SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended April 26, 2003   Commission file number 1-4947-1

                                       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. ______________

                        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 June 4, 2003.

THE REGISTRANT  MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTION H (1) (a)
AND (b) OF FORM  10-Q  AND IS  THEREFORE  FILING  THIS  FORM  WITH  THE  REDUCED
DISCLOSURE FORMAT.
                                       1
<page>

PART I - FINANCIAL INFORMATION

ITEM 1.  Unaudited 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 25, 2003.


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

                                                                         13 weeks ended
                                                                   Apr. 26,         Apr. 27,
                                                                     2003             2002
                                                                   -------          -------
Interest earned from
        JCPenney and affiliates                                        $ -              $ -

Interest expense                                                         -                -
                                                                       ---              ---
Income before income taxes                                               -                -

Income taxes                                                             -                -
                                                                       ---              ---
Net income                                                               -                -

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

Reinvested earnings at
       end of period                                                $1,093           $1,093
                                                                    ======           ======
</table>
                                       2
<page>


Balance Sheets
(Dollars in millions) (Unaudited)
<table>
<c>                                                                       <c>              <c>                     <c>


                                                                         Apr. 26,      Apr. 27,        Jan.25,
                                                                            2003          2002           2003
                                                                         -------       -------        -------
ASSETS
Loans to JCPenney and affiliates                                          $1,238        $1,238         $1,238

LIABILITIES AND EQUITY HELD BY JCPENNEY
Liabilities                                                                 $  -          $  -           $  -

Equity held by JCPenney:
        Common stock (including contributed capital), par value
        $100 per share:
        Authorized, 750,000 shares
        Issued and outstanding, 500,000 shares
                                                                            $145          $145           $145

Reinvested earnings                                                       $1,093        $1,093         $1,093
                                                                          ------        ------         ------

Total equity held by JCPenney                                             $1,238        $1,238         $1,238
                                                                          ------        ------         ------
Total liabilities and equity held by JCPenney                             $1,238        $1,238         $1,238
                                                                          ======        ======         ======
</table>
                                       3
<page>


Consolidated Statements of Cash Flows
(Dollars in millions) (Unaudited)
<table>
<c>                                                                    <c>                   <c>



                                                                             13 weeks ended
                                                                   Apr. 26,            Apr. 27,
                                                                      2003                2002
                                                                   -------             -------
Operating Activities                                                  $  -                $  -

Financing Activities                                                     -                   -
                                                                      ----                ----

Increase in cash                                                         -                   -

Cash at beginning of year                                                -                   -
                                                                      ----                ----
Cash at end of first quarter                                          $  -                $  -
                                                                      ====                ====
</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  2001,  JCPenney  sold the  assets  of J. C.  Penney  Direct
Marketing  Services,  Inc.  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.


2) Subsequent Event
   ----------------

     On May 29, 2003, Standard & Poor's downgraded  JCPenney's corporate credit,
senior unsecured and secured bank loan ratings to BB+ from BBB-. This new rating
is more in line with the Moody's and Fitch ratings.

                                       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.  No commercial  paper has been
issued or outstanding  during the first quarter of 2003.  The  commercial  paper
program is rated "Not Prime" by Moody's Investors Service, Inc. and "B" by Fitch
Ratings. Standard & Poor's Rating Services does not rate the program.

Funding had no short-term debt  outstanding as of April 26, 2003 nor as of April
27, 2002.

JCPenney's financial condition remains strong with approximately $2.6 billion in
cash  and  short-term  investments  as  of  April  26,  2003,  which  represents
approximately 43% of the total of the $5.8 billion of outstanding long-term debt
plus the proceeds of $250 million from the securitization of Eckerd managed care
receivables.  Included in the total cash and short-term  investment balance were
restricted  short-term  investment balances of $87 million as of April 26, 2003,
which are pledged as collateral for import letters of credit not included in the
bank credit facility and for a portion of casualty program liabilities.

JCPenney's liquidity position was further strengthened in February 2003 with the
completion of two financing  transactions.  First, on February 3, 2003, JCPenney
raised approximately $50 million by securitizing  additional Eckerd managed care
receivables.  Second,  on  February  28,  2003,  JCPenney  issued  $600  million
principal  amount of unsecured 8% Notes Due 2010  ("Notes") at an effective rate
of 8.125%. J. C. Penney Company,  Inc. is a co-obligor on the Notes.  Additional
liquidity strengths include the available $1.5 billion credit facility discussed
in J. C. Penney Company,  Inc.'s 2002 Annual Report on Form 10-K and significant
unencumbered assets, primarily Eckerd inventory, which totaled $2,307 million at
April 26, 2003, that could be used to secure additional  short-term  funding, if
needed. No borrowings,  other than the issuance of trade and stand-by letters of
credit,  which  totaled $200 million as of the end of the first quarter of 2003,
have been made under this credit facility.

For the  remainder  of 2003,  JCPenney's  management  believes  that  cash  flow
generated from  operations,  combined with the short-term  investment  position,
will be adequate to fund cash  requirements  for capital  expenditures,  working
capital and  dividend  payments  and,  therefore,  no external  funding  will be
required.  On May 29,  2003,  Standard  &  Poor's  (S&P)  downgraded  JCPenney's
corporate  credit,  senior  unsecured  and secured bank loan ratings to BB+ from
BBB-.  This change brings the S&P rating more in line with the Moody's and Fitch
ratings. This change is not expected to impact JCPenney's liquidity or financial
position as the lower  credit  rating had  already  been  incorporated  into the
long-term  financing  strategy.  JCPenney's  management believes that JCPenney's
financial position will continue to provide the financial flexibility to support
its turnaround initiatives.





                                       6
<page>



ITEM 4.  Controls and Procedures

     (a)  Based  on  their  evaluation  of  Funding's  disclosure  controls  and
procedures (as defined in Rules 13a-14 and 15d-14 under the Securities  Exchange
Act of 1934 (the "Exchange Act")) as of a date within 90 days of the filing date
of this Quarterly Report on Form 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 on Form 10-Q is made known
to them by others on a timely basis.

     (b) 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.


PART II - OTHER INFORMATION


  ITEM 6.  Exhibits and Reports on Form 8-K.
           ---------------------------------

          (a)  Exhibits
               --------

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

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

          (b)  Reports on Form 8-K
               --------------------
                    None.




                                       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:  June 10, 2003




                                       8
<page>



                                 CERTIFICATIONS
                                 --------------

I, Michael P. Dastugue, Chairman, 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 have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated 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  performing  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  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:  June 10, 2003.
                                                /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 have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated 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  performing  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  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:  June 10, 2003.
                                                 /s/ William J. Alcorn
                                               --------------------------
                                               William J. Alcorn
                                               Vice President and Controller
                                               J. C. Penney Funding Corporation


                                       10