<PAGE>
 
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                   FORM 10-K
                                        
               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                                        
     For the 52 weeks ended January 30, 1999 Commission file number 1-777

                          J. C. PENNEY COMPANY, INC.
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                 DELAWARE                             13-5583779
          -------------------------            ------------------------
           (State of incorporation)            (I.R.S. Employer ID No.)

          6501 LEGACY DRIVE, PLANO, TEXAS                    75024-3698
          -------------------------------                    ----------
     (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:    (972) 431-1000
--------------------------------------------------     --------------

Securities registered pursuant to Section 12(b) of the Act:
---------------------------------------------------------- 

                                           Name of each exchange on
           Title of each class                  which registered
    -------------------------------         -----------------------

Common Stock of 50c par value               New York Stock Exchange
Preferred Stock Purchase Rights             New York Stock Exchange


       Securities registered pursuant to Section 12(g) of the Act:  None
       ----------------------------------------------------------       

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X  No ___.
                                               ---        

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
<PAGE>
 
     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant: $10,486,998,096 as of March 22, 1999.

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 252,834,719 shares
of Common Stock of 50c par value, as of March 22, 1999.

                      DOCUMENTS INCORPORATED BY REFERENCE
                      -----------------------------------

     Documents from which portions           Parts of the Form 10-K
     are incorporated by reference           into which incorporated
     -----------------------------           -----------------------

1.   J. C. Penney Company, Inc.              Part I, Part II, and
     1998 Annual Report to Stockholders      Part IV
 
2.   J. C. Penney Company, Inc.              Part III
     1999 Proxy Statement

3.   J. C. Penney Funding Corporation        Part I and Part IV
     Form 10-K for fiscal year 1998

                                      -2-
<PAGE>
 
                                    PART I
                                    ------

1.   BUSINESS.
     -------- 

     J. C. Penney Company, Inc. ("Company") was founded by James Cash Penney in
1902.  Incorporated in Delaware in 1924, the Company has grown to be a major
retailer, operating approximately 1,150 JCPenney department stores in all 50
states, Puerto Rico, Mexico and Chile.  In addition, in January 1999, the
Company completed the acquisition of the majority interest in a Brazilian
department store chain that operates 21 stores under the Renner name.  The major
portion of the Company's business consists of providing merchandise and services
to consumers through department stores that include catalog departments.  The
Company markets predominantly family apparel, jewelry, shoes, accessories, and
home furnishings.  In addition, the Company, through its wholly-owned
subsidiary, Eckerd Corporation ("Eckerd"), operates a chain of approximately
2,900 drugstores located throughout the northeast, southeast, and Sunbelt
regions of the United States, including the Company's March 1999 acquisition of
the New York-based Genovese drugstore chain.  The Company also has several
direct marketing subsidiaries, the principal of which is J. C. Penney Life
Insurance Company, which market life, health, accident and credit insurance as
well as a growing portfolio of membership services to both domestic and
international customers.

     The business of marketing merchandise and services is highly competitive.
Although the Company is one of the largest department store and drugstore
retailers in the United States, it has numerous competitors.  Many factors enter
into the competition for the consumer's patronage, including price, quality,
style, service, product mix, convenience, and credit availability.  The
Company's annual earnings depend to a significant extent on the results of
operations for the last quarter of its fiscal year. Sales for that period
average approximately 31 per cent of annual sales.

     In the normal course of its business, the Company accepts merchandise
returns from customers. This policy, which has been in place for many years, is
designed to enhance the customer's shopping experience and build customer
loyalty. From time to time, the Company has analyzed the effects of its sales
returns policy on its operations. Historically, sales return rates have been
consistent from year to year for the Company's retail stores and catalog
operations and have not had a material impact on its results of operations or
financial condition. Based on its analysis, the Company does not believe that
merchandise returns present material operational or financial risks.
Accordingly, the Company has not established a reserve for sales returns and
does not believe that any such reserve is required.

     On April 15, 1999, Moody's Investors Service and Fitch IBCA lowered their
respective ratings of the Company's long-term debt from A2 to A3 and from A to
A-, and commercial paper from P1 to P2 

                                      -3-
<PAGE>
 
and from F1 to F2.

     Information about certain aspects of the business of the Company included
under the captions of "Investments and Fair Value of Financial Instruments"
(pages 28 and 29) and "Segment Reporting" (page 39), which appear in the section
of the Company's 1998 Annual Report to Stockholders entitled "Notes to the
Consolidated Financial Statements", "Five Year Financial Summary" (page 40),
"Five Year Operations Summary" (page 41), and "Supplemental Data (unaudited)"
(pages 42 through 44), which appear in the Company's 1998 Annual Report to
Stockholders on the pages indicated in the parenthetical references, is
incorporated herein by reference and filed hereto as Exhibit 13 in response to
Item 1 of Form 10-K.

     In addition, information about J. C. Penney Funding Corporation, a wholly
owned consolidated subsidiary of the Company, which appears in Item 1 of its
separate Annual Report on Form 10-K for the fiscal year ended January 30, 1999,
is incorporated herein by reference and filed hereto as Exhibit 99(a) in
response to Item 1 of Form 10-K.

     SUPPLIERS.  The Company purchases its merchandise from approximately 4,150
     ---------                                                                 
domestic and foreign suppliers, many of whom have done business with the Company
for many years.  In addition, Eckerd purchases merchandise and pharmaceuticals
from approximately 3,100 suppliers, substantially all of which are domestic.
The majority of Eckerd's suppliers have done business with Eckerd for many
years.  In addition to its Plano, Texas home office, the Company, through its
international purchasing subsidiary, maintained buying offices in twelve foreign
countries and quality assurance inspection offices in an additional six foreign
countries as of January 30, 1999.

     EMPLOYMENT.  The Company and its consolidated subsidiaries employed
     ----------                                                         
approximately 262,000 persons as of January 30, 1999.

     ENVIRONMENT.  Environmental protection requirements did not have a material
     -----------                                                                
effect upon the Company's operations during fiscal 1998.  While management
believes it unlikely, it is possible that compliance with such requirements will
lengthen lead time in expansion plans and increase construction, and therefore
operating costs due in part to the expense and time required to conduct
environmental and ecological studies.

2.   PROPERTIES.
     ---------- 

     At January 30, 1999, the Company operated 3,925 retail stores, comprised of
1,148 JCPenney department stores, 21 Renner department stores and 2,756
drugstores, in all 50 states, Puerto Rico, Brazil, Mexico, and Chile, of which
288 JCPenney department stores and 16 drugstores were owned.  In addition, the
Company owns six store locations that are leased to other tenants and not
operated as units of the Company.  The Company also operated six catalog
fulfillment centers, of which four were owned, and owned one store 

                                      -4-
<PAGE>
 
distribution center, three drugstore distribution centers, J. C. Penney Direct
Marketing Services, Inc. and Eckerd corporate offices, and the Company's home
office facility and approximately 240 acres of property in Plano, Texas,
adjacent to the facility. Information relating to certain of the Company's
facilities included under the caption "Five Year Operations Summary", which
appears on page 41 of the Company's 1998 Annual Report to Stockholders, is
incorporated herein by reference and filed hereto as Exhibit 13 in response to
Item 2 of Form 10-K.

3.   LEGAL PROCEEDINGS.
     ----------------- 

     The Company has no material legal proceedings pending against it.

4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
     --------------------------------------------------- 

     No matter was submitted to a vote of stockholders during the fourth quarter
of fiscal 1998.

                                      -5-
<PAGE>
 
          EXECUTIVE OFFICERS OF THE REGISTRANT.
          ------------------------------------ 

The following is a list, as of March 22, 1999, of the names and ages of the
executive officers of the Company and of the offices and other positions held by
each such person with the Company.  The terms of all executive officers will
expire on May 21, 1999.  There is no family relationship between any of the
named persons.

<TABLE>
<CAPTION>
                              OFFICES AND OTHER POSITIONS         
         NAME                    HELD WITH THE COMPANY                    AGE 
     ------------             ---------------------------                 --- 
<S>                      <C>                                              <C>  
James E. Oesterreicher...Chairman of the Board and
                             Chief Executive Officer; Director             57
Marilee J. Cumming.......President of Merchandising for JCPenney             
                             Stores and Catalog                            51
Gary L. Davis............Executive Vice President, Chief                     
                             Human Resources and Administration              
                             Officer                                       56
Gale Duff-Bloom..........President of Marketing and Company                  
                             Communications                                59
David V. Evans...........Senior Vice President, Chief                        
                             Information Officer                           53
John E. Fesperman........President and Chief Operating Officer,              
                             JCPenney Direct Marketing                       
                             Services, Credit, and Facilities                
                             Services                                      53
Thomas D. Hutchens.......President and Chief Operating                       
                             Officer, International                        58
Charles R. Lotter........Executive Vice President, Secretary                 
                             and General Counsel                           61
Donald A. McKay..........Executive Vice President and                        
                             Chief Financial Officer                       53
Francis A. Newman........Chairman of the Board,                              
                             President and Chief Executive                   
                             Officer of Eckerd Corporation                 50
Michael W. Taxter........Senior Vice President, Director                     
                             of JCPenney Stores                            47 
</TABLE> 
 
_____________

  Mr. Oesterreicher was elected Chairman of the Board effective January 1997 and
has served as Chief Executive Officer since 1995. He served as Vice Chairman of
the Board from 1995 to 1997. From 1992 to 1995, he served as President of
JCPenney Stores and Catalog.

  Ms. Cumming was elected President of Merchandising for JCPenney Stores and
Catalog, effective March 1, 1999.  Prior to that, she served as President of the
Women's Apparel Division from 1996 to 1999, and from 1993 to 1996, President of
the Home and Leisure Division.

                                      -6-
<PAGE>
 
  Mr. Davis, who was elected Executive Vice President, Chief Human Resources and
Administration Officer, effective April 1, 1998, served as Senior Vice
President, Director of Human Resources and Administration from 1997 to 1998.
From 1996 to 1997, he served as Senior Vice President and Director of Personnel
and Administration.  He was elected President of the Northwestern Region in 1992
and served in that capacity until 1996.

  Ms. Duff-Bloom was elected President of Marketing and Company Communications
in February 1996.  She was elected Senior Executive Vice President and served as
Director of Personnel and Company Communications from January 1995 to February
1996.  She was elected an Executive Vice President in 1993 and served as
Director of Administration from 1993 to 1995.

  Mr. Evans was elected Senior Vice President, Chief Information Officer,
effective November 1, 1997. Prior to that, he served as Senior Vice President,
Director of Information Systems and from 1995 to 1997 he served as Senior Vice
President, Director of Planning and Information Systems.  He was elected a Vice
President in 1987 and served as Director of Information Systems from 1987 to
1995.

  Mr. Fesperman was elected President and Chief Operating Officer, JCPenney
Direct Marketing Services, Credit, and Facilities Services, effective December
1, 1997.  Prior to that, he served as Senior Vice President, Director of
Planning, Facilities, and International Development and from 1996 to 1997 he
served as Senior Vice President and Director of Support Services and Subsidiary
Operations.  He was elected a Vice President in 1993 and served as Director of
Insurance from 1991 to 1996.

  Mr. Lotter was elected an Executive Vice President in 1993.  He was elected
Senior Vice President, General Counsel and Secretary in 1987.  He has also
served as a director of Eckerd Corporation since December 1996.

  Mr. McKay was elected an Executive Vice President in 1997.  He was elected
Senior Vice President and Chief Financial Officer in 1996.  From 1994 to 1996,
he served as Vice President and Controller.  He was elected Vice President and
Treasurer in 1985 and served in that capacity until 1994.  He has also served as
a director of Eckerd Corporation since December 1996.

  Mr. Newman was elected Chairman of the Board of Eckerd Corporation in May
1997.  He has served as Chief Executive Officer of Eckerd Corporation since
February 1996.  He is also President and a director of Eckerd Corporation,
positions he has held since July 1993.  Prior to joining Eckerd, Mr. Newman
served as President, Chief Executive Officer and a director of F&M Distributors,
Inc. ("F&M"), a drugstore chain, since 1986.  F&M filed bankruptcy under Chapter
11 of the United States Bankruptcy Code in December 1994.  Prior to joining F&M,
he was the Executive Vice President of Household Merchandising, Inc., a retail
firm, from 1984 to 1986 and the Senior Vice President of Merchandising for F. W.
Woolworth, a 

                                      -7-
<PAGE>
 
retail firm, from 1980 to 1984.
 
  Mr. Taxter was elected Senior Vice President, Director of JCPenney Stores,
effective March 1, 1999.  In 1998, he was elected Senior Vice President and
served as Director of Strategic Development.  In 1995, he was elected Regional
President and served as President of the South and Southeastern Region from 1996
to 1998.  Prior to that, he served as Director of Coordination between 1993 and
1996.



                                    PART II
                                    -------

5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
     ---------------------------------------------------------------------

  The Company's Common Stock is traded principally on the New York Stock
Exchange, as well as on other exchanges in the United States. In addition, the
Company has authorized 25 million shares of Preferred Stock, of which 792
thousand shares of Series B ESOP Convertible Preferred Stock were issued and
outstanding at January 30, 1999.  Additional information relating to the Common
Stock and Preferred Stock of the Company included under the captions
"Consolidated Statements of Stockholders' Equity" (page 23), "Capital Stock"
(page 30), and "Quarterly Data (Unaudited)" (page 40), which appear in the
Company's 1998 Annual Report to Stockholders on the pages indicated in the
parenthetical references, is incorporated herein by reference and filed hereto
as Exhibit 13 in response to Item 5 of Form 10-K.

6.   SELECTED FINANCIAL DATA.
     ----------------------- 

  Information for the fiscal years 1994-1998 included in the "Five Year
Financial Summary" on page 40 of the Company's 1998 Annual Report to
Stockholders is incorporated herein by reference and filed hereto as Exhibit 13
in response to Item 6 of Form 10-K.

7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
     --------------------------------------------------------------------------
      OPERATIONS.
      ----------

  The discussion and analysis included under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations", which
appears in the Company's 1998 Annual Report to Stockholders on pages 12 through
20 thereof, is incorporated herein by reference and filed hereto as Exhibit 13
in response to Item 7 of Form 10-K.

                                      -8-
<PAGE>
 
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
     ---------------------------------------------------------- 

  The Company holds an interest rate swap with a notional principal amount of
$375 million entered into in connection with the issuance of asset-backed
certificates in 1990.  This swap presents no material risk to the Company's
results of operations.

8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
     ------------------------------------------- 

  The Consolidated Balance Sheets of the Company and subsidiaries as of January
30, 1999 and January 31, 1998, and the related Consolidated Statements of
Income, Stockholders' Equity and Cash Flows for each of the years in the three-
year period ended January 30, 1999, appearing on pages 22 through 25 of the
Company's 1998 Annual Report to Stockholders, together with the Independent
Auditors' Report of KPMG LLP, independent certified public accountants,
appearing on page 21 of the Company's 1998 Annual Report to Stockholders, the
Notes to the Consolidated Financial Statements on pages 26 through 39, and the
quarterly financial highlights ("Quarterly Data (unaudited)")appearing on page
40 thereof, are incorporated herein by reference and filed hereto as Exhibit 13
in response to Item 8 of Form 10-K.

9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
     -------------------------------------------------------------------------
      DISCLOSURE.
      ----------

  None.


                                   PART III*
                                   -------- 

10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.*
     --------------------------------------------------  

 
11.  EXECUTIVE COMPENSATION.*
     ----------------------  
 
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
     ----------------------------------------
     OWNERS AND MANAGEMENT.*
     ---------------------  

13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.*
     ----------------------------------------------  

____________

  * Pursuant to General Instruction G to Form 10-K, the information called for
by Items 10, with respect to directors of the Company (to the extent not set
forth in Part I hereof), 11, 12, and 13 is incorporated by reference to the
Company's 1999 Proxy Statement, which involves the election of directors, the
final copy of which the Company filed with the Securities and Exchange
Commission, pursuant to Regulation 14A, on April 13, 1999.

                                      -9-
<PAGE>
 
                                    PART IV
                                    -------


14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
     ---------------------------------------------------------------- 

  (a)(1) All Financial Statements.  See Item 8 of this Annual Report on Form
10-K for financial statements incorporated by reference to the Company's 1998
Annual Report to Stockholders.

  (a)(2) Financial Statement Schedules.  Schedule II (Valuation and Qualifying
Accounts and Reserves) is attached on Page F-1.  See Independent Auditors'
Report of KPMG LLP, independent certified public accountants, appearing on page
13 of this Annual Report on Form 10-K.

  All other schedules have been omitted as they are inapplicable or not required
under the rules, or the information has been submitted in the consolidated
financial statements and related financial information included in the Company's
1998 Annual Report to Stockholders incorporated herein by reference and filed
hereto as Exhibit 13.

  Separate financial statements are filed for J. C. Penney Funding Corporation,
a wholly owned consolidated subsidiary, in its separate Annual Report on Form
10-K for the 52 weeks ended January 30, 1999, which financial statements,
together with the Independent Auditors' Report of KPMG LLP thereon, are
incorporated herein by reference and filed hereto as Exhibit 99(b).

  (a)(3) Exhibits.  See separate Exhibit Index on pages G-1  through G-10.

  (b)    Current Reports on Form 8-K.  During the last quarter of the period
covered by this Annual Report on Form 10-K, the Company filed its Current Report
on Form 8-K (Item 5 - Other Events) dated November 23, 1998.

  (c)    Each management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form is filed as part of the separate Exhibit
Index on pages G-1 through G-10 and specifically identified as such beginning on
page G-5.

                                      -10-
<PAGE>
 
                                  SIGNATURES
                                  ----------


  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                            J. C. PENNEY COMPANY, INC.
                            --------------------------
                                  (Registrant)



                            By: /s/ C. R. LOTTER
                               -----------------------
                                C. R. Lotter
                                Executive Vice President,
                                Secretary and General Counsel



Dated:  April 28, 1999

                                      -11-
<PAGE>
 
  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE> 
<CAPTION> 
  SIGNATURES                       TITLE                  DATE
  ----------                       -----                  ----
<S>                     <C>                             <C>  
J. E. Oesterreicher*    Chairman of the Board and       April 28, 1999
----------------------
J. E. Oesterreicher     Chief Executive Officer
                        (principal executive officer);
                        Director 

D. A. McKay*            Executive Vice President and    April 28, 1999
----------------------
D. A. McKay             Chief Financial Officer
                        (principal financial officer)
 
W. J. Alcorn*           Vice President and Controller   April 28, 1999
----------------------
W. J. Alcorn            (principal accounting officer)
 
M. A. Burns*            Director                        April 28, 1999
----------------------
M. A. Burns
 
T. J. Engibous*         Director                        April 28, 1999
----------------------
T. J. Engibous
 
K. B. Foster*           Director                        April 28, 1999
----------------------
K. B. Foster
 
V. E. Jordan, Jr.*      Director                        April 28, 1999
----------------------
V. E. Jordan, Jr.
 
George Nigh*            Director                        April 28, 1999
----------------------
George Nigh
 
J. C. Pfeiffer*         Director                        April 28, 1999
----------------------
J. C. Pfeiffer
 
A. W. Richards*         Director                        April 28, 1999
----------------------
A. W. Richards
 
F. Sanchez-Loaeza*      Director                        April 28, 1999
----------------------
F. Sanchez-Loaeza
 
C. S. Sanford, Jr.*     Director                        April 28, 1999
----------------------
C. S. Sanford, Jr.
 
R. G. Turner*           Director                        April 28, 1999
----------------------
R. G. Turner
</TABLE>

*By: /s/ C. R. LOTTER
    ------------------
    C. R. Lotter
    Attorney-in-fact

                                      -12-
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
                         ----------------------------



The Board of Directors of
J. C. Penney Company, Inc.:


Under date of February 25, 1999, we reported on the consolidated balance sheets
of J. C. Penney Company, Inc. and subsidiaries as of January 30, 1999 and
January 31, 1998, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended January 30, 1999, as contained in the 1998 Annual Report to
Stockholders.  These consolidated financial statements and our report thereon
are incorporated by reference in the Company's Annual Report on Form 10-K for
the 1998 fiscal year.  In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedule listed in Item 14(a)(2) of the Annual Report on
Form 10-K.  This financial statement schedule is the responsibility of the
Company's management.  Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.


/s/ KPMG LLP

Dallas, Texas
February 25, 1999

                                      -13-
<PAGE>
 
                                                                     SCHEDULE II
                          J. C. PENNEY COMPANY, INC.
                               AND SUBSIDIARIES

         SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                             (Amounts in millions)




--------------------------------------------------------------------------------
                                         52 Weeks       53 Weeks      52 Weeks
                                          Ended          Ended          Ended
                                       January 30,    January 31,    January 25,
Description                                1999           1998          1997
--------------------------------------------------------------------------------
                                                                     
Reserves deducted from assets                                        
-----------------------------                                        
                                                                     
Allowance for doubtful accounts (1)                                  
   Balance at beginning of period       $ 105           $ 77           $ 63
   Additions charged to costs and                                    
       expenses                           241            249            196
   Deductions of write-offs, less                                    
       recoveries                        (228)          (221)          (182)
                                       ------         ------          ------
                                                                     
   Balance at end of period             $ 118          $ 105           $ 77
                                       ======         ======          ======


          (1) Excludes amounts related to the Company's retained interest in JCP
Master Credit Card Trust.


Allowance for loan losses -
   JCPenney National Bank
   Balance at beginning of period       $ -            $ 51            $ 47
   Additions charged to costs and                                      
       expenses                           -               8              83
   Deductions of write-offs, less                                      
       recoveries                         -             (11)            (79)
   Reduction in reserves related                                       
       to the sale of the bank                                         
       receivables portfolio              -             (48)              -
                                       ------         ------          ------
                                                                       
   Balance at end of period             $ -            $ -             $ 51
                                       ======         ======          ======

                                      F-1
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------
 
               Exhibit
               -------


3.   (i)    ARTICLES OF INCORPORATION Restated Certificate of Incorporation of
            -------------------------                                      
          the Company, as amended.


     (ii)   BYLAWS  Bylaws of Company, as amended to January 11, 1995
            ------                                                   
          (incorporated by reference to Exhibit 3(ii)(a) to Company's Annual
          Report on Form 10-K for the 52 week period ended January 28, 1995*).

4.  INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
    -------------------------------------------------------------------------

     (a) Indenture, dated as of October 1, 1982, between the Company and U.S.
         Bank Trust National Association (formerly First Trust of California,
         National Association) (as Successor Trustee to Bank of America National
         Trust and Savings Association) (incorporated by reference to Exhibit
         4(a) to Company's Annual Report on Form 10-K for the 52 week period
         ended January 29, 1994*).

     (b) First Supplemental Indenture, dated as of March 15, 1983, between the
         Company and U.S. Bank Trust National Association (formerly First Trust
         of California, National Association) (as Successor Trustee to Bank of
         America National Trust and Savings Association)(incorporated by
         reference to Exhibit 4(b) to Company's Annual Report on Form 10-K for
         the 52 week period ended January 29, 1994*).

     (c) Second Supplemental Indenture, dated as of May 1, 1984, between the
         Company and U.S. Bank Trust National Association (formerly First Trust
         of California, National Association)(as Successor Trustee to Bank of
         America National Trust and Savings Association)(incorporated by
         reference to Exhibit 4(c) to Company's Annual Report on Form 10-K for
         the 52 week period ended January 29, 1994*).

     (d) Third Supplemental Indenture, dated as of March 7, 1986, between the
         Company and U.S. Bank Trust National Association (formerly First Trust
         of 

                                      G-1
<PAGE>
 
         California, National Association) (as Successor Trustee to Bank of
         America National Trust and Savings Association)(incorporated by
         reference to Exhibit 4(d) to Company's Registration Statement on Form
         S-3, SEC File No. 33-3882).

     (e) Fourth Supplemental Indenture, dated as of June 7, 1991, between the
         Company and U.S. Bank Trust National Association (formerly First Trust
         of California, National Association) (as Successor Trustee to Bank of
         America National Trust and Savings Association)(incorporated by
         reference to Exhibit 4(e) to Registrant's Registration Statement on
         Form S-3, SEC File No. 33-41186).

     (f) Indenture, dated as of April 1, 1994, between the Company and U.S.
         Bank Trust National Association (formerly First Trust of California,
         National Association) (as Successor Trustee to Bank of America National
         Trust and Savings Association) (incorporated by reference to Exhibit
         4(a) to Company's Registration Statement on Form S-3, SEC File No. 33-
         53275).

     (g) Rights Agreement, dated as of March 26, 1999, by and between the
         Company and ChaseMellon Shareholder Services L.L.C. as Rights Agent
         (incorporated by reference to Exhibit 4 to Company's Current Report on
         Form 8-K, Date of Report - March 10, 1999*).

     (h) Amended and Restated 364-Day Revolving Credit Agreement dated as of
         December 3, 1996, among J. C. Penney Company, Inc., J. C. Penney
         Funding Corporation, the Lenders party thereto, Morgan Guaranty Trust
         Company of New York, as Agent for the Lenders, and Bank of America
         Illinois, Bankers Trust Company, The Chase Manhattan Bank, Citibank,
         N.A., Credit Suisse First Boston, and NationsBank of Texas, N.A., as 
         Co-Agents for the Lenders (incorporated by reference to Exhibit 4(d) to
         J. C. Penney Funding Corporation's Annual Report on Form 10-K for the
         52 weeks ended January 25, 1997, SEC File No. 1-4947-1).

     (i) Amended and Restated Five-Year Revolving Credit Agreement dated as of
         December 3, 1996, among J. C. Penney Company, Inc., J. C. Penney
         Funding Corporation, the Lenders party thereto, Morgan Guaranty Trust
         Company of New York, as Agent for the Lenders, and Bank of America
         Illinois, Bankers Trust Company, The Chase Manhattan Bank, Citibank,
         N.A., Credit Suisse

                                      G-2
<PAGE>
 
         First Boston, and NationsBank of Texas, N.A., as Co-Agents for the
         Lenders (incorporated by reference to Exhibit 4(e) to J. C. Penney
         Funding Corporation's Annual Report on Form 10-K for the 52 weeks ended
         January 25, 1997, SEC File No. 1-4947-1).

     (j) Amendment and Restatement Agreement to 364-Day Revolving Credit
         Agreement, dated as of November 20, 1998, among J. C. Penney Company,
         Inc., J. C. Penney Funding Corporation, the Lenders parties thereto,
         Morgan Guaranty Trust Company of New York, as Agent, Citibank, N. A.,
         Nationsbanc Montgomery Securities LLC and The Chase Manhattan Bank, as
         Co-Syndication Agents, and Credit Suisse First Boston and First Union
         National Bank, as Managing Agents (incorporated by reference to Exhibit
         4(f) to J. C. Penney Funding Corporation's Annual Report on Form 10-K
         for the 52 weeks ended January 30, 1999, SEC File No. 1-4947-1).

     (k) Amendment and Restatement Agreement to Five-Year Revolving Credit
         Agreement, dated as of November 21, 1997, among J. C. Penney Company,
         Inc., J. C. Penney Funding Corporation, the Lenders party thereto,
         Morgan Guaranty Trust Company of New York, as Agent, and Bank of
         America National Trust and Savings Association, Bankers Trust Company,
         The Chase Manhattan Bank, Citibank, N.A., Credit Suisse First Boston
         and NationsBank of Texas, N.A., as Managing Agents (incorporated by
         reference to Exhibit 4(g) to J. C. Penney Funding Corporation's Annual
         Report on Form 10-K for the 53 weeks ended January 31, 1998, SEC File
         No. 1-4947-1).

     (l) Guaranty dated as of February 17, 1997, executed by J. C. Penney
         Company, Inc. (incorporated by reference to Exhibit 4(c) to J. C.
         Penney Funding Corporation's Annual Report on Form 10-K for the 52
         weeks ended January 25, 1997, SEC File No. 1-4947-1).

     (m) Guaranty dated as of December 3, 1996, executed by J. C. Penney
         Company Inc. with respect to the Amended and Restated 364-Day and Five-
         Year Revolving Credit Agreements, each dated as of December 3, 1996
         (incorporated by reference to Exhibit 4(m) to J. C. Penney Funding
         Corporation's Annual Report on Form 10-K for the 52 weeks ended January
         25, 1997, SEC File 

                                      G-3
<PAGE>
 
         No. 1-4947-1).

Other instruments evidencing long-term debt have not been filed as exhibits
hereto because none of the debt authorized under any such instrument exceeds 10
percent of the total assets of the Registrant and its consolidated subsidiaries.
The Registrant agrees to furnish a copy of any of its long-term debt instruments
to the Securities and Exchange Commission upon request.

10.  MATERIAL CONTRACTS
     ------------------

  (i) OTHER THAN COMPENSATORY PLANS OR ARRANGEMENTS
      --------------------------------------------- 

      (a) Amended and Restated Receivables Agreement dated as of January 29,
          1980 between Company and J. C. Penney Funding Corporation
          (incorporated by reference to Exhibit 10(i)(a) to Company's Annual
          Report on Form 10-K for the 52 week period ended January 29, 1994*).

      (b) Amendment No. 1 to Amended and Restated Receivables Agreement dated as
          of January 25, 1983 between Company and J. C. Penney Funding
          Corporation (incorporated by reference to Exhibit 10(i)(b) to
          Company's Annual Report on Form 10-K for the 52 week period ended
          January 29, 1994*).

      (c) Loan Agreement dated as of January 28, 1986 between Company and J. C.
          Penney Funding Corporation (incorporated by reference to Exhibit 4 to
          Company's Current Report on Form 8-K, Date of Report - January 28,
          1986*).

      (d) Amendment No. 1 to Loan Agreement dated as of January 28, 1986 between
          Company and J. C. Penney Funding Corporation (incorporated by
          reference to Exhibit 1 to Company's Current Report on Form 8-K, Date
          of Report - December 31, 1986*).

      (e) Amendment No. 2 to Loan Agreement dated as of January 28, 1986 between
          Company and J. C. Penney Funding Corporation (incorporated by
          reference to Exhibit 10(i)(e) to Company's Annual Report on Form 10-K
          for the 52 weeks ended January 25, 1997*).


      (f) Personal Services Agreement dated as of February 12, 1997 between
          Company and W. R. Howell

                                      G-4
<PAGE>
 
          (incorporated by reference to Exhibit 10(i)(f) to Company's Annual
          Report on Form 10-K for the 52 weeks ended January 25, 1997*).


(ii) COMPENSATORY PLANS OR ARRANGEMENTS REQUIRED TO BE FILED AS EXHIBITS TO THIS
     ---------------------------------------------------------------------------
     REPORT PURSUANT TO ITEM 14 (C) OF THIS REPORT.
     ---------------------------------------------

      (a) J. C. Penney Company, Inc. 1989 Management Incentive Compensation
          Program as amended through March 27, 1990 (incorporated by reference
          to Exhibit 10(e) to Company's Annual Report on Form 10-K for the 52
          week period ended January 27, 1990*).

      (b) September 1995 Amendment to J. C. Penney Company, Inc. 1989 Management
          Incentive Compensation Program, as amended (incorporated by reference
          to Exhibit 10(ii)(b)to Company's Annual Report on Form 10-K for the 52
          weeks ended January 25, 1997*).

      (c) Supplemental Retirement Program for Management Profit-Sharing
          Associates of J. C. Penney Company, Inc., as amended through April 1,
          1996 (incorporated by reference to Exhibit 10(ii)(c) to Company's
          Annual Report on Form 10-K for the 52 weeks ended January 25, 1997*).

      (d) July 1997 Amendment to Supplemental Retirement Program for Management
          Profit-Sharing Associates of J. C. Penney Company, Inc. (incorporated
          by reference to Exhibit 10(b) to Company's Quarterly Report on Form
          10-Q for the 13 and 39 week periods ended October 25, 1997*).

      (e) December 1997 Amendment to Supplemental Retirement Program for
          Management Profit-Sharing Associates of J. C. Penney Company, Inc.
          (incorporated by reference to Exhibit 10 (ii)(e) to Company's Annual
          Report on Form 10-K for the 53 weeks ended January 31, 1998*)

      (f) March 1998 Amendment to Supplemental Retirement Program for
          Management Profit-Sharing Associates of J. C. Penney Company, Inc.

                                      G-5
<PAGE>
 
      (g) January 1999 Amendment to Supplemental Retirement Program for
          Management Profit-Sharing Associates of J. C. Penney Company, Inc.

      (h) J. C. Penney Company, Inc. Retirement Plan for Non-Associate
          Directors (incorporated by reference to Exhibit 10(b) to Company's
          Quarterly Report on Form 10-Q for the 13 week period ended April 26,
          1997*).

      (i) J. C. Penney Company, Inc. Directors' Equity Program Tandem Restricted
          Stock Award/Stock Option Plan (incorporated by reference to Exhibit
          10(k) to Company's Annual Report on Form 10-K for the 52 week period
          ended January 28, 1989*).

      (j) J. C. Penney Company, Inc. 1989 Equity Compensation Plan (incorporated
          by reference to Exhibit A to Company's definitive Proxy Statement for
          its Annual Meeting of Stockholders held on May 19, 1989*).

      (k) February 1995 Amendment to J. C. Penney Company, Inc. 1989 Equity
          Compensation Plan (incorporated by reference to Exhibit 10(ii)(k) to
          Company's Annual Report on Form 10-K for the 52 week period ended
          January 28, 1995*).

      (l) February 1996 Amendment to J. C. Penney Company, Inc. 1989 Equity
          Compensation Plan, as amended (incorporated by reference to Exhibit
          10(ii)(k) to Company's Annual Report on Form 10-K for the 52 week
          period ended January 27, 1996*).

      (m) J. C. Penney Company, Inc. 1993 Equity Compensation Plan
          (incorporated by reference to Exhibit A to Company's definitive Proxy
          Statement for its Annual Meeting of Stockholders held on May 21,
          1993*).

      (n) February 1995 Amendment to J. C. Penney Company, Inc. 1993 Equity
          Compensation Plan (incorporated by reference to Exhibit 10(ii)(l) to
          Company's Annual Report on Form 10-K for the 52 week period ended
          January 28, 1995*).

      (o) November 1995 Amendment to J. C. Penney Company, Inc. 1993 Equity
          Compensation Plan, as amended (incorporated by reference to Exhibit

                                      G-6
<PAGE>
 
          10(ii)(n) to Company's Annual Report on Form 10-K for the 52 week
          period ended January 27, 1996*).

      (p) J. C. Penney Company, Inc. 1993 Non-Associate Directors' Equity Plan
          (incorporated by reference to Exhibit B to Company's definitive Proxy
          Statement for its Annual Meeting of Stockholders held on May 21,
          1993*).

      (q) February 1995 Amendment to J. C. Penney Company, Inc. 1993 Non-
          Associate Directors' Equity Plan (incorporated by reference to Exhibit
          10(ii)(m) to Company's Annual Report on Form 10-K for the 52 week
          period ended January 28, 1995*).

      (r) J. C. Penney Company, Inc. Deferred Compensation Plan as amended
          through July 14, 1993 (incorporated by reference to Exhibit 10(a) to
          Company's Report on Form 10-Q for the 13 and 26 week periods ended
          July 31, 1993*).

      (s) J. C. Penney Company, Inc. Deferred Compensation Plan for Directors,
          as amended effective April 9, 1997 (incorporated by reference to
          Exhibit 10(a) to Company's Quarterly Report on Form 10-Q for the 13
          week period ended April 26, 1997*).

      (t) Directors' Charitable Award Program (incorporated by reference to
          Exhibit 10(r) to Company's Annual Report on Form 10-K for the 52 week
          period ended January 27, 1990*).

      (u) Form of Indemnification Trust Agreement between Company and The Chase
          Manhattan Bank (formerly Chemical Bank) dated as of July 30, 1986, as
          amended (incorporated by reference to Exhibit 1 to Exhibit B to
          Company's definitive Proxy Statement for its Annual Meeting of
          Stockholders held on May 29, 1987*).

      (v) Form of Indemnification Agreement between Company and individual
          Indemnitees (incorporated by reference to Exhibit B to Company's
          definitive Proxy Statement for its Annual Meeting of Stockholders held
          on May 29, 1987*).

      (w) J. C. Penney Company, Inc. Benefit Restoration Plan (incorporated by
          reference to Exhibit 

                                      G-7
<PAGE>
 
           10(ii)(y) to Company's Annual Report on Form 10-K for the 52 week
           period ended January 27, 1996*).

      (x)  February 1996 Amendment to J. C. Penney Company, Inc. Benefit
           Restoration Plan (incorporated by reference to Exhibit 10(ii)(z) to
           Company's Annual Report on Form 10-K for the 52 weeks ended January
           25, 1997*).

      (y)  July 1997 Amendment to J. C. Penney Company, Inc. Benefit Restoration
           Plan (incorporated by reference to Exhibit 10(c) to Company's
           Quarterly Report on Form 10-Q for the 13 and 39 week periods ended
           October 25, 1997*).

      (z)  December 1997 Amendment to J. C. Penney Company, Inc. Benefit
           Restoration Plan (incorporated by reference to Exhibit 10(ii)(ac) to
           Company's Annual Report on Form 10-K for the 53 weeks ended January
           31, 1998*).

      (aa) December 1998 Amendment of J. C. Penney Company, Inc. Benefit
           Restoration Plan.

      (ab) January 1999 Amendment to J. C. Penney Company, Inc. Benefit
           Restoration Plan.

      (ac) Supplemental Term Life Insurance Plan for Management Profit-Sharing
           Associates of J. C. Penney Company, Inc. (incorporated by reference
           to Exhibit 10(ii)(aa) to Company's Annual Report on Form 10-K for the
           52 weeks ended January 25, 1997*).

      (ad) January 1995 Amendment to Supplemental Term Life Insurance Plan for
           Management Profit-Sharing Associates of J. C. Penney Company,
           Inc. (incorporated by reference to Exhibit 10(ii)(ab) to Company's
           Annual Report on Form 10-K for the 52 weeks ended January 25, 1997*).

      (ae) November 1997 Amendment to Supplemental Term Life Insurance Plan for
           Management Profit-Sharing Associates of J. C. Penney Company, Inc.
           (incorporated by reference to Exhibit 10(ii)(af) to Company's Annual
           Report on Form 10-K for the 53 weeks ended January 31, 1998*).

      (af) Employment Agreement dated as of February 4, 1996 between Eckerd
           Corporation and Francis A. 

                                      G-8
<PAGE>
 
           Newman (incorporated by reference to Exhibit 10.26 to Eckerd
           Corporation's Annual Report on Form 10-K for the fiscal year ended
           February 3, 1996, SEC File No. 1-4844).

      (ag) Amendment No. 1, dated as of November 2, 1996, to the Employment
           Agreement dated as of February 4, 1996, by and between Eckerd
           Corporation and Francis A. Newman (incorporated by reference to
           Exhibit (c)(3) to Company's Schedule 14D-1 dated November 2, 1996*).

      (ah) J. C. Penney Company, Inc. 1997 Equity Compensation Plan
           (incorporated by reference to Exhibit A to Company's definitive proxy
           statement for its Annual Meeting of Stockholders held on May 16,
           1997*).

      (ai) J. C. Penney Company, Inc. 1998 EVA Performance Plan (incorporated by
           reference to Exhibit 10(ii)(aj) to Company's Annual Report on Form 
           10-K for the 53 weeks ended January 31, 1998*).

      (aj) J. C. Penney Company, Inc. Mirror Savings Plan I and II as amended
           through January 1, 1999.

*  SEC file number 1-777

11.   STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
      -----------------------------------------------

Computation of Net Income Per Common Share.

12.   STATEMENT RE: COMPUTATION OF RATIOS
      -----------------------------------

      (a)  Computation of Ratios of Available Income to Combined Fixed Charges
           and Preferred Stock Dividend Requirement.
      (b)  Computation of Ratios of Available Income to Fixed Charges.


13.   ANNUAL REPORT TO SECURITY HOLDERS
      ---------------------------------

Excerpt from Company's 1998 Annual Report to Stockholders.

                                      G-9
<PAGE>
 
21.   SUBSIDIARIES OF THE REGISTRANT
      ------------------------------

List of certain subsidiaries of the Company at March 22, 1999.

23.   INDEPENDENT AUDITORS' CONSENT
      -----------------------------

24.   POWER OF ATTORNEY
      -----------------

27.   FINANCIAL DATA SCHEDULE
      -----------------------

(a)   Financial Data Schedule for the 52 week period ended January 30, 1999.
(b)   Restated Financial Data Schedule for the 53 week period ended January 31,
      1998.
(c)   Restated Financial Data Schedule for the 52 week period ended January 25,
      1997.

99.   ADDITIONAL EXHIBITS
      -------------------

(a)   Item 1 of J. C. Penney Funding Corporation Annual Report on Form 10-K for
      the 52 weeks ended January 30, 1999 (incorporated by reference to J. C.
      Penney Funding Corporation Annual Report on Form 10-K for the 52 weeks
      ended January 30, 1999 filed April 23, 1999, SEC File No. 1-4947-1).
(b)   Excerpt from J. C. Penney Funding Corporation Annual Report.

                                     G-10