Kohl's Credit Card Alliance With JPMorgan Chase

The two companies have signed a definitive agreement whereby Chase will purchase Kohl's private label credit card accounts and the outstanding balances associated with the accounts. The total purchase price to be paid in cash at closing will be equal to the receivable balances purchased and is expected to be approximately $1.5 billion.

Additionally, the companies have entered into a multi-year program agreement whereby Kohl's will continue to handle all customer service functions and will continue to be responsible for all advertising and marketing related to its credit card customers. All of Kohl's current credit organization associates will remain employees of Kohl's. Further, the company expects the credit organization to grow to support the long-term growth plans of the company. In return for these services, Kohl's will receive on-going payments related to the profitability of the program.

Larry Montgomery, Kohl's chairman and chief executive officer, commented, "We are excited to be partnering with Chase. Our credit card program is an instrumental part of Kohl's success, and our relationships with our cardholders are extremely important to us. While our customers can continue to expect the same great service they have always received from Kohl's, our strategic alliance with Chase will provide us with additional operational and marketing capabilities to support our continued growth. Like Kohl's, Chase has many years of experience in running credit operations with a focus on customer relationships, so we will leverage the expertise of both companies to build a best in class credit card program to support our continued growth."

"Chase is extremely excited about this partnership because it offers many tremendous opportunities," said Rich Srednicki, chief executive officer, Chase Card Services. "We are pleased to be partnering with Kohl's, one of the nation's best retail brands and a great growth company. We are eager to work with Kohl's to expand their private label business and to continue working closely with Kohl's to offer great service and value-added products to consumers."

Commenting on the financial benefits for Kohl's, Larry Montgomery said, "This transaction strengthens our balance sheet and improves our return on assets. It converts our receivables to cash while allowing us to continue to service our customers and participate in the ongoing growth and profitability of our credit business. The transaction is expected to generate savings in interest expense in fiscal 2006, therefore increasing both net income and earnings per share."