JCP » Topics » Merchandise Inventories

These excerpts taken from the JCP 10-K filed Mar 31, 2009.

Merchandise Inventories

Inventories are valued primarily at the lower of cost (using the last-in, first-out or “LIFO” method) or market, determined by the retail method for department stores, regional warehouses and store distribution centers, and standard cost, representing average vendor cost, for Direct. The lower of cost or market is determined on an aggregate basis for similar types of merchandise. To estimate the effects of inflation/deflation on ending inventory, an internal index measuring price changes from the beginning to the end of the year is calculated using merchandise cost data at the item level.

Total LIFO (charges)/credits included in cost of goods sold were $(1) million, $7 million and $16 million in 2008, 2007 and 2006, respectively. If the first-in, first-out or “FIFO” method of inventory valuation had been used instead of the LIFO method, inventories would have been $2 million and $1 million higher at January 31, 2009 and February 2, 2008, respectively.

Merchandise Inventories

FACE="Times New Roman" SIZE="2">Inventories are valued primarily at the lower of cost (using the last-in, first-out or “LIFO” method) or market, determined by the retail method for department stores, regional warehouses and store
distribution centers, and standard cost, representing average vendor cost, for Direct. The lower of cost or market is determined on an aggregate basis for similar types of merchandise. To estimate the effects of inflation/deflation on ending
inventory, an internal index measuring price changes from the beginning to the end of the year is calculated using merchandise cost data at the item level.

SIZE="2">Total LIFO (charges)/credits included in cost of goods sold were $(1) million, $7 million and $16 million in 2008, 2007 and 2006, respectively. If the first-in, first-out or “FIFO” method of inventory valuation had been used
instead of the LIFO method, inventories would have been $2 million and $1 million higher at January 31, 2009 and February 2, 2008, respectively.

SIZE="3">Property and Equipment, Net

 






























































































































($ in millions)  Estimated
Useful Lives
FACE="Times New Roman" SIZE="2">(Years)
  2008  2007 
     

Land

  N/A  $308  $303 

Buildings

  50   4,090   3,670 

Furniture and equipment

  3-20   2,364   2,241 

Leasehold improvements

     1,044   964 

Accumulated depreciation

     (2,439)  (2,219)
           

Property and equipment, net

    $    5,367  $    4,959 
           

Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed primarily by
using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the improvements or the term of the lease, including renewals determined
to be reasonably assured.

Routine maintenance and repairs are expensed when incurred. Major replacements and improvements are capitalized. The cost of
assets sold or retired and the related accumulated depreciation or amortization are removed from the accounts with any resulting gain or loss included in net income.

FACE="Times New Roman" SIZE="2">We account for our conditional asset retirement obligations, which are primarily related to asbestos removal, based on the guidance in FIN 47, “Accounting for Conditional Asset Retirement Obligations – an
Interpretation of FASB Statement No. 143.” FIN 47 requires us to recognize a liability for the fair value of the conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated.

This excerpt taken from the JCP 10-K filed Apr 1, 2008.

Merchandise Inventories

Inventories are valued primarily at the lower of cost (using the last-in, first-out or “LIFO” method) or market, determined by the retail method for department stores and store distribution centers, and standard cost, representing average vendor cost, for Direct and regional warehouses. The lower of cost or market is determined on an aggregate basis for similar types of merchandise. To estimate the effects of inflation/deflation on ending inventory, an internal index measuring price changes from the beginning to the end of the year is calculated using merchandise cost data at the item level.

Total Company LIFO credits included in Cost of Goods Sold were $7 million, $16 million and $1 million in 2007, 2006 and 2005, respectively. If the first-in, first-out or “FIFO” method of inventory valuation had been used instead of the LIFO method, inventories would have been $1 million and $8 million higher at February 2, 2008 and February 3, 2007, respectively.

This excerpt taken from the JCP 10-K filed Apr 4, 2007.
Merchandise Inventories
Inventories are valued primarily at the lower of cost (using the last-in, first-out or “LIFO” method) or market, determined by the retail method for department stores and store distribution centers, and standard cost, representing average vendor cost, for Direct and regional warehouses. The lower of cost or market is determined on an aggregate basis for similar types of merchandise. To estimate the effects of inflation/deflation on ending inventory, an internal index measuring price changes from the beginning to the end of the year is calculated using merchandise cost data at the item level.
 
Total Company LIFO (credits) included in Cost of Goods Sold were $(16) million, $(1) million and $(18) million in 2006, 2005 and 2004, respectively. If the first-in, first-out or “FIFO” method of inventory valuation had been used instead of the LIFO method, inventories would have been $8 million and $24 million higher at February 3, 2007 and January 28, 2006, respectively.


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Table of Contents

 
This excerpt taken from the JCP 10-K filed Apr 6, 2006.

Merchandise Inventories

Inventories are valued primarily at the lower of cost (using the last-in, first-out or “LIFO” method) or market, determined by the retail method for department stores and store distribution centers, and standard cost, representing average vendor cost, for Direct and regional warehouses. The lower of cost or market is determined on an aggregate basis for similar types of merchandise. To estimate the effects of inflation/deflation on ending inventory, an internal index measuring price changes from the beginning to the end of the year is calculated using merchandise cost data at the item level.

Total Company LIFO (credits) included in Cost of Goods Sold were $(1) million, $(18) million and $(6) million in 2005, 2004 and 2003, respectively. If the first-in, first-out or “FIFO” method of inventory valuation had been used instead of the LIFO method, inventories would have been $24 million and $25 million higher at January 28, 2006 and January 29, 2005, respectively.

 

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Table of Contents
Index to Financial Statements
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