<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 25, 1997 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]

   State the aggregate market value of the voting stock held by non-affiliates
of the registrant:  $11,910,650,902 as of February 26, 1997.
<PAGE>
 
   Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date: 224,197,904 shares of Common
Stock of 50c par value, as of February 26, 1997.

                      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
        1996 Annual Report to Stockholders    Part IV
 
2.      J. C. Penney Company, Inc.            Part III
        1997 Proxy Statement
 
3.      J. C. Penney Funding Corporation      Part I and Part IV
        Form 10-K for fiscal year 1996
<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.  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.

  On February 27, 1997, the Company completed its acquisition of Eckerd
Corporation ("Eckerd"), an approximately 1,748 store drugstore chain
headquartered in Largo, Florida, pursuant to a cash and stock transaction valued
at $3.3 billion, including the assumption of $760 million of Eckerd debt.  The
transaction was effected through a cash tender offer for approximately 50.1
percent of Eckerd's outstanding common stock, followed by a second-step merger,
as a result of which Eckerd stockholders received 0.6604 of a share of the
Company's common stock for each remaining Eckerd share not purchased in the cash
tender offer.  The cash tender offer was completed on December 6, 1996 and
resulted in the Company acquiring approximately 35.3 million shares, or 50.1
percent, of the outstanding Eckerd common stock at that date.  The merger was
approved by Eckerd stockholders and completed on February 27, 1997.  With the
completion of its acquisition of Eckerd, the Company operates a chain of
approximately 2,700 drugstores located throughout the northeast, southeast, and
Sunbelt regions of the United States.

  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 one-third of annual sales.

  Information about certain aspects of the business of the Company included
under the captions of "Receivables" (page 24), "Properties" (page 25), "Capital
Expenditures" (page 25), "Financial Instruments and Fair Value" (pages 25 and
26), and "Segment Reporting" (page 34), which appear in the section of the
Company's 1996 Annual Report to Stockholders entitled "Notes to Consolidated
Financial Statements", "Supplemental Information (unaudited)" (pages 36 and 37),
"Five Year Financial Summary" (page

                                      -1-
<PAGE>
 
38), and "Five Year Operations Summary" (page 39), which appear in the Company's
1996 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 25, 1997,
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 6,000
  ---------                                                                 
domestic and foreign suppliers, most of whom have done business with the Company
for many years.  In addition to its Plano, Texas home office, the Company,
through its international purchasing subsidiary and as of January 25, 1997,
maintains buying offices in Brazil, Guatemala, Hong Kong, India, Italy, Japan,
Korea, Mexico, the Philippines, Singapore, Taiwan and Thailand.

  EMPLOYMENT.  The Company and its consolidated subsidiaries employed
  ----------                                                         
approximately 252,000 persons as of January 25, 1997.

  ENVIRONMENT.  While environmental protection requirements did not have a
  -----------                                                             
material effect upon the Company's operations during fiscal 1996, 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 25, 1997, the Company operated 3,927 retail stores, comprised of
1,228 JCPenney department stores and 2,699 drugstores, in all 50 states, Puerto
Rico, Mexico, and Chile, of which 275 JCPenney department stores and 17
drugstores were owned.  In addition, the Company owns nine 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 distribution center, the insurance company corporate
offices, and the Company's home office facility and approximately 244 acres of
property in Plano, Texas, adjacent to the facility.  Information relating to
certain of the Company's facilities included under the captions of "Five Year
Financial Summary" and "Five Year Operations Summary", which appear on pages 38
and 39, respectively, of the Company's 1996 Annual Report to Stockholders, is
incorporated herein by reference and filed hereto as Exhibit 13 in response to
Item 2 of Form 10-K.

                                      -2-
<PAGE>
 
  Additional information relating to certain aspects of the Company's properties
included under the caption "Properties" (page 25), which appears in the section
of the Company's 1996 Annual Report to Stockholders entitled "Notes to
Consolidated Financial Statements", on the page indicated in the parenthetical
reference, is also 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 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 issued approximately 1.2 million shares of Series B ESOP Convertible
Preferred Stock pursuant to a leveraged employee stock ownership plan.
Additional information relating to the Common Stock and Preferred Stock of the
Company included under the captions of "Preferred Stock" (pages 27 and 28),
"Common Stock" (page 28), "Changes in outstanding common stock" (page 28), and
"Quarterly Data (Unaudited)" (page 35), which appear in the Company's 1996
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 1992-1996 included in the "Five Year
Financial Summary" on page 38 of the Company's 1996 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 1996 Annual Report to Stockholders on pages 14 through
17 thereof, is

                                      -3-
<PAGE>
 
incorporated herein by reference and filed hereto as Exhibit 13 in response to
Item 7 of Form 10-K.


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

  The Consolidated Balance Sheets of the Company and subsidiaries as of January
25, 1997, January 27, 1996, and January 28, 1995, and the related Consolidated
Statements of Income, Reinvested Earnings, and Cash Flows for the years then
ended, appearing on pages 19 through 21 of the Company's 1996 Annual Report to
Stockholders, together with the Independent Auditors' Report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing on page 18 of
the Company's 1996 Annual Report to Stockholders, the Notes to Consolidated
Financial Statements on pages 22 through 34, and the quarterly financial
highlights ("Quarterly Data (unaudited)") appearing on page 35 thereof, are
incorporated herein by reference and filed hereto as Exhibit 13 in response to
Item 8 of Form 10-K.  The Independent Auditors' Report of KPMG Peat Marwick LLP
covering the aforementioned consolidated financial statements of the Company
refers to the adoption by the Company (a) in 1994 of the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
                   -----------------------------------------------------
Securities, and (b) in 1995 of the provisions of the Financial Accounting
----------                                                               
Standards Board's Statement of Financial Accounting Standards No. 121,
                                                                      
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
-------------------------------------------------------------------------------
Be Disposed Of.
-------------- 

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

  The Company has had no change in, or disagreements with, its independent
certified public accountants on accounting and financial disclosure.


                                   PART III*
                                   -------- 

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

  The following is a list, as of March 1, 1997, 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 16, 1997.  There is no family relationship between any of the
named persons.

                                      -4-
<PAGE>
 
<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            55
W. Barger Tygart.........President and Chief Operating Officer;
                           Director                                     61
John T. Cody, Jr.........President of JCPenney Stores                   57
Gary L. Davis............Senior Vice President, Director
                           of Human Resources and
                           Administration                               54
Gale Duff-Bloom..........President of Marketing and Company
                           Communications                               57
David V. Evans...........Senior Vice President, Director of
                           Information Systems                          52
John E. Fesperman........Senior Vice President, Director of
                           Planning, Facilities, and
                           International Development                    51
Thomas D. Hutchens.......President of Merchandising Worldwide           56
Charles R. Lotter........Executive Vice President, Secretary
                           and General Counsel                          59
William E. McCarthy......President of Catalog and Distribution          55
Donald A. McKay..........Senior Vice President and
                           Chief Financial Officer                      51
Francis A. Newman........President and Chief Executive
                           Officer of Eckerd Corporation                48
Ted L. Spurlock..........Senior Vice President and Director
                           of Financial Services and
                           Government Relations                         58
</TABLE> 
-------------


  Mr. Oesterreicher was elected Chairman of the Board effective January 8, 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.  He was elected an Executive Vice
President in 1988 and served as Director of JCPenney Stores from 1988 to 1992.

  Mr. Tygart was elected President and Chief Operating Officer, and a director
of the Company, effective January 1, 1995.  He was elected a Senior Executive
Vice President and was named Director of Merchandising, Quality Assurance and
Distribution in 1992.  In 1993, he was appointed Director of Merchandising and
Support Operations, and served in that capacity until 1995.  He served as an
Executive Vice President and Director of Merchandising from 1987 to 1992.  He
has also served as a director of Eckerd Corporation since February 1997.

  Mr. Cody was elected President of JCPenney Stores effective January 1, 1995.
He was elected an Executive Vice President in 1992 and served as Director of
JCPenney Stores from 1992 to 1995. He 

                                      -5-
<PAGE>
 
served as a Senior Vice President and Director of Real Estate, Construction
Services and Speciality Retailing from 1991 to 1992.

  Mr. Davis was elected Senior Vice President and Director of Personnel and
Administration effective February 1, 1996, and since 1997 has served as Senior
Vice President, Director of Human Resources and Administration. He was elected
President of the Northwestern Region in 1992 and served in that capacity until
1996. From 1990 to 1992, he served as Director of Coordination for JCPenney
Stores and Catalog.

  Ms. Duff-Bloom was elected President of Marketing and Company Communications
effective February 1, 1996.  She was elected Senior Executive Vice President and
served as Director of Personnel and Company Communications from January 1, 1995
to February 1, 1996.  She was elected an Executive Vice President in 1993 and
served as Director of Administration from 1993 to 1995.  She served as Senior
Vice President and Associate Director of Merchandising from 1990 to 1993.

  Mr. Evans was elected a Senior Vice President and was appointed Director of
Planning and Information Systems effective January 1, 1995, and since 1997 has
served as Senior Vice President, Director of 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 Senior Vice President and Director of Support
Services and Subsidiary Operations effective January 1, 1996, and since 1997 has
served as Senior Vice President, Director of Planning, Facilities, and
International Development. He was elected a Vice President in 1993 and served as
Director of Insurance from 1991 to 1996.

  Mr. Hutchens was elected President of Merchandising Worldwide effective
January 1, 1995.  He was elected an Executive Vice President in 1992 and served
as Director of Merchandising from 1992 to 1995.  He served as President of the
Men's Division from 1987 to 1992.

  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. McCarthy was elected President of Catalog and Distribution effective
January 1, 1995.  He was elected President, Catalog Division in 1992, and served
in that capacity until 1995.  He was elected President, Northwestern Region in
1991 and served in that capacity until 1992.
 
  Mr. McKay was elected Senior Vice President and Chief Financial Officer
effective February 1, 1996. From 1994 to 1996, he served as the Company's
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 has served as Chief Executive Officer of Eckerd Corporation since
February 1996.  He is also President and a 

                                      -6-
<PAGE>
 
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 retail firm, from 1980 to
1984.

  Mr. Spurlock was elected a Senior Vice President and was named Director of
Financial Services and Company Communications in 1992.  He was appointed
Director of Financial Services and Government Relations effective January 1,
1995.  He served as Director of Credit and Financial Services from 1989 to 1992.

-------------

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 herein), 11, 12, and 13 is incorporated by reference to the Company's 1997
Proxy Statement, which involves the election of directors, the final copy of
which the Company will file with the Securities and Exchange Commission,
pursuant to Regulation 14A, on or prior to May 25, 1997.

                                    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 1996
Annual Report to Stockholders.

  (a)(2) Financial Statement Schedules.  The following schedule is attached on
Page F-1.

  II.  Valuation and Qualifying Accounts and Reserves

                                      -7-
<PAGE>
 
  See Independent Auditors' Report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing on page 11 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 material to the Company's 1996 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 25, 1997, which financial statements,
together with the Independent Auditors' Report of KPMG Peat Marwick 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 dated November 3, 1996.

  (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-6.

                                      -8-
<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: March 25, 1997

                                      -9-
<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.

 SIGNATURES                 TITLE                                DATE
 ----------                 -----                                ----


J. E. Oesterreicher*  Chairman of the Board and               March 25, 1997
-------------------     Chief Executive Officer (principal         
J. E. Oesterreicher     executive officer); Director
                      
 
W. B. Tygart*          President and Chief Operating          March 25, 1997
---------------------    Officer; Director
W. B. Tygart                          
 

D. A. McKay*           Senior Vice President and              March 25, 1997
---------------------    Chief Financial Officer
D. A. McKay              (principal financial officer)
                       
 
W. J. Alcorn*          Vice President and Controller          March 25, 1997
---------------------    (principal accounting officer)
W. J. Alcorn           
 
M. A. Burns*           Director                               March 25, 1997
---------------------
M. A. Burns
 
C. H. Chandler*        Director                               March 25, 1997
---------------------
C. H. Chandler
 
V. E. Jordan, Jr.*     Director                               March 25, 1997
---------------------
V. E. Jordan, Jr.
 
George Nigh*           Director                               March 25, 1997
---------------------
George Nigh
 
J. C. Pfeiffer*        Director                               March 25, 1997
---------------------
J. C. Pfeiffer
 
A. W. Richards*        Director                               March 25, 1997
---------------------
A. W. Richards
 
C. S. Sanford, Jr.*    Director                               March 25, 1997
---------------------
C. S. Sanford, Jr.
 
R. G. Turner*          Director                               March 25, 1997
---------------------
R. G. Turner
 
J. D. Williams*        Director                               March 25, 1997
---------------------
J. D. Williams


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

                                      -10-
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
                         ----------------------------



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


Under date of February 27, 1997, we reported on the consolidated balance sheets
of J. C. Penney Company, Inc. and subsidiaries as of January 25, 1997, January
27, 1996, and January 28, 1995, and the related consolidated statements of
income, reinvested earnings, and cash flows for the years then ended, as
contained in the 1996 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 1996 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 Peat Marwick LLP



Dallas, Texas
February 27, 1997

                                      -11-
<PAGE>

                                                                     SCHEDULE II
                           J. C. PENNEY COMPANY, INC.
                                AND SUBSIDIARIES

          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                              (Amounts in millions)
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------

                                                               52 Weeks Ended
                                                      ---------------------------------------
                                                      January 25,   January 27,   January 28,
Description                                             1997           1996          1995
---------------------------------------------------------------------------------------------
<S>                                                   <C>          <C>          <C>

Reserves deducted from assets
-----------------------------

Allowance for doubtful accounts
            Balance at beginning of period            $  84         $  74          $  59
            Additions charged to costs and
                        expenses                        267           219            177
            Deductions of write-offs, less
                        recoveries                     (246)         (209)          (162)
                                                      -----         -----          -----

Balance at end of period                              $ 105         $  84          $  74
                                                      =====         =====          =====
Allowance for loan losses -
            JCPenney National Bank
            Balance at beginning of period            $  47         $  44          $  35
            Additions charged to costs and
                        expenses                         83            45             45
            Deductions of write-offs, less
                        recoveries                      (79)          (42)           (36)
                                                      -----         -----          -----

Balance at end of period                              $  51         $  47          $  44
                                                      =====         =====          =====

</TABLE>

                                      F-1

<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

                                        
               EXHIBIT
               -------

2.  PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION
    ---------------------------------------------------------------------------

        (a) Amended and Restated Agreement and Plan of Merger, dated as of
            November 2, 1996, among J.C. Penney Company, Inc., Omega Acquisition
            Corporation, and Eckerd Corporation (incorporated by reference to
            Exhibit 2.1 to Company's Registration Statement on Form S-4, SEC
            File No. 333-20271).

        (b) Amendment dated February 25, 1997 to Amended and Restated Agreement
            and Plan of Merger, dated as of November 2, 1996, among J.C. Penney
            Company, Inc., Omega Acquisition Corporation, and Eckerd
            Corporation.

3.  (I)     ARTICLES OF INCORPORATION Restated Certificate of Incorporation of
            -------------------------                                         
            the Company (incorporated by reference to Exhibit (3)(i) to
            Company's Quarterly Report on Form 10-Q for the thirteen week period
            ended April 27, 1996*).


    (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
            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 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 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 First Trust of California, National Association (as

                                      G-1
<PAGE>
 
            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 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 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 February 14, 1990 between Company and
            First Chicago Trust Company of New York, as Rights Agent
            (incorporated by reference to Exhibit 1 to Company's Current Report
            on Form 8-K, Date of Report - February 6, 1990*).

        (h) Amendment to Rights Agreement, dated as of February 14, 1990,
            between Company and First Chicago Trust Company of New York, as
            Rights Agent, effective as of January 13, 1992, among Company, First
            Chicago Trust Company of New York, and Manufacturers Hanover Trust
            Company of New York (now ChaseMellon Shareholder Services, L.L.C.),
            as successor Rights Agent (incorporated by reference to Exhibit 4(b)
            to Company's Annual Report on Form 10-K for the 52 week period ended
            January 25, 1992*).

        (i) Letter to Company stockholders dated May 1, 1993 explaining
            adjustments to Rights and to underlying Series A Junior
            Participating Preferred Stock, including exercise price of such
            Rights, and the voting rights and participating dividend on such
            Preferred Stock as a result of the two-for-one stock split payable
            May 1, 1993 to stockholders of record on April 12, 1993
            (incorporated by reference to Exhibit 4(c) to

                                      G-2
<PAGE>
 
            Company's Annual Report on Form 10-K for the 53 week period ended
            January 30, 1993*).

        (j) Explanation of adjustments to Rights and to underlying Series A
            Junior Participating Preferred Stock and changes to shares of Series
            B Convertible Preferred Stock held by Trustee of Company's Savings,
            Profit-Sharing and Stock Ownership Plan on behalf of Plan
            participants as a result of the two-for-one stock split payable May
            1, 1993 to stockholders of record on April 12, 1993 (incorporated by
            reference to Item 5 of Company's Current Report on Form 8-K dated
            March 10, 1993*).

        (k) 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, 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).

        (l) 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, 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).

        (m) 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, Bank of America Illinois, Bankers Trust
            Company, The Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty
            Trust Company of New York, and NationsBank of Texas, N.A., as Co-
            Agents for the Lenders, and Credit Suisse, as Administrative Agent
            for the Lenders (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 25, 1997, SEC File No. 1-4947-1).

        (n) 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, Bank of America Illinois, Bankers Trust
            Company, The Chase Manhattan Bank, Citibank, N.A., Morgan Guaranty
            Trust Company of New York, and NationsBank of Texas, N.A., as Co-
            Agents for the Lenders and Credit Suisse, as Administrative Agent
            for the Lenders (incorporated by reference to Exhibit 4(g) 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).

        (o) 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).

        (p) 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 No. 1-4947-1).

        (q) Guaranty dated as of December 3, 1996, executed by J.C. Penney
            Company, Inc. with respect to the 364-Day and Five-Year Revolving
            Credit Agreements, each dated as of December 3, 1996 (incorporated
            by reference to Exhibit 4(n) 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).

    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*).

                                      G-3
<PAGE>
 
        (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.

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

    (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.

        (c) Supplemental Retirement Program for Management Profit-Sharing
            Associates of J. C. Penney Company, Inc., as amended through April
            1, 1996. 
        
        (d) J. C. Penney Company, Inc. Retirement Plan for Non-Associate
            Directors, as amended through July 8, 1992 (incorporated by
            reference to Company's Quarterly Report on Form 10-Q for the 13 and
            26 week periods ended July 25, 1992*).

        (e) February 1996 Amendment to J. C. Penney Company, Inc. Retirement
            Plan for Non-Associate Directors, as amended (incorporated by
            reference to Exhibit 10(ii)(e) to Company's Annual Report on Form

                                      G-4
<PAGE>
 
            10-K for the 52 week period ended January 27, 1996*).

        (f) 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*).

        (g) J. C. Penney Company, Inc. 1984 Equity Compensation Plan, as amended
            through January 31, 1989 (incorporated by reference to Exhibit 10(l)
            to Company's Annual Report on Form 10-K for the 52 week period ended
            January 28, 1989*).

        (h) February 1995 Amendment to J. C. Penney Company, Inc. 1984 Equity
            Compensation Plan, as amended (incorporated by reference to Exhibit
            10(ii)(j) to Company's Annual Report on Form 10-K for the 52 week
            period ended January 28, 1995*).

        (i) 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*).

        (j) 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*).

        (k) 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*).

        (l) 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*).

        (m) February 1995 Amendment to J. C. Penney Company, Inc. 1993 Equity
            Compensation Plan (incorporated by reference to Exhibit

                                      G-5
<PAGE>
 
            10(ii)(l) to Company's Annual Report on Form 10-K for the 52 week
            period ended January 28, 1995*).

        (n) November 1995 Amendment to J. C. Penney Company, Inc. 1993 Equity
            Compensation Plan, as amended (incorporated by reference to Exhibit
            10(ii)(n) to Company's Annual Report on Form 10-K for the 52 week
            period ended January 27, 1996*).

        (o) 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*).

        (p) 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*).

        (q) J. C. Penney Company, Inc. 1984 Performance Unit Plan (incorporated
            by reference to Exhibit B to Company's definitive Proxy Statement
            for its Annual Meeting of Stockholders held on May 22, 1984*).

        (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 through July 8, 1992 (incorporated by reference to
            Exhibit 10(c) to Company's Quarterly Report on Form 10-Q for the 13
            and 26 week periods ended July 25, 1992*).

        (t) J. C. Penney Company, Inc. 1995 Deferred Compensation Plan
            (incorporated by reference to Exhibit 10 to Company's Registration
            Statement on Form S-8, SEC File No. 33-56993).

        (u) November 1995 amendment to J. C. Penney Company, Inc. 1995 Deferred
            Compensation Plan (incorporated by reference to Exhibit

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

        (v) 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*).

        (w) Form of Indemnification Trust Agreement between Company and 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*).

        (x) 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*).

        (y) J. C. Penney Company, Inc. Benefit Restoration Plan (incorporated by
            reference to Exhibit 10(ii)(y) to Company's Annual Report on Form 
            10-K for the 52 week period ended January 27, 1996*).

        (z) February 1996 Amendment to J.C. Penney Company, Inc. Benefit 
            Restoration Plan.

            (aa) Supplemental Term Life Insurance Plan for Management 
                 Profit-Sharing Associates of J.C. Penney Company, Inc.

            (ab) January 1995 Amendment to Supplemental Term Life Insurance Plan
                 for Management Profit-Sharing Associates of J.C. Penney
                 Company, Inc.

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

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


*  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 1996 Annual Report to Stockholders.

                                      G-7
<PAGE>
 
21.  SUBSIDIARIES OF THE REGISTRANT
     ------------------------------

     List of certain subsidiaries of the Company at March 1, 1997.

23.  CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
     ---------------------------------------------------

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

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

     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 25, 1997 (incorporated by reference
            to J. C. Penney Funding Corporation Annual Report on Form 10-K for
            the 52 weeks ended January 25, 1997 filed concurrently herewith, SEC
            File No. 1-4947-1).

     (b)    Excerpt from J. C. Penney Funding Corporation Annual Report.

     (C)    Eckerd Corporation Selected Historical Consolidated Financial 
            Information

                                      G-8