UPDATE: JC Penney Amends Stockholder Rights Plan to Protect Tax Benefits, Says Has Over $2B in NOLS

J. C. Penney Company, Inc.

(the "Company") today announced that its Board of Directors has acted to protect the Company's valuable net operating loss carryforwards ("NOLs") by amending and extending the Company's existing stockholder rights plan. The Company has over $2 billion in NOLs, which can be used in certain circumstances to offset future taxable income and reduce federal income tax liability.  The Company's ability to use its NOLs would be substantially limited if an "ownership change" under Section 382 of the Internal Revenue Code were to occur. Ownership changes under Section 382 generally relate to the cumulative change in ownership among stockholders with an ownership interest of 5% or more (as determined under Section 382's rules) over a rolling three year period.  The amended rights plan was adopted by the Board to reduce the likelihood of an "ownership change" occurring. The amendments to the Company's rights plan include extending the plan's expiration date from August 20, 2014 to January 26, 2017, and lowering the beneficial ownership threshold for a person or group to become an "acquiring person" under the plan from 10% to 4.9%. Under the amended rights plan, if any person or group acquires 4.9% or more of the outstanding shares of common stock of the Company without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the ownership interest of such person or group.  However, existing stockholders who currently own 4.9% or more of the outstanding shares of common stock will trigger a dilutive event only if they acquire additional shares, subject to specified exceptions. The purpose of the amended rights plan is to protect stockholder value by preserving the Company's ability to fully use its NOLs.  The amended rights plan is similar to plans adopted by other public companies with significant net operating losses. The amended rights plan, which takes effect immediately, will continue in effect until January 26, 2017, subject to earlier expiration in specific circumstances.  The Company expects to submit the amended rights plan to a vote at the next annual meeting of stockholders in May 2014.  If stockholders do not approve the amended rights plan, it will be terminated. The full text of the amended rights plan will be filed with the Securities and Exchange Commission. Concurrently with the amendment and extension of the rights plan, the Board of Directors has adopted certain amendments to the Company's certificate of incorporation which are also designed to preserve the Company's ability to use its NOLs.  The charter amendments would generally void transfers of shares that would result in the creation of a new 4.9% stockholder or an existing 4.9% stockholder acquiring additional shares.  The Company expects to submit the charter amendments to a stockholder vote at the 2014 annual meeting.  If stockholders do not approve the charter amendments, they will not become effective.