FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

(Mark One)

      X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended October 26, 2002

                                       OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

       For the transitional period from ______________ to ________________

                          Commission File No. 1-4947-1

                        J. C. PENNEY FUNDING CORPORATION
             (Exact name of registrant as specified in its charter)

    Delaware                                                51-0101524
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                  6501 Legacy Drive, Plano, Texas 75024 - 3698
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (972) 431-1000
              (Registrant's telephone number, including area code)
     ______________________________________________________________________
              (Former name, former address and former fiscal year,
                          if changed since last report)

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  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes               No       X

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

500,000 shares of Common Stock of $100 par value, as of October 26, 2002.



                                        1
<page>


PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

The following interim financial  information of J. C. Penney Funding Corporation
("Funding"),  a  wholly  owned  subsidiary  of J. C.  Penney  Corporation,  Inc.
("JCPenney"),  is unaudited; however, in the opinion of Funding, it includes all
adjustments,  consisting only of normal recurring accruals, necessary for a fair
presentation.  The financial  information should be read in conjunction with the
audited  financial  statements  included in Funding's Annual Report on Form 10-K
for the 52 weeks ended January 26, 2002.


Statements of Income and Reinvested Earnings
(Dollars in millions)
<table>
                                                                     <c>                <c>             <c>             <c>

                                                                         13 weeks ended                     39 weeks ended
                                                                   Oct. 26,         Oct. 27,          Oct. 26,          Oct. 27,
                                                                     2002             2001              2002              2001
Interest earned from
        JCPenney and affiliates                                        $  0             $  0              $  0              $  0

Interest expense                                                          0                0                 0                 0

Income before income taxes                                                0                0                 0                 0

Income taxes                                                              0                0                 0                 0

Net income                                                                0                0                 0                 0

Reinvested earnings at                                                1,093            1,093             1,093             1,093
        beginning of period                                          ------           ------            ------            ------

Reinvested earnings at
        end of period                                                $1,093           $1,093            $1,093            $1,093
                                                                     ======           ======            ======            ======
</table>

                                        2
<page>
Balance Sheets
(Dollars in millions)
<table>
                                                                            <c>                    <c>                    <c>

                                                                         Oct. 26,               Oct. 27,              Jan.26,
                                                                           2002                   2001                 2002
                                                                          ------                 ------               ------
ASSETS
Loans to JCPenney and affiliates                                          $1,238                 $1,240               $1,238

Total assets                                                              $1,238                 $1,240               $1,238

LIABILITIES AND EQUITY OF JCPENNEY

Short-term debt                                                             $  0                   $  0                 $  0

Due to JCPenney                                                                0                      2                    0
                                                                            ----                   ----                 ----

Total liabilities                                                           $  0                   $  2                 $  0

Equity of JCPenney:
        Common stock (including contributed
        capital), par value $100:
        Authorized, 750,000 shares
        Issued, 500,000 shares
                                                                            $145                   $145                 $145

Reinvested earnings                                                       $1,093                 $1,093               $1,093
                                                                          ------                 ------               ------
Total equity of JCPenney                                                  $1,238                 $1,238               $1,238
                                                                          ------                 ------               ------
Total liabilities and stockholder's equity                                $1,238                 $1,240               $1,238
                                                                          ======                 ======               ======
</table>
                                       3
<page>
Consolidated Statements of Cash Flows
(Dollars in millions)


<table>
                                                                                   <c>                      <c>

                                                                                          39 weeks ended
                                                                                 Oct. 26,                 Oct. 27,
                                                                                   2002                     2001

Operating Activities
       Net Income                                                                   $  0                     $  0

       (Increase) decrease in loans to                                                 0                        0
       JCPenney

       (Decrease) increase in amount due                                               0                        0
       to JCPenney                                                                   ---                      ---
                                                                                       0                        0
                                                                                     ---                      ---

Financing Activities

       Increase (decrease) in short-term
       Debt                                                                            0                        0

Increase (decrease) in cash                                                            0                        0

Cash at beginning of year                                                              0                        0
                                                                                     ---                      ---
Cash at end of third quarter                                                        $  0                     $  0
                                                                                    ====                     ====
</table>
                                       4
<page>

Notes to the Unaudited Interim Financial Statements

1) Background

     Historically,  Funding has  provided  short-term  financing  for  JCPenney.
Principally,  Funding  issued  commercial  paper to finance  JCPenney's  working
capital needs. In 1999,  JCPenney sold its credit card operation and the related
accounts  receivable to an unrelated third party. The result of this transaction
coupled  with  JCPenney's  other  sources of liquidity  eliminated  the need for
Funding  to  issue  commercial  paper  for  short-term  borrowing  requirements.
Therefore,  Funding has not  produced any revenue or income.  In addition,  with
Funding's  current credit ratings,  it is assumed that Funding would have little
or no current access to commercial paper borrowing.



                                       5

<page>

ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

Funding  derives  earnings  on loans to  JCPenney  under  the  terms of the Loan
Agreement  which provides for unsecured loans to be made by Funding to JCPenney.
Additionally,  in order to maintain Funding's income at defined coverage ratios,
Funding's  income is supplemented by charges to JCPenney.  The income of Funding
is designed to cover  Funding's fixed charges  (interest  expense) at a coverage
ratio  mutually  agreed  upon by Funding  and  JCPenney.  The  earnings to fixed
charges coverage ratio has historically been at least one and one-half times.

When  applicable,  Funding  from time to time issues  commercial  paper  through
Credit Suisse First Boston  Corporation,  J.P. Morgan  Securities Inc.,  Merrill
Lynch Money  Markets  Inc.,  and Morgan  Stanley  Dean Witter to  corporate  and
institutional  investors  in  the  domestic  market.  The  commercial  paper  is
guaranteed by JCPenney on a subordinated  basis.  The commercial  paper is rated
"A3" by Standard & Poor's Ratings Services and "Not Prime" by Moody's  Investors
Service, Inc.

Funding  had no  short-term  debt  outstanding  as of October 26, 2002 nor as of
October 27, 2001.

After  paying  $920  million  of debt in the  first  half  of  2002,  JCPenney's
liquidity remains strong with  approximately $1.7 billion in cash and short-term
investments as of October 26, 2002.

Given JCPenney's current favorable liquidity position,  no short-term borrowings
are expected for the  remainder of the year.  If a need for  short-term  funding
were to arise,  JCPenney  has access to funding via its $1.5  billion  revolving
credit facility maturing in May 2005. No borrowings,  other than the issuance of
trade and stand-by  letters of credit,  which totaled $258 million as of the end
of the third quarter 2002, have been made under the credit facility.


ITEM 4.  Controls and Procedures

Based on their  evaluation of Funding's  disclosure  controls and procedures (as
defined in Rules  13a-14(c) and 15d-14(c)  under the Securities  Exchange Act of
1934) as of a date within 90 days of the filing date of this Quarterly Report on
10-Q, Funding's principal executive officer and principal financial officer have
concluded  that Funding's  disclosure  controls and procedures are effective for
the  purpose  of  ensuring  that  material  information  required  to be in this
Quarterly  Report is made known to them by others on a timely basis.  There were
no significant  changes in Funding's  internal controls or in other factors that
could  significantly  affect these controls subsequent to the date of their most
recent evaluation.

                                       6
<page>


PART II - OTHER INFORMATION


   Item 6.  Exhibits and Reports on Form 8-K.
              ________________________________

            (a)  Exhibits
                 ________

               99(i)Certificate of Michael P. Dastugue Pursuant to ss.906 of the
               Sarbanes-Oxley Act

               99(ii) Certificate of William J. Alcorn Pursuant to ss.906 of the
               Sarbanes-Oxley Act

            (b)  Reports on Form 8-K
                 ___________________

               Current  Report on Form 8-K  dated  September  6, 2002
               (Item 5 - Other Events and Regulation FD Disclosure)



                                      7

<page>





                                   SIGNATURES


Pursuant  to the  requirements  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 FUNDING CORPORATION


                                           By:     /s/ W. J. Alcorn
                                                -------------------------------
                                                   W. J. Alcorn
                                                   Vice President and Controller
                                                  (Principal Accounting Officer)



Date: December 6, 2002



                                       8

<page>

CERTIFICATIONS

I, Michael P. Dastugue, Chairman of the Board, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of J. C. Penney Funding
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consoliated  subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors  (or persons  peforming  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls: and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  December 6, 2002.
                                                /s/ Michael P. Dastugue
                                               --------------------------------
                                               Michael P. Dastugue
                                               Chairman of the Board
                                               J. C. Penney Funding Corporation
                                       9

<page>

CERTIFICATIONS

I, William J. Alcorn, Vice President and Controller, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of J. C. Penney Funding
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consoliated  subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors  (or persons  peforming  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls: and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  December 6, 2002.

                                                /s/ William J. Alcorn
                                              ---------------------------------
                                               William J. Alcorn
                                               Vice President and Controller
                                               J. C. Penney Funding Corporation


                                       10