10-Q

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 July 7, 2007

OR

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

For the transition period from __________ to __________

Commission File Number 1-10746

JONES APPAREL GROUP, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania (State or other jurisdiction of incorporation or organization)	06-0935166 (I.R.S. Employer Identification No.)
1411 Broadway New York, New York (Address of principal executive offices)	10018 (Zip Code)

(212) 642-3860
(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 by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [X] Accelerated filer [   ] Non-accelerated filer [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [   ] No [X]

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

Class of Common Stock
$.01 par value Outstanding at August 13, 2007
108,941,791

JONES APPAREL GROUP, INC.

Index		Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Consolidated Balance Sheets     July 7, 2007, July 1, 2006 and December 31, 2006	3
	Consolidated Statements of Operations     Fiscal Quarters and Six Months ended July 7, 2007 and July 1, 2006	4
	Consolidated Statements of Stockholders' Equity     Fiscal Six Months ended July 7, 2007 and July 1, 2006	5
	Consolidated Statements of Cash Flows     Fiscal Six Months ended July 7, 2007 and July 1, 2006	6
	Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4.  Controls and Procedures		30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		30
Item 1A.  Risk Factors		30
Item 4.  Submission of Matters to a Vote of Security Holders		34
Item 5. Other Information		35
Item 6. Exhibits		35
Signatures		36
Exhibit Index		37

DEFINITIONS

    As used in this Report, unless the context requires otherwise, "our," "us" and "we" means Jones Apparel Group, Inc. and consolidated subsidiaries, "Sun" means Sun Apparel, Inc., "McNaughton" means McNaughton Apparel Group Inc., "Kasper" means Kasper, Ltd., "Maxwell" means Maxwell Shoe Company Inc., "Barneys" means Barneys New York, Inc., " Polo" means Polo Ralph Lauren Corporation, "SFAS" means Statement of Financial Accounting Standards and "SEC" means the United States Securities and Exchange Commission.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Jones Apparel Group, Inc. 
Consolidated Balance Sheets (Unaudited)
(All amounts in millions except per share data)
  

		July 7, 2007	July 1, 2006	December 31, 2006
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$  53.6	$  83.2	$ 64.3
	Accounts receivable	374.5	355.8	342.9
	Inventories	535.7	482.2	509.0
	Assets held for sale	645.3	192.1	744.8
	Deferred taxes	68.8	43.1	53.7
	Prepaid expenses and other current assets	60.6	56.6	63.0
	TOTAL CURRENT ASSETS	1,738.5	1,213.0	1,777.7
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization of $418.9, $410.7 and $419.8		283.3	256.0	277.2
GOODWILL		1,051.9	1,493.2	1,051.9
OTHER INTANGIBLES, at cost, less accumulated amortization		626.6	641.1	627.8
DEFERRED TAXES		14.5	-	-
ASSETS HELD FOR SALE		-	512.8	-
OTHER ASSETS		52.9	49.9	52.4
		$ 3,767.7	$ 4,166.0	$ 3,787.0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Short-term borrowings	$ 184.1	$    -	$  100.0
	Current portion of capital lease obligations	3.9	3.9	4.1
	Accounts payable	219.1	231.0	273.4
	Liabilities related to assets held for sale	165.9	67.7	186.9
	Income taxes payable	5.9	50.8	11.3
	Accrued employee compensation	39.4	38.3	41.6
	Accrued expenses and other current liabilities	87.8	77.6	93.4
	TOTAL CURRENT LIABILITIES	706.1	469.3	710.7
NONCURRENT LIABILITIES:
	Long-term debt	749.3	749.3	749.3
	Obligations under capital leases	29.7	37.9	35.8
	Deferred taxes	-	154.7	7.8
	Liabilities related to assets held for sale	-	86.0	-
	Other	73.0	68.4	71.8
	TOTAL NONCURRENT LIABILITIES	852.0	1,096.3	864.7
	TOTAL LIABILITIES	1,558.1	1,565.6	1,575.4
COMMITMENTS AND CONTINGENCIES		-	-	-
STOCKHOLDERS' EQUITY:
	Preferred stock, $.01 par value - shares authorized 1.0;  none issued	-	-	-
	Common stock, $.01 par value - shares authorized 200.0; issued 154.3, 152.5 and 153.2	1.5	1.5	1.5
	Additional paid-in capital	1,344.3	1,290.7	1,320.0
	Retained earnings	2,196.8	2,461.5	2,226.4
	Accumulated other comprehensive loss	(2.6)	(4.0)	(5.9)
	Treasury stock, 45.3, 39.7 and 45.3 shares, at cost	(1,330.4)	(1,149.3)	(1,330.4)
	TOTAL STOCKHOLDERS' EQUITY	2,209.6	2,600.4	2,211.6
		$ 3,767.7	$ 4,166.0	$ 3,787.0

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc. 
Consolidated Statements of Operations (Unaudited) 
(All amounts in millions except per share data)
  

		Fiscal Quarter Ended		Fiscal Six Months Ended
		July 7, 2007	July 1, 2006	July 7, 2007	July 1, 2006
Net sales		$ 894.5	$ 909.6	$ 1,959.0	$ 1,973.2
Licensing income (net)		9.2	9.6	21.4	21.3
Service and other revenue		0.2	4.7	2.0	7.9
Total revenues		903.9	923.9	1,982.4	2,002.4
Cost of goods sold		613.7	586.7	1,327.1	1,277.8
Gross profit		290.2	337.2	655.3	724.6
Selling, general and administrative expenses		263.1	280.5	544.9	544.8
Trademark impairments		69.0	-	69.0	-
Impairments of assets held for sale		30.4	-	30.4	-
Loss on sale of Polo Jeans Company business		-	-	-	45.1
Operating (loss) income		(72.3)	56.7	11.0	134.7
Interest income		0.4	1.8	0.7	2.8
Interest expense and financing costs		13.5	12.0	28.1	26.7
Equity in earnings of unconsolidated affiliates		1.5	0.9	2.1	1.8
(Loss) income from continuing operations before provision for income taxes		(83.9)	47.4	(14.3)	112.6
(Benefit) provision for income taxes		(32.8)	17.0	(7.6)	61.6
(Loss) income from continuing operations		(51.1)	30.4	(6.7)	51.0
Income from discontinued operations, net of tax		4.0	6.2	7.5	9.6
Cumulative effect of change in accounting for share-based payments, net of tax		-	-	-	1.9
Net (loss) income		$ (47.1)	$ 36.6	$ 0.8	$ 62.5
Earnings per share
Basic
	(Loss) income from continuing operations	$(0.48)	$0.27	$(0.06)	$0.45
	Income from discontinued operations	0.04	0.06	0.07	0.09
	Cumulative effect of change in accounting for share-based payments	-	-	-	0.02
	Basic (loss) earnings per share	$(0.44)	$0.33	$0.01	$0.56
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 for share-based payments	-	-	-	0.02
	Basic (loss) earnings per share	$(0.44)	$0.32	$0.01	$0.55
Weighted average common shares and share equivalents outstanding
Basic		107.1	113.3	106.9	112.3
Diluted		107.1	113.5	109.0	114.5
Dividends declared per share		$0.14	$0.12	$0.28	$0.24

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc.
Consolidated Statements of Stockholders' Equity (Unaudited)
(All amounts in millions except per share data)
  

		Number of common shares outstanding	Total stock- holders' equity	Common stock	Additional paid-in capital	Retained earnings	Accumu- lated  other compre- hensive income (loss)	Treasury stock
Balance, January 1, 2006		115.9	$ 2,666.4	$ 1.5	$ 1,269.4	$ 2,426.2	$ (6.5)	$ (1,024.2)
Fiscal six months ended July 1, 2006:
Comprehensive income:
	Net income	-	62.5	-	-	62.5	-	-
	Change in fair value of cash flow hedges, net of $1.2 tax	-	1.5	-	-	-	1.5	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $0.9 tax	-	(1.3)	-	-	-	(1.3)	-
	Foreign currency translation adjustments	-	2.3	-	-	-	2.3	-
	Total comprehensive income		65.0
Issuance of restricted stock to employees, net of forfeitures		0.5	-	-	-	-	-	-
Amortization expense in connection with employee stock options and restricted stock		-	9.3	-	9.3	-	-	-
Exercise of employee stock options		0.6	13.3	-	13.3	-	-	-
Excess tax benefits from share-based payment arrangements		-	1.8	-	1.8	-	-	-
Dividends on common stock ($0.24 per share)		-	(27.2)	-	-	(27.2)	-	-
Cumulative effect of change in accounting for share-based payments		-	(3.1)	-	(3.1)	-	-	-
Treasury stock acquired		(4.2)	(125.1)	-	-	-	-	(125.1)
Balance, July 1, 2006		112.8	$ 2,600.4	$ 1.5	$ 1,290.7	$ 2,461.5	$ (4.0)	$ (1,149.3)
Balance, January 1, 2007		107.9	$ 2,211.6	$ 1.5	$ 1,320.0	$ 2,226.4	$ (5.9)	$ (1,330.4)
Fiscal six months ended July 7, 2007:
Comprehensive income:
	Net income	-	0.8	-	-	0.8	-	-
	Change in fair value of cash flow hedges, net of $0.6 tax	-	(0.9)	-	-	-	(0.9)	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $0.2 tax	-	(0.3)	-	-	-	(0.3)	-
	Foreign currency translation adjustments	-	4.5	-	-	-	4.5	-
	Total comprehensive income		4.1
Issuance of restricted stock to employees, net of forfeitures		0.6	-	-	-	-	-	-
Amortization expense in connection with employee stock options and restricted stock		-	11.6	-	11.6	-	-	-
Exercise of employee stock options		0.5	10.3	-	10.3	-	-	-
Excess tax benefits from share-based payment arrangements		-	2.4	-	2.4	-	-	-
Dividends on common stock ($0.28 per share)		-	(30.4)	-	-	(30.4)	-	-
Balance, July 7, 2007		109.0	$ 2,209.6	$ 1.5	$ 1,344.3	$ 2,196.8	$ (2.6)	$ (1,330.4)

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc. 
Consolidated Statements of Cash Flows (Unaudited) 
(All amounts in millions)
  

			Fiscal Six Months Ended
			July 7, 2007	July 1, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$ 0.8	$ 62.5
Less: income from discontinued operations			(7.5)	(9.6)
(Loss) income from continuing operations			(6.7)	52.9
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
		Total adjustments	(20.6)	190.8
	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
	Net cash (used in) provided by operating activities		(5.9)	261.1
CASH FLOWS FROM INVESTING ACTIVITIES:
	Net proceeds from sale of Polo Jeans Company business		-	350.6
	Capital expenditures		(47.7)	(37.6)
	Proceeds from sales of property, plant and equipment		2.8	0.1
	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)
	Net cash (used in) provided by investing activities		(71.8)	285.8
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 capital 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
	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
	Net cash provided by (used in) financing activities		60.7	(494.0)
EFFECT OF EXCHANGE RATES ON CASH			2.6	0.6
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
CASH AND CASH EQUIVALENTS, ENDING, including $3.5 and $5.2 reported under assets held for sale			$ 57.1	$ 88.4

See accompanying notes to consolidated financial statements

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JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

BASIS OF PRESENTATION

        The consolidated financial statements include the accounts of Jones Apparel Group, Inc. and its wholly-owned subsidiaries. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and in accordance with the requirements of Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the footnotes thereto included within our Annual Report on Form 10-K.

        In our opinion, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature. Certain reclassifications have been made to conform prior year data with the current presentation. The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 2007.

        In accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), the assets and liabilities relating to Barneys and certain moderate product lines to be sold have been reclassified as held for sale in the Consolidated Balance Sheets for all periods presented and the results of operations of Barneys for the current and prior periods have been reported as discontinued operations.

SALE OF POLO JEANS COMPANY BUSINESS

        In October 1995, we acquired an exclusive license to manufacture and market women's shirts, blouses, skirts, jackets, suits, sweaters, pants, vests, coats, outerwear and hats under the Lauren by Ralph Lauren trademark in the United States, Canada and Mexico pursuant to license and design service agreements with Polo, which were to expire on December 31, 2006. In May 1998, we acquired an exclusive license to manufacture and market women's dresses, shirts, blouses, skirts, jackets, suits, sweaters, pants, vests, coats, outerwear and hats under the Ralph by Ralph Lauren trademark in the United States, Canada and Mexico pursuant to license and design service agreements with Polo. The Ralph License was scheduled to end on December 31, 2003.

        During the course of the discussions concerning the Ralph License, Polo asserted that the expiration of the Ralph License would cause the Lauren License agreements to end on December 31, 2003, instead of December 31, 2006. We believed that this was an improper interpretation and that the expiration of the Ralph License did not cause the Lauren License to end.

        On June 3, 2003, we announced that our discussions with Polo regarding the interpretation of the Lauren License had reached an impasse and that, as a result, we had filed a complaint in the New York State Supreme Court against Polo and its affiliates and our former President, Jackwyn Nemerov. The complaint alleged that Polo breached the Lauren License agreements by claiming that the license ends at the end of 2003. The complaint also alleged that Ms. Nemerov breached the confidentiality and non-compete provisions of her employment agreement with us. Additionally, Polo was alleged to have induced Ms. Nemerov to breach her employment agreement and Ms. Nemerov was alleged to have induced Polo to breach the Lauren License agreements. We asked the court to enter a judgment for compensatory damages of $550 million, as well as punitive damages, and to enforce the confidentiality and non-compete provisions of Ms. Nemerov's employment agreement.

        These matters were resolved by settlement dated January 22, 2006, which closed on February 3, 2006. In connection with this settlement, we entered into a Stock Purchase Agreement with Polo and certain of its subsidiaries with respect to the sale to Polo of all outstanding stock of Sun. We received gross proceeds of $355.0 million in connection with the sale and the settlement. Sun's assets and liabilities on the closing date primarily

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related to the Polo Jeans Company business, which Sun operated under long-term license and design agreements entered into with Polo in 1995. We retained distribution and product development facilities in El Paso, Texas, along with certain working capital items, including accounts receivable and accounts payable. In addition, as part of the agreements, we provided certain support services to Polo (including manufacturing, distribution and information technology) until January 2007 and certain financial and administrative functions until March 2007. Service revenue related to these agreements recognized in the statement of operations is based on negotiated monthly amounts according to the terms of the agreements.

        We recorded a loss of approximately $145.1 million after allocating $356.7 million of goodwill to the business sold. We also recorded an after-tax gain of approximately $96.3 million related to the litigation settlement, resulting in a combined after tax loss of approximately $48.8 million. The combined loss created federal and state capital loss carryforwards that we do not expect to be realizable and, as a result, we increased our deferred tax valuation allowance to offset the deferred tax benefit recorded as a result of the combined loss.

        Long-lived assets included in the sale include $2.0 million of net property, plant and equipment and $5.5 million of unamortized long-term prepaid marketing expenses. Net sales for the Polo Jeans Company business, which are reported under the wholesale better apparel segment, were $23.9 million for the fiscal six months ended July 1, 2006.

STOCK-BASED EMPLOYEE COMPENSATION

        In December 2004, the FASB issued a revision of SFAS No. 123, "Share-Based Payment" (hereinafter referred to as "SFAS No. 123R"), which requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans. We adopted SFAS No. 123R on January 1, 2006 using the modified prospective application option. As a result, the compensation cost for the portion of awards we granted before January 1, 2006 for which the requisite service had not been rendered and that were outstanding as of January 1, 2006 will be recognized as the remaining requisite service is rendered. In addition, the adoption of SFAS No. 123R required us to change from recognizing the effect of forfeitures as they occur to estimating the number of outstanding instruments for which the requisite service is not expected to be rendered. As a result, we recorded a pretax gain of $3.1 million on January 1, 2006, which is reported as a cumulative effect of a change in accounting principle. We were also required to change the amortization period for employees eligible to retire from the period over which the awards vest to the period from the grant date to the date the employee is eligible to retire. This change resulted in additional amortization expense of $2.3 million and $0.2 million for the fiscal six months ended July 7, 2007 and July 1, 2006, respectively. Concurrently with the adoption of SFAS No. 123R, we have shifted the composition of our share-based compensation awards towards the use of restricted shares and away from the use of employee stock options.

ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

(In millions)	July 7, 2007	July 1, 2006	December 31, 2006
Trade accounts receivable	$ 404.4	$ 383.3	$ 372.4
Allowances for doubtful accounts, returns, discounts and co-op advertising	(29.9)	(27.5)	(29.5)
	$ 374.5	$ 355.8	$ 342.9

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INVENTORIES

        Inventories are summarized as follows (in millions):

	July 7, 2007	July 1, 2006	December 31, 2006
Raw materials	$ 4.4	$ 12.3	$ 10.4
Work in process	4.8	25.2	10.1
Finished goods	526.5	444.7	488.5
	$ 535.7	$ 482.2	$ 509.0

EARNINGS PER SHARE

        The computation of basic and diluted (loss) earnings per share is as follows:

		Fiscal Quarter Ended		Fiscal Six Months Ended
(In millions except per share amounts)		July 7, 2007	July 1, 2006	July 7, 2007	July 1, 2006
(Loss) income from continuing operations		$ (51.1)	$ 30.4	$ (6.7)	$ 51.0
Income from discontinued operations		4.0	6.2	7.5	9.6
Cumulative effect of change in accounting for share-based payments		-	-	-	1.9
Net (loss) income		$ (47.1)	$ 36.6	$ 0.8	$ 62.5
Weighted average common shares outstanding - basic		107.1	111.3	106.9	112.3
Effect of dilutive employee stock options and restricted stock		-	2.2	2.1	2.2
Weighted average common shares and share equivalents outstanding - diluted		107.1	113.5	109.0	114.5
(Loss) earnings per share - basic
	(Loss) income from continuing operations	$ (0.48)	$ 0.27	$ (0.06)	$ 0.45
	Income from discontinued operations	0.04	0.06	0.07	0.09
	Cumulative effect of change in accounting for share-based payments	-	-	-	0.02
	Basic (loss) earnings per share	$(0.44)	$0.33	$0.01	$0.56
(Loss) 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 for share-based payments	-	-	-	0.02
	Diluted (loss) earnings per share	$(0.44)	$0.32	$0.01	$0.55

DISCONTINUED OPERATIONS

        On June 22, 2007, we entered into a definitive stock purchase agreement to sell Barneys to Istithmar for $825.0 million in cash, subject to certain purchase price adjustments. We subsequently received additional proposals from a third party to acquire Barneys and, as permitted under the stock purchase agreement, we entered into discussions with that party. On August 8, 2007, we entered into an amended and restated definitive stock purchase agreement to sell Barneys to Istithmar for $942.3 million in cash, subject to certain purchase price adjustments. The transaction, which is expected to close in the third quarter of 2007, is subject to certain

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customary conditions, including the expiration or early termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act.

        In accordance with the provisions of SFAS No. 144, the results of operations of Barneys for the current and prior periods have been reported as discontinued operations and the assets and liabilities relating to Barneys have been reclassified as held for sale in the Consolidated Balance Sheets.  Operating results of Barneys, which were formerly included in our retail segment, are summarized as follows:

	Fiscal Quarter Ended		Fiscal Six Months Ended
(In millions)	July 7, 2007	July 1, 2006	July 7, 2007	July 1, 2006
Total revenues	$ 169.2	$ 150.3	$ 338.9	$ 287.0
Income before provision for taxes	8.2	11.2	15.6	17.3
Provision for income taxes	4.2	5.0	8.1	7.7
Income from discontinued operations	$ 4.0	$ 6.2	$ 7.5	$ 9.6

        We have allocated interest expense to discontinued operations based on the weighted-average monthly borrowing rate under our senior credit facilities applied to the average net monthly balance of funds that have been advanced to Barneys.

TRADEMARK IMPAIRMENTS

        On May 1, 2007, we made the strategic decision to exit or sell some of our moderate product lines by year end 2007 as a result of the continued trend of our moderate customers towards differentiated product offerings. Projected revenues for these product lines are approximately $300 million for 2007, with estimated combined operating margins in the low single digits. We believe that exiting or selling these product lines will strengthen our future operating results and allow us to focus primarily on growth opportunities in our remaining wholesale product lines, which have strong fundamentals and operate at substantially higher margins. This decision will not impact in any way our denim and junior division labels such as Gloria Vanderbilt, l.e.i., Energie, GLO, Jeanstar, Grane and others, which are also reported in the wholesale moderate apparel segment. As a result of the loss of these projected revenues, we recorded impairments for our Norton McNaughton and Erika trademarks of $69.0 million during the fiscal quarter ended July 7, 2007.

        The moderate product lines to be sold have not been classified as discontinued operations as they do not meet the criteria for discontinued operations as set forth in SFAS No. 144.

ASSETS HELD FOR SALE

        The assets and liabilities relating to Barneys and the moderate product lines to be sold have been reclassified as held for sale in the Consolidated Balance Sheets. We have estimated the fair value of the moderate net assets to be sold to be $22.5 million based upon preliminary sales negotiations. The carrying value of these net assets is $52.9 million as of July 7, 2007; therefore, we have recorded an impairment charge of $30.4 million to write these assets down to realizable value. The impairment was first allocated to reduce the carrying value of the long-term assets to zero, with the remaining charge allocated pro rata to the remaining assets. Assets held for sale also include property, plant and equipment at our Bristol, Pennsylvania distribution facility and our Mexican production facilities, all of which have been closed.

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        The assets and liabilities relating to these businesses consist of:

(In millions)	Barneys	Moderate	Other	Total
At July 7, 2007:
Inventories	$ 113.8	$ 13.7	$ -	$ 127.5
Other current assets	63.3	14.8	-	78.1
Property, plant and equipment	124.3	-	5.5	129.8
Goodwill	247.4	-	-	247.4
Other intangibles	62.3	-	-	62.3
Other assets	0.2	-	-	0.2
Assets held for sale	$ 611.3	$ 28.5	$ 5.5	$ 645.3
Current liabilities	$ 77.2	$ 6.0	$ -	$ 83.2
Long-term portion of deferred taxes	23.2	-	-	23.2
Other long-term liabilities	59.5	-	-	59.5
Liabilities related to assets held for sale	$ 159.9	$ 6.0	$ -	$ 165.9
At July 1, 2006:
Inventories	$ 86.1	$ 17.4	$ -	$ 103.5
Other current assets	70.9	17.7	-	88.6
Property, plant and equipment	78.6	2.9	-	81.5
Goodwill	247.4	-	-	247.4
Other intangibles	64.4	119.2	-	183.6
Other assets	0.3	-	-	0.3
Assets held for sale	$ 547.7	$ 157.2	$ -	$ 704.9
Current liabilities	$ 64.6	$ 3.1	$ -	$ 67.7
Long-term debt	3.5	-	-	3.5
Long-term portion of deferred taxes	35.1	-	-	35.1
Other long-term liabilities	47.4	-	-	47.4
Liabilities related to assets held for sale	$ 150.6	$ 3.1	$ -	$ 153.7
At December 31, 2006:
Inventories	$ 105.5	$ 21.8	$ -	$ 127.3
Other current assets	93.8	19.4	-	113.2
Property, plant and equipment	105.4	2.3	5.2	112.9
Goodwill	247.4	-	-	247.4
Other intangibles	63.3	80.5	-	143.8
Other assets	0.2	-	-	0.2
Assets held for sale	$ 615.6	$ 124.0	$ 5.2	$ 744.8
Current liabilities	$ 85.4	$ 6.2	$ -	$ 91.6
Long-term debt	3.5	-	-	3.5
Long-term portion of deferred taxes	34.7	-	-	34.7
Other long-term liabilities	57.1	-	-	57.1
Liabilities related to assets held for sale	$ 180.7	$ 6.2	$ -	$ 186.9

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ACCRUED RESTRUCTURING COSTS

        In connection with the acquisitions of McNaughton, Kasper and Maxwell, we assessed and formulated plans to restructure certain operations of each company. These plans involved the closure of distribution facilities and certain offices. The objectives of the plans were to eliminate unprofitable or marginally profitable lines of business and reduce overhead expenses.

        In late 2003, we began to evaluate the need to broaden global sourcing capabilities to respond to the competitive pricing and global sourcing capabilities of our denim competitors, as the favorable production costs from non-duty/non-quota countries and the breadth of fabric options from Asia began to outweigh the benefits of Mexico's quick turn and superior laundry capabilities. The decision to expand global sourcing, combined with lower projected shipping levels of denim products for 2005, led us to begin a comprehensive review of our denim manufacturing during the fourth quarter of 2004. The result of this review was the development of a plan of reorganization of our Mexican operations to reduce costs associated with excess capacity.

        On July 11, 2005, we announced that we had completed a comprehensive review of our denim manufacturing operations located in Mexico. The primary action plan arising from this review resulted in the closing of the laundry, assembly and distribution operations located in San Luis, Mexico (the "denim restructuring"). All manufacturing was consolidated into existing operations in Durango and Torreon, Mexico. A total of 3,170 employees were terminated as a result of the closure. We undertook a number of measures to assist affected employees, including severance and benefits packages. As a result of this consolidation, we expected that our manufacturing operations would perform more efficiently, thereby improving our operating performance.

        In connection with the denim restructuring, we recorded $11.4 million of net pre-tax costs, which includes $5.1 million of one-time termination benefits, $3.2 million of losses on the sale of property, plant and equipment, $2.2 million of contract termination costs and $0.9 million of legal and other associated costs. Of these amounts, $10.1 million were reported as cost of sales and $1.3 million were reported as a selling, general and administrative expense in the wholesale moderate apparel segment. The restructuring was substantially completed during the fiscal quarter ended April 1, 2006.

        On May 30, 2006, we announced the closing of our Stein Mart leased shoe departments, effective January 2007. In connection with the closing, we incurred $1.1 million of one-time termination benefits and associated employee costs for 468 employees, which was reported as a selling, general and administrative expense in the retail segment.

        On September 12, 2006, we announced the closing of certain El Paso, Texas and Mexican operations related to the decision by Polo to discontinue the Polo Jeans Company product line (the "manufacturing restructuring"), which we produced for Polo subsequent to the sale of the Polo Jeans Company business to Polo in February 2006. In connection with the El Paso closing, we recorded $4.8 million of one-time termination benefits and associated employee costs for an estimated 155 employees and $0.6 million of other costs. Of this amount, $2.9 million has been reported as a selling, general and administrative expense and $2.5 million has been reported as a cost of sales in the wholesale moderate apparel segment (of which $0.7 and $0.6 million was recorded in selling, general and administrative expenses and cost of sales, respectively, during the fiscal six months ended July 7, 2007). In connection with the Mexican closing, we expect to incur $3.0 million of one-time termination benefits and associated employee costs for an estimated 1,732 employees and $0.3 million of other costs. Of this amount, $3.1 million has been reported as cost of sales in the wholesale moderate apparel segment (of which $0.3 million was recorded during the fiscal six months ended July 7, 2007), and the remaining $0.2 million will be recorded during the fiscal quarter ending October 6, 2007. In addition, we determined the estimated fair value of the property, plant and equipment employed in Mexico was less than its carrying value. As a result, we recorded an impairment loss of $8.5 million, which is also reported as cost of sales in the wholesale moderate apparel segment, with the estimated fair value of $5.2 million reclassified as assets held for sale. The closings were substantially completed by the end of March 2007.

        Our continued strategic operational reviews and efforts to improve profitability and the continued trend of our moderate customers towards differentiated product offerings has led us to make the strategic decision to exit or sell some of our moderate product lines by year end 2007 (the "moderate restructuring"). In connection with

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the moderate restructuring, we expect to incur $1.6 million of one-time termination benefits and associated employee costs for an estimated 77 employees. Of this amount, $1.5 million was recorded as a selling, general and administrative cost in the wholesale moderate apparel segment during the fiscal six months ended July 7, 2007, and the remaining $0.1 million will be accrued on a straight-line basis over the remaining period each employee is required to render service to receive the benefit. The moderate restructuring will be substantially complete by the end of 2007.

        The accrual of restructuring costs and liabilities, of which $3.4 million is included in accrued expenses and other current liabilities and $1.2 million is included in other noncurrent liabilities, is as follows:

(In millions)	Severance and other employee costs	Closing of retail stores and consolidation of facilities	Denim restructuring	Manufacturing restructuring	Total
Balance, January 1, 2006	$ 3.4	$ 2.1	$ 2.5	$  -	$ 8.0
Net additions (reversals)	2.8	-	(0.5)	-	2.3
Payments and reductions	(2.9)	(0.4)	(1.8)	-	(5.1)
Balance, July 1, 2006	$ 3.3	$ 1.7	$ 0.2	$  -	$ 5.2
Balance, January 1, 2007	$ 1.4	$ 1.6	$ -	$ 3.4	$ 6.4
Net additions	1.4	-	-	1.6	3.0
Payments and reductions	(1.2)	(0.2)	-	(3.4)	(4.8)
Balance, July 7, 2007	$ 1.6	$ 1.4	$ -	$ 1.6	$ 4.6

        Estimated severance payments and other employee costs of $1.6 million accrued at July 7, 2007 relate to the remaining estimated severance for 78 employees. During the fiscal six months ended July 7, 2007, we reversed $0.1 million of the severance accrual related to the Stein Mart shoe department closings as a reduction of selling, general and administrative expenses in the retail segment.

        During the fiscal six months ended July 7, 2007 and July 1, 2006, $1.2 million and $2.9 million, respectively, of the reserve was utilized (relating to partial or full severance and related costs for 472 and 91 employees, respectively). Employee groups affected (totaling an estimated 895 employees) included administrative, warehouse and management personnel at locations closed.

        The $1.4 million accrued at July 7, 2007 for the consolidation of facilities relates to expected costs to be incurred, including lease obligations, for closing certain acquired facilities in connection with consolidating their operations into our other existing facilities.

        The details of the denim restructuring accruals are as follows:

(In millions)	One-time termination benefits	Contract termination costs	Other associated costs	Total denim restructuring
Balance, January 1, 2006	$ 0.4	$ 1.6	$ 0.5	$ 2.5
Reversals	(0.2)	(0.3)	-	(0.5)
Payments and reductions	(0.2)	(1.3)	(0.3)	(1.8)
Balance, July 1, 2006	$    -	$    -	$ 0.2	$ 0.2

        During the fiscal six months ended July 1, 2006, we settled all outstanding lease commitments for facilities we closed, resulting in a $0.3 million reversal, of which $0.2 million and $0.1 million was recorded as a reduction of cost of sales and selling, general and administrative expenses, respectively, in the wholesale moderate apparel segment. During the fiscal six months ended July 1, 2006, $0.2 million of the termination benefits reserve was utilized (relating to costs for 18 employees) and $0.2 million of the accrual was reversed to cost of sales in the wholesale moderate apparel segment.

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        The details of the manufacturing restructuring accruals are as follows:

(In millions)	One-time termination benefits	Other associated costs	Total denim restructuring
Balance, January 1, 2007	$ 2.8	$ 0.6	$ 3.4
Additions	1.3	0.3	1.6
Payments and reductions	(2.9)	(0.5)	(3.4)
Balance, July 7, 2007	$ 1.2	$ 0.4	$ 1.6

        The $1.6 million accrued at July 7, 2007 represents $1.2 million of one-time termination benefits for an estimated 24 employees and $0.4 million of legal fees and related costs. During 2007, $2.9 million of the termination benefits reserve was utilized (relating to partial or full severance for 75 employees).

        Our plans have not been finalized in all areas, and additional restructuring costs may result as we continue to evaluate and assess the impact of duplicate responsibilities, warehouses and office locations. We do not expect any final adjustments to be material. Any additional costs will be charged to operations in the period in which they occur.

STATEMENT OF CASH FLOWS

Fiscal Six Months Ended: (In millions)	July 7, 2007	July 1, 2006
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$ 30.6	$ 31.8
Net income tax payments	38.7	59.5
Supplemental disclosures of non-cash investing and financing activities:
Equipment acquired through capital lease financing	2.4	3.9
Restricted stock issued to employees	22.9	18.0

DERIVATIVES

        SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," subsequently amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" and SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (as amended, hereinafter referred to as "SFAS 133"), establishes accounting and reporting standards for derivative instruments. Specifically, SFAS 133 requires us to recognize all derivatives as either assets or liabilities on the balance sheet and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders' equity or net income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

        We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies and purchase products from foreign suppliers who require payment in funds other than the U.S. Dollar. At July 7, 2007, we had outstanding foreign exchange contracts to exchange Canadian Dollars for a total of US $44.1 million through December 2008, US $45.6 million for Euros through August 2008 and US $2.1 million for British Pounds through April 2008.

        We recorded amortization of net gains resulting from the termination of interest rate swaps and locks of $2.3 million during the fiscal six months ended July 1, 2006 as a reduction of interest expense. We reclassified $0.5 million of net gains and $0.1 million of net losses from foreign currency exchange contracts to cost of sales during

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the fiscal six months ended July 7, 2007 and July 1, 2006, respectively. There has been no material ineffectiveness related to our foreign currency exchange contracts as the instruments are designed to be highly effective in offsetting losses and gains on transactions being hedged. If foreign currency exchange rates do not change from their July 7, 2007 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months also will not be material. The actual amounts that will be reclassified to earnings over the next 12 months could vary, however, as a result of changes in market conditions.

PENSION PLANS

Components of Net Periodic Benefit Cost

	Fiscal Quarter Ended		Fiscal Six Months Ended
(In millions)	July 7, 2007	July 1, 2006	July 7, 2007	July 1, 2006
Interest cost	$ 0.7	$ 0.5	$ 1.3	$ 1.1
Expected return on plan assets	(0.7)	(0.4)	(1.2)	(1.0)
Amortization of net loss	0.2	0.2	0.5	0.5
Net periodic benefit cost	$ 0.2	$ 0.3	$ 0.6	$ 0.6

Employer Contributions

        As of July 7, 2007, we have made contributions of $4.1 million to our defined benefit pension plans. We anticipate making $3.4 million of additional contributions during 2007.

WAIVER OF LONG-TERM DEBT COVENANT

        One of the provisions of our Senior Credit Facilities requires an interest coverage ratio to be maintained at the end of each quarterly reporting period. As a result of our financial results for the second fiscal quarter of 2007, our interest coverage ratio did not meet the requirement for the quarter ended July 7, 2007. We received a waiver from our lenders addressing this deficiency. We were in compliance with all other debt covenants as of July 7, 2007.

SEGMENT INFORMATION

        We identify operating segments based on, among other things, the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Our operations are comprised of four reportable segments: wholesale better apparel, wholesale moderate apparel, wholesale footwear and accessories, and retail. Segment revenues are generated from the sale of apparel, footwear and accessories through wholesale channels and our own retail locations. The wholesale segments include wholesale operations with third party department and other retail stores, the retail segment includes operations by our own stores, and income and expenses related to trademarks, licenses and general corporate functions are reported under "licensing, other and eliminations." We define segment profit as operating income before net interest expense, equity in earnings of unconsolidated affiliates, gains or losses on disposition of businesses and income taxes. Summarized below are our revenues and income by reportable segment for the fiscal quarters ended July 7, 2007 and July 1, 2006.

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(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)	-
Total revenues	265.1	259.8	226.8	193.2	(41.0)	903.9
Segment income (loss)	$ 23.4	$ 3.5	$ 18.4	$ (5.1)	$ (82.1)	(41.9)
Net interest expense						(13.1)
Impairments of assets held for sale						(30.4)
Equity in earnings of unconsolidated affiliates						1.5
Loss from continuing operations before provision for income taxes						$ (83.9)
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)	-
Total revenues	262.2	268.8	213.6	213.2	(33.9)	923.9
Segment income	$ 20.1	$ 23.6	$ 8.3	$ 18.7	$ (14.0)	56.7
Net interest expense						(10.2)
Equity in earnings of unconsolidated affiliates						0.9
Income from continuing operations before provision for income taxes						$ 47.4
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)	-
Total revenues	648.1	567.8	493.1	365.1	(91.7)	1,982.4
Segment income (loss)	$ 85.0	$ 27.6	$ 51.5	$ (23.6)	$ (99.1)	41.4
Net interest expense						(27.4)
Impairments of assets held for sale						(30.4)
Equity in earnings of unconsolidated affiliates						2.1
Loss from continuing operations before provision for income taxes						$ (14.3)
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)	-
Total revenues	637.7	602.2	453.6	381.8	(72.9)	2,002.4
Segment income	$ 86.7	$ 64.1	$ 38.6	$ 15.2	$ (24.8)	179.8
Loss on sale of Polo Jeans Company business						(45.1)
Net interest expense						(23.9)
Equity in earnings of unconsolidated affiliates						1.8
Income from continuing operations before provision for income taxes						$ 112.6

NEW ACCOUNTING STANDARDS

        In June 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109," which establishes that the financial statement effects of a tax position taken or expected to be taken in a tax return are to be recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

        We adopted FIN 48 on January 1, 2007. On that date, we had no uncertain tax positions. We recognize interest and penalties, if any, as part of our provision for income taxes in our Consolidated Statements of Operations. We file a consolidated U.S. federal income tax return as well as unitary and combined income tax returns in several state jurisdictions, of which California is the most significant. Our subsidiaries also file separate company income tax returns in multiple states, of which New York is the most significant.

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        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The adoption of SFAS No. 157 is not expected to have a material impact on our results of operations or our financial position.

        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115," which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. The adoption of SFAS No. 159 is not expected to have a material impact on our results of operations or our financial position.

SUPPLEMENTAL SUMMARIZED FINANCIAL INFORMATION

        Certain of our subsidiaries function as co-issuers (fully and unconditionally guaranteed on a joint and several basis) of the outstanding debt of Jones Apparel Group, Inc. ("Jones"), including Jones Apparel Group USA, Inc. ("Jones USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings"), Nine West Footwear Corporation ("Nine West") and Jones Retail Corporation ("Jones Retail").

        The following condensed consolidating balance sheets, statements of operations and statements of cash flows for the "Issuers" (consisting of Jones and Jones USA, Jones Holdings, Nine West and Jones Retail, which are all our subsidiaries that act as co-issuers and co-obligors) and the "Others" (consisting of all of our other subsidiaries, excluding all obligor subsidiaries) have been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. Separate financial statements and other disclosures concerning Jones are not presented as Jones has no independent operations or assets. There are no contractual restrictions on distributions from Jones USA, Jones Holdings, Nine West or Jones Retail to Jones. On January 1, 2007, Kasper, Ltd. and Jones USA merged. As a result, the condensed consolidating balance sheets, statements of income and statements of cash flows for prior periods have been restated for comparison purposes.

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Condensed Consolidating Balance Sheets
(In millions)

		July 7, 2007				December 31, 2006
		Issuers	Others	Eliminations	Cons- olidated	Issuers	Others	Eliminations	Cons- olidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$ 19.0	$ 34.6	$ -	$ 53.6	$ 35.1	$ 29.2	$ -	$ 64.3
	Accounts receivable - net	213.5	161.0	-	374.5	194.6	148.3	-	342.9
	Inventories	345.6	190.4	(0.3)	535.7	359.9	150.0	(0.9)	509.0
	Assets held for sale	0.5	644.8	-	645.3	-	744.8	-	744.8
	Prepaid and refundable income taxes	0.6	6.5	(7.1)	-	0.5	6.7	(7.2)	-
	Deferred taxes	33.2	35.6	-	68.8	28.4	25.5	(0.2)	53.7
	Prepaid expenses and other current assets	43.8	16.8	-	60.6	39.9	23.1	-	63.0
	TOTAL CURRENT ASSETS	656.2	1,089.7	(7.4)	1,738.5	658.4	1,127.6	(8.3)	1,777.7
Property, plant and equipment - net		154.2	129.1	-	283.3	157.7	119.5	-	277.2
Due from affiliates		43.6	755.0	(798.6)	-	51.8	755.6	(807.4)	-
Goodwill		1,479.1	172.3	(599.5)	1,051.9	1,479.1	172.3	(599.5)	1,051.9
Other intangibles - net		160.6	466.0	-	626.6	160.6	467.2	-	627.8
Deferred taxes		-	33.4	(18.9)	14.5	-	13.4	(13.4)	-
Investments in subsidiaries		2,114.9	-	(2,114.9)	-	2,091.4	-	(2,091.4)	-
Other assets		29.2	23.7	-	52.9	32.9	21.5	(2.0)	52.4
		$ 4,637.8	$ 2,669.2	$ (3,539.3)	$ 3,767.7	$ 4,631.9	$ 2,677.1	$ (3,522.0)	$ 3,787.0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Short-term borrowings	$ 184.1	$ -	$ -	$ 184.1	$ 100.0	$ -	$ -	$ 100.0
	Current portion of capital lease obligations	0.6	3.3	-	3.9	1.5	2.6	-	4.1
	Accounts payable	140.0	79.1	-	219.1	189.0	84.4	-	273.4
	Liabilities related to assets held for sale	-	165.9	-	165.9	-	186.9	-	186.9
	Income taxes payable	26.2	14.0	(34.3)	5.9	18.4	23.4	(30.5)	11.3
	Deferred taxes	-	-	-	-	-	0.2	(0.2)	-
	Accrued expenses and other current liabilities	91.0	36.2	-	127.2	101.2	33.8	-	135.0
	TOTAL CURRENT LIABILITIES	441.9	298.5	(34.3)	706.1	410.1	331.3	(30.7)	710.7
NONCURRENT LIABILITIES:
	Long-term debt	749.3	-	-	749.3	749.3	-	-	749.3
	Obligations under capital leases	4.7	25.0	-	29.7	11.1	24.7	-	35.8
	Deferred taxes	4.5	-	(4.5)	-	9.8	-	(2.0)	7.8
	Due to affiliates	755.0	43.6	(798.6)	-	755.6	51.8	(807.4)	-
	Other	51.5	21.5	-	73.0	52.6	19.2	-	71.8
	TOTAL NONCURRENT LIABILITIES	1,565.0	90.1	(803.1)	852.0	1,578.4	95.7	(809.4)	864.7
	TOTAL LIABILITIES	2,006.9	388.6	(837.4)	1,558.1	1,988.5	427.0	(840.1)	1,575.4
STOCKHOLDERS' EQUITY:
	Common stock and additional paid-in capital	1,345.8	1,979.0	(1,979.0)	1,345.8	1,321.5	1,979.9	(1,979.9)	1,321.5
	Retained earnings	2,618.1	294.6	(715.9)	2,196.8	2,658.2	267.4	(699.2)	2,226.4
	Accumulated other comprehensive (loss) income	(2.6)	7.0	(7.0)	(2.6)	(5.9)	2.8	(2.8)	(5.9)
	Treasury stock	(1,330.4)	-	-	(1,330.4)	(1,330.4)	-	-	(1,330.4)
	TOTAL STOCKHOLDERS' EQUITY	2,630.9	2,280.6	(2,701.9)	2,209.6	2,643.4	2,250.1	(2,681.9)	2,211.6
		$ 4,637.8	$ 2,669.2	$ (3,539.3)	$ 3,767.7	$ 4,631.9	$ 2,677.1	$ (3,522.0)	$ 3,787.0

Condensed Consolidating Statements of Operations
(In millions)

		Fiscal Quarter Ended July 7, 2007				Fiscal Quarter Ended July 1, 2006
		Issuers	Others	Eliminations	Cons- olidated	Issuers	Others	Eliminations	Cons- olidated
Net sales		$ 601.7	$ 296.6	$ (3.8)	$ 894.5	$ 607.0	$ 306.4	$ (3.8)	$ 909.6
Licensing income (net)		-	9.2	-	9.2	-	9.6	-	9.6
Service and other revenue		0.2	-	-	0.2	-	4.7	-	4.7
	Total revenues	601.9	305.8	(3.8)	903.9	607.0	320.7	(3.8)	923.9
Cost of goods sold		386.8	228.3	(1.4)	613.7	369.6	223.9	(6.8)	586.7
	Gross profit	215.1	77.5	(2.4)	290.2	237.4	96.8	3.0	337.2
Selling, general and administrative expenses		234.5	31.3	(2.7)	263.1	257.5	25.1	(2.1)	280.5
Trademark impairments		-	69.0	-	69.0	-	-	-	-
Impairments of assets held for sale		-	30.4	-	30.4	-	-	-	-
	Operating (loss) income	(19.4)	(53.2)	0.3	(72.3)	(20.1)	71.7	5.1	56.7
Net interest (expense) income and financing costs		(18.3)	5.2	-	(13.1)	(14.7)	4.5	-	(10.2)
Equity in earnings of unconsolidated affiliates		(1.0)	0.1	2.4	1.5	0.1	0.9	(0.1)	0.9
	(Loss) income from continuing operations before provision for income taxes and equity in earnings of subsidiaries	(38.7)	(47.9)	2.7	(83.9)	(34.7)	77.1	5.0	47.4
(Benefit) provision for income taxes		(13.1)	(21.0)	1.3	(32.8)	(8.4)	25.2	0.2	17.0
Equity in earnings of subsidiaries		29.6	-	(29.6)	-	59.8	-	(59.8)	-
	(Loss) income from continuing operations	4.0	(26.9)	(28.2)	(51.1)	33.5	51.9	(55.0)	30.4
(Loss) income from discontinued operations		(0.4)	4.4	-	4.0	-	6.2	-	6.2
	Net income (loss)	$ 3.6	$ (22.5)	$ (28.2)	$ (47.1)	$ 33.5	$ 58.1	$ (55.0)	$ 36.6

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Condensed Consolidating Statements of Operations (continued)
(In millions)

		Fiscal Six Months Ended July 7, 2007				Fiscal Six Months Ended July 1, 2006
		Issuers	Others	Eliminations	Cons- olidated	Issuers	Others	Eliminations	Cons- olidated
Net sales		$ 1,325.2	$ 642.1	$ (8.3)	$ 1,959.0	$ 1,281.7	$ 699.8	$ (8.3)	$ 1,973.2
Licensing income (net)		-	21.4	-	21.4	-	21.3	-	21.3
Service and other revenue		0.4	1.6	-	2.0	-	7.9	-	7.9
	Total revenues	1,325.6	665.1	(8.3)	1,982.4	1,281.7	729.0	(8.3)	2,002.4
Cost of goods sold		854.1	478.9	(5.9)	1,327.1	777.5	506.9	(6.6)	1,277.8
	Gross profit	471.5	186.2	(2.4)	655.3	504.2	222.1	(1.7)	724.6
Selling, general and administrative expenses		474.8	76.2	(6.1)	544.9	473.6	77.1	(5.9)	544.8
Trademark impairments		-	69.0	-	69.0	-	-	-	-
Impairments of assets held for sale		-	30.4	-	30.4	-	-	-	-
Loss on sale of Polo Jeans Company business		-	-	-	-	22.8	22.3	-	45.1
	Operating (loss) income	(3.3)	10.6	3.7	11.0	7.8	122.7	4.2	134.7
Net interest (expense) income and financing costs		(37.8)	10.4	-	(27.4)	(32.3)	8.4	-	(23.9)
Equity in earnings of unconsolidated affiliates		(0.9)	1.0	2.0	2.1	0.3	2.0	(0.5)	1.8
	(Loss) income from continuing operations before provision for income taxes and equity in earnings of subsidiaries	(42.0)	22.0	5.7	(14.3)	(24.2)	133.1	3.7	112.6
(Benefit) provision for income taxes		(10.0)	2.5	(0.1)	(7.6)	9.1	53.1	(0.6)	61.6
Equity in earnings of subsidiaries		22.6	-	(22.6)	-	118.6	-	(118.6)	-
	(Loss) income from continuing operations	(9.4)	19.5	(16.8)	(6.7)	85.3	80.0	(114.3)	51.0
(Loss) income from discontinued operations		(0.4)	7.9	-	7.5	-	9.6	-	9.6
Cumulative effect of change in accounting for share-based payments, net of tax		-	-	-	-	1.9	-	-	1.9
	Net (loss) income	$ (9.8)	$ 27.4	$ (16.8)	$ 0.8	$ 87.2	$ 89.6	$ (114.3)	$ 62.5

Condensed Consolidating Statements of Cash Flows
(In millions)

		Fiscal Six Months Ended July 7, 2007				Fiscal Six Months Ended July 1, 2006
		Issuers	Others	Eliminations	Cons- olidated	Issuers	Others	Eliminations	Cons- olidated
Cash flows from operating activities:
	Net cash (used in) provided by operating activities of continuing operations	$ (48.1)	$ 20.8	$ -	$ (27.3)	$ 223.3	$ 21.4	$ (1.0)	$ 243.7
	Net cash provided by operating activities of discontinued operations	-	21.4	-	21.4	-	17.4	-	17.4
	Net cash (used in) provided by operating activities	(48.1)	42.2	-	(5.9)	223.3	38.8	(1.0)	261.1
Cash flows from investing activities:
	Net proceeds from sale of Polo Jeans Company business	-	-	-	-	344.1	6.5	-	350.6
	Capital expenditures	(28.4)	(19.3)	-	(47.7)	(20.3)	(17.3)	-	(37.6)
	Proceeds from sales of plant, property and equipment	0.1	2.7	-	2.8	0.1	-	-	0.1
	Net cash (used in) provided by investing activities of continuing operations	(28.3)	(16.6)	-	(44.9)	323.9	(10.8)	-	313.1
	Net cash used in investing activities of discontinued operations	-	(26.9)	-	(26.9)	-	(27.3)	-	(27.3)
	Net cash (used in) provided by investing activities	(28.3)	(43.5)	-	(71.8)	323.9	(38.1)	-	285.8
Cash flows from financing activities:
	Net borrowings (repayments) under credit facilities	84.1	-	-	84.1	(129.5)	-	-	(129.5)
	Redemption at maturity of 7.875% Senior Notes	-	-	-	-	(225.0)	-	-	(225.0)
	Principal payments on capital leases	(0.5)	(1.4)	-	(1.9)	(1.0)	(1.3)	-	(2.3)
	Purchases of treasury stock	-	-	-	-	(125.1)	-	-	(125.1)
	Dividends paid	(30.4)	-	-	(30.4)	(27.2)	(1.0)	1.0	(27.2)
	Proceeds from exercise of employee stock options	10.3	-	-	10.3	13.3	-	-	13.3
	Net cash advances to discontinued operations	(5.6)	-	-	(5.6)	(8.2)	-	-	(8.2)
	Excess tax benefits from share-based payment arrangements	2.4	-	-	2.4	1.8	-	-	1.8
	Net cash provided by (used in) financing activities of continuing operations	60.3	(1.4)	-	58.9	(500.9)	(2.3)	1.0	(502.2)
	Net cash provided by financing activities of discontinued operations	-	1.8	-	1.8	-	8.2	-	8.2
	Net cash provided by (used in) financing activities	60.3	0.4	-	60.7	(500.9)	5.9	1.0	(494.0)
Effect of exchange rates on cash		-	2.6	-	2.6	-	0.6	-	0.6
Net (decrease) increase in cash and cash equivalents		(16.1)	1.7	-	(14.4)	46.3	7.2	-	53.5
Cash and cash equivalents, beginning, including cash reported under assets held for sale		35.1	36.4	-	71.5	21.1	13.8	-	34.9
Cash and cash equivalents, ending, including cash reported under assets held for sale		$ 19.0	$ 38.1	$ -	$ 57.1	$ 67.4	$ 21.0	$ -	$ 88.4

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

        The following discussion provides information and analysis of our results of operations for the 13 and 27 week periods ended July 7, 2007 (hereinafter referred to as the "second fiscal quarter of 2007" and the "first fiscal six months of 2007," respectively) and the 13 and 26 week periods ended July 1, 2006 (hereinafter referred to as the "second fiscal quarter of 2006" and the "first fiscal six months of 2006," respectively), and our liquidity and capital resources. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements included elsewhere herein.

Executive Overview

        We design, contract for the manufacture of and market a broad range of women's collection sportswear, suits and dresses, casual sportswear and jeanswear for women and children, and women's footwear and accessories. We sell our products through a broad array of distribution channels, including better specialty and department stores and mass merchandisers, primarily in the United States and Canada. We also operate our own network of retail and factory outlet stores. In addition, we license the use of several of our brand names to select manufacturers and distributors of women's and men's apparel and accessories worldwide.

        During the first fiscal six months of 2007, the following significant events took place:

• in May 2007, we announced our strategic decision to exit or sell some of our moderate product lines by year end 2007;
• in June 2007, Moody's announced it had placed our credit ratings on watch for a possible downgrade;
• in June 2007, we announced that we entered into a definitive stock purchase agreement to sell Barneys to Istithmar, a Dubai-based private equity and alternative investment house, for $825.0 million in cash, subject to certain purchase price adjustments; and
• in July 2007, we announced that we had received an unsolicited non-binding proposal from Fast, a Japan-based company, to acquire Barneys for $900 million in cash.

Exit or Sale of Moderate Brands

        Our continued strategic operational reviews and efforts to improve profitability and the continued trend of our moderate customers towards differentiated product offerings has led us to make the strategic decision to exit or sell some of our moderate product lines by year end 2007. Projected revenues for these product lines are approximately $300 million for 2007, with estimated combined operating margins in the low single digits. We believe that exiting or selling these product lines will strengthen our future operating results and allow us to focus primarily on growth opportunities in our remaining wholesale product lines, which have strong fundamentals and operate at substantially higher margins. This decision will not impact in any way our denim and junior division labels such as Gloria Vanderbilt, l.e.i., Energie, GLO, Jeanstar, Grane and others, which are also reported in the wholesale moderate apparel segment. As a result of the loss of these projected revenues, we recorded impairments for our Norton McNaughton and Erika trademarks of $69.0 million in our licensing, other and eliminations segment during the fiscal quarter ended July 7, 2007.

        The assets and liabilities relating to the moderate product lines to be sold have been reclassified as held for sale in the Consolidated Balance Sheet at July 7, 2007. We have estimated the fair value of the moderate net assets to be sold to be $22.5 million based upon preliminary sales negotiations. The carrying value of these net assets is $52.9 million as of July 7, 2007; therefore, we have recorded an impairment charge of $30.4 million to write these assets down to realizable value. The impairment was first allocated to reduce the carrying value of the long-term assets to zero, with the remaining charge allocated pro rata to the remaining assets. The moderate product lines to be sold have not been classified as discontinued operations as they do not meet the criteria for discontinued operations as set forth in SFAS No. 144.

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Sale of Barneys

        On June 22, 2007, we entered into a definitive stock purchase agreement to sell Barneys to Istithmar for $825.0 million in cash, subject to certain purchase price adjustments. We subsequently received additional proposals from a third party to acquire Barneys and, as permitted under the stock purchase agreement, we entered into discussions with that party. On August 8, 2007, we entered into an amended and restated definitive stock purchase agreement to sell Barneys to Istithmar for $942.3 million in cash, subject to certain purchase price adjustments. The transaction, which is expected to close in the third quarter of 2007, is subject to certain customary conditions, including the expiration or early termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act.

        We expect to report a net gain from this transaction of approximately $362.0 million based on the amended and restated agreement with Istithmar. In light of available tax benefits that we will be able to utilize upon closing, we anticipate net cash proceeds after taxes and transaction expenses of approximately $840.0 million. These tax benefits include the reversal of a deferred tax valuation allowance previously created from capital loss carryforwards that we had not expected to be able to utilize. These amounts are subject to change, based on the net book value of Barneys at closing and certain purchase price adjustments. We are considering several alternatives for the use of the proceeds, including, among other things, the return of a substantial amount of capital to our shareholders, the repayment of some of our outstanding short-term indebtedness and other uses consistent with our business strategy. The transaction will not result in a default under, or obligation to redeem or repurchase, any of our senior notes.

        In accordance with the provisions of SFAS No. 144, the results of operations of Barneys for the current and prior periods have been reported as discontinued operations and the assets and liabilities relating to Barneys have been reclassified as held for sale in the Consolidated Balance Sheets.

Sale of Polo Jeans Company Business

        On January 22, 2006, we entered into a Stock Purchase Agreement with Polo and certain of its subsidiaries with respect to the sale to Polo of all outstanding stock of Sun. We also entered into a settlement and release agreement with Polo to settle the pending litigation between the respective parties, including our former President, upon closing. Gross proceeds of the transactions, which closed on February 3, 2006, were $355.0 million. Sun's assets and liabilities on the closing date primarily related to the Polo Jeans Company business, which Sun operated under long-term license and design agreements entered into with Polo in 1995. We retained distribution and product development facilities in El Paso, Texas, along with certain working capital items, including accounts receivable and accounts payable. In addition, we provided certain support services to Polo (including manufacturing, distribution and information technology) until January 2007 and certain financial and administrative functions until March 2007.

        We recorded a loss of approximately $145.1 million after allocating $356.7 million of goodwill to the business sold. We also recorded an after tax gain of approximately $96.3 million related to the litigation settlement, resulting in a combined after tax loss of approximately $48.8 million. The combined loss created federal and state capital loss carryforwards that we do not expect to be realizable and, as a result, we increased our deferred tax valuation allowance to offset the deferred tax benefit recorded as a result of the combined loss.

        Long-lived assets included in the sale include $2.0 million of net property, plant and equipment and $5.5 million of unamortized long-term prepaid marketing expenses. Net sales for the Polo Jeans Company business, which are reported under the wholesale better apparel segment, were $23.3 million for the fiscal quarter ended July 1, 2006.

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Strategic Review of Operations

        We have completed a strategic review of our operating infrastructure and general and administrative support areas to improve profitability and to ensure we are properly positioned for the long-term benefit of our shareholders. By proactively reviewing our infrastructure, systems and operating processes at a time when the industry is undergoing consolidation and change, we plan to eliminate redundancies and improve our overall cost structure and margin performance.

Supply Chain Management

• We are in the process of implementing a product development management system which will ultimately be integrated with our third-party manufacturers.
• We are utilizing the capabilities of our third-party manufacturers to increase pre-production collaboration efforts with them, thereby increasing speed to market and improving margins. This has already been achieved in some of the moderate and better apparel businesses, and will continue to be expanded across most of our businesses.
• We have selected SAP Apparel and Footwear Solution as our enterprise resource planning system, which is being implemented company-wide utilizing one universal platform.
• The logistics network is being analyzed in an effort to reduce costs and increase efficiency by following a tiered approach of (i) multiple product usage of existing distribution centers, (ii) utilizing third party logistics providers, and (iii) ultimately direct shipping from factory to customer.
• In response to the elimination of apparel quotas and other trade safeguards, we are in the process of consolidating our third-party manufacturing to a more concentrated vendor matrix.

General and Administrative Areas

• We are implementing best practices in connection with the migration of our current systems to the SAP Apparel and Footwear Solution platform.

        We estimate that the implementation and execution of the initiatives underway will be substantially completed by the end of 2007. We are targeting annual savings of approximately $100 million once all the initiatives have been implemented. The costs associated with the review and the ultimate capital expenditures and execution expenses (including severance and fees) related to the initiatives that are derived are expected to fall in a range of $115 million to $120 million. As of July 7, 2007, we have spent a total of $100.6 million.

Critical Accounting Policies

        Several of our accounting policies involve significant judgements and uncertainties. The policies with the greatest potential effect on our results of operations and financial position include the estimated collectibility of accounts receivable, the recovery value of obsolete or overstocked inventory and the estimated fair values of both our goodwill and intangible assets with indefinite lives.

        For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends of trade discounts and co-op advertising deductions taken by our customers, allowances we provide to our retail customers to flow goods through the retail channels, and the possibility of non-collection due to the financial position of our customers. For inventory, we estimate the amount of goods that we will not be able to sell in the normal course of business and write down the value of these goods to the recovery value expected to be realized through off-price channels. Historically, actual results in these areas have not been materially different than our estimates, and we do not anticipate that our estimates and assumptions are likely to materially change in the future. However, if we incorrectly anticipate trends or unexpected events occur, our results of operations could be materially affected.

        We utilize independent third-party appraisals to estimate the fair values of both our goodwill and our intangible assets with indefinite lives. These appraisals are based on projected cash flows and interest rates; should interest rates or our future cash flows differ significantly from the assumptions used in these projections,

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material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts.

RESULTS OF OPERATIONS

Statements of Operations Stated in Dollars and as a Percentage of Total Revenues

(In millions)	Fiscal Quarter Ended				Fiscal Six Months Ended
	July 7, 2007		July 1, 2006		July 7, 2007		July 1, 2006
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%
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%
Gross profit	290.2	32.1%	337.2	36.5%	655.3	33.1%	724.6	36.2%
Selling, general and administrative 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%
Operating (loss) income	(72.3)	(8.0%)	56.7	6.1%	11.0	0.6%	134.7	6.7%
Net interest expense	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%
(Loss) income from continuing operations before provision for income 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%
(Loss) income from continuing operations	(51.1)	(5.7%)	30.4	3.3%	(6.7)	(0.3%)	51.0	2.5%
Income from discontinued operations	4.0	0.4%	6.2	0.7%	7.5	0.4%	9.6	0.5%
Cumulative effect of change in accounting for share-based payments, net of tax	-	-	-	-	-	-	1.9	0.1%
Net (loss) income	$ (47.1)	(5.2%)	$ 36.6	4.0%	$ 0.8	0.0%	$ 62.5	3.1%

Percentage totals may not add due to rounding.

Fiscal Quarter Ended July 7, 2007 Compared with Fiscal Quarter Ended July 1, 2006

        Revenues. Total revenues for the second fiscal quarter of 2007 were $903.9 million compared with $923.9 million for the second fiscal quarter of 2006, a decrease of 2.2%.

        Revenues by segment were as follows:

(In millions)	Second Fiscal Quarter of 2007	Second Fiscal Quarter of 2006	Increase/ (Decrease)	Percent  Change
Wholesale better apparel	$ 230.0	$ 229.3	$ 0.7	0.3%
Wholesale moderate apparel	255.6	267.9	(12.3)	(4.6%)
Wholesale footwear and accessories	215.9	203.2	12.7	6.3%
Retail	193.2	213.2	(20.0)	(9.4%)
Other	9.2	10.3	(1.1)	(10.7%)
Total revenues	$ 903.9	$ 923.9	$ (20.0)	(2.2%)

        Wholesale better apparel revenues increased primarily due to increased shipments of our Jones New York Signature and Evan-Picone Dress product lines due to increased orders from our customers based on the

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performance of these brands at retail, new special market programs for these brands, and the launch of our Nine West Jeans, Evan Picone Suit and Rena Rowan Dress lines. These increases were offset by decreased shipping in our Jones Sport product line due to lower special market orders, higher levels of markdowns in our Jones New York Collection to clear excess inventory and the discontinuance of our Jones New York Country apparel line (which we discontinued because we were offering similar products under our Jones New York Signature brand).

        Wholesale moderate apparel revenues decreased primarily due to decreased shipments of our l.e.i., Norton McNaughton, Nine & Co. and Bandolino product lines (where customers are replacing these brands in their locations with private-label and other products) and the discontinuance by our wholesale customers of their exclusive Joneswear Jeans, C.L.O.T.H.E.S., Latina and Duckhead product lines. These decreases were partially offset by increased shipments of our Energie product line due to increased orders from our customers based on the performance of this brand at retail and the introduction of our Jones Wear Studio and Jones & Co. product lines.

        Wholesale footwear and accessories revenues increased primarily due to (1) increased shipments of our Nine West, Enzo Angiolini and AK Anne Klein footwear products and our Nine West handbag products due to higher customer orders from strong product performance at retail, (2) the launch of our Anne Klein New York footwear product line, and (3) increased shipping in our international business due to increased orders from our existing customers and the addition of new territories.

        Retail revenues decreased primarily due to the effect of the closing of our leased Stein Mart locations ($14.9 million) and an 8.0% decline in comparable store sales ($14.8 million) (comparable stores are stores that have been open for a full year, are not scheduled to close in the current period and are not scheduled for an expansion or downsize by more than 25% or relocation to a different street or mall), offset by $4.3 million from new store openings. Excluding Barneys, we began the second fiscal quarter of 2007 with 996 retail locations and had a net increase of seven locations during the quarter to end the quarter with 1,003 locations.

        Revenues for the second fiscal quarter of 2006 also include $4.7 million of service fees charged to Polo under a short-term transition services agreement entered into with Polo at the time of the sale of the Polo Jeans Company business. These revenues are based on contractual monthly and per-unit fees as set forth in the agreement. Of this amount, $3.2 million was recorded in the wholesale better apparel segment, $0.8 million was recorded in the wholesale moderate apparel segment and $0.7 million was recorded in the licensing and other segment.

        Gross Profit. The gross profit margin decreased to 32.1% in the second fiscal quarter of 2007 from 36.5% in the second fiscal quarter of 2006.

        Wholesale better apparel gross profit margins were 33.1% and 37.4% for the second fiscal quarters of 2007 and 2006, respectively. The decrease was due to higher levels of markdowns to clear excess inventory, higher levels of sales to off-price retailers, higher production costs and higher levels of shipments of lower-margin specialty market products.

        Wholesale moderate apparel gross profit margins were 18.8% and 24.6% for the second fiscal quarters of 2007 and 2006, respectively. Margins were negatively impacted in the current period by higher levels of markdowns to clear inventory for the moderate brands we plan to exit or sell, as well as by higher levels of sales to off-price retailers and air shipments compared with the prior period.

        Wholesale footwear and accessories gross profit margins were 27.8% and 28.9% for the second fiscal quarters of 2007 and 2006, respectively. The decrease was primarily the result of higher levels of sales in our lower-margin international business and of our Circa Joan& David footwear product line to off-price retailers, as well as markdowns of our Circa Joan& David and Bandolino footwear product lines due to poor performance at retail. These decreases were offset by lower levels of sales to off-price retailers in our Easy Spirit, AK Anne Klein and various children's footwear product lines, lower markdowns of our Enzo Angiolini footwear products due to improved performance at retail and the launch of our Anne Klein New York footwear product line.

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Retail gross profit margins were 49.8% and 54.4% for the second fiscal quarters of 2007 and 2006, respectively. The decrease was primarily the result of a higher level of promotional activity in our footwear and accessories stores in the current period to liquidate excess Spring merchandise.

        Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses were $263.1 million and $280.5 million for the second fiscal quarters of 2007 and 2006, respectively. SG&A expenses in our retail segment increased by $4.1 million, primarily as a result of $1.7 million of higher occupancy costs, $1.4 million of costs related to store remodels and $1.2 million of consulting fees. Lower expenses of $4.8 million resulting from the closure of our leased Stein Mart locations were offset by $2.8 million in expenses resulting from new store openings. SG&A expenses in our other segments decreased primarily due to the effects of our strategic initiatives offset by $2.1 million related to the launch of new product lines. SG&A expenses for the second fiscal quarter of 2006 included $2.6 million in the wholesale better apparel segment related to the closing of the Secaucus warehouse and $10.0 million recorded in the wholesale footwear and accessories segment related to the termination of a former executive officer and the settlement of litigation concerning a license agreement. SG&A expenses for the second fiscal quarter of 2006 also included $2.6 million in the retail segment and $0.9 million recorded in the licensing, other and eliminations segment related to the termination of the former executive officer.

        Operating (Loss) Income. The operating loss for the second fiscal quarter of 2007 was $72.3 million compared with operating income of $56.7 million for the second fiscal quarter of 2006, due to the factors described above, $69.0 million of trademark impairments and $30.4 million of impairments of assets held for sale in the current period.

        Net Interest Expense. Net interest expense was $13.1 million in the second fiscal quarter of 2007 compared with $10.2 million in the second fiscal quarter of 2006. The increase was primarily the result of higher average borrowings during the second fiscal quarter of 2007.

        Provision for Income Taxes. The effective income tax rate on continuing operations was 39.1% for the second fiscal quarter of 2007 and 35.9% for the second fiscal quarter of 2006. The difference was primarily driven by a higher state effective tax rate in the current period.

        Discontinued Operations. Income from discontinued operations before income taxes, which represents the results of Barneys, was $8.2 million and $11.2 million for the second fiscal quarters of 2007 and 2006, respectively. The decrease was primarily due to $0.4 million of higher levels of equity-based compensation expense, $0.4 million of higher levels of interest expense, $1.2 million of higher advertising costs and $0.7 million of higher professional fees in the current period.

        Net (Loss) Income and (Loss) Earnings Per Share. Net loss was $47.1 million in the second fiscal quarter of 2007 compared with net income of $36.6 million in the second fiscal quarter of 2006. Diluted loss per share for the second fiscal quarter of 2007 was $0.44 compared with earnings per share of $0.32 for the second fiscal quarter of 2006, on 5.6% fewer shares outstanding.

Fiscal Six Months Ended July 7, 2007 Compared with Fiscal Six Months Ended July 1, 2006

        Revenues. Total revenues for the first fiscal six months of 2007 were $1.98 billion compared with $2.00 billion for the first fiscal six months of 2006, a decrease of 1.0%.

        Revenues by segment were as follows:

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(In millions)	First Fiscal Six Months of 2007	First Fiscal Six Months of 2006	Increase/ (Decrease)	Percent  Change
Wholesale better apparel	$ 569.9	$ 567.0	$ 2.9	0.5%
Wholesale moderate apparel	560.5	600.0	(39.5)	(6.6%)
Wholesale footwear and accessories	465.2	431.1	34.1	7.9%
Retail	365.1	381.8	(16.7)	(4.4%)
Other	21.7	22.5	(0.8)	(3.6%)
Total revenues	$ 1,982.4	$ 2,002.4	$ (20.0)	(1.0%)

        Wholesale better apparel revenues increased primarily due to increased shipments of our Jones New York Signature and Evan-Picone Dress product lines due to increased orders from our customers based on the performance of these brands at retail, new special market programs for these brands and the launch of our Nine West Jeans, Evan Picone Suit and Rena Rowan Dress lines. These increases were offset by decreased shipping in our Jones Sport product line due to lower specialty market orders, higher levels of markdowns in our Jones New York Collection to clear excess inventory, the discontinuance of our Jones New York Country apparel line (which we discontinued because we were offering similar products under our Jones New York Signature brand) and by the effects of the sale of the Polo Jeans Company business, which contributed $23.9 million in net sales in the prior period.

        Wholesale moderate apparel revenues decreased primarily due to decreased shipments of our l.e.i., Norton McNaughton, Nine & Co. and Bandolino product lines (where customers are replacing these brands in their locations with private-label and other products) and the discontinuance by our wholesale customers of their exclusive Joneswear Jeans, C.L.O.T.H.E.S., Latina and Duckhead product lines. These decreases were partially offset by increased shipments of our Energie product line due to increased orders from our customers based on the performance of this brand at retail, as well as the introduction of our Jones Wear Studio and Jones & Co. product lines.

        Wholesale footwear and accessories revenues increased primarily due to (1) increased shipments of our AK Anne Klein and Nine West footwear products and our Nine West handbag products due to higher customer orders from strong product performance at retail, (2) the launch of our Anne Klein New York, Joan & David and Boutique 9 footwear product lines, and (3) increased shipping in our international business due to increased orders from our existing customers and the addition of new territories. These increases were partially offset by reductions in our Bandolino and certain other footwear product lines due to retail consolidations.

        Retail revenues decreased primarily due to the effect of the closing of our leased Stein Mart locations ($25.6 million) and a 6.5% decline in comparable store sales ($21.8 million), offset by $5.2 million from new store openings and approximately $14.4 million in net sales for the extra week during the current period. Excluding Barneys, we began the first fiscal six months of 2007 with 1,100 retail locations and had a net decrease of 97 locations (primarily the Stein Mart locations) during the period to end the period with 1,003 locations.

        Revenues for the first fiscal six months of 2007 and 2006 also include $1.6 million and $7.9 million, respectively, of service fees charged to Polo under a short-term transition services agreement entered into with Polo at the time of the sale of the Polo Jeans Company business. These revenues are based on contractual monthly and per-unit fees as set forth in the agreement. Of this amount, $1.1 million was recorded in the wholesale better apparel segment, $0.2 million was recorded in the wholesale moderate apparel segment and $0.3 million was recorded in the licensing and other segment during the first fiscal six months of 2007, and $5.3 million was recorded in the wholesale better apparel segment, $1.4 million was recorded in the wholesale moderate apparel segment and $1.2 million was recorded in the licensing and other segment during the first fiscal six months of 2006.

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        Gross Profit. The gross profit margin decreased to 33.1% in the first fiscal six months of 2007 from 36.2% in the first fiscal six months of 2006.

        Wholesale better apparel gross profit margins were 35.3% and 38.6% for the first fiscal six months of 2007 and 2006, respectively. The decrease was due to higher levels of markdowns to clear excess inventory, higher levels of sales to off-price retailers, higher production costs and higher levels of shipments of lower-margin specialty market products.

        Wholesale moderate apparel gross profit margins were 21.4% and 24.8% for the first fiscal six months of 2007 and 2006, respectively. Margins were negatively impacted in the current period by higher levels of markdowns to clear inventory for the moderate brands we plan to exit or sell, as well as by higher levels of sales to off-price retailers and air shipments compared with the prior period.

        Wholesale footwear and accessories gross profit margins were 28.6% and 30.0% for the first fiscal six months of 2007 and 2006, respectively. The decrease was primarily the result of higher levels of sales of our Circa Joan& David footwear product line to off-price retailers and markdowns of our Circa Joan& David and Bandolino footwear product lines due to poor performance at retail, offset by lower levels of sales to off-price retailers in our Nine West, Easy Spirit and Enzo Angiolini footwear product lines and lower markdowns of our Nine West handbag products due to improved performance at retail.

        Retail gross profit margins were 48.7% and 52.5% for the first fiscal six months of 2007 and 2006, respectively. The decrease was primarily the result of a higher level of promotional activity in our footwear and accessories stores in the current period to liquidate excess Fall 2006, Spring 2007 and Anne Klein New York merchandise, including the effects of the closing of all of our Stein Mart retail locations.

        Selling, General and Administrative Expenses. SG&A expenses were $544.9 and $544.8 million in the first fiscal six months of 2007 and 2006, respectively. SG&A expenses in our retail segment increased by $16.0 million, primarily as a result of $6.9 million of higher employee compensation and occupancy costs, $3.6 million related to store remodels and $1.6 million of consulting fees. Lower expenses of $8.7 million resulting from the closure of our leased Stein Mart locations were offset by $3.6 million in expenses resulting to new store openings. SG&A expenses in our other segments decreased primarily due to the effects of our strategic initiatives offset by $5.1 million related to the launch of new product lines, $2.3 million additional stock-based compensation and higher levels of employee compensation due to the extra week in the current period. SG&A expenses for the first fiscal six months of 2006 included $2.6 million in the wholesale better apparel segment related to the closing of the Secaucus warehouse and $10.0 million recorded in the wholesale footwear and accessories segment related to the termination of a former executive officer and the settlement of litigation concerning a license agreement. SG&A expenses for the first fiscal six months of 2006 also included $2.6 million in the retail segment and $0.9 million recorded in the licensing, other and eliminations segment related to the termination of the former executive officer.

        Operating Income. The resulting operating income for the first fiscal six months of 2007 was $11.0 million compared with $134.7 million for the first fiscal six months of 2006, due to the factors described above, $69.0 million of trademark impairments and $30.4 million of impairments of assets held for sale in the current period.

        Net Interest Expense. Net interest expense was $27.4 million in the first fiscal six months of 2007 compared with $23.9 million in the first fiscal six months of 2006. The increase was primarily the result of higher average borrowings during the second fiscal quarter of 2007.

        Provision for Income Taxes. The effective income tax rate on continuing operations was 53.3% for the first fiscal six months of 2007 and 54.7% for the first fiscal six months of 2006. Without the net tax effects of the Polo Jeans Company sale and litigation settlement, the effective tax rate on continuing operations for the first fiscal six months of 2006 was 36.7%. The difference between the 53.3% effective tax rate for the first fiscal six months of 2007 and the 36.7% effective tax rate for the first fiscal six months of 2006 without the net tax effects of the Polo Jeans Company sale and litigation settlement is due primarily to the greater impact of the foreign income difference relative to pre-tax loss in the current period than in the prior period.

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        Discontinued Operations. Income from discontinued operations before income taxes, which represents the results of Barneys, was $15.6 million and $17.3 million for the first fiscal six months of 2007 and 2006, respectively. The decrease was primarily due to $0.9 million of higher levels of equity-based compensation expense and $0.9 million of higher levels of interest expense in the current period.

        Cumulative Effect of Change in Accounting for Share-Based Payment. The adoption of SFAS No. 123R required us to change from recognizing the effect of forfeitures of unvested employee stock options and restricted stock as they occur to estimating the number of outstanding instruments for which the requisite service is not expected to be rendered. As a result, we recorded a gain of $1.9 million (net of $1.2 million in taxes) on January 1, 2006 as a cumulative effect of a change in accounting principle.

        Net Income and Earnings Per Share. Net income was $0.8 million in the first fiscal six months of 2007 compared with $62.5 million in the first fiscal six months of 2006. Diluted earnings per share for the first fiscal six months of 2007 was $0.01 compared with $0.55 for the first fiscal six months of 2006, on 4.8% fewer shares outstanding.

LIQUIDITY AND CAPITAL RESOURCES

        Our principal capital requirements have been to fund acquisitions, pay dividends, working capital needs, capital expenditures and repurchases of our common stock on the open market. We have historically relied on internally generated funds, trade credit, bank borrowings and the issuance of notes to finance our operations and expansion. As of July 7, 2007, total cash and cash equivalents were $57.1 million (including $3.5 million of cash recorded under assets held for sale), a decrease of $14.4 million from the $71.5 million reported as of December 31, 2006 (including $7.2 million of cash recorded under assets held for sale).

        Operating activities from continuing operations used $27.3 million and provided $243.7 million in the first fiscal six months of 2007 and 2006, respectively. The increase in accounts receivable in the current period compared with a decrease in the prior period is primarily the result of the timing of shipments during the current period and a reduction in the prior period accounts receivable balance in the wholesale better apparel segment due to the sale of the Polo Jeans Company business. Inventory increased in the current period compared with a decrease in the prior period, primarily due to the timing of inventory receipts. Accounts payable decreased in the current period compared with an increase in the prior period primarily as a result of the effects of the Polo Jeans Company sale.

        Investing activities from continuing operations used $44.9 million and provided $313.1 million in the first fiscal six months of 2007 and 2006, respectively. The difference was primarily due to cash received from the sale of the Polo Jeans Company business in the prior period.

        Financing activities from continuing operations provided $58.9 million in the first fiscal six months of 2007. Borrowings under our Senior Credit Facilities were primarily used for working capital needs and to pay dividends to our common shareholders. On July 2, 2007, we redeemed all of our outstanding Barneys 9% Senior Secured Notes Due 2008 at par for a total payment of $3.8 million, which is reported under net cash provided by financing activities of discontinued operations.

        Financing activities from continuing operations used $502.2 million in the first fiscal six months of 2006, primarily to repay amounts outstanding under our Senior Credit Facilities, to redeem at maturity our outstanding 7.875% Senior Notes on June 15, 2006, to repurchase our common stock and to pay dividends to our common shareholders.

        We repurchased $125.1 million of our common stock on the open market during the first fiscal six months of 2006 and we repurchased no common stock during the first fiscal six months of 2007. As of July 7, 2007, a total of $1.4 billion had been expended under announced programs to acquire up to $1.7 billion of such shares. We may make additional share repurchases in the future depending on, among other things, market conditions and our financial condition. Proceeds from the issuance of common stock to our employees exercising stock options amounted to $10.3 million and $13.3 million in the first fiscal six months of 2007 and 2006, respectively.

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        At July 7, 2007, we had credit agreements with several lending institutions to borrow an aggregate principal amount of up to $1.75 billion under Senior Credit Facilities. These facilities, of which the entire amount is available for letters of credit or cash borrowings, provide for a $1.0 billion five-year revolving credit facility that expires in June 2009 and a $750.0 million five-year revolving credit facility that expires in June 2010. At July 7, 2007, $466.9 million was outstanding under the credit facility that expires in June 2009 (comprised of $184.1 million in cash borrowings and $282.8 million in outstanding letters of credit) and no amounts were outstanding under the credit facility that expires in June 2010. Borrowings under the Senior Credit Facilities may also be used for working capital and other general corporate purposes, including permitted acquisitions and stock repurchases. The Senior Credit Facilities are unsecured and require us to satisfy both a coverage ratio of earnings before interest, taxes, depreciation, amortization and rent to interest expense plus rents and a net worth maintenance covenant, as well as other restrictions, including (subject to exceptions) limitations on our ability to incur additional indebtedness, prepay subordinated indebtedness, make acquisitions, enter into mergers and pay dividends.

        One of the provisions of our Senior Credit Facilities requires an interest coverage ratio to be maintained at the end of each quarterly reporting period. As a result of our financial results for the second fiscal quarter of 2007, our interest coverage ratio did not meet the requirement for the quarter ended July 7, 2007. We received a waiver from our lenders addressing this deficiency. We were in compliance with all other debt covenants as of July 7, 2007.

        At July 7, 2007, we also had a C$10.0 million unsecured line of credit in Canada, under which C$0.2 million of letters of credit were outstanding.

        On June 25, 2007, Moody's announced it had placed our credit rating on watch for a possible downgrade. Moody's, which has a Baa3 senior unsecured rating on our outstanding senior notes, said it will review how we use the proceeds from the sale of Barneys and what strategies we develop to shore up our remaining businesses.

        On August 1, 2007, we announced that the Board of Directors had declared a 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.

        We have a joint venture with Sutton Developments Pty. Ltd. ("Sutton") to operate retail locations in Australia. We have unconditionally guaranteed up to $7.0 million of borrowings under the joint venture's uncommitted credit facility and up to $0.4 million of presettlement risk associated with foreign exchange transactions. Sutton is required to reimburse us for 50% of any payments made under these guarantees. At July 1, 2006, the outstanding balance subject to these guarantees was approximately $0.9 million.

        We believe that funds generated by operations, proceeds from the issuance of notes, the Senior Credit Facilities and the Canadian line of credit will provide the financial resources sufficient to meet our foreseeable working capital, dividend, capital expenditure and stock repurchase requirements and fund our contractual obligations and our contingent liabilities and commitments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in interest rates or foreign currency exchange rates. We manage this exposure through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Our policy allows the use of derivative financial instruments for identifiable market risk exposures, including interest rate and foreign currency fluctuations. We do not enter into derivative financial contracts for trading or other speculative purposes.

        The primary interest rate exposures on floating rate financing arrangements are with respect to United States and Canadian short-term interest rates. We had approximately $1.75 billion in variable rate credit facilities at July 7, 2007.

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        We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies and purchase products from foreign suppliers who require payment in funds other than the U.S. Dollar. We believe that these financial instruments should not subject us to undue risk due to foreign exchange movements because gains and losses on these contracts should offset losses and gains on the assets, liabilities, and transactions being hedged. We are exposed to credit-related losses if the counterparty to a financial instrument fails to perform its obligation. However, we do not expect the counterparties, which presently have high credit ratings, to fail to meet their obligations.

        For further information see "Derivatives" in the Notes to Consolidated Financial Statements.

Item 4. Controls and Procedures

        As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that both our disclosure controls and procedures and our internal controls and procedures are effective at the reasonable assurance level in timely alerting them to material information required to be included in our periodic SEC filings and that information required to be disclosed by us in these periodic filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

        We have made changes to our internal controls and procedures over financial reporting to enhance the control environment as a result of the implementation of SAP, an enterprise resource planning ("ERP") system. We are in the process of implementing SAP throughout Jones Apparel Group, Inc. and our consolidated subsidiaries. SAP will integrate our operational and financial systems and expand the functionality of our financial reporting processes. This process began in late 2006, when we converted our Gloria Vanderbilt, Norton McNaughton and Miss Erika businesses to this system. During the second fiscal quarter of 2007, we did not complete any further conversions in this process. We expect to roll out the implementation of this system to all locations over a multi-year period. As the phased roll out occurs, we may experience changes in internal control over financial reporting each quarter. We expect this ERP system to further advance our control environment by automating manual processes, improving management visibility and standardizing processes as its full capabilities are utilized.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

        We have been named as a defendant in various actions and proceedings arising from our ordinary business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in our opinion, any such liability will not have a material adverse financial effect on us.

Item 1A. Risk Factors

        There are certain risks and uncertainties that could cause actual results and events to differ materially from those anticipated. The following risk factors have been updated from those included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as amended. The risks and uncertainties that could adversely affect us include, without limitation, the following factors.

        The apparel, footwear and accessories industries are highly competitive. Any increased competition could result in reduced sales or prices, or both, which could have a material adverse effect on us.

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        Apparel, footwear and accessories companies face competition on many fronts, including the following:

• establishing and maintaining favorable brand recognition;
• developing products that appeal to consumers;
• pricing products appropriately; and
• obtaining access to retail outlets and sufficient floor space.

        There is intense competition in the sectors of the apparel, footwear and accessories industries in which we participate. We compete with many other manufacturers and retailers, some of which are larger and have greater resources than we do. Any increased competition could result in reduced sales or prices, or both, which could have a material adverse effect on us.

        We compete primarily on the basis of fashion, price and quality. We believe our competitive advantages include our ability to anticipate and respond quickly to changing consumer demands, our brand names and range of products and our ability to operate within the industries' production and delivery constraints. Furthermore, our established brand names and relationships with retailers have resulted in a loyal following of customers.

        We believe that, during the past few years, major department stores and specialty retailers have been increasingly sourcing products from suppliers who are well capitalized or have established reputations for delivering quality merchandise in a timely manner. However, there can be no assurance that significant new competitors will not develop in the future.

        We also believe there is an increasing focus by the department stores to concentrate an increasing portion of their product assortments within their own private label products. These private label lines compete directly with our product lines and may receive prominent positioning on the retail floor by department stores. While this creates more competition, our independent studies indicate that our brands are preferred by the consumer.

        We may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on us.

        The apparel, footwear and accessories industries have historically been subject to rapidly changing fashion trends and consumer preferences. We believe that our success is largely dependent on our ability to anticipate and respond promptly to changing consumer demands and fashion trends in the design, styling and production of our products and in the merchandising and pricing of products in our retail stores. If we cannot gauge consumer needs and fashion trends and respond appropriately, then consumers may not purchase our products. This would result in reduced sales and profitability and in excess inventories, which would have a material adverse effect on us.

        We believe that consumers in the United States are shopping less in department stores (our traditional distribution channel) and more in other channels, such as specialty shops and mid-tier locations where value is perceived to be higher. We have responded to these trends by enhancing the brand equity of our brands through our focus on design, quality and value, and through strategic acquisitions which provide diversification to the business by adding new distribution channels, labels and product lines. Our strategy also involves planned divestiture or closing of certain of our moderate apparel product lines, increased investment in our core brands, remodeling of our retail locations and implementation of new and enhanced retail systems. Despite our efforts to respond to these trends, there can be no assurance that these trends will not have a material adverse effect on us.

        The apparel, footwear and accessories industries are heavily influenced by general economic cycles that affect consumer spending. A prolonged period of depressed consumer spending would have a material adverse effect on us.

        The apparel, footwear and accessories industries have historically been subject to cyclical variations, recessions in the general economy and uncertainties regarding future economic prospects that affect consumer spending habits, which could negatively impact our business. The success of our operations depends on a number of factors impacting discretionary consumer spending, including general economic conditions, consumer

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confidence, wages and unemployment, consumer debt, interest rates, fuel and energy costs, taxation and political conditions. A downturn in the economy may affect consumer purchases of our products and adversely impact our continued growth and profitability.

        The loss of any of our largest customers could have a material adverse effect on us.

        Our ten largest customer groups, principally department stores, accounted for approximately 47% of revenues in 2006. Federated Department Stores, Inc. accounted for approximately 18% of our 2006 gross revenues.

        We believe that purchasing decisions are generally made independently by department store units within a customer group. There has been a trend, however, toward more centralized purchasing decisions. As such decisions become more centralized, the risk to us of such concentration increases. A decision by the controlling owner of a customer group of department stores to modify those customers' relationships with us (for example, decreasing the amount of product purchased from us, modifying floor space allocated to apparel in general or our products specifically, or focusing on promotion of private label products rather than our products) could have a material adverse effect on us. Furthermore, we believe a trend exists among our major customers to concentrate purchasing among a narrowing group of vendors. To the extent any of our key customers reduces the number of vendors and consequently does not purchase from us, this could have a material adverse effect on us.

        In the future, retailers may have financial problems or consolidate, undergo restructurings or reorganizations, or realign their affiliations, any of which could further increase the concentration of our customers. The loss of any of our largest customers, or the bankruptcy or material financial difficulty of any customer or any of the companies listed above, could have a material adverse effect on us. We do not have long-term contracts with any of our customers, and sales to customers generally occur on an order-by-order basis. As a result, customers can terminate their relationships with us at any time or under certain circumstances cancel or delay orders.

        The loss or infringement of our trademarks and other proprietary rights could have a material adverse effect on us.

        We believe that our trademarks and other proprietary rights are important to our success and competitive position. Accordingly, we devote substantial resources to the establishment and protection of our trademarks on a worldwide basis. There can be no assurances that such actions taken to establish and protect our trademarks and other proprietary rights will be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as violative of their trademarks and proprietary rights. Moreover, there can be no assurances that others will not assert rights in, or ownership of, our trademarks and other proprietary rights or that we will be able to successfully resolve such conflicts. In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United States. The loss of such trademarks and other proprietary rights, or the loss of the exclusive use of such trademarks and other proprietary rights, could have a material adverse effect on us. Any litigation regarding our trademarks could be time-consuming and costly.

        As of July 7, 2007, the book value of our goodwill and other intangibles, excluding amounts reported under assets held for sale, was $1.7 billion. We utilize independent third-party appraisals to estimate the fair value of both our goodwill and our intangible assets with indefinite lives. These appraisals are based on projected cash flows and interest rates. If interest rates or future cash flows were to differ significantly from the assumptions used in these projections, material non-cash impairment losses could result where the estimated fair values of these assets become less than their carrying amounts.

        Our continued strategic operational reviews and efforts to improve profitability and the continued trend of our moderate customers towards differentiated product offerings has led us to make the strategic decision to exit or sell some of our moderate product lines by year end 2007. As a result of the loss of these projected revenues, we recorded impairments for our Norton McNaughton and Erika trademarks of $69.0 million in our licensing, other and eliminations segment during the fiscal quarter ended July 7, 2007.

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        As a result of continuing decreases in projected revenues and profitability with respect to our Norton McNaughton, l.e.i. and certain other moderate apparel brands and changes in business strategy for our Norton McNaughton brand, as well as continuing decreases in projected revenues for our Albert Nipon better apparel brand, our Westies and Sam & Libby footwear brands and our Richelieu costume jewelry brand, we recorded goodwill and trademark impairment charges of $441.2 million and $50.2 million, respectively, in 2006. As a result of similar continuing decreases in projected accessory revenues in one of our costume jewelry brands, we recorded a trademark impairment charge $0.2 million in 2004.

        The loss of key personnel could disrupt our operations and our ability to successfully execute our strategies.

        Our executive officers and other members of senior management have substantial experience and expertise in our business. Our success depends to a significant extent both upon the continued services of these individuals as well as our ability to attract, hire, motivate and retain additional talented and highly qualified management in the future. Competition for key executives in the apparel, footwear and accessories industries is intense, and our operations and the execution of our business strategies could be adversely affected if we cannot attract and retain qualified executives and other key personnel.

        The extent of our foreign operations and manufacturing may adversely affect our domestic business.

        In 2006, approximately 96% of our apparel products were manufactured outside of the United States, its territories and Mexico, primarily in Asia, while approximately 4% were manufactured in the United States, its territories and Mexico. Nearly all of our footwear and accessories products were manufactured outside of North America in 2006 as well. The following may adversely affect foreign operations:

• political instability in countries where contractors and suppliers are located;
• imposition of regulations and quotas relating to imports;
• imposition of duties, taxes and other charges on imports;
• significant fluctuation of the value of the dollar against foreign currencies; and
• restrictions on the transfer of funds to or from foreign countries.

        As a result of our substantial foreign operations, our domestic business is subject to the following risks:

• uncertainties of sourcing associated with the new environment in which quota has been eliminated on apparel products pursuant to the World Trade Organization Agreement, effective January 1, 2005 (although China has agreed to safeguard quota on certain classes of apparel products through 2008 as a result of a surge in exports to the United States, political pressure will likely continue for restraint on importation of apparel);
• reduced manufacturing flexibility because of geographic distance between us and our foreign manufacturers, increasing the risk that we may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product; and
• violations by foreign contractors of labor and wage standards and resulting adverse publicity.

        Fluctuations in the price, availability and quality of raw materials could cause delay and increase costs.

        Fluctuations in the price, availability and quality of the fabrics or other raw materials used by us in our manufactured apparel and in the price of materials used to manufacture our footwear and accessories could have a material adverse effect on our cost of sales or our ability to meet our customers' demands. The prices for such fabrics depend largely on the market prices for the raw materials used to produce them, particularly cotton. The price and availability of such raw materials may fluctuate significantly, depending on many factors, including crop yields and weather patterns. In the future, we may not be able to pass all or a portion of such higher raw materials prices on to our customers.

        Our reliance on independent manufacturers could cause delay and damage our reputation and customer relationships.

        We rely upon independent third parties for the manufacture of most of our products. A manufacturer's failure to ship products to us in a timely manner or to meet the required quality standards could cause us to miss

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the delivery date requirements of our customers for those items. The failure to make timely deliveries may drive customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us. This could damage our reputation. We do not have long-term written agreements with any of our third party manufacturers. As a result, any of these manufacturers may unilaterally terminate their relationships with us at any time.

        We are also increasing pre-production collaboration efforts with many of our third party manufacturers to utilize their capabilities to increase speed to market and improve margins. Difficulties in effectively achieving this collaboration could have an adverse impact on our ability to achieve a substantial portion of the savings we anticipate as a result of our strategic review.

        Although we have an active program to train our independent manufacturers in, and monitor their compliance with, our labor and other factory standards, any failure by those manufacturers to comply with our standards or any other divergence in their labor or other practices from those generally considered ethical in the United States and the potential negative publicity relating to any of these events could materially harm us and our reputation.

        Difficulties in implementing a new enterprise system could impact our ability to design, produce and ship our products on a timely basis.

        We are in the process of implementing the SAP Apparel and Footwear Solution as our core operational and financial system. The implementation of the SAP Apparel and Footwear Solution software, which began at select locations in November 2006, is a key part of our ongoing efforts to eliminate redundancies and enhance our overall cost structure and margin performance. Difficulties migrating existing systems at our remaining locations to this new software could impact our ability to design, produce and ship our products on a timely basis.

Item 4. Submission of Matters to a Vote of Securities Holders

        The 2006 Annual Meeting of Stockholders was held on June 14, 2007. The proposals submitted to the vote of the stockholders and the results of the votes were as follows:

		For	Against	Withheld	Abstain	Broker Non-Votes
Election of Directors
	Peter Boneparth	92,382,240	*	3,307,422	*	*
	Sidney Kimmel	91,604,789	*	4,084,873	*	*
	Howard Gittis	70,673,573	*	25,016,089	*	*
	Matthew H. Kamens	91,809,992	*	3,879,670	*	*
	J. Robert Kerrey	94,325,051	*	1,364,611	*	*
	Ann N. Reese	94,259,798	*	1,429,864	*	*
	Gerald C. Crotty	94,329,159	*	1,360,503	*	*
	Lowell W. Robinson	94,329,397	*	1,360,265	*	*
	Frits D. van Paasschen	94,316,214	*	1,373,448	*	*
Ratification of the selection of BDO Seidman, LLP as our independent registered public accountants for 2007		92,382,480	2,771,621	*	535,563	*
Approval of an amendment to our by-laws		91,848,879	3,171,594	*	669,190	*

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	For	Against	Withheld	Abstain	Broker Non-Votes
Approval of the 2007 Executive Annual Cash Incentive Plan	91,020,076	4,101,826	*	567,762	*
Shareholder proposal regarding advisory vote on executive compensation	43,436,864	46,260,694	*	727,343	5,264,761

_____________
*Not Applicable

Item 5. Other information

Statement Regarding Forward-looking Disclosure

        This Report includes, and incorporates by reference, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding our expected financial position, business and financing plans are forward-looking statements. The words "believes," "expects," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements. Forward-looking statements also include representations of our expectations or beliefs concerning future events that involve 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 our products within the prevailing retail environment;
• customer acceptance of both new designs and newly-introduced product lines;
• our reliance on a few department store groups for large portions of our business;
• consolidation of our retail customers;
• financial difficulties encountered by our customers;
• the effects of vigorous competition in the markets in which we operate;
• our ability to attract and retain qualified executives and other key personnel;
• our reliance on independent foreign manufacturers;
• changes in the costs of raw materials, labor, advertising and transportation;
• the general inability to obtain higher wholesale prices for our products that we have 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);
• our ability to successfully implement new operational and financial computer systems; and
• our ability to secure and protect trademarks and other intellectual property rights.

        All statements other than statements of historical facts included in this Report, including, without limitation, the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from our expectations ("Cautionary Statements") are disclosed in this Report in conjunction with the forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise.

Item 6. Exhibits

        See Exhibit Index.

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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 thereunto duly authorized.

JONES APPAREL GROUP, INC.
(Registrant)

Date: August 14, 2007 By          /s/ Wesley R. Card
WESLEY R. CARD
 President and Chief Executive Officer

By          /s/ John T. McClain
JOHN T. McCLAIN
Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
3.1*	Amended and Restated By-Laws.
31*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32o	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________
* Filed herewith.
^o Furnished herewith.

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EX-3

EXHIBIT 3.1

JONES APPAREL GROUP, INC.

AMENDED AND RESTATED
BY-LAWS

(as of April 16, 2002June 14, 2007)

ARTICLE I - OFFICES

        1.1 Registered Office. The registered office of the corporation shall be at such place within the Commonwealth of Pennsylvania as the Board of Directors may from time to time determine.

        1.2 Other Offices. The corporation may also have offices at such other places as the Board of Directors may from time to time appoint or the activities of the corporation may require.

ARTICLE II - SEAL

        2.1 Seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its incorporation, and the words "Corporate Seal, Pennsylvania".

ARTICLE III - SHAREHOLDERS' MEETINGS

        3.1 Annual Meeting. A meeting of shareholders of the corporation shall be held annually for the election of Directors and the transaction of such other business as may properly be brought before the meeting, on a day to be determined each year by the Board of Directors.

        3.2 Special Meetings. Except as expressly required by law, special meetings of the shareholders may be called at any time for any purpose not prohibited by law or the Articles of Incorporation only by the Chairman, the President or the Board of Directors, by submitting a written request therefor, stating the object of the meeting, to the Secretary. The Secretary shall fix the time and place of the meeting, which shall be not later than 60 days after the receipt of the request. If the Secretary shall neglect or fail so to set the time and place of the meeting, the person calling the meeting or a person designated by the Board of Directors for such purpose may do so. Business transacted at all special meetings shall be confined to the object stated in the request therefor, and matters directly related and germane thereto.

        3.3 Notice. Written notice of every meeting of the shareholders, stating the place, time and hour thereof, shall be given to each shareholder not later than five days prior to the date of the meeting; provided that notice shall be given not later than ten days prior to the date of a meeting to consider a fundamental change under Chapter 19 of the Pennsylvania Business Corporation Law of 1988, as amended (the "Pennsylvania BCL"). Notice of a special meeting shall state the general nature of the business to be transacted.

        3.4 Quorum. At all meetings of the shareholders, the presence of shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast on a particular matter to be acted upon at the meeting shall constitute a quorum for the purposes of consideration and action on the matter. If a meeting of shareholders cannot be organized because of the absence of a quorum, the shareholders present may adjourn the meeting to such time and place as they may determine, and in the case of a meeting called for the purpose of electing Directors, those who attend the second such adjourned meeting shall constitute a quorum for the purpose of electing Directors. Except as otherwise provided in these By-Laws, the Articles of 

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Incorporation, or applicable law, whenever any corporate action is to be taken by vote of the shareholders, such action shall be authorized upon receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon and, if any shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by the shareholders entitled to vote as a class.

        3.5 Conduct of Meetings of Shareholders.

                A. Presiding Officer. There shall be a presiding officer at every meeting of the shareholders. The presiding officer shall be appointed by, or in the manner authorized by, the Board of Directors; provided that if a presiding officer is not designated by, or in the manner authorized by, the Board of Directors, the chief executive officer shall be the presiding officer.

                B. Authority of Presiding Officer. Except as prescribed by the Board of Directors, the presiding officer shall determine the order of business and shall have the authority to establish rules for the conduct of the meeting of the shareholders.

                C. Procedural Standard. Any action by the presiding officer in adopting rules for, and in conducting, a meeting of the shareholders shall be fair to the shareholders. The conduct of the meeting need not follow Robert's Rules of Order or any other published rules for the conduct of a meeting.

                D. Closing of the Polls. The presiding officer shall announce at the meeting of the shareholders when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes, nor any revocations or changes thereto, may be accepted.

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        3.6 Voting List. The officer or agent having charge of the transfer books for shares of the corporation shall prepare an alphabetical list of the names and addresses of and shares held by the shareholders entitled to vote at the meeting. The list shall be produced and kept open for inspection by shareholders at the place of the meeting and during the whole time of the meeting, except that, if the corporation has 5,000 or more shareholders, in lieu of the making of the list, the corporation may make the information therein available at the meeting by any other means.

        3.7 Judges of Elections. The Board of Directors may, before a meeting of shareholders, appoint one or three Judges of Election (who need not be shareholders) for such meeting. If no such Judges of Election are appointed, the presiding officer of the meeting may and, on the request of any shareholder shall, make such appointment. If Judges of Election are appointed at the request of one or more shareholders, the shareholders present and entitled to vote shall determine whether there will be one or three Judges of Election. In case any person appointed as a Judge of Election fails to appear or refuses to act, the vacancy may be filled by appointment made by the Board of Directors in advance of the convening of the meeting or at the meeting by the presiding officer. The Judges of Election shall have such duties as are provided in Section 1765(a)(3) of the Pennsylvania BCL and shall report in writing on any matter they determine, executing a certificate of any fact they find, if requested by the presiding officer of the meeting or any shareholder. No person who is a candidate for office shall act as a Judge of Election.

        3.8 Conduct of Other Business at Adjourned Meetings. Those shareholders entitled to vote who attend a meeting of shareholders that has been previously adjourned for one or more periods aggregating at least 15 days because of an absence of a quorum, although less than a quorum as fixed in Section 3.4 hereof, shall nevertheless constitute a quorum for the 

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purpose of acting upon any matter set forth in the notice of meeting if the notice states that those shareholders who attend the adjourned meeting shall nevertheless constitute a quorum for the purpose of acting upon the matter.

        3.9 Voting. Except as otherwise specifically provided by law, all matters coming before the meeting shall be determined by a vote of shares. Except as otherwise specifically provided in the Articles of Incorporation, shareholders shall be entitled to one vote for each share of the outstanding stock of the corporation held by them as of the applicable record date. Votes shall be taken by ballot if so directed by the presiding officer or, in the case of election of Directors, if required by vote of the shareholders before the vote begins. Otherwise, votes shall be taken by voice vote, show of hands or other means as directed by the presiding officer.

        3.10 Proxies. At all meetings of shareholders, shareholders entitled to vote may attend and vote either in person or by proxy. Every proxy shall be executed or authenticated by the shareholder or by such shareholder's duly authorized attorney-in-fact and filed with or transmitted to the Secretary of the corporation or its designated agent. A shareholder or such shareholder's duly authorized attorney-in-fact may execute or authenticate a writing or transmit an electronic message authorizing another person to act for such shareholder by proxy. A proxy, unless coupled with an interest (as defined in Section 1759(d) of the Pennsylvania BCL), shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but the revocation of a proxy shall not be effective until notice thereof has been given to the Secretary of the corporation or its designated agent in writing or by electronic transmission. An unrevoked proxy shall not be valid after three years from the date of its execution unless a longer time is expressly provided therein. A proxy shall not be revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is 

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exercised, written notice of the death or incapacity is given to the Secretary of the corporation or its designated agent.

        3.11 Participation in Meetings by Electronic Means. Subject to the policy, if any, established from time to time by the Board of Directors on the subject, the presiding officer may permit, with respect to a particular meeting of shareholders, one or more persons to participate in such meeting of the shareholders, be counted for the purposes of determining a quorum and exercise all rights and privileges to which such person might be entitled were such person personally in attendance, including the right to vote, by means of conference telephone or other electronic means, including, without limitation, the Internet. Unless the Board of Directors so provides, or the presiding officer so permits, no person may participate in a meeting of the shareholders by means of conference telephone or other electronic means. If requested prior to or during a meeting, the presiding officer will advise any shareholder promptly whether such permission will be granted for a particular meeting and. if granted by the presiding officer, such permission will be irrevocable for that meeting. If the request is made prior to the meeting, the presiding officer for purposes of the preceding sentence shall be deemed to be a person designated by these Bylaws to preside at a meeting of shareholders.

        3.12 Business at Meetings of Shareholders.

                A. Except as otherwise provided by law or in these By-Laws, or except as permitted by the presiding officer of the meeting in the exercise of such officer's sole discretion in any specific instance (unless objected to by a majority of the Directors then in office), the business which shall be voted upon or discussed at any annual or special meeting of the shareholders shall (i) have been specified in the notice of the meeting (or any supplement thereto) given by the corporation, (ii) be brought before the meeting at the direction of the Board 

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of Directors, (iii) be brought before the meeting by the presiding officer of the meeting unless a majority of the Directors then in office object to such business being conducted at the meeting, or (iv) in the case of an annual meeting of shareholders, have been specified in a written notice given to the corporation by or on behalf of any shareholder who shall have been a shareholder of record on the record date for such meeting and who shall continue to be entitled to vote thereat (the "Shareholder Notice"), in accordance with all of the requirements set forth below.

                B. Each Shareholder Notice must be delivered to, or mailed and received at, the principal executive offices of the corporation addressed to the attention of the President (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of shareholders, not less than 45 days nor more than 90 days prior to such anniversary date, provided, that a proposal submitted by a shareholder for inclusion in the corporation's proxy statement for an annual meeting which is appropriate for inclusion therein and otherwise complies with Securities Exchange Act of 1934 Rule 14a-8 (including timeliness), shall be deemed to have also been submitted timely pursuant to these Bylaws and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, not later than the close of business on the fifth day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure of the meeting date (which shall include disclosure of the meeting date given to a national securities exchange or the National Association of Securities Dealers) was made. Each such Shareholder Notice must set forth (A) the name and address of the shareholder who intends to bring the business before the annual meeting ("Proposing Shareholder"); (B) the name and address of the beneficial owner, if different than the Proposing Shareholder, of any of the shares owned of record by the Proposing 

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Shareholder ("Beneficial Owner"); (C) the number of shares of each class and series of shares of the corporation which are owned of record and beneficially by the Proposing Shareholder and the number which are owned beneficially by any Beneficial Owner; (D) any interest (other than an interest solely as a shareholder) which the Proposing Shareholder or a Beneficial Owner has in the business being proposed by the Proposing Shareholder; (E) a description of all arrangements and understandings between the Proposing Shareholder and any Beneficial Owner and any other person or persons (naming such person or persons) pursuant to which the proposal in the Shareholder Notice is being made; (F) a description of the business which the Proposing Shareholder seeks to bring before the annual meeting, the reason for doing so and, if a specific action is to be proposed, the text of the resolution or resolutions which the Proposing Shareholder proposes that the corporation adopt; and (G) a representation that the Proposing Shareholder is at the time of giving the Shareholder Notice, was or will be on the record date for the meeting, and will be on the meeting date a holder of record of shares of the corporation entitled to vote at such meeting, and intends to appear in person or by proxy at the meeting to bring the business specified in the Shareholder Notice before the meeting. The presiding officer of the meeting may, in such officer's sole discretion, refuse to acknowledge any business proposed by a shareholder which the presiding officer determines is not made in compliance with the foregoing procedure.

ARTICLE IV - SHARE CERTIFICATES

        4.1 Form of Certificate. The certificates of shares of the corporation shall state the name of the registered holder; the number, class, and series (if any) of the shares represented; and the par value of each share or the absence of par value, as appropriate. Each certificate shall be numbered and registered in a share register in the order issued.

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        4.2 Signature. Each share certificate shall be signed, by the Chairman, the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the corporate seal. When a certificate is signed by a transfer agent or registrar, the signature of an authorized officer may be facsimile. If an officer who has signed a certificate, personally or by facsimile, ceases to be an officer before the certificate is delivered, the certificate may be issued as if the signatory remained in office.

        4.3 Lost Certificates. The Board of Directors shall cause the issuance of a new certificate as a replacement for a certificate claimed to have been lost, destroyed or wrongfully taken, upon submission of an affidavit of the person making the claim of the loss, destruction, or wrongful taking. The Board of Directors may, in its discretion, require as a condition to the issuance of a replacement certificate that the owner of the certificate advertise the loss in such manner as the Board of Directors may determine and/or give the corporation a bond in such sum and with such sureties as the Board of Directors may direct as indemnity against any claim that may be made against the corporation with respect to the certificate claimed to have been lost, destroyed or wrongfully taken.

        4.4 Transfer of Shares. Upon surrender to the corporation or its transfer agent of a share certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction in its books.

        4.5 Record Dates. The Board of Directors may fix a record date for the determination of the shareholders entitled to notice of and to vote at a meeting, to receive payment of a dividend or distribution, to receive an allotment of rights, or to exercise rights in 

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respect to a change, conversion or exchange of shares. In such case, only the shareholders of record on the record date shall be entitled to notice of or to vote at or participate in such meeting or activity or event, notwithstanding any transfer of any shares on the books of the corporation after the record date. The record date may not be more than that number of days prior to the meeting, activity or event to which it relates which is permitted under the Pennsylvania BCL.

        4.6 Registered Shareholders. The corporation shall be entitled to treat the holder of record of any shares as the holder in fact for all purposes and shall not be bound to recognize any claim to or interest in such share on the part of any other person. The corporation shall not be liable for any improper or impermissible registration or transfer of shares which are or to be registered in the name of a fiduciary or its nominee unless the corporation had actual knowledge that the fiduciary or nominee are committing a breach of trust in requesting such registration or transfer, or the corporation had knowledge of such facts that its participation in the registration or transfer amounts to bad faith.

        4.7 Certification by Nominee. The Board of Directors may adopt a procedure whereby a shareholder of the corporation may certify in writing to the corporation that all or a portion of the shares registered in the name of the shareholder are held for the account of a specified person or persons. The resolution of the Board of Directors may set forth:

A. the classification of shareholder who may certify;

B. the purpose or purposes for which the certification may be made;

C. the form of certification and information to be contained therein;

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D. if the certification is with respect to a record date, the time after the record date within which the certification must be received by the corporation; and

E. such other provisions with respect to the procedure as are deemed necessary or desirable.

        Upon receipt by the corporation of a certification complying with the procedure, the persons specified in the certification shall be deemed, for the purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification.

        4.8 Uncertificated Shares. Notwithstanding anything herein to the contrary, any or all classes and series of shares, or any part thereof, may be represented by uncertificated shares to the extent determined by the Board of Directors, except that shares represented by a certificate that is issued and outstanding shall continue to be represented thereby until the certificate is surrendered to the corporation. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof, a written notice containing the information required to be set forth or stated on certificates. The rights and obligations of the holders of shares represented by certificates and the rights and obligations of the holders of uncertificated shares of the same class and series shall be identical. Notwithstanding anything herein to the contrary, the provisions of Sections 4.1 through 4.4 hereof shall be inapplicable to uncertificated shares and in lieu thereof the Board of Directors shall adopt alternative procedures for registration of transfers.

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ARTICLE V - BOARD OF DIRECTORS

        5.1 General Powers. The business and affairs of the corporation shall be managed under the direction of the Board of Directors, and all powers of the corporation are hereby granted to and vested in the Board of Directors, except as otherwise expressly provided in these By-Laws, the Articles of Incorporation, or by law.

        5.2 CompositionNumber and Term of Office. The number of Directors of the cCorporation shall be one, or such larger number as the Board of Directors may fix from time to time. Except as provided in Section 5.8, each Director shall be elected by the vote of the majority of the votes cast with respect to the Director at any meeting for the election of Directors at which a quorum is present, provided that if the number of nominees exceeds the number of Directors to be elected, the Directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of Directors. For purposes of this Section 5.2, a majority of the votes cast means that the number of shares voted "for" a Director must exceed the number of votes "withheld" from or voted "against" that Director. If a director is not elected, the Director shall offer to tender his or her resignation to the Board. The Nominating/Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Committee's recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The Director who tenders his or her resignation will not participate in the Board's decision. Directors shall hold office until the next annual meeting and until their successors shall be duly elected and qualified, or until their earlier death, resignation or removal. Directors need not be shareholders. If, for any cause, the Board of Directors shall not have been 

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elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the shareholders called for that purpose in the manner provided in these By-Laws.

        5.3 Term. Directors shall be elected at the annual meeting of shareholders of the corporation and shall serve until the next annual meeting of the shareholders of the corporation or until their successors are duly elected and qualified, or until their earlier death, resignation or removal.

        5.45.3 Regular Meetings. The Board of Directors may hold regular meetings at such times and places as it may determine.

        5.55.4 Special Meetings. Special meetings of the Board of Directors may be called, at any time, by the Chairman, by the President or by a majority of the Directors in office, by submitting a written request therefor, stating the object of the meeting, to the Secretary. The Secretary shall set the time and place of the meeting, which shall be held not later than ten days after the receipt of the request, unless the person or persons calling the meeting otherwise agree in writing. If the Secretary shall neglect or refuse to set the time and place of the meeting, the person or persons calling the meeting may do so.

        5.65.5 Annual Meeting. There shall be an annual meeting of the Board of Directors following each annual meeting of the shareholders. At the annual meeting, the Board of Directors shall elect officers and transact such other business as may be properly brought before the meeting.

        5.75.6 Notices. Written notice of regular and annual meetings of the Board of Directors, stating the time and place thereof shall be given to all Directors at least five days prior to the date 

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of the meeting. Written notice of special meetings of the Board of Directors shall be given to each Director at least 48 hours prior to the time of the meeting and shall state the business to be transacted at the meeting.

        5.85.7 Quorum. A majority of the members of the Board of Directors shall constitute a quorum for the transaction of business, and the acts of a majority of Directors present and voting at a meeting at which a quorum is present shall be the acts of the Board of Directors. In the event that a quorum is not present at any meeting of the Board of Directors, the Directors present may adjourn the meeting without any notice of the time and place of the adjourned meeting except for announcement at the meeting at which adjournment is taken.

        5.95.8 Vacancies. If the office of a Director shall become vacant for any reason, including an increase in the number of Directors, the remaining Directors shall elect a successor, who shall hold office for the unexpired term for which the vacancy occurred or until his or her successor is duly qualified and seated. A majority of the remaining Directors shall constitute a quorum for purposes of filling the vacancy on the Board of Directors.

        5.105.9 Compensation. Members of the Board of Directors shall not receive any salary for their services as Directors, but Directors may be reimbursed for expenses incurred in connection with service on the Board of Directors, and a fixed sum may be allowed for attendance at each regular or special meeting of the Board of Directors or at meetings of committees. Members of the Board of Directors may receive such other compensation in cash, securities or other form as the Board of Directors may determine. Directors shall not be precluded from serving the corporation in any other capacity and receiving compensation therefor.

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        5.115.10 Informal Action by the Board of Directors. Any action required or permitted to be taken at a meeting of the Directors, or of the members of any committee of the Board of Directors, may be taken without a meeting if, prior or subsequent to the action, a consent or consents thereto by all of the Directors in office (or members of the committee with respect to committee action) is filed with the Secretary of the corporation. For purposes of this Section 5.11,5.10, a consent may be given by means of a physical written copy or may be transmitted by facsimile transmission, e-mail or similar electronic communications technology; provided that the means of giving consent shall enable the corporation to keep a record of the consents in a manner satisfying the requirements of Section 107 of the Pennsylvania Associations Code. In addition to other means of filing with the Secretary, insertion in the minute book of the corporation shall be deemed filing with the Secretary regardless of whether the Secretary or some other authorized person has actual possession of the minute book. Consents by all of the Directors or committee members, as the case may be, given pursuant to this Section 5.115.10 may be given in any number of counterparts and shall be deemed effective as of the date set forth therein or, if no date is set forth therein, as of the date consents of all the Directors are received by or on behalf of the corporation.

        5.125.11 Nominations. Notwithstanding the provisions of Section 3.12 hereof (dealing with business at meetings of shareholders), nominations for the election of Directors may be made by the Board of Directors, by a committee appointed by the Board of Directors with authority to do so or by any shareholder of record entitled to vote in the election of Directors who is a shareholder at the record date of the meeting and also on the date of the meeting at which Directors are to be elected; provided, however, that, with respect to a 

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nomination made by a shareholder, such shareholder must provide timely written notice to the President of the corporation in accordance with the following requirements:

                A. To be timely, a shareholder's notice must be delivered to, or mailed and received at, the principal executive offices of the corporation addressed to the attention of the President (i) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of shareholders, not less than 45 days nor more than 90 days prior to such anniversary date, and (ii) in the case of an annual meeting that is called for a date that is not within 30 days before or after the anniversary date of the immediately preceding annual meeting, or in the case of a special meeting of shareholders called for the purpose of electing Directors, not later than the close of business on the fifth day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure of the meeting date (which shall include disclosure of the meeting date given to a national securities exchange or the National Association of Securities Dealers) was made; and

                B. Each such written notice must set forth: (i) the name and address of the shareholder who intends to make the nomination ("Nominating Shareholder"); (ii) the name and address of the beneficial owner, if different than the Nominating Shareholder, of any of the shares owned of record by the Nominating Shareholder ("Beneficial Holder"); (iii) the number of shares of each class and series of shares of the corporation which are owned of record and beneficially by the Nominating Shareholder and the number which are owned beneficially by any Beneficial Holder; (iv) a description of all arrangements and understandings between the Nominating Shareholder and any Beneficial Holder and any other person or persons (naming such person or persons) pursuant to which the nomination is being made; (v) the name and

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address of the person or persons to be nominated; (vi) a representation that the Nominating Shareholder is at the time of giving of the notice, was or will be on the record date for the meeting, and will be on the meeting date a holder of record of shares of the corporation entitled to vote at such meeting, and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (vii) such other information regarding each nominee proposed by the Nominating Shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (viii) the written consent of each nominee to serve as a Director of the corporation if so elected. The presiding officer of the meeting may, in such officer's sole discretion, refuse to acknowledge the nomination of any person which the presiding officer determines is not made in compliance with the foregoing procedure.

ARTICLE VI - COMMITTEES

        6.1 Establishment. The Board of Directors may establish one or more standing or special committees, including without limitation an executive committee. Except as otherwise provided in these By-Laws, the Articles of Incorporation, or applicable law, any committee may exercise such powers and functions as the Board of Directors may from time to time determine.

        6.2 Committee Members. The Board of Directors shall appoint all committee members and committee chairpersons and may appoint alternates for any member or chairperson of any committee.

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ARTICLE VII - OFFICERS

        7.1 Officers. The officers of the corporation shall be chosen by the Board of Directors and shall include a Chairman, President, Treasurer, Secretary, and such Vice Presidents and assistant officers as the Board of Directors may determine to be necessary or appropriate. If the Board of Directors so determines, the officers may include a Chief Operating Officer and a Chief Financial Officer. Any two or more offices may be held by the same person.

        7.2 Election and Term.

                A. The Chairman, President, each Vice President, the Chief Operating Officer, if any, the Chief Financial Officer, if any, Treasurer and Secretary shall be elected by the Board of Directors at its annual meeting and shall serve for terms of one year, or until their successors are duly elected and qualified. All assistant officers shall be elected or appointed at such times and for such terms as the Board of Directors may determine.

                B. A vacancy in any office shall be filled by the Board of Directors.

        7.3 Chairman. The Chairman shall preside at all meetings of the Board of Directors. He or she may execute on behalf of the corporation all bonds, mortgages, contracts, and other documents, except for such documents required by law to be otherwise executed or where the execution thereof shall be delegated by the Board of Directors to another officer. Until May 22, 2002, the Chairman shall be the chief executive officer of the corporation.

        7.4 President. The President shall have the general direction and control of the affairs of the corporation, and he or she shall have the authority and duties generally invested in the chief executive officer of publicly-traded corporations of similar size to the corporation. The

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President shall be the chief external representative of the corporation and shall report solely and directly to the Board of Directors. All employees of the Company (other than the Chairman) shall report to the President or the President's designee. He or she may execute on behalf of the corporation all bonds, mortgages, contracts, and other documents, except where such documents are required by law to be otherwise executed or when the execution thereof shall be delegated by the Board of Directors to another officer. Effective May 22, 2002, the President shall be the chief executive officer of the corporation.

        7.5 Chief Operating Officer. The Chief Operating Officer, if any, shall have the authority and duties generally invested in the chief operating officer of publicly-traded corporations of similar size to the corporation, as such duties may be modified from time to time by the Board of Directors or chief executive officer.

        7.6 Chief Financial Officer. The Chief Financial Officer, if any, shall have the authority and duties generally invested in the chief financial officer of publicly-traded corporations of similar size to the corporation, as such duties may be modified from time to time by the Board of Directors or chief executive officer.

        7.7 Vice Presidents. The Vice Presidents, if any, shall perform such duties as may be delegated to any of them by the Board of Directors or the President.

        7.8 Treasurer. The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects of the corporation in separate accounts or depositaries in the name of and to the credit of the corporation as shall be designated by the Board of Directors. He or she shall disburse the funds 

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of the corporation as may be ordered by the Board of Directors for such disbursements and shall render to the Board of Directors, whenever it may so require it, an account of all his or her transactions as Treasurer and of the financial condition of the corporation.

        7.9 Secretary. The Secretary shall attend all meetings of the Board of Directors and record all votes of the corporation and the minutes of all transactions in a book to be kept for that purpose and perform like duties for committees of the Board of Directors, if and when required. He or she shall give, or cause to be given, notice of all meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the President. He or she shall keep, or cause to be kept, in safe custody the corporate seal and, when authorized to do so by the Board of Directors, affix the same to any instrument requiring it and attest to it by his or her signature.

        7.10 Assistant Officers. Assistant officers, who may include a controller, shall perform such functions and have such responsibilities as the Board of Directors may determine.

ARTICLE VIII - LIMITATION OF LIABILITY AND INDEMNIFICATION

        8.1 Limitation of Liability. Directors of this corporation shall not be personally liable for monetary damages as such for any action taken or failure to take any action other than as expressly provided in 42 Pa.C.S. Section 8364. It is the intention of this Section 8.1 to limit the liability of Directors of this corporation to the fullest extent permitted by 42 Pa.C.S. Section 8364 or by any other present or future provision of Pennsylvania law.

        8.2 Indemnification. The corporation shall indemnify every Director and officer, and may indemnify any employee or agent, to the full extent permitted by the Pennsylvania 

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Business Corporation Law, the Pennsylvania Directors' Liability Act and any other present or future provision of Pennsylvania law. The corporation shall pay and advance expenses to Directors and officers for matters covered by indemnification to the full extent permitted by such law, and may similarly pay and advance expenses for employees and agents. This Section 8.2 shall not exclude any other indemnification or other rights to which any party may be entitled in any manner.

ARTICLE IX - NOTICES

        9.1 Form of Notice. Whenever any notice is required or permitted, by these By-Laws or otherwise, to be given to any person or entity, it may be given either personally or by sending a copy thereof by (i) first class or express mail, postage prepaid, or courier service, charges prepaid, to the postal address of the appropriate person or entity as it appears on the books of the corporation or, in the case of a Director, supplied by such Director to the corporation for the purpose of notice or (ii) by facsimile transmission, e-mail or other electronic communication to such person's facsimile number or address for e-mail or other electronic communications supplied by such person to the corporation for the purpose of notice. Notice pursuant to clause (i) in the preceding sentence shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a courier service for delivery to that person; and notice pursuant to clause (ii) in the preceding sentence shall be deemed to have been given to the person entitled thereto when sent. Except as otherwise provided herein, or as otherwise directed by the Board of Directors, notices of meetings may be given by, or at the direction of, the Secretary.

        9.2 Waiver of Notice. Whenever any notice is required, by these By-Laws or otherwise, a waiver of such notice in writing, signed by the person or persons or on behalf of the 

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entity or entities entitled to receive the notice shall be deemed equivalent to the giving of such notice, whether the waiver is signed before or after the time required for such notice. Except as otherwise required by law, the waiver of notice need not state the business to be transacted at nor the purpose of the meeting. Attendance at any meeting shall constitute a waiver of notice of such meeting, except where a person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of business because the meeting was not lawfully called or convened.

ARTICLE X - MISCELLANEOUS PROVISIONS

        10.1 Fiscal Year. The fiscal year of the corporation shall be as the Board of Directors may determine.

        10.2 Participation by Telecommunications. One or more persons may participate in a meeting of the Board of Directors or of any committee by means of a conference telephone or other electronic technology by which all persons participating in the meeting can hear one another. Participation in a meeting pursuant to this section shall constitute the presence in person at such meeting.

ARTICLE XI - AMENDMENTS

        11.1 Amendments. To the full extent permitted by the Pennsylvania BCL, the Board of Directors shall have the power to amend, alter, or repeal all or any part of these By-Laws, subject to the power of the shareholders to change such action.

* * * * *

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EX-31

EXHIBIT 31

CERTIFICATIONS

I, Wesley R. Card, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Jones Apparel Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2007
 

/s/ Wesley R. Card
Wesley R. Card
President and Chief Executive Officer

I, John T. McClain, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Jones Apparel Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2007
 

/s/ John T. McClain
John T. McClain
Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    I, Wesley R. Card, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Jones Apparel Group, Inc. on Form 10-Q for the fiscal quarter ended July 7, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Jones Apparel Group, Inc.

By: /s/ Wesley R. Card

Name: Wesley R. Card
Title: President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Jones Apparel Group, Inc. and will be retained by Jones Apparel Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

    I, John T. McClain, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Jones Apparel Group, Inc. on Form 10-Q for the fiscal quarter ended July 7, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Jones Apparel Group, Inc.

By: /s/ John T. McClain

Name: John T. McClain
Title: Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Jones Apparel Group, Inc. and will be retained by Jones Apparel Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.