common stock and increased the
quarterly dividend to 36 cents per share from 33 cents per share, or an
indicated annual rate of $1.44 compared with $1.32 per share in 1992.
The Company anticipates that the major portion of its cash requirements
during the next few years to finance its operations, update its stores, and
expand will continue to be generated internally from operations. The Company
will continue to review all expenditures to maximize financial returns and
maintain financial flexibility.
IMPACT OF INFLATION AND CHANGING PRICES. The impact of inflation on the Company has lessened in recent years as the rate of inflation has declined. Inflation causes increases in the cost of doing business, including capital expenditures. The effect of rising costs cannot always be passed along to customers by adjusting prices because of competitive conditions. By striving to control costs, the Company attempts to minimize the effects of inflation on its operations.
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 29, 1994, January 30, 1993, and
January 25, 1992, and the related consolidated statements of income, reinvested
earnings, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 disclosures in the financial statements. An audit
also includes assessing 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 position of J.C. Penney
Company, Inc. and Subsidiaries as of January 29, 1994, January 30, 1993, and
January 25, 1992, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.
As discussed on page 25, the Company adopted the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, in 1991. Also, as discussed on page 27, the Company adopted the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, in 1993.
KPMG Peat Marwick
200 Crescent Court, Dallas, Texas 75201
February 24, 1994
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
generally accepted accounting principles and are considered to present fairly
in all material respects the Company's results of operations, financial
position, and cash flows. Certain amounts included in the consolidated
financial statements are estimated based on currently available information and
judgment of 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 auditors. This
system is designed to provide reasonable assurance, at suitable costs, that
assets are safeguarded and that transactions are executed in accordance with
appropriate authorization and are recorded and reported properly. The system is
continually reviewed, evaluated, and where appropriate, modified to accommodate
current conditions. Emphasis is placed on the careful selection, training, and
development of professional 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 understood throughout the Company.
The consolidated financial statements have been audited by independent
auditors whose report appears above. This audit was conducted in accordance
with generally accepted auditing standards, which includes the consideration of
the Company's internal controls to the extent necessary to form an independent
opinion on the consolidated financial statements prepared 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 recommending to the Board for stockholder
approval the independent auditors for the annual audit of the Company's
consolidated financial statements. The Committee also reviews the audit plans,
scope, fees, and audit results of the auditors; internal audit reports on the
adequacy of internal controls; non-audit services and related fees; the
Company's ethics program; status 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. Company
personnel, including internal auditors, meet periodically with the Audit
Committee to discuss auditing and financial reporting matters.
William R. Howell Robert E. Northam Chairman of the Board Executive Vice President and Chief Executive Officer and Chief Financial Officer |
CONSOLIDATED STATEMENTS OF INCOME
(In millions except per share data)
J.C. Penney Company, Inc. and Subsidiaries
FOR THE YEAR 1993 1992 1991
---- ---- ----
REVENUE
Retail sales $ 18,983 $ 18,009 $ 16,201
Other revenue 595 506 447
-------- -------- --------
TOTAL REVENUE 19,578 18,515 16,648
-------- -------- --------
COSTS AND EXPENSES
Cost of goods sold, occupancy, buying,
and warehousing costs 12,997 12,297 11,099
Selling, general, and administrative expenses 4,508 4,446 4,154
Costs and expenses of other businesses 446 381 356
Net interest expense and credit costs 73 132 176
Nonrecurring items -- -- 395
-------- -------- --------
TOTAL COSTS AND EXPENSES 18,024 17,256 16,180
-------- -------- --------
INCOME BEFORE INCOME TAXES, EXTRAORDINARY
CHARGE, AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,554 1,259 468
Income taxes 610 482 204
-------- -------- --------
INCOME BEFORE EXTRAORDINARY CHARGE AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 944 777 264
Extraordinary charge on debt redemption,
net of income taxes of $35 (55) -- --
Cumulative effect of accounting change
for income taxes 51 -- --
Cumulative effect of accounting change for
postretirement health care benefits, net of
income taxes of $116 -- -- (184)
-------- -------- --------
NET INCOME $ 940 $ 777 $ 80
======== ======== ========
EARNINGS PER COMMON SHARE
PRIMARY
Income before extraordinary charge and cumulative
effect of accounting changes $ 3.79 $ 3.15 $ .99
Extraordinary charge on debt redemption, net (.23) -- --
Cumulative effect of accounting change for
income taxes .21 -- --
Cumulative effect of accounting change for
postretirement health care benefits -- -- (.79)
-------- -------- --------
Net income $ 3.77 $ 3.15 $ .20
======== ======== ========
FULLY DILUTED
Income before extraordinary charge and cumulative
effect of accounting changes $ 3.55 $ 2.95 $ .99
Extraordinary charge on debt redemption, net (.21) -- --
Cumulative effect of accounting change for
income taxes .19 -- --
Cumulative effect of accounting change for
postretirement health care benefits -- -- (.79)
-------- -------- --------
Net income $ 3.53 $ 2.95 $ .20
======== ======== ========
|
See Notes to Consolidated Financial Statements on pages 18 through 29.
CONSOLIDATED
BALANCE
SHEETS
(In millions except share data)
J.C.Penney Company,
Inc. and Subsidiaries
ASSETS 1993 1992 1991
---- ---- ----
CURRENT ASSETS
Cash and short term investments of $156, $405,
and $126 $ 173 $ 426 $ 137
Receivables, net 4,679 3,750 4,131
Merchandise inventories 3,545 3,258 2,897
Prepaid expenses 168 157 163
-------- -------- --------
TOTAL CURRENT ASSETS 8,565 7,591 7,328
PROPERTIES, NET 3,818 3,755 3,633
INVESTMENTS 1,182 991 442
DEFERRED INSURANCE POLICY ACQUISITION COSTS 426 372 313
OTHER ASSETS 797 758 728
-------- -------- --------
$ 14,788 $ 13,467 $ 12,444
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,139 $ 2,038 $ 1,565
Short term debt 1,284 907 471
Current maturities of long term debt 348 -- 237
Deferred taxes 112 64 60
-------- -------- --------
TOTAL CURRENT LIABILITIES 3,883 3,009 2,333
LONG TERM DEBT 2,929 3,171 3,354
DEFERRED TAXES 1,013 1,012 968
BANK DEPOSITS 581 538 530
INSURANCE POLICY AND CLAIMS RESERVES 540 462 353
OTHER LIABILITIES 477 570 718
STOCKHOLDERS' EQUITY
Preferred stock, without par value:
Authorized, 25 million shares --
issued, 1 million shares of Series B LESOP
convertible preferred 648 666 684
Guaranteed LESOP obligation (379) (447) (509)
Common stock, par value $0.50:
Authorized, 500 million shares --
issued, 236, 235, and 233 million shares 1,003 955 857
Reinvested earnings 4,093 3,531 3,156
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 5,365 4,705 4,188
-------- -------- --------
$ 14,788 $ 13,467 $ 12,444
======== ======== ========
|
See Notes to Consolidated Financial Statements on pages 18 through 29.
CONSOLIDATED STATEMENTS OF
REINVESTED EARNINGS
(In millions)
REINVESTED EARNINGS AT BEGINNING
OF YEAR $ 3,531 $ 3,156 $ 3,413
Net income 940 777 80
Unrealized change in equity securities 1 (1) 5
Two-for-one stock split -- (59) --
Common stock dividends declared (339) (309) (308)
Preferred stock dividends declared, net
of taxes (40) (33) (34)
-------- -------- --------
REINVESTED EARNINGS AT END OF YEAR $ 4,093 $ 3,531 $ 3,156
======== ======== ========
|
See Notes to Consolidated Financial Statements on pages 18 through 29.
CONSOLIDATED
STATEMENTS
OF CASH FLOWS
(In millions)
J.C. Penney Company,
Inc. and Subsidiaries
FOR THE YEAR 1993 1992 1991
---- ---- ----
OPERATING ACTIVITIES
Net income $ 940 $ 777 $ 80
Extraordinary charge, net of income taxes 55 -- --
Cumulative effect of accounting change for
income taxes (51) -- --
Nonrecurring items and cumulative effect of
accounting change -- -- 695
Deferred tax effects -- -- (268)
Depreciation and amortization 316 310 316
Amortization of original issue discount 48 58 53
Deferred taxes 100 48 109
Change in cash from:
Customer receivables (352) 411 413
Securitized customer receivables amortized (425) (36) (214)
Inventories, net of trade payables (196) (27) (293)
Other assets and liabilities, net (149) 33 20
------ ------ ------
286 1,574 911
INVESTING ACTIVITIES ------ ------ ------
Capital expenditures (480) (454) (516)
Investment in asset-backed certificates (12) (419) --
Purchases of investment securities (351) (325) (169)
Proceeds from sales of investment securities 215 195 149
------ ------ ------
(628) (1,003) (536)
FINANCING ACTIVITIES ------ ------ ------
Increase (decrease) in short term debt 377 436 (433)
Issuance of long term debt 1,015 280 500
Payments of long term debt (875) (677) (104)
Premium on debt retirement (76) -- --
Common stock issued, net 37 39 7
Preferred stock retired (18) (18) (13)
Dividends paid, preferred and common (371) (342) (342)
------ ------ ------
89 (282) (385)
NET INCREASE (DECREASE) IN CASH AND ------ ------ ------
SHORT TERM INVESTMENTS (253) 289 (10)
CASH AND SHORT TERM INVESTMENTS AT
BEGINNING OF YEAR 426 137 147
CASH AND SHORT TERM INVESTMENTS AT ------ ------ ------
END OF YEAR $ 173 $ 426 $ 137
====== ====== ======
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 253 $ 265 $ 267
Interest received $ 51 $ 71 $ 22
Income taxes paid $ 486 $ 322 $ 259
|
See Notes to Consolidated Financial Statements on pages 18 through 29.
SUMMARY OF
ACCOUNTING POLICIES
RECLASSIFICATIONS. Certain amounts for prior years have been reclassified in the Consolidated Statements of Income to conform with the classifications used in 1993. Previously, these amounts were included in "Selling, general, and administrative expenses," "Interest expense, net," "Finance charge revenue," and "Costs and expenses of other businesses." The "Net interest expense and credit costs" caption in the Consolidated Statements of Income includes net interest expense, finance charge revenue, and credit operating costs, including bad debt expense. These reclassifications had no effect on net income. In the Consolidated Balance Sheets, the assets and liabilities of JCPenney Insurance, JCPenney National Bank, and JCP Realty, Inc., which were included in "Other assets" and "Other liabilities," respectively, in prior years, have been fully consolidated. All prior year data throughout this report has been restated to conform with the classifications used in 1993.
BASIS OF CONSOLIDATION. The consolidated financial statements present the results of J.C. Penney Company, Inc. and all of its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
DEFINITION OF FISCAL YEAR. The Company's fiscal year ends on the last Saturday in January. Fiscal year 1993 ended January 29, 1994, 1992 ended January 30, 1993, and 1991 ended January 25, 1992. They comprised 52 weeks, 53 weeks, and 52 weeks, respectively. The accounts of JCPenney Insurance and JCPenney National Bank are on a calendar year basis.
RETAIL SALES. Retail sales include merchandise and services, net of returns, and exclude sales taxes.
EARNINGS PER COMMON SHARE. Primary earnings per share are computed by dividing net income less dividend requirements on the Series B LESOP convertible preferred stock, net of tax, by the weighted average common stock and common stock equivalents outstanding. Fully diluted earnings per share also assume conversion of the Series B LESOP convertible preferred stock into the Company's common stock. Additionally, it assumes adjustment of net income for the additional cash requirements, net of tax, needed to fund the LESOP debt service resulting from the assumed replacement of the preferred dividends with common stock dividends. The number of shares used in the computation of fully diluted earnings per share was 261 million in 1993, 258 million in 1992, and 234 million in 1991.
CASH AND SHORT TERM INVESTMENTS. Cash invested in instruments with remaining maturities of three months or less from time of investment is reflected as short term investments. The carrying value of these instruments approximates market value due to their short maturities.
MERCHANDISE INVENTORIES. Substantially all merchandise inventories are valued at the lower of cost (last-in, first-out) or market, determined by the retail method.
DEPRECIATION. The cost of buildings and equipment is depreciated on a straight line basis over the estimated useful lives of the assets. The principal annual rates of depreciation are 2 per cent for buildings, 5 per cent for warehouse fixtures and equipment, 10 per cent for selling fixtures and equipment, and 20 per cent for data center equipment. Improvements to leased premises are amortized on a straight line basis over the expected term of the lease or their estimated useful lives, whichever is shorter.
DEFERRED CHARGES. Expenses associated with the opening of new stores are written off in the year of the store opening, except those of stores opened in January, which are written off in the following fiscal year. Deferred policy acquisition costs, principally marketing costs and commissions incurred by JCPenney Insurance to secure new insurance policies, are amortized over the expected premium-paying period of the related policies.
INVESTMENTS. Fixed income investments (principally bonds), held by JCPenney Insurance, are carried at amortized cost. Marketable equity securities are carried at market value. Investments also include JCP Receivables, Inc. asset-backed certificates held by the Company, which are carried at amortized cost.
INSURANCE POLICY AND CLAIMS RESERVES. Liabilities established by JCPenney Insurance for future policy benefits are computed using a net level premium method including assumptions as to investment yields, mortality, morbidity, and persistency based on the Company's experience. Liabilities for unpaid claims are charged to expense in the period that the claims are incurred.
ADVERTISING. Costs for newspaper, television, radio, and other media are expensed as incurred, and were $523 million in 1993, $503 million in 1992, and $398 million in 1991. Direct response advertising consists primarily of catalog preparation and printing costs, which are charged to expense over the period during which the benefits of the catalogs are expected, not to exceed six months. Catalog advertising reported in prepaid expense on the balance sheet was $88 million at the end of 1993, as compared with $79 million and $81 million at the end of 1992 and 1991, respectively.
FINANCE CHARGE REVENUE AND BAD DEBT EXPENSE, on customer accounts receivable owned by the Company, are included in the "Net interest expense and credit costs" line of the Consolidated Statements of Income. Finance charge revenue was $523 million in 1993, $509 million in 1992, and $567 million in 1991. Bad debt expense was $95 million in 1993, $122 million in 1992, and $175 million in 1991.
NONRECURRING ITEMS amounted to $395 million in 1991, and included recognition of the costs to dispose of certain real estate properties, the write-off of investments in several experimental businesses, and costs associated with consolidating and streamlining various Company activities. There were no nonrecurring items in 1993 or 1992.
RECENT ACCOUNTING
STANDARDS
INCOME TAXES. The Financial Accounting Standards Board issued Statement No. 109, Accounting for Income Taxes, in February 1992. This statement requires an asset and liability approach to accounting for differences between the tax basis of an asset or liability and its reported amount in the financial statements. Previously, the Company accounted for income taxes under APB Opinion No. 11. The Company adopted Statement No. 109 effective January 31, 1993, and recorded a $51 million cumulative adjustment, reducing deferred taxes on the balance sheet, and increasing net income by the same amount.
POSTEMPLOYMENT BENEFITS. The Financial Accounting Standards Board issued Statement No. 112, Employers' Accounting for Postemployment Benefits, in November 1992. This statement, which is required to be adopted in 1994, requires employers to recognize the obligation to provide postemployment benefits on an accrual basis if certain conditions are met. The impact on the Company of adopting this standard is expected to be immaterial.
DEBT AND EQUITY SECURITIES. The Financial Accounting Standards Board issued Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, in May 1993. This statement, which is required to be adopted in 1994 and reflected prospectively, requires that, except for debt securities classified as "held to maturity," investments in debt and equity securities be reported at fair value. Changes in unrealized gains and losses for securities classified as "available for sale" are recorded directly to stockholders' equity, net of applicable income taxes. Had this statement been adopted at year end 1993, assets and deferred taxes on the balance sheet would be increased $119 million and $45 million, respectively, and stockholders' equity would be increased $74 million, with no change in net income.
ADVERTISING. The American Institute of Certified Public Accountants issued Statement of Position No. 93-7, Reporting on Advertising Costs, in December 1993. This SOP, which is effective in 1994, requires that all advertising costs be expensed as incurred or the first time the advertising takes place, except for direct response advertising, which can be capitalized and written off over the period during which the benefits are expected. The Company's reporting of advertising costs is in conformance with the provisions of this statement.
NOTES TO THE
FINANCIAL STATEMENTS
RECEIVABLES (In millions) 1993 1992 1991
---- ---- ----
Customer receivables serviced $ 4,410 $ 4,068 $ 4,489
Customer receivables sold 725 1,150 1,186
------- ------- -------
Customer receivables owned 3,685 2,918 3,303
Less allowance for doubtful accounts 59 69 79
------- ------- -------
Customer receivables, net 3,626 2,849 3,224
JCPenney National Bank receivables 587 538 539
Other receivables 466 363 368
------- ------- -------
Receivables, net $ 4,679 $ 3,750 $ 4,131
|
The Company believes that the carrying value of existing customer and
bank receivables is the best estimate of fair value because of their short
average maturity and bad debt losses can be reasonably estimated and have been
reserved.
The Company's policy is to write off accounts when the scheduled minimum
payment has not been received for six consecutive months, if any portion of the
balance is more than 12 months past due, or if it is otherwise determined that
the customer is unable to pay. Collection efforts continue subsequent to write
off, and recoveries are applied as a reduction of bad debt losses.
Concentrations of credit risk with respect to customer receivables are limited
due to the large number of customers comprising the Company's credit card base
and their dispersion across the country.
During the period 1988 to 1990, the Company transferred portions of its
customer receivables to a trust which, in turn, sold certificates representing
undivided interests in the trust in public offerings. Certificates sold during
this period totaled $1,400 million. No gain or loss was recognized at the date
of sale. The $250 million of certificates sold in 1988 were completely
amortized by the end of 1992. Of the $800 million certificates sold in 1990,
$425 million were amortized in 1993. As of JanuaryE29, 1994, $725 million of
the certificates were outstanding and the balance of the receivables in the
trust was $1,642 million. The Company owns the remaining undivided interest in
the trust not represented by the certificates and will continue to service all
receivables for the trust.
In 1993 and 1992, the Company purchased $12 million and $419 million,
respectively, of its asset-backed certificates in the open market. The fair
value of this total investment of $431 million at the end of 1993 was $510
million based upon quoted market value. The fair value of the $419 million
investment at the end of 1992 was $465 million.
Cash flows generated from receivables in the trust are dedicated to
payment of interest on the certificates (fixed rates ranging from 8.70% to
9.625%), absorption of defaulted accounts in the trust, and payment of
servicing fees to the Company. The reserve funds are fully funded ($112 million
at January 29, 1994). Reserves are available if cash flows from the receivables
become insufficient to make such payments. None of the reserve funds has been
utilized as of January 29, 1994. Additionally, the Company has made available
to the trust irrevocable letters of credit of $138 million that may be drawn
upon should the reserve funds be exhausted. None of the letters of credit was
in use as of January 29, 1994.
In connection with the sale of $375 million of certificates in 1990, the
Company entered into two offsetting interest rate swap agreements with a
commercial bank, each having a notional principal amount of $375 million.
Because these interest rate swap agreements are offsetting, their net fair
value at the end of 1993 and 1992 was zero. Currently, the Company has no
interest rate exposure from these offsetting interest rate swap agreements
which terminate when all certificates have been settled in the year 2000. Under
one swap the Company receives a fixed rate and pays a floating rate while under
the second swap, the Company pays a fixed rate and receives a floating rate.
Because of the offsetting nature of these swaps, there is no financial
statement impact. The credit risk has been minimized by the selection of a
high credit quality commercial bank as counter party. As long as the Company
holds both swap positions, there is effectively no credit risk since there is
no net exchange of cash flows.
MERCHANDISE INVENTORIES (In millions) 1993 1992 1991
-------- -------- -------
Merchandise inventories, at lower of cost (FIFO)
or market $ 3,791 $ 3,540 $ 3,211
LIFO reserve (246) (282) (314)
------- ------- -------
Merchandise inventories, at LIFO cost $ 3,545 $ 3,258 $ 2,897
|
Substantially all of the Company's inventories are measured using the last-in, first-out (LIFO) method of inventory valuation. Since 1991, the Company has applied internally developed indices that more accurately measure increases and decreases in its own retail prices. From 1974 through 1990, the Company used the Bureau of Labor Statistics price indices applied against inventory selling values to arrive at an inventory valuation. The cumulative effect of this change on reinvested earnings at the beginning of 1991 was not determinable. However, the effect of using the internal indices instead of the Bureau of Labor Statistics price indices at the end of 1991 was to increase net income by approximately $100 million, or 39 cents per share.
PROPERTIES (In millions) 1993 1992 1991
------- ------- -------
Land $ 213 $ 212 $ 205
Buildings
Owned 2,119 2,016 1,838
Capital leases 219 237 244
Fixtures and equipment 2,693 2,703 2,649
Leasehold improvements 575 544 569
------- ------- -------
5,819 5,712 5,505
Less accumulated depreciation and amortization 2,001 1,957 1,872
------- ------- -------
Properties, net $ 3,818 $ 3,755 $ 3,633
|
At January 29,1994, the Company owned 245 retail stores, four catalog distribution centers, one store distribution center, its home office facility, and the insurance company corporate office building.
CAPITAL EXPENDITURES (In millions) 1993 1992 1991
-------- -------- -------
Land $ 1 $ 8 $ 7
Buildings 119 189 209
Fixtures and equipment 276 270 238
Leasehold improvements 63 27 52
-------- -------- --------
Total capital expenditures $ 459 $ 494 $ 506
|
Expenditures for existing stores, primarily modernizations and updates, were $130 million in 1993, as compared with $76 million in 1992 and $134 million in 1991. Expenditures for new stores opened in 1993, 1992, and 1991 were $162 million, $130 million, and $172 million, respectively.
INVESTMENTS at year end 1993 totalled $1,182 million, and consisted of fixed
income securities and asset-backed certificates carried at amortized cost
(shown in the table below) and equity securities carried at market value. The
market value of investments is based on quoted market prices.
Equity securities were $80 million (cost, $71 million) at year end 1993,
$29 million (cost, $22 million) at the end of 1992, and $27 million (cost, $18
million) at the end of 1991. Gross unrealized gains and losses at year end 1993
were $10 million and $1 million, respectively. Net unrealized investment gains
on equity securities included in stockholders' equity were $6 million, net of
deferred income taxes of $3 million.
The market values of investments carried at amortized cost were as
follows:
1993 1992 1991
---------------------- ------------------ ---------------------
Amortized Market Amortized Market Amortized Market
INVESTMENTS (ln millions) Cost Value Cost Value Cost Value
--------- -------- --------- -------- ---------- -------
U.S. Government obligations $ 139 $ 153 $ 138 $ 142 $ 48 $ 52
Corporate securities 280 302 210 224 193 210
Mortgage-backed securities 158 164 148 159 140 154
Asset-backed certificates 431 510 419 465 -- --
Other 94 92 47 45 34 35
-------- ------- ------ ------- ------- -------
Total $ 1,102 $ 1,221 $ 962 $ 1,035 $ 415 $ 451
|
Gross unrealized gains and losses were $125 million and $6 million, respectively, at year end 1993.
Investments carried at amortized cost had scheduled maturities at year end 1993, as follows:
Amortized Market
(In millions) Cost Value
--------- --------
Due in one year or less $ 12 $ 12
Due after one year through five years 147 153
Due after five years through ten years 567 657
Due after ten years 201 218
-------- -------
$ 927 $ 1,040
Mortgage-backed securities 158 164
Other 17 17
-------- -------
Total $ 1,102 $ 1,221
|
Net realized investment gains are included in "Other revenue" on the
Consolidated Statements of Income. These gains were $14 million in 1993, $12
million in 1992, and $5 million in 1991.
The Company limits the credit risk by diversifying its investments by
industry and geographic region.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (In millions) 1993 1992 1991
-------- ------- -------
Trade payables $ 1,034 $ 944 $ 610
Accrued salaries, vacations, profit-sharing,
and bonuses 311 308 256
Taxes, including income taxes 234 238 209
Workers' compensation and public liability
insurance 126 116 112
Common dividend payable 85 77 77
Other 349 355 301
-------- -------- --------
Total $ 2,139 $ 2,038 $ 1,565
|
SHORT TERM DEBT (In millions) 1993 1992 1991
-------- ------- -------
Commercial paper $ 1,284 $ 887 $ 414
Master notes and other -- 20 57
-------- ------- -------
Short term debt $ 1,284 $ 907 $ 471
Average short term debt outstanding $ 1,350 $ 1,154 $ 754
Peak outstanding $ 2,327 $ 1,675 $ 1,489
Average interest rates 3.2% 3.7% 5.6%
|
LONG TERM DEBT (In millions) 1993 1992 1991
------- -------- -------
Original issue discount
Zero coupon notes and 6% debentures, due
1992 to 1994 and 2006, $700 at maturity,
yields 13.5% to 15.1%, effective rates 12.5%
to 13.2% $ 101 $ 401 $ 359
Debentures and notes
5.375% to 7.125%, due 1998 to 2023 1,000 -- --
8.25% to 8.875%, due 1992 to 2022 250 366 269
9% to 10%, due 1992 to 2021 1,000 1,750 2,007
Guaranteed LESOP notes, 8.17%, due 1998* 379 447 509
Present value of commitments under capital
leases 127 141 160
Other 72 66 50
------- ------- -------
Long term debt $ 2,929 $ 3,171 $ 3,354
Average long term debt outstanding $ 2,471 $ 2,683 $ 2,827
Average interest rates 9.9% 10.5% 10.2%
|
*For further discussion, see LESOP on page 26.
The fair value for long term debt at the end of 1993 and 1992, excluding
capital leases, exceeded the recorded amount by $219 million and $265 million,
respectively. The fair value of these instruments was determined based on the
interest rate environment and the Company's credit rating.
The Company has in place interest rate swap contracts that were entered
into shortly after the issuance of $250 million aggregate principal amount of
8.25 per cent sinking fund debentures in August 1992. These are four year
agreements with a notional principal amount totalling $250 million. Under the
swap agreements, the Company receives a fixed rate payment and disburses a
floating rate payment. The counter parties to these contracts are high credit
quality commercial banks. Consequently, credit risk, which is inherent in all
swaps, has been minimized to a large extent. The accounting treatment for these
contracts, which serve to hedge the 8.25 per cent debentures, is to record the
net interest received or paid as an adjustment to interest expense on a current
basis. Gains or losses resulting from market movements are not recognized. The
fair value of these interest rate swaps at the end of 1993 and 1992 was $13
million and $4 million, respectively.
CHANGES IN LONG TERM DEBT (In millions) 1993 1992 1991
-------- ------- -------
Increases
5.375% to 9.75% notes, due 1997 to 2023 $ 1,000 $ 250 $ 500
Amortization of original issue discount 48 43 53
Other 16 30 5
-------- ------- -------
1,064 323 558
-------- ------- -------
Decreases
Transfers to current maturities of long
term debt 348 -- 237
8.375% to 12.75% debentures, bonds, and
notes, due 1995 to 2021, retired in 1992 and 1993 872 423 --
Other, including LESOP amortization 86 83 102
-------- ------- -------
1,306 506 339
-------- ------- -------
Net increase (decrease) in long term debt $ (242) $ (183) $ 219
|
Long term Capital
MATURITIES OF LONG TERM DEBT (In millions) debt leases
--------- --------
1994 $ 352 $ 24
1995 2 18
1996 6 19
1997 257 15
1998 587 16
1999 to 2003 821 53
Thereafter 845 19
--------- --------
Total $ 2,870 164
=========
Less future interest and executory expenses 37
--------
Present value $ 127
========
|
COMMITTED BANK CREDIT FACILITIES available to the Company as of January 29, 1994, amounted to $1.25 billion. In 1993, the Company entered into two syndicated revolving credit facility agreements. These facilities include a $450 million, one-year revolver and an $800 million, five-year revolver with a group of 39 domestic and international banks. These facilities, which replaced the $500 million confirmed lines of credit and the $750 million International Revolving Credit Facility, support commercial paper borrowing arrangements. Neither of the borrowing facilities was in use as of January 29, 1994.
PREFERRED STOCK. In 1988, a leveraged employee stock ownership plan (LESOP) was adopted (see page 26 for further discussion). The LESOP purchased approximately 1.2 million shares of a new issue of Series B convertible preferred stock from the Company. These shares are convertible into shares of the Company's common stock at a conversion rate equivalent to 20 shares of common stock for each share of preferred stock. The conversion price is $30.00 per common share. The convertible preferred stock may be redeemed at the option of the Company or the LESOP, under certain limited circumstances. The redemption price may be satisfied in cash or common stock or a combination of both at the Company's sole discretion. The dividends are cumulative, are payable semi-annually on January 1 and July 1, and yield 7.9 per cent. The convertible preferred stock issued to the LESOP has been recorded in the stockholders' equity section of the consolidated balance sheet, and the "Guaranteed LESOP obligation," representing borrowings by the LESOP, has been recorded as a reduction of stockholders' equity.
THE PREFERRED DIVIDEND is payable semi-annually at an annual rate of $2.37 per
common equivalent share. Preferred dividends declared were $52 million in 1993,
$53 million in 1992, and $54 million in 1991; on an after tax basis, the
dividends amounted to $31 million in 1993, $33 million in 1992, and $34 million
in 1991.
In 1990, the Board of Directors declared a dividend distribution of
one new preferred stock purchase right on each outstanding share of common
stock and authorized the redemption of the old preferred stock purchase rights
for five cents per share totalling $12 million. The preferred stock purchase
rights, in accordance with the rights agreement, entitle the purchase, for each
right held, of 1/400 of a share of Series A junior participating preferred
stock at a price of $140. The rights are exercisable upon the occurrence of
certain events and are redeemable by the Company under certain circumstances,
all as described in the rights agreement.
COMMON STOCK. On March 9, 1994, the Board of Directors increased the quarterly
common dividend to 42 cents per share, or an indicated annual rate of $1.68 per
share. The regular quarterly dividend on the Company's outstanding common stock
was payable on May 1, 1994, to stockholders of record on April 8, 1994. The
Board of Directors also approved on March 9, 1994, the purchase of up to 10
million shares of the Company's common stock to offset dilution caused by the
issuance of common shares under the Company's equity compensation and benefit
plans. The shares will be purchased from time to time on the open market or
through privately negotiated transactions.
The quarterly common dividend was 36 cents per share in 1993, and 33
cents per share in 1992 and 1991, or an indicated annual rate of $1.44 per
share in 1993, and $1.32 per share in 1992 and 1991. Common dividends declared
were $339 million in 1993, $309 million in 1992, and $308 million in 1991.
On March 10, 1993, the Board of Directors declared a two-for-one stock
split in the form of a stock dividend, which was payable May 1, 1993, to
stockholders of record on April 12, 1993.
The Company will request stockholder approval at its May 20, 1994 Annual
Meeting of Stockholders to increase the authorized number of shares of common
stock from 500 million to 1.25 billion shares.
Shares Amounts
---------------------------- ------------------------
CHANGES IN OUTSTANDING (In thousands) (In millions)
COMMON STOCK 1993 1992 1991 1993 1992 1991
------- ------- ------- ------ ------ ------
Balance at beginning of year 234,778 233,302 233,122 $ 955 $ 857 $ 850
Two-for-one stock split -- -- -- -- 59 --
Common stock issued 1,308 1,476 180 48 39 7
------- ------- ------- ------ ----- -----
Balance at end of year 236,086 234,778 233,302 $1,003 $ 955 $ 857
|
There were approximately 53,000 stockholders of record at year end 1993. In addition, the Company's savings plans, including the LESOP, had 111,000 participants and held 36.1 million shares of the Company's common stock. The savings plans also held 1.1 million shares of preferred stock, convertible into 21.6 million shares of common stock. On a combined basis, these plans held approximately 22 per cent of the Company's common shares after giving effect to the conversion of the preferred stock at the end of fiscal year 1993.
1993 EQUITY COMPENSATION PLAN AND 1993 NON-ASSOCIATE DIRECTORS' EQUITY PLAN. In May 1993, stockholders approved the 1993 Equity Compensation Plan (1993 Plan), which replaced the expiring 1989 Equity Compensation Plan. Under the 1993 Plan, 11.6 million shares of common stock were reserved for issuance upon the exercise of options and stock appreciation rights and for the payment of stock awards over the five-year term of the 1993 Plan. No discount options nor tax benefit rights may be issued under the 1993 Plan. Participants in the 1993 Plan are generally to be selected management associates of the Company and its subsidiaries and affiliates as determined by the committee administering the 1993 Plan. It is anticipated that approximately 2,000 associates will be eligible to participate. No awards may be made under the 1993 Plan after May 31, 1998. In May 1993, stockholders also approved the 1993 Non- Associate Directors' Equity Plan (Directors' Plan). Under the Directors' Plan, 90,000 shares of common stock were reserved for issuance upon the exercise of stock options and the payment of stock awards over the five-year term of the Directors' Plan. Each director who is presently not an active employee of the Company will automatically be granted annually an option to purchase 800 shares, in tandem with an award of 200 restricted shares of common stock. An initial grant/award in this same amount will also automatically be granted to each new Non-Associate Director upon his or her first being elected as a director. Such stock options will become exercisable six months from the date of grant, but shares acquired upon such exercise will not be transferable until a director terminates service.
1993 1992 1991
------------------------- ------------------------ -------------------------
Weighted Weighted Weighted
average average average
Shares option Shares option Shares option
STOCK OPTIONS (In thousands) price (In thousands) price (In thousands) price
-------------- -------- -------------- -------- -------------- --------
Balance at beginning
of year 8,844 $ 27.42 9,490 $ 26.31 3,820 $ 24.11
Granted 159 41.24 574 35.10 6,048 27.29
Exercised (752) 24.49 (974) 21.02 (206) 12.85
Expired and cancelled (16) 26.89 (246) 27.66 (172) 28.20
----- ----- -----
Balance at end of year 8,235 $ 27.96 8,844 $ 27.42 9,490 $ 26.31
|
At year end 1993, options covering 2.2 million shares were exercisable and 11.6 million shares were reserved for future grants.
INTEREST EXPENSE (In millions) 1993 1992 1991
------ ------ ------
Short term debt $ 43 $ 43 $ 42
Long term debt 246 281 288
Income on short term investments (14) (48) (19)
Interest capitalized (4) (14) (12)
Other, net* (30) (4) 9
------ ------ ------
Interest expense, net $ 241 $ 258 $ 308
|
*1993 and 1992 include $34 million and $28 million, respectively, of interest income from the Company's investment in asset-backed certificates.
RENT EXPENSE (In millions) 1993 1992 1991
------ ------ ------
Minimum rent on noncancelable operating leases $ 236 $ 244 $ 251
Rent based on sales 37 35 33
Minimum rent on cancelable personal
property leases 92 107 91
Real estate taxes and common area costs 145 134 120
------ ------ ------
Total $ 510 $ 520 $ 495
|
The Company conducts the major part of its operations from leased premises which include retail stores, distribution centers, warehouses, offices, and other facilities. Almost all leases will expire during the next 20 years; however, most leases will be renewed or replaced by leases on other premises.
MINIMUM ANNUAL RENTS UNDER NONCANCELABLE
OPERATING LEASES AND SUBLEASES (In millions) Gross rents Net rents*
----------- ----------
1994 $ 247 $ 173
1995 232 163
1996 217 152
1997 197 141
1998 184 125
Thereafter 973 718
------ ------
Total $2,050 $1,472
====== ======
Present value $ 900
Weighted average interest rate 10%
|
*Rents are shown net of their estimated executory costs, which are principally real estate taxes, maintenance, and insurance.
RETIREMENT PLANS (In millions) 1993 1992 1991
---- ---- ----
Pension
Service cost $ 50 $ 46 $ 37
Interest cost 123 122 114
Actual (return) loss on assets (236) (90) (332)
Net amortization and deferral 59 (90) 180
----- ----- -----
Pension credit (4) (12) (1)
----- ----- -----
Postretirement health care
Service cost 3 6 5
Interest cost 24 27 26
----- ----- -----
Total 27 33 31
----- ----- -----
LESOP expense 50 49 48
----- ----- -----
Total retirement plans $ 73 $ 70 $ 78
|
PENSION PLAN. JCPenney's principal pension plan, which is noncontributory,
covers substantially all United States employees who have completed 1,000 or
more hours of service within a period of 12 consecutive months and have
attained 21 years of age. In addition, the Company has an unfunded,
noncontributory, supplemental retirement program for certain management
employees. In general, benefits payable under the principal pension plan are
determined by reference to a participant's final average earnings and years of
credited service up to 35 years.
In 1993, the Company lowered its discount rate to 7.25 per cent due to
the continuation of a lower interest rate environment. The discount rate was
also lowered in 1992 to 8 per cent from 9 per cent in 1991. In 1992, the salary
progression rate was reduced from 6 per cent to 4 per cent because of lower
inflation. The impact of these changes increased the Company's obligation at
year end 1993 and 1992. Accordingly, the Company made a cash contribution of
$65 million to the plan in 1993 and expects to make a cash contribution to the
plan in 1994. The 1993 contribution was the first since 1983.
POSTRETIREMENT HEALTH CARE BENEFITS. The Company's retiree health care plan (Retiree Plan) covers medical and dental services and eligibility for benefits is based on age and years of service. The Retiree Plan is contributory and the amounts paid by retired employees have increased in recent years and are expected to continue to do so. For certain groups of employees, Company contributions toward the cost of retiree coverage will be based on a fixed dollar amount which will vary with years of service, age, and dependent coverage. The Retiree Plan is funded on a pay-as-you-go basis by the Company and retiree contributions. The Company adopted the Financial Accounting Standards Board Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, for its Retiree Plan in 1991.
In 1993 and 1992, the Company modified several postretirement health care assumptions. The discount rate was lowered from 8 per cent to 7.25 per cent in 1993 and from 9 per cent to 8 per cent in 1992. The health care trend rate was lowered from 12 per cent to 10 per cent for 1994 with gradual reductions to 6 per cent by 2003 and beyond. In 1992, the health care trend rate was lowered from 13 per cent to 12 per cent. The health care trend rate change represents a modification from previous assumptions because of favorable experience and a lower inflation environment. The changes in plan assumptions had no significant impact on the Company's obligation at year end 1993. A one per cent increase in the health care trend rate would increase the amount reported for the accumulated obligation by $28 million and would result in $2 million additional expense for 1993.
LESOP. The Company's LESOP, adopted in 1988, is a defined contribution plan
which covers substantially all United States employees who have completed at
least 1,000 hours of service within a period of 12 consecutive months, and if
hired on or after January 1, 1988, have attained 21 years of age.
The LESOP borrowed $700 million at an interest rate of 8.17 per cent
through a 10 year loan guaranteed by the Company. The LESOP used the proceeds
of the loan to purchase a new issue of convertible preferred stock from the
Company. The Company used the proceeds from the issuance of preferred stock to
the LESOP to purchase 28 million common shares of the Company in the open
market.
The Company has reflected the guaranteed LESOP borrowing as long term
debt on the Consolidated Balance Sheet. A like amount of "Guaranteed LESOP
obligation" was recorded as a reduction of stockholders' equity. The
convertible preferred stock issued to the LESOP for cash was recorded in the
stockholders' equity section. As the Company makes contributions to the LESOP,
these contributions, plus the dividends paid on the Company's preferred stock
held by the LESOP, will be used to repay the loan. As the principal amount of
the loan is repaid, the "Guaranteed LESOP obligation" is reduced accordingly.
The amount of compensation cost recorded by the Company represents its
cash contribution to the LESOP.
The following table sets forth the status of the Company's retirement
plans:
December 31
-----------
RETIREMENT PLANS (In millions) 1993 1992 1991
---- ---- ----
Pension
Present value of accumulated benefits
Vested $ 1,367 $ 1,227 $ 976
Non-vested 80 73 67
------- ------- -------
$ 1,447 $ 1,300 $ 1,043
======= ======= =======
Present value of actuarial benefit obligation $(1,781) $(1,694) $(1,373)
Net assets at fair market value 1,800 1,585 1,561
Unrecognized transition asset, net of
unrecognized losses 216 259 (64)
------- ------- -------
Net prepaid pension cost $ 235 $ 150 $ 124
======= ======= =======
Postretirement health care benefits
Accumulated benefit obligation
Retirees $ 246 $ 205 $ 191
Fully eligible active participants 51 82 77
Other active participants 41 43 42
------- ------- -------
338 330 310
Unrecognized net loss (10) (7) --
------- ------- -------
Net liability $ 328 $ 323 $ 310
======= ======= =======
Key assumptions
Rate of return on pension plan assets 9.5% 9.5% 9.5%
Discount rate 7.25% 8.0% 9.0%
Salary progression rate 4.0% 4.0% 6.0%
|
Savings plans Pension
------------- -------
December 31 December 31
----------- -----------
TOTAL ASSETS AND EQUITY (In millions) 1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
JCPenney preferred and common stock $3,030 $2,200 $1,720 $ -- $ -- $ --
Equity securities 117 103 79 1,424 1,232 1,188
Fixed income investments 1,091 1,061 902 302 275 279
LESOP loan obligation,
including accrued interest
of $17, $20, and $21 (431) (498) (560) -- -- --
Other assets, net 47 37 32 74 78 94
------ ------ ------ ------ ------ ------
Net assets $3,854 $2,903 $2,173 $1,800 $1,585 $1,561
====== ====== ====== ====== ====== ======
|
Savings plans Pension
------------- -------
December 31 December 31
CHANGES IN FAIR VALUE OF ----------- -----------
NET ASSETS (In millions) 1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
Net assets at beginning of year $2,903 $2,173 $1,823 $1,585 $1,561 $1,284
Company contribution 50 49 48 65 -- --
Participants' contributions 184 169 156 -- -- --
Gains 984 794 400 236 93 332
LESOP interest expense (35) (40) (45) -- -- --
Benefits paid (232) (242) (209) (86) (69) (55)
------ ------ ------ ------ ------ ------
Net assets at end of year $3,854 $2,903 $2,173 $1,800 $1,585 $1,561
====== ====== ====== ====== ====== ======
|
TAXES. Taxes other than income taxes, over half of which were payroll taxes,
totalled $416 million in 1993, as compared with $386 million in 1992 and $372
million in 1991.
The Financial Accounting Standards Board issued Statement No. 109,
Accounting for Income Taxes, in February 1992. This statement requires an asset
and liability approach to accounting for differences between the tax basis of
an asset or liability and its reported amount in the financial statements
(temporary differences). Deferred taxes are determined by applying the
provisions of enacted tax laws, and adjustments are required for changes in tax
laws and rates. The Company adopted Statement No. 109 effective January 31,
1993. Deferred taxes reflected on the balance sheet were reduced by $51
million, and a cumulative adjustment was recorded to increase net income by the
same amount, using current tax rates in effect at the beginning of fiscal 1993.
The Omnibus Budget Reconciliation Act of 1993, which was signed into law
on August 10, 1993, included an increase in the statutory Federal income tax
rate from 34 per cent to 35 per cent, retroactive to January 1, 1993. This
change in the tax rate resulted in higher taxes on operating income in 1993 as
well as a one-time, non-cash tax expense totalling $14 million for the
revaluation of deferred taxes on the balance sheet as required by Statement No.
109.
Deferred tax assets and liabilities reflected on the Company's
consolidated balance sheet at January 29, 1994, were measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The major components of
deferred tax liabilities (assets) at January 29, 1994, were as follows:
Net
Deferred Deferred (Asset)
TEMPORARY DIFFERENCES (In millions) (Asset) Liability Liability
-------- --------- ---------
Retirement plans $ (191) $ 154 $ (37)
Restructuring reserve (49) -- (49)
Worker's compensation/public liability (78) -- (78)
Leases (36) 388 352
Accounts receivable (22) -- (22)
Inventories (23) 125 102
Depreciation -- 704 704
Deferred policy acquisition costs -- 147 147
Other (153) 159 6
------ ------- -------
Total $ (552) $ 1,677 $ 1,125
|
No valuation allowances were considered necessary as of January 31, 1993
or January 29, 1994. The Company believes that the existing deductible
temporary differences will be offset by future reversals of differences
generating taxable income.
Deferred taxes, under APB Opinion No. 11 in 1992 and 1991, consisted
principally of accumulated depreciation and accounting for leases.
INCOME TAX EXPENSE (In millions) 1993 1992 1991
---- ---- ----
Current
Federal $ 443 $ 372 $ 196
State and local 67 62 62
------ ------ ------
510 434 258
------ ------ ------
Deferred
Federal 80 29 (29)
State and local 20 19 (25)
------ ------ ------
100 48 (54)
------ ------ ------
Total $ 610 $ 482 $ 204
Effective tax rate 39.3% 38.3% 43.5%
|
Per cent of
Amounts (In millions) pre-tax income
--------------------- --------------
RECONCILIATION OF TAX RATES 1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
Federal income tax at statutory rate $ 544 $ 428 $ 159 35.0 34.0 34.0
State and local income taxes, less federal
income tax benefit 58 53 25 3.7 4.2 5.1
Revaluation of deferred taxes 14 -- -- .9 -- --
Tax effect of dividends on allocated
LESOP shares (9) -- -- (.5) -- --
Interest, net of tax, on prior years'
audit adjustments -- -- 21 -- -- 4.6
Tax credits and other 3 1 (1) .2 .1 (.2)
------ ------ ------ ---- ---- ----
Total $ 610 $ 482 $ 204 39.3 38.3 43.5
|
SEGMENT REPORTING. The Company operates predominantly in one industry segment consisting of selling merchandise and services to consumers through retail department stores that include catalog departments. Total assets for that industry segment at the end of the last three years were $12,888 million, $11,820 million, and $10,987 million, respectively.
QUARTERLY DATA
--------------
(Unaudited)
First Second Third Fourth
----- ------ ----- ------
(In millions except per share data) 1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
- ----------------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
RETAIL SALES $ 3,964 3,793 3,433 3,963 3,789 3,456 4,735 4,342 3,937 6,321 6,085 5,375
Per cent increase (decrease) 4.5 10.5 (2.7) 4.6 9.6 (3.5) 9.1 10.3 (1.4) 3.9 13.2 2.2
TOTAL REVENUE $ 4,106 3,918 3,538 4,106 3,912 3,567 4,888 4,472 4,050 6,478 6,213 5,493
Per cent increase (decrease) 4.8 10.7 (2.2) 5.0 9.7 (2.8) 9.3 10.4 (1.0) 4.3 13.1 2.5
LIFO gross margin $ 1,280 1,233 1,107 1,191 1,164 1,036 1,530 1,395 1,250 1,985 1,920 1,709
LIFO gross margin, per cent of retail sales 32.3 32.5 32.2 30.1 30.7 30.0 32.3 32.1 31.8 31.4 31.6 31.8
Selling, general, and administrative
expenses, per cent of retail sales 25.9 26.7 28.4 25.8 27.1 27.8 24.2 25.0 26.3 20.8 21.7 22.0
INCOME BEFORE EXTRAORDINARY CHARGE
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES $ 172 136 80 112 80 31 221 186 116 439 375 37
NET INCOME (LOSS) $ 206 136 (104) 112 80 31 185 186 116 437 375 37
INCOME PER SHARE BEFORE EXTRAORDINARY
CHARGE AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES
Primary $ .68 .54 .31 .43 .31 .10 .88 .75 .46 1.80 1.55 .12
Fully diluted $ .65 .52 .31 .42 .31 .10 .83 .70 .46 1.65 1.42 .12
NET INCOME (LOSS) PER COMMON SHARE
Primary $ .82 .54 (.48) .43 .31 .10 .73 .75 .46 1.79 1.55 .12
Fully diluted $ .78 .52 (.48) .42 .31 .10 .69 .70 .46 1.64 1.42 .12
DIVIDENDS PER COMMON SHARE $ .36 .33 .33 .36 .33 .33 .36 .33 .33 .36 .33 .33
COMMON STOCK PRICE RANGE
High $ 45 34 28 49 36 29 52 38 27 56 40 29
Low $ 36 27 24 41 32 24 39 33 24 49 36 24
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SUPPLEMENTAL
INFORMATION
(Unaudited)
CREDIT OPERATIONS. The following table presents the results of the Company's proprietary credit card operation, measuring on an all- inclusive basis the costs of granting, operating, and financing credit, net of finance charge revenue. Revenue, costs, and expenses contained in the table below relate to all customer accounts receivable generated and serviced by the Company, including those recorded as sold under asset securitization transactions. This presentation is designed to measure on an "economic basis" the total pre-tax cost of providing the JCPenney credit card to customers.
PRE-TAX COST OF JCPENNEY CREDIT CARD (In millions) 1993 1992 1991
---- ---- ----
Finance charge revenue
On receivables owned $ (523) $ (509) $ (567)
On receivables sold (129) (166) (197)
------ ------ -------
Total (652) (675) (764)
Bad debt expense 128 171 240
Operating expenses (including
in-store costs) 265 270 275
Cost of capital 399 417 496
------ ------ -------
Total 792 858 1,011
------ ------ -------
Pre-tax cost of JCPenney credit $ 140 $ 183 $ 247
Per cent of JCPenney credit sales 1.6% 2.2% 3.1%
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The cost of capital shown above represents the cost of financing both Company-owned accounts receivable and securitized accounts receivable. The cost of the sold receivables is the actual interest paid to certificate holders. The owned accounts receivables are financed with both debt and equity capital. The debt component uses the total Company weighted average interest rate, while the equity component uses the Company's minimum return on equity objective of 16 per cent. On a combined basis, for both owned and sold receivables, the debt and equity components of the total capital requirements were 88 per cent debt and 12 per cent equity, which approximates the finance industry standard debt to equity ratio.
1993 1992 1991
---- ---- ----
Per cent Per cent Per cent
Amounts of eligible Amounts of eligible Amounts of eligible
CREDIT SALES (In billions) sales (In billions) sales (In billions) sales
------------- ----------- ------------- ----------- ------------- -----------
JCPenney credit card $ 8.8 46.4 $ 8.4 46.6 $ 7.9 49.3
American Express, Discover,
MasterCard, and Visa 2.9 15.4 2.4 13.2 2.0 12.3
------ ---- ----- ---- ----- ----
Total $ 11.7 61.8 $10.8 59.8 $ 9.9 61.6
KEY JCPENNEY CREDIT CARD INFORMATION (In millions) 1993 1992 1991
---- ---- ----
Number of accounts serviced with balances 17.2 17.5 18.3
Total customer receivables serviced $ 4,410 $ 4,068 $ 4,489
Average customer receivables financed $ 3,767 $ 3,901 $ 4,288
Average account balances (in dollars) $ 256 $ 231 $ 244
Average account maturity (months) 4.0 4.1 4.7
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FINANCING COSTS incurred by the Company to finance its operations, including those costs related to off-balance-sheet liabilities were as follows:
(In millions) 1993 1992 1991
---- ---- ----
Interest expense, net $ 241 $ 258 $ 308
Interest portion of LESOP debt payment 35 40 45
Off-balance-sheet financing costs
Interest imputed on operating leases 97 96 95
Asset-backed certificates interest 87 105 117
------ ------ ------
Total $ 460 $ 499 $ 565
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DEBT TO CAPITAL ratio shown in the table below includes both debt recorded on the Company's Consolidated Balance Sheet as well as off-balance-sheet debt related to operating leases and the securitization of a portion of the Company's customer accounts receivable.
(In millions) 1993 1992 1991
---- ---- ----
Short term debt, net of short term investments $ 1,128 $ 502 $ 345
Long term debt, including current maturities 3,277 3,171 3,591
------- -------- --------
4,405 3,673 3,936
Off-balance-sheet debt
Present value of operating leases 900 950 900
Securitization of accounts receivable, net 294 731 1,186
------- -------- --------
Total debt $ 5,599 $ 5,354 $ 6,022
Consolidated equity $ 5,365 $ 4,705 $ 4,188
Total capital $10,964 $ 10,059 $ 10,210
Per cent of total debt to capital 51.1% 53.2% 59.0%
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FIVE YEAR
FINANCIAL
SUMMARY
(In millions except per
share data)
J.C. Penney Company,
Inc. and Subsidiaries
1993(1) 1992 1991(2) 1990 1989(3)
------ ---- ------ ---- ------
RESULTS FOR THE YEAR
Total revenue $ 19,578 18,515 16,648 16,736 16,405
Retail sales $ 18,983 18,009 16,201 16,365 16,103
Per cent increase (decrease) 5.4 11.2 (1.0) 1.6 8.6
LIFO gross margin, per cent of
retail sales 31.5 31.7 31.5 31.4 33.4
FIFO gross margin, per cent of
retail sales 31.3 31.5 30.9 31.7 33.2
Selling, general, and administrative
expenses, per cent of retail sales 23.7 24.7 25.6 26.2 25.8
Depreciation and amortization $ 316 310 316 299 275
Income taxes $ 610 482 204 255 368
Income before extraordinary charge
and cumulative effect of
accounting changes $ 944 777 264 577 802
Net income $ 940 777 80 577 802
EARNINGS PER COMMON SHARE
PRIMARY
Before extraordinary charge and
cumulative effect of
accounting changes $ 3.79 3.15 .99 2.30 3.16
Net income $ 3.77 3.15 .20 2.30 3.16
FULLY DILUTED
Before extraordinary charge and
cumulative effect of
accounting changes $ 3.55 2.95 .99 2.16 2.93
Net income $ 3.53 2.95 .20 2.16 2.93
PER COMMON SHARE
Dividends $ 1.44 1.32 1.32 1.32 1.12
Stockholders' equity $ 21.53 19.17 17.33 18.38 17.81
RETURN ON STOCKHOLDERS' EQUITY 20.1 18.6 12.0 13.3 20.8
FINANCIAL POSITION
Receivables, net $ 4,679 3,750 4,131 4,303 4,872
Merchandise inventories $ 3,545 3,258 2,897 2,657 2,613
Properties, net $ 3,818 3,755 3,633 3,532 3,268
Capital expenditures $ 459 494 506 601 520
Total assets $ 14,788 13,467 12,444 12,256 12,635
Total debt $ 4,561 4,078 4,062 4,114 4,207
Stockholders' equity $ 5,365 4,705 4,188 4,394 4,353
NUMBER OF COMMON SHARES
OUTSTANDING AT YEAR END 236 235 233 234 240
WEIGHTED AVERAGE COMMON SHARES
Primary 239 236 234 236 244
Fully diluted 261 258 234 260 268
NUMBER OF EMPLOYEES AT YEAR END
(In thousands) 193 192 185 196 198
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(1) Excluding the impact of the tax rate increase on deferred taxes, after tax income was $958 million, or $3.60 per share, on a fully diluted basis.
(2) Excluding the effect of nonrecurring items and the cumulative effect of an accounting change, after tax income was $528 million, or $2.00 per share, on a fully diluted basis.
(3) Excluding the effect of nonrecurring items, after tax income was $822 million, or $3.00 per share, on a fully diluted basis.
FIVE YEAR
OPERATIONS
SUMMARY
J.C.Penney Company,
Inc. and Subsidiaries
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
JCPENNEY STORES
Number of stores
Beginning of year 1,266 1,283 1,312 1,328 1,355
Openings 24 33 38 46 38
Closings (44) (50) (67) (62) (65)
End of year 1,246 1,266 1,283 1,312 1,328
-------- ------ ------ ------ ------
Gross selling space (In million sq. ft.) 113.9 114.4 114.5 114.4 112.8
Sales including catalog
desks (In millions) $ 16,846 15,698 14,277 14,616 14,469
Comparative store sales per cent
increase (decrease)(1) 6.4 9.7 (1.5) 0.0 6.8
Sales per gross square foot(1) $ 146 137 125 127 127
CATALOG
Number of catalog units
JCPenney stores 1,246 1,266 1,283 1,312 1,328
Freestanding sales centers
and merchants 543 640 697 626 501
Drug stores 101 128 134 136 126
Other, principally outlet stores 14 14 16 16 16
-------- ------ ------ ------ ------
Total 1,904 2,048 2,130 2,090 1,971
Number of distribution centers 6 6 6 6 6
Distribution space (In million sq. ft.) 11.4 11.4 11.4 11.4 11.4
Sales (In millions) $ 3,514 3,166 3,002 3,220 3,205
DRUG STORES
Number of stores
Beginning of year 548 530 487 471 434
Openings 35 30 46 22 39
Closings (77) (12) (3) (6) (2)
-------- ------ ------ ------ ------
End of year 506 548 530 487 471
Gross selling space (In million sq. ft.) 4.6 5.2 5.0 4.8 4.7
Sales (In millions) $ 1,413 1,383 1,192 1,097 987
Sales per gross square foot(1) $ 235 211 201 198 189
JCPENNEY INSURANCE (In millions)
Premium income $ 416 333 286 221 165
Policies and certificates in force 5.8 4.6 4.3 4.1 3.5
Amount of life insurance in force $ 7,627 6,552 5,419 5,268 3,797
Total assets $ 1,246 1,033 857 764 739
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(1) 1992 is presented on a 52 week basis.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Set forth below is a list of certain subsidiaries of the Company at January 29, 1994. All of the voting securities of each named subsidiary are owned by the Company or by another subsidiary of the Company.
Subsidiaries
JCPenney Business Services, Inc. (Delaware)
J. C. Penney Financial Services, Inc. (Delaware)
J. C. Penney Funding Corporation (Delaware)
J. C. Penney Life Insurance Company (Vermont)
JCPenney National Bank (National Association)
JCPenney Card Bank (National Association)
J. C. Penney Properties, Inc. (Delaware)
JCP Realty, Inc. (Delaware)
JCP Receivables, Inc. (Delaware)
Thrift Drug, Inc. (Delaware)
Separate financial statements are filed for J. C. Penney Funding Corporation, a consolidated subsidiary, in its separate Annual Report on Form 10-K.
The names of other subsidiaries have been omitted because these unnamed subsidiaries, considered in the aggregate as a single subsidiary, do
not constitute a significant subsidiary.
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of J. C. Penney Company, Inc.
We consent to incorporation by reference in: (1) the Registration Statement (No. 2-91101) on Form S-8; (2) the Registration Statement (No. 33-28390) on Form S-8;(3) the Registration Statement (No. 33-59666) on Form S-8; (4) the Registration Statement (No. 33-59668) on Form S-8; (5) the Registration Statement (No. 33-66070) on Form S-8; and (6) the Registration Statement (No. 33- 66072) on Form S-8 of J. C. Penney Company, Inc. of our report dated February 24, 1994 relating to the consolidated balance sheets of J. C. Penney Company, Inc. and subsidiaries as of January 29, 1994, January 30, 1993, and January 25, 1992, and the related consolidated statements of income, reinvested earnings, and cash flows for the years then ended, which report appears in the 1993 Annual Report to Stockholders of J. C. Penney Company, Inc., which Annual Report is incorporated by reference in the Annual Report on Form 10-K of J. C. Penney Company, Inc. for the year ended January 29, 1994, and to our report dated February 24, 1994, relating to the financial statement schedules of J. C. Penney Company, Inc. and subsidiaries for each of the years in the three-year period ended January 29, 1994, which report appears in the Annual Report on Form 10-K of J. C. Penney Company, Inc. for the year ended January 29, 1994.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
Dallas, Texas
April 6, 1994
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Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT each of the undersigned directors and officers of J. C. PENNEY COMPANY, INC., a Delaware corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, its Annual Report on Form 10-K for the 52 weeks ended January 29, 1994, hereby constitutes and appoints D. A. McKay and C. R. Lotter, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power to act without the other, for him or her and in his or her name, place, and stead, in any and all capacities, to sign said Annual Report, which is about to be filed, and any and all subsequent amendments to said Annual Report, and to file said Annual Report and each subsequent amendment so signed, with all exhibits thereto, and any and all documents in connection therewith, and to appear before the Securities and Exchange Commission in connection with any matter relating to said Annual Report and any subsequent amendments, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as of the 9th day of March, 1994.
/s/ W. R. HOWELL /s/ R. E. NORTHAM W. R. Howell R. E. Northam Chairman of the Board and Executive Vice President and Chief Executive Officer Chief Financial Officer (principal executive officer); (principal financial officer) Director /s/ L. A. GISPANSKI /s/ BORIS YAVITZ L. A. Gispanski Boris Yavitz Vice President and Controller Director (principal accounting officer) /s/ M. A. BURNS /s/ C. H. CHANDLER M. A. Burns C. H. Chandler Director Director |
/s/ V. E. JORDAN, JR. /s/ GEORGE NIGH V. E. Jordan, Jr. George Nigh Director Director /s/ J. C. PFEIFFER /s/ A. K. PYE J. C. Pfeiffer A. K. Pye Director Director /s/ C. S. SANFORD, JR. /s/ J. D. WILLIAMS C. S. Sanford, Jr. J. D. Williams Director Director |
EXHIBIT 99
(EXCERPT)
J. C. PENNEY FUNDING CORPORATION
FINANCIAL HIGHLIGHTS (In millions)
FOR THE YEAR 1993 1992 1991
--------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 16 $ 17 $ 23
Fixed charges - times earned . . . . . . . . . . . . . . . . 1.52 1.52 1.52
Commercial paper and master notes
Volume . . . . . . . . . . . . . . . . . . . . . . . . $ 12,507 $ 11,645 $ 13,122
Peak outstanding . . . . . . . . . . . . . . . . . . . $ 2,327 $ 1,665 $ 1,489
Average outstanding . . . . . . . . . . . . . . . . . . $ 1,347 $ 1,146 $ 754
AT YEAR END
Loans to JCPenney . . . . . . . . . . . . . . . . . . . . . . $ 2,323 $ 1,912 $ 1,609
Total debt
Short term debt . . . . . . . . . . . . . . . . . . . . $ 1,284 $ 887 $ 471
Long term debt . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ 177
Total debt . . . . . . . . . . . . . . . . . . . . . . $ 1,284 $ 887 $ 648
Equity of JCPenney . . . . . . . . . . . . . . . . . . . . . $ 996 $ 980 $ 963
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TABLE OF CONTENTS
Financial Highlights 1 Independent Auditors' Report 6
Management's Discussion and Analysis of Notes to Financial Statements 6
Financial Condition and Results of Operations 2
Five Year Financial Summary 7
Statements of Income 3
Quarterly Data 8
Statements of Reinvested Earnings 3
Committed Revolving Credit Facilities 8
Balance Sheets 4
Commercial Paper Sales Policies 9
Statements of Cash Flows 5
Directors and Officers 10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 1993 ANNUAL REPORT FINANCIAL CONDITION AND RESULTS OF OPERATIONS
J. C. Penney Funding Corporation ("Funding") is a wholly-owned consolidated subsidiary of J. C. Penney Company, Inc. ("JCPenney"). The business of Funding consists of financing a portion of JCPenney's operations through loans to JCPenney, the purchase of customer receivable balances that arise from the retail credit sales of JCPenney, or a combination of both. No receivables have been purchased by Funding since 1985. The loan agreement between Funding and JCPenney provides for unsecured loans to be made by Funding to JCPenney. Each loan is evidenced by a revolving promissory note and is payable upon demand in whole or in part as may be required by Funding. Copies of our loan and receivables agreements with JCPenney are available upon request.
To finance its operations, Funding primarily issues commercial paper through The First Boston Corporation and J.P. Morgan Securities, Inc. to corporate and institutional investors in the domestic market. The commercial paper is guaranteed by JCPenney on a subordinated basis. Funding has, from time to time, issued long term debt in public and private markets in the United States and abroad. The commercial paper is rated "A-1" by Standard & Poor's Corporation, "Prime-1" by Moody's Investors Service, Inc., and "F- 1" by Fitch Investors Service, Inc.
Income is derived primarily from earnings on loans to JCPenney and is designed to produce earnings sufficient to cover fixed charges (principally interest expense) at a coverage ratio mutually agreed upon by Funding and JCPenney. The earnings to fixed charges ratio has historically been at least one and one-half times.
In 1993, net income decreased to $16 million from $17 million in 1992 and $23 million in 1991. The decrease is attributed to lower interest rates and the commensurate lower earnings on loans to JCPenney. Interest expense was $47 million in 1993 compared with $50 million in 1992 and $66 million in 1991. Interest earned from JCPenney was $71 million in 1993 compared to $75 million in 1992 and $89 million in 1991.
Commercial paper borrowings averaged $1,347 million in 1993 compared to $1,146 million in 1992 and $754 million in 1991. The average interest rate on commercial paper was 3.2 per cent in 1993, down from 3.7 per cent in 1992 and 5.6 per cent in 1991.
Total debt averaged $1,347 million in 1993, compared with $1,185 million in 1992 and $986 million in 1991. During 1992, JCPenney initiated a program to restructure its debt portfolio to take advantage of declining interest rates. Under the debt restructure program, Funding exercised its option to prepay all of its long term debt, totalling $177 million.
In 1993, Funding and JCPenney entered into two syndicated revolving credit facility agreements. Committed bank credit facilities available to the Company as of January 29, 1994, amounted to $1.25 billion. These facilities include a $450 million, one-year revolver and an $800 million, five-year revolver with a group of 39 domestic and international banks. These facilities, which replaced the $500 million confirmed lines of credit and the $750 million international revolving credit facility, support commercial paper borrowing arrangements. Neither of the borrowing facilities was in use as of January 29, 1994. See page 8 for a complete list of committed bank credit facilities.
We would like to express our appreciation to the institutional investment community, as well as to our credit line participants and commercial paper dealers for their continued support during 1993.
/s/ D. A. MCKAY Donald A. McKay Chairman of the Board March 28, 1994 |
STATEMENTS OF INCOME J. C. PENNEY FUNDING CORPORATION
(In millions)
FOR THE YEAR 1993 1992 1991
------ ----- ----
INCOME
Interest earned from JCPenney . . . . . . . . . . . . . . $ 71 $ 75 $ 89
Interest earned on short term investments . . . . . . . . -- 2 12
----- ----- -----
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . . 71 77 101
----- ----- -----
EXPENSES
Interest on short term debt . . . . . . . . . . . . . . . 47 46 46
Interest on long term debt . . . . . . . . . . . . . . . -- 4 20
Administrative and other expenses . . . . . . . . . . . . -- 1 1
----- ----- -----
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . . 47 51 67
----- ----- -----
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . 24 26 34
Income taxes . . . . . . . . . . . . . . . . . . . . . . 8 9 11
------ ----- -----
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16 $ 17 $ 23
====== ===== =====
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STATEMENTS OF REINVESTED EARNINGS
(In millions)
1993 1992 1991
------ ----- -----
BALANCE AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . $ 835 $ 818 $ 795
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 23
------ ----- -----
BALANCE AT END OF YEAR . . . . . . . . . . . . . . . . . . . . $ 851 $ 835 $ 818
====== ===== =====
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See Notes to Financial Statements on page 6 and Five Year Financial Summary on page 7.
BALANCE SHEETS J. C. PENNEY FUNDING CORPORATION
(In millions except share data)
1993 1992 1991
-------- ------- -------
ASSETS (ALL CURRENT)
Loans to JCPenney . . . . . . . . . . . . . . . . . . . . . . $ 2,323 $ 1,912 $ 1,609
Short term investments . . . . . . . . . . . . . . . . . . . -- -- 53
Other assets . . . . . . . . . . . . . . . . . . . . . . . . -- -- 1
-------- ------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $ 2,323 $ 1,912 $ 1,663
======== ======= =======
LIABILITIES AND EQUITY OF JCPENNEY
CURRENT LIABILITIES
Short term debt . . . . . . . . . . . . . . . . . . . . . . . $ 1,284 $ 887 $ 471
Due to JCPenney . . . . . . . . . . . . . . . . . . . . . . . 43 45 47
Accrued interest and other expenses . . . . . . . . . . . . . -- -- 5
-------- ------- -------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . 1,327 932 523
Long term debt . . . . . . . . . . . . . . . . . . . . . . . -- -- 177
EQUITY OF JCPENNEY
Common stock (including contributed
capital), par value $100:
Authorized, 750,000 shares -
issued and outstanding, 500,000 shares . . . . . . . . . 145 145 145
Reinvested earnings . . . . . . . . . . . . . . . . . . . . . 851 835 818
-------- ------- -------
TOTAL EQUITY OF JCPENNEY . . . . . . . . . . . . . . . 996 980 963
-------- ------- -------
TOTAL LIABILITIES AND EQUITY OF JCPENNEY . . . . . . . $ 2,323 $ 1,912 $ 1,663
======== ======= =======
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See Notes to Financial Statements on page 6 and Five Year Financial Summary on page 7.
STATEMENTS OF CASH FLOWS J. C. PENNEY FUNDING CORPORATION
(In millions)
FOR THE YEAR 1993 1992 1991
----- ----- -----
OPERATING ACTIVITIES
Net income $ 16 $ 17 $ 23
(Increase) decrease in loans to JCPenney (411) (303) 477
(Decrease) increase in amount due to JCPenney (2) (2) 1
Change in other assets and liabilities, net -- (4) (5)
----- ----- -----
(397) (292) 496
----- ----- -----
FINANCING ACTIVITIES
Increase (decrease) in short term debt . . . . . . . . . . . . . 397 416 (433)
Payments of long term debt . . . . . . . . . . . . . . . . . . . -- (177) (94)
----- ----- -----
397 239 (527)
----- ----- -----
INCREASE (DECREASE) IN SHORT TERM INVESTMENTS . . . . . . . . . -- (53) (31)
Short term investments at beginning of year . . . . . . . . . . -- 53 84
----- ----- -----
Short term investments at end of year . . . . . . . . . . . . . $ -- $ -- $ 53
===== ===== =====
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . $ 47 $ 55 $ 70
Interest received . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 2 $ 12
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . $ 4 $ 11 $ 10
|
See Notes to Financial Statements on page 6 and Five Year Financial Summary on page 7.
INDEPENDENT AUDITORS' REPORT J. C. PENNEY FUNDING CORPORATION
To the Board of Directors of
J. C. Penney Funding Corporation:
We have audited the accompanying balance sheets of J. C. Penney Funding Corporation as of January 29, 1994, January 30, 1993, and January 25, 1992, and the related statements of income, reinvested earnings, and cash flows, appearing on pages 3 through 6, for the years then ended. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. 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 disclosures in the financial statements. An audit also includes assessing 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 financial statements referred to above present fairly, in all material respects, the financial position of J. C. Penney Funding Corporation as of January 29, 1994, January 30, 1993, and January 25, 1992, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
In our opinion, the information set forth in the selected financial data for each of the three years in the period ended January 29, 1994, appearing on page 7, is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived.
/S/ KPMG PEAT MARWICK KPMG Peat Marwick 200 Crescent Court, Dallas, Texas 75201 February 24, 1994 |
NOTES TO FINANCIAL STATEMENTS
GENERAL
J. C. Penney Funding Corporation ("Funding") is a wholly-owned consolidated
subsidiary of J. C. Penney Company, Inc. ("JCPenney"). The principal business
of Funding consists of financing a portion of JCPenney's operations through
loans to JCPenney. To finance its operations, Funding issues commercial paper,
which is guaranteed by JCPenney on a subordinated basis, to corporate and
institutional investors in the domestic market. Funding has, from time to
time, issued long term debt in public and private markets in the United States
and abroad.
DEFINITION OF FISCAL YEAR
Funding's fiscal year ends on the last Saturday in January. Fiscal year 1993
ended January 29, 1994, 1992 ended January 30, 1993, and 1991 ended January 25,
1992. Fiscal years 1991 and 1993 each comprised 52 weeks and fiscal year 1992
comprised 53 weeks.
COMMERCIAL PAPER PLACEMENT
Funding began placing commercial paper solely through dealers, rather than as a
direct issuer, on April 3, 1992.
SUMMARY OF ACCOUNTING POLICIES
SHORT TERM INVESTMENTS
Cash invested in instruments with maturities of three months or less from time
of investment is reflected as short term investments. No short term
investments existed on January 29, 1994, or January 30, 1994.
INCOME TAXES
Funding's taxable income is included in the consolidated federal income tax
return of JCPenney. Income taxes in Funding's statement of income are computed
as if Funding filed a separate federal income tax return.
LOANS TO JCPENNEY
Funding and JCPenney are parties to a Loan Agreement which provides for
unsecured loans, payable on demand, to be made from time to time by Funding to
JCPenney for the general business purposes of JCPenney, subject to the terms
and conditions of the Loan Agreement. Under the terms of the Agreement,
Funding and JCPenney agree upon a mutually-acceptable earnings coverage of
Funding's interest and other fixed charges. The earnings to fixed charges
ratio has historically been at least one and one-half times.
COMMITTED BANK CREDIT FACILITIES
In 1993, Funding and JCPenney entered into two syndicated revolving credit
facility agreements. Committed bank credit facilities available as of January
29, 1994, amounted to $1.25 billion. These facilities include a $450 million,
one-year revolver and an $800 million, five-year revolver with a group of 39
domestic and international banks. These facilities, which replaced the $500
million confirmed lines of credit and the $750 million international revolving
credit facility, support commercial paper borrowing arrangements. See page 8
for a complete list of committed bank credit facilities. In addition a number
of minority-owned banks participate in a $5 million credit line for which First
Texas Bank acts as agent. None of the borrowing facilities were in use as of
January 29, 1994.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of short term debt (commercial paper) at January 29, 1994, and
January 30, 1993, approximates the amount as reflected on the balance sheet due
to its short average maturity.
The fair value of loans to JCPenney at January 29, 1994, and January 30, 1993, also approximates the amount reflected on the balance sheet because the loan is payable on demand and the interest charged on the loan balance is adjusted to reflect current market interest rates.
FIVE YEAR FINANCIAL SUMMARY J. C. PENNEY FUNDING CORPORATION
(In millions)
AT YEAR END 1993 1992 1991 1990 1989
--------- -------- ------- ------- ------
CAPITALIZATION
Short term debt
Commercial paper . . . . . . . . . . . . $ 1,284 887 414 842 1,255
Master notes . . . . . . . . . . . . . . -- -- 57 62 33
-------- -------- ------- ------- ------
Total short term debt . . . . . . . 1,284 887 471 904 1,288
-------- -------- ------- ------- ------
Current maturities of long term debt -- -- -- 75 --
-------- -------- ------- ------- ------
Long term debt
7.875% to 9.25% due 1991 to 1998 -- -- 177 196 278
10.20% to 12.75% due 1991 to 1994 . . . . . -- -- -- -- 7
-------- -------- ------- ------- ------
Total long term debt . . . . . . . . -- -- 177 196 285
-------- -------- ------ ------ ------
Total debt . . . . . . . . . . . . . . . . . 1,284 887 648 1,175 1,573
-------- -------- ------- ------- ------
Equity of JCPenney . . . . . . . . . . . . . 996 980 963 940 895
-------- -------- ------- ------- ------
TOTAL CAPITALIZATION . . . . . . . . . . . . . . . $ 2,280 1,867 1,611 2,115 2,468
======== ======== ======= ======= ======
COMMITTED BANK CREDIT FACILITIES . . . . . . . . . $ 1,250 1,250 1,250 2,000 1,200
FOR THE YEAR
INCOME . . . . . . . . . . . . . . . . . . . . . . $ 71 77 101 200 227
EXPENSES . . . . . . . . . . . . . . . . . . . . . $ 47 51 67 132 149
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 16 17 23 45 52
FIXED CHARGES - TIMES EARNED . . . . . . . . . . . 1.52 1.52 1.52 1.52 1.52
PEAK SHORT TERM DEBT . . . . . . . . . . . . . . . $ 2,327 1,665 1,489 1,665 2, 241
AVERAGE DEBT
Short term . . . . . . . . . . . . . . . . . $ 1,347 1,146 754 1,277 1,266
Long term . . . . . . . . . . . . . . . . . . $ -- 39 232 281 365
Total . . . . . . . . . . . . . . . . . . . . $ 1,347 1,185 986 1,558 1,631
AVERAGE INTEREST RATES
Short term debt . . . . . . . . . . . . . . . 3.2 % 3.7% 5.6% 8.1% 8.9%
Long term debt . . . . . . . . . . . . . . . -- % 8.9% 8.7% 8.6% 8.8%
Total . . . . . . . . . . . . . . . . . . . . 3.2 % 3.9% 6.3% 8.2% 8.9%
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See Notes to Financial Statements on page 6 and Five Year Financial Summary on page 7.
QUARTERLY DATA J. C. PENNEY FUNDING CORPORATION
($ in millions) (Unaudited)
FIRST SECOND THIRD FOURTH
------------------ ----------------- ---------------- ----------------
1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Income . . . . . . . . $ 13 22 28 15 19 22 22 18 24 21 18 27
Expenses . . . . . . . $ 9 15 19 10 12 14 14 12 16 14 12 18
Income before taxes . . $ 4 7 9 5 7 8 8 6 8 7 6 9
Net income . . . . . . $ 3 5 6 3 4 5 5 4 6 5 4 6
Fixed charges -
times earned . . . . 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52 1.52
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