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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 27, 2007
JONES APPAREL GROUP, INC.
Pennsylvania (State or Other Jurisdiction of Incorporation) |
1-10746 (Commission File Number) |
06-0935166 (IRS Employer Identification No.) |
1411 Broadway New York, New York 10018 (Address of principal executive offices) |
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(212) 642-3860
(Registrant's telephone number, including area code) |
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Not Applicable
Former name or former address, if changed since last report |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
On July 27, 2007, Jones Apparel Group, Inc. (the "Company") entered into (1) a Letter Amendment and Waiver (the "2004 Facility Amendment") with certain financial institutions and other parties thereto as lenders, which amends the Amended and Restated Five-Year Credit Agreement dated as of June 15, 2004 (the "2004 Credit Agreement") among the Company and certain of its subsidiaries (collectively, the "Credit Parties"), the lenders party thereto and Wachovia Bank, National Association, as Administrative Agent; and (2) a Letter Amendment and Waiver (the "2005 Facility Amendment") with certain financial institutions and other parties thereto as lenders, which amends the Amended and Restated Five-Year Credit Agreement dated as of May 16, 2005 (the "2005 Credit Agreement") among the Credit Parties, the lenders party thereto and the Administrative Agent.
The 2004 Credit Agreement and the 2005 Credit Agreement have been previously filed and are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2006, as amended (File No. 1-10746).
The 2004 Facility Amendment and the 2005 Facility Amendment:
permanently reduce the minimum Consolidated Net Worth requirement of $1,750,000,000 by the amount of net cash proceeds from the sale of the Company's subsidiary, Barneys New York, Inc. (the "Barneys Sale"), used to repurchase the Company's outstanding common stock within six months after the consummation of the Barneys Sale;
exclude the Barneys Sale from the restrictions on sales or transfers of assets by the Credit Parties; and
waive the Credit Parties' failure, as of the end of the fiscal quarter ended July 7, 2007, to meet the minimum Interest Coverage Ratio of 2.75 to 1.0, provided that the Interest Coverage Ratio as of the end of such fiscal quarter is not less than 2.50 to 1.0. The foregoing description of the two amendments is hereby qualified in its entirety by reference to the full text of the amendments, which are filed herewith as Exhibits 10.1 and 10.2 and incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On August 1, 2007, Jones Apparel Group, Inc. issued a press release reporting its results of operations for the fiscal quarter ended July 7, 2007.
A copy of the press release is attached as Exhibit 99.1 to this report.
This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
The press release attached as Exhibit 99.1 contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. To supplement the Company's consolidated financial statements presented in accordance with GAAP, it is presenting non-GAAP information regarding severance and other expenses related to the strategic operating initiatives, expenses related to the settlement of litigation concerning certain licensing agreements, the loss on the sale of the Polo Jeans Company business, restructuring costs and certain other items.
These non-GAAP measures are provided to enhance the user's overall understanding of the Company's current financial performance. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core operating results. In addition, because the Company has historically reported certain non-GAAP results to investors, the Company believes the inclusion of non-GAAP numbers provides consistency in our financial reporting. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for or superior to GAAP results. The non-GAAP measures of adjusted net income and adjusted diluted earnings per share included in the attached press release have been reconciled to the equivalent GAAP measure.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. | Description |
10.1 | Letter Amendment and Waiver dated July 27, 2007, by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein, and Wachovia Bank, National Association, as Administrative Agent. |
10.2 |
Letter Amendment and Waiver dated July 27, 2007, by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein, and Wachovia Bank, National Association, as Administrative Agent. |
99.1 | Press Release of the Registrant dated August 1, 2007. |
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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 hereunto duly authorized.
JONES APPAREL GROUP, INC. (Registrant) By: /s/ John T. McClain |
Date: August 1, 2007
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Exhibit Index
Exhibit No. | Description |
10.1 | Letter Amendment and Waiver dated July 27, 2007, by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein, and Wachovia Bank, National Association, as Administrative Agent. |
10.2 |
Letter Amendment and Waiver dated July 27, 2007, by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein, and Wachovia Bank, National Association, as Administrative Agent. |
99.1 | Press Release of the Registrant dated August 1, 2007. |
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EXHIBIT 10.1
LETTER AMENDMENT AND WAIVER
Dated as of July 27, 2007
To the banks, financial institutions
and other institutional lenders
(collectively, the "Lenders")
parties to the Credit Agreement
referred to below and to Wachovia Bank, National Association,
as administrative agent (the "Administrative Agent")
for the Lenders
Ladies and Gentlemen:
We refer to the Amended and Restated Five-Year Credit Agreement dated as of June 14, 2004 (the "Credit Agreement") among the undersigned and you. Capitalized terms not otherwise defined in this Letter Amendment and Waiver (this "Letter Amendment") have the same meanings as specified in the Credit Agreement.
Jones Apparel Group, one of the Additional Obligors, has announced its intention to sell its Subsidiary Barneys New York, Inc. to an independent third party (the "Barneys Sale"). We hereby request that you agree to amend Section 11.6 of the Credit Agreement to permit the Barney's Sale and to amend Section 10.2 of the Credit Agreement to permit us to use the proceeds of the Barneys Sale to repurchase shares of our outstanding common stock.
You have indicated your willingness, on the terms and conditions stated below, to so agree. Accordingly, it is hereby agreed by you and us as follows:
The Credit Agreement is, effective as of the date of this Letter Amendment, hereby amended as follows:
(a) Section 10.2 is amended in full to read as follows:
SECTION 10.2. Minimum Net Worth. As of the end of any fiscal quarter, permit Consolidated Net Worth to be less than $1,750,000,000, provided that such amount shall be permanently reduced by the amount equal to such portion of the cash proceeds (net of income or gains taxes payable by the seller as a result of any gain recognized in connection therewith) of the Barneys Sale that are used to repurchase outstanding common stock of Jones Apparel Group within six months after the consummation of the Barneys Sale.
(b) Section 11.6 is amended by adding to the end thereof a new subsection (g), to read as follows:
(g) the sale of Barneys New York, Inc., a wholly-owned Subsidiary of Jones Apparel Group, to an independent third party (the "Barneys Sale").
The Credit Parties' failure to comply with Section 10.1 of the Credit Agreement as of the end of the fiscal quarter ended July 7, 2007 is hereby waived in respect of such fiscal quarter, effective as of the date of this Letter Amendment, provided that the Interest Coverage Ratio as of the end of such fiscal quarter is not less than 2.50:1.00.
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The Credit Parties represent and warrant as follows:
i. | Each of the Credit Parties is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. |
ii. | The execution, delivery and performance by each Credit Party of this Letter Amendment and the performance by each Credit Party of its obligations under the Credit Agreement, as amended hereby, do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any of the Credit Parties or any of their Subsidiaries to obtain any Governmental Approval not otherwise already obtained or violate any Applicable Law relating to the Credit Parties or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of the Credit Parties or any of their Subsidiaries or any indenture or other material agreement or instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person except as could not reasonably be expected to have a Material Adverse Effect, or (iii) result in or require the creation or imposition of any material Lien upon or with respect to any property now owned or hereafter acquired by such Person other than a Lien permitted under the terms of the Loan Documents. |
iii. | Each of the Credit Parties has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Letter Amendment and the performance of its obligations under the Credit Agreement, as amended hereby, in accordance with their respective terms. This Letter Amendment has been duly executed and delivered by the duly authorized officers of the Credit Parties and such document constitutes, and each of the Loan Documents does and continues to constitute, the legal, valid and binding obligation of the Credit Parties and, if applicable, each of their Subsidiaries party thereto, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. |
iv. | Except for matters existing on the Closing Date and set forth on Schedule 7.1(q) to the Credit Agreement, there are no actions, suits or proceedings pending nor, to the knowledge of the Credit Parties, threatened against or affecting the Credit Parties or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority, which could reasonably be expected to have a Material Adverse Effect or which relate to the enforceability of this Letter Amendment or any Loan Documents, as amended hereby. |
v. | No event has occurred and is continuing that constitutes a Default or an Event of Default. |
This Letter Amendment shall become effective as of the date first above written when, and only when, the Administrative Agent shall have received counterparts of this Letter Amendment executed by the undersigned and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Letter Amendment, and the consent attached hereto executed by each Additional Obligor. This Letter Amendment is subject to the provisions of Section 14.11 of the Credit Agreement.
On and after the effectiveness of this Letter Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit
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Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Letter Amendment.
The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Letter Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at least two counterparts of this Letter Amendment to Susan Hobart, Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022.
This Letter Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Letter Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Letter Amendment.
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This Letter Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
Very truly yours,
JONES APPAREL GROUP USA, INC., By: /s/ Joseph T. Donnalley |
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JONES APPAREL GROUP, INC., as Additional Obligor By: /s/ Joseph T. Donnalley |
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JONES APPAREL GROUP HOLDINGS, INC., as Additional Obligor By: /s/ Joseph T. Donnalley |
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JONES RETAIL CORPORATION, as Additional Obligor By: /s/ Joseph T. Donnalley |
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NINE WEST FOOTWEAR CORPORATION, as Additional Obligor By: /s/ Joseph T. Donnalley |
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Agreed as of the date first above written: | |
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender and Lender By: /s/ Susan T. Gallagher |
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JPMORGAN CHASE BANK, N.A., as Issuing Lender and Lender By: /s/ James A. Knight |
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CITIBANK, N.A., as Issuing Lender and Lender By: /s/ John McQuiston |
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BANK OF AMERICA, N.A., as Issuing Lender and Lender By: /s/ Thomas J. Kane |
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BARCLAYS BANK PLC, as Lender By: /s/ Esther Carr |
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SUNTRUST BANK, as Lender By: /s/ Michael Vegh |
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THE BANK OF TOKYO-MITSUBISHI UFJ, LTD, NEW YORK BRANCH, as Lender By: /s/ Spencer Hughes |
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BEAR STEARNS CORPORATE LENDING INC., as Lender By: /s/ Randall Trombley |
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MALAYAN BANKING BERHAD, NEW YORK BRANCH, as Lender By: /s/ Fauzi Zulkifli |
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BANK OF CHINA, as Lender By: /s/ Richard Bradspies |
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MIZUHO CORPORATE BANK, LTD., as Lender By: /s/ Hidekatsu Take |
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SUMITOMO MITSUI BANKING CORPORATION, as Lender By: /s/ David A. Buck |
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THE BANK OF NOVA SCOTIA, as Lender By: /s/ Todd S. Meller |
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UNION BANK OF CALIFORNIA, N.A., as Lender By: /s/ Ching Lim |
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THE ROYAL BANK OF SCOTLAND, as Lender By: /s/ Charlotte Sohn Fuiks |
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PNC BANK, NATIONAL ASSOCIATION as Lender By: /s/ Denise D. Killen |
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STANDARD CHARTERED BANK, as Lender By: /s/ Bert de Guzman By: /s/ Robert K. Reddington |
EXHIBIT 10.2
LETTER AMENDMENT AND WAIVER
Dated as of July 27, 2007
To the banks, financial institutions
and other institutional lenders
(collectively, the "Lenders")
parties to the Credit Agreement
referred to below and to Wachovia Bank, National Association,
as administrative agent (the "Administrative Agent") for the
Lenders
Ladies and Gentlemen:
We refer to the Amended and Restated Five-Year Credit Agreement dated as of May 16, 2005 (the "Credit Agreement") among the undersigned and you. Capitalized terms not otherwise defined in this Letter Amendment and Waiver (this "Letter Amendment") have the same meanings as specified in the Credit Agreement.
Jones Apparel Group, one of the Additional Obligors, has announced its intention to sell its Subsidiary Barneys New York, Inc. to an independent third party (the "Barneys Sale"). We hereby request that you agree to amend Section 11.6 of the Credit Agreement to permit the Barney's Sale and to amend Section 10.2 of the Credit Agreement to permit us to use the proceeds of the Barneys Sale to repurchase shares of our outstanding common stock.
You have indicated your willingness, on the terms and conditions stated below, to so agree. Accordingly, it is hereby agreed by you and us as follows:
The Credit Agreement is, effective as of the date of this Letter Amendment, hereby amended as follows:
(a) Section 10.2 is amended in full to read as follows:
SECTION 10.2. Minimum Net Worth. As of the end of any fiscal quarter, permit Consolidated Net Worth to be less than $1,750,000,000, provided that such amount shall be permanently reduced by the amount equal to such portion of the cash proceeds (net of income or gains taxes payable by the seller as a result of any gain recognized in connection therewith) of the Barneys Sale that are used to repurchase outstanding common stock of Jones Apparel Group within six months after the consummation of the Barneys Sale.
(b) Section 11.6 is amended by adding to the end thereof a new subsection (g), to read as follows:
(g) the sale of Barneys New York, Inc., a wholly-owned Subsidiary of Jones Apparel Group, to an independent third party (the "Barneys Sale").
The Credit Parties' failure to comply with Section 10.1 of the Credit Agreement as of the end of the fiscal quarter ended July 7, 2007 is hereby waived in respect of such fiscal quarter, effective as of the date of this Letter Amendment, provided that the Interest Coverage Ratio as of the end of such fiscal quarter is not less than 2.50:1.00.
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The Credit Parties represent and warrant as follows:
i. | Each of the Credit Parties is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. |
ii. | The execution, delivery and performance by each Credit Party of this Letter Amendment and the performance by each Credit Party of its obligations under the Credit Agreement, as amended hereby, do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any of the Credit Parties or any of their Subsidiaries to obtain any Governmental Approval not otherwise already obtained or violate any Applicable Law relating to the Credit Parties or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of the Credit Parties or any of their Subsidiaries or any indenture or other material agreement or instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person except as could not reasonably be expected to have a Material Adverse Effect, or (iii) result in or require the creation or imposition of any material Lien upon or with respect to any property now owned or hereafter acquired by such Person other than a Lien permitted under the terms of the Loan Documents. |
iii. | Each of the Credit Parties has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Letter Amendment and the performance of its obligations under the Credit Agreement, as amended hereby, in accordance with their respective terms. This Letter Amendment has been duly executed and delivered by the duly authorized officers of the Credit Parties and such document constitutes, and each of the Loan Documents does and continues to constitute, the legal, valid and binding obligation of the Credit Parties and, if applicable, each of their Subsidiaries party thereto, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. |
iv. | Except for matters existing on the Closing Date and set forth on Schedule 7.1(q) to the Credit Agreement, there are no actions, suits or proceedings pending nor, to the knowledge of the Credit Parties, threatened against or affecting the Credit Parties or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority, which could reasonably be expected to have a Material Adverse Effect or which relate to the enforceability of this Letter Amendment or any Loan Documents, as amended hereby. |
v. | No event has occurred and is continuing that constitutes a Default or an Event of Default. |
This Letter Amendment shall become effective as of the date first above written when, and only when, the Administrative Agent shall have received counterparts of this Letter Amendment executed by the undersigned and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Letter Amendment, and the consent attached hereto executed by each Additional Obligor. This Letter Amendment is subject to the provisions of Section 14.11 of the Credit Agreement.
On and after the effectiveness of this Letter Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit
2
Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Letter Amendment.
The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Letter Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at least two counterparts of this Letter Amendment to Susan Hobart, Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022.
This Letter Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Letter Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Letter Amendment.
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This Letter Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
Very truly yours,
JONES APPAREL GROUP USA, INC., By: /s/ Joseph T. Donnalley |
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JONES APPAREL GROUP, INC., as Additional Obligor By: /s/ Joseph T. Donnalley |
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JONES APPAREL GROUP HOLDINGS, INC., as Additional Obligor By: /s/ Joseph T. Donnalley |
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JONES RETAIL CORPORATION, as Additional Obligor By: /s/ Joseph T. Donnalley |
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NINE WEST FOOTWEAR CORPORATION, as Additional Obligor By: /s/ Joseph T. Donnalley |
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Agreed as of the date first above written: | |
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender and Lender By: /s/ Susan T. Gallagher |
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JPMORGAN CHASE BANK, N.A., as Issuing Lender and Lender By: /s/ James A. Knight |
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CITIBANK, N.A., as Issuing Lender and Lender By: /s/ John McQuiston |
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BANK OF AMERICA, N.A., as Issuing Lender and Lender By: /s/ Thomas J. Kane |
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BARCLAYS BANK PLC, as Lender By: /s/ Esther Carr |
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SUNTRUST BANK, as Lender By: /s/ Michael Vegh |
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THE ROYAL BANK OF SCOTLAND PLC, By: /s/ Charlotte Sohn Fuiks Title: Managing Director |
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STANDARD CHARTERED BANK, By: /s/ Bert de Guzman Name: Bert de Guzman Title: Senior Vice President By: /s/ Robert K. Reddington |
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THE BANK OF TOKYO-MITSUBISHI UFJ, LTD, NEW YORK
BRANCH, By: /s/ Spencer Hughes Title: Authorized Signatory |
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BANK OF CHINA, By: /s/ Richard Bradspies Title: Deputy General Manager |
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MIZUHO CORPORATE BANK, LTD., By: /s/ Hidekatsu Take Title: Deputy General Manager |
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THE BANK OF NOVA SCOTIA, By: /s/ Todd S. Meller Title: Managing Director |
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UNION BANK OF CALIFORNIA, N.A., By: /s/ Ching Lim Title: Vice President |
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BANK LEUMI USA, By: /s/ Phyllis Rosenfeld Title: Vice President By: /s/ Iris Steinhardt Title: Vice President |
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BEAR STEARNS CORPORATE LENDING INC., By: /s/ Randall Trombley Title: Authorized Signatory |
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ISRAEL DISCOUNT BANK OF NEW YORK, By: /s/ Juan C. Ziano Title: First Vice President By: /s/ David Korngruen |
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FORTIS CAPITAL CORPORATION, By: /s/ Gill Dickson Title: Director By: /s/ Daniel Jaffe |
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LAND BANK OF TAIWAN, By: Title: |
Exhibit 99.1
For Immediate Release
Jones Apparel Group,
Inc.
Media Contacts: |
Joele
Frank and Sharon Stern
|
JONES APPAREL GROUP, INC.
REPORTS SECOND QUARTER 2007 FINANCIAL RESULTS
New York, New York - August 1, 2007 - Jones Apparel Group, Inc. (NYSE: JNY) today reported results for the second quarter ended July 7, 2007. Revenues for the second quarter of 2007 totaled $904 million versus revenues of $924 million for the second quarter of 2006.
The Company reported a loss per share of $0.44 for the second
quarter of 2007, as compared to earnings per share of $0.32 in the same period
last year. Excluding results of our discontinued operations, the impact of
severance and other expenses related to restructuring activities and the
strategic review of operations and certain other charges, adjusted earnings per
share from continuing operations for the second quarter of 2007 were $0.17, as
compared with $0.39 for the same period last year, as detailed in the
accompanying schedule.
Wesley R. Card, President and Chief Executive Officer, stated, "Several of our businesses, including brands in our Denim, Sportswear, Better Apparel and Wholesale Footwear and Accessories businesses performed well during the quarter, as expected, reflecting the strength of our core Jones New York, Nine West and Anne Klein brands. The negative sales trend, however, in the overall retail environment in the second quarter heavily impacted our results. Further affecting results were our company-owned retail stores, which continued to trend negatively throughout the second quarter as comparable store sales were down 8.0% for the period, with heavy promotional selling to clear excess inventory. Our wholesale businesses, although overall positive performers, were also impacted by the softening retail atmosphere and required us to provide higher than planned markdown support to our retail partners in the quarter."
John T. McClain, Chief Financial Officer, commented, "We ended the quarter with $967 million of total debt and, net of $54 million cash on hand, our debt to total capitalization ratio was 29.2%, in line with our expectations. Our cash used by operating activities during the period was $6 million, compared with cash provided by operating activities of $261 million in the prior year. The decrease in cash from operations was the result of lower earnings, the timing of shipments and payments for inventory, as well as the absence of the positive impact from the exit of Polo Jeans Company, which benefited last year."
Mr. Card continued, "Based on our performance to date, the impending sale of our Barneys retail operations and the exit from most of our Moderate Sportswear labels, and the continued potential for weakening in the retail environment, we have adjusted our outlook for 2007. We are now targeting 2007 full year adjusted earnings per share to be in a range of $1.28 to $1.34, compared to 2006 adjusted earnings per share of $2.19. Continuing operations are forecast to fall in an adjusted EPS range of $1.20 to $1.25."
Mr. Card concluded, "I firmly believe there is opportunity for Jones in our core brands - Jones New York, Anne Klein and Nine West, as well as our denim family of brands, including Gloria Vanderbilt and l.e.i. To that end, the management team, at the direction of the Board of Directors, is focused on stabilizing Jones and strategically investing in growing our brands for the future benefit of our shareholders. We have a highly talented and energized team of people across all of our operating divisions and they are reinvigorating our commitment to product quality and excellence in execution. I am confident that, by working together with a clear focus on strategic growth and investment, we will return the Company to a period of better predictability and consistency, and sustainable, improved profitability."
The Company's Board of Directors has declared a regular quarterly cash dividend of $0.14 per share to all common stockholders of record as of August 17, 2007 for payment on August 31, 2007.
The Company will host a conference call with management to discuss these results at 8:30 a.m. eastern time today, which is accessible by dialing 412-858-4600 or through a web cast at www.jny.com. The call will be recorded and made available through August 9 and may be accessed by dialing 877-344-7529. Enter account number 409163.
Presentation of Information in the Press Release
In an effort to provide investors with additional information regarding the Company's consolidated operating results as determined by generally accepted accounting principles (GAAP), the Company has also disclosed in this press release non-GAAP financial information regarding the effect on earnings per share of the strategic review of its operations, the loss on the sale of the Polo Jeans Company business, restructuring costs, the costs associated with the termination of certain licensing agreements and certain other items. The Company believes that providing this further information will allow investors to better analyze its ongoing results. The Company has also provided a reconciliation of its GAAP results to adjusted results. The Company has not provided a reconciliation with respect to 2007 targeted earnings per share growth given that it is an estimate derived from projected results.
Jones Apparel Group, Inc. (www.jny.com), a Fortune 500 company, is a leading designer, marketer and wholesaler of branded apparel, footwear and accessories. The Company also markets directly to consumers through our chain of specialty retail and value-based stores, and operates the Barneys New York chain of luxury stores. The Company's nationally recognized brands include Jones New York, Evan-Picone, Norton McNaughton, Gloria Vanderbilt, Erika, l.e.i., Energie, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Kasper, Anne Klein, Albert Nipon, Le Suit and Barneys New York. The Company also markets costume jewelry under the Givenchy brand licensed from Givenchy Corporation and footwear under the Dockers Women brand licensed from Levi Strauss & Co. Each brand is differentiated by its own distinctive styling, pricing strategy, distribution channel and target consumer. The Company primarily contracts for the manufacture of its products through a worldwide network of quality manufacturers. The Company has capitalized on its nationally known brand names by entering into various licenses for several of its trademarks, including Jones New York, Evan-Picone, Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., with select manufacturers of women's and men's products which the Company does not manufacture. For more than 30 years, the Company has built a reputation for excellence in product quality and value, and in operational execution.
Certain statements contained herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding the Company's expected financial position, business and financing plans are forward-looking statements. The words "believes," "expect," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements. Forward-looking statements also include representations of the Company's expectations or beliefs concerning future events that involves risks and uncertainties, including:
those associated with the effect of national and regional economic conditions;
lowered levels of consumer spending resulting from a general economic downturn or lower levels of consumer confidence;
the performance of the Company's products within the prevailing retail environment;
customer acceptance of both new designs and newly-introduced product lines;
the Company's reliance on a few department store groups for large portions of the Company's business;
consolidation of the Company's retail customers;
financial difficulties encountered by customers;
the effects of vigorous competition in the markets in which the Company operates;
the Company's ability to identify acquisition candidates and, in an increasingly competitive environment for such acquisitions, acquire such businesses on reasonable financial and other terms;
the integration of the organizations and operations of any acquired businesses into the Company's existing organization and operations;
the Company's reliance on independent foreign manufacturers;
changes in the costs of raw materials, labor and advertising;
the general inability to obtain higher wholesale prices for the Company's products that the Company has experienced for many years;
the uncertainties of sourcing associated with the new environment in which general quota has expired on apparel products (while China has agreed to safeguard quota on certain classes of apparel products through 2008, political pressure will likely continue for restraint on importation of apparel);
the Company's ability to successfully implement new operational and financial computer systems; and
the Company's ability to secure and protect trademarks and other intellectual property rights.
A further description of these risks and uncertainties and
other important factors that could cause actual results to differ materially
from the Company's expectations can be found in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2006, including, but not
limited to, the Statement Regarding Forward-Looking Disclosure and Item 1A -
Risk Factors therein, and in the Company's other filings with the Securities and
Exchange Commission. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, such expectations
may prove to be incorrect. The Company does not undertake to publicly update or
revise its forward-looking statements as a result of new information, future
events or otherwise.
JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
(UNAUDITED)
All amounts in millions except per share data
SECOND QUARTER
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SIX MONTHS
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2007 | 2006 | 2007 | 2006 | |||||||||
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Net sales | $894.5 | 99.0% | $ 909.6 | 98.5% | $ 1,959.0 | 98.8% | $ 1,973.2 | 98.5% | ||||
Licensing income (net) | 9.2 | 1.0% | 9.6 | 1.0% | 21.4 | 1.1% | 21.3 | 1.1% | ||||
Service and other revenue | 0.2 | 0.0% | 4.7 | 0.5% | 2.0 | 0.1% | 7.9 | 0.4% | ||||
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Total revenues | 903.9 | 100.0% | 923.9 | 100.0% | 1,982.4 | 100.0% | 2,002.4 | 100.0% | ||||
Cost of goods sold | 613.7 | 67.9% | 586.7 | 63.5% | 1,327.1 | 66.9% | 1,277.8 | 63.8% | ||||
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Gross profit | 290.2 | 32.1% | 337.2 | 36.5% | 655.3 | 33.1% | 724.6 | 36.2% | ||||
SG&A expenses | 263.1 | 29.1% | 280.5 | 30.4% | 544.9 | 27.5% | 544.8 | 27.2% | ||||
Trademark impairments | 69.0 | 7.6% | - | - | 69.0 | 3.5% | - | - | ||||
Impairments of assets held for sale | 30.4 | 3.4% | - | - | 30.4 | 1.5% | - | - | ||||
Loss on sale of Polo Jeans Company business | - | - | - | - | - | - | 45.1 | 2.3% | ||||
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(Loss) income from operations | (72.3) | (8.0%) | 56.7 | 6.1% | 11.0 | 0.6% | 134.7 | 6.7% | ||||
Net interest expense and financing costs | (13.1) | (1.4%) | (10.2) | (1.1%) | (27.4) | (1.4%) | (23.9) | (1.2%) | ||||
Equity in earnings of unconsolidated affiliates | 1.5 | 0.2% | 0.9 | 0.1% | 2.1 | 0.1% | 1.8 | 0.1% | ||||
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(Loss) income from continuing operations before taxes | (83.9) | (9.3%) | 47.4 | 5.1% | (14.3) | (0.7%) | 112.6 | 5.6% | ||||
(Benefit) provision for income taxes | (32.8) | (3.6%) | 17.0 | 1.8% | (7.6) | (0.4%) | 61.6 | 3.1% | ||||
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(Loss) income from continuing operations | (51.1) | (5.7%) | 30.4 | 3.3% | (6.7) | (0.3%) | 51.0 | 2.5% | ||||
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Income from discontinued operations before taxes | 8.2 | 0.9% | 11.2 | 1.2% | 15.6 | 0.8% | 17.3 | 0.9% | ||||
Provision for income taxes | 4.2 | 0.5% | 5.0 | 0.5% | 8.1 | 0.4% | 7.7 | 0.4% | ||||
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Income from discontinued operations | 4.0 | 0.4% | 6.2 | 0.7% | 7.5 | 0.4% | 9.6 | 0.5% | ||||
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Cumulative effect of change in accounting for share-based payments, net of tax | - | - | - | - | - | - | 1.9 | 0.1% | ||||
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Net (loss) income | $ (47.1) | (5.2%) | $ 36.6 | 4.0% | $ 0.8 | 0.0% | $ 62.5 | 3.1% | ||||
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Shares outstanding - diluted | 107.1 | 113.5 | 109.0 | 114.5 | ||||||||
Earnings per share - diluted | ||||||||||||
(Loss) income from continuing operations | $(0.48) | $0.27 | $(0.06) | $0.45 | ||||||||
Income from discontinued operations | $0.04 | $0.05 | $0.07 | $0.08 | ||||||||
Cumulative effect of change in accounting principle | - | - | - | $0.02 | ||||||||
Net (loss) income | $(0.44) | $0.32 | $0.01 | $0.55 |
Percentages may not add due to rounding.
JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
(UNAUDITED)
As required by the Securities and Exchange Commission Regulation G, the following table contains information regarding the non-GAAP adjustments used by the Company in the presentation of its financial results:
All amounts in millions except per share data
SECOND QUARTER
|
SIX MONTHS
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2007 | 2006 | 2007 | 2006 | |||||
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(Loss) income from continuing operations (as reported) | $(51.1) | $ 30.4 | $(6.7) | $ 51.0 | ||||
(Benefit) provision for income taxes | (32.8) | 17.0 | (7.6) | 61.6 | ||||
Loss on sale of Polo Jeans Company business (a) | - | - | - | 45.1 | ||||
Impairments of assets held for sale (b) | 30.4 | - | 30.4 | - | ||||
Items affecting segment income: | ||||||||
Trademark impairments (c) | 69.0 | - | 69.0 | - | ||||
Severance and other expenses related to strategic review of operations, and certain other items (d) | 11.8 | 22.4 | 21.7 | 28.7 | ||||
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Adjusted income from continuing operations before taxes | 27.3 | 69.8 | 106.8 | 186.4 | ||||
Adjusted provision for income taxes | 9.2 | 25.5 | 38.1 | 68.8 | ||||
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Adjusted income from continuing operations | $ 18.1 | $ 44.3 | $ 68.7 | $ 117.6 | ||||
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(Loss) earnings per share from continuing operations - diluted (as reported) | $(0.48) | $ 0.27 | $(0.06) | $ 0.45 | ||||
(Benefit) provision for income taxes | (0.31) | 0.15 | (0.07) | 0.54 | ||||
Loss on sale of Polo Jeans Company business (a) | - | - | - | 0.39 | ||||
Impairments of assets held for sale (b) | 0.28 | - | 0.28 | - | ||||
Items affecting segment income: | ||||||||
Trademark impairments (c) | 0.64 | - | 0.63 | - | ||||
Severance and other expenses related to strategic review of operations, and certain other items (d) | 0.11 | 0.20 | 0.20 | 0.25 | ||||
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Adjusted income from continuing operations before taxes | 0.24 | 0.62 | 0.98 | 1.63 | ||||
Adjusted provision for income taxes | 0.08 | 0.23 | 0.35 | 0.60 | ||||
Adjustment for using diluted share count (e) | 0.01 | - | - | - | ||||
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Adjusted earnings per share from continuing operations - diluted | $ 0.17 | $ 0.39 | $ 0.63 | $ 1.03 | ||||
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Breakdown of items affecting segment income by segment: | ||||||||
Wholesale better apparel | $ 1.1 | $ 5.6 | $ 8.5 | $ 7.6 | ||||
Wholesale moderate apparel | 8.6 | 0.2 | 9.9 | 0.7 | ||||
Wholesale footwear and accessories | 0.5 | 11.9 | 0.9 | 14.8 | ||||
Retail | 1.2 | 3.2 | 1.6 | 3.8 | ||||
Licensing, other & eliminations | 69.4 | 1.5 | 69.8 | 1.8 | ||||
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Total | $ 80.8 | $ 22.4 | $ 90.7 | $ 28.7 | ||||
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Adjusted segment margins | ||||||||
Wholesale better apparel | 9.2% | 9.8% | 14.4% | 14.8% | ||||
Wholesale moderate apparel | 4.6% | 8.9% | 6.5% | 10.8% | ||||
Wholesale footwear and accessories | 8.3% | 9.5% | 10.6% | 11.8% | ||||
Retail | (2.0%) | 10.3% | (6.0%) | 6.2% | ||||
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Total | 4.3% | 8.6% | 6.6% | 10.0% | ||||
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(a) | Represents the net loss recorded in relation to the settlement of the litigation with Polo Ralph Lauren Corporation and sale of our Polo Jeans Company operations to Polo Ralph Lauren Corporation in February 2006. |
(b) | Represents the loss recorded relating to the adjustment of certain assets to their net realizable value in anticipation of the sale of certain moderate sportswear brands. |
(c) | Represents the impairments recorded in accordance with SFAS No. 142, resulting from the shutdown of certain of our moderate sportswear brands. |
(d) | Represents certain items and charges incurred in relation to the overall strategic review of operations, inclusive of the charges related to the closure of our Stein Mart leased shoe departments as announced in May 2006. |
(e) | In accordance with SFAS No. 128, the calculation of diluted shares for the purpose of generating GAAP EPS does not include any antidilutive items (options and restricted stock) that would result in a lower loss per share. Since the non-GAAP adjustments would result in projected adjusted net income, these items would become dilutive to EPS. This adjustment represents the impact of including these dilutive items in the calculation of diluted shares for generating the projected adjusted EPS. |
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
(UNAUDITED)
All amounts in millions
Wholesale Better Apparel |
Wholesale Moderate Apparel |
Wholesale Footwear & Accessories |
Retail |
Licensing, Other & Eliminations |
Consolidated |
|
For the fiscal quarter ended July 7, 2007 | ||||||
Revenues from external customers | $ 230.0 | $ 255.6 | $ 215.9 | $ 193.2 | $ 9.2 | $ 903.9 |
Intersegment revenues | 35.1 | 4.2 | 10.9 | - | (50.2) | - |
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Total revenues | 265.1 | 259.8 | 226.8 | 193.2 | (41.0) | 903.9 |
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Segment income (loss) | $ 23.4 | $ 3.5 | $ 18.4 | $(5.1) | $ (82.1) | (41.9) |
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8.8% | 1.3% | 8.1% | (2.6%) | (4.6%) | ||
Net interest expense | (13.1) | |||||
Impairment of assets held for sale | (30.4) | |||||
Equity in earnings of unconsolidated affiliates | 1.5 | |||||
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Loss from continuing operations before provision for income taxes | $(83.9) | |||||
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Segment income (loss) | $ 23.4 | $ 3.5 | $ 18.4 | $(5.1) | $ (82.1) | $ (41.9) |
Adjustments affecting segment income | 1.1 | 8.6 | 0.5 | 1.2 | 69.4 | 80.8 |
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Adjusted segment income (loss) | $ 24.5 | $ 12.1 | $ 18.9 | $(3.9) | $ (12.7) | $ 38.9 |
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Adjusted segment margin | 9.2% | 4.6% | 8.3% | (2.0%) | 4.3% | |
For the fiscal quarter ended July 1, 2006 | ||||||
Revenues from external customers | $ 229.3 | $ 267.9 | $ 203.2 | $ 213.2 | $ 10.3 | $ 923.9 |
Intersegment revenues | 32.9 | 0.9 | 10.4 | - | (44.2) | - |
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Total revenues | 262.2 | 268.8 | 213.6 | 213.2 | (33.9) | 923.9 |
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Segment income | $ 20.1 | $ 23.6 | $ 8.3 | $ 18.7 | $ (14.0) | 56.7 |
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7.7% | 8.8% | 3.9% | 8.8% | 6.1% | ||
Net interest expense | (10.2) | |||||
Equity in earnings of unconsolidated affiliates | 0.9 | |||||
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Income from continuing operations before provision for income taxes | $ 47.4 | |||||
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Segment income | $ 20.1 | $ 23.6 | $ 8.3 | $ 18.7 | $ (14.0) | $ 56.7 |
Adjustments affecting segment income | 5.6 | 0.2 | 11.9 | 3.2 | 1.5 | 22.4 |
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Adjusted segment income | $ 25.7 | $ 23.8 | $ 20.2 | $ 21.9 | $ (12.5) | $ 79.1 |
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Adjusted segment margin | 9.8% | 8.9% | 9.5% | 10.3% | 8.6% | |
For the fiscal six months ended July 7, 2007 | ||||||
Revenues from external customers | $ 569.9 | $ 560.5 | $ 465.2 | $ 365.1 | $ 21.7 | $ 1,982.4 |
Intersegment revenues | 78.2 | 7.3 | 27.9 | - | (113.4) | - |
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Total revenues | 648.1 | 567.8 | 493.1 | 365.1 | (91.7) | 1,982.4 |
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Segment income (loss) | $ 85.0 | $ 27.6 | $ 51.5 | $(23.6) | $ (99.1) | 41.4 |
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13.1% | 4.9% | 10.4% | (6.5%) | 2.1% | ||
Net interest expense | (27.4) | |||||
Impairment of assets held for sale | (30.4) | |||||
Equity in earnings of unconsolidated affiliates | 2.1 | |||||
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Loss from continuing operations before provision for income taxes | $(14.3) | |||||
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Segment income (loss) | $ 85.0 | $ 27.6 | $ 51.5 | $(23.6) | $ (99.1) | $ 41.4 |
Adjustments affecting segment income | 8.5 | 9.9 | 0.9 | 1.6 | 69.8 | 90.7 |
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Adjusted segment income (loss) | $ 93.5 | $ 37.5 | $ 52.4 | $(22.0) | $ (29.3) | $ 132.1 |
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Adjusted segment margin | 14.4% | 6.5% | 10.6% | (6.0%) | 6.6% | |
For the fiscal six months ended July 1, 2006 | ||||||
Revenues from external customers | $ 567.0 | $ 600.0 | $ 431.1 | $ 381.8 | $ 22.5 | $ 2,002.4 |
Intersegment revenues | 70.7 | 2.2 | 22.5 | - | (95.4) | - |
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Total revenues | 637.7 | 602.2 | 453.6 | 381.8 | (72.9) | 2,002.4 |
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Segment income | $ 86.7 | $ 64.1 | $ 38.6 | $ 15.2 | $ (24.8) | 179.8 |
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13.6% | 10.6% | 8.5% | 4.0% | 9.0% | ||
Loss on sale of Polo Jeans Company business | (45.1) | |||||
Net interest expense | (23.9) | |||||
Equity in earnings of unconsolidated affiliates | 1.8 | |||||
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Income from continuing operations before provision for income taxes | $ 112.6 | |||||
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Segment income | $ 86.7 | $ 64.1 | $ 38.6 | $ 15.2 | $ (24.8) | $ 179.8 |
Adjustments affecting segment income | 7.6 | 0.7 | 14.8 | 3.8 | 1.8 | 28.7 |
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Adjusted segment income | $ 94.3 | $ 64.8 | $ 53.4 | $ 19.0 | $ (23.0) | $ 208.5 |
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Adjusted segment margin | 14.8% | 10.8% | 11.8% | 5.0% | 10.4% |
JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
All amounts in millions
July 7, 2007
|
July 1, 2006
|
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ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 53.6 | $ 83.2 | |
Accounts receivable, net of allowances of $29.9 and $27.5 for doubtful accounts, discounts, returns and co-op advertising | 374.5 | 355.8 | |
Inventories | 535.7 | 482.2 | |
Assets held for sale | 645.3 | 192.1 | |
Deferred taxes | 68.8 | 43.1 | |
Other current assets | 60.6 | 56.6 | |
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TOTAL CURRENT ASSETS | 1,738.5 | 1,213.0 | |
Property, plant and equipment, at cost, less accumulated depreciation and amortization | 283.3 | 256.0 | |
Goodwill | 1,051.9 | 1,493.2 | |
Other intangibles, less accumulated amortization | 626.6 | 641.1 | |
Deferred taxes | 14.5 | - | |
Assets held for sale | - | 512.8 | |
Other assets | 52.9 | 49.9 | |
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$ 3,767.7 | $ 4,166.0 | ||
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LIABILITIES AND STOCKHOLDERS' EQUITY | |||
CURRENT LIABILITIES: | |||
Short-term borrowings | $ 184.1 | $ - | |
Current portion of capital lease obligations | 3.9 | 3.9 | |
Accounts payable | 219.1 | 231.0 | |
Liabilities related to assets held for sale | 165.9 | 67.7 | |
Income taxes payable | 5.9 | 50.8 | |
Accrued expenses and other current liabilities | 127.2 | 115.9 | |
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TOTAL CURRENT LIABILITIES | 706.1 | 469.3 | |
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NONCURRENT LIABILITIES: | |||
Long-term debt and obligation under capital leases | 779.0 | 787.2 | |
Deferred taxes | - | 154.7 | |
Liabilities related to assets held for sale | - | 86.0 | |
Other | 73.0 | 68.4 | |
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TOTAL NONCURRENT LIABILITIES | 852.0 | 1,096.3 | |
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TOTAL LIABILITIES | 1,558.1 | 1,565.6 | |
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STOCKHOLDERS' EQUITY | 2,209.6 | 2,600.4 | |
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$ 3,767.7 | $ 4,166.0 | ||
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JONES APPAREL GROUP, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
All amounts in millions
Six Months Ended
|
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July 7, 2007 | July 1, 2006 | |||
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CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 0.8 | $ 62.5 | ||
Income from discontinued operations | (7.5) | (9.6) | ||
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(Loss) income from continuing operations | (6.7) | 52.9 | ||
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Adjustments to reconcile net income to net cash (used in) provided by operating activities, net of sale of Polo Jeans Company business: | ||||
Loss on sale of Polo Jeans Company business | - | 45.1 | ||
Cumulative effect of change in accounting for share-based payments | - | (3.1) | ||
Amortization expense in connection with employee stock options and restricted stock | 8.6 | 7.2 | ||
Depreciation and other amortization | 37.9 | 35.2 | ||
Trademark impairments | 69.0 | - | ||
Impairments of assets held for sale | 30.4 | - | ||
Equity in earnings of unconsolidated affiliates | (2.1) | (1.8) | ||
Provision for losses on accounts receivable | 0.3 | 0.1 | ||
Deferred taxes | (35.1) | 15.0 | ||
Other items, net | (3.3) | 0.6 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (36.9) | 40.7 | ||
Inventories | (25.1) | 40.8 | ||
Prepaid expenses and other current assets | 3.1 | 6.0 | ||
Other assets | 1.0 | 2.3 | ||
Accounts payable | (54.3) | 10.4 | ||
Income taxes payable | (5.0) | (1.3) | ||
Accrued expenses and other current liabilities | (9.3) | (10.3) | ||
Other liabilities | 0.2 | 3.9 | ||
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Total adjustments | (20.6) | 190.8 | ||
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Net cash (used in) provided by operating activities of continuing operations | (27.3) | 243.7 | ||
Net cash provided by operating activities of discontinued operations | 21.4 | 17.4 | ||
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Net cash (used in) provided by operating activities | (5.9) | 261.1 | ||
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CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Net proceeds from sale of Polo Jeans Company business | - | 350.6 | ||
Capital expenditures | (47.7) | (37.6) | ||
Other | 2.8 | 0.1 | ||
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Net cash (used in) provided by investing activities of continuing operations | (44.9) | 313.1 | ||
Net cash used in investing activities of discontinued operations | (26.9) | (27.3) | ||
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Net cash (used in) provided by investing activities | (71.8) | 285.8 | ||
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CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Net borrowings (repayments) under credit facilities | 84.1 | (129.5) | ||
Redemption at maturity of 7.875% Senior Notes | - | (225.0) | ||
Principal payments on capitalized leases | (1.9) | (2.3) | ||
Purchases of treasury stock | - | (125.1) | ||
Dividends paid | (30.4) | (27.2) | ||
Proceeds from exercise of employee stock options | 10.3 | 13.3 | ||
Net cash advances to discontinued operations | (5.6) | (8.2) | ||
Excess tax benefits from share-based payment arrangements | 2.4 | 1.8 | ||
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Net cash provided by (used in) financing activities of continuing operations | 58.9 | (502.2) | ||
Net cash provided by financing activities of discontinued operations | 1.8 | 8.2 | ||
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Net cash provided by (used in) financing activities | 60.7 | (494.0) | ||
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EFFECT OF EXCHANGE RATES ON CASH | 2.6 | 0.6 | ||
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (14.4) | 53.5 | ||
CASH AND CASH EQUIVALENTS, BEGINNING, including $7.2 and $6.9 reported under assets held for sale | 71.5 | 34.9 | ||
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CASH AND CASH EQUIVALENTS, ENDING, including $3.5 and $5.2 reported under assets held for sale | $ 57.1 | $ 88.4 | ||
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