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JCPENNEY ANNOUNCES ONE-TIME CHARGE TO EARNINGS

 JCPENNEY ANNOUNCES ONE-TIME CHARGE TO EARNINGS
 DALLAS, Jan. 16 /PRNewswire/ -- J.C. Penney Company, Inc.'s fiscal


1991 results will reflect a one-time pretax charge of $695 million, or $438 million after taxes ($3.42 per share). This will produce a small loss for the fourth quarter and full year, which ends Jan. 25, 1992.
 Chairman of the board William R. Howell said the one-time charge to earnings "will have no significant effect on cash flow." He said that once the program is implemented completely later in 1992, the company will realize savings of approximately $160 million, before taxes, annually.
 The major component of the pretax charge, or $300 million, relates to the recognition of post retirement health care costs, while the balance represents actions that are designed to improve the company's future profitability. These include recognition of the decline in market value of the company's real estate portfolio; the write-off of investments in several experimental businesses; and costs associated with consolidating and streamlining various company activities.
 The adoption of Financial Accounting Standard 106, Employers Accounting for Post-Retirement Benefits Other Than Pensions, will result in a one-time charge to earnings retroactive to the first quarter of 1991. The company henceforth will account for retiree health care benefits on an accrual rather than a pay-as-you-go basis.
 "Significant declines in the real estate market nationwide and the unlikelihood that there will be a return to formerly high values have prompted us to reevaluate our entire real estate portfolio," Howell noted. The result of this effort, he said, will be a $200 million charge against fourth quarter earnings. This charge represents the company's total obligation with respect to any asset in the portfolio that was previously carried at an amount in excess of its net realizable value. The real estate portfolio is worth substantially more than the net book value reflected in the company's financial statements.
 Other charges in the fourth quarter relate to the discontinuance of the JCPenney Home Shopping Network and other experimental activities; the write-off of goodwill associated with various non-core business acquisitions; and the costs of restructuring the custom decorating operation.
 Howell said, "We want our company's net income to reflect, and our investors to profit from, the results of our core businesses -- department stores, catalog, and drug stores -- undiluted by the impact of experimental businesses and other drains on our earnings. We will begin fiscal 1992 with a clean slate."
 -0- 1/16/92
 /CONTACT: Harvey McCormick, or 214-591-1333, or Duncan Muir, 214-591-1329, both of JCPenney/
 (JCP) CO: J.C. Penney Company Inc. ST: Texas IN: REA SU:


CK -- NY035 -- 0418 01/16/92 10:32 EST
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Publication:PR Newswire
Date:Jan 16, 1992
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