Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

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Stockholders' Equity
12 Months Ended
Jan. 28, 2012
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

13) Stockholders' Equity

 

Accumulated Other Comprehensive (Loss)/Income

 

 

 

 

 

 

 

 

 

 

2011

 

 

2010

 

 

Pre-Tax
Amount

 

Deferred
Tax
(Liability)/
Asset

 

Net of
Tax
Amount

 

 

Pre-Tax
Amount

 

Deferred
Tax
(Liability)/
Asset

 

Net of
Tax
Amount

 

($ in millions)

 

 

 

 

 

 

 

Net unrealized gains on real estate investments

$            256

$          (91)

$            165

 

$            174

$                (62 )

$            112

Net actuarial (loss)/gain  – pension and postretirement plans

        (2,285)

            888

        (1,397)

 

         (1,568 )

                 611

           (957)

Prior service credit/(cost) – pension and postretirement plans

                38

            (15)

                23

 

                66

                 (26)

                40

 

 

 

 

 

 

 

 

Accumulated other comprehensive (loss)

$      (1,991)

$         782

$      (1,209)

 

$      (1,328)

$               523

$          (805 )

 

 

 

 

 

 

 

 

Common Stock

On a combined basis, our 401(k) savings plan, including our employee stock ownership plan (ESOP), held approximately 14 million shares, or approximately 6.6% of outstanding Company common stock, at January 28, 2012.

Preferred Stock

We have authorized 25 million shares of preferred stock; no shares of preferred stock were issued and outstanding as of January 28, 2012 or January 29, 2011.

 

Stock Warrant

On June 13, 2011, prior to his employment, we entered into a warrant purchase agreement with Ronald B. Johnson pursuant to which Mr. Johnson made a personal investment in the Company by purchasing a warrant to acquire approximately 7.3 million shares of J. C. Penney Company, Inc. common stock for a purchase price of approximately $50 million at a mutually determined fair value of $6.89 per share.The warrant has an exercise price of $29.92 per share, subject to customary adjustments resulting from a stock split, reverse stock split, or other extraordinary distribution with respect to J. C. Penney Company, Inc. common stock. The warrant has a term of seven and one-half years and is exercisable after the sixth anniversary, or June 13, 2017, provided that the warrant is immediately exercisable upon a change in control of J. C. Penney Company, Inc. or, if applicable, upon the termination of Mr. Johnson's employment with us. The warrant is also subject to transfer restrictions. The proceeds from the sale of the warrant have been recorded as additional paid-in capital and the dilutive effect of the warrant has been included in the EPS calculation from the date of issuance. The fair value of the warrant was determined on the date of the warrant purchase agreement using a Monte Carlo simulation methodology with the following assumptions:

 

Expected term

7.5 years

Expected volatility

37.0%

Risk-free interest rate

2.47%

Expected dividend yield

2.67%

 

 

Common Stock Repurchase Program

In February 2011, our Board of Directors authorized a program to repurchase up to $900 million of Company common stock using existing cash and cash equivalents. In the first quarter of 2011, through open market transactions, we repurchased approximately 21 million shares for $787 million. In the second quarter, we purchased an additional three million shares for $113 million and completed the program on May 6, 2011. As a result of this repurchase program, approximately 24 million total shares were purchased for a total of $900 million at an average share price of $36.98, including commission. Repurchased shares were retired on the date of purchase, and the excess of the purchase price over par value was allocated between reinvested earnings and additional paid-in capital.

 

Stockholders Agreements