JCPenney contributes common stock to company pension plan

PLANO, Texas JCPenney announced that it made a voluntary contribution of JCPenney common stock to the JCPenney Corporation Pension Plan. The contribution made to the plan is valued at $340 million and consists of approximately 13.4 million newly issued shares of JCPenney common stock. The value of the contribution was based on a price of $25.3946 per share. With the contribution, the plan’s fully funded status under ERISA rules is further enhanced with a funding ratio in excess of 110%.

“The addition of company stock to the plan demonstrates management’s confidence in our business plan and our strong prospects for future growth,” stated Robert Cavanaugh, EVP and CFO. “The contribution, which is fully tax deductible, increases the company’s financial flexibility for 2009 and future years and is accretive to earnings and cash flow this year. It is also indicative of our commitment to effectively and efficiently deliver the highest quality benefits programs to our associates.”

An independent fiduciary, Evercore Trust Company, will manage the JCPenney common stock contributed to the plan. The stock contribution provides the plan with dividend income and the potential for future price appreciation during the time the stock is held by the plan. Evercore Trust Company will be solely responsible for deciding when to sell the shares owned by the plan. State Street Bank and Trust Company remains the plan trustee and custodian for all plan assets.