-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QY4Uc69ZyEpWNDyLBgIlGi6i3kN2z45+YSQ+URBAxQGIq9IFGU4um3sbxM4Vu4jk pyDx6kj3nGSL/0ioFVFH0Q== 0000874016-97-000005.txt : 19970813 0000874016-97-000005.hdr.sgml : 19970813 ACCESSION NUMBER: 0000874016-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES APPAREL GROUP INC CENTRAL INDEX KEY: 0000874016 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 060935166 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10746 FILM NUMBER: 97656241 BUSINESS ADDRESS: STREET 1: 250 RITTENHOUSE CIRCLE CITY: BRISTOL STATE: PA ZIP: 19007 BUSINESS PHONE: 2157854000 MAIL ADDRESS: STREET 1: 250 RITTENHOUSE CIRCLE CITY: BRISTOL STATE: PA ZIP: 19007 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10746 JONES APPAREL GROUP, INC. (Exact name of registrant as specified in its charter) Pennsylvania 06-0935166 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 250 Rittenhouse Circle Bristol, Pennsylvania 19007 (Address of principal (Zip Code) executive offices) (215) 785-4000 (Registrant's telephone number, including area code) Not Applicable (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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class of Common Stock Outstanding at August 11, 1997 $.01 par value 52,209,801 JONES APPAREL GROUP, INC. AND SUBSIDIARIES Index PART I. FINANCIAL INFORMATION Page No. Financial Statements: Consolidated Balance Sheets June 29, 1997 and December 31, 1996................. 3 Consolidated Statements of Income Thirteen and Twenty-six Weeks ended June 29, 1997 and June 30, 1996................................. 4 Consolidated Statements of Stockholders' Equity Twenty-six Weeks ended June 29, 1997................ 5 Consolidated Statements of Cash Flows Twenty-six Weeks ended June 29, 1997 and June 30, 1996..................................... 6 Notes to Consolidated Financial Statements.................. 7 - 8 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 9 - 12 PART II. OTHER INFORMATION....................................... 13 - 14 - 2 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 29, December 31, 1997 1996 ----------- ------------ (Unaudited) ASSETS CURRENT: Cash and cash equivalents............................................................. $ 30,010 $ 30,085 Accounts receivable, net of allowance of $3,533 and $2,263............................ 104,583 112,678 Inventories........................................................................... 274,067 214,437 Receivable from and advances to contractors........................................... 12,468 11,490 Deferred taxes........................................................................ 17,257 9,708 Prepaid expenses and other current assets............................................. 14,463 11,432 ------- ------- TOTAL CURRENT ASSETS................................................................ 452,848 389,830 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation and amortization of $38,567 and $33,127.................................. 69,573 61,696 CASH RESTRICTED FOR CAPITAL ADDITIONS................................................... 9,015 - INTANGIBLES, less accumulated amortization of $6,758 and $5,896......................... 25,426 26,288 DEFERRED TAXES.......................................................................... 1,311 461 OTHER ASSETS............................................................................ 10,520 9,834 ------- ------- $568,693 $488,109 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings................................................................. $ 11,879 $ - Current portion of long-term debt and capital lease obligations....................... 3,655 3,067 Accounts payable...................................................................... 89,536 72,569 Income taxes payable.................................................................. 4,844 8,959 Accrued expenses and other current liabilities........................................ 14,705 11,265 ------- ------- TOTAL CURRENT LIABILITIES........................................................... 124,619 95,860 NONCURRENT LIABILITIES: Obligations under capital leases...................................................... 19,925 12,134 Long-term debt........................................................................ 2 7 ------- ------- TOTAL NONCURRENT LIABILITIES........................................................ 19,927 12,141 ------- ------- TOTAL LIABILITIES................................................................... 144,546 108,001 EXCESS OF NET ASSETS ACQUIRED OVER COST................................................. 2,457 3,379 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value - shares authorized 1,000; none issued................ - - Common stock, $.01 par value - shares authorized 100,000; issued 54,053 and 53,595............................................................. 541 536 Additional paid in capital............................................................ 109,444 99,140 Retained earnings..................................................................... 366,011 317,192 Cumulative foreign currency translation adjustments................................... (1,216) (1,154) ------- ------- 474,780 415,714 Less treasury stock, 1,976 and 1,600 shares, at cost.................................. (53,090) (38,985) ------- ------- TOTAL STOCKHOLDERS' EQUITY.......................................................... 421,690 376,729 ------- ------- $568,693 $488,109 ======= ======= All amounts in thousands except per share data See notes to consolidated financial statements
- 3 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Thirteen weeks ended Twenty-six weeks ended ---------------------- ------------------------ June 29, June 30, June 29, June 30, 1997 1996 1997 1996 -------- -------- --------- --------- Net sales................................................. $262,988 $193,275 $580,978 $453,626 Cost of goods sold........................................ 178,542 132,243 393,426 319,800 ------- ------- ------- ------- Gross profit.............................................. 84,446 61,032 187,552 133,826 Selling, general and administrative expenses.............. 56,632 42,157 115,729 84,874 Licensing income.......................................... (3,301) (2,659) (6,766) (5,235) ------- ------- ------- ------- Income from operations.................................... 31,115 21,534 78,859 54,187 Net interest expense...................................... 267 463 629 984 ------- ------- ------- ------- Income before provision for income taxes.................. 30,848 21,071 77,960 53,203 Provision for income taxes................................ 11,568 7,733 29,141 19,526 ------- ------- ------- ------- Net income................................................ $19,280 $13,338 $48,819 $33,677 ======= ======= ======= ======= Earnings per share Primary................................................. $0.36 $0.25 $0.90 $0.63 Fully diluted........................................... $0.36 $0.25 $0.90 $0.63 Weighted average common shares and share equivalents outstanding Primary................................................. 54,014 53,967 53,979 53,749 Fully diluted........................................... 54,167 53,967 54,250 53,844 All amounts in thousands except per share data See notes to consolidated financial statements
- 4 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Cumulative foreign Total Additional currency stock- Common paid-in Retained translation Treasury holders' stock capital earnings adjustments stock equity ------- ----------- ----------- ----------- ---------- ----------- Balance, January 1, 1997.............................. $536 $99,140 $317,192 ($1,154) $(38,985) $376,729 Twenty-six weeks ended June 29, 1997: Amortization of deferred compensation................. - 158 - - - 158 Net income............................................ - - 48,819 - - 48,819 Exercise of stock options............................. 5 6,280 - - (100) 6,185 Tax benefit derived from exercise of stock options.... - 3,866 - - - 3,866 Acquisition of treasury stock......................... - - - - (14,005) (14,005) Foreign currency translation adjustments.............. - - - (62) - (62) ------- ---------- ---------- ---------- --------- ---------- Balance, June 29, 1997............................... $541 $109,444 $366,011 ($1,216) $(53,090) $421,690 ======= ========== ========== ========== ========= ========== All amounts in thousands See notes to consolidated financial statements
- 5 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Twenty-six weeks ended -------------------------- June 29, June 30, 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income.................................................................................. $48,819 $33,677 ------- ------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization............................................................. 5,877 4,146 Provision for losses on accounts receivable............................................... 1,783 460 Deferred taxes............................................................................ (8,399) 1,929 Other..................................................................................... 87 154 Decrease (increase) in: Trade receivables....................................................................... 6,282 (4,825) Inventories............................................................................. (59,694) (61,383) Prepaid expenses and other current assets............................................... (4,023) (2,697) Other assets............................................................................ (687) (227) Increase (decrease)in: Accounts payable........................................................................ 16,975 14,690 Taxes payable........................................................................... (256) 4,614 Accrued expenses and other current liabilities.......................................... 3,462 2,639 ------- ------- Total adjustments..................................................................... (38,593) (40,500) ------- ------- Net cash provided by (used in) operating activities......................................... 10,226 (6,823) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures...................................................................... (13,523) (10,744) Changes in cash restricted for capital additions.......................................... (9,015) (2,798) Trademark costs........................................................................... - (1,519) Proceeds from disposition of assets....................................................... - 108 ------- ------- Net cash used in investing activities....................................................... (22,538) (14,953) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in short-term borrowings......................................................... 11,879 18,839 Proceeds from capital lease............................................................... 10,000 5,000 Repayment of capital leases and long-term debt............................................ (1,846) (1,187) Acquisition of treasury stock............................................................. (14,005) (14,299) Proceeds from exercise of stock options................................................... 6,185 7,085 Other..................................................................................... - (37) ------- ------- Net cash provided by financing activities................................................... 12,213 15,401 ------- ------- EFFECT OF EXCHANGE RATES ON CASH............................................................ 24 1 ------- ------- NET DECREASE IN CASH........................................................................ (75) (6,374) CASH AND CASH EQUIVALENTS, beginning of period.............................................. 30,085 16,864 ------- ------- CASH AND CASH EQUIVALENTS, end of period.................................................... $30,010 $10,490 ======= ======= All amounts in thousands See notes to consolidated financial statements
- 6 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The consolidated financial statements include the accounts of Jones Apparel Group, Inc. and its wholly-owned subsidiaries (collectively, the "Company"). The financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally made in an annual Form 10-K filing. Accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements and the footnotes therein included within the Company's Annual Report on Form 10-K. The financial information has been prepared in accordance with the Company's customary accounting practices and has not been audited. All significant intercompany balances and transactions have been eliminated. In the opinion of management, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature. The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 1997. The Company reports interim results in 13 week quarters; however, the annual reporting period is the calendar year. 2. Inventories Inventories are summarized as follows (amounts in thousands): June 29, December 31, 1997 1996 -------- ------------ Raw materials..................... $39,340 $38,571 Work in process................... 68,185 37,682 Finished goods.................... 166,542 138,184 ------- ------- $274,067 $214,437 ======= ======= - 7 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Earnings Per Share The computation of earnings per share is based on the weighted average number of common shares outstanding during the period plus, in periods in which they have a dilutive effect, the effect of common shares contingently issuable upon exercise of stock options. Fully diluted earnings per share also reflect additional dilution related to stock options due to the use of the market price at the end of the period when this price is higher than the average price for the period. 4. Statement of Cash Flows Cash payments made for interest for the twenty-six weeks ended June 29, 1997 and June 30, 1996 were $1,176,000 and $1,272,000, respectively. Cash payments made for income taxes for the twenty-six weeks ended June 29, 1997 and June 30, 1996 were $37,751,000 and $12,198,000, respectively. Equipment acquired through capital lease financing during the twenty-six weeks ended June 29, 1997 was $220,000. Reduction in income tax payments resulting from the exercise of employee stock options during the twenty-six weeks ended June 29, 1997 and June 30, 1996 were $3,866,000 and $4,002,000, respectively. Under the provisions of the Company's 1991 Stock Option Plan, employees exercising stock options during the twenty-six weeks ended June 29, 1997 exchanged 2,122 shares of the Company's Common Stock (valued at $100,000) for 8,963 newly issued shares and during the twenty-six weeks ended June 30, 1996 exchanged 28,000 shares of the Company's Common Stock (valued at $763,000) for 67,430 newly issued shares. 5. New Accounting Standards. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earning per Share," which provides for the calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution from the assumed exercise of stock options in a manner similar to fully diluted earnings per share, except that the use of the market price at the end of the period, when that price is higher than the average market price for the period, has been eliminated. This standard is effective for periods ending after December 15, 1997. The adoption of this standard is not expected to have a significant effect on the Company's earnings per share calculation. Under SFAS No. 128, basic and diluted earning per share for the twenty-six weeks ended June 29, 1997 would be $.94 and $.90, respectively. Basic and diluted earnings per share for the twenty-six weeks ended June 30, 1996 would be $.64 and $.63, respectively. Under SFAS No. 128, basic and diluted earnings per share for the thirteen weeks ended June 29, 1997 would be $.37 and $.36, respectively. Basic and diluted earnings per share for the thirteen weeks ended June 30, 1996 would be $.25 and $.25, respectively. 6. Capital Stock On July 30, 1996, the Company's Board of Directors approved a two-for-one stock split of the Company's Common Stock in the form of a 100% stock dividend for shareholders of record as of September 12, 1996. Concurrently, the number of authorized shares of Common Stock was increased to 100,000,000. On October 2, 1996, a total of 26,744,580 shares of Common Stock were issued in connection with the split. The stated par value of each share was not changed from $0.01. All share and per share amounts have been restated to retroactively reflect the stock split. - 8 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion provides information and analysis of the Company's results of operations for the thirteen and twenty-six week periods ended June 29, 1997 and June 30, 1996 and its liquidity and capital resources. The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements included elsewhere herein. Results of Operations Quarter Ended June 29, 1997 Compared to Quarter Ended June 30, 1996 Net Sales. Net sales in the thirteen weeks ended June 29, 1997 (hereinafter referred to as the "second quarter of 1997") increased by 36.1%, or $69.7 million, to $263.0 million as compared to $193.3 million in the thirteen weeks ended June 30, 1996 (hereinafter referred to as the "second quarter of 1996"). The increase was due primarily to an increase in the number of units shipped, as well as the impact of a higher average price per unit resulting from the mix of products shipped. Career sportswear sales, which include the new Lauren Ralph Lauren division in 1997, increased by 57.1% or $59.1 million, to $162.6 million in the second quarter of 1997 as compared to $103.5 million in the second quarter of 1996. Casual sportswear sales for the second quarter of 1997 increased by 19.1%, or $10.8 million, to $67.4 million as compared to $56.6 million in the second quarter of 1996. Net sales for the Company's suit, dress and other category decreased by 0.6%, or $0.2 million, to $33.0 million in the second quarter of 1997 as compared to $33.2 million in the second quarter of 1996. Gross Profit. The gross profit margin was 32.1% in the second quarter of 1997 as compared to 31.6% in the second quarter of 1996. The increase was primarily attributable to the impact of higher gross profit margins from the Company's major product lines including, in 1997, the new Lauren Ralph Lauren label, which carries higher margins than the corporate average. SG&A Expenses. Selling, general and administrative expenses ("SG&A" expenses) of $56.6 million in the second quarter of 1997 represented an increase of $14.5 million over the second quarter of 1996. As a percentage of sales, SG&A expenses decreased to 21.5% in the second quarter of 1997 from 21.8% for the comparable period in 1996. Advertising, royalties and operating expenses associated with Lauren Ralph Lauren sales, as well as the Company's overall sales growth, added significant expenses during the quarter. Retail store operating expenses increased by $2.0 million, reflecting the added cost of 24 more stores in operation at the end of the second quarter of 1997 compared to the end of the second quarter of 1996. Licensing Income. Licensing income increased by $0.6 million to $3.3 million in the second quarter of 1997 as compared to $2.7 million in the second quarter of 1996. Licensees under the Jones New York label accounted for $0.5 million of the increase while income from licenses under the Evan-Picone label increased by $0.1 million. - 9 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Operating Income. The resulting second quarter of 1997 operating profit of $31.1 million increased by 44.5%, or $9.6 million, as compared to $21.5 million during the second quarter of 1996. The operating profit margin increased to 11.8% for the second quarter of 1997 from the 11.1% achieved during the second quarter of 1996. Net Interest Expense. Net interest expense was $0.3 million in the second quarter of 1997 compared to $0.5 million in the comparable period of 1996. The primary reasons for the change were lower average borrowings and higher average cash balances during the second quarter of 1997. Provision for Income Taxes. The effective income tax rate was 37.5% for the second quarter of 1997 as compared to 36.7% for the second quarter of 1996. The increase was primarily due to higher state income tax provisions for the second quarter of 1997. Net Income. Net income increased by 44.5% to $19.3 million in the second quarter of 1997, an increase of $6.0 million over the net income of $13.3 million earned in the second quarter of 1996. Net income as a percentage of sales was 7.3% in the second quarter of 1997 and 6.9% in the second quarter of 1996. Six Months Ended June 29, 1997 Compared to Six Months Ended June 30, 1996 Net Sales. Net sales in the twenty-six weeks ended June 29, 1997 (hereinafter referred to as the "first six months of 1997") increased by 28.1%, or $127.4 million, to $581.0 million as compared to $453.6 million in the twenty-six weeks ended June 30, 1996 (hereinafter referred to as the "first six months of 1996"). The increase was due primarily to an increase in the number of units shipped, as well as the impact of a higher average price per unit resulting from the mix of products shipped. Career sportswear sales, which include the new Lauren Ralph Lauren division in 1997, increased by 44.9% or $112.9 million, to $364.1 million in the first six months of 1997 as compared to $251.2 million in the first six months of 1996. Casual sportswear sales for the first six months of 1997 increased by 9.9%, or $13.1 million, to $145.2 million as compared to $132.1 million in the first six months of 1996. Net sales for the Company's suit, dress and other category increased by 2.0%, or $1.4 million, to $71.7 million in the first six months of 1997 as compared to $70.3 million in the first six months of 1996. Gross Profit. The gross profit margin was 32.3% in the first six months of 1997 as compared to 29.5% in the first six months of 1996. The increase was primarily attributable to the impact of higher gross profit margins from the Company's major product lines including, in 1997, the new Lauren Ralph Lauren label, which carries higher margins than the corporate average. SG&A Expenses. Selling, general and administrative expenses ("SG&A" expenses) of $115.7 million in the first six months of 1997 represented an increase of $30.9 million over the first six months of 1996. As a percentage of sales, SG&A expenses increased to 19.9% in the first six months of 1997 from 18.7% for the comparable period in 1996. Advertising, royalties and operating expenses associated with Lauren Ralph Lauren sales, as well as the Company's overall sales growth, added significant expenses during - 10 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) the first six months. Retail store operating expenses increased by $3.8 million, reflecting the added cost of 24 more stores in operation at the end of the first six months of 1996. Licensing Income. Licensing income increased by $1.6 million to $6.8 million in the first six months of 1997 as compared to $5.2 million in the first six months of 1996. Licensees under the Jones New York label accounted for $1.3 million of the increase while income from licenses under the Evan-Picone label increased by $0.3 million. Operating Income. The resulting first six months of 1997 operating profit of $78.6 million increased by 45.0%, or $24.4 million, as compared to $54.2 million during the first six months of 1996. The operating profit margin increased to 13.5% for the first six months of 1997 from the 11.9% achieved during the first six months of 1996. Net Interest Expense. Net interest expense was $0.6 million in the first six months of 1997 compared to $1.0 million in the comparable period of 1996. The primary reasons for the change were lower average borrowings and higher average cash balances during the first six months of 1997. Provision for Income Taxes. The effective income tax rate was 37.4% for the first six months of 1997 as compared to 36.7% for the first six months of 1996. The increase was primarily due to higher state income tax provisions for the first six months of 1997. Net Income. Net income increased by 45.0% to $48.8 million in the first six months of 1997, an increase of $15.1 million over the net income of $33.7 million earned in the first six months of 1996. Net income as a percentage of sales was 8.4% in the first six months of 1997 and 7.4% in the first six months of 1996. Liquidity and Capital Resources The Company's principal capital requirements have been to fund working capital needs, capital expenditures and, beginning in 1995, to repurchase the Company's Common Stock on the open market. The Company has historically relied primarily on internally generated funds, trade credit and bank borrowings to finance its operations and expansion. Net cash provided by (used in) operations was $10.2 million in the first six months of 1997, compared to ($6.8) million in the first six months of 1996, primarily reflecting the effects of a higher net income for the first six months of 1997 (before depreciation and amortization charges). Significant offsetting changes also include a decrease in trade receivables of $6.3 million in 1997 compared to a $4.8 million increase in 1996 and the generation of an $8.4 million deferred tax benefit in 1997 compared to a deferred tax expense of $1.9 million in 1996. Net cash used in investing activities was $7.6 million higher in the first six months of 1997 than in the first six months of 1996 due to additional capital improvements and replacements. Expenditures for capital improvements, replacements and property under capital lease for the full year 1997 are expected to approximate $20 million, of which $10 million represents the estimated cost of an additional warehouse facility under construction to support anticipated growth. - 11 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Net cash provided by financing activities was $12.2 million in the first six months of 1997 as compared to $15.4 million in the first six months of 1996. The principal reasons for the changes were decreases in the amounts of short-term borrowings to fund working capital requirements and transactions involving the Company's Common Stock. In the first six months of 1997, the Company repurchased $14.0 million of its Common Stock on the open market under an announced program under which the Company is authorized to acquire up to $100.0 million of such shares through the end of 1997. As of June 29, 1997, an aggregate of $52.2 million had been expended pursuant to the stock repurchase program. Proceeds from the issuance of common stock to employees exercising stock options amounted to $6.2 million in the first six months of 1997 as compared to $7.1 million in the first six months of 1996. As of June 29, 1997, the Company had credit arrangements with six United States financial institutions which totaled $330.0 million. These lines, which may be used for unsecured borrowings and letters of credit (issued primarily to finance foreign inventory purchases), contain an aggregate sub-limit of $190.0 million for unsecured borrowings with rates depending on the borrowing vehicle utilized. At June 29, 1997, $169.8 million was utilized for letters of credit and there were $11.9 million of short-term borrowings outstanding, leaving $148.3 million available for additional borrowings and letters of credit at that date. The Company also has a line of credit with a Canadian institution for C$4.0 million to be used for unsecured borrowings under which no amounts were outstanding at June 29, 1997. The Company believes that funds generated by operations and the bank credit arrangements will provide the financial resources sufficient to meet its foreseeable working capital, letter of credit, capital expenditure and stock repurchase requirements. - 12 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES OTHER INFORMATION Part II. Item 4. Submission of matters to a vote of security holders (a) Annual Meeting of Shareholders May 21, 1997 (c) Proposals
Broker For Against Withheld Abstain Nonvotes ---------- ------- -------- ------- -------- Election of Directors Sidney Kimmel 49,872,806 * 471,480 * - Herbert J. Goodfriend 49,954,082 * 390,204 * - Irwin Samelman 49,959,606 * 384,680 * - Geraldine Stutz 50,121,506 * 222,780 * - Howard Gittis 50,129,006 * 215,280 * - Ratification of Appointment of BDO Seidman as Independent Public Accountants 50,333,014 5,859 * 5,413 - *Not Applicable
Item 5. Other information Statement Regarding Forward-looking Disclosure This Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended which represent the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of national and regional economic conditions, the overall level of consumer spending, the performance of the Company's products within the prevailing retail environment, customer acceptance of both new designs and newly-introduced product lines, and financial difficulties encountered by customers. All statements, other than statements of historical facts included in this Quarterly Report, including, without limitation, the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed in this Report. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. Item 6. Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended June 29, 1997. - 13 - JONES APPAREL GROUP, INC. AND SUBSIDIARIES OTHER INFORMATION (CONTINUED) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized. JONES APPAREL GROUP, INC. (Registrant) Date: August 12, 1997 By /s/ Sidney Kimmel ---------------------------- SIDNEY KIMMEL Chief Executive Officer By /s/ Wesley R. Card ---------------------------- WESLEY R. CARD Chief Financial Officer - 14 - EX-27 2
5 1,000 6-MOS DEC-31-1997 JUN-29-1997 30,010 0 108,116 3,533 274,067 452,848 108,140 38,567 568,693 124,619 0 0 0 541 421,149 568,693 580,978 580,978 393,426 393,426 115,729 1,783 629 77,960 29,141 48,819 0 0 0 48,819 .90 .90
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